Monday 26 October 2009


EAST ASCENDS, WEST WANES IN RE-ORDERED WORLD ECONOMY

Gwyn Morgan

Global and Mail, October 26, 2009

Recessions are high-profile times for economists and financial analysts. One popular focus is the "shape" of the recovery. Optimists think it will be V-shaped; the more cautious predict it will be U-shaped. Those who believe that house prices and the stock market are ahead of the real economy foresee a W shape. Then there's the dreaded L shape. But such speculation misses the bigger question: What will our "after the recovery" world actually look like?

Start by thinking back only 15 months: World oil prices hit $147 (U.S.) a barrel, transferring enormous wealth to oil-exporting states. Demand for raw materials (such as cement, copper, zinc, nickel and steel), combined with labour shortages, played havoc with construction projects. Global food shortages and price hikes fuelled riots in developing nations. China's embrace of market principles had transformed it into the world's workshop, displacing much of the West's labour-intensive manufacturing. India emerged as the leading global services economy.

The "after the recovery" picture will no doubt reflect some of these trends, but what will have changed? The first place to look for an answer is the country that dominated world affairs before its domestic mortgage meltdown ignited a global meltdown. Optimists remind us that the U.S. economy has always been the most resilient example of what the late Austrian economist Joseph Schumpeter labelled capitalism's "creative destruction." But current realities tell us our neighbour is unlikely to lift up the world again this time.

There is no credible scenario for turning around growth of the country's $8-trillion national debt. Huge stimulus spending and corporate bailouts are adding even more trillions, yet the Obama administration doesn't seem to have heard the adage, "When you are in a hole, stop digging." Interest payments and new spending on health care and other initiatives ensure a continuation of out-of-control, trillion-dollar-plus deficits. Some 39 American states are technically bankrupt. Meanwhile, President Barack Obama and his leftist colleagues throw sand in the gears of Corporate America, the only engine that has ever powered the U.S. economy out of peril. One of his first initiatives was a bill to remove the right of workers to a secret ballot before union certification, further reducing productivity and competitiveness. The administration's plan to double-tax foreign subsidiaries of the country's enviable stable of global companies risks the loss of important head offices. Lastly, it's payback time for debt-laden Americans who shopped the world to prosperity on borrowed money.

(...) [artículo aquí]

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