RE AN INTERNATIONAL ECONOMY AND CURRENCY

RE AN INTERNATIONAL CURRENCY

As long as the elenents of our monetary system rest upon foundations governed by national political interests; and as long as there are disagreements among the major economic powers; the chances for the emergence of a stable and sensible international economic system are not very likely of accomplishment.  Disagreements among the economists entrusted with the tasks concerning the determination of exchange rates; coupled with the enormous degree of pure speculation indulged in by the private holders of vast amounts of financial assets; combine to create an illogical world economy that is creating wealth for a few, and spinning out of control for the rest of us.

Recent years have witnessed extreme fluctuations in currency values, together with giant imbalances between surplus and deficit countries.  Furthermore, we are told that currencies have at times been intentionally manipulated by national governments in order to give certain industries within that nation an advantage over their foreign competitors.  During these years, erratic swings have frequently occurred among the world's three major currencies:  the Dollar, the Euro, and the Yen.  Their comparative values have at times varied by as much as forty percent.  The consequent opportunities for profit that such unnatural conditions as these can create have caused ordinary building of income via simple industry, or earning of traditional interest income in traditional manners, to be viewed as too unrewarding, too slow, or just plain "boring."  These dangerous fluctuations and imbalances have consequently convinced a number of economics professionals to recommend the merging of our banking systems into a single world central bank, and the simultaneous establishment of a single world currency.

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Another consideration lies in the fact that the right of a nation-state to coin its own currency is a fundamental element of sovereignty.  It was, for example, set forth as an original precept in the United States' national constitution, as one of the basic rights of our federal government.  This traditional privilege leads to further reluctance on the part of national governments to cede control over the valuation of their currency to other entities or authorities; and contributes further to the economic hodgepodge that we see about us today.  Nevertheless, mankind must one day confront this confounded heap of monetary chaos, and take steps to restore order to our world's economy.

In a world without borders, there would be no "deficit countries" or "surplus countries."  Economies would not be contained within, nor defined by, geographic areas having separate national identities.  True, individuals persons, families, businesses, corporations, and other entities could and would continue to function below, within, or beyond their respective means; but this would not impinge upon the economic interests of their respective neighbors--nor of those who live many miles away, but who yet happen to live within the same nation-state. 

Distresses associated with devaluations or appreciations of currencies in regard to other currencies would no longer occur, because there would be but a single currency for all people in all places.  And, likely, the only complaints that would be heard would come from those former aforedescribed traders and speculators in currency, whose attempts to reap profit from these very defects of which I have been heretofore speaking will be no longer possible, and therefore but a scourge of the past.

How would conversion to a single world currency be executed?  It seems to require but a setting of a particular date (in the very recent past, as opposed to a future date--so as to avoid last-minute maneuvering by holders of different denominations in efforts to maximize the comparative values of their particulat currencies) as the date upon which whe values of all currencies would (have) become fixed and immutable.  (Perhaps said date would need to be somehow kept in secrecy--or unknown to all, via selection by a random instrumentality.)  Any "innocent" changes between said date and the said effective date would hopefully be insignificant.  Subsequently, all would be expected and required to exchange their respective currency holdings for the equivalent in new money.  Of course, as regards sums not actually held in physical possession--being most of the world's wealth anyway--the conversion would constitute a simple recalculation of the sums of all accounts from their respective former figures into the new universal denomination.  All forms of fluctuating value (.e.g., of stocks, bonds, interest, commodities, real estate values, etc.) could and would continue to so fluctuate as they had in the past; for these would be functions of ordinary non-political market conditions, and not a result of the aforedescribed political, economic, and/or currency-related divisions of our world.

(In regard to the above, it is respectfully suggested that:
1.  The aforesaid suggestions do not constitute a change in values of these various currencies from what they were on the day before the "changeover" date.  "Changeover" would simply amount to a conversion from what said value was on the day before--to its (same) value on said day of conversion, in the new universal currency.
2.  It would be hoped that skilled professionals in the fields of economics and currency management might come together and agree regarding a method for this--basically mechanical [significant though it be]--conversion procedure.

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RE AN INTERNATIONAL ECONOMY AND CURRENCY

RE AN INTERNATIONAL CURRENCY

As long as the present system persists, the economies of the world will be plagued by volatile exchange rates, and the consequent need for defensive measures such as trade protectionism that result therefrom.  These burdens have convinced a number of economists that return to a fixed rate system would be the best solution.  Even when the present system is functioning "properly," the fact that said system is but one more expression of our mixed up world of numerous nation-states is reflected in the circumstance that such "proper" functioning requires strong leadership by several economically and/or militarily powerful nations who desire, and therefore strive to maintain and preserve, the integrity of the system.  Parenthetically, such leadership generally results, as well, in the rules of the system being tilted advantageously toward the interests of these stronger leading nations.

"Seigniorage" is the term used to denote the privilege possessed by a particular nation as a result of its being in the position of providing the world's primary currency during that period.  Seigniorage is a key factor in the determination of economic freedoms as well as economic restraints among nations.  It is necessary for a nation having seigniorage (i.e., the nation whose currency is considered the world's key currency) to instill confidence in the rest of the world that it will not resort to inflationary policies in regard to its own economy--policies which would lead to devaluation of its own currency and its reserves thereof.  This position of seigniorage used to belong to the United States.  But, unfortunately, we have permitted the Dollar's position as the world's key currency to enable us to become the world's foremost debtor state.

As a nation, the United States has in fact lived excessively beyond its means.  A result has been the growth of its international debt to an astronomical One Trillion Dollars  (Its public debt has reached Fifteen Trillion Dollars).  A result has been a weakening of confidence in the Dollar as a reserve currency--which has led to a situation wherein the world's economic stage is no longer dominated by said Dollar; but has instead been shared of late with the Euro and the Yen.

Chins has in fact lately called for the creation of an international reserve currency, "anchored to a stable benchmark," and not connected in any way to economic conditions within, nor the national interests of, any single nation.  According to this proposal, such a currency would be expressed via "Special Drawing Rights" as issued by the International Monetary Fund.  The concept has met with suspicion in the United States, however, as a potential means for countries such as China to mainly improve their positions and consequent stability regarding their investments in items that are connected with the U.S. Dollar's status as a world reserve currency--such as U.S. Treasury Bonds.

The plain and simple rationale regarding this seems to lie in the fact that, just like it exists among people and families, so too are there countries that live beyond their means (and others that do so beneath their means).  When a country lives beyond its means, it becomes a "deficit country," and is said to be pursuing inflationary policy.  The medication for such a condition, as prescribed by economists, is currency devaluation, as well as a deflation of that nation's basic economy, or standard of living.  Such measures are called "adjustments."  They cause considerable economic pain to the residents of such places; as the reduction in income caused by the first remedy (devaluation), and the rise in unemployment brought about by the latter (deflation), take their toll.  These forms of remediation likewise impose terrible costs upon countries to whom monetary debt is owed by the aforesaid spendthrift nation--because the unpaid balance, defined in the newly established reduced monetary terms, has thereby become a debt of a relatively lesser sum.

Avoidance of economic pain likewise causes "surplus countries" (i.e., those that live within or below their means) to attempt to avoid the steps that would constitute "adjustment" on their own part.  Such opposite measures, such as currency appreciation, produce detriment to such nations' export industries--as the prices that their products will command abroad consequently drop.

It is the "deficit nations" that are thus traditionally expected to bear the pangs of adjustment.  For, since the problems implicit in such adjustments touch and affect the political interests of the particular nation-state involved, the adjustment mechanisms, or "medications," are frequently modified, or "tilted," in favor of the interests of the stronger leading nations as referred to earlier.

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RE AN INTERNATIONAL ECONOMY AND CURRENCY

RE AN INTERNATIONAL CURRENCY

In a borderless world, there would be no "current account" or "capital account" as between countries, because there would be no countries to maintain such accounts.  Goods might continue to be produced in places and shipped to other places, at times quite distant, just like before; but there would be no need to "keep score" regrding relative amounts of shipments to and fro, or comparisons of quantities of assets from one place that are purchased by individuals or entities of other places. 

To restate an oft-cited theme of mine once again, it appears that if there were no myriad of separate nations--which would obviate the existence of a variety of separate national currencies--these difficulties and concerns would automatically evaporate.  Wages could become similar all over the world; and so too would costs and prices.  Similar to the reasonable bases for the few differences set forth by me in earlier posts regarding wages for the same occupation (such as scarcity of personnel, or more difficult working conditions in certain places), variations in cost and/or price would be based simply and primarily upon expenses connected with transportation of goods from the place of production to the place of sale; and possibly with storage at the aforesaid place of sale or consumption. 

The only group who might not favor such a simple, but seemingly ideal, solution are currency speculators--who seem, by their efforts, to add no value to the world or its economy; and in deriving profit from their activities, appear to thus detract therefrom.  Currency speculation has been described as actually nothing more than betting on exchange rate movements.  The existence of numerous countries, each with its own ever-varying exchange rates as regards the currencies of all the other countries, has caused our world to become a game-board for currency traders and international financial speculators.  The currency exchange market has become a financial trading institution of its own, frequently performing more markedly, and consequently more profitably for the winners within its arena than could be had from other forms of financial speculation.  Its players are described as incessantly monitoring Reuters and similar reporting agencies, so as to divine and respond to their fellow-traders' interpretations of the financial news there displayed.  In that these reporting services are primarily broadcast in English, their news is said to be overreflective of the American point of view.  When it becomes apparent that a currency devaluation is imminent, speculators crowd in, like fish in a feeding frenzy, to reap profits for themselves, but producing benefit to no one else.

A dramatic example of the harms thereby caused is demonstrated in occurrences such as those which took place in Southeast Asia during the late 1990s.  In that instance, excessive economic excitement in Thailand's stock and real estate markets caused a sudden surge of speculative funds into the country, creating what could only be described as a "bubble."  An abrupt panicky reversal in the flow of speculators' currency brought about the collapse of the Thai baht, and a consequent flight of capital out of Thailand, as well as most of the other newly emerging Southeast Asian markets.  The value of the currencies of Indonesia, Malaysia, South Korea, and Thailand were quickly deflated like so many punctured baloons.  This produced an economic crisis having a ripple errect throughout the world; and brought the entire planet to the brink of a collapse similar in gravity to that which took place in 1929.

In his Globalization and its Discontents, economist Joseph Stiglitz laments that if currency cpeculators only gained profit from each other, their activities would have no positive or negative effect upon the rest of the rest of the world.  However, problems for the rest of us do indeed arise:  for example, when governments, at times supported by such institutions as the International Monetary Fund, overexpend or squander, in efforts to maintain an unrealistically excessive exchange rate.  The profits therefrom go tto the speculators--while the losses that constitute the other side of this balance are borne by the "ordinary people." 

In any event, the paradigms and guidelines that influence currency exchange rates, and hence the choreography of the currency market, are said to be inexact at best; and possibly untrue at worst.  Their main purpose is said to be the provision of opportunities for currency dealers to "make money"--a desire which is described as seemingly endless.

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Today's financial collapse is not connected to variations in the values of the world's various currencies.  But it can be attributed, at least in many aspects, to greed on the part of mortgage security traffickers, would-be real estate "flippers," and other unreasistic opportunists, who sought to create wealth via escalating value in ordinary assets and nebulous financial instrumentalities, without adding or otherwise contributing anything thereto, besides baseless hoopla and undue optimism.  Such attitudes and activities reflect one more instance of seeking financial advantage from nothing more than tomorrow's prices growing higher than today's due to no positive input by the hopeful beneficiary aside from theoretical recognition of a likely upward advance of present value--much akin to the traditional mindset of currency speculators.  In short, the chaos appears to be but another tragic consequence of reckless attempts by a few to make "something" out of "nothing."

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RE AN INTERNATIONAL ECONOMY AND CURRENCY

RE AN INTERNATIONAL CURRENCY

Attempts to deal with faults in the international monetary system were undertaken in Europe commencing in the 1960s.  It was during this time that West Europeans began to consider a single currency for the continent.  By 1978, this had progressed to the formation of the European Economic Community; and the establishment of a European Monetary System.  The system promoted and maintained an arrangement of somewhat fixed exchange rates within the region, via an Exchange Rate Mechanism governing Western European currencies.  An official standard for European currency came into being, which led to the beginnings of currency stability across the continent.  One of the primary purposes or motivations behind this was protection of the continent from the effects of the wild swings that were befalling the American dollar during that period.
By the late '80s, pursuant to a plan propounded by French Finance Minister Jacques Delors, further steps were taken toward the establishment of a European monetary union and a common European currency.  And by 1991, the European community further cemented their common commitment to a unified monetary system by approval of the Maastricht Treaty.  This final step led the way to the birth of the Euro as the official currency of Euroland.

Among the benefits of such a unified system are an end to foreign exchange transactions--for no purpose other than profit; as well as monetary stability, which produces price stability, and is hence a defense against inflation.    The success and consequent expansion of this phenomenon within Europe is evidence that such a procedure could and should be replicated on a worldwide basis.

Today, unfortunately, some economic troubles have erupted in the Mediterranean nation-states, which seem to have resulted from varying degrees of excess and other profligacies regarding certain of their respective monetary and financial policies.  I attribute this to the fact that--while united under the aegis of a single currency, they remain separate and independent as regards their respective governments, and said governments' respective handling of national monetary policies.  Had the European Union adopted as well a form of unity regarding planning, determination, and direction of economic policy, concerning all of its membership, the application and utilization of this wise and practical currency system would have reaped benefit and improvement within all component nation-states--including those on the Mediterranean--instead of the disorder, protest, and desparate measures which have recently transpired.

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RE AN INTERNATIONAL ECONOMY AND CURRENCY

RE AN INTERNATIONAL CURRENCY

The monetary states of affairs that exist in many parts of today's world--being a major component of world affairs--are further cause for worry and concern.  One need not be an economics professional to conclude that profound problems concerning our world's financial system presently exist.  This is additionally borne out by the fact that, worldwide, a number of economic experts and officials have called for fundamental reform of our international monetary system.  Across the globe, we learn that economists are burdened with concerns about the status of their particular nation's current account and its capital account.

A nation's "current account" basically consists of a comparison of its imports to its exports of goods and services to other nations.  We hear this more commonly referred to as an expression of that nation's "balance of trade."  At the same time, that nation's "capital account" traces the status of the difference between foreign purchases of that particular nation's assets (such as realty, stocks, and bonds) as against that nation's own citizens' purchases of like assets of other nations.  When current account and/or capital account deficits occur (i.e., when the value of nation A's imports exceeds that of its exports; or when the purchases of foreign assets by the citizens of nation A exceed the value of purchases by foreign persons or entities of nation A's assets), there is worry and concern; and occasionally implementation of hostile or retaliatory demands or strategies.

These aforedescribed imbalances are sometimes made to happen, when nation-state A, seeking to move ahead commercially and industrially, begins to "flood" the rest of the world with its products; and simultaneously discourages or prevents the purchase by individuals and entities of its own nation from importing and purchasing products from many of the very countries that are the recipients of its strongly active marketing efforts.  (It is fair to state in addition that these imbalances can also be prompted by more innocent factors as a current trend in taste within nation B for the products of nation A; and/or the relative income levels within nations A and B.)

But a factor which has much greater influence upon the aforesaid balance of trade is the current "exchange rate" of a nation's currency against that of one or more of its trading partners.  When a country's currency appreciates (i.e., when it is valued at a higher rate as against the currencies of other nations than it used to be), that country's situation will usually follow a natural path which includes a greater quantity of imports, marked by a corresponding reduction in the amount or value of its exports.

The methods via which exchange rates are determined include:
a.  the Gold Standard, wherein all currencies are denominated in ounces of gold;
b.  "Pegged" Exchange Rates, wherein currencies are valued in regard to one another; and
c.  "Free-Floating" Exchange Rates, wherein the rate is determined by "market forces" (i.e., as in any other open market, by buyers and sellers of currency).
To avoid undesirable extreme fluctuations, the amount by which a currency value might vary (or "float") may be limited, or "managed."

Aristotle once asked, several thousand years ago:  How can one find the number of sandals equivalent to the value of someone's dinner?  The only feasible universal answer to such a question was devised by man via the development of a common denominator having the properties of a worldwide standard of value; in a word:  currency.

The world's economy is international in nature; and thereby rests upon an international monetary system.  The aforesaid common denominator that constitutes the "backbone" of this system used to be based upon the traditional acceptance of gold by most people in the world as a token of value.  Under the Gold Standard, One Thousand Dollars used to be able to be readily converted into "X" ounces of gold; which could, in turn, be readily converted into "Y" Francs, or "Z" Marks.  Until 1914, these relative values were all fixed and unchanging.  Exchange rates between the world's currencies remained stable; and countries' respective currencies did not "appreciate" or "fall."  British Pounds Sterling, French Francs, German Marks, and American Dollars thus maintained the same relative values, one as to the other, year in and year out.  Until then, currency was synonymous with the words "universal standard" regarding mankind's activities in business and trade.

However, shortly thereafter, and specifically during the years between World Wars I and II, most nation-states abandoned the Gold Standard, and took part in a devaluation of their currencies for the sake of advantage in international trade.  Controlling factors were abandoned; and currencies werer permitted to "float' in relation to each other.  The result has been a situation in which the myriad of currencies of our world are in a state of constantly fluctuating values in relation to one another.

As the currency of nation A appreciates in value as against that of nation B, imports into nation A from nation B--paid for with the now more valuable units of nation A's currency--thereby become cheaper--and, for this reason, more accessible to more of the people of nation A.  Imports into nation A of goods from nation B consequently increase.  At the same time, exports from nation A to nation B--priced by the exporters in the aforesaid more valuable units of currency of nation A--become more espensive to the pepople of nation B, and therefore less accessible to them.  Consequently as well, exports from nation A to nation B begin to decrease.  A solution that the exporters of nation A can resort to--in order to maintain the same export level, or quantity, as prior to the said appreciation--is to reduce the prices they set for their exported goods.  This, of course, is less than desirable to the manufacturers and/or sellers of such exported products. 

Such changes in exchange rates, or of the relative value of the currency of nation A as against that of nation B, also produce consequent effect upon the value of foreign investments.  The value of an investment belonging to an investor from nation A, in a stock or enterprise within nation B, becomes reduced, when an appreciation in the value of nation A's currency causes a consequent relative decline in the value of the currency of--and thus of the value of the investment within--nation B.

Appreciation in the value of the currency of a nation can result from the inflow of large quantities of foreign capital.  That is to say, a surge into nation A, of capital from investors within nation B, can cause the relative value of nation A's currency to rise, as against that of nation B.  This is a simple application of the concept of supply and demand.

Since there is no longer a system of fixed exchange rates in place concerning the numerous currencies of the world, our monetary system has thus become quite unstable.  Such instability serves to breed financial disturbances--which, in turn, cause disruptive impact upon the economic lives of individuals within various "nation As" as well as "nation Bs."

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In 1944, as World War II was winding down, the brilliant cognizance of John Maynard Keynes led him to propose the creation of a single world currency (the "Bancor"), and an associated "International Clearing Union," for use in worldwide trade within the postwar economy.  But, like so many other logical and sensible suggestions, Keynes' concept was never implemented.

Following World War II, the famous Bretton Woods Conference sought to re-establish the equivalent of Gold Standard conditions, including fixed exchange rates, and ready convertibility of various currencies.  The International Monetary Fund (IMF) was established to thus fix and regulate said exchange rates.  Each nation-state who was a member of this consortium was permitted to modify its exchange rate only with IMF consent.  Moreover, a country could borrow from the IMF (whose resources consisted of funds furnished thereto by member nations in accordance with their relative wealth), where necessary, in order to compensate for a temporary trade imbalance. 

In the 1970s, this "Bretton Woods System" came to a halt, and currencies began to "float" against each other once more.  So too did the value of gold--which had once been the fixed standard against which all currency values rested.  Now, gold values began to "float" and to once again vary upward and downward from day to day.  Loans made by the International Monetary Fund to nation-states were employed to maintain sustainably high exchange rates for short periods.  During these intermezzos, wealthy natives and foreigners were able to transfer their private funds to other countries at favorable terms.  Subsequently, the exchange rate would inevitably tumble, leaving the local workers and taxpayers hard-pressed to repay their IMF creditors.

The within paragraphs obviously do not constitute the first suggestion that currency throughout the world ought be strictly and immutably coordinated.  A primary reason behind such suggestions consists of the fact that, under the present state of affairs, national monetary systems are subject to numerous opportunities for abuse of many sorts.

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RE AN INTERNATIONAL ECONOMY AND CURRENCY

RE AN INTERNATIONAL ECONOMY

In actuality, global collective action on the part of the various governments who are today working together via international institutions has already been identified as a reliable method of improving the world's economic status.  But even more benefit will be derived from a system tnhat is completely free of any and all positical influence as regards economic decision-makimng.

In a sense, the aforesaid can be referred to as "apples and oranges."  In our world today, political issues are the apples, and economic concerns the oranges.  Neither should be a part of, assist, or function as a detriment to, the other, if benefit to mankind is to be the ultimate objective.  Efforts have in the past been undertaken to promote international economic cooperation with a minimum of needless interference on a political level.  Institutions such as the General Agreement on Tariffs and Trade, International Monetary Fund, and the World Bank, are examples of entities founded to fulfill such functions.  To their favor, statistics can be cited such as the reduction in tariff levels from an average of forty percent to five percent between 1945 and the 1980s.  But further progress appears to be required--upon considering, for example, that the International Monetary Fund and World Bank are regarded in many places as mere instrumentalitiews of the United Stsates Treasury and Wall Street.

Conmingling of economics with politics can furthermore produce troublesome leagues of political entities that are joined together on account of a common economic attribute or interest.  A famous league of this nature is the Organization of Petroleum Exporting Countries (or "OPEC"), whose members are said to possess a major proportion of the world's oil reserves.  This organization consists of a number of nation-states, who are themselves separate and independent, and occasionally at odds with one another.  They have banded together for the primary purpose of using their common possession of a resource which happens to be presently needed by most of mankind, as a means of deriving defense against, and advantage in their dealings with, nation-states who do not have natural access to oil.  The result is frequently hostility, of the "us and them" variety--which is counter to a peacefully functioning world and a productive society.

If there were no separate nations, there would be no joining together of peoples on this basis.  There would be no sense of suspicion or hostility toward "outsider" nations; nor would there be a need to utilize the possession of a universally necessary resource as a means of maintaining mutual protection from nations vieweed as potential aggressors.  Instead, there would simply be areas of our earth where petroleum is plentiful--and areas where it is not.  Oil would no longer be a pawn in a chess game between nation-states--but rather a part of the global economy--fueled, governed, and regulated by a global investment regime.  Oil prices would be basically uniform worldwide--except for modifications based upon logistical costs, such as shipping from the places of production to the places of purchase, refinery, storage, consumption, and similar considerations.  There would be no nationally oriented industries or entities to protect--and no individual nation-states to ptrotect or favor them.

In my opinion, the economically needless constraints of national boundaries have actually become a hindrance to further economic progress.  Were there no borders, a single worldwide economy would promptly and fully emerge; and differences based upon national existence would fade.  The overall result would seem to likely consist of a worldwide set of basic costs, wages, and prices; with variations occasioned only by miscellaneous immutable factors such as heretofore set forth.  No longer would there be protests by American union workers over the loss of jobs to cheaper foreign labor--because wages would be uniformly appropriate both here and abroad.  And no longer would one set of wages for one sort of worker in a particular industry purchase more, or less, depending upon his or her location--because, subject only to the aforesaid (probably few and minor) miscellaneous considerations, costs and prices would become similar worldwide.  Moreover, it is poossible that even these variations--minor and short-lived as they would probably be--could be equalized for the time being via public funding.

I envision a world subject to but a single economic order, defined by a single currency, free of tariffs and international regulations, governed by a single set of laws and rules pertaining to industry, commerce, labor, and the marketplace, and regulated by a global central bank.  In such an atmosphere, economic conditions would become equalized everywhere; and economically advantaged and disadvantaged persons, places, and things would naturally come to arrive at a single universally satisfactory level.

It is assumed that there would be need for a single worldwide regulatory and monitoring agency, whose function would be to promote and preserve this single worldwide economic order.  But that is all that would be required in such an era of universal economy.

Such a worldwide economy would obviously intrude upon concepts such as sovereignty and national autonomy.  It would intrude upon what are until now known and referred to as "domestic economic and political affairs."  For this reason it is apparent that a single worldwide economy would more logically exist--in fact, could probably only exist--in a world governed by a single world governing body.  It is predicted that such a new world order would thereupon naturally foster global prosperity as well as world peace.

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RE AN INTERNATIONAL ECONOMY AND CURRENCY

RE AN INTERNATIONAL ECONOMY

Economic considerations have also been the motivation behind international migration for many centuries as well.  A flow of undocumented migrants usually results from and denotes a state of economic disparity between the sending and receiving countries.  However, today, another form of movement, similar in nature, but legally proper, is also taking place on a widespread basis.  This movement constitutes the flow of goods from countries where wages are lower and production costs consequently cheaper, to countries where the product is destined to be ultimately marketed or utilized, at a more favorable economic return.  This latter form of movement constitutes one aspect of that which is referred to above as "outsourcing."  Another form of outsourcing comprises the practice wherein companies in countries where wages are relatively higher transfer a number of "back office" functions, such as accounting and customer relations, to employees halfway across the world who command wages that are a fraction of those in the originating country.

Many in the United States and Europe also presently blame competition from undocumented migrants working within their countries for more scarcity of domestic jobs, lower wages for said jobs, as well as various other economic and social ills.  But the true solution to many of these problems appears to likewise prospectively lie in the establishment of a single worldwide economy.  For in a borderless world, having a single currency, a single worldwide pricing system, and a consequent worldwide system for a natural determination of wages for the various professions, trades, and other employments for which wages are normally the form of recompense, there would be no further need for outsourcing, nor for migrants illegally crossing borders.  There would, first of all, be no borders for a person in search of employment to cross.  Moreover, he or she would not need to travel far from home for the purpose of earning higher wages for the same work, because a single worldwide economy would naturally dictate, and/or result in, a more or less single worldwide rate of pay for his or her job title.

Of course wages, like prices, would vary somewhat due to logistical and other such considerations, such as unavoidable travel requirements, or premiums demanded in place A by people in place B due to the scarcity of their particular services in place A.  But it is expected that, re most forms of employment, a natural "filling in" would eventually take place, causing travel as well as scarcity to become a thing of the past.  Moreover, it would not be worthwhile, nor in fact necessary, for a company in place A to have its products made in place B in order to trim costs--because the cost of materials, as well as wages, would be basically the same in both places.  (Of course, in this regard as well, scarcity of something in place A would require transportation of it from place B, and thus justify an addition to its cost in place A.

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