The Current Economic Recession, Analogous to a Serious Diabetic Disease

By Ho-Hyung (Luke) Lee (luke.h.lee@gmail.com)

Many experts are trying to solve the current economic crisis, but to no avail. It seems that our economy is inextricably tied to a wider series of economic problems, such as the housing market collapse, the sub-prime mortgage system failure, and the financial market meltdown. These problems have catapulted us into what may be a deep recession—a high rate of unemployment and a virtual retrenchment in new business development. We are faced with a situation that makes the Gordian knot seem like child’s play. Our “knot” can be untied only by employing an Alexandrian solution, not any of the conventional solutions we have turned to in the past to jumpstart a flagging economy mired in recession. 

The current economic situation is analogous to a serious diabetic disease. Generally, it is difficult to detect diabetes from a single, simple symptom before it develops into a serious complication. This is because this one symptom, apart from any other, does not look to be seriously harmful to the body and because it is not easy to detect the relationship between the symptom and the disease. Likewise, it will not be easy to determine the real causes of the current economic conditions which afflict us. If each complication is treated separately, the proper treatment will escape us. Moreover, this may also cause other potential, perhaps fatal, complications.

As many experts may recognize, the market as a whole could not have itself generated enough businesses and jobs to keep consumer spending at the desired level. There seemed little other choice but to adopt excessive economic policies to immediately increase the level of consumer spending. Accordingly, every Western nation, including the U.S. and Japan, has aggressively adopted expansionary policies for economic revitalization, but most of them have been ineffective and have created numerous abnormal phenomena in the market; the federal budget deficit and monetary liquidity have increased significantly, and numerous other economic abnormalities have accumulated in the market.

An objective review of current market conditions leads one to conclude that there must have been a serious change in the market process, for if there is a serious and negative change regarding business and job creation in the market process, the market will be unable to self-generate enough businesses and jobs to keep consumer spending at the desired level. As a result, no matter how powerful and aggressive the adopted economic policies are, they will not be effective. Rather, they will likely cause greater ill effects.

The question now arises as to what kind of correlation exists between the changes in the market process and the self-generation capability of the market. The development of the modern information age by way of the digital revolution and the Internet revolution has brought major changes to the market and to society as a whole. Most people would agree with this. What is less widely acknowledged is that changes in the market process that were intended to increase its efficiency actually adversely influenced employment conditions. A significant improvement in employment conditions was temporarily achieved in the IT and Internet sectors of the market during the dot-com boom; however, through efforts to reduce the number of transactions and functions in a chain of linearly constructed transactions and to increase the efficiency of a function through collaboration with all sectors of the market, the existing market process has actually worsened employment conditions. Moreover, it has also contributed to the shift to a more efficiency-oriented supply side environment—that is, a mutually complementary relationship between the supply side and the existing market process has been more firmly established.

To increase efficiency, the following actions have occurred on the supply side:

l       Sharp productivity increases from IT progress;

l       Increased off-shoring and outsourcing to lower-labor cost countries;

l       Broad adoption of automation processes equipped with information devices.

These changes have also resulted in increased difficulties in job creation for middle- and lower-income workers and an intensified polarity between the poor and the rich. It could be said that the existing market process has been too efficiency-oriented to create businesses and jobs in the market, and that this is deeply correlated with the self-generation capability of the market. That is, the real cause of the current economic and social crisis is that the existing market process is no longer suitable for the modern information market.

If we do not change the existing efficiency-oriented market process to a more effectiveness-oriented one, this economic and social tailspin will not stop; it could even develop into a worse crisis. At the very least, as long as the current conditions remain, we cannot achieve sustainable economic growth.

The conditions necessary for the development of this effectiveness-oriented market process are in fact already in place—that is, the information technologies, facilities, devices, and people already exist. The only issue that remains is the will to develop it. I believe that the solution is also already available; it need only be implemented. If the decision-makers are willing to make the necessary choices, it will also be relatively easy to implement, and it won’t take long to see positive results.

According to my simulation, if we shift the existing outdated market process to a new updated market process, more than 5 million new jobs could be created in the U.S. market alone within 5-7 years. This is the Alexandrian solution to help us emerge from the current economic and social crisis and revitalize the economy.

Our economic crisis is getting worse day by day, moving inexorably toward a depression. We don’t have time to delay action any longer. To stave off this impending crisis and revitalize the economy, the government must initiate and support the development of this new market process and actualize it in the market as soon as possible—before it is too late.

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