Can Romney Really Make the Economy Grow?
Can Mitt Romney really make the economy grow? Romney says he'll foster a "recovery" if elected. But what if there is no recovery possible?
I ask this because I've been noticing a growing chorus of "slow growth" proponents out there. These people claim that the idea that we'll return either now or in the future to growth rates we had before 2008 doesn't make sense.
One group takes the view that oil production won't increase sufficiently to meet global demand. Since oil has fueled the growth of the world's economies for over a century, you can see why a lack of supply of oil would stunt growth. Makes sense, right?
The counter argument to this says that new methods of extracting oil from the ground - most typically "fracking" - will allow more oil to be produced and meet the world's growing demand. A variation of this says that new sources of energy will come on line. No, I don't mean solar or wind-generated energy. The idea that solar or wind technologies will provide sufficient energy to sustain worldwide economic growth has never really been sufficiently demonstrated. But something like "hydrino" generated power might prove to be a legitimate energy source that's available and cheap enough to use anywhere in the world. (You can read about it HERE.)
Another group claims that the sort of growth rates we've experienced in the 19th and 20th centuries were a historical anomaly. This group simply says that slow growth is more the norm throughout history.
These are all interesting thoughts and theories. But one thing I'm thinking we can count on - unfortunately - is growing trade wars. These trade wars have already been spawned by the ongoing phenomenon of "competitive devaluation" that countries around the world have pursued since the beginning of this century. "Competitive devaluation" occurs when a country manipulates its currency so that it will be worth less than the currency of other countries. When a country's currency is cheaper than other countries, the goods it exports to other countries are cheaper. This gives a country an advantage when it exports goods.
Of course, what happens when Country A makes its currency cheaper to gain this advantage is that Country B goes ahead and makes its currency cheaper to take back the advantage. And so it has gone around the world from country to country, since the 21st century began.
But now it seems competitive devaluations aren't enough. With the economy of the world slowing, countries around the world have now taken the next step to initiating trade wars. "Competitive devaluations" are really a more mild, let's say polite, version of trade wars.
And so governments have now begun to slap special taxes and tariffs on goods from other countries in order to make imports more expensive. They think they're supporting their local economy by making imports expensive because theoretically their domestic goods won't be as expensive.
The thing about trade wars is that they've never proven to be really effective and have in some instances led to actual hot wars. The 1930s found countries around the world - countries experiencing the Great Depression - engage in trade wars. By the late '30s, actual shooting wars broke out that eventually wound up being World War II.
Now we're in the midst of a pretty serious economic, well, call it whatever you will: crisis, downturn, recession, depression. And here we go again with the trade wars.
So, Mr. Romney, how exactly will your being elected bring "recovery"? I know you've said you'll use government to help business grow. Does that include engaging in trade wars? If not, what will you do about all those other countries who are indeed engaging in trade wars? Ignore them?
The point is, it's not going to be so easy, even with your experience in the private equity business to make the economy grow. Slow growth isn't just an Obama phenomenon, and recovery may take a lot longer and prove to be a lot slower and weaker than you think.
I ask this because I've been noticing a growing chorus of "slow growth" proponents out there. These people claim that the idea that we'll return either now or in the future to growth rates we had before 2008 doesn't make sense.
One group takes the view that oil production won't increase sufficiently to meet global demand. Since oil has fueled the growth of the world's economies for over a century, you can see why a lack of supply of oil would stunt growth. Makes sense, right?
The counter argument to this says that new methods of extracting oil from the ground - most typically "fracking" - will allow more oil to be produced and meet the world's growing demand. A variation of this says that new sources of energy will come on line. No, I don't mean solar or wind-generated energy. The idea that solar or wind technologies will provide sufficient energy to sustain worldwide economic growth has never really been sufficiently demonstrated. But something like "hydrino" generated power might prove to be a legitimate energy source that's available and cheap enough to use anywhere in the world. (You can read about it HERE.)
Another group claims that the sort of growth rates we've experienced in the 19th and 20th centuries were a historical anomaly. This group simply says that slow growth is more the norm throughout history.
These are all interesting thoughts and theories. But one thing I'm thinking we can count on - unfortunately - is growing trade wars. These trade wars have already been spawned by the ongoing phenomenon of "competitive devaluation" that countries around the world have pursued since the beginning of this century. "Competitive devaluation" occurs when a country manipulates its currency so that it will be worth less than the currency of other countries. When a country's currency is cheaper than other countries, the goods it exports to other countries are cheaper. This gives a country an advantage when it exports goods.
Of course, what happens when Country A makes its currency cheaper to gain this advantage is that Country B goes ahead and makes its currency cheaper to take back the advantage. And so it has gone around the world from country to country, since the 21st century began.
But now it seems competitive devaluations aren't enough. With the economy of the world slowing, countries around the world have now taken the next step to initiating trade wars. "Competitive devaluations" are really a more mild, let's say polite, version of trade wars.
And so governments have now begun to slap special taxes and tariffs on goods from other countries in order to make imports more expensive. They think they're supporting their local economy by making imports expensive because theoretically their domestic goods won't be as expensive.
The thing about trade wars is that they've never proven to be really effective and have in some instances led to actual hot wars. The 1930s found countries around the world - countries experiencing the Great Depression - engage in trade wars. By the late '30s, actual shooting wars broke out that eventually wound up being World War II.
Now we're in the midst of a pretty serious economic, well, call it whatever you will: crisis, downturn, recession, depression. And here we go again with the trade wars.
So, Mr. Romney, how exactly will your being elected bring "recovery"? I know you've said you'll use government to help business grow. Does that include engaging in trade wars? If not, what will you do about all those other countries who are indeed engaging in trade wars? Ignore them?
The point is, it's not going to be so easy, even with your experience in the private equity business to make the economy grow. Slow growth isn't just an Obama phenomenon, and recovery may take a lot longer and prove to be a lot slower and weaker than you think.
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