Feb, 1, 2006

Quick comment on the Alan Greenspan impacts. This article was written to mark the day. Today might become a milestone in the global economy, or a turning point of globalization, after the nearly two decades of Alan Greenspan’s post as the chairman of FED ended.

我不是經濟專家, 不過是一個從關心勞工權力的臺灣大學生, 到一個身任美國公司管理階層的一員.　多年來 我一直在思索, 　大經濟環境對民生問題的衝擊, 尤其是對臺灣人的衝擊有多大. 這十八年中,　 臺灣與美國的經濟關係密切, 且都受到一位重要人士的重大影響: 美國聯邦儲備理事會會主席 - 葛林斯潘.

葛林斯潘, 在經濟全球化關鍵時刻的今天退休了 十八年前 伏爾克卸任 貨幣供應論已近末期 而今 交易論似乎面臨空前的挑戰. 他到底扮演怎樣的角色　近二十年來　美國如何受到他的影響呢？ 將來美國及全世界經濟又面臨一個樣的局面呢?

After all these years, the only thing I have learned for sure about
economy is that: "The only certainty of economy is the uncertainty."
One of the best example was an interview of two economists couple
years ago. The interview with those two gentlemen was centered on
how good the economy was at that time. The two highly recognized
economist friends brought up their different opinions, and it turned out
they pretty much disagreed on every single aspect during the
discussion.

Today is the first day after Alan Greenspan stepped down, from the
position not that many people can spell correctly. In coming is Ben
Bernanke, a person four years ago was just an economy professor.
So, what is going to be changed? In US, a battle of minimum living
wedge is going on in many places. Is Mr. Bernanke going to address
the domestic and global economy issues properly? Interestingly, there
are only few people set the expectation that high. After all, Greenspan
is as popular as Pope John Paul II. He was holding a position that
people believed created the new waves of American economy, which
Japan failed to catch up with, then the united Europe is also struggling
to figure out the balance point of competibility and the welfare of
European people. Now, can this trend substain, or it is going to decline?

First, let's look at what Greenspan's image to general public. For stock
market investors, home owners, business owners, Greenspan was
the man for interest rate. Greenspan almost lower the interest rate
to almost historic low late in his term. He did that in order to revive
the US economy. But how could there be such a terrible down turn in 
the year 2000? While everyone was so nervous about the millenium
bugs, the unreal internet bobble was about to burst. It was a
business built on a weak fundaction. The ones running the business
knew, but investors were just willing to throw in their money to
finance those companies. With the low interest rate policy, people 
was able to buy more products, houses, cars, consumer products, 
more students was able to get the loans for their educations, many
cooperates in American were able to survive through external financing
when the company was not profitable.

But, the scope of his job is way beyond just the interest rate policy.
At least, he was able to hold a strong position in the US currency rate,
even it went through some up and down period. In the hours long
regular press conference, Mr. Greenspan usually released a lot more
information then most people were aware of. Many people just looked
at the outcome, rate changes. But the long term impact was actually
from messages he delivered during the press conferences. They were 
about his about policy, his view points of economy, his philosophy, and
others. Listening careful in Greenspan's conference once, you could
barely understand what he tried to say. Believe me, I taped record
several of his press conferences, or even went through couple time
in live, trying to learn what he tried to say, in the mean time learn
how to speak good English. His wording was so sophisticated that
you could not understand what his position was unless some
economist explained to you word by word. I couldn't even
understand whether his message was positive or negative. At this
day as he stepped down, I finally realized that it was probably just
one single word: Flexibility.

Greenspan constantly address the trend of globalization. In reality,
by opening up the global market the costs of products are kept the
similar level, or even lower. Yes, it is correct that a box of cereal costs
60 cents more than 18 years ago when Greenspan joined Federal
Reserve, when such changes could be doubled in the previous
decade. Things are getting even better in the past few years, for
example an outdoor garden furniture set used to cost US$3,000 now
cost US$600, or even cheaper. Why, they are made in China
now. What does that mean? It means that American companies are
losing the market, and the American are losing jobs. Just take the city
that is hosting the Super Bowl this Sunday, Detroit. Detroit is one of
the over looked cities that have many things and maintain a low living
cost, housing, food, rental, in the US. However, Suprt Bowl to the
Mo-town work force seems to be something that is happening in a
different world. Ford and GM have announced a laid-off of 30,000
work force each. We can't help to wonder whether the government,
the city, are spending to much money on the Super Bowl, other than
creating more long term jobs for people. So much about Henry Ford's
promise to the labor union that one day, they will make enough
money to buy the car they make. Ironically, the stadium that is going
to host the Super Bowl is still called Ford Stadium. And you are sure
to see a lot of automobile commercials throughout the game.

Nobody tried to explain that, at least not Mr. Greenspan. It is hard to
explain to people the free-market policy helps them if they are out of
the job and can’t afford a thing. Low price is good only when you
have the same income. Greenspan and other economists were, and
are still trying to explain to people that the decline in job loss is a short
term loss for the gain of making more products available and in the
cheaper price. But, please try to explain to those who have lost their
jobs or are going to lose their jobs in the near future. To economists,
they are just numbers. In the past few years, US economy is
facing a new challenge in job losing. The insurance companies are
offering the un-employed package that will pay people enough if they
lose their job, but they are still trying to find out how much they
should pay without keeping people unemployed. So, now try to
answer this, is globalization really a good thing?

This brings us back to the 1819 treatise by David Ricardo, a famous
British economist who came up with the classic argument in favor of
trade: When England specializes in cloth and Portugal in wine,
they end up better off than if each tries to make everything. Do you
remember what happened after that? Countries signed that treatise
was trying to open up the global market. It led to wars when they ran
into obstacles. Sounds familiar? I hope this time, Mr. Bernanke can
make me understand better about the pros and cons of certain
economical policies.