Opinion

Bernd Debusmann

U.S., China and eating soup with a fork

Bernd Debusmann
Oct 29, 2010 14:35 UTC

-The opinions expressed are the author’s own-

Are economists the world over using an outdated tool to measure economic progress?

The question, long debated, is worth pondering again at a time when two economic giants, the United States and China, are sparring over trade, currency exchange rates and their roles in the global economy.

In the run-up to U.S. mid-term elections on November 2, politicians from both parties, for different reasons, blamed trade with China for American job losses. China responded with irritation and hit back by accusing the U.S. of “out of control” printing of dollars tantamount to an attack on China with imported inflation.

Measured by Gross Domestic Product (GDP), the United States tops the list of countries. China overtook Japan in August to become number two. Depending on whose forecasts you believe, China will overtake the United States in 2020, 2035 or 2040 and therefore turn the 21st century into the long-predicted Chinese Century. It’s becoming conventional wisdom that the United States will play a reduced role on the world stage.

Crystal ball gazers might do well to remember that long-range forecasts have often been wrong in the past. At the turn of the 20th century, eminent strategists predicted that Argentina would be a world power within 20 years. In the late 1980s, Japan was seen as the next economic leader, on the strength of supposedly unstoppable progress. Forecasters extrapolated from past GDP growth rates.

Obama, Moses and exaggerated expectations

Bernd Debusmann
Oct 25, 2010 13:58 UTC

-Bernd Debusmann is a Reuters columnist. The opinions expressed are his own-

President Barack Obama is close to the half-way mark of his presidential mandate, a good time for a brief look at health care, unemployment, war, the level of the oceans, the health of the planet, and America’s image. They all featured in a 2008 Obama speech whose rhetoric soared to stratospheric heights.

“If…we are willing to work for it, and fight for it, and believe in it, then I’m absolutely certain that generations from now, we will be able to look back and tell our children that this was the moment when we began to provide care for the sick and good jobs for the jobless; this was the moment when the rise of the oceans began to slow and our planet began to heal; this was the moment when we ended a war and secured our nation and restored our image as the last best hope on earth.”

The date was June 3, 2008. Obama had just won the Democratic Party’s nomination as presidential candidate. He was also winning the adulation of the majority of the American people, who shrugged off mockery from curmudgeonly Republicans who pointed out that the last historical figure to affect ocean levels was Moses and he had divine help when he parted the Red Sea.

California vote and Mexican drug cartels

Bernd Debusmann
Oct 15, 2010 13:48 UTC

What would legalizing marijuana in California, America’s most populous state, mean to the drug cartels whose fight for access to American markets have turned parts of Mexico into war zones? Shrinking profits? Certainly. Less violence? Maybe.

These topics are being raised as the U.S. heads towards Nov. 2 mid-term elections which in California include a ballot initiative, Proposition 19, providing for marijuana to be treated like alcohol and tobacco for Californians over 21. A vote in favour would end 73 years of prohibition and have enormous political impact not only on the rest of America but also on the long-running global war on drugs.

Experts on the issue have been working overtime and the latest of a string of academic studies, out this week, came from the RAND Corporation, a California-based think tank. The voluminous paper is entitled: Reducing Drug Trafficking and Violence in Mexico – Would Legalizing Marijuana in California Help? The study’s four authors, all prominent authorities on the illegal drug business, hedged their answer.

The economic case for legal marijuana

Bernd Debusmann
Oct 8, 2010 13:43 UTC

CALIFORNIA-MARIJUANA/

On June 2, 2005, more than 500 economists, including three Nobel prize winners, issued an open letter that called attention to a report on the economic benefits of treating marijuana like alcohol and tobacco – billions and billions in budgetary savings and gains in new tax revenue.

The report, by Harvard’s Jeffrey Miron, an expert on the budgetary implications of enforcing the prohibition of illicit drugs, provided fodder for a long-running debate on the pros and cons of legalizing marijuana but did little to impress the people to which it was addressed – President George W. Bush, Congress, governors and state legislatures. One reason: the economy was humming along nicely in the first half of 2005.

That’s no longer the case and Miron has just published a follow-up report for the Cato Institute, a libertarian think tank in Washington, that revisits the economic case for ending prohibition at a time when state and federal governments stagger under enormous deficits and America’s national debt is at its highest since World War Two. Legalizing all drugs, Miron says, would yield $41.3 billion a year in savings on government spending on law enforcement and $46.7 billion in tax revenue.

America, world’s top military forever?

Bernd Debusmann
Oct 1, 2010 14:21 UTC

America’s defense establishment, from the Pentagon to think tanks, is trying to work out ways to cut military spending at a time of economic trouble. Proposals range from $100 billion to $1 trillion. None touches the underlying philosophy that led the United States to spend almost as much on military power as the rest of the world combined.

Of the many explanations of that philosophy American leaders have offered over the past few decades, one of the most succinct came from Madeleine Albright, when she was Secretary of State in the Clinton administration: “It is the threat of the use of force…if we have to use force, it is because we are America, we are the indispensable nation. We stand tall and we see further than other nations into the future…”

Since Albright made that remark, in 1998, the U.S. defense budget has grown every year, in real terms, and is now higher than at any time since the end of World War Two, according to the liberal Center for American Progress, one of the Washington think tanks to make savings suggestions. Even if the United States were to cut its spending in half, that would still be more than its current and potential adversaries.

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