The global economic crisis has revealed the folly of large U.S. budget and trade deficits, as well as of the strong dollar that makes them possible. If it is serious about recovery, the United States must balance the budget, stimulate private saving, and embrace a declining dollar.
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Now, let me hear the opposite argument...
While this article is extremely good at expounding an Amerocentric view of the collapse of the economies of the Asian countries, it is quite a bit like blaming the victim for what happened to them. I'm assuming that the authors are currently working on an article that takes into account the Asian culture and way of doing business and explain how adopting the very characteristics of capitalism, those of indulgence and extravagance, by spending beyond means to stimulate the local economy and shifting the burden of debt from the government to the citizen, will actually profit the region in the long run. I would have to believe that, in any financial crisis, adopting business practices that are not your own and trying to introduce and enforce them in countries, by the authors' admission, do not have the infrastructure necessary to educate the population on how to enact them (hello, China is in one time zone for a reason) would only exacerbate the problems. I would like to see an analysis of what would happen in the West if we were to adopt Asian values and save more for lean times, such as what our parents and grandparents did before credit became free and easy to obtain. Would growth not be less cyclical in nature and the booms and busts that occur actually be mitigated? Of course, that would be admitting that our society has flaws, that all of the socio-economic think-tanks would have wasted time telling governments what they want to hear, and individual citizens wondering what to do with their first generation i-pods. Honestly, this has to be one of the most ill-informed and bias arguments on the economic crisis I have seen yet.
Increasing exports is not the Silver Bullet
Urs P. Thomas, MBA PhD
Administrator
EcoLomics International
16, bd des Philosophes, 6th floor
1205 Geneva, Switzerland
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Tamed Tigers, Distressed Dragon
Brian Klein and Kenneth Cukier make undoubtedly a valid argument by pointing out the risk of a national, even regional, strategy that is largely dependent on the willingness and capacity of the American consumer to continue buying imported manufactured goods on a very large scale. At the same time, the risk taken by the government of these very same consumers in building the nation’s prosperity and independence on its capacity to endlessly borrow huge sums of money from those countries, including its main geopolitical rival, and other governments with very problematic human rights standards, is a separate issue, yet it is also part of the equation. But the silver bullet for solving the financial crisis by generating more consumption across the board without any consideration of the kinds of goods and services that ought to be consumed in larger quantities doesn’t exist – there is no silver bullet.
There is at least one other part of the equation, however, that is at least as important, it may represent a challenge of the Rubik cube type, but its neglect will have much more dramatic consequences than the present crisis. We are no longer living in the good old times of most of the twentieth century when one could plan for growth scenarios and look after pollution problems sometime later on, if ever they should turn out to be really serious. It is clear now with climate change, health problems related to chemical contamination, and with a number of other environmental concerns, that we can no longer ignore our planet’s carrying capacity, and that we have to closely integrate such environmental concerns into our socio-economic planning.
Impossible? It certainly looks that way. The reason for that is precisely our decision makers’, our analysts’, and our citizens’ and voters’ deeply embedded reflex of keeping the socio-economic planning neatly separated from potential environmental ramifications which one acknowledges, but one postpones them for another day in case those should really become unavoidable… This attitude of course ignores the lessons of Environmental Policy 101 which teaches us in countless case studies that preventing environmental degradation is far cheaper than remediation if it is feasible at all. Our societies have learnt at least to try to address social and economic issues in a comprehensive approach, and they have developed solutions which vary significantly depending on national, political and other circumstances. But we are just simply not trained and encouraged to give equal importance to environmental and economic priorities. Such an approach of striving for equilibrium between ecology and economics is logically called EcoLomics. Only an ecolomic kind of planning which tightly integrates environmental and economic objectives can safeguard our ecosystem for generations to come. Such policies need to be based on scientifically rigorous life cycle analyses of economic scenarios which enable us to assume the intergenerational challenge of sustainability. EcoLomic planning of course is not a silver bullet either but it represents the sine qua non for a truly sustainable policy platform.
Overarching policies dominated by environmental considerations don’t have a chance of getting the required political support, whereas the traditional socio-economic planning and scenarios enhanced with some environmental window dressing may look impressive in the political arena but they have no chance of preventing irreparable environmental degradation within the next decades. The social dimension inevitably will be dealt with differently in different countries and sub-national entities. Is more social equity good or bad for the environment? Impossible to say, it all depends how the environmental and the economic dimensions are interacting. Every policy in every domain that contains commitments only for 2050, like the recent pronouncement of our leaders on climate change, blatantly spells out their unwillingness to act now. It is like a junkie who swears he will be clean in six months. What we do need is a track record of results which point in the right direction latest by 2020. To conclude, more growth may be the answer for our financial crisis, in Asia and everywhere else, but only with the right incentive structures for both consumption and production.