US WATCH: TRANSPORT U.S. BACK TO PROSPERITY

Erle Frayne  Argonza y Delago

The final feature of the US ‘real economy’ worth featuring is transportation & communications. This is among the most productive sectors that produce real wealth, contrasted to the ‘casino economy’ of predatory finance that produces wealth from out of wealth itself, producing really nothing worth our value. Broad as it is, let me focus on the transport sector.

 

Time was when the railway industry took off, inducing growth as soon as the railways hit the West. The continental divide among the US states was bridged quickly, intra-trade exponentially increased. Soon enough, foreign trade also increased in leaps and bounds as maritime shipping grew and matured quickly, making US articles of trade be exported to all corners of the planet.

 

Trains, ships, airplanes, automotives, trucks, heavy equipment, tractors, and other state-of-the art prototypes came out of America’s workshops to propel growth not only in the US but in other countries as well. “Made in the USA” products became household words everywhere, including my Wild Wild West province of Cagayan in Northern Philippines, precisely due to the miracle of the transport sector that was broadly a facet of the ‘real economy’ of America. I was a child in the 1960s and early 70s when the “Made in the USA” was chic and almost a cult-level cliché.

 

That era now is now consigned to the dustbins of a remote past. Sure, America still produces state-of-the art transport prototypes. But look, railways have stagnated (is there a mag-lev there now?), automotives are shrinking by the day (laying off and displacing thousands of top quality industrial technicians), while the cutting edge technology for almost all prototypes, save for military transport, have already been surpassed by Asia.

 

McCain and Obama should better do their homework and understand the catastrophic future that awaits America if the transport sector remains neglected and ceaselessly ravaged inch-by-inch by the infernal fires of predatory finance. The policy makers there better salve the ailing sector quickly, and get back those laid-off topnotch industrial technicians to work before they lose every iota of motivation to even get involved in the sector they grew up with but which rejected them (how traumatic!).

 

If there’s any sector to begin with, it’s railways. Better renovate the railways, and establish maglevs in all the major continental routes of the US. And quickly take the initiative to establish cross-border maglevs with Canada and Mexico. Later, establish maglevs connecting Alaska with Russia via Siberia, thus connecting US to the Asian land mass.

 

Sorry for sounding ‘interventionist’, fellows in America. We Asians are as concerned with your economy as you are, and we would want your economic leadership to again rise to the fore. If America does that, other nations will then move on, propelled by growth in the ‘real economy’ because America is doing so. Failing to do that, the economic baton will transfer to Asia, and it will crash our hearts to see our fellow Earthans of America sinking in esteem by the day, because of their collapsing prosperity.

 

We are all siblings on Earth, this is certain, that’s why we share words of wisdom about your economic conditions. May you finally have a reform-oriented President comes this coming electoral contest.

 

[Writ 07 June 2008, Quezon City, MetroManila]

SAVE THE PHYSICAL ECONOMY

Erle Frayne D. Argonza

 

[Writ 23 March 2008, Quezon City, MetroManila]

 

Globalization is not only destroying the nation-state. It has also been destroying the ‘physical economy’ that is the economic foundation of the nation-state. All in the name of the greed of the financier oligarchs, who bred the monstrous ‘virtual economy’ founded on predatory finance.

 

The New Nationalism, as contended in my meaty article on the same, argues strongly for a restoration of the physical economy of affected nations. The USA, which produces 22% of the world’s gross economic output, is now in the phase of advanced decay as its physical economy had been looted and eventually destroyed by predatory financiers. There is now way that we citizens of the global community can’t be concerned about this, as the eventual crumbling of this megalithic economy will redound to global economic turbulence that can lead to global war.

 

In East Asia we all witnessed the horror of the economic meltdown in the late 1990s. Though the impact of that meltdown is hardly felt today, we saw the horror of it just the same. We peoples of the region simply felt so helpless as the contagion smelted the mightily growing economies here, beginning by destroying the currencies and ending with the crash of the physical economies.

 

Incidentally, East Asia has a better chance to weather the storms being caused by predatory globalization. The physical economy here has better chances of being secured, even food security has better chances of crystallizing contrasted to the crashing economies of the USA and Europe.

 

The lesson should be clearly read by every development practitioner: destroy not thy physical economy if you want peace and development to go on in sustained levels. Absent the physical economy, and the nation will crumble, leading to civil disturbances and uprisings and even to global conflicts among the world powers.

 

Below is the entire subsection regarding the physical economy culled from the New Nationalism article.

 

Continue to stimulate growth through the ‘physical economy’.

 

This writer strongly argues that the greatest driver of the economy must be the ‘physical economy’. By ‘physical economy’ we refer to the combination of (a) agriculture, (b) manufacturing, (c) infrastructure, (d) transport and (e) science & technology (S&T) whose results further induce ‘production possibilities’ in the sectors a-d. An economy that is prematurely driven by the service sector, growing at the expense of the physical economy, will create imbalances in the long run, failing in the end to meet the needs of the population. A premature service-driven economy would be subject to manipulations by predatory financiers, who would do everything to destroy the national currencies and consequently the physical economy of the nation as well. An economy driven by derivatives and every kind of speculative pursuit is a ‘virtual economy’ such as what has dominated the USA since the era of Reaganomics.

 

I would hazard the thesis that our national economy moved to a service-driven phase prematurely. Look at all the fiasco after our ‘physical economy’ had rapidly declined in GDP contributions since the early 1990s, as the service economy advanced in its stead! Relatedly, the over-hyped Ramos-era ‘Philippines 2000’ economy was largely a ‘bubble economy’ driven by speculation and portfolio capital, and was more in kinship with the ‘virtual economy’ than any other one. We have not fully recovered from the bursting of that bubble, even as we are now threatened with another bursting of sorts—of the debt bubble, leading to fiscal crisis.

 

It pays to learn our lessons well from out of the immediate past experiences. And the clear message sent forth is: get back to the physical economy and re-stimulate the concerned sectors, while simultaneously perfect those services where we have proved to be competitive, e.g. pre-need sector, retail, restaurant/f&b. We should also strive to learn some key lessons from other countries’ positive experiences such as China’s, whose economy continues to grow enormously, and grow precisely because it is the physical economy that primarily drives it up and lead it—at an enormously rapid rate—towards development maturity, permitting China to outpace the USA’s economy on or before 2014 (using GDP Purchasing Power Parity indexing).