Dynamite Economy (5) -- Feeble Solutions

5. Feeble Solutions

The stellar growth of Japan in the 70s and 80s was fueled by Sony and the like. The regain of leadership by American, in the 90s was by IT/Communications. Clinton without IT will face similar challenges as Carter/Reagan facing Sony. We can quite clearly conclude that locomotives for economic growth were not, and will never be created by politicians, economists. These Joseph Stiglitz stated in his recent Raffles Speech in Singapore.

Even seven years latter, only few like DeLong[1] written about this phenomenon, based on dated numbers. In a rapidly changing market, knowing the number, without the cause, nor the scale, is as good as telling you yesterday was sunny. Others, Management Gurus like Michael Porters, have not demonstrated such foresight and insight into the cause and effect, scale and gravity of problems. This can be seen from his recommendation to Singapore government to focus on petrochemicals, fertilizers, and plastics. When low price for farm produce, stagnated electronics, these would not provide a substantial growth path.

Technology, innovations are not able to create enough investment opportunities to absorb over-abundance of wealth, of labor. So funds are rarely invested in Industrial facilities, production spaces. There are no job creations; there is no real wealth generation. The multiplier effects in economic axioms cannot be put into action.

Worse, excessive liquidity inflated the price of even every cake of tea, every gram of chocolate, even pay you to borrow (sub-prime loans), pay to buy others debt (negative value assets repackaged), to beyond imagination.

This demonstrated a fact that experts without grasping the root cause of issues, not only they cannot have foresight, they are even unable to solve problems at hands, not to dream effectively at the root.
[1] DeLong, Bradford, 2007. “Fear of Finance”, Project Syndicate, http://www.project-syndicate.org/.