bbzz24

Stagflation and the Limits of Growth

ray,
if you can afford it, please visit dubai or abu dhabi. you will get a handle what incentives there are to produce more of what they are already producing. as i see it: 0. they spend money on anything but productive assets.
same applies to the u.s. as it hardly produces anything else but money.
on the other hand china produces so much consumer goods that if they lose their external market they simply have to cut production and lay off 1/2 their workforce. japan does the same with industrial goods.
there is no balance with regards to those countries and if they dont want to exchange depreciating paper for growth and employment there will be no trade. as of now it is mutually beneficial. if there is no trade between them they have to develop somewhat sustainable policies.
do you see americans working real jobs that require skills and knowledge than just filling out paper documents or real estate agents? do you see japanese using their own machinery becuase there they have competitive advantage? do you see the chinese that barely make enough to feed themselves to just play with ipods and plastic toys?
there is accute need for some balance of domestic investment: develop the sectors you are best at, but dont ditch everything else as it is necessary and use the tax system to redistribute wealth so you are not dependent on the mercy of others.