Comments on Simon Tay “The US-Asia relationship in 2010: Progress and problems”,
30/12/2010, http://www.eastasiaforum.org/2010/12/30/the-us-asia-relationship-in-2010-progress-and-problems/
Tay's concluding remarks are particularly worth noting: "A new context for American-Asian relations is emerging. America now faces a spectrum of strategic choice running from potential isolationism grounded in the idea of American decline to the acceptance of a more multipolar world and a continued engagement on different terms. Leaders on both sides must work to smooth this new and difficult transition."
History could be a burden, but unrealistic and wrong expectations may also be unhelpful and counter productive and even harmful and destructive.
It is in that context and expectation that every country. including declining and rising powers, should conduct itself and behave in a cooperative way appropriate to that context. Missteps by any may not be in the interests of most countries.
2010-12-31
Unions have a useful role to play
Comments on Christopher Bantick “School autonomy plan will be union's last stand”, 31/12/2010, http://www.theaustralian.com.au/news/opinion/school-autonomy-plan-will-be-unions-last-stand/story-e6frg6zo-1225978938975
I must confess that I have little to do with unions at the outset before I begin my commenting.
There are two sides of the story and Christopher Bantick appears to be on the extreme part of one side.
If the public or taxpayers have difficulties to hold the one state government and parliament to account, how could they hold so many taxpayers funded individual schools and hospitals accountable for their performances?
It is easy to say that let poor performed schools die, but what about the students in them? That is especially important and pressing, given the fact that school performance are affected by many factors and the socio economic background of students included.
There should and must be an appropriate administration of taxpayers' money.
Christopher Bantick seems a fun of Gillard's approach, how he feels about her BEN wastes? Don't just simply say that was others responsibility and problems.
So please be realistic and not too idealogical on either side, mate. The reality is much more complex than you presented.
Further, while not all actions by unions are good, but there should be a role for unions to protect the most vulnerable ones in any professions.
Of course, that does not mean that unions should be above everyone else or other organisations.
I must confess that I have little to do with unions at the outset before I begin my commenting.
There are two sides of the story and Christopher Bantick appears to be on the extreme part of one side.
If the public or taxpayers have difficulties to hold the one state government and parliament to account, how could they hold so many taxpayers funded individual schools and hospitals accountable for their performances?
It is easy to say that let poor performed schools die, but what about the students in them? That is especially important and pressing, given the fact that school performance are affected by many factors and the socio economic background of students included.
There should and must be an appropriate administration of taxpayers' money.
Christopher Bantick seems a fun of Gillard's approach, how he feels about her BEN wastes? Don't just simply say that was others responsibility and problems.
So please be realistic and not too idealogical on either side, mate. The reality is much more complex than you presented.
Further, while not all actions by unions are good, but there should be a role for unions to protect the most vulnerable ones in any professions.
Of course, that does not mean that unions should be above everyone else or other organisations.
2010-12-30
Bernanke's QE effort applaudable
Commnets on Karen Maley “Primed to pop in the US”, 30/12/2010, http://www.businessspectator.com.au/bs.nsf/Article/Primed-to-pop-in-America-pd20101230-CLT7U?OpenDocument&src=sph&src=rot
Ben Bernanke's idea of creating an asset effect is a good one, though it requires a concerted effort by all relevant US authorities to put the best effort for it to work. The condition can be very difficult to be met.
Should the Fed's single minded effort not work, then the consequences would be more serious than without such effort.
But when the economy is in a crisis situation, and there is no other conventional means to get it out of that predicament, then one is attempted to do something novel.
Another way to achieve that goal is for the authorities to purchase foreclosed houses with a predetermined rule that can stimulate the house market by putting a floor under.
It may be difficult to implement it, but should be more effective.
There might be a middle way to combine QE and house purchasing to stimulate both equity and house markets.
In this sense, the different authorities must work together cooperatively while still not to undermine the independence of the Fed or monetary authority in terms of monetary policy.
They are all possible new macroeconomic ways to deal with the balance sheet recession or possibly more serious depression. The US is now in a similar situation to Japan's in the 1990s.
This crisis or more enduring economic recession requires new policy prescriptions. Bernanke has been trying to do that from the monetary policy point of view.
I wish him good luck on his innovative endeavour.
Ben Bernanke's idea of creating an asset effect is a good one, though it requires a concerted effort by all relevant US authorities to put the best effort for it to work. The condition can be very difficult to be met.
Should the Fed's single minded effort not work, then the consequences would be more serious than without such effort.
But when the economy is in a crisis situation, and there is no other conventional means to get it out of that predicament, then one is attempted to do something novel.
Another way to achieve that goal is for the authorities to purchase foreclosed houses with a predetermined rule that can stimulate the house market by putting a floor under.
It may be difficult to implement it, but should be more effective.
There might be a middle way to combine QE and house purchasing to stimulate both equity and house markets.
In this sense, the different authorities must work together cooperatively while still not to undermine the independence of the Fed or monetary authority in terms of monetary policy.
They are all possible new macroeconomic ways to deal with the balance sheet recession or possibly more serious depression. The US is now in a similar situation to Japan's in the 1990s.
This crisis or more enduring economic recession requires new policy prescriptions. Bernanke has been trying to do that from the monetary policy point of view.
I wish him good luck on his innovative endeavour.
Rudd and Rudd - brothers
Comments on Greg Rudd “Always expect the unexpected”, 30/12/2010, http://www.theaustralian.com.au/news/opinion/always-expect-the-unexpected/story-e6frg6zo-1225978219105
While I was amused when reading the first half about we Australians making jokes about our PMs, I have some questions about G Rudd's second half.
His argument about America and China in terms of unintended consequences, for example, may be only half correct. Clearly, access to large overseas markets like the America's has played a useful and possibly important role in China's rise over the past two decades, the seed of its rise was sod in the late 1970s. Further, the key elements of China's economic rise have lied in its political stability with its main focus on economic development as opposed to political campaigns that has characterised the Mao's era proceeding the reforms.
So, in my view, America to the most played a useful reservoir role to China's economic growth to adjust its uneven processes, and to accelerate its capital accumulation process. But that should not have been the deciding factor.
Another is his argument about 2011: "a leading global issue for 2011 is going to be workforce availability and cost of labour."
That will undoubtedly be true for Australia, possibly for some developing countries including possibly China (the emerging shortage of surplus rural labour supply), but it will be unlikely true for the US, Japan and most of Europe and they still have a lions share of the world economy. The latter' economies will still be struggling to rid of their recession or debt issues or austerity consequences like the UK.
The world has been multi speed economy! The global economic crisis, more more accurately, the North Atlantic financial and economic crisis, has made the differences in economic growth among the world economies much more contrasting and possibly more enduring!
However, for Australia, there is a question about the improvement or benefit for local "labour", of mining boom. Many business people argue that immigration should be used to ease the pressure of labour shortage, but they are for their own interests, that is, more immigration and increases in labour supply will depress labour wages and increase their profits at the expenses of local labour.
The government should consider the impact on local businesses and local labour of immigration, as compared to just taking a pro business approach and liberalise immigration. That is unjust to local labour both in terms of the direct effects on current wages and the indirect effect on their skills upgrading!
That is the essence of analysis of political economy!
More interesting time lies ahead to watch!
While I was amused when reading the first half about we Australians making jokes about our PMs, I have some questions about G Rudd's second half.
His argument about America and China in terms of unintended consequences, for example, may be only half correct. Clearly, access to large overseas markets like the America's has played a useful and possibly important role in China's rise over the past two decades, the seed of its rise was sod in the late 1970s. Further, the key elements of China's economic rise have lied in its political stability with its main focus on economic development as opposed to political campaigns that has characterised the Mao's era proceeding the reforms.
So, in my view, America to the most played a useful reservoir role to China's economic growth to adjust its uneven processes, and to accelerate its capital accumulation process. But that should not have been the deciding factor.
Another is his argument about 2011: "a leading global issue for 2011 is going to be workforce availability and cost of labour."
That will undoubtedly be true for Australia, possibly for some developing countries including possibly China (the emerging shortage of surplus rural labour supply), but it will be unlikely true for the US, Japan and most of Europe and they still have a lions share of the world economy. The latter' economies will still be struggling to rid of their recession or debt issues or austerity consequences like the UK.
The world has been multi speed economy! The global economic crisis, more more accurately, the North Atlantic financial and economic crisis, has made the differences in economic growth among the world economies much more contrasting and possibly more enduring!
However, for Australia, there is a question about the improvement or benefit for local "labour", of mining boom. Many business people argue that immigration should be used to ease the pressure of labour shortage, but they are for their own interests, that is, more immigration and increases in labour supply will depress labour wages and increase their profits at the expenses of local labour.
The government should consider the impact on local businesses and local labour of immigration, as compared to just taking a pro business approach and liberalise immigration. That is unjust to local labour both in terms of the direct effects on current wages and the indirect effect on their skills upgrading!
That is the essence of analysis of political economy!
More interesting time lies ahead to watch!
2010-12-29
When will China be the largest economy?
Comments on the Economist's question and its projection on when China will take over the US as the largest economy. See http://www.economist.com/blogs/dailychart/2010/12/save_date
It seems reasonable that China will take over the US as the largest economy by 2020.
While the assumption about growth rate, inflation and exchange rate changes can be made to project different scenarios, it may be easier to use the purchasing power parity (PPP) as the base of projection and that would involve fewer assumptions and leave the inflation and change rate changes out of the equation.
That would certainly make the projection more focused on the real side, as opposed to nominal side that can swing dramatically from time to time.
Based on CIA world factbook data, China's GDP was $8.8 trillion and the US $14 trillion in 2009, indicating that the US' was 1.591 times of China's economy in real terms in that year.
Assuming the difference in their growth rates is 5% a year in real terms, it would take 9.5 years for China to catch up with US, i.e. 2018-19.
You can vary the assumption on the difference in growth rate and derive a range.
By doing that, the likely scenario is that between 2016 to 2022, China will become the largest economy.
PS: The Economist projection is:
Over the past decade real GDP growth averaged 10.5% a year in China and 1.7% in America; inflation averaged 3.8% and 2.2% respectively. Since Beijing scrapped its dollar peg in 2005, the yuan has risen by an annual average of 4.2%. Our best guess for the next decade is that annual real GDP growth averages 7.75% in China and 2.5% in America, inflation rates average 4% and 1.5%, and the yuan appreciates by 3% a year. Plug in these numbers and China will overtake America in 2019. But if China’s real growth rate slows to an annual average of only 5%, then (leaving the other assumptions unchanged) China would become number one in 2022.
It seems reasonable that China will take over the US as the largest economy by 2020.
While the assumption about growth rate, inflation and exchange rate changes can be made to project different scenarios, it may be easier to use the purchasing power parity (PPP) as the base of projection and that would involve fewer assumptions and leave the inflation and change rate changes out of the equation.
That would certainly make the projection more focused on the real side, as opposed to nominal side that can swing dramatically from time to time.
Based on CIA world factbook data, China's GDP was $8.8 trillion and the US $14 trillion in 2009, indicating that the US' was 1.591 times of China's economy in real terms in that year.
Assuming the difference in their growth rates is 5% a year in real terms, it would take 9.5 years for China to catch up with US, i.e. 2018-19.
You can vary the assumption on the difference in growth rate and derive a range.
By doing that, the likely scenario is that between 2016 to 2022, China will become the largest economy.
PS: The Economist projection is:
Over the past decade real GDP growth averaged 10.5% a year in China and 1.7% in America; inflation averaged 3.8% and 2.2% respectively. Since Beijing scrapped its dollar peg in 2005, the yuan has risen by an annual average of 4.2%. Our best guess for the next decade is that annual real GDP growth averages 7.75% in China and 2.5% in America, inflation rates average 4% and 1.5%, and the yuan appreciates by 3% a year. Plug in these numbers and China will overtake America in 2019. But if China’s real growth rate slows to an annual average of only 5%, then (leaving the other assumptions unchanged) China would become number one in 2022.
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