Who have been the biggest beneficiaries of the Asian mercantilism policies?
How have they contributed to the job growth and the income growth in the broader context of economic development? If they did so during the early stages of industrialization, how about in the late phases of industrialization?
There is ample literature on its positive aspects and effects (e.g., how it has helped some Asian countries build their manufacturing foundation).
Yet, it may have screwed its own entrepreneurs.
Further, one needs to factor in the political eoonomy issue, of course.
Friday, July 30, 2010
Thursday, July 29, 2010
Emerging Middle Class and Bubbles in China
If one looks at what has been going on in China since the 1990s in terms of technology capacity building and emerging middle class coupled with bubbles, s/he can’t help but notice some parallels between China and Korea (even Japan to some extent) (e.g., development trajectories and bad loans).
China needed the means of production, so they have invested in it accordingly. This has made China see the largest emerging middle class. And yet, their credit/property bubbles are bound to deleverage. They have also engaged in monetization. What effects would these policy actions have on their emerging middle class?
Of course, China is a communist country after all.
China needed the means of production, so they have invested in it accordingly. This has made China see the largest emerging middle class. And yet, their credit/property bubbles are bound to deleverage. They have also engaged in monetization. What effects would these policy actions have on their emerging middle class?
Of course, China is a communist country after all.
Wednesday, July 28, 2010
The Role of Government at a Major Inflection Point
Some argue that we are at one of major inflection points in history. Then, what would be the purpose for any government in this situation? Perhaps the ultimate role would be to protect the public’s lives and liberties.
Some governments are playing the long game.
As I said on numerous occasions, global forces are no excuses for the policy errors.
We have to use history as guidance.
We also have to ask what type of nation it wishes to be.
Some governments are playing the long game.
As I said on numerous occasions, global forces are no excuses for the policy errors.
We have to use history as guidance.
We also have to ask what type of nation it wishes to be.
Tuesday, July 27, 2010
The Fallacy of Globalization
I’ve written several pieces on globalization.
Globalization has painted quite a different picture across the globe. Two major factors have driven globalization: wage arbitrage and high levels of international capital flows.
The fuel for Korea’s economic engine had been manufacturing and innovation. The 1997 financial crisis largely caused by overleveraged chaebols which had pursued globalization was one of major inflection points for the Korean economy as Korea got exposed to external global forces to a significant degree.
Globalization has been one of the underlying forces behind worldwide economic slowdown. For a number of countries, it has impeded wealth producing growth, blowing bubbles.
Yet, again, global forces are no excuses for domestic policy errors. Policy tools should be backed by morality.
We need to reconsider globalization and its scope and impact on policy actions before it is too late.
Globalization has painted quite a different picture across the globe. Two major factors have driven globalization: wage arbitrage and high levels of international capital flows.
The fuel for Korea’s economic engine had been manufacturing and innovation. The 1997 financial crisis largely caused by overleveraged chaebols which had pursued globalization was one of major inflection points for the Korean economy as Korea got exposed to external global forces to a significant degree.
Globalization has been one of the underlying forces behind worldwide economic slowdown. For a number of countries, it has impeded wealth producing growth, blowing bubbles.
Yet, again, global forces are no excuses for domestic policy errors. Policy tools should be backed by morality.
We need to reconsider globalization and its scope and impact on policy actions before it is too late.
Monday, July 26, 2010
Housing Bubbles and Their Consequences Worldwide
China is facing huge property bubbles. So are some other Asian countries. It is no surprising to see the similarities between U.S.-Europe of 2007-2008 and China/Asia now. Some Asian countries are tightening.
If one wants to know what would happen when this storm arrives, take a look at the U.S. of 2006-2008 and the Europe of 2009-2010. The cycle seems to continue.
Who is responsible for these bubbles?
They have been destructive forces of an economy.
Deleveraging is a good thing, yet, the general populace would seem to suffer most through this deleveraging process.
If one wants to know what would happen when this storm arrives, take a look at the U.S. of 2006-2008 and the Europe of 2009-2010. The cycle seems to continue.
Who is responsible for these bubbles?
They have been destructive forces of an economy.
Deleveraging is a good thing, yet, the general populace would seem to suffer most through this deleveraging process.
Friday, July 23, 2010
The Role of Innovation in Economic/Political/Social Wellbeing of a Nation
The role of innovation is often considered in the context of economic and technological development. Yet, it should be probed in the broader context of political and social wellbeing as well.
A number of nations are experiencing similar trends such as the continued erosion of the middle class, the loss of manufacturing jobs, and stagnant incomes, which point to a deterioration of economic and social wellbeing.
The decline of SMEs which hold up a large portion of an economy and increased unequal income distributions are associated with not only economic indicators such as living standards but also social wellbeing indicators like crime levels.
Along with financial reform and other necessary measures to bring back balance to the economy, industrial production and innovation which will spur the job/income growth are key drivers of economic recovery. Any policy interventions should be crafted in this framework.
In the case of U.S., new startups were the drivers for jobs. Unfortunately, entrepreneurial investment has been replaced by financial engineering (e.g., unfathomable derivatives).
Japan had a strong manufacturing based economy, but they squandered their world-class assets through bad debt and insolvent Kereitsu.
Korea had a chance to undertake a fundamental restructuring of its economy toward a solid innovation and production-based economy in the wake of the 1997 financial crisis.
The cases of the U.S., Japan and Korea show the importance of innovation and industrial production in the overall health of a nation. It may well prove that they are vital to sovereignty.
A number of nations are experiencing similar trends such as the continued erosion of the middle class, the loss of manufacturing jobs, and stagnant incomes, which point to a deterioration of economic and social wellbeing.
The decline of SMEs which hold up a large portion of an economy and increased unequal income distributions are associated with not only economic indicators such as living standards but also social wellbeing indicators like crime levels.
Along with financial reform and other necessary measures to bring back balance to the economy, industrial production and innovation which will spur the job/income growth are key drivers of economic recovery. Any policy interventions should be crafted in this framework.
In the case of U.S., new startups were the drivers for jobs. Unfortunately, entrepreneurial investment has been replaced by financial engineering (e.g., unfathomable derivatives).
Japan had a strong manufacturing based economy, but they squandered their world-class assets through bad debt and insolvent Kereitsu.
Korea had a chance to undertake a fundamental restructuring of its economy toward a solid innovation and production-based economy in the wake of the 1997 financial crisis.
The cases of the U.S., Japan and Korea show the importance of innovation and industrial production in the overall health of a nation. It may well prove that they are vital to sovereignty.
Thursday, July 22, 2010
China Blames the U.S. for Being Insolvent and Facing Bankruptcy
As we all understand, there are two opposite views on China. Some argue it is headed for a collapse. Others contend the U.S. is in much worse shape than China. Time will tell.
From Jesse’s:
China is not the only country that resents the devastating frauds that the US has perpetrated on not only its own people but the rest of the world through its Wall Street banks and ratings agencies.
Most Americans overlook this developing estrangement that is beginning to isolate the US and UK from even their traditional allies in Europe and South America and Asia. This is a serious error, but so typical of the short term mentality dominated by greed, dishonesty, and self-delusion that captured the American psyche in the latter part of The New American Century. But what choice does Europe have except to take what the Anglo-Americans serve them. Take it or leave it. And ain't currency war hell?
It never pays to have a 'checkerboard mentality' when your opponent is playing Go."
http://jessescrossroadscafe.blogspot.com/2010/07/china-us-is-insolvent-and-faces.html
From Jesse’s:
China is not the only country that resents the devastating frauds that the US has perpetrated on not only its own people but the rest of the world through its Wall Street banks and ratings agencies.
Most Americans overlook this developing estrangement that is beginning to isolate the US and UK from even their traditional allies in Europe and South America and Asia. This is a serious error, but so typical of the short term mentality dominated by greed, dishonesty, and self-delusion that captured the American psyche in the latter part of The New American Century. But what choice does Europe have except to take what the Anglo-Americans serve them. Take it or leave it. And ain't currency war hell?
It never pays to have a 'checkerboard mentality' when your opponent is playing Go."
http://jessescrossroadscafe.blogspot.com/2010/07/china-us-is-insolvent-and-faces.html
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