Friday, March 11, 2005

Aside: How the US saved the world by buying vast amounts of stuff...

Sorry, here's a topical aside. There's so much in the news.

Of course it all relates to the modernist agenda and its enemies.

Saving the World Through Walmart?...

Every year, Warren Buffett (probably the world’s greatest investor personally writes a letter to the shareholders of the company he controls, Berkshire Hathaway. The following excerpt is from a section that concerns the US trade deficit, in which Buffett explains why he is diversifying into currencies other than the US dollar.

"If the U.S. was running a $.6 trillion current-account surplus, commentators worldwide would violently condemn our policy, viewing it as an extreme form of “mercantilism” – a long discredited economic strategy under which countries fostered exports, discouraged imports, and piled up treasure. I would condemn such a policy as well. But, in effect if not in intent, the rest of the world is practicing mercantilism in respect to the U.S., an act made possible by our vast store of assets and our pristine credit history. Indeed, the world would never let any other country use a credit card denominated in its own currency to the insatiable extent we are employing ours. Presently, most foreign investors are sanguine: they may view us as spending junkies, but they know we are rich junkies as well.

"Our spendthrift behavior won’t, however, be tolerated indefinitely. And though it’s impossible to forecast just when and how the trade problem will be resolved, it’s improbable that the resolution will foster an increase in the value of our currency relative to that of our trading partners. "



While I respect and admire Buffett in many ways, I think that things may be a little more complicated that he portrays them to be.

I have a perspective I'd like to add. It does require "stepping back a bit" and taking in an even wider context, so hold on.

Many periods in history have seen one empire or another achieve enough power to establish and enforce the rules of trade - nearly always to their own advantage. It happened under Pax Romana. Britain did it with the Triangular Trade in 1770s. Ghandi's biggest complaint against the Raj was the way Indian industries were crushed in favor of exports from British mills. As Buffett says, it is called mercantilism.

Only now comes a funny thing that happened in our lifetimes. It is probably the biggest fact about world civilization in the last sixty years, yet I do not know of anyone explicitly or openly discussing it.

After WWII, the United States had an overwhelmingly superior position in the world, with an economy that had benefitted prodigiously from war, rather than suffering from it. By any measure we had become the latest "pax" or imperium, able to set rules and establish patterns that others could only follow.

But something surprising and historically unprecedented happened. For the first time, this kind of power was held by a nation and people whose value system was colored by both satiation and lessons of the Enlightenment. (The two are, of course, related.) Moreover, we were guided at this time - with respect to international matters - by arguably the greatest man of the Twentieth Century, George Marshall, who ensured that the U.S. would use all this power in ways diametrically opposite to any other historical imperium.

Motivated by a strangely pragmatic version of utopianism - called Modernism - we set about the ambitious goal of reshaping the world.

Most people today know Marshall only for his "plan" to rebuild European cities and farms in the immediate aftermath of war. But that was only one small part of a far greater scheme. More significant, in the long run was the establishment of trade policies that reversed mercantilism.

Instead of the Central Kingdom (Chung Kuo) forcing satrapies to buy manufactured goods from the center, the U.S. allowed client states to set up barriers against US manufactures while facing negligible duties to their goods imported to America.

Chief results?

#1 - a huge U.S. balance of payments deficit. This has been discussed relentlessly ever since the sixties - offering grist and nourishment for pessimists, predicting disaster. Indeed, it is becoming hard even for optimists to imagine happy outcomes for America, with the trade deficit now reaching more than half a trillion dollars a year!

Keen observers such as Warren Buffett predict a major reconfiguring of currencies in the near future, with another dolorous outcome -- the U.S. becoming an extreme debtor nation. And they are probably right. This is mismanagement on a collosal scale.

Okay. That's pretty clear. So far. But there is another side. A completely nother side.


#2 - The 60 year anti-mercantilist trade pattern established by America also resulted in the greatest transfer of real wealth in world history. The effects, first in Europe and Japan, then Taiwan and Korea, then the smaller "Asian Tigers" and parts of Latin America, have been staggering.

Out of the world's six billion people, more than two billion have been lifted into some kind of middle class existence - with modest but clean homes, access to water, power, education and hope - as a direct or indirect result of Americans buying trillions of dollars worth of goods we never needed.

Another billion or so appear to be on the same track, only a little behind.

We are told that the world is a devastatingly sad and oppressive place, filled with poverty and hopelessness. And, indeed, the raw numbers of people who suffer malnourishment and/or oppression, can only tear at the heart. Ideally, this awareness will spread and make us feel determined to do better.

But the irony is that only people who are relatively satiated can indulge in empathy and feel the pain of others, for whom satiation is but a dream.

In fact, the percentage of human beings who live in some degree of comfort and safety, with secure hope that their increasingly educated children will do better, has been rising spectacularly for two generations. And the principal driver of this change has been the U.S. consumer, purchasing the output of tens of thousands of foreign factories, wherein the same pattern gets repeated from one country to the next. Workers systematically move from exploited peons to hard-pressed semi-skilled assemblers, to unionized skilled labor... while roads and infrastructure get built all around them and their kids go to school, graduating into the bourgeoisie.

Let me reiterate this point. Far outweighing all "aid" the world ever saw, the greatest force for good in the world has consisted of Americans purchasing megatons of crap we never had to buy in the first place, under trade rules designed to favor those thousand of foreign factories.

Alas, we'll never get a scintilla of credit for this vast beneficence. Because it did not blossom out of motivations like guilt or generosity. To a large part, it flowed out of a childishly spendthrift love of shopping.

Indeed, when viewed from this unusual angle, America looks even more impressive than ever. After single-handedly lifting up Europe and Japan, in the wake of WWII, then hauling Korea and Taiwan into the middle class with the helpful voraciousness of our appetites and wallets, we proceeded thereupon to offer this same bounteous good deed to dozens of other nations and peoples until, today, we are accomplishing what no one would have imagined possible.

We are SIMULTANEOUSLY lifting both China and India toward prosperity. Nations amassing more than two billion people. At the same time.

Now this view may infuriate liberals, who believe that doing good should feel like doing good, ideally motivated by sacrifice, guilt... and maybe some paternalism.)

It also won't please conservatives, who would just hate to picture George Marshall saving the world. (They certainly give Ronald Reagan all the credit for calling the final plays in Marshall's long and patient game.)

It seems to be in nobody's interest, left or right, to acknowledge either that the world is being saved, or that it has been accomplished by good-natured American extravagance. Is this why such a blatant fact is so ignored?

Oh, but it is NOT being ignored... in Beijing.

The Chinese leadership is painfully aware how much they have at stake in continuing the American buying spree. If their present transition were to stall short of the halfway point, with most of the rural population poised at an especially dangerous phase - aware of possibilities that have not yet been realized - then social disruption could wrack the nation on a seismic scale. Beijing needs confident Americans to buy plenty more unneeded goods with strong dollars, for the foreseeable future.

Can this be achieved, while our current accounts deficit shatters all records? Yes, if a sufficient counterflow is maintained. The Chinese and others could buy more American goods, for example. (Unlikely.) Or they could pay for intellectual property (even less likely).

Or they'll buy more American capital. The latter will be done even with complete awareness that US investments must depreciate eventually. They don't have any choice. They must buy our bonds and banks and skyscrapers and golf courses, as the Japanese did, at an expected long term loss.

Shall we derive some small satisfaction from that?

I don't see it as an issue of us-them quite as much as some do. Had we played this as a competitive game on that basis, Marshall would have set up a traditional mercantilist trade pattern and we would right now be not only the richest nation but the Great Creditor, owning debt in every other country... and the world would be a raging storm of rebellion against a genuine American Imperium, with billions more suffering in angry poverty than do now.

As I see it, we ARE getting something. We are getting cheap Asian goods and a better world. High quality Japanese cars and a vast majority of Earth's children going to school. A cornucopia at Walmart, and four billion people rushing toward the middle class.

(With concomitant ecological crises that will challenge the NEXT generation. Don't think for a minute that I've forgotten THAT part of things... or the way we are betraying our role as R&D department for efficient and sustainable growth.)

The ironies pile up higher and higher. If America fades somewhat because of all this, will we be taunted because a great empire let itself slip from the pinnacle through spendthrift ways?

Or will we be given credit we deserve? We spent and spent and spent, and in the long run, what we bought was hope for the world.

For follow-up, see: How Americans Spent Themselves into Ruin, but Saved the World


...next, a return to modernism...

31 comments:

A.R.Yngve said...

The long, sad anti-capitalist tradition in Western culture started with that arch-idealist Plato, who famously said about a marketplace: "I never imagined there could be so many things I do not need."

And the rest is history...

I see the whole Western history of ideas as an ongoing battle between Aristoteles and Plato. They were the first to write down the opposing viewpoints, and it's been war between science and the humanities department ever since.

And despite Plato losing every major battle, the old bastard just won't admit defeat...

-A.R.Yngve
http://aryngve.blogspot.com

David Ivory said...

As someone who sees it all happening over the border in China I can tell you the last 10 years have been amazing - and there is more to come yet!

In the same vein the New Scientist today has an interesting spin on the physics of poverty...

NewScientist.com

reason said...

I'm not sure that your particular slant can be applied to the whole of postwar history. The size of the current trade deficits are unprecedented and unfortunately due to the size of the US economy difficult to finance. It is also not true that only the US has financed everybody else or that it has been a leader in free trade. I have a suspicion that some of the deficit can be explained by high rates of immigration bringing substantial amounts of capital with them (that might explain how my own nation Australia has survived so long with such large current account deficits). None the less the point about Marshall and the benefits to the world of the increasing US openness are well taken. And Asian mercantilism is definitely a problem. I think we are coming to the stage where the world currency and financial are deeply in need of review. We need a way to pressure countries to react to surplices as well as deficits and to stop the destabilising influences of hot money. Contrary to what many libertarians would have you believe, the capitalist system is BASED on regulations and their enforcement (Private Property rights, contract laws and financial regulation).

Anonymous said...

I'm a liberal and I don't feel indignant about this at all. The economy is a highly non-linear system. There are no a priori reasons why the only way to help the impoverished is to throw money at them. Getting them into factories, ensuring that they have work to do, giving them disposable incoming are all parts of how this can be done.

And I do take issue with you that
urging Americans to spend less is somehow against modernity. If the consumer spends less and saves more, they would have more of a nest-egg to give to their better-educated sons and daughters. This is the only way to make a new generation of American entrepenuers. As the example of Bill Gates shows, the billionaires come from the middle-class!

Rephrasing Orwell, I would say: "If there is hope, it lies with the middle-class."

Ian said...

Some parallel thoughts over at the New York Times Magazine this weekend: "Our Currency, Your Problem" (Why Asian banks finance the U.S. way of life.)

And “The Chinese Century”, written by Dana Blankenhorn, a Fictional-Non-Fiction (ala Tom Clancy), ripped from today's headlines when China says no to a Strong Dollar policy.

TLS said...

I am reminded of the old saying - if I owe you ten thousand dollars, you own me. If I owe you ten million, I own you.

I suppose all this debt shows yet another interdependency of the various world powers.

Willey Nelson said...

Hearing the story of the past 60 years told that way, I agree, is something we will be hearing more of in the short term future. Funny how that gets ignored in peoples daily Wal-Mart bashing. I wonder though, what are the catalysts for change in this story? What will force world leader's hands and stop them from holding up US debt? Oil, and energy, perhaps a region that absolutely refuses to let themselves be bootstrapped into the middle class?

Mark said...

The problem with Walmart is the downward pressure on wages in this country, not the importation of cheep goods from oversees.

Anonymous said...

Relatively FEW people attack Wal-Mart simply because they sell cheap imported goods. In fact, that may be a kind of straw man attack.

A lot of folks in my area (Portland, OR suburbs) are ticked at Wal-Mart for trying to put stores in entirely inappropriate areas.

One proposed site is literally just down the road from my home, at the interesection of two two-lane country roads. The area is ALREADY congested, thanks to the large number of new homes and apartments going up in the area. It sometimes takes five minutes to get through this intersection. Putting a Wal-Mart on one of the corners would plug things up no end.

It's not as though there's a screaming need for more "big box" retail in the area. Within a mile and a half of this intersection is a Target, a Bi-Mart (local Wal-Mart clone, employee owned), a Lowes, a Home Depot, an Office Depot, three major supermarkets, a Fred Meyer (think Target with a supermarket), two pet superstores, a Marshalls . . . there may be more that don't come to mind because they are not the kind of places at which I shop, but that gives you an idea.

Stefan

Anonymous said...

I wish that the author would list a "table of contents" for this essay letting us know if there is eventually going to be a point to all of this. This last post sounded like a really cheap commercial (buy! buy! buy! for Uncle Sam!) ; didn't most of us get pissed off that this was the best the Bush Administration could come up with? Short version, author: Put up or Shut up and start practicing science. Propose a hypothesis and let's test it and submit it to peer review.; otherwise you're just another incanter and you'll end up snoozing in a tree like that last one.

Jon

Willey Nelson said...

Jon,
I can understand what your saying, we all would like the world to get itself figured out Now, instead of later. But seriously, you gotta respect the man and give him time to put together the quality thought such as he has thusfar. Rome wasn't built in a day, and all that... Really this type of information exchange only really works if everyone is patient, and takes it as it comes.

David Brin said...

A.R.Yngve said: And despite Plato losing every major battle, the old bastard just won't admit defeat...

Well, I beg to differ. Plato has almost completely controlled Western thought, including all the rationalizations made by elites to excuse their secretive dominance over others. WE are the underdogs, opposing that 2500 year platonist momentum against democracy, pragmatism and enlightenment.

(Actually, I see his main opponent as Pericles. But Aristotle had his moments.)

Anonymous said...I'm a liberal and I don't feel indignant about this at all. The economy is a highly non-linear system. There are no a priori reasons why the only way to help the impoverished is to throw money at them. Getting them into factories, ensuring that they have work to do, giving them disposable incoming are all parts of how this can be done.

But you are a MODERNIST liberal! The romantic left is totally illogical in its hatred of globalization, the main force bringing infrastructure, schools, water pipes and (eventually) labor and environmental laws, to much of the 3rd world.

And I am NOT saying that Americans should not behave more sensibly. Personally I dislike Walmart (ooops, China Depot) and I wish Americans would save more and spend less... and especially be more careful ecologically. What I am saying is that of all the world's immature behaviors, our spending spree has had more silver linings than any other.

Anonymous said...I wish that the author would list a "table of contents" for this essay letting us know if there is eventually going to be a point to all of this.

Oh bugger off ;-) This is a blog (!) wherein I am testing bits and pieces under fire, living by my code of CITOKATE. I will get to the point. Eventually. Meanwhile, if I throw a few grenades to provoke side discussions... nu? In the blogosphere this is a BAD thing?

Patience friend. I got a zillion other irons in the fire. I am lucky to be able to dive in once a week and sometimes current events matter to me more than the languid pace of theorizing about plato-vs-Franklin... or antimodernists vs our future...

Anonymous said...

David Brin said: What I am saying is that of all the world's immature behaviors, our spending spree has had more silver linings than any other.

Thanks for clarifying that. This line does have a ironic yet trollish tenor good for a signature somewhere. Can I quote you on this? I'm being very serious here.

Nate said...

This is true, though it'd be nice if we'd work at skipping the whole exploited and polluting phase. It shouldn't be that hard, sayeth the guy sitting behind the keyboard.

I was wondering, though, if Dr. Brin had seen some of the stuff about The End of Poverty, a book by Jeffrey Sachs, which was quoted in Time. There's more on it and a bunch of links here. Also here, the UN Millenium project.

I'd like him to be right, but I doubt it's that simple. But even if it's not, it'd probably be worth doing, I'd think.

Yeah, it's kinda a threadjack, sorry about that.

Anonymous said...

"it'd be nice if we'd work at skipping the whole exploited and polluting phase"

Check out:

http://www.worldchanging.com

They cover a whole lot of neat stuff, but one major theme is "leapfrogging." That is, encouraging Third World development with carefully selected bits of *high* technology. Countries which DON'T have a huge investment in a petroleum refining and distribution infrastructure, and no national existing grid, might find it cheaper to go straight to local wind and solar power.

Stefan

Jon said...

Willey Nelson said...

"...But seriously, you gotta respect the man and give him time to put together the quality thought such as he has thusfar... Really this type of information exchange only really works if everyone is patient, and takes it as it comes."

Good point. I shouldn't post when It's late, and I'm cranky and irritated. I specifically disagreed with the folowing statements:

"But the irony is that only people who are relatively satiated can indulge in empathy and feel the pain of others, for whom satiation is but a dream."

I disagree; I've seen immense sympathy among the impoverished, and
immense callousness from the well-off. I think of the story about the rich man who didn't donate to charity untill he stood outside in the cold to feel a little of what they felt.

and:

"Let me reiterate this point. Far outweighing all "aid" the world ever saw, the greatest force for good in the world has consisted of Americans purchasing megatons of crap we never had to buy in the first place, under trade rules designed to favor those thousand of foreign factories."

This sounds like the world according to Ayn Rand. Greed is good. Humanism is weak. Obey the market, Buy for Uncle Sam, etc.

David Brin said...

"Oh bugger off ;-)"

Fair enough; I deserved that.

"Meanwhile, if I throw a few grenades to provoke side discussions... nu? In the blogosphere this is a BAD thing? "

Lantsman, Hok mir nit kayn chainik.

(ah, I've been waiting to use THAT phrase for awhile.)

"Patience friend. I got a zillion other irons in the fire. I am lucky to be able to dive in once a week and sometimes current events matter to me more than the languid pace of theorizing about plato-vs-Franklin... or antimodernists vs our future..."

I thought that a blog was supposed to be about current events for the most part.

As for a zillion irons in the fire, that's what the Kiln People are for.

I recommend 'bots.

(Last note; I've been trying to organize various ecumenical events/conferences on my campus. "The Life Eaters" made it look (comparitively) easy. Grumble.)

Jon

Tony Fisk said...

Jon,

Brin isn't saying that the spending spree was/is a good thing, just that some unintentional good has come of it.

Also note his point about it occurring '..under trade rules designed to favor those thousand of foreign factories.'

How does this compare with the furore over World Trade Agreements?
I don't pretend to understand the issues fully, but can see that it has raised a lot of passion, which seems to stem from a fear of local disenfranchisement.

Nate said...

Stefan said:

"Check out:

http://www.worldchanging.com

They cover a whole lot of neat stuff, but one major theme is "leapfrogging." That is, encouraging Third World development with carefully selected bits of *high* technology."

That's exactly what I was thinking of, thanks. I've bookmarked the site already.


As for what the bit about what blogs are supposed to be about, I think they're supposed to be about whatever people want them to be. Journals, commentary, writing, or pictures of cats. :)

One thing though, interesitng as all this is, I'm wondering what kinds of things we can do to improve the way things are going. Solutions, that we can implement. I've kinda given up on the "Writing to Senators" thing, because neither of mine have listened to a single thing I've contacted them about, in years.

Anonymous said...

My Senators and Reps get back to me, and when they stop representing me, I'll bote em out. In the meantime, I'm signing various moveon.org, trumajority.org, and other petitions, (such as ones at "the petition site") and I'm using care2.com to personalize email and advertise my favorite causes. I figure that when enough people band together and send a message that says, "Change your ways or we'll buy from your competiton and vote you out of office" that corporations and officials have to listen. The audience/customer/voter ultmiately decides.

Jon

Tim Swanson said...

I myself am facing similar “imbalances.” My trade deficit with the local pizza parlor is staggering: for all the pizzas I have purchased over the past year, they have not purchased a single good from me. I have tried increasing my savings rate and making sure that I don’t run a deficit, but nothing seems to work. Perhaps the only solution is for some third-party to make it more difficult for me to purchase pizzas. Via: http://analysis.typepad.com/analysis/2005/03/trade_deficit_n.html

Check out this one too: http://blog.lewrockwell.com/lewrw/archives/002468.html

Anonymous said...

Not sure that I agree that our spending has really brought the world up as you make claim. Granted, it's had great effect for small segments of individuals - bankers, CEOs, and the already affluent/upper classes in those developing nations.

I've been part of several outsourcing deals and the invididuals that I met and worked with, that profited from our exporting, were all upper crust, and I was shocked to discover that some things that I thought were relics of history, like the caste system, were still very much in effect. People are getting rich, but there is still widescale poverty in China and India.

Rob Sperry said...

First let me gush complementary, that was fantastic, its wonderful to see sensible understanding and analysis!

I ain't much a good writer ... so this is a weird project to give myself ... but I want to resell what I think was Brin's basic message in my own wacky terms. Humor me please.

In America we have known (in some broad metaphorical sense that countries know things) for the last few hundred years how to do business, be productive, improve our productivity and create technology i.e we have had a largely capitalist economy. The question is how do you go from a substance economy like India and China to a modern technology-market driven economy? Note that the communism that China tried and the socialism that India tried were abject failures.

What we are trading China for all those goods we buy is basically a compressed education in how to create a market driven economy that doesn't take a two hundred years. China becomes focused on learning the skills of manufacturing, then product creation in a market by meeting the demands of our market (i.e. our people). We get lots of stuff. We enjoy getting lots of stuff. Once they learn these skills they can then transfer some of their effort from making us stuff, to making themselves stuff in what is a continuous process that improves their standard of living. During this time we don't as people fret go back to becoming subsistence farmers, but move on to learning new things in a way that is a bit scary because no one ever quite knows what those things will be down the link. But so far it has all seemed to work out, and we still seem to be improving our productivity at a nice clip.

Think about it this way for the last several decades people have been sending us more stuff than we send them, while we send them more paper and bits called dollars. Sometimes they store the extra dollars in banks sometimes they trade them in for other paper called bonds or titles to some property. But we get the stuff and still get to use the property (in exchange for more paper). But what we know based on the trade deficits or current accounts deficit is that we have continuously had an inflow of more stuff (as valued by dollars!) then we have sent the rest of the world. Why would they ever accept such a deal? Not just for a year or a decade, but for decades!

What I truly don't understand is how so many people look at this situation and moan that we (the USA) are getting the short end of the stick. Does anyone want to send me stuff for the next 60 years in exchange for me sending them IOU bits? Of coarse not! Thats crazy! But what if you were a substance farmer, and you had no idea how to get out of that cycle, but you decided that you really wanted to. Now you can accept the same deal, but something I didn't mention is that I will teach you how to get out of that cycle and the whole time we interact you will be progressively living a better life. Now failure to accept the deal would be irrational. But many would do so out of spite just because they I have told them they would be giving me more stuff than I gave them.

Some people fret about savings. Savings as such are irrelevant on the national level . There is nothing that you are going to physically set aside that will be helpful to you in 30 years. What matters is improving the productivity and technology of the people that are going to be around in 30 years to help you live. Now granted to do that investment often involves setting aside income from current consumption to activities focused on productivity and technology. But that can come just as much from buying a stock as sending yourself to get better educated. And it doesn't much matter if that capital to do the improvement came from within a line on the map called a country or outside.

Now what happens when this process has been applied to the whole world lifting it out of subsistence and there is no one left that needs an education? What happens to the accumulated trillions of IOU's? I have no idea. None Nil Nada. I am not sure anyone does, or that anyone really needs to. What I do believe is that we are decades and billions of people away from that time. If I had to venture a guess it would be the effect of compound growth and technological development will make those trillions of IOU's seem like a minor dislocation. Probably not a good idea to try and trade them all in on the same day though.

Cheers,

P.S If you don't believe me and want to take my deal and send me stuff please contact me so we can work out an arrangement.

Nate said...

Rob Sperry talked about moving on to new technologies and so on, which is how the US economy has kept going. Which is true as far as it goes, the problem is, we're NOT doing that any more.

Most government research funding is going into "applied" research instead of basic research now. Companies are moving R&D over to China and India more and more. Colleges are getting more expensive, so they're out of reach of more and more people. With the economy being as uncertain and variable as it is, lots of people are stuck keeping jobs for health insurance or whatever, and don't go start the new companies taht can capitalize on new tech. And the biggest problem is infrastructure, ours is old and getting older, and we don't have nearly as good broadband, cell phone, or otehr kinds of service as much of Europe and high-tech Asia.

All of these are things we could turn around or overcome, but they require investing in the future, something out politicans lately don't want to do. Especially the ones in office now.

There's some more i this article from the Washington Monthly (which is slightly liberal, but hey).

Nicole Tedesco said...

David,

Lovely piece! I guess I consider it lovely since I not only agree with uspremise but also have been prosteletizing that very point for some time. You know what they say about "great minds!" :-)

However, it would take a physicist to appreciate what else I like to prosteletize--we can look at economies as the entropic conversion of potential energy into kinetic. Available natural resources can be seen to be "under pressure" from the energy imposed by the intent of sentient beings such as individual actor/humans. As long as the pressure holds up, and as long as there are natural resources which contain yet-unconverted potential energy, then the conversion continues. It seems to me that not only have we have gotten more efficient at this energy conversion, but we are witnessing an increasingly powerful feedback loop where this expended energy appears to fuel the knowledge base of all humanity, as well as its dignity, curiosity and thus will to generate more of the same. Let's hope now (I think with more than good reason) that we have reached a critical point at which the global machine is self-sustaining (the strength of the global knowledge base translating into increasing pressure on the natural resources). Am I truly in the right to hope for such?

I opine now we are only limited by -- literally -- the laws of thermodynamics. There is only so much energy that this planet can generate before it simply cannot radiate any more into space. Forget about Industrial-era/chemical global warming for now (heck, even go so far as to assume 100% clean energy) and think about what it will take for us to generate so much extra energy from our activities that we simply heat up because our economy is simply roaring too fast, with so many people, with so much knowledge, dignity and will, and too much simple activity! That is the ultimate limit to our global economy.

Does this reductio ad absurdum do anything for us? Does it provide any additional insight into this discussion? Does it at least provide a different metaphor by which we can approach the problem? (Probably not. Perhaps I'm just ranting.)

Nicole Tedesco

Rick Aucoin said...

I've quoted this essay (with credit given of course) several times. It's a damned well thought out alternative point of view on the suject of deficits and what the U.S. has done for the world post WWII.

Neil Craig said...

The situation is not as unique as you think. In the Victorian age Britain built up the colonial economies (inc the USA) partly by buying from them & partly by annually investing about 6% of GNP in them. This was obviously a drain on Britain's wealth.

I think that example, & the post war non-communist US dominated part of the world (& also the Soviet Empire) show that empires, since the industrial revolution, are a drain on a state not a source of power. For that reason, among others, engaging in free trade with the Chinese is a lot smarter than running Iraq.

David Mercer said...

Anonymous, Bill Gates did NOT come out of the middle class. His father was a multimillionaire lawyer.

wkwillis said...

Dave Mercer
And his mother served on the same board as the CEO of IBM, which is why the biggest computer company in the world had even heard of Bill Gates.

Walter said...

Amend!

Jalf said...

"In fact, the percentage of human beings who live in some degree of comfort and safety, with secure hope that their increasingly educated children will do better, has been rising spectacularly for two generations."

I'd like to to know where you got that from (Now it sounds like I'm implying you're wrong... heh).
I was under the impression that this percentage has been going down, and what's more, that the poor get poorer, the rich get richer (to pulla cliché).
I've never seriously researched this, tried to dig up all the numbers to find the ultimate truth, so I could very well be wrong. It's just what I've always been told, and have always heard/read when I stumbled across anything on the topic. I'd just like to hear if your version has more facts supporting it than mine. ;)

"Let me reiterate this point. Far outweighing all "aid" the world ever saw, the greatest force for good in the world has consisted of Americans purchasing megatons of crap we never had to buy in the first place, under trade rules designed to favor those thousand of foreign factories."
And again, what do you base this on?
I know an awful lot of (American) trade rules favor only America. Admittedly, there's an awful lot of them I've never heard about, and which may in fact favor those "thousands of foreign factories".

Now, I'm not denying that in the case of some countries, you're right (Europe after WW2 is a good example. And no-one can deny that China or Korea are catching up fast either because of the reasons you mentioned).
But what about all the "proper" third-world countries? And what about the absolute numbers? is the US trade overall helping more people outside the US than it's hurting? (If we look at both imports and exports as well as US-enforced restrictions on both)
I was under the impression that the opposite was the case. That yes, while some get richer from selling to the US, far more people get poorer by being restricted from selling to the US (or being allowed, only if they buy raw materials from the US)

Do you have any numbers on this? :)

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