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Common component- primary elements of economy |
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In Chapter 20 of UCA, we introduced the essential parameters upon which any society, and city, indeed any population of human beings may be considered economically. |
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While the model differed from the traditional nature of economics, it nonetheless enabled us to glimpse a simple and effective understanding of the inter linkages of an economy as well as the key themes of trade that have existed at each and every level step of human civilization. |
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The key components to an modern economy |
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Just as ancient economies, the basic elements to a modern economy are the same, namely primary producers/industry. Historically and today, the first and most important primary producers and industry are: |
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| · Food |
· Water/Sanitation |
| · Fuel |
· Mining and materials |
| · Transport Systems |
· Storage and distribution |
| · Building |
· Rules of economy- economic policy |
| · Means of exchange (money) |
· People |
| · Knowledge/education system |
· Law/legal system |
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People |
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The central environmental and economic problem of the world today is the overpopulation of human beings. Regardless of studies that show a more equitable distribution of resources would enable most people to live above poverty, the current estimate of 7 Billion people and 10 Billion people by the year 2005 will stretch the resources of the world to its limit. |
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Overpopulation incredible strain on the resources of any country, and no where is such strain not needed than poorer under developed countries where over population if rife. |
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The strange twist of the 20th Century has been that thanks to the improvements in medicines and health, the rate of population growth has never been greater. |
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Food |
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In contrast to over population, the largest populations of the world experience shortages of essential dietary foodstuffs. At the same time, developed countries are battling a completely different problem- the increase in obesity from over eating. |
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As a result and quite perversely, people hooked to satellite in poor third world countries are able to watch cable TV shows about the fat and cosmetic problems of developed countries, while rainwater erodes under their tin shacks. |
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Water/Sanitation |
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Similarly to food, the planet now suffers chronic lack of adequate water and sanitation systems in most cities ( developed world) and especially undeveloped world. |
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As a result, periodic outbreaks of infectious diseases continue to erupt in cities right around the world. As most cities are built on rivers, the rivers themselves have become one of the no 1 carriers of infectious death to thousands of city residents per year. |
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Fuel |
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As we discussed in Chapter 17 of UCA, fuel is a fundamental resource for any society. A lack of fuel leads to a dramatic reduction in manufacturing and increased focus on essential living needs- and abundance of fuel leads to a growth in manufacturing and health of the economy. |
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At the end of the 20th century, there has been a general increase in the cost of fuel, corresponding to a rise of scarcity of essential fuels. As a result, many manufacturing industries have no become effectively extinct, while at the same time growing unemployed in countries as diverse as American heavy manufacturing to Africa. |
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Mining/Materials refinement |
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There has been a steady increase in the cost of mining and materials refinement throughout the 20th century. |
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In contrast, something rarely understood, the manipulation of minerals in 1920's contributed in part to severe economic slowdown in the 1930's through Germany ( in particular) and again in the 1970's with higher costs in appliances and transport being a reflection of both higher primary mineral (refinement) costs and fuel costs. |
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Countries with rich mineral wealth experienced a strange environment in the 1930's and 1970's/1980's with high inflation, yet high wealth from the mineral deposits .Refinement industries e.g. Australia, USA, Canada and Sth America. |
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Transport Systems |
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Transport is undoubtedly one of the three greatest economic growth areas of the 20th century and a key signature to the modern society. In the last 10,000 years, we have gone from: |
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| · The road and cart 10,000 years to 4000 years |
| · The commercial airport and plane 50 years ago to present day |
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While we outlined the inherent importance of integrated transport strategies, transport planning has largely been a commercially driven part of the economy for most of the 20th century ( excepting two world wars). |
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As a result, few transport systems of the world are fully integrated and optimized. Instead, most economies waste precious resources in duplication and triplication of transport- from national highways, to national rail systems, to multiple city transport systems. |
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| Transport type |
Cargo type |
Optimum distances |
| Large Ships |
Seafaring-Long haul, heavy cargo |
1000's km |
| Small ships |
Canals/locked rivers- short haul heavy cargo |
10 to 100km |
| Rail- |
Medium hall, heavy cargo |
30 to 1000 km |
| Road- |
Short hall, small cargo |
0 to 30km |
| Air |
Very long haul, small cargo |
1000's km |
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At the same time, each system of transport is least efficient in certain circumstances- |
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| · Large Ships- |
· Short distances |
| · Small ships- |
· Long distances |
| · Rail- |
· Long distances, very small distances |
| · Road- |
· Medium to long distances |
| · Air |
· Short distances |
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Storage and distribution |
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Traditionally storage and distribution is seen either as a function of transport or a secondary industry. However, in terms of infrastructure and planning, storage and distribution ( i.e. warehouses and docks/goods transfer systems) have been a feature of the earliest cities of humanity to the present day. |
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A society with poor storage capacity is vulnerable in times of low fuel, food, mineral levels. A society with good storage capacity has greater chance of overcoming seasonal variations and unforeseen events such as war. Principally the function then of an efficient system of flowing goods and services is a combination of both storage, distribution and transport system. |
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Building |
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As we discussed, similar to storage and distribution, building is often seen as a secondary industry associated with the sourcing of materials ( such as wood/stone). However, the skills and development of cities as well as key structures rests on the ability to build and build well. |
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It is to the eternal regret of the human race that building and the associated skills of architecture, stonemasonry and craftspeople has been replaced by functional/universal design so that a building in New York looks exactly the same as a building in downtown Hong Kong. |
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Means of exchange/finance |
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Money is also a signature of the 20th century, the advent of electronic money and the speed of growth of money relative to the growth of economic wealth. Money is an independent power unto itself, capable of bankrupting or supporting an economy within hours. |
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In the 20th century, the advent of foreign exchange hedging has given rise to speculative values of currencies and the manipulation of exchange rates by market forces for their own gain. |
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Education/skills/knowledge |
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Of all systems that have suffered under the reforming of the modern society has been the Victorian dream of an enlightened society. Now much of education has been left open to commercial market forces, shaping attitudes and ideas via television, the NET and mass marketing. |
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Few societies have control of the education of their masses. Those that do, control their media for other motives, such as state controlled television as a key part to dictatorship rule. |
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The cognitive disadvantaged can be seen across the world in no starker example than the modern 20th century city ghetto, of poor education standards, delivery corresponding to even bleaker job prospects. To consumer companies, these people still represent legitimate markets. However to law makers, these areas represent dead economic value. |
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We will say more about this issue and its implications later in this chapter. |
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Legal/Legal system |
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As we discussed, the legal framework of the society, similar to education is often considered more a secondary element than primary economic element of a society. |
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A great trend and experiment of the 20th century has been the American dream via the United Nations to develop international law. While significant documents have been designed, international law has also had the unintended result of weakening the effectiveness of law enforcement in many countries. |
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Permissive erosion of law enforcement, to statute law has caused the law process in many countries to become corrupted to its foundations. The relevence in litigation in the United States of America is testimony to the decline in the enforcement of surgery asa fundamental attack on the integrity of the legal process. |
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At the same time, the opening of trade via relaxation of trade restrictions has resulted in many countries losing vast economic wealth to the home of multi-nationals well structured to taking advantage of distribution opportunities and loopholes. |
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Economic policy |
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The determinations and focus of the state leadership has a significant effect on a societies economy and therefore must be considered a primary element. |
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In terms of social science, economic policy has been one the greatest growth areas in thinking of the 20th century, from more of a philosophy to a seriously recognized science and regarded as critical for projection planning for all governments and major corporations. |
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Economic policy effectively can be divided into the following categories: |
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| · monetary policy |
| · govt expenditure policy |
| · govt standards |
| · govt planning and trade |
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A healthy economy |
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A healthy economy is where all 12 primary elements are functioning and have solid foundations, ideally self sourcing. |
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As we have shown, leaders that understand this, have prospered greatly in world history. Increasingly, economic policy has been away from understanding these elements of part of a closed system and more points of specialization in an increasingly specialized world. As a result of free marketing thinking, many countries have opted to wind down certain parts of their economy in preference for specialization in some other area. |
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Increasingly, the push and principles of a global economy has been in opposition to this point. |
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