As the world economy continues to flounder, the G20 conference is in full swing. The hope is, of course, that the world leaders will be able to save us from the mess they were unable to prevent.
Oversimplifying things a great deal, the two main strategies that are coming out of the meeting are 1) throw money at the problem and 2) increase regulation. On the side, the Chinese are making a play to weaken the role of the United States in the world economy. Part of this is their suggestion that the US Dollar no longer be used as the foundation of the global economy.
While American businesses are quite happy to have money thrown at them, they are less amenable to regulation. They are most especially against regulation that would allow agencies outside the United States to interfere with their operations.
As far as the money solution goes, the obvious flaw is that the money has to come from somewhere. While governments can keep taking out loans and value can be created by complex financial means, the magic trick can only work for so long. At some point a solid foundation must be found from which the world economies can recover, or not. After all, when you are falling, clouds will only slow you down so much (that is, not at all).
As far as regulation goes, the general idea is a good one. The economy wrecking problems stemmed in part from the fact that the folks minding the store were not, in fact, minding the store. Also, as people have pointed out, many of the economy wrecking antics were perfectly legal (not all, though). Thus, good regulations that are properly enforced would help avoid another such meltdown (when or if the economy recovers). Obviously, the United States is not going to accept outside regulation. While we (like other countries) are happy to meddle with others, we prefer that others not meddle with us.
Of course, given that the world economy is transnational, the idea of world regulations does make some sense. After all, most of the big players are multinational corporations and have used that to their advantage. Effective world wide regulation would help deal with some of the problems. Unfortunately, if such regulation were to be handled like the UN, then it would most likely be ineffective.
I suspect that no country would be willing to give other countries serious regulatory teeth in regards to its own business. As such, any international regulations would probably be fairly toothless.
Ummm, giving the Chinese and say in regulating our economy would be a very bad thing.
I’ll say this again: China is over rated. Only about 3% of their population has access to normal Western technology. They’re advantage lies in their government’s aggressiveness and amorality. And the fact that we let them do pretty much whatever they want because at one time at least, like with Russia, we had hoped that they would adopt a Western style of government and ideology. It didn’t happen.
The economy is a wave-cycle, like everything else in life. There are ups and downs, ebbs and flows. Anti-capitalists sit perched for decades waiting for a two year period where capitalism is struggling, so that they can tell the world that capitalism is the source of all their sorrows. They hedge their bets on people not knowing history very well. They hope people will displace their daily and normal frustrations with life onto the “system” of capitalism.
Many of the problems we have today are because of regulation. Like the laws passed forcing banks to give loans to people who would have trouble paying them back. This is especially true in the housing market.
And there’s nothing all that capitalistic about propping up bad products with government money.
Obama will live or die by the results of his economic plan. If it works, he’ll be here for 8 years. If it doesn’t his career as a celebrity will be shorter than Ralph Maccio’s.
However, he can always fall back on the tried and true tactic of his party: Blame Bush.
I love hearing Capitalism doesn’t work when the problems were mostly caused from people of the same philosophy.