Saturday, May 03, 2008

Need For Economic Adjustments To Cope

Written on M.S. Prinsendam, In Arabian Sea--

One of the most memorable days spent thus far on my cruise around Africa was the ship's visit to The Gambia, a tiny West African country sandwiched in between parts of Senegal. The poverty was depressing. Toward the end of a long day in the hinterland, I saw a girl of about five, beautiful in a simple green dress, her eyes gleaming with intelligence, one of many who ran to the side of the road to see the tourists. I could not help thinking: What kind of future does this child have?

With oil prices skyrocketing, a push for biofuels to replace oil increasing, interest rate cuts by the Federal Reserve Board which have encouraged inflation and reduced the value of the dollar, and population control languishing, it is often the poorest countries in the world who absorb the brunt of such developments.

What is needed now?

1--In The Gambia, it is certainly population control. Those who resist it are being completely unrealistic. It, and countries like it, have already stripped their resources. They simply cannot support a greater population without desperate privation.

2--There has to be a careful assessment of the costs of biofuel production. It is fueling also in many cases a rise of food prices which has led to riots in Haiti, Egypt and other countries. Ethanol production in the U.S. has certainly led to a rise in corn prices. Some biofuels can be produced without affecting the food supply and food prices. Those must be emphasized, and others, which are shown to be counterproductive, need to be dropped. There is indeed a "food crisis," as is seen by the recent proposals made by Thailand for a world rice cartail, like, God forbid, OPEC.

3--Currency stabilization. The Federal Reserve Board seems more solicitous of Wall Street and its stock prices than it should be. An ever more valuable Euro is, paradoxically, contributing to European tensions, since it works in Germany's interest but not in those of France, Italy, Spain and Portugal. The fall in the dollar has generated ever higher oil prices in dollars, and most countries without oil pay in dollars, as do the American people. The adverse consequences economically of the drastic Federal Reserve cuts in interest rates over the past few months may well outweigh the benefits, such as lessening chances of a Recession.

4--Atomic power. It requires careful handling and a foolproof method needs to be developed for disposing of nuclear waste. But it produces electricity without the use of the global warming villains, oil and coal, and it is an absolutely necessary part of the mix. Certain countries like France are far ahead of the U.S. in its use.

5--I have previously suggested taking the matter of oil prices to the U.N. Security Council to begin discussions about a consortium which would share oil revenues worldwide. This may seem an idea the oil producers would never accept. But four of the five powers with a veto power in the Security Council -- the U.S., Britain, France and China -- are net oil importers, so there could be powerful support for such an idea, sort of a National Football League profit-sharing scheme.

It is fine to send economic aid to places like The Gambia. I'm all for it. But the underlying steps and reforms suggested above could do more good than whatever aid is being sent.



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