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Economics

“Why the Critics Are Wrong: Sad About the State” Summary

(1) The author opens up, after his quote from Gray, with a very powerful and descriptive statement that the global economy directly has an effect on policies put into place in individual countries. In fact, he goes so far as to introduce the fact notion that an unregulated economy can make a government completely irrelevant altogether, and tells the reader this is well established–only for means of ironic purposes. Instead, he adopts the very opposite idea–that the economy can mold the government and its policies.

(2) The author then goes on to attack the generally accepted “excuse” that globalization is “inescapable”. The author cites the statement that globalization makes things such as tax cuts, a reduction in spending, and a reduction in regulation possible as a frequently used, but baseless excuse. In addition, he cites crafts a dangerous “keeping up with the Jonses” scenario. The taxes and regulation levels of one sovereign nature are serving to more than influence, but even to destroy the economic systems of others.

(3) Western Europe has a model that involves high taxes, high regulation, and increasingly Socialist policies. These policies, especially indicative of welfare and wealth redistribution, are made impossible when economies such as America’s are allowed to run wild. Each government is going to have its individual needs with regards to economic policy–whether it be government-sponsored employment or a weighed tax bracket, these “common good” programs are made impossible by the economic aspects of globalization. (4) The countries that have the least amount of regulation are always going to be able to employ the most pro-business policies–inherently giving them an advantage.

(5-6) Globalization as a whole, and when kept in check, is necessary to the growth of a nation as a whole. Technological advancements have allowed split-second connectivity like never before, allowing for the instant transmission of information–information free like never before.

While developing states open their borders to aspects of international trade such as trade and development to benefit their citizens, this eventually spirals into a fully globalized economy–often at the expense of the unskilled workforce as a whole. The policy of outsourcing is a perfect example of this. When a country’s economic policy is exploitative on a global scale, as seen in recent years, its greed motivates leaders to choose laws to enforce carefully and selectively.

(7-9) To be able to continue to function, a country must be able to generate revenue through taxation. If people cannot afford to pay taxes in high-rate economies, unskilled labor will move to where they can afford to live. With the absence of unskilled labor, it is extremely difficult for a country to continue to economically develop. To keep this unskilled labor within a country, social policies such as a more reasonable minimum wage must be adopted. Statistics show that general government tax revenue has marginally increased, but as a share of GDP percent. In addition, while taxes on corporations have gone down, person taxes have gone up. This points to a widening stratification overall, and explains it as well.

(10-12) There is definitely a connection between a national deficit, constraints on the development on other countries, and which constraints are desirable. For example, necessary constraints are those that place restrictions on “fiscal termites”. Things made to impede an economy is, as unskilled workers, the moving of skilled labor to other countries. Often times these countries have better financial benefits, giving the individual incentive to contribute to a foreign economy.

Deficit spending depends directly on the economic climate of the country in question. If the country is viewed as a “safe” investment, as within personal banking, they tend to be favored, and rightfully so, in the international credit market. Unfortunately, this causes an even further disconnect between the developed and the developing, as a country less established is likely to generate less faith. This is an indirect and unwanted constraint on developing and globalized economies.

Other constraints necessary to employ would be many of the same principles set forth by the Roosevelt Administration after the Great Depression: government-controlled interest rates and housing markets. In addition, many of these countries would truly benefit from a living wage, rather than a minimum one, to ensure all citizens are taken care of adequately.

(13-14) Globalization is both an opportunity to strengthen international bonds, but also to break other domestic ones. Some argue that implications of globalization could be the break down of nations as a whole, in favor or a more global governing body. This is not advisable; it will serve to not only destroy patriotism, but lose entire cultures, forever swallowed up by the encompassing challenges of moderating globalization.