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June 27, 2011


Bud Byrd

The Michael Spence article gives me a sense of foreboding, unfortunately not a sense of optimism. I think his point on tradeable and non-tradeable partitioning of the world economy is on target and well stated.

In our country it is argued by many that the 'market' will handle the economy ...that all we need do is back away from any type of intervention and success will be our reward. Mr. Spence's paper, if widely read and internalized, should lay to rest the market as a cure-all for America. The market has moved to optimization at the world level and not just to America, Western Europe and Japan.

Left unfettered, the market will move to a state of high efficiency and high effectiveness as a business engine, but from a jobs and family well-being perspective, it will create separate American communities of the haves and the have nots with little room for a middle of have somes. In a sharply partitioned community, America cannot remain the America that history has treated so kindly. The country, without a middle class, will die on the vine. Unfortunately, many see us taking that pathway to middle-class destruction at an alarming and ever accelerating rate.

Mr. Spence seems to articulate a future wherein the countries of the world, developed and emerging must come together and cooperate to ensure that we have equitable distribution of the fruits of world resources and world productivity.

He envisions the G20 playing a role that leads the world to a consensus on distribution of wealth, jobs and I suppose the standard of living amongst the current developed and emerging economies. I doubt the G20 has the capability to deliver on that vision.

The world's business leaders and the mandatory requirement of profits will trump any action, short of massive international regulation, that the G20 could employ. Of course, any compelling, world-wide management of the economy assumes that the G20 is an effective governing body. Realistically, it is a forum for discussions and not a governing body.

In a sense, the G20 is a metaphor for the problem. The G20 is a grouping of the well-off, maybe well-intentioned but individual and generally speaking, nationalistic counties of the world. It is quite difficult to get the members to agree on anything that will help one country or one set of countries to overcome problems and raise its (or their) level of participation in the fruits (and/or the collective responsibilities) of our planet. It is especially difficult when the G20 consists of the richest countries attempting to set the pace for all the countries of the world.

We are a world of individual countries, most with very selfish motives who will come to the table of cooperation reluctantly, and oftentimes only when compelled to do so by internal necessity or external force.

In our country, we have enjoyed several generations as “king of the hill”. Other countries, especially China, India, Brazil and others seem poised to climb the surrounding peaks ...many reaching the heights of the peak on which we reside. The rent on our peak may become so high that we will be forced to move to a lower one ...I don't see those on other adjacent or lower peaks worrying so much about where we, driven by our income and expenses, must live. How will America respond to the new world reality?

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