My response to the Indian economist The logic ic so way off the mark! On '' Saving is Sin and spending is virtue..''
The export of US way of life to the whole world where US controls the products we are becoming use too is the basis of this whole saga. The analogy of that shopkeeper in thesis article is so off the mark that one can only ridicule and rubbish it, yes, world may be a shop keeper helping the customer US to buy more by lending credit, but the customer in this case is buying goods which are primarily made by him. Take CDMA telephone who gets the royalty for Qualcom chip inside, or Nokia phones may be a great sale but ''smart technology'' inside is dependent on a few US corporations and they get their cut through royalty, dirty industry like toy making and garment making has been shifted to the third world and china because they have low wage structure and they can export price stability to US, the reason US can sustain today 70$ a barrel without any sizeable dent in disposable income is because of falling prices of communications, falling prices of technology and falling prices of garments and shoes and inflation adjusted oil is still far lower than appreciation of any other asset class over last 30 years. rather in commodities inflation adjusted we are in low cycle.
From entertainment to drugs like Lipitor or food products or Proctor and Gamble or amongst the top 100 well known brands 82 of them are US companies like the MSFTs, Cisco’s and Intel’s of the world, even chillies Indian speciality Tabasco does it better, or Kellogg or Heinz or Donuts or Ice cream like Hagen-Daz or Baskin and Robbins, who is eating and becoming use to all this the billions of noveux rich of the world, it is China and India that is getting use to Duracell way of life or Baskin Robbins I will avoid McDonalds or KFC contribution to this long list of US corporatism that dominated the world taste. A way of life is being transported and ‘nous somme Amrecain’ is happening at a Gods speed, if a nation can export its culture through a few trillion $ depth it is a virtuous cycle for that nation. If US economist fail to understand the simple dynamics of this whole complex phenomenon, the new economic imperial reach through knowledge and products. Something this world has never experienced before.
They can afford to get all the credit of the world since their markets have the depth to consume this capital, no other markets have this, Kuwaitis and Saudis are nearly ploughing everything back in to treasuries and US investments since they are most dependable and triple AAA, imagine the anger of the world that this customer of our who is buying all these products on shop keeper credit had notes which are more trust worthy than gold and those notes can buy oil, the currency of global trading is $, not because people love US but because no other currency offers the ability and liquidity.
the R&D of Harvard alone is mind-boggling, their endowment alone so 16 billion $’s no other company or school in the world can show this kind of huge expenditure on education and excellence, Europe is rotting whereas US is flourishing, not because I say that because we take pride in sending our kids to US schools even in Karachi. US consumerism is addictive and is right there in your own home that is the real reason everyone supports that consumerism with their hard earned dollars. I though you will enjoy this which I wrote in 2003..
Posted by: Iqbal Latif on September 18, 2003 01:47 AM
Now, what happens to America when it can't borrow the money??
The Chinese first of all would go bust, their entire prosperity depends on US imports, in turn they deposit their earnings in TB's to support the US consumerism, the present deficit and import – export game is not a zero sum game but a positive cycle, the US remains the growth engine of the global economy with the aim that many don’t understand that of creating new buyers by exporting American way of life! The new riches bring new habits of films that are made in Hollywood, the need of keeping in universal contact that is fed by coalition of MFST-INTC-DELL and CSCO, the basic requirement to feel healthy and remain healthy that is fulfilled by pharmaceuticals that are predominantly American, the best cocktail for Aids is not made by Europeans or from Alzheimer’s to Parkinson to ordinary blood pressure the intellectual property rights and innovation rights are owned by US companies, the richness of the old poor nations of the east are inflicting on them US habits, life style and similar health problems and for that once new consumers with massive appetite are being added I see no threat of so called unsustainable phenomenon of financing the deficit. The wave of new America habits loving consumers sadly for me appear no where on any economic pundit studies! They abuse Americanism every day in Middle East over super big cups of Starbuck coffees, hating America is fun talk living the style is the walk the talk.
The ‘mother of all exports’ and the strongest of all commodities is the ' The American way of life,' new Chinese and emerging noveux riches in sub-continent are styled in unabashed US consumerism, US is creating a huge market outside US in region of billion people who depend on US products like Starbucks for their coffee and big Mac for their lunch, sushi are out and US empire has done what no one lese has ever done, create a billion new consumers without taking their retirement responsibilities, the trade deficit is a big plus as far as new outposts keep creating new global frontiers where American way of life is the way to go, from Tianman Square to Red Fort in Delhi the 400 million plus new middle class just in these two countries is going to become the next baby boomers, no one but American exporters of services and medicines and food will benefit from this huge rise of middle classes in China, the fact is that US deficit is a small price in terms of keeping world economies to grow but the real goal that is not appreciated by any Krugman is that all these are adding to a new consumer class that underpins future US economy, a new Europe is emerging from consumerist habits of Americans from the ashes of poverty of China and India, this could not have been possible or could not have been created by any Europe, the US deficits is the most intelligent policy ever devised by any global empires, it arouse out of natural selection because freedom and hoping for better life is a way we all want to adopt.
A new ASEAN baby boom is the future I see, it is in the interest of China to finance this deficit not for Taiwan that is silly argument, theirs and the 586 billion dollars of Hong Kong reserves do not at the moment have a place that has appetite for this kind of placement and parking, the R&D of US companies and consumerism of US public decontaminates the global economic system and provide their capital an oasis of suability and a market, America in return is creating millions of new American every day who like their lifestyle and may disagree with their politics. It is all about creating markets blessed enough to pay for the future intellectual rights of US corporate, the strangle hold of the American corporate on the global markets has a premium of more than present global GDP. The few hundred billion of deficit is a small change if it is compared to collateral benefits of creating a billion new customer in emerging markets, imagine a world that is totally littered with poverty, a rich India and a rich China benefits no one lese but US, US instead of launching a Marshall plan to create consumers helps them t create prosperity by exporting industry that is inefficient within US borders but makes perfect sense for people on the lowest rung of the ladder, the two are in twined the interests are forged and this link economists like Krugman cannot see!
The free spree spending of Americas has brought the benefits of lower prices on the Mall shelves but for Chinese from 1972 few billion dollar reserves to 356 billion today and massive increase in life style was only possible if US stayed the course, it is naive to assume that Chinese or Aseans will withdraw their funds from US, the liquidity arising from such withdrawals has no place for parking, overheating is a challenge that Chinese are still facing, same with India the new reserves of 100 plus billon has created a new middle class that loves American values although US bashing may be a common slogan after a dose of lipitor, a big meal at Taco bell and double cream Mocha cold from star buck, every time the new rich middle class steps on to the new world the tills at the US corporate in US start ringing, for every cent the new generation spends their is a cent of royalty for US corporations, this non sense of unsuitability of US deficit is cry of theoretical economists.
Posted by: Iqbal Latif on September 18, 2003 01:52 AM
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