Zeev, as always I have great respect for your thoughts and ideas especially on the topic of international economics. I'd just like to add some of my own thoughts on the subject of Japan.
Most agree that Japan needs to stimulate domestic consumer spending which should lead to greater imports. I also believe you are right when you note that because of a bias against imported goods and services we may not see an appropriate package of reforms in our lifetime.
What I'm about to say applies equally to the U.S. as well as Japan; increasing imports from other Pacific Rim countries should be viewed as a replacement for foreign aid. We have a choice: 1) we provide assistance to these countries either in the form of direct aid or loan guaranties; or, 2) we stimulate their economies by buying more goods from them (the AFL/CIO won't like Option 2). In the case of Option 1, we only perpetuate many of the problems that exist today which led to the current economic crisis. In addition, loan guarantees through the IMF will certainly come with stings attached - austerity measures that will weigh most heavily on the working classes of Asia. Option 2, on the other hand will strengthen the Asian economies based on market fundamentals (trade) and will help elevate living standards. This in turn, will create larger markets for U.S. companies selling everything from computers and software to Boeing 737s.
By trading with smaller Asian economies versus giving direct aid, we have the added benefit of "getting something" for our money. Instead of dumping aid money into government programs. Like I said, domestically we would see skyrocking trade deficits and I don't thing the unions would like this, but jobs that may be lost in certain industries would be gained in others. We import lower value-added goods from the far east and export higher value-added goods, like aircraft and advanced telecommunications gear, which employ highly skilled and well paid workers. |
