Vicious Circle Of Trade - WPost op-ed

[Cassandra]

http://www.washingtonpost.com/wp-dyn/articles/A55857-2003Aug13.html

" During the past quarter-century of globalizing markets, we have been assured that freer trade would vastly accelerate the rise in living standards. Yet world economic growth since the mid-1970s has been below that of the previous 25 years. The gap between rich and poor countries has widened, and the legal disputes that accompany new trade agreements have actually raised, rather than lowered, tensions among nations. Free market "reforms" imposed by trade agreements on poor nations often produce a thin layer of globally connected elites, while further impoverishing and angering the poor. "

Good overview.

[Code_Name_D]

1. An intresting point.

What is global GDP, or would that be GGP? (Gross Global product.) As Economics Dude said, it can be a depresion with positive "growth" (as in positive GDP.) But if this is a global economey, wouldn't the GGP be more important than GDP?

[rapier]

2. notes

Despite all the talk of the benefits of globalization, of computerization and tech in general, of lowered taxes and the supply side revolution and the fetish for 'investment' as trillions of dollars fly around the world daily and last but not least the great 'productivity' advances, growth sucks, Has sucked for 25 years compared to the post WWII era and is likely to continue to suck.

Not ony that but corporate profits have been eroding steadily almost as long. Forget all the silly earnings talk. Real positive cash flow profits, ones that Adam Smith would recognize, are pathetic and continue to crater.

Now one would think that these two undeniable trends would have the bussiness and financial elite, and the public too up in arms. Obviously that isn't the case. I suspect that is because of a combination of two things. The propoganda that comprises the bussiness media and the flawed ideology that drives our political discourse (and is dutifully repeated by the general media)

As to the cause. Well I might write a book but the topic is too big for one book and besides, the dominant players would scoff and I would convince almost nobody. I dont think I could nail down the 'cause' anyway.

But in shorthand I'll give it a try. DEBT. Individuals, companies and the nation as a whole, and all nations, are swimming in debt. Far too much. This goes beyond partisanship for the most part really. The financial world we have built has certainly been a product of both parties. To a large extent the culture of consumption has been non partaisan as well.

THe accumulation of debt is I think the main culpret in lack of growth.
-------

On an historical note there were two events in 73 which altered the post WWII system. THe fist was the abondonment of the Brenton Woods monetary system with gold backed money and the adoption of floating currencies. The second was the oil shock, which coincided with the fist year ever that US oil production fell. (1 political event as well which I think had profound psychological ramifications. Our surrender in VietNam. It is never called that but that is what it was)

So the cause might be financial in nature, or cultural or historic or all three. Probably all three. One must also accept the possibility that the growth from 41 to 73 as itself an anomoly. We shouldn't expect rapid economic growth after all so assiging blame for slow growth might be a fools errand.