A major economic realignment is coming

[eridani]

http://www.guardian.co.uk/commentisfree/2008/feb/18/northernrock.alistairdarling

There are two conclusions that we can draw from the economic crisis that began last August and might, in some form or another, last for a prolonged period. First, it heralds a major reduction in the global economic and political influence of the US, rather in the manner that the 1931 crisis announced the final and belated end of Britain's global economic supremacy. Fundamental systemic crises are often associated with the decline of the dominant imperial power and its increasing inability to sustain the system over which it had previously presided. The profound instability of the interwar period owed much to Britain's inability to maintain its role.

The present crisis, at root, is a consequence of the economic decline of the US and its increasing weakness at the apex of an international financial system of which it was the architect and chief beneficiary. This is most clearly expressed in the US's chronic balance of payments deficit and its long-term dependence on East Asian inward capital flows to shore up the value of the dollar. Perhaps the present turmoil will ease, but in truth the old arrangements are now coming apart and, in anything other than the short term, seem patently unsustainable. We are entering a period of protracted instability as the old order breaks down, the US seeks to resist change and the world embarks on a conflictual and painful passage towards a new global economic order.

The second conclusion is that the political consequences of this shift will be enormous. The interwar crisis led to the second world war and the birth of Keynesianism. The less significant Opec crisis of the 1970s destroyed the social-democratic consensus and led to the triumph of neoliberalism. And this time? One thing seems certain: the neoliberal orthodoxy will be undermined. This could come in many different forms. It could lead to a rise of protectionism in the US and Europe against developing countries such as China, or new regulations designed to prevent sovereign wealth funds from taking over what are deemed key strategic assets.

When the free market and deregulation are the means by which the western world extends its global economic power over the developing world, then they are deemed highly virtuous, but it is a different matter when they become the instrument by which developing countries can extend their influence over western economies. Similarly, during a recession the state is likely to be called into active service on a far more regular basis as western governments seek to deal with the mushrooming effects of market failure. It is not an accident that developing countries - virtually the whole of East Asia, for example - view the role of the state in a far more interventionist way than does the Anglo-Saxon world. Laissez-faire and free markets are the favoured means of the powerful and privileged. The decline of the western world could well usher in a significant change in this mind-set.

[FogerRox]

1. Fluff piece

No mention of Free Trade vs FAIR Trade. No mention Fair Tariffs ...... Chinese 20% tariffs and our 2% tariffs. Just protectionism in the US & Europe.

Excuse me.... who is currently being the the Protectionist ?

Correct diagnosis of the American Imperium, but its fluff.

[eridani]

2. I think the point was that western countries have used tariffs in the past--

--the way China is using them now.

[AdHocSolver]

3. There are NO free markets and there is NO free trade.

NAFTA, the WTO, the IMF, the World Bank, etc. are all techniques used by the multinational corporations to CONTROL markets and trade. The guy who wrote the article quoted above is correct about the decline of the U.S. However, his explanations are idiotic.

The U.S. has a huge trade deficit because the large corporations have eliminated the ability of smaller American companies to produce goods in the U.S. and compete with the multinational corporations who have built factories in Asia.

General Motors is downsizing in the U.S. to concentrate on their markets in Asia. They are purposely leaving the U.S. markets to Toyota and Honda, as their sales in China are starting to take off. As GM closed plants in the U.S., they built factories in China. Their biggest seller in China so far are Buicks, which is why they spent a billion and a half dollars to build a Buick plant in China at the same time that they fired workers in the U.S.

The main goal of the multinational corporations is to eliminate all U.S. manufacturing, where labor costs are higher, and shift all manufacturing overseas. The corporations cry that foreign countries are preventing them from exporting. Nonsense. The trade agreements have mechanisms that the corporations could use to remedy that situation. They don't want to manufacture in the U.S. The tax laws and higher wages here make it more profitable to produce overseas. However, corporate policies to increase their profits are exactly what is destroying our country.

Smaller American corporations could produce goods here and still compete in local markets, by running lean operations. However, big box stores like Wal-mart have driven the "mom and pop" companies who would buy locally out of business.

No country can continue to pile up debt in the amounts that the U.S. has and remain viable economically. This debt is causing inflation, bankruptcies, and the collapse of whole industries. Kevin Phillips' book "Wealth and Democracy" describes how the great empires of the past collapsed because their rulers drove them into the ground fighting unending wars, pursuing colonialism, and the destruction of the middle class. The Roman, Spanish, Dutch, and Portuguese empires all were run into the ground due to the greed and corruption of their ruling classes. The U.S. is headed for a melt down for the same reasons.

We need to do away with trade agreements like NAFTA and the WTO, and institute tariffs, import quotas, and revise the tax laws to bring manufacturing back to the U.S. Only this will reduce the debt that we have accumulated for the sole benefit of the multinational corporations. Protection from the multinational corporations is exactly what is needed.

Reducing the national debt will rein in inflation. Manufacturing locally the goods that we use will reduce the debt as the money we spend will stay here. Increasing employment here will increase government revenues since working people pay taxes. (Who would have thought that the solution to many of our problems could be so simple.)

The first step is to explain reality to people. What the government tells you, what the financial "experts" tell you, what the economists tell you, what the corporations tell you, and what the "think tanks" tell you is all bovine manure. The next step is to get people to decide whether they want to support ever increasing corporate profits or save the country from a melt down. Increasing the profits of a few large corporations is no longer compatible with a stable and successful economy.

[Yavin4]

4. Brilliant Post! Here's THE Key Part of Your Post

<<The first step is to explain reality to people. What the government tells you, what the financial "experts" tell you, what the economists tell you, what the corporations tell you, and what the "think tanks" tell you is all bovine manure. >>

The corporate media loves to trot out bought and paid for economists who will tell you that any form of tarriffs will destroy our economy when that indeed is absolute garbage.