Interdependence of Global Economies and Financial Systems

By Nathan Pyles

Shanghai during China’s National Day.

Several years ago I was in Shanghai during China’s National Day. Most of the central city was closed to traffic because of expectations for huge crowds gathering in the Bund – the old colonial district – along the arcing Huangpu River. With no work and a rare cool breeze, I walked the several miles from the French Concession to the Bund.

China’s National Day celebrates the final victory and ascension of Mao’s revolutionary communist government. The incongruity between the meaning of this day, and the miles of storefronts I passed could not have been starker. I walked by store after store of some of the best merchandised and meticulously maintained shops and boutiques found anywhere in the world.

Every one of them was open. The proud capitalist shop owners carefully primped their displays and polished their already immaculate windows. Between these boutiques were the occasional Starbucks, KFC, or McDonalds. There were also the Hilton and Marriott hotels. And on nearly every other street corner were ATM’s with instructions in a half-dozen languages. I could at any time enter my bankcard from one of the smallest banks in the Midwest and withdraw cash in Chinese RMB.

So what does this have to do with nuclear weapons? With largely open trade borders, the business community is running light years ahead of much public and foreign policy. Business sprints, government lags, and nuclear policy sucks serious wind – still rounding the first bend on heavy, leaden legs while business leaders from around the globe consistently find new ways to cooperate for their mutual benefit. Sometimes the deals work. Sometimes they go bust. But each success inexorably binds nations ever closer.

The global economy is, as it has been since the days of the Silk Road, a powerful social lubricant. Adam Smith’s invisible hand not only drives efficiency and rational resource allocation, it harnesses self-interest to break down barriers between tradesmen all across the world.

My Taiwanese colleagues laugh whenever they read in the Western press about a mainland threat on their tiny nation. The Chinese and Taiwanese all know that Taiwan is an indispensable bridge for foreign capital (est. U.S. $200B+) and Western market contacts and sales. A military conflict would bring both nations’ economic interests to a crashing and costly halt. A nuclear assault? Somewhere just above a meteor strike on the real-world threat scale. The cross-channel saber rattling is now as formalized and as harmless as a Beijing mask opera.

What has happened in Shanghai over the last decade at a breakneck pace foreshadows what will be happening around the globe, albeit at a slower pace. Unprecedented levels of global trade now bring people from every country together with daily global communication the new business norm. More and more individuals are experiencing these interactions first-hand. Much has already been written about this linkage of interests on the macro level – with China holding one quarter of the entire U.S. national debt. Each year, commerce and global exchange further twines our economic co-dependency.

Like it or not, open economies buff away our sharper differences and slowly form a more homogeneous world. The daily execution of a global economy builds strong personal bonds between tens of millions of individuals and makes demonization and dehumanization of another nationality more difficult. Views which are prerequisites for pulling the nuclear trigger.

Besides commerce’s benefits of cross-border relationships, it is hard to contemplate any possible upside for a trade partner to send nuclear weapons hurtling toward its own customer base, manufacturing base, or own currency reserve. Simply put, any nuclear weapons policy that might chance nuclear war is bad for business.

Adam Smith identified and anticipated the inevitable demise of the worn-out mercantilist economies. The spread and growth of global commerce is now helping accelerate the demise of anachronistic nuclear weapons policies.