Luke,
Thanks for the link. Interesting read.
The author makes a couple of important points,. The first if the relationship of trade and government. We today tend to think Government is somehow promoting or controlling trade. The opposite is probably a better approximation of the situation. Government is shaped by economic interaction be it national or international. From time to time government will make laws to encourage or discourage trade, but it is the need for goods that drives trade. The author appears to be somewhat conservative in his assessment of this process. It has been going since the start of civilization. When the Pilgrims hit Plymouth Rock they dined with the natives on corn. Corn was first found in South America and transported to the north through trade. The diffusion of product is transparent to organized borders. Our War on Drugs is testament to the ubiquitous nature of trade.
Openness is a key characteristic to economic and business growth. As I laid out in an earlier post on Microsoft, I showed how Microsoft gained an unfair advantage on the competition by opening up their software to one and all. The openness of England to trade allowed them to build the Commonwealth - the greatest world organization ever created. Only after England ran towards protectionism and closed borders did they run into economic trouble. While England was building its wealth China was
closing down trade ending a long period of economic prosperity.
I have to take a couple of exceptions on the theme. How does on infer openness. With Smoot Hawley it was easy to draw a conclusion. Was WW II a period of openness? Probably not when viewed from government perspective, but in reality the clashing of Armies forced innovation at an increased pace. The stealing of ideas and technology was probably at its greatest in history. After the War the US seeded both the European and Japanese economies with money and technology, in some cases to the disadvantage of our allies. Nothing came back for a while because of the physical devastation.
In many ways I have to agree with Carl on this one. Each long wave while having similar drivers has to be treated on its own. WW I and WW II were not part of some long cycle. They were an outcome of displacement. WW I was unique in that it displaced in a short time almost all of the crown heads of Europe and Russia. These were families who ruled Europe in some cases for centuries. Such a revolution has never been seen before. Technology of manufacturing reaching critical mass created the shift.
WW II was a direct outcome of the use of technology to get ones historic enemies. Just as the Native Plains Americans used the horse to get at their natural enemies the diverse cultures of Europe used technology to get at theirs. Manufacturing is a homogeneous process - all units look the same. Is it any wonder Hitler had such an appeal when he wanted to create a world where all was similarly
homogeneous?
Massive geopolitical change takes place in the down grade. Is it instability that brings on these changes or is it innovation that demands different governmental structures? One can never really know. While the characteristics are similar, the outcomes and manifestations are different. I am always suspicious when one uses 1929 as a point from which to measure anything. The conditions creating 1929 are unique and will never be repeated. I prefer to find similarities and deal with aberrations on a one to one basis.
People making the comparison of the 1980s to the 1930s are always disturbed because the 1980s did not have the high levels of bone grinding unemployment. Neither did the 1980s have net deflation or breed massive wars. These differences cause some to argue there is more depression or down grade to come. It is the interaction of conditions and accumulated wealth that skews the reality. Certainly, Flint Michigan and Soviet Russia saw the bone grinding unemployment and depression easily equivalent to the 1930s.
The point I am attempting to make is while the author is correct in saying trade transcends government. He is missing, by using history as a basis, the massive social and governmental shift taking place today right in front of us. What is occurring to day with Globalization is new and is unique. What makes it unique and separate from the past is the information revolution. Trade of goods can be regulated by government. The trade of ideas and information cannot. As such government loses central control. The
social structures evolving today are as equally as great as the hippy revolution of the 1960s. The biggest issue facing Bush in the next election is not the war on terror or the economy, but our relations with Europe.