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To Trade Or Not To Trade

Time: China’s biggest threat is not its currency manipulation. GlobalPost: Obama deserves blame for the failure of Mideast peace talks. WSJ: Europe benefits from US protectionism.

Economic downturn risks threatening public support for free trade

Paul H. Rubin, professor of economics at Emory University, writes in the Wall Street Journal that professional economists agree that free trade is good for the global economy, and yet the public often supports protectionist, anti-outsourcing policies. He writes that politicians at times capitalize on the incorrect belief that there exists a limited number of jobs in the world.

QUOTE: One of the great triumphs of modern economics is the reduction in tariffs and other barriers to the free international flow of goods. Enough voters have been convinced of the benefits of free trade that it has generally been a winning political position, and those running on protectionist platforms do not do well in contemporary America. It would be a disaster if the current economic malaise reversed this situation.

China’s size poses both challenges and opportunities

Columnist David Pilling writes in the Financial Times that China’s sheer size has a profound impact on its challenges and opportunities. Its size impacts how its currency policy is viewed and its demand for resources. Its large internal market also enables it to quickly develop competitive industries.

QUOTE: China’s size means it can’t do anything without making waves. But it also gives it a much better chance of riding out the rough seas ahead.

China’s biggest threat is not its currency manipulation

Journalist Fareed Zakaria writes in TIME that the real threat that China poses is not related to its currency policy but rather that it will move up the value chain. China’s investment in human capital will pose a serious competition to the US economy.

QUOTE: China is beginning a move up the value chain into industries and jobs that were until recently considered the prerogative of the Western world. This is the real China challenge.

Republicans would be even worse for the economy

Columnist Nicholas Kristof writes in the New York Times that US Republicans attack the Obama administration and Democratic Party over the state of the US economy, but their proposals would create fewer jobs, worsen the deficit and increase the nation’s income gap.

QUOTE: The Republican tax cut would lead to an even more gargantuan gap between rich and poor. As Warren Buffett has said: “There’s class warfare, all right. But it’s my class, the rich class, that’s making war, and we’re winning.”

Private sector fears slow economic recovery

Alan Greenspan, former chairman of the US Federal Reserve, writes in the Financial Times that anxiety in the US private sector continues to hurt the economy and has defused much of the Obama administration’s fiscal stimulus. Restructuring of the financial system and the large national debt keep the business community’s fears alive.

QUOTE: The critical question, of course, is how much of a contraction in deficits and a decrease in the frenetic pace of new regulations can assuage the sense of a frightening future, allowing the natural forces of economic recovery to take hold.

Obama deserves blame for the failure of Mideast peace talks

Joel Brinkley, a professor of journalism at Stanford University, writes in GlobalPost that President Obama deserves much of the blame for the collapse of Israeli-Palestinian peace talks. Obama should have known, he argues, that US presidents have never been successful at pushing settlements as the key issue.

QUOTE: Now, because of settlements, the peace talks are moribund. [Israeli Prime Minister Benjamin] Netanayahu still has time to change his mind before the Arab League meets on Friday and almost certainly ratifies the Palestinians’ decision to end the negotiations. After that, I can’t see how the two sides can talk about peace again in the foreseeable future.

Europe benefits from US protectionism

An editorial in the Wall Street Journal argues that the US Democrats’ protectionist policies have hurt the country’s exports, while European countries have subsequently reaped the benefits of new trade deals.

QUOTE: Congratulations are due to US Democrats for the success of their recent export promotion initiative—at boosting exports between othercountries. Witness the trade deal the European Union and South Korea signed this week. There but for the foolishness of US protectionists could have gone America.

China holds all the power

Financial journalist Eric J. Weiner writes in the Los Angeles Times that China has been acting so aggressively with global powers like the United States and Japan because its leaders know that if necessary, China would win a trade war.

QUOTE: China could inflict real pain on the US without feeling it at home. For instance, by simply moving the maturities of some of its $850 billion in Treasury holdings from 90 days to 60 days, it could cause chaos in the US stock markets.

Seoul must prepare for a North Korean transition

Chief editorial writer Lee Chang-sup writes in the Korea Times that South Korea must respond to the likely leadership transition in North Korea by regularly consulting with the United States, China, Japan and Russia over the North’s political situation; preparing its people for reunification; and persuading China to accept a unified Korea.

QUOTE: In 2012 when North marks the centennial of the Kim Il-sung’s birth, the South will hold a presidential election. Kim Jong-il knows how to exploit a change of power in the South.

Moving beyond the dollar

Adrian Pabst, a lecturer in politics at the University of Kent and a visiting professor at the Institut d’Etudes Politiques de Lille, writes in the Moscow Times that both China and the US are distorting free trade. He argues that Russia, Europe and Brazil should respond to this by creating a new global currency mechanism and eventually a new world reserve currency.

QUOTE: Second, Russia, Brazil and the EU can lead the way in trading much more in their respective currencies instead of relying primarily on the dollar.