I was washing up dishes and a thought came into my mind. It was after the Christmas dinner and of course clearing up was not immediate. But no flies.
So I thought, good, the spiders got the flies. So I looked round, hmmnm, no spiders either.
I guess for now my little eco system has worked like this. The spiders ate the flies. The spiders died because they have no flies to eat.
When it is warm enough again to leave the doors open I guess I will get flies back, but I need the spiders back first, but of course they will have nothing to eat, so the flies have to come first.
The current state of the economy, in Europe and USA, is a bit like the spiders and the flies. People who make things want people to buy things but people who buy things need to be out there earning money before they will start buying again.
This eco understanding has been the battleground of economists for a long time. Some argue that you need to print money and then people spend it which then creates more jobs so people earn more and then spend more.
That seems all well and good except it seems to get out of control. Too many flies and the spiders can’t eat them quickly enough so the value of the fly drops. Then too many spiders and no more flies because they have all been eaten.
Other people think that the relationship between supply and demand has to be more rigorous, demand draws down supply, but increasing demand and slow response in supply leads to system failure as well.
These analogies only work up to a point. My little house is part of a wider eco system and outside there are plenty of spiders and flies. Outside Europe and the USA the economic growth has been pretty good, with Africa showing steady strong progress with better governance and an inward investment in infrastructure and a growing internal market. Our problem in the developed ‘West’ is that we all got a bit too greedy, we ate everything up and stopped thinking about supplying, or at least stopped accounting for a balance which worked.
Germany and France have said that there will be no growth in 2012, which is enough to put off anyone wanting to invest in new supply there.
Anyone who has run a business knows that one essential is good book-keeping. This does not mean you have accountants run your company, as you know from other posts I make on how our brains work, if you try to run your decision-making on numbers alone you are going to get into big trouble.
What it means is that you need to have some kind of eye on the traffic, between production and consumption, you can’t control it perfectly but you need to keep an eye on it. One UK company that shall be nameless decided to keep a set of books where everything they produced was regarded as an asset and so was entered into the books as if it was sold. Production raced ahead until there was nowhere to store all the produced and unsold product. The factory had to close for a few months while consumption brought everything back to some kind of normality.
When the Spring weather is starting I will be opening the back door and letting the flies back in. Hopefully a few spiders will join them across the threshold.
European leaders and those in the USA need to have a good eye on when Spring is about to start, then open the door.
I am pretty optimistic that once markets get moving again things will pick up very quickly. Technology will be delivering several years worth of extra productivity, business systems will have lost a bit of then unnecessary fat, well, I hope so. When all this happens we will see that the world outside has grown up quite a lot.
It isn’t as if there aren’t pretty big jobs needing to be done. Climate change needs to have a ramp up in development, failing countries need to be pulled out of system collapse, developing countries need to find a stable place in the world markets.
If you are still pessimistic, I take you back to Africa. Have a look at this report.
They are the best that have been seen for a long time, maybe forever.
And the future us all about attitude, and good thinking.
And if you fancy a trip somewhere new and very different, why not give Ethiopia a try. The people are lovely, there are some great places to visit, it would need some planning or use a reputable travel company. To stay near the City Centre (though what that means might not be quite what you think), I would heartily recommend The Harmony Hotel, owned and run by two Ethiopian brothers. If you say I recommended it they may play you some great tracks by Jan Garbarek and Yul Anderson.