Web Letters: A Global Recovery for a Global Recession

I would like to add a commentary to Mr. Stiglitz's article on the global economy. I hope it makes it to someone's desk. I can't help make a link between what happened in Argentina about seven years ago to what just happened here in the US (I'm talking about the economic crash). An economic system based on credit was put in effect in Argentina, which seemed an excellent market for such an IMF maneuver. The country's population had a percentage of consumer-age citizens with an acceptable education and working skills to support an economy with the right incentive: purchasing power. It also conveniently helped to balance the critical state of deficit that the US faced related to imports compared to exports of products. Argentinians flocked to US ports, making substantial purchases for the duration of the experiment. No visas were required for these "preferred guests." When the bottom fell out (predictibly so), the IMF moved in and emptied the coffer (so to speak). Left the country with no currency.

Any similarity with what we are facing these days here at home? My belief is that the only difference is that the bottom fell out this time before anyone predicted. Too simplistic an analogy? In such a scenario, the bailouts amount to the same attitude of the IMF investors and their omnipotent power to control governments and do as they will. Could some of them be associated to the suddenly questionable private organism that holds the US's assets captive and is beyond the reach of the law or any form of audit... the Federal Reserve? Is it possible that these same individuals' interests lay in bailing out those institutions that they invest in, rather than those that could strengthen the economy by helping the citizens of this nation?

Gustav Alsina

Santa Fe, NM

Dr. Stiglitz writes: "The massive bailouts and guarantees provided by the United States and other wealthy countries give their firms an unfair competitive advantage." I don't understand this reasoning. A subsidy by the federal government, that is by the American taxpayer, benefits all non-taxpaying purchasers. The net effect of a subsidy is thus to subsidize the so-called developing countries who do not contribute anything to the subsidy, or for that matter any non-taxpaying American. It may give our firms an unfair advantage (indeed, I would argue that government interference in general is unfair), but it does so at the expense of the consumer. It's like trying to fill up a bucket with its own water. This is true of all protectionism.

I am sure Dr. Stiglitz knows this, as it is Econ 101. Why the sloppy reasoning?

William Palumbo
New York Young Republican Club

New York, NY

Good essay, Dr. Stiglitz; however, as you move into the future, I encourage you to recall The Golden Rule: guy with the gold makes the rules.

The bankers are never going to agree with rules that limit their fiscal or monetary range or influence, and as a senior senator in Washington, DC, (Tim Durbin) admitted last week, "These guys own the place."

My prediction: nothing will change. However, you might think about keeping your spare change under your mattress.

John W. Anthony

Denver, CO

It appears that the good Dr. Stiglitz believes the only solution is global socialism under the direct supervision of his friends at the UN.

Brian marks

Dallas, TX

I want to wish you good luck in attempting to micromanage the globalized economy. A globalized interconnected economy will often fail because of its interdependence. Failure in one part of the system has a ripple effect on the whole system. With dispersed national economies, the failure of single economy will not have the same ripple effect around the world.

I guess I am a product of another time. What I learned in college and from American history is that tariffs are intended to protect the fragile economies of developing nations. Any developing nation who enters into a free-trade relationship with a developed country gives control of their economy to the developed nation. The cheap goods produced by developed nations prevents industrial development in the underdeveloped country. We called it Economic Imperialism!

Anyone who thinks we became a developed nation through "free Trade" doesn't have a clue about this country. We had a planned economy! In his "Report On Manufactures" to Congress, Alexander Hamilton laid out our plan for national development. Look at it and you will see how the American Market and industrial development was created. It is the model for economic development for any country.

Without tariffs, Great Britain would have dominated our economy, and the American Revolution would have been meaningless. If Great Britain had been "successful," we would not have had the industrial capacity to support them through two world wars. If you bother to read Hamilton's report, you will notice it also has a a national defense aspect to it!

Pervis James Casey

Riverside, CA