Economic crisis can scare people so much that they are seduced by populists and demagogues. This reaction is as human as it is dangerous. Now as always the prophets of doom know exactly what and who is to blame: greedy capitalists, markets and gobalisation. But if these new antiglobalists succeed, the poor and weak will suffer first and most – in the U.S. and around the globe.
C. Fred Bergsten from the Peterson Institute explains in the Washington Times how globalisation has so far saved the U.S. economy from recession and will probably continue to do so (although it’s still too early to tell):
“International trade has saved the day. Our external balance has improved by more than $200 billion as calculated for gross domestic product (GDP) purposes, cutting the previous deficit by more than one-third. This dramatic progress has kept the overall economy growing by modest amounts. The prophets of recession ignored the international engagement of the US economy. The OECD foresees continued modest expansion of the US economy during 2008–09, with 80 percent of the impetus coming from trade improvement.”
Watch three videos of a Peterson Institute semiannual meeting earlier this year on the question of how much the crisis can be expected to slowdown economic growth in the U.S. and the rest of the world.
Outlook for the world economy – Michael Mussa
The current financial crisis – Morris Goldstein
Prospects for India and emerging market economies – Arvind Subramanian
“The world economy stands at a fragile point. The United States has slowed sharply and may be in, or approaching, a recession. The world economy as a whole is proceeding much more strongly, however, and a key question is the extent to which it has “decoupled” from the United States and may even be cushioning the US downturn through a process of ‘reverse coupling.'”
So, some reasons to be worried. No reason to panic!