Friday, October 9, 2009

Retrospection: Are the American people more capitalist than ..... ?

In April 2008, while the US and world economy were only at the beginning of the current crisis, I wrote the following thoughts, following my participation to an international online discussion forum.

"In effect we are selling ourselves to other nations" wrote a participant from the US in a recent discussion I participated in.

This was my reply (I have added some parts, in blue):

It is not as simple as that. The Americans IMO did not "sell themselves" to other nations, not per se. Most nations have major investments from private or institutional investors. And no non-American can have control of private companies in key areas such as airlines.

The issue IMO is that most Americans are NOT capitalists in practice, although they live in a capitalist country, because most do not (at least directly) own stocks in US "multinationals" or even US companies with mostly US operations and listed in US stock markets. Plus they over-invested in land, which is old capitalism (pre-industrial age) IMO plus they consumer on credit rather than save.

Plus, the US multinationals that have been selling their products an services to other national markets, especially since the 1950s, were bound one day to become "multinational" in ownership too.

In capitalism, what goes around, comes around: The rest of the world learned how to play the capitalist game and now the competition is fierce and Americans are complaining. Like the British are complaining because call centers are being outsourced to India, a former colony whose citizens speak good English BECAUSE they are a former colony! The pendulum goes both ways now.

Now, in globalization, which was a US/UK "invention", letting "non market based" investors invest is not in many analysts' opinion such a good idea, because the investment comes with geopolitical "influence" attached to it. I am not going to mention cases, some very recent, not only in the US but in Europe too. All I am going to say is that the decision to let into the WTO "centrally planned economies" was not IMO such a good idea. It is "unfair" competition. Guess who pressured for that, though, back in 2001!

IMO, the US is suffering from an identity crisis and needs to decide on a model for economic, social etc for the 21st century. It has all the gurus, who even export their theories and philosophies via books and expensive conferences and seminars to many other countries (that is part of the 75% Services US economy). Are these ideas "for export purposes only" (like the "Bon pour l' Orient" French exports of times past)?

All Americans have to do to "buy back" "their" companies and the US bonds is simply come up the money to buy them back via the stock and bonds markets. As simple as ABC! Who has the money to put where his/her mouth is though, these days, though?

And my (somewhat provocative) syllogisms, 18 month ago, concluded with:

One of the key "drivers" that keep the US economy going is the "almost" "eternal confidence of the US consumer" and that is an "asset" not many economies have. Look at the German consumer, for example! That US confidence is worth "gold" and it must be protected/cared for.

Today, October 9, 2009, we can see how the German citizen, via his/her savings, contributed to the re-bounding of the German economy out of recession in Q2. And how the US economy is still struggling, under a new President, via stimulus plan with not so free trade "Buy American" clauses, car scrapping schemes with cash rebates to promote car sales (others have done that too), to get out of recession.

I insist: The US desperately needs a new socio-economic model for competitiveness, growth, employment and happiness. One that is based on real traditional American values but is suitable for the times!

Plus the provocative question, aiming at shocking or (shaking) the still waters in socio-economic thinking and modeling:

Who are more "capitalist" a) The American or b) the Chinese or c) other (specify nationality or region, eg Asia or EU, etc) people these days?

Tough questions, I know. For tough, complicated, volatile, too interesting times.

Reminder: "May you live in interesting times" was an Ancient Chinese curse, not a wish!

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BRs
Nick

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