Advice From Afar

The Economist usually can be counted on to say what Tony Blankley wishes he could say. That is, if he had more time. And actually came up with the stuff. Erudition rarely erupts accidentally. But that aside, the comparison holds. Sometimes.


The point is that once more, they offer cheerful Athenian wisdom to their puckish Roman cousins. This time it’s on the dollar’s catastrophic collapse. The first part is actually a pithy, grim and concise summary of the events leading up to the crime scene. Then, the Economist veers into prime Tony territory by optimistically asserting that things in fact are not all that bad if:

[S]elf lf-interest and sensible policy can cut the odds of trouble. The first step is for American policymakers to pay more heed to their currency. For all their talk about a strong dollar, American officials have behaved as if they cared little about its worth. A reserve currency is supposed to be a store of value; by running a huge current-account deficit America has left the dollar vulnerable. At such a tricky time, benign neglect will no longer do. For the moment, this need mean little more than some carefully chosen words. If the slide becomes chaotic, it could demand currency-market intervention and a willingness to hold back interest-rate cuts for the sake of the dollar.

The other part of the solution lies elsewhere, particularly with those countries with dollar-pegging currencies. These economies need to allow their currencies to rise, both to curb inflation and encourage the rebalancing of the global economy. Appreciation would mean that these countries accumulated new dollar reserves at a slower pace. That in turn would lead to a loss of the dollar’s pre-eminence and the emergence of other reserve currencies: there is no rule to say you can have only one reserve currency. But this need not—and in today’s febrile environment must not—mean dumping existing dollar reserves. That would impose a far higher cost on everyone, including the dumpers.

The history of international co-operation on currencies is patchy. But China and the oil-rich Gulf states have ample reason to play their part in an orderly decline of the dollar’s dominance. Despite the opprobrium heaped on them, the Chinese do not want to see the Fed’s hands tied by a dollar crisis; nor do they want to see the euro zone, one of their best markets, slow sharply; and they have little interest in the external value of their existing dollar reserves plunging. Beyond all that, China’s leaders want to be taken seriously as responsible actors in the international system. Now is their chance.

Now, we are quite confident that the Economist’s upper management enforce a drug free workplace banning narcotics, hallucinogens and even crippling alcoholism. (Recall Conrad Black’s unkind observation that many if not most journalists he knows (on both sides of the Atlantic) battle the bottle now and then). We jest, Dear solicitors. Yet no responsible adult with even a casual understanding of recent history — and particularly recent American financial history — could type those words with composure. Those paragraphs are, to refer to recent comments here discussing America’s Most Important Columnist, beyond Friedman-esque. None of the proposed American actions will survive an election year race to the bottom. Two words: Walter Mondale. Nor does Beijing show or have any incentive to bail America out of a disaster of her own making. Quite the opposite, in fact. They have their own distractions and strategic timetables.

So what gives? One wonders in the end if there isn’t some quiet desperation going on. After all, what’s the point in being head cheerleader if your team’s willfully committing seppuku? There’s no “I” in dollar . . .

Comments

  1. Comment says

    ” … are Evangelists such as Negroponte (we have clear memories when Being Digital was first released and even before that) often get tunnel vision and assume that technology is a means and and end unto itself.”

    We agree with your sentiment here – Though to be fair to Negroponte, many of his once hype sounding predictions in Being Digital now sound normal.
    But we became intrigued after he displayed that unique machine on the Brian Lamb interview above. In the interview it showed a machine that was subversive to the traditional model of the Reed Hundt types who always seem to be ties into some meaningless catch phrase or corporate baloney.
    Then we started reading up on it and we noticed that Microsoft started developing a version of XP that would run on the XO (Negroponte’s machine) after the XO was developed – Plus Intel ramped up their competition afterward, while trying to kneecap the charity project from within – This showed the project as a good catalyst.
    So we figure if they gave a million dollars worth of these machines to Cambodians – (they run on low power) – It will go to waste with some, if not most, but there will be created a small cadre of Cambodians who will more than repay the million dollars over the next decade.
    It may not work – but if you compare it to most development efforts – that only help real estate in the South of France …

  2. Dr.LeoStrauss says

    Agree actually with both of you re the diffusion here. Seeding stable developing regions/nations/tribal communities with ultra accessible/Open Source/Copyleft technologies would create opportunities for many different tech-cultural ecosystems to develop with great potential for them and even the wider global community.

    My concern, perhaps not fully set forth due to skills and pounding migraines, are Evangelists such as Negroponte (we have clear memories when Being Digital was first released and even before that) often get tunnel vision and assume that technology is a means and and end unto itself.

  3. Hunter says

    Also worth noting is the penetration of cell phones into markets like Kenya, with economies being stimulated at the micro level by, e.g., individuals making a business out of having a cell, and carrying it around to let others use it (for a fee). My sister spent some time in the region this summer, and we think the laptop could be a good idea in a similar way, but, as Comment mentioned, in countries that are already basically stable.

  4. Comment says

    Hopefully distribution will focus on countries that have basic development and are not at war. This would be valuable merchandise and would not be secure in the hands of many in the third world. Maybe it should come with a flak jacket and a basic sidearm.

  5. Dr.LeoStrauss says

    A couple of different points:

    Whether promoting open source versus a Wintel/AMD position. Second, whether the needs of the developing world really are met by getting their own cheap laptops. Perhaps they indeed might use them beyond creating their own Facebook pages or checking out LonelyGrrl 15 on YouTube, etc.

    All this still seems like a surface effect. That’s why we mentioned the Gates Foundation. Originally, Gates thought the way Negroponte did, that the developing world needed first technology, particular computers to join the community of nations, information blah blah. Of course, Windows-based. There is a version of Windows Vista not available to the US market intended to compete with the ultra low end laptops.

    Melinda to her credit taught BG that he was wrong. She like many others explained that the developing world is facing far more primal and immediate issues such as completely absent health care infrastructure, food, sanitation, etc.

    My own view is that this is the case. We raised Hundt because it was a similar technological (looney) utopian vision that in the end amounted to nothing (except technology companies lining up to get FCC money).

    Cheap laptops are always welcome.

  6. Anon says

    Here’s Negroponte’s website – We are unconvinced that it will lift up the masses, but we might be wrong and it seems worth a gamble for the money. The computer is forcing others to compete and offer more cheap models, with less bs features. This is much better than Reed Hundt’s idea because this has a Linux OS that people can program on and experiment with – Then press a button to restore, if need be. Hundt’s idea would have just been mayhem in practice – But this has potential to create many autodidacts in the developing world
    http://laptopgiving.org/en/index.php

  7. Dr Leo Strauss says

    Too funny at Joe’s Redneck Riviera poking fun at E. Burnett’s education – speaks volumes — for him, Tweety and others.

    On Mr. Being Digital’s laptop thing, let me punt for a day or so. Do have some thoughts about it, the industry’s efforts to strangle the baby in the bathtub and whether the entire concept is that vital — say compared to what the Bill & Melinda Gates Foundation realized with health care, etc. There is a GOSPLAN mindset with some of these techno-cure — Reed Hundt, for example, wanted to wire every classroom in America as a metric of success, not realizing so what? Do you need Internet and how will be used and who will train for it, etc.

    A slight snow fall is dusting the Imperial City and D.C. drivers are notorious for freaking out with just one flake in the air. Our commute home was hellish because of Imperial City driving incompetence. The rest of this evening is likely to be devoted to aspirin and mindless non-cable news channel surfing.

    More anon . . .

  8. A Random Quote says

    Hi Owen [Henkel] —

    We cannot approve the spot with it being Danny Glover’s opinion that the Bush Administration is destroying the Constitution. If you have documentation that it is indeed being destroyed, we can look at that.

    Sorry about that,

    Erin Kelley
    (Email from FNC rejecting an
    ad from Center for Constitutional
    Rights)

  9. Comment says

    Leo – this is OT – But do you have an opinion on N. Negroponte’s One Laptop XO laptop?

  10. A Random Quote says

    “You are such a Williams elitist.”
    ~Joe Scarborough
    Morning Joe
    (To Erin Burnett)

  11. Comment says

    Fred Thompson on Charlie Rose says Iran is now a greater threat to US national security that the Soviet Union ever was. He notes the current NIE may be an Iranian disinformation op. This madness has to stop – especially from failing pols who have no hope of winning.

  12. cato90025 says

    Did not Israel request its billions of dollars of US aid to be paid in Euros? Sounds like a definition for chutzpah-light.

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