My comment: I could not resist to write some comments for American friends once I read this comment in Robert Reich s blog. Excellent because he explains easily what is happening these months in US economy.
Why the Dow is Hitting 10,000 Even When Consumers Can't Buy And Business Cries "Socialism" http://robertreich.blogspot.com/2009/09/why-dow-is-hitting-10000-even... Briefly, his answer is "because of the very thing so many executives are complaining about, which is government’s expansion." I am absolutely pragmatic --cherrypickist-- and I try to combine short and long term approaches. Therefore, please, do not read my comments from any ideological perspective but from a very pagmatic point of view. President Obama tried copy and paste what Chinese authorities successfully did. That is the possitive side for US economy that Mr. Reich describes and I agree with him. US economy is gaining tone. It is bottoming or maybe it bottomed already. The negatve side comes now. 1) We have learned a lot since Keynes. To spend more is not enough. Even it can be wrong. We either have to envision a future and our expenses must drive that vision or they will be just another waste of resources as US economy did along former Friedman-driven decades. For example, to state as a goal that US manufactured cars have to complain in 2020 the same standards that Japanese, European, Korean and Chinese cars do in 2009 is useless and a waste of resources. To build in USA in 2012 railways that in 2009 would be obselete in Japan, Europe, China or Saudi Arabia, etc. is useless. Our goal must be "in 2020 US manufactured cars have to be better, less pollutants, cheaper, safer, etc. than any other car" or they better do not waste resources in car manufacturers. 2) That vision cannot be but "sustainable growth embeded into a global economy". It implies necesarilly that trade disputes are bad for both sides (as wars are bad for both winners and losers) and US administration should start to avoid them. Obama´s economic protectionism cannot be part of that vision unless USA wants to become a developing economy in the future -that obviously Americans do not want-. For example, USA must point at the best, fastest and safest railways. Disregarding where that technology comes from. Yes, Americans have to learn those technologies from scratch and they have to pay for it in the short term. If they do not do that, in 2012 and in 2020 US technology and infraestructure will be as obsolete as it is nowadays or even worse. "Buy American", "buy Chinese", "buy Japanese" or whatever might sound good for elections, but it is wrong for any economy that wants to be world class. We have to buy the very best. Another example, tariffs on Chinese tires are simply ridiculous in a developed country, is tires production part of that vision? really? They better spend resources teaching workers new technologies -in this context new means futuristic- and spend resources sustaining their actual needs of food, housing, clothing, etc during learning period, even if that learning takes one or two years or longer. (*) 3) Disrearding ideologies, this crisis have proven that only social policies that lead to a robust "social network" allow domestic economies to thrive. I do not want to write much about this, I just want to address it to many compared studies Japanese versus US car manufacturers. 4) Please, Western economists, forget that one economy can thrive just with paper money production. Financial liquidity is just a mean to help economies, financial liquidity is not what pushes economies ahead, US economy is a living proof of it, excess of financial liquidity just pushes price inflation, sooner or later. Economic policies push economies, financial policies must provide financial resources to make them posible, that is its role. Forget the "religious" side of Friedman´s monetarism simply because it does not work, not because any ideology. With all my respect toward Milton Friedman, and his followers, and his huge contributions to economics along his life. 5) Are we on time (in this message I write as if I were an American)? I am afraid that we are not in the short term. Too many mistakes along too many years. Within the next five to ten years US economy has to change completely. That is very expensive and very painful. But a final possitive comment: 6) Again, we have learned a lot since Keynes. To spend more is not enough. Even it can be wrong under some circumstances. Fortunately, US authorities finally agree that now, for American people it is time to save even during the hardhship. As it is time to spend a bit more for Chinese. Yes, it is the end of the "American way of life" and the end of the ancient "Chinese way of life". Empires come and go, dynasties come and go, politic systems come and go, economic systems come and go. One civilization dies, a new civilization is born. We better accept and live within or or we ruin with it. Peace and best wishes. Xi (*) In my opinion China as well should have invested more in education for workers along past months. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/world-thread?hl=en -~----------~----~----~----~------~----~------~--~---
