Informative article. I'd take issue with several comments
- Economic growth after the Depression resumed in the early 1930s. It is true that aggregate levels of GDP did not recover until WWII, but economic recovery was advancing well before that.
domestic development is preempted by global trade, even in the rich economies,
This is not only a false dichotomy, but its also false. First, the two are not incongruous. In almost all emerging domestic economies, demand is not wide or deep enough to develop at a country's maximum output. Trade is a requirement for development to do so. This is true even for China. Second, global trade negotiations have moved in fits and starts. And in reality, most international trade is duty free, unlike 100 years ago when tariffs were one if not the main source of government revenues.
Since the end of the Cold War some 15 years ago, world economic growth has shifted to rely exclusively on globalized neo-liberal trade engineered and led by the US as the sole remaining superpower, financed with the US dollar as the main reserve currency for trade and anchored by the huge US consumer market made possible by the high wages of US workers. This growth has been sustained by knocking down national tariffs everywhere around the world through supranational institutions such as the World Trade Organization (WTO), and financed by a deregulated foreign-exchange market working in concert with a global central-banking regime independent of local political pressure, lorded over by the supranational Bank of International Settlement (BIS) and the International Monetary Fund (IMF).
This is again is somewhat false and is certainly misleading on several counts. It leaves the impression that the last 15 years have seen great reductions in trade barriers. In fact, the greatest reduction in tariffs and restrictions on trade occurred in the 15 years after WWII. Also, growth has not exclusively been driven by international trade, though it has been certainly a factor. In the US, growth has been driven by what it always has been driven - the internal dynamic of the US economy. Trade accounts for somehere around 10-15% of the US economy. Compare that to Europe which has seen stagnant demand and growth has been averaging 1-2% the last 10-15 years. If it hadn't been for trade, European growth would have been lower.
-Trade disputes occurred long before 9/11 and the US's status as a sole superpower and will occur in the future.
Two decades of neo-liberal globalized trade have widened income and wealth disparity within and between nations. Free trade has turned out not to be the win-win game promised by neo-liberals. It is very much a win-lose game, with heads, the rich economies win, and tails, the poor economies lose.
What the hell is this guy talking about? Over the past two decades, Asia has seen tremendous growth, far, far faster than in America or Europe. That growth has and continues to lift hundreds of millions of people out of abject poverty in that part of the world.
Domestic development has been marginalized as a hapless victim of foreign trade,
Trade has been the driving force of development in Asia. Thus, this is wrong.
dependent on trade surplus for capital.
No kidding. In many developing economies, countries run current account (trade) surpluses to fund capital account deficits. Thats been happening for hundreds of years.
Foreign trade and foreign investment have become the prerequisite engines for domestic development.
You mean like in Asia? Plus there's a big, big difference between foreign trade and foreign investment in the dynamics they play in development.
This trade model condemns those economies with trade deficits to perpetual underdevelopment. Because of dollar hegemony, all foreign investment goes only to the export sector where US dollars can be earned. Even the economies with trade surpluses cannot use their dollar trade earnings for domestic development, as they are forced to hold huge dollar reserves to support the exchange rate of their currencies.
This is wrong on many levels. First, it makes zero sense to say that countries running trade deficits are prone to perpetual underdevelopment when the biggest, richest, fastest growing developed nation on the planet has been running a trade deficit for three decades. Next, in developing countries that run trade deficits, the currency should be allowed to make their exports cheaper. That's why we have floating exchage rates. Finally, economies with trade surpluses do not have to hold dollars in reserves to "support" their exchange rate, unless "support" means keeping the value of it down, not up, like what is occurring in China today. All other things being equal, a rising trade surplus will mean a rising currency and vice-versa.
In the fifth WTO ministerial conference held in Cancun, Mexico, in September 2003, the richer countries rejected the demands of poorer nations for radical reform of agricultural subsidies that have decimated Third World agriculture. Failure to get the Doha Round back on track after the collapse of Cancun runs the danger of a global resurgence of protectionism, with the US leading the way. Larry Elliott reported on October 13, 2003, in The Guardian on the failed 2003 Cancun ministerial meeting: "The language of globalization is all about democracy, free trade and sharing the benefits of technological advance. The reality is about rule by elites, mercantilism and selfishness." Elliot noted that the process is full of paradoxes: why is it that in a world where human capital is supposed to be the new wealth of nations, labor is treated with such contempt?
I have to point this out because I strongly agree with this statement. The West is shutting out the product that the poorest countries have the biggest competitive advantage - agriculture. If you Lefties want to help the poorest, the best way to do so would be to lobby to stop the subsidies of agriculture in the west. But its important to understand that "the elites" the author talks about isn't Bay Street or Wall Street in this case, its the protected industries - and their workers - within the rich countries. It is the protection of those workers through the political process which is driving this policy.
Many developing countries have gained relatively little from increased manufactures trade, with most of the profit going to foreign capital.
This is false. There have been several economic studies saying otherwise.
Market access for their most competitive manufactured export, such as textiles and apparel, remains highly restricted, and recent trade disputes threaten further restrictions.
But this is true. Shame on the West.
Price arbitrage is the opposite of wage arbitrage in that producers seek to make their goods in the lowest wage locations and to sell their goods in the highest price markets.
No its not. Its the same. Wage arbitrage will gravitate towards labour productivity and wages will rise or fall in accordance with that productivity. This is why there has been a rapid increase in wages in China. Also, it fails to take into account other economic policies such as capital restrictions, foreign exchange policy, etc.
-The reason why Bretton Woods fell is because it was unstable. There is an axiom in economics - you can control the price of something, you can control the supply of something, but you cannot control both. Bretton Woods was an artificial system in that it tried to control both the supply and price of money, which lead to distortions in the real economy through inflation and capital mis-allocation. The author says the system was based on the gold system. That is only nominally true as you could not actually exchange fiat currency for gold as you can in a true gold system.
I'm going to stop there. I'm getting bored as I'm sure you are too.
