Monday, June 27, 2011

The best liberal wisdom regarding the situation of the US in the world economy

is to be found in THE LAST ECONOMIC SUPERPOWER by Joseph P. Quinlan (recently published). Here is an excerpt from it:

As I say, this is the best that contemporary LIBERAL wisdom has to offer.

However, like most other assessment of global trends, it simply takes current trends and projects them forwards, without considering whether (and if so, what) may derail those trends.

For example, there is nothing here about whether China can continue to maintain at least 8% real growth while keeping inflation in check, nothing on whether Brazil will ever move out of the category of "a most promising country" (a category of which it has been a member since the Sixties to my recollection), whether Russia will continue to be politically stable (what happens if Putin dies - or, worse, falls sick?), whether Indian will finally start including the majority of its population in its "shining growth" or will fall victim to a revolt of the masses at the increasing gap between the rich and the scandalously poor....

For some reason, liberals focus on the right things that are being done by emerging nations (and it is of course right that that should be done) but do not focus on the wrong things that have been done by Anglo-American-style financial capitalism (which do need to be taken into account) - as well as the prospects for the US, UK and other Western countries to return to sanity - and what effect that may have on global economics.

As I write this, global regulators (led of course by the USA and other Western countries) have just agreed minimum capital requirements, including larger capital requirements for "systemically important" financial institutions. Of course, this still has to be okayed by the G20 and, deficient though the measure is (see my earlier posts on this topic), it is better than nothing. And if it is start of more sensible regulations to come, then it would be excellent. Naturally, the reverse if regulation stalls without creating a sufficiently comprehensive global framework for all aspects of financial services, money supply, and so on.

Meanwhile, with commodity prices falling sharply, and global growth set to be slow for the foreseeable future, the question is whether the huge Chinese bet on commodities will pay off or will itself create problems for the country. Sphere: Related Content

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