16 September 2010

To each his own!

More news from the US against outsourcing in particular, clearly the times are bad. Bangalore meanwhile does not appear unduly ruffled by these growing protectionist trends, 'He (Obama) has his own concerns for his own country, but nothing will stop India from emerging as a superpower not only in IT but in other areas also. I have no concerns on this," said P Radhakrisnan, from Infotech, quoted on NDTV.

The problem of course has much wider ramifications, as this article in the Knowledge@Wharton series points out, its not just China, but also Germany that needs to be included in the list of countries causing the global imbalance, and of course the US stands at the other end. There are no easy solutions.

Meanwhile, Wharton legal studies and business ethics professor Philip Nichols advises U.S. manufacturers to ignore the politics and "populist aversion" around today's trade imbalances, "Political borders don't reflect the commercial reality," he notes. Economies today are so intertwined that "a trade war is really a war on ourselves." This intertwining has also been noted by Richard Baldwin in the debate on the future of EU Trade Policy on Voxeu. The fact that production has been unbundled and there has been internationalisation of the supply chain must be kept in mind, he says,  while fashioning trade policies.

For two others who have left comments on the debate so far - Tim Worstall and Jeff York-  the answer is simple - keep politicians out and let businessmen handle business.
Unfortunately,  the simplest strategy is often the most difficult to implement in practice.

3 comments:

  1. "keep politicians out and let businessmen handle business."

    Well, sorta....although what I actually advocate is keep politicians out and let consumers handle consumption. Business and businessmen will catch up soon enough.

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  2. Agreed that global business is more intertwined than ever but believe we need international institutions/agreements to keep pace. Agreed consumers can direct business more effectively than government but consumers are often blind to where and how the products and services they consume are produced. That is of course the consumer's responsibility but business transparency would help this along as well.

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