Tag: china

Neo Economics: A NEW PARADOX OF ECONOMICS

By Dr. Jagdish Bhagwati, an Indian economist in the US

Japanese save a lot. They do not spend much. Also, Japan exports far more than it imports. Has an annual trade surplus of over 100 billion. Yet Japanese economy is considered weak, even collapsing.

Americans spend, save little. Also US imports more than it exports.
Has an annual trade deficit of over $400 billion. Yet, the American economy is considered strong and trusted to get stronger.

But where do Americans get money to spend? They borrow from Japan, China and even India.
Virtually others save for the Americans to spend. Global savings are mostly invested in US, in dollars.

India itself keeps its foreign currency assets of over $50 billion in US securities. China has sunk over $160 billion in US securities.
Japan’s stakes in US securities is in trillions.

Result:
The US has taken over $5 trillion from the world. So, as the world
saves for the US – It’s The Americans who spend freely. Today, to keep the US consumption going, that is for the US economy to work, other countries have to remit $180 billion every quarter, which is $2
billion a day, to the US!

A Chinese economist asked a neat question. Who has invested more, US in China, or China in US? The US has invested in China less than half of what China has invested
in US.

The same is the case with India. It have invested in US over $50
billion. But the US has invested less than $20 billion in India.

Why the world is after US?

The secret lies in the American spending, that they hardly save. In fact they use their credit cards to spend their future income. That the US spends is what makes it attractive to export to the US. So US imports more than what it exports year after year.

The result:

The world is dependent on US consumption for its growth. By its deepening culture of consumption, the US has habituated the world to feed on US consumption. But as the US needs money to finance its consumption, the world provides the money.

It’s like a shopkeeper providing the money to a customer so that the customer keeps buying from the shop. If the customer will not buy, the shop won’t have business, unless the
shopkeeper funds him. The US is like the lucky customer. And the world is like the helpless shopkeeper financier.

Who is America’s biggest shopkeeper financier? Japan of course. Yet it’s Japan which is regarded as weak. Modern economists complain that Japanese do not spend, so they do not grow. To force the Japanese to spend, the Japanese government exerted itself, reduced the savings
rates, even charged the savers. Even then the Japanese did not spend (habits don’t change, even with taxes, do they?). Their traditional postal savings alone is over $1.2 trillion. Thus, savings, far from being the strength of Japan, has become its pain.

Hence, what is the lesson?

That is, a nation cannot grow unless the people spend, not save. Not just spend, but borrow and spend.

Dr. Jagdish Bhagwati, the famous Indian-born economist in the US, told Manmohan Singh that Indians wastefully save. Ask them to spend, on imported cars and, seriously, even on cosmetics! This will put India on a growth curve. This is one of the reason for MNC’s coming down to India, seeing the consumer spending.

‘Saving is sin, and spending is virtue.’
But before you follow this Neo Economics, get some fools to save so that you can borrow from them and spend !!!

CHINA IN SPACE, TALKING TO AFRICANS FROM SPACECRAFT STATION

The new word, Taikonaut, is born. Before it was cosmonaut and astronaut.

African youth attracted to the Chinese space exploration event
Watching and listening to Taikonauts

HOW I WAS INTRODUCED TO CHINA

My father passed away in De Martini Hospital on the southern seashore of Mogadishu in 1968. He withdrew his last breath, while I was holding his hand at his death bedside. Hovering and standing over me were the late Prime Minister of Somalia 🇸🇴, Abdirizak Haji Hussein and Mr Yassin Nur Hassan Bidde, the late Interior Minister at the time. In attendance was a Chinese physician trying his best to save my father’s life, who was suffering from malaria. At that moment, the ministers were contemplating and discussing on the possibility of evacuating my father to a better medical facilities in the People’s Republic of China 🇨🇳. My father’s medical situation brought together a former prime minister, who was leading a strong political opposition to the government of the day, and the minister of Internal Affairs of the administration then. Tragically, my father died prematurely before he was airlifted to China. Following his death, I was devastated, depressed and sick for a week. At the time, I was in school.

Earlier in my childhood, in 1964 to be exact, I do recall the visit of Zhou En Lai, the first and late Chinese Premier, in Mogadishu. I was a kid with some members of my family among the crowd at airport, welcoming the Premier. I vividly remember Zhou En Lai speaking in Chinese at Airport reception. What I found remarkable was the fact that a Somali interpreter of Mandarin suddenly appeared on the stage. It was hilarious. Somali singers sang a song right there: “Zhou Lai ha jiroo cadowgii ha jabee” ( Let Zhou Lai long live, let his enemies perish.)

Since then, I had the opportunity to learn a lot about the Soviet Union, China and other countries of the left from the late Secretary-General of the Somali Democratic Union (SDU), a leftist political party popularly known in Somali political history as the “Great” (a term standing for greater Somalia), Mr. Yusuf Osman Samater (Bardacad). Bardacad was a good friend of my former Boss, the late President of Puntland and Transitional Federal Government of the Somali Republic, Abdullahi Yusuf. That was an extra education on the top of myself winning a scholarship to the Soviet Union immediately after leaving high school.

[This article was edited a bit since posting.]

( photo courtesy to Wikipedia)