10/09/2012
Using Gross Domestic Product (GDP) as a measure of predictable economic activity is a tricky prophecy at best. The IMF is putting forth a perspective that says "it can't be helped." Their investigation isn't a jump up and say something report and to be honest, the wealthy and politically connected have had this information since the start of summer. What it means at this point is that the prospects for a Mitt Romney cure for what ails America are nil. None of what he proposes will work and everything he recommends to undo will hurt more people that has heretofore been reported and accounted for.
Last week, the IMF stated that this will take ten years to unwind. They did not indicated that it has been unending for four years already. They also failed to mention that in 2008, they predicted that the damage done by the world banks & Wall Street speculators would take twenty years to undo. So, we have a net sixteen more years of this slower economy? Not necessarily, but a lot depends on the U.S. Election. Electing Mitt Romney would be an indication to the world that we accept the IMF prognostication that the situation is hopeless. Electing Barack Obama would tell the world that the Americans have not given up and will be leading the charge on progress with new and innovative thinking that takes the best that the opposition can come up with and adds a twist that makes it doable.
For those who are looking at charts and wondering how it is that the emerging nations GDP can be so robust compared to ours, the key word is 'domestic'. The business we do with each other, not other nations is the real trick. Whereas the nations with the biggest populations have the greatest demand for internal development of new projects, their growth is dependant on the immediate prior investment in infrastructure to effect productivity that caters to the demand. Its simply hard to not consider how the wealthy of America and the West are invested in BRIC nations (Brazil, Russia, India, China) at the expense of their domestic neighbors. That was the original point of offshore bank accounts. Tax havens are another matter for a separate consideration.
Most common people do not understand economics because it is something that they put off considering. If that is you, consider this... Taxing the wealthy takes away resources that can be devoted to foreign investments and makes it available for domestic purposes. Our mature infrastructure needs overhauling but the work needs to be performed by domestic companies and American citizens. If the SCOTUS thinks that it is ok for corporations to be classified as citizens, then those citizens should be taxed for the privilege of being immortal entities. We can't tax God, but we can tax the shareholders and the Administrators who run these organizations. At the moment, the only contribution they are willing to pay for is to purchase politicians who are willing to say anything to get paid by the plutocrats. We should add additional taxes to the cods that specifically designate what the responsibilities of the multinational corporations are.
In the BRIC nations, this kinds of taxation is non-oppositional. The people who run the government and those who run the corporations are one and in the same people. So far, in the United States, the separation of Corporation and State is symbolized by the opposition that the corporations supporting Mitt Romney have towards Barack Obama. That does not mean that no corporations support Barack Obama. It just means that it appears that those do are of a domestic U.S. beneficiary mindset where their allegiance to a national community is more patriotic for less military reasons.
The lesson we should be considering is that we learned in the 1970's. When the oil producing nations formed OPEC and took control of the pricing of energy, we panicked and dumped Jimmy Carter for Ronald Reagan. What did we get for our troubles, what we have now. Total abdication by the more responsible for the mess. A growing gap between the haves and the have nots. Obstinate refusal by the people with the resources to do something about the local social conditions in favor of personal wealth building.
What we have to determine is if there is an alternate course, then we can evaluate the alternative offered. The Mitt Romney plan is ill-defined and doomed from its basic premise. It can only work IF we go to war with another nation or two and even then, only partially so. The Obama plan would work better if there were a second round of stimulus proposed that were large enough to actually stimulate domestic production capacity. Note that this is not the same as stimulating domestic consumption. What I am talking about isn't shovel ready projects, but shovel factory projects that must be designed and erected from the ground up.
Let's just face it. The BRIC economies have great GDP because they have giant domestic populations. If they can service their neighbors and keep American / Western companies out of the game, they will prosper and we will languish. Given the history of the West, it isn't unconscionable for BRIC's less economically sophisticated citizens to have a kind of jaundiced reverse bigotry against the Western nations. This is true even though our most economically savvy citizens are and have been partially bankrolling their development for the past few decades. Now that they have shoes that fit, it is time for them to consider the global implications of the global citizens' and mega corporations' role in war and peace. No, this isn't James Bond drama, it is pure economics given the facts of the issues at hand.
State controlled economies such as some (if not most) of the BRIC nations operate under cannot control every aspect of the economy any better than democratic republics and socialist democracies. This is reflected in the troubles in Europe where the economies are crippled by the lack of markets for GDP. There's that term again. Gigantic Deposits of Production is a alternative definition that applies to this specific explanation of Europe's ills. The local economies of Southern Europe along the Northern Mediterranean coast just don't have GDP because most of their manufacturing were exported to the BRIC and other emerging nations along with that of the United States and Northern Europe with the exception of Germany.
Although this transfer of the ability to generate domesticated productivity created an economic boom in the BRIC nations, it did not create a consumption economy there. The people made things that they had no intentions of consuming because the capacity owners were short-sighted and risk adverse. Those owners were unfamiliar with the vulgarities of the capitalist models they were borrowing elements of from. They stopped short of inputting true entrepreneurship and opted instead for massively centralized corporate control. Thus, they perpetuated poverty and allowed the most capable to create a virtual slave state where labor demand was regulated and peasants were industrialized but not given an equal share of the resulting profits sufficient to entrepreneurialize their domestic conditions. This prompted the plutocrats to pile up inventories, forgo factory repair / maintenance and generally run the business into the ground. Now they have gigantic inventories but only enough employment costs to ship orders. Innovation is on hold and the world suffers while American Republican politicians advocate abdication of educational reforms to find new solutions for emerging markets.
Keep your eyes peeled , but vote your best interests America, VOTE a straight D ticket in 2012 and sort it out in 2014.
The global economy risks skidding toward recession just three years after pulling out of the previous one, the International Monetary Fund warned, adding that fighting a renewed world-wide downturn will be much more complex than it was in 2009.
