Hi Oblomov, <<Wouldn't "global income equalization" appear (in the developed world) as deflation?>>
Yes, absolutely, Deflation could/should hit the developed world as a result of globalization, and even there, hits differently by geography and sector. But, of course, the globalist would say that given the overall rise of global income as a result of absolutely free trade, the Hawaii condo will maintain its value even as the Shanghai suburb sharply increases in value.
I am of two minds on all this ...
"Behind Door #1, we have globalization and its consequences of income equalization. Reduction of prices on certain goods, services and property and increase of prices on certain other goodies, depending on geography, sector, economic class and other less identifiable target markers. The overall effect should be a rise in overall global GDP, unless the social disruption is so large that the whole matter's cost/benefit will be a wash, or in the worst case, negative"
and
"Behind Door #2, we have heighten protectionism, reduced trade, and as we are on the precipice of an economic and financial free-fall resulting from a bubble exploding, we could be further blown to bits in a depression given this mentioned deflation"
Do not get me wrong. I do think the world would be better off if income is more evenly distributed (as usual, I will just hold on to my chunk of goodies), but I think what the authorities have failed to consider is that their push for globalization will, all by itself, trigger new momentum for protectionism.
And so, I suspect, if not navigated properly, Door #1 and #2 lead to the same dungeon. Politicians' ability to navigate is too ... how should I say? ... well, I just do not know and so I will just watch for a while.
Chugs, Jay
P.S. Hong Kong is a strange place. We are very developed in many ways (income, education, physical, financial and legal infrastructure ...) and less developed in others (culture, sense of history, ...), and we are smack in the middle of the developing world. Our wealth is dependent on small government, proximity to markets and cheap labour, and free trade. Keeping our wealth is only dependent on personal skill (as opposed to FDIC) and luck. |
