Posted on 08/13/2005 4:53:43 PM PDT by Ernest_at_the_Beach
GLOBALIZATION is imperfectly understood by many American policy makers, with dangerous consequences for the United States economy, says Clyde Prestowitz, author of "Three Billion New Capitalists: The Great Shift of Wealth and Power to the East" (Basic Books, 2005, $26). A former trade negotiator in the Reagan administration, he is president of the Economic Strategy Institute in Washington. Here are excerpts from a conversation:
Q. Why do you say that many American policy makers don't understand globalization?
A. There are two different concepts of globalization. One concept is based on the American experience, which is one of a democratic country under a rule of law that holds to market principles. This view holds that the objective of economic policy is to improve consumer welfare and believes in the thinking of David Ricardo and Adam Smith about comparative advantage and free trade maximizing consumer wealth.
Q. Doesn't everybody embrace that view?
A. No, there's a second concept, which is a strategic-trade, export-led, growth kind of globalization. This concept is held by many countries around the world, particularly in Asia. It focuses on economic development as a matter of strategic significance. It explicitly aims to achieve trade surpluses and large dollar reserves. It's aimed at fostering production and a high savings rate but suppressing consumption.
There are two different games going on. The difficulty in the United States is that frequently the second game is not recognized or acknowledged or, if it is, it's dismissed as being not significant.
Q. What are the consequences of not speaking the same language about globalization?
A. We have a very distorted global economy. It is tilted. There's one consumer, which is the United States. All the other major countries are producers and net exporters. ...............................
(Excerpt) Read more at nytimes.com ...
Actually, Adam Smith promoted absolute advantage; Ricardo was comparative advantage.
I am not going to register with the NYT but the differences between the US and developing nations in Asia is not exactly news. I wonder if the article goes on to explain how the different economic outlooks are absolutely mutually exclusive?
This looks like an interesting interview though I refuse to sign up with the slimes.
Supressing consumption surely sounds like the MO of Communist states and come to think about the enviro's, Hollywood, and American left also.
Forum here:
I don't see a version for Internet Explorer.....may be Firefox only!
if we eliminated the minimum wage we would have a huge trade surplus.
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