Re: For How Long? At What Cost?

["廖子光 HenryC.K.Liu 郭??" <hliu@xxxxxxxxxxxxxx>]

You left out Warren Mosler who dealt an intellectual coup de grace to
neo-liberal global trade, by pointing out the economic fallacy of
export-driven growth, at least for economies that have the capacity of self
sufficiency, like the US, China, Brazil, the EU and even possibly
Malaysia.  The US was the first to realize this truth, being theorectically
more advanced.  It happily let its export sector decline in the last
decade.

Davidson, while granting the theoretically validity of the Mosler doctrine,
reminds us that in the existing trade regime, the rich have more options.
He implies that even "foolish" policies, if they produce cash, can increase
options for exporting governments.
This is a truism, although Asian economies have found that the penalties
tend to grow faster the added options.

Gelles' concern for the American worker is legitimate.  Although
Greenspan/Rubin/Summers never actually said so, in their scheme is the
inevitable evolutionary obsolensce of the American worker, through a new
international division of labor.  Greenspan sppeches on Schumpetrean
creative destruction are part of the message.

The working class will simply disappear from the US economy through
globalization.  The AFL-CIO is painfully aware of this trend, as evidenced
by its recent reversal of position on immigrant workers.  They are its only
remaining target for union organization. One has to first find the workers
before one can improve their lot.

The battle in the US is no longer one between workers and capitalists.  All
Americans are capitalists through their pension funds. The wealth effect
from pension assets has kept all Americans happy.

The battle is about the mal-distribution of wealth between what is
traditionally known as the middle class and the new robber barons in the
new economy.  The criticism of Microsoft is not that it abuses it workers
who, btw, are non-union, but that a handful of individuals take too much
wealth to sit well in the moral context of America's Judea-Christian
poplulist, if not socialist, culture.  Even universities are cracking down
on faculty memebers who are turning into billionares from their
intellectual property.

The trade deficit is indirectly, may be even directly, responsible for low
inflation which keeps interest rate low which make the trade edeficit
managable, etc, etc.

The worst scenario for the US is if the NICs dicide en mass not to export.
It would be the equivalent of a global general strike. Inflation will
quickly reach double digits again with all its unpleasant consequencies.

Poverty continues to be the enemy.  But poverty is not longer measured in
absolute terms, but increasingly in relative terms.
Therein lies the future conflict.  The gap between political democracy and
economic democracy cannot hold.  One person one vote demands one person one
dollar.  The question is: is American ready for true democracy?

Henry C.K. Liu

John Gelles wrote:

>             "Only as long as the US persistently runs larger
>              and larger trade deficits with benign neglect can
>              the rest of the world improve !!"
>                                                        -- Paul Davidson
>
>             "This is an insight that Greenspan/Rubin/Summers
>              have never grasped.  Globalization requires a US
>              trade deficit.  The US has no choice but to be the
>              market of last resort.  This is the function of the
>              leading component of the global economy, just as
>              it is the role of the central bank to be lender of last
>              resort.
>             "The US dual policy of a strong dollar being in its
>              national interest and its unrealistic quest for
>              declining trade deficit in an expanding global
>              economy is self-contradictory."
>                                                         -- Henry Liu
>
>         With "benign neglect" indeed!.
>
>         We Keynesians know, as Paul has argued, that the
>         author of hard money, the USA, can keep creating
>         more money until it softens up.  We can keep world
>         trade moving until no one wants the dollar.
>                     Or until ancilliary effects, like high interest
>         costs (associated with hardness of the dollar and its
>         power to stimulate world trade) begins to hurt.
>                     Or unemployment in the USA demands
>         protection of labor.
>
>         Meanwhile, assuming Greenspan and Summers are
>         as smart as Davidson and Liu, (a proposition that is
>         self-evident), effort to improve the US balance of
>         payments, via export of tangible and intellectual
>         property, makes a lot of sense.
>
>         Surely the day must come when the economic
>         infrastructure of the so called "global economy"
>         will include a great many nations able to fully
>         protect their consumers from predatory export
>         drives intended to make them dependent on
>         foreigners out to do no good -- economic
>         colonialists, favorably situated, but not so much
>         so as once such exploiters were.
>
>         Remember this:  Anytime the USA wanted to
>         close its consumer markets to all foreign exports
>         it could -- with no ill effect on others.   All it
>         would have to do, after closure, is to offer
>         foreign nations credit to buy their needs -- of
>         both consumer and capital goods.
>
>         The undeveloped nations, who thereafter
>         borrowed their needs, (as if by the old lend-lease),
>         would fight the battle on their soil to develop
>         local industry -- without throwiing Americans out
>         of work.
>
>         What would remain to be done is to arrive at a
>         low enough rate of interest (on such borrowed
>         development money) for the recipient nations to
>         be able to handle their debt without real cost
>         to their progress.
>                     That would be easy enough, especially
>         if they were open to tourism.
>
>         Meanwhile, Americans are working in temporary
>         and part time jobs as globaloney is spouted by
>         experts.  Most of whom ask others to pay its
>         cost.
>
>         Greenspan, Summers, Davidson and Liu, may be
>         equally smart.  Are they equally good for American
>         labor?  For world labor?
>                 Of course not. We know our PK'ers are better.
>         Their quoted ideas above are but a tiny segment of
>         their intended program.  In fact, to labor, they are
>         even nicer than I am -- if only you read all they've
>         written.
>
>         In your dreams.
>
>         John Gelles
>          email    1944@xxxxxxxx
>              url    http://1944.org