May 12, 2004
A HYPERPOWER AMONG THE DYING:
U.S., Britain and Asia drive global recovery: OECD sees 2-speed climb as Europe lags (Katrin Bennhold, May 12, 2004, International Herald Tribune)
The world economy is facing an uneasy two-speed recovery as the United States, Asia and Britain power ahead, leaving much of Europe behind, the Organization for Economic Cooperation and Development said on Tuesday. [...]Even as oil prices surge and concern about terrorism lingers, the OECD raised the growth forecast for its member countries to 3.4 percent this year and 3.3 percent in 2005. In its last twice-yearly Economic Outlook in November, the organization had predicted expansion of no more than 3 percent for 2004. Growth was 2.2 percent in 2003.
Three years after a recession in the United States slowed the world economy, an increase in high-technology spending in America and Japan has been the driver of an OECD-wide rise in investment, which is beginning to trim unemployment lines and lift household income. Consumption, while still sluggish in continental Europe, has been buoyant in the United States, Britain and in other countries with flexible mortgage markets, where low interest rates fueled a housing boom and helped keep spending power relatively insulated, the OECD said. Meanwhile, as the specter of job outsourcing to low-cost countries is sparking debate in the United States, Europe and Japan, trade flows are on their way up.
Policy makers in all regions have their work cut out for them, Cotis said. America, racing ahead at well above its trend growth, needs higher interest rates to stifle nascent inflationary pressure; Japan needs still easier credit to leave behind the lingering threat of deflation; and the 12 euro-zone nations need a complete makeover including a rate cut, more flexible labor markets and a coordinated policy on research and development to enhance their competitiveness.
In addition, Cotis said, all three regions must work to reduce their growing budget deficits to prepare for decades of slowing population growth and exploding health and pension costs.
America has been the main force behind the worldwide pickup in growth, buoyed by the lowest interest rates in 46 years and by $1.7 trillion in tax cuts.
Expansion in the world's largest economy is on track to reach 4.7 percent this year, which would be the fastest rate in two decades and much higher than trend growth at about 3.3 percent, the OECD estimates.
We "need" a slight tweak--they need a massive rethinking and restructuring of the very purpose of their states. How many years until the kids at Halloween are, as Brother Burnett suggests below, collecting UNICEF money for the French? Posted by Orrin Judd at May 12, 2004 7:44 AM
"America has been the main force behind the worldwide pickup in growth buoyed by...$1.7 trillion in tax cuts".
Should be a Bush ad
A man who can't feel for France and all that money she can no longer pocket from Iraq is a man without compassion.
(As for collecting for UNICEF on Hallowe'en, I would have thought all the oil-for-whatever money the UN has reeled since 1992 would have made those boxes a tad redundant. But what to tell the kids?)
Posted by: Barry Meislin at May 12, 2004 8:08 AMBarry:
You're talking to a man who cheered the guardsmen at Kent State--compassion?
Posted by: oj at May 12, 2004 8:31 AMThis isn't some tragedy that has overtaken old Europe, or even some unintended consequence of a policy decision. The Europeans have knowingly chosen to grow at a slower rate in order to have strong welfare states.
Posted by: David Cohen at May 12, 2004 8:46 AMThis is utterly 'simplisme'!
I scoff in your general direction.
...and waste no time in reminding you that it is a sign of their superiority.
(Shall we just tell them that yest they're oh so absolutely right, and then get on with the business of living in the real world?)
Posted by: Barry Meislin at May 12, 2004 8:50 AMoj --
An attempt to answer for David...
Well, first any welfare state worth its salt must have enough poor victimns to comfort. Their economic policies ensure a good supply of those.
Delivering the welfare may be a bit tricky when you get smaller and poorer by the decade but they can save money by extorting below market prices for American pharma products and dumping all their security needs on the US.
They are at cruising altitude for an economic mediocrtiy that allows them to be wealthy enough to command an elevated chattering platform, but not rich enough to see wealth perpetuate and expand beyond the state beaurocracies.
That's my attempt to explain the irrational...
Posted by: MG at May 12, 2004 9:01 AMBarry:
"Shall we just tell them that yes they're oh so absolutely right, and then get on with the business of living in the real world"
That's not a bad description of traditional Canadian economic thinking. We LOVE your ideals, but history has blighted us with the burden of trying to keep up with the Yankee traders. Quel dommage!
Posted by: Peter B at May 12, 2004 9:14 AMOJ: I'm not saying it can work. It can't. I'm just saying I don't feel sorry for them.
Posted by: David Cohen at May 12, 2004 9:41 AMOh, and we're only different in degree, not in kind.
Posted by: David Cohen at May 12, 2004 9:43 AMHad I a guaranteed under-the-table economy of several billion dollars a year for the foreseeable future (and no need to worry about my oil supplies), might I "knowingly [choose] to grow at a slower rate in order to have [a] strong welfare state."
(Especially as I'm superior and deserve it--and may Saddam & Sons be granted a long and auspicious life.)
Hence the manifold ways that America (hypocrite!)is hated--must necessarily be hated--for meddling in what is not her business and in what she understands not....
Posted by: Barry Meislin at May 12, 2004 9:53 AMBarry: And of course that explains why the sanctions weren't going away. Both Saddam and the SC benefited from having them in place.
Posted by: David Cohen at May 12, 2004 10:05 AMSaddam may have been able to circumvent the sanctions, but at considerable cost to his nation and military...
Saddam tried at least twice to have the sanctions lifted.
It benefitted the UN to have the sanctions in place, but not Hussein.
Also, wasn't one of the conditions of the back-door sweetheart oil deals with France and Russia that said nations attempt to have the sanctions removed ?
Posted by: Michael Herdegen at May 13, 2004 2:01 AM