The way the world economy is manipulated by world leaders is a little like a giant video game. The object of the game is to keep the world economy growing, without too many adverse consequences to particular members of the world economy. We represent this need for growth of the world economy as being similar to making a jet airplane fly at ever-higher altitudes.
Figure 1. Author’s view of the situation we are facing. World leaders look at their video screens and adjust their controllers to try to make the world economy fly at ever-higher levels.
World leaders look at their video game screens for indications regarding where the world economy is now. They also want to see whether there are specific parts of the economy that are doing badly.
The game controllers that the world leaders have are somewhat limited in the functions they can perform. Typical adjustments they can make include the following:
- Add or remove government programs aimed at providing jobs for would-be workers
- Add or remove government sponsored pension plans and payments to those without jobs
- Add or remove laws regulating efficiencies of new vehicles
- Change who or what is taxed, and the overall level of taxation
- Through the above mechanisms, change government debt levels
- Change interest rates
There are numerous problems with this approach. For one thing, the video game screen doesn’t give a very complete picture of what is happening. For another, the aspects of the economy that can be controlled are rather limited. Furthermore, the situation is very complex–there seem to be several “sides” of the economy that need to “win” at the same time, for the economy to continue to grow: (a) oil importers and oil exporters, (b) businesses and their would-be customers, (c) governments and their would-be taxpayers, and (d) asset holders and the would-be buyers of these assets, such as families needing new homes.
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