The Economic Food Chain

By Chuck Fisher
Staff Writer

In grade school we all learned about food chains; the sun helps the grass grow, the mouse eats the grass, the snake eats the mouse, and the eagle eats the snake (sometimes a poacher eats the eagle but that’s another story). A food chain seems pretty cut and dry, but is it really? Snakes aren’t the only creatures that eat mice. Hawks also eat mice. Hawks also eat rabbits. Rabbits are hunted and eaten by wolves. Wolves also hunt deer. Humans hunt rabbits, wolves, and deer. In the end you have a very tangled mess with this animal eating that one and that animal running from this one before that one gets eaten by another one. It’s INSANE! We call this a food web because a tangled web is the best way to show how all of the animals in an environment depend on each other for survival. A food web is also a great way to look at our current global financial difficulties. The recent economic crisis in America has not only affected Americans but the world as a whole. Our vast interconnections into the global economy have tied us all together in this massive global mess. Furthermore, it’s often the organisms at the bottom of the food chain, the “poor” plants that wind up in trouble when things start going wrong at the top.

So how did the global economic engine get discombobulated and pull us into this dark smelly hole? Economics is a very complicated topic with all sorts of odds and ends (another tangled web!) so there is no single answer. In general rising oil prices, the sub-prime mortgage collapse, and numerous massive bank failures are just some of the larger obvious reasons we’re in trouble. Greed, miscalculation, over speculation, and stupidity are another way to look at it. But how do the problems in America affect the globe? And how does the globe affect us?

Well think about it. What if you own a small bank in the third world country of let’s say Randomistan (it’s located on the border of China, Paraguay, and Germany). Your family has run that bank since the before the rise and fall of the king, the communists, and Wal-Mart. Everyone relies on you to buy new houses, hold onto money and currency, and generally help to raise the standard of living. Your bank has large holdings in American companies and banks because they have shown to be the strongest over the years. When those American companies and banks are doing good, you are doing good. When they start bankrupting/collapsing/imploding into a sub-stellar mass that even light can’t escape …you got trouble. When the money you invested disappears the people who gave their money to you start seeing it disappear. You run out of money and need to default for yourself and declare bankruptcy. When many small entities and people around the world start losing their money, larger and larger entities start to implode. Larger bigger banks like ones in America and Germany Italy and Japan also falter. Stock markets plunge because all the rats are trying to get off the ship and no one knows what to do. Our stock market is the standard for the world, so when it dives everyone goes for a swim.

Like in the US, banks have been failing throughout Europe. Sure the American government is spending $700 billion to save our skin but what’s it doing to save Europe? Nothing. What can it do? The bailout may save our economy but if other nations are still hurting they aren’t going to invest money over here and we won’t be able to do it over there. The global economy will still be in a muddy rut.

Looking back down the food chains, what about those on the bottom; how are they weathering this? Those in poverty have been hurting especially during this time. According to the U.S. Department of Labor 159,000 people lost their jobs in September (that’s double the population of Scranton) and many more jobs have been lost in the preceding months . High fuel prices and the rising price of basic necessities is another kick in the face.

Pretend for a moment that you work in a factory that makes rubber chickens (or computers, cars, plastics, etc.). Your company needs to cut costs so you get laid off. You’re out of work and can’t buy stuff so now more people are losing their jobs because you can’t buy their stuff. You receive unemployment benefits for a few months while you try to find a job but that only goes so far. You still can’t find a job and it seems no one else can either and unless you’ve learned to photosynthesize or suck energy out of quantum voids, you still need to eat. Your paltry budget needs to be spent on keeping you and your family from starving. In light of that, how do you make the payments on your home? your credit cards? your heating oil for winter? With everyone else going out of work, who the heck wants a rubber chicken? Worst case scenario you default and declare bankruptcy, the bank forecloses on your house, and you wind up on the streets. This has been happening across American and more and more people are being thrown into the depths of poverty. More people in poverty encourages more economic trouble and you create a positive feedback loop that leaves ever increasing numbers of people out of work and out of luck.

The last few months have seen important financial numbers (stocks, home values, retirement accounts, hopes) dropping faster and further than the jaws of the investors, politicians, and economists who helped cause this debacle. This global crisis needs global fixes. Politicians talk about Wall Street affecting Main Street but Wall Street affects many other international streets as well. We are all in the tangled web together.