Re: Bushbaby & the economy (world and US)

["Andrew Hagen" <xah@xxxxxxxxxxxxx>]

On Sun, 25 Mar 2001 21:21:09 +0000, jdevine@xxxxxxxxxxxxxxx wrote:
>> A healthy US economy would benefit the world's poor.<
>
>Assuming that by "healthy," you mean "like during the period 1992 to 2000," this benefit
>is only by increasing the demand for non-US countries' exports, the benefits of which
>mostly went to rich folks there -- and in the rich countries, where the owners of the
>multinationals are. (The benefit of jobs in _maquiladoras_ and the like was to a large
>extent cancelled out by the commercialization of agriculture, which took jobs away.) Even
>then, this benefit was at the expense of greater US debt to the rest of the world, a
>process that can't continue forever.

Nevertheless, we can't stop globalization. We can only soften its
impact. The traditional economies are everywhere in decline. Better
that some people have jobs. In capitalist economies the surest measure
of well-being is employment. The repressive nature of maquiladoras is
revolting. That can improve over time, however, as factory conditions
in the US have.

Amartya Sen would argue that the world's poor countries have a right to
attempt development on their own terms. I think his book "Development
as Freedom" is wrong on a lot of points, but who are we to withhold
development capital from poor countries?

>you think? the Gore folks seemed much more concerned with "paying down the [government]
>debt" than with helping the U.S. economy.

I base my conjecture on the Gore campaign proposal. Paying down the
debt would be tremendously helpful in the long run, because, as you
state, reduced interest payments would increase the government's
discretionary income. Additionally, in the short run, the perception
would be created that the Administration was serious about reducing the
national debt/GDP ratio to something far more manageable. This
perception would give Greenspan the leeway he needs to lower interest
rates to 3-4%. When President Bush proposes tax cuts for the rich
without reducing spending, a reduction in interest rates beyond where
they are now is unfeasible because the Japanese will pull out their
money, killing the dollar. Treasury Secretary O'Neill doesn't
understand this, because he's too busy selling off his Alcoa stock
(worth $90 million) to quiet the growing chorus of his critics.

When the Open Market Committee reduced interest rates by only 0.5%,
they sent a signal that only minor adjustments are possible. Clearly
they recognize the gravity of the situation. They just don't have much
room to maneuver.

>this is backward. If AG keep rates low, then the government debt would be less of a
>problem. It's important to remember that the _real_ burden of the government's debt
>concerns the interest payments on it, which take money away from spending or tax cuts.

I think that right now it's a perception problem, not a numbers
problem.

>I reject the crude Marxism that says recessions/doldrums cause wars. Clinton launched a
>war against Serbia even though there was no recession in the US. The war against Vietnam
>wasn't caused by recessions or doldrums.

I would reject that logic, too. I do think that the Bush Administration
is positioned to accept that logic, should the economy not grow for a
year or two, and political pressure mounts to "do something." The
skirmish-war I'm thinking of would be more along the lines of another
Persian gulf "war." That wasn't technically a war, since it was so
one-sided. More like butchery. I would except the bombing of
Yugoslavia. That was justified, IMHO. Any nation that attempts genocide
should now expect as much. BTW, let's remember how easy it was to start
the American involvement in the Vietnam War: the Gulf of Tonkin
non-event.

Andrew Hagen
xah@xxxxxxxxxxxxx