I think the question is not whether some sort of dirigisme is the answer to better economic growth. I realize that this is scarcely a widely-accepted argument, but I think the credit crisis and coming economic deflation will bring the numbers into focus.
If we start from a pro-dirigisme point of view, the question becomes what that dirigisme should and will look like. You concede my original point here, but I didn't mean to make the point as purely negative. I just think the BRIC thesis - which one finds on the left and right - comes both out of a bubble trade AND, more importantly, a theory of dirigisme that hasn't changed much since Lenin, Mao and Lyndon LaRouche.
An effective model for an economy governed by a broader base of the people has not yet been put together. The BRIC thesis comes from the idea that resources flowing to a standard dirigiste nation-state should produce prosperity. Yes to a point, no doubt, but international trade now seems to be the key to the most-successful versions of the dirigiste model (whether commodities-based or "Asian Tiger") moving us away from the old autarky model. But is the export model dependent on "First World" capitalism rather than a replacer of it?
I suggest that a failure of the predicted BRIC model will show that we need to re-think dirigisme - what it is, how it works, what it needs to provide.
>
>> The Chinese state-industrial complex is absolutely dependent on
>> exports
>
> Exports to Asia. Exports to the US - less so these days.
>
Well, I don't think the numbers are on your side yet and I would suggest that the Asian exports are funded by the First World exports, as Asian economies to which China exports are themselves export-driven economies.
>> First, these structures have failed, as yet, to internationalize.
>
> Huawei, Lukoil, Gazprom, and all those sovereign wealth funds are
> international through and through.
>
Huawei, yes. Lukoil and Gazprom? That's where I think Putin may be in the process of killing the goose that lays the golden eggs.
>>> They're not. 40% of world reserves are in non-dollars.
>>
>> That's 35%, actually, DOWN from about 43% in 1997.
>
> There's a measurement problem, because actual reserves are a state secret.
> Most estimates I've seen (Brad Setser, e.g.) say 40% or thereabouts, and
> show a slow decline of dollar holdings.
>
> -- DRR
Okay, but once again my point was about Latin America, where dollarization has increased ENORMOUSLY.
So the development state in Latin America is clearly choosing the US dollar.