Every civilization has gone through its peaks and falls, most of the oldest civilizations have become extinct after reaching their pinnacle. Like the Egyptian, Mesopotamian, Harappa, Incas, Mayas etc. We have had empires spread over the world reduced to rumbles and ashes. Rulers with control over half the world reduced to unpronounceable names in history books. So where do they go wrong, some lost it all to the power of nature, some lost it to irresponsible incompetent heirs and some even fell to incomprehensible superstitions. But in the flat world it is either the end of world or economic downtroddeness, there cannot be any end to this civilization unless we have a nuclear holocaust or a apocalyptic meteorite attack like the one in Armageddon.
How do economies fall from grace, from their superior wealth and higher standard of living? We have had the mystic Indian Subcontinent which at a time contributed to around 20 % of world GDP reduced to now when we hold just 1%. The Japanese economy in its real estate boom of 90’s had a land value of 4 times equal to the land price of USA. Tokyo city was compared equal in land price to the whole of USA, from there it went bust and millions of people lost billions of dollars and led to the closure of thousands of business houses. The Asian tigers like Taiwan, Korea and Malaysia had their share in the late 90 are when the roller coaster ride controlled by USA lost control and the whole economy fell to its feet.
Now is the time for the neo rich Arab economies gone prosperous by the black gold called crude. It leads to a class of People made rich overnight with least of their effort and maximum external involvement. This lead to irresponsible spending and unavoidable external control on vital national resources. People who have minimal knowledge on how to operate and exploit their natural resources. But fortunately over the years through immense exploitation and unprofitable mutual deal the local populous and a set of technically educated Diaspora of Asian Origin they have gained control of what is left. In the time of their prosperity they have made limited spending on social Infrastructure and communal development leading to the growth of an incompetent new generation. Add to this the rise of extremist Islamic ideology promoting violence and hatred; they are moving into a vulnerable scenario. The easily earned money is spend on gas guzzling SUV’s, over priced foreign acquisitions in non complimentary sectors and companies, unnecessary luxury products etc.
There are basic forces of economy which rule all basic economical activity like demand and supply. If demand exceeds supply, a commodities need and price will rise and vice versa. These basic forces were denied corrective action in time of dire need and this has lead to the fall of certain gulf countries. When land was available in abundance, it was reclaimed from sea in the pretext of providing sea front living. Artificial islands in size bigger than Hongkong and Manhattan were built to attract foreign investors, high risers touching the sky and senseless architectural designs given funding and life to create the ultimate city. There is an old saying which goes like this “slow and steady wins the race” but they were into an anomaly of both with senseless pace and unregulated consistency.
Unless something really happens and the dream is broken everybody fails to notice the warning signals, the unfavourable external debt equity ratio, unrealistic pricing compared to the demand supply ratio. When will we learn to control our growth and regulate sensibly, when will there be a sound mechanism to direct a viable development. From this crisis we have understood that capitalism is not the best possible solution for equitable economic growth, it is not a perfect scenario. I am not a leftist promoting more government involvement and socialistic policies.
The fall of the oil economies is short lived since as long as the middle class is rising and the need for petroleum products is on the rise, they will revive and live another day to commit the same mistakes. The china’s and India’s of the world will provide consistent demand for their natural resources to compete in this new world.