Comrade Telemarxist,
It would take an economics book to respond to your many good and valid points, and your many good but invalid points. The rise in derivatives (aka gambling) is indeed troubling, as is the rise in debt, as is the rise in world financial organizations, institutions and markets. But switching from horse and wagons to steam and automobile power, and switching from coal to fuel oil and natural gas, were complicated transitions as well. Does anyone want to go back to city taxicabs powered by horseshit factories on 4 legs?
Just taking one level of the debt, consumer debt, though, it is in many ways a transference of money and convenience from the less intelligent to the more intelligent (in that way it's like the lovely tax known as the "lotto"). Dimwitted consumers get a few credit cards (what fun!) and go to the Target or Walmart and engage in a little retail psychotherapy, running up the ugliest 4 syllables in the English language: credit balance.
I have a friend who in 1991 went to England as a student and ran up 15,000 dollars on his credit card which he couldn't afford to pay for in cash. Eleven years later he is still paying off the 18% on his credit cards. This outrageous rate of return (nice bond for MBNA though, 18% throughout the 90s and into the new millenium) funds all the delinquencies of a few delinquents AND all the pristine credit card use of one consumer family known as Mr & Mrs. Kodiak_bull. I have gold cards, platinum cards, airline cards, you name it. I use only one of them (United Airlines), where for every dollar I spend I get a frequent flier mile. I pay off the balance every month, therefore no charges. How convenient is that? A tax on stupidity which rewards the intelligent. Almost like evolution. I don't have to carry cash, run to the bank, nada. I love this country. Jeff Gerber (not his real name!) funds ME!!
The government bailout of the airlines (which may soon fall short) is a regrettable transfer of risk from the shareholders (who assumed it) to the taxpayers, and wealth vice versa. I can say this with impunity since I have no position in the airlines!
Oh well. As for the worry that running trade deficits is somehow bad, again, this is a very complex subject that could go on for chapters. Instead I will give you a very simple example. Japan in 1970-2001 has consistently run trade surpluses, manufacturing everything, selling enormous amounts of goods outside of Japan, from cars to ships to steel, and selling everything inside of Japan from soap to shoes to suits. The U.S. in 1970-2001 has consistently run trade deficits, easing from a manufacturing giant to a global services & manufacturing giant. We have been flexible.
So, on the verge of 2001 the U.S. citizen should be poor and the Japanese should be rich, right? But the reality is the U.S. citizen is rich and the Japanese citizen is poor, and the trend continues. By any measure, all that mercantilist, beggar thy neighbor, discipline and save theology followed by the Japanese has beggared the entire nation, now entering its 11th or 12th straight year of recession.
Other countries that tried to run straight trade surpluses (Korea, Thailand, Taiwan, Singapore, Indonesia) have stumbled as well. Could it be that trading your paper currency for Camrys, Sonys and Mitsubishis is the smartest thing you could ever do? Could it be that forcing your own populace to scrimp and save, live 4 to a 600 square foot rabbit hutch, pay $2.15 cents per can of Asahi or Sapporo beer no matter where or when it's bought, cutting back on current profits to take world market share is maybe the dumbest way to run an economy? So bring on the trade deficits if it means we can buy a quality sweater for $13 made in Pakistan by a guy who receives 25 cents an hour, rather than paying $28 for the same sweater made by a guy in Georgia who makes $11/hour. Let the guy in Georgia do something else, make Krispy Kremes or do the accounting for Georgia Pacific, or be assistant pro at a local golf club or a yoga instructor at the YMCA.
My grandmother never approved of the telephone, my great aunt thinks the personal computer is the work of the devil.
I would answer you at greater length but I'm beginning to bore myself, so everyone else hit "Next" several paragraphs ago.
Skiers of the world unite, you have nothing to lose but your bindings (and your anterior cruciate ligaments)!
Kb |
