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Monday, August 28, 2006

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Pienso... Luego Existo

Thanks for the find. Another quote that I liked from the piece:

"Fewer than 25,000 American farmers could jeopardise the whole global trading system... When you think about it, you realise something's wrong in the global democracy"

Arthur Eckart

I believe the comments above are motivated by politics. "On the U.S. economy:" Export-led foreign countries are inducing U.S. consumption, since they're overproducing. Consequently, the U.S. has a right to "lecture" these countries to slow production to more sustainable rates. So, the U.S. has a great deal of credibility, and has given sound advice to these exporters. "On Iraq:" The war in Iraq didn't cause high oil prices. Oil prices are rising, because there's little excess supply, given strong demand, or more importantly, future demand will exceed future supply, because oil is being depleted too quickly. "On Russia:" The Soviet Union was a wartime economy. Russia and other former Soviet countries have shifted from "guns" to "butter," which should be an improvement, although there may be other problems, e.g. greater income inequality. "The fact is they're not better off:" Globalization does work, e.g. increasing consumer surplus and competition. However, the global imbalance is caused by the U.S. willingness (or power) to consume (not imposing import restrictions and not raising taxes) and some of its major trading partners dispositions to produce (to maintain output and employment, and not lowering taxes or inducing consumption). This creates many problems beyond the natural disruptions of globalization itself. Nonetheless, globalization has proven to be a net benefit.

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