Relative Prices versus Inflation

Terms of trade have shifted away from agriculture toward manufacturing and away from manufactuing toward services since the industrial revolution started. This shift in terms of trade accelerated during the decades following World War II.

I have maintained that the introducton of 3 billion new producers and consumers into the free market system in the ealy nineties created a potential oversupply of labor for manufacturing (China) and services(India). The technology, media and communication revolution has made services tradeable. At the same time, the introduction of the new producers and consumers has increased the demand for agricultural products while reducing the labor supply to agriculture. More...

India is not built for visitors

One of the questions I always get asked by visiting investors or colleagues is why India does not look anything like China, Thailand, Brazil, Eastern Europe or any of the other emerging countries of the world.

I visited Thailand and Indonesia for the holidays this year and I think I have the answer for my distressed India watching friends. More...

The real economy is fractured!

When asked about the impact of the French Revolution, Chinese leader Zhou Enlai said that it was too early to tell.

The world is experiencing the continuing impact of the fall of the iron curtain and the integration of 3 billion people into the free market economic system. Unfortunately, these new entrants are realizing that the erstwhile evangelists of free markets don't like free markets anymore. They now want to change the rules of the game. More...