The U.S. Economy and Its Future Transformation

Published in Lianhe Zaobao
(Singapore) on 4 Mar 2009
by Zheng Weiyun (link to originallink to original)
Translated from by Edward Seah. Edited by Katy Burtner.
The economic crisis that broke out in 2007 has now implicated the physical economy, triggering the worst global recession since the Great Depression in the 1930's. The U.S. economic growth in the last quarter of 2008 was -6.2 percent, the worst in 26 years, and it had also affected the developed economies of places like Europe and Japan. While the Obama administration's economic bailout package has started up the currency printing machines, the federal government has also thus far run up a debt of over $10 trillion, which is equivalent to $38,000 per capita, due to massive borrowing.

Criticisms of the American institutions by newspaper commentaries can often be seen during the economic crisis, some of which include criticisms on Americans' excessive spending, the government's unrestrained borrowing, as well as comments saying that the U.S. dollar will inflate and depreciate due to excessive distribution. Some critics have even described the dollar as a “black hole for global capitals.” Though this description is not without some truth, it is still worth further examination.

American consumerism had once brought about benefits

If we were to look at the greatest economy, the U.S. economy's performance has been the best in the world since the second World War. The Anglo-Saxon model that the U.S. introduced had been more efficient than any other kind of model. For instance, unemployment rate in the U.S. could usually stay within four percent to six percent during the 90's, whereas in the Euro-zone during the same period it was seven percent and above, and its actual economic growth was also lower than that of the U.S.

For a long time, the American consumers have been the main impetus behind the world economic growth. The reason Europe and Japan were able to recover rapidly after World War II was, besides receiving aid from the U.S., that the U.S. opened up its market to these countries.

The Four Asian Dragons subsequently modeled themselves after this developmental model and developed an economy that was oriented toward exporting to or servicing developed countries, and they became developed economies. China's economy has also relied mainly on export in the last 30 years since its reform and has only started turning its attention to its domestic needs recently.

Some of the main reasons that the Axis started the war all those years ago were, among others, raw materials and markets. The issue was resolved when the U.S. opened its economy to the world. Large-scale conventional wars have since disappeared, and there emerged the U.S.-led post-war Pax Americana which has lasted till this day.

In other words, nearly 60 years of American consumerism has helped countless people out of poverty and has aided an autocratic country's opening up and reform. The U.S., however, was not simply benefiting others exclusively. Former Federal Reserve chairman Alan Greenspan mentioned in his book that when a market becomes dominant, Communist control would be weakened. Such an evolution of peace has undoubtedly been very successful.

China ultimately became a responsible superpower as a result of developing its market economy and weakening its autocracy, and that had certainly suited U.S. interests. Moreover, the U.S. could easily procure a large amount of low-priced products through trading with China.

China's profit is greater than its loss

However, it was not the case that the American elites did not realize that opening up its market meant the loss of a concentrated labor force, such as the manufacturing industry. For instance, if we factor in all the benefits, the lowest wage in the U.S. presently is still more than 10 times above that in China. Multinational corporations, in their pursuit for profit, would definitely shift their production to countries that required lower production capital. The hi-tech and service sectors that the U.S. relies on, however, are not enough to make up for the loss of wealth created by the loss of the manufacturing sector, thus resulting in a structural trade deficit.

At the same time, the U.S. did consider protectionism. While protectionism could indeed solve the problem mentioned above, the world's wealth has also shrunken greatly because it went against David Ricardo's comparative advantage theory. And so, there could be nothing left of the fruits of the post-war peace and prosperity.

The external demand economies have also abetted the said situation by buying the U.S. treasury bonds in large amounts and driving down their own currencies' exchange rates. Many countries, especially China, have been braving the dangers of trade wars and throwing money into the black hole for capitals. This is like a strange situation where the shop owner wants to sell his products off cheaply, yet the customer demands a raise in the price.

The reason for this is that there is much more benefit than loss for China under this institution. The shifting of the world's production to China has driven down the unemployment rates and has brought about the upgrading of corporate technology and management. More importantly, it sped up the urbanization of the population, expanded productivity, and increased the wealth of the society. This is also a prerequisite for political democratization.

The U.S. government tried to resolve the economic crisis through spending as it has always done. Its first package was worth up to $787 billion. According to the laws of economy, this would surely trigger a serious inflation and the depreciation of the currency and will greatly damage the world economy.

The U.S. dollar, however, has so far risen 19 percent compared to the previous year. One of the main reasons was that, since last August, China has sped up buying U.S. treasury bonds, buying them at an average of $20 billion every month. In the whole of 2008, the U.S. treasury bonds that China had bought had increased by 46 percent, reaching a historical new height.

When we consider the fact that partial indebtedness would surely cause the U.S. to leave the inflation to fluctuate, such a move was no different from an exchanging of gifts, a mutual economic aid to the U.S ... The U.S. and China are actually economic allies in fact, but not in name.

Of course, the Anglo-Saxon model that was introduced by the U.S. is not flawless. Market economy theories like that of Adam Smith's, as well as the “Invisible Hand,” were not sufficient to regulate the financial institutions. The cause of this crisis was also brought about by inadequacy in monitoring financial institutions. That said, we would still have to give our affirmation to the superiority of the overall market economy institution.

Though the concept of American consumers driving the global economy is getting old and becoming unsustainable, it has been in force successfully for the past 60 years and had solved the poverty problem for many countries. The more developed economies in East Asia and the 1.3 billion population in China have especially benefited much from it. Perhaps critics should not be passing unfair judgment during a crisis while benefiting from the U.S. economy at the same time.


美国经贸与未来转变

2007年美国爆发的金融危机现在已经波及实体经济,引发自上世纪30年代大萧条以来最严重的全球性衰退。2008年美国第四季经济成长达负 6.2%,是26年来最糟,也殃及欧洲日本等发达经济体。奥巴马政府经济拯救配套除开动印钞机,另外联邦政府也因大量举债,迄今已总负债愈十万亿,相等于人均3万8000美元。

  经济危机中,报章上的专论文章经常能看到对美国体制的批评。其中包括美国人过度消费,政府放任举债,美元将因滥发而通胀贬值,更有甚者把它形容成“全球资金的黑洞”,虽然并非全无道理,却值得进一步审视。

美国的消费曾带来好处

  若以大经济体看,美国经济从二战以来是世界上表现得最好的。美国所推行的盎格鲁-撒克逊模式比任何一种模式更加高效。如美国失业率在上世纪90年来经常可以维持在4至6%,同期欧元区是7%以上,实际经济成长也要低于美国。

  长久以来,美国消费者一直都是拉动世界经济成长的主要动力。二战后欧洲和日本能够迅速恢复,除美援外就是美国对这些国家的开放市场。

  这个发展模式后来亚洲四小龙效仿,发展向发达国家出口或服务为导向的经济,成为发达经济体。而中国改革开放至今30年也主要靠出口带动,最近才开始设法向内需转型。

  当年轴心国发动战争,其中重大原因包括取得原料和市场。这个问题随着美国对世界的经济开放而获得解决。从此大规模常规战争消失,出现了从战后至今美国主导下的和平(PaxAmericana)的太平盛世。

  换句话说,近60年美国人的消费换来无数人民的脱贫,专制国家的开放及转型。美国也并非仅仅惠及他人。美联储前主席格林斯潘在他的书上提到当市场成为主导,共产党控制将被弱化。这个和平演变无疑的做得非常成功。

  中国因发展市场经济,专制弱化,最终成为负责任的大国,自然符合美国利益,更何况可以通过贸易取得大量廉价商品。

中国的得益大过损失

  美国精英也非没有意识到,开放市场意味着劳动力密集如制造业的流失。如现在美国最低工资若把福利算在内也要高过中国10倍以上,跨国企业为追求利润,必将生产转移至低生产成本国家。而美国经济现所倚赖的高科技与服务业并不足以填补制造业流失所造成的财富外流,因而出现结构性的贸易赤字。

  同时美国不是没有考虑过保护主义。的确保护主义能解决上述问题,但世界的财富也因违反李嘉图(David Ricardo)比较优势论而大为缩小,战后和平繁荣成果可能荡然无存。

  外需经济体长期大量采购美国公债,以压低本国货币汇率,也助长了上述局面。不少国家尤其是中国更是顶着贸易战的危险,向资金的黑洞撒钱。这有如店主要贱卖商品,客户却吵着要起价的怪象。

  原因是中国在此制度中所获得的利益大大高过损失。世界的生产向中国转移,缓和了失业率,促进企业技术和管理的提升。更重要的是加速了人口城市化,扩大了生产力,增加了社会上的财富。这也是政治民主化的必要条件。

  危机中,美国政府和往常一样藉消费来解决经济危机。首个配套高达7870亿美元,按照经济学定律,必引发剧烈通胀和货币贬值,对世界经济造成重大伤害。

  但迄今美元兑欧元比起年前涨了19%。重大原因之一是自去年8月以来,中国加快增持美国公债,每月平均增持200亿美元。整个2008年中国买入的美国公债增加了46%,达历史新高。

  考虑到部分债务必会让美国任由通胀涨掉,此举无异于投桃报李,对美国的经济互助。中美实际上是有实无名的经济同盟。

  中国尽了大国的经济责任,换角度看,正是美国对华经济政策的成功,中国改革开放才能在短期内如此深化,从而大大减缓了中美之间因意识形态的对立。

  当然,美国所推行的盎格鲁——撒克逊模式也并非全无缺点,亚当斯密(Adam Smith)、看不见的手(Invisible Hand)等市场经济论,并不足以调节金融机构。这次危机的诱因正也是对金融机构监督不足所致,然而,话虽如此,对市场经济制度总体优越性仍是要给予肯定。

美国消费者拉动全球经济虽然垂垂老矣,无以为继,但毕竟成功运行60年,解决了不少国家的贫穷问题,东亚较先进经济体和中国13亿人民受益尤巨。论者或许不必在获利于美国经济的同时,却又在危机时作出偏颇的论断。
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  1. please note you did not mention the american industrial military complex and its cost to every american, and our wars for profits and resources, and our privatized health care system which is the most expensive in the world.

    we are a bankrupt country due to our spending and refusing to see our decline of wealth which started over 30 years ago with reagan economic policies.

    you also failed to mention the poverty rate in america and our crime rate which is going through the roof.

    our style of capitalism is self destructing just as communism self destructed. both exploits man.

  2. my apology you are correct but I stated those comments for the orginal author of the article.

    few who write these articles understand americans or american politics.

    to be an american and watch your beloved country self destruct is no easy task.

    we were never able to detune our big industrial military complex after world war II.

    now we pay the price.

    our imperialism is so bad in america we have southern states that raise their children to fight in these illegal wars for profits and call their children heros for doing so.

    americans actually think they have a god given right to be a super power even supported by our churches. not exactly in line with jesus teachings.

    iraq and afgan will and has bankrupted america.

    no money for health care but plenty for these wars for profits.