The Frontiers of Management. Peter F. Drucker

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СКАЧАТЬ matter how many of these Eurodollars, or yen, or Swiss francs are just being moved from one pocket into another and thus counted more than once, there is only one explanation for the discrepancy between the volume of international money transactions and the trade in goods and services: capital movements unconnected to, and indeed largely independent of, trade greatly exceed trade finance.

      There is no one explanation for this explosion of international—or more accurately, transnational—money flows. The shift from fixed to “floating” exchange rates in 1971 may have given the initial impetus (though, ironically, it was meant to do the exact opposite). It invited currency speculation. The surge in liquid funds flowing to Arab petroleum producers after the two “oil shocks” of 1973 and 1979 was surely a major factor. But there can be little doubt that the American government deficit also plays a big role. It sucks in liquid funds from all over into the “Black Hole” that the American budget has become* and thus has already made the United States into the world's major debtor country. Indeed, it can be argued that it is the budget deficit which underlies the American trade and payments deficit. A trade and payments deficit is, in effect, a loan from the seller of goods and services to the buyer, that is, to the United States. Without it the administration could not possibly finance its budget deficit, or at least not without the risk of explosive inflation.

      Altogether, the extent to which major countries have learned to use the international economy to avoid tackling disagreeable domestic problems is unprecedented: the United States, for example, by using high interest rates to attract foreign capital and thus avoiding facing up to its domestic deficit, or the Japanese through pushing exports to maintain employment despite a sluggish domestic economy. And this “politicization” of the international economy is surely also a factor in the extreme volatility and instability of capital flows and exchange rates.

      Whatever the causes, they have produced a basic change: In the world economy, the real economy of goods and services and the symbol economy of money, credit and capital are no longer tightly bound to each other, and are, indeed, moving further and further apart.

      Traditional international economic theory is still neoclassical and holds that trade in goods and services determines international capital flows and foreign-exchange rates. Capital flows and foreign-exchange rates these last ten or fifteen years have, however, moved quite independently of foreign trade and indeed (for instance, in the rise of the dollar in 1984/85) have run counter to it.

      But the world economy also does not fit the Keynesian model in which the symbol economy determines the real economy. And the relationship between the turbulences in the world economy and the domestic economies has become quite obscure. Despite its unprecedented trade deficit, the United States has, for instance, had no deflation and has barely been able to keep inflation in check. Despite its trade deficit, the United States also has the lowest unemployment rate of any major industrial country, next to Japan. The U.S. rate is lower, for instance, than that of West Germany, whose exports of manufactured goods and trade surpluses have been growing as fast as those of Japan. Conversely, despite the exponential growth of Japanese exports and an unprecedented Japanese trade surplus, the Japanese domestic economy is not booming but has remained remarkably sluggish and is not generating any new jobs.

      What is the outcome likely to be? Economists take it for granted that the two, the real economy and the symbol economy, must come together again. They do disagree, however—and quite sharply—about whether they will do so in a “soft landing” or in a head-on collision.

      The soft-landing scenario—the Reagan administration is committed to it, as are the governments of most of the other developed countries—expects the U.S. government deficit and the U.S. trade deficit to go down together until both attain surplus, or at least balance, sometime in the early 1990s. And then capital flows and exchange rates would both stabilize, with production and employment high and inflation low in major developed countries.

      In sharp contrast to this is the “hard-landing” scenario. With every deficit year the indebtedness of the U.S. government goes up, and with it the interest charges on the U.S. budget, which in turn raises the deficit even further. Sooner or later, the argument goes, this then must undermine foreign confidence in America and the American dollar: some authorities consider this practically imminent. Then foreigners stop lending money to the United States. Indeed, they try to convert the dollars they hold into other currencies. The resulting “flight from the dollar” brings the dollar's exchange rates crashing down. It also creates an extreme credit crunch, if not a “liquidity crisis,” in the United States. The only question is whether the result will be a deflationary depression in the United States, a renewed outbreak of severe inflation, or, the most dreaded affliction, stagflation, that is, both a deflationary, stagnant economy and an inflationary currency.

      There is, however, also a totally different “hard-landing” scenario, one in which it is Japan rather than the United States that faces a hard—a very hard—landing. For the first time in peacetime history the major debtor, the United States, owes its foreign debt in its own currency. To get out of its debt it does not need to repudiate, to declare a moratorium, or to negotiate a rollover. All it has to do is to devalue its currency, and the foreign creditor has effectively been expropriated.

      For foreign creditor read Japan. The Japanese by now hold about half of the dollars the United States owes foreigners. In addition, practically all their other claims on the outside world are in dollars, largely because the Japanese have so far resisted all attempts to make the yen an international trading currency lest the government lose control over it. Altogether, the Japanese banks now hold more international assets than do the banks of any other country, including the United States. And practically all these assets are in U.S. dollars—640 billions of them! A devaluation of the U.S. dollar thus falls most heavily on the Japanese and immediately expropriates them.

      But also, the Japanese might be the main sufferers of a hard landing in their trade and their domestic economy. By far the largest part of Japan's exports go to the United States. If there is a hard landing, the United States might well turn protectionist almost overnight; it is unlikely that we would let in large volumes of imported goods were our unemployment rate to soar. But this would immediately cause severe unemployment in Tokyo and Nagoya and Hiroshima and might indeed set off a true depression in Japan.

      There is still another hard-landing scenario. In it neither the United States nor Japan—nor the industrial economies altogether—experiences the hard landing; this will be suffered by the already depressed primary-products producers. Practically all primary materials are traded in dollars; thus, their prices may not go up at all should the dollar be devalued. They actually went down when the dollar plunged by 30 percent between June 1985 and January 1986. Japan may thus be practically unaffected by a dollar devaluation; all she needs her dollar balances for, after all, is to pay for primary-products imports, as she buys little else on the outside and has no foreign debt. The United States, too, may not suffer, and may even benefit as American industrial exports become more competitive. But while the primary producers sell mainly in dollars, they have to pay in other developed-nations currencies for a large part of their industrial imports. The United States, after all, although the world's leading exporter of industrial goods, still accounts for one-fifth only of the industrial goods on the world market. Four-fifths are furnished by others—the Germans, the Japanese, the French, the British, and so on. Their prices in U.S. dollars are likely to go up. This then might bring on a further deterioration in the terms of trade of the already depressed primary producers. Some estimates of the possible drop go as high as 10 percent, which would entail considerable hardship for metal mines in South America and Rhodesia, and also for farmers in Canada, Kansas, or Brazil.

      There is, however, one more possible scenario. And it involves no “landings,” whether soft or hard. What if the economists were wrong and both American budget deficit and American trade deficit could go СКАЧАТЬ