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The problem with Latin American and other places was not the trade balance but government spending and government loan guarantees. The market would quickly have sorted things out had politicians not been involved. The capital would have been used for investment rather than socialism. It's the difference between teaching someone to fish versus giving them a fish.

The problem in the US is out of control government, not out of control business. Business operates within constraints imposed by markets, which will be imperfect, but correct themselves quickly. Government operates outside those constraints. So asking government to constrain markets is like asking the wolf to guard the hen house.

I am a business professor with a PhD in marketing. To fully understand what I am talking about requires quite an education. I have had eight years, and still do not understand it fully. But certain things are well-known, even to liberals. One of them is that free markets are way more efficient than controlled ones.

The two industries with the most out-of-control pricing are health care and education. It is no coincidence that these are the two industries with the most government regulation. Imposing more restrictions on imports and exports would yield results comparable to those we face in education and health care: it would dramatically increase the price of everything and produce a semi-permanent class of people who produce nothing but useless paperwork.

Thank you for your detailed and well reasoned response.

Okay. I see where you're coming from. But I think I wasn't clear. I see what you're saying wrt to government regulation and Argentina. Thanks for clearing up the difference between the two examples.

However what I still don't understand is how an American economy dependent on foreign investment can deal with the inevitable corrections in the world economy. I understand that India and China are quite unstable economies currently so in the near future there's no reliable alternative to investment in America. But in the future how will the American economy sustain itself?

As you and many others have mentioned America has moved to a services and high technology oriented economy. I only have a rudimentary understanding of economics, but from what I understand other countries are quickly catching up to America in many high tech and services industries. From my limited understanding I know that the strongest economies need to be involved in fields with high barriers to entry to maintain their superiority. I see these barriers leveling between the world economies.

How do you see America maintaining its economic superiority? And in what fields?

As you and many others have mentioned America has moved to a services and high technology oriented economy. I only have a rudimentary understanding of economics, but from what I understand other countries are quickly catching up to America in many high tech and services industries. From my limited understanding I know that the strongest economies need to be involved in fields with high barriers to entry to maintain their superiority. I see these barriers leveling between the world economies. How do you see America maintaining its economic superiority? And in what fields?

It's a combination of patents and trade secrets and some undefinable secret sauce. Why do Acer and Lenovo persistently have lower margins than Dell? Why does Toyota lead the world in profitability? Why do all three German automakers thrive despite strong competition? How is it that Colgate Palmolive and P&G are beating the pants off Chinese, Japanese and European consumer goods makers in China? It's that undefinable element.

I think American companies will do well the way they always have - by inventing new products and services and improving existing one in the way Americans have always done. Some might say this is taking things a little too much on faith. I don't think so - look at how many of the most profitable companies in America are only a few decades old, and compare that to a similar roster of foreign companies that make the list. Just because they can compete on the low end doesn't mean they can compete on the high end.

But in the future how will the American economy sustain itself?

It will sustain itself as it always has. By being at the forefront of technology, information and innovation, and by adapting as the world changes.

We cannot predict where the future growth will come from anymore than we could have predicted what the Internet would become in 1980. But we do know what kind of system will keep us competitive; and that is a system that is open and honest and free of government intrusion.

You want to be rich yourself? Figure out the next big thing and make that thing happen. Given the fact that you have free and open, instantaneous communication with just about anyone in the world, there are very few boundaries except those imposed by your own fears. I suggest you stop thinking about what may not be possible and focus on what is possible.

Every American economic pessimist in history was wrong. Don't join them.

And in what fields?

If I were a young person thinking about a major, I would major in some technical field such as engineering or Biology, and minor in business. I would take my electives in introductory languages so that I had a working knowledge of Spanish and Arabic and Chinese.

We simply do not know what will be important in the future. That is what makes the present so exciting. If I were designing a curriculum, I'd make students take 120 one unit classes to graduate, as opposed to 40 3 unit classes.

The people who do the best in the future will be very adaptable, not particularly locked into any one way of thinking, and functionally skillful in a multitude of areas, both technical and cultural.