Saturday, February 17, 2007

When globalization isn't for you...

To Brink Lindsey, the biggest mistake that Thomas Friedman (author of The World is Flat and the Lexus and the Olive Tree) makes is in believing that globalization is inevitable and governments are powerless. Lindsey's book after all, is titled "Against the Dead Hand: The Uncertain Struggle for Global Capitalism". Countries apparently willingly check out of the global economy all the time.

Which brings us to Venezuela and Zimbabwe. Zimbabwe inflation reached an annual rate of 1281% in December according to New York Times. But here's their prescription, as quoted by Greg Mankiw:

The central bank’s latest response to these problems, announced this week, was to declare inflation illegal. From March 1 to June 30, anyone who raises prices or wages will be arrested and punished. Only a “firm social contract” to end corruption and restructure the economy will bring an end to the crisis, said the reserve bank governor, Gideon Gono.
Now comes Venezuela (hat tip Instapundit) where Daniel Drezner reports "things are beginning to fall apart". What is a bit galling, is that while their problems are entirely predictable (i.e. if you print money ad infinitum, its value goes down), their ideological allies agree with the view that their problems are caused by some American conspiracy.

Same thing with Cuba in that sense. I don't know how many people who have said the whole reason Cuba is an economic basket case is that the Americans have had them embargoed for all this time. I've even agreed to a certain extent, but PJ O'Rourke, does a good job of reminding us of another small island that's been embargoed by an economic giant and in spite of it all, has done quite well for itself - Taiwan.

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