Saturday, January 24, 2009
We learn from history that we learn nothing from history
Right after the pious G-20 proclamations on eschewing protectionism, we got a flurry of protectionism from G-20 countries. Now India has banned the import of Chinese toys. Those who fail to learn from history are doomed to relive it. An outburst of barriers to trade or capital flows could tip us from this great recession to a great depression.
6 comments:
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LaTeX mathematics works. This means that if you want to say $10 you have to say \$10.
History is a nightmare from which we're trying to awake.
ReplyDeleteIts interesting, if the ban is coming because of bad design and hazards or protectionism.
ReplyDeleteSoham
The hazard complaint seems like a bad excuse for bending to the protectionist lobby.
ReplyDeleteThe Great Depression and its history are not the correct model for India in the current context. One must look at the changed world and Indian context to help figure out what we must be doing. Even while giving primacy to Market Phenomenon we must not forget our security and foreign policy needs. That would be tantamount to not learning fom history.
ReplyDeleteThe key variable which has mitigated the effects global recession over the past several years, was that the globalized trade was allowed to perform unfettered.
ReplyDeleteIt has been proved in history that combining tariff barriers with a downturn is a sureshot recipe for global depression.
And India cannot remain immune, depiste its relative short economic history. Especially so when we do not have alternative internal growth plan, not even in plan stage, except for haphazard policy prescriptions.
I believe that trying to shut yourself off the cyclone individually may not be the methods of survival. Rather, the world should act as a group and Trade has continue without barriers. Various central bank's concerted measure has mitigated the effects of recession to some extent till date.
It is good to recall that investment has always followed trade.
That there is a recession is certian and a very good chance that this will lead to a a Global Depression. Trade may mitigate this and help us get out of it in a shorter time. But the pain that all economies will have to bear will not be the same. A look at the exposure that the Indian Economy has to this reality shows the costs that we will have to bear. All other actions that we might take must also factor in other costs.
ReplyDeleteThese costs include unfetteed access to our markets without a quid pro quo. We also live in a dangeous environment. The costs must not be allowed to compromise us in any way.