Towards A Good Samaritan World

Monday, August 21, 2006

THE WORLD ECONOMY IS BOOMING

My latest piece at Tech Central Station, entitled "Don't Look Now, But the World Economy is Booming," got picked up in a number of places in the blogosphere. Philosopher Stone calls it "an interesting read" and likes my distinction between "sweatshop countries" and "non-sweatshop countries." Craig Williams at StaticNoise adds that "there's pain associated with all this good news... for all intents and purposes high paying low-skill jobs are going away [from North America and Western Europe] and there's nothing to be done about that." I'm not sure that's true. A lot of low-skilled jobs, in many services for example, can't be outsourced. Anyway, a growing global economy won't make that worse, but better: if wages rise in other countries, there will be less downward pressure. The pain for Western Europe and North America from world economic growth is in high commodity prices, but we were aware of those already.

I always love getting a "Brothers Judd" link! As usual, they concisely contribute their own insight through a tendentious blog post title: "What the Deficits Buy." Brilliant. An exaggeration, but I do think that America's twin deficits are acting as a demand-side stimulus for the entire world economy, which is a bit risky but probably a good thing (though I'd prefer less of a government deficit).

Sam Koritz grabs a bunch of text, and adds no comments except a blog title post-- "Convergence?"-- and an interesting graphic showing the demographic transition.

BizzyBlog calls my article "reality-based optimism on ending world poverty." Yeah! (And I was the "column of the day.")

I got a link from the Club for Growth. And one from Free Republic, where none of the commenters recognized me as the firebrand immigration advocate they have despised in the past... Also a link from "World Trade Organizations," whatever that is.

This post at Forbes.com links to me but mostly talks about Cuba and Larry Kudlow.

They cut out one section from the article as I submitted it, which was actually the most interesting section from my point of view, though also the most controversial. I argued that the Iraq War, which began at about the same time as the world economic boom, might be part of the reason for the good years since 2003. How so? I gave two reasons: 1) business investors apparently thought the war would be worse than it turned out, considering that there was a boom in business investment starting immediately after April 2003-- this contradicts the phoney-baloney conventional wisdom that no one thought the Iraq War would be this bad-- and 2) the Iraq War showed that totalitarian dictators who wreck their countries' economies can be overthrown to the delight of the subject populations, however since nobody's talking about regime change in China, it seems like authoritarian regimes can get off the hook for not being democratic if they manage their countries' economies well. So the Iraq War created a new incentive for authoritarian leaders to try to survive by fostering economic growth, rather than by honing their repressive apparatuses. Brothers Judd would really have loved the article if that had been in there! But it is admittedly a bit speculative. I might not have gotten the "reality-based" plaudit from BizzyBlog.

1 Comments:

  • I think you missed one obvious reason for world-wide growth, and that is the development and spread of the internet. It's about as revolutionary as the printing press, and a very large percentage of business transactions can be done instantaneously nowadays, whereas before there was significant time-overhead. Heck, just look at the dot-com bubble. That whole period in the '90s may have been a little optimistic, but can you really blame investors? As developing countries get more and more connected to the interent, world-wide growth will explode.

    By Blogger Thomas Reasoner, at 2:31 PM  

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