One fine day, some peace activists decide to go out and shop around for a banner saying ‘Unite for World Peace’. Their intention to buy this banner has provided a ‘price signal’ to makers of cloth to produce more banner sized clothes. These producers of clothes in turn have provided another ‘price signal’ to cotton farmers around the world to grow more cotton. Since every country doesn’t have cotton fields, some of them have to import the cotton from other countries which produce more of cotton and less of ‘Unite for World Peace’ banner-holding people.
Now, the need to transport the cotton has provided a ‘price signal’ to makers of ships to manufacture more ships. Even people who are not sailors know that ships are not powered by wind. Sailing boats maybe, but they don’t carry cotton.
Anticipating the increase in the number of ships, the demand for oil goes up. Since oil is a scarce resource (at least economically), the production of oil cannot be increased as per the whims and fancies of the peace activists. So, oil’s importance as a strategic resource increases.
Iraq is a region rich with oil resources. Since the demand for a scarce resource is seen to be increasing, countries like the United States decide to acquire more of the scarce resource to increase their world superpower status. After all, even Dubya knows the golden rule that he who has the gold makes the rules. Ok, oily rule in this case, but please bear with me.
So, on the one hand, the increase in demand for oil caused by the decision of certain activists to hold banners has provided an economic incentive for the United States to attack Iraq. Of course, they call it the war against terrorism and search for WMDs, because they don’t want to attract other peace activists carrying more banners. Even the US knows that there are only so many countries in the world that you can bomb for oil. They learnt it in Afghanistan.
On the other hand, most (maybe all) countries hold US dollar as the reserve currency. And use it as the transactional currency for international trade too. So, with all this global movement of cotton and ships, higher foreign trade takes place, leading to more demand for US dollars to settle these trades. The US Government is only happy to print more and more dollars for the world to consume, since paper is cheaper than the dollar. Or at least was, since the financial crisis hadn’t happenned then. The US is thus being indirectly financed by the governments across the world. The US uses this ‘money’ to make war, and kill Iraqi civilians, which they justify as ‘collateral damage’.
Thus, the 'butterfly effect' of activists uniting for world peace has far-reaching, unintended consequences of starting a war, and killing innocent civilians.
Horrified at being accused of such a crime, the peace activists decide to troop back to their houses and have a nice cup of coffee. Oh wait, that sends a 'price signal' to coffee producers to ship their coffee to other countries...
I don’t know if this is an example of the ‘Chaos Theory’. Chaos Theory is a favourite of a certain egoistic South Indian actor to make random films and make them sound intellectual. I don't know whether such a 'Grand' theory can be applied to jobless bloggers writing random posts and trying to appear intellectual.
Long P.S.: Economics is an relatively confusing subject. Or at least that was my excuse for not getting a grasp of Economics. That is why I firmly believe that it should not be dumbed down for the masses.
I have had the opportunity to read some interesting books like Freakonomics and The Undercover Economist over the past year. While these books are good for a quick read into the quirks of the world, they should not be taken too seriously. It is like watching Rang De Basanti. Laugh at Aamir’s antics, have a temporary crush on Soha and the firang chick, enjoy Rahman’s music, but for God’s sake don’t go out and plan to shoot a politician. Not that they don’t deserve it, but still...
So, coming back to my point, casual readers of economics should not indulge in thought experiments on their own. Especially when the readers are such that they have to be experimented on to see if they can actually indulge in thought. Like yours truly.