David Smick on Today's 'Hidden Dangers'

I read David's book and it's marvelous. This is how I would summarize: the world is 'flat' in trading in goods and services as Friedman states - imports and exports go around the world with fewer barriers than ever. There is no argument with Friedman on this point, but the financial world is different.

Free trade has created enormous prosperity; it has resulted in a giant somewhat uncontrollable ocean of money, which is the financial world. Unlike the world of trade, the financial world, is not flat, it's curved. Individual countries can't always see over the horizon-- where this ocean will go next. The ocean of money (financial world) created from trade is huge and can move from country to country very rapidly (look how suddenly international investment evacuated Russia after its recent invasion of Georgia), with much of it having been invested in the USA up to this point, and we have benefited enormously because we have led free-trade in the world.

While the USA has really benefited from this ocean of money, our wealth having grown by 70% since 1997 because of it, the fact this ocean cannot be fully controlled is a somewhat scary scenario to many people, and many politicians are increasingly exploiting that fear because many prefer greater predictability and control.

We have a choice - maintain and expand our openness to the world, and we will continue to benefit. We can continue to nurture our entrepreneurs, new businesses, and creators of wealth, and continue to attract investment money (the ocean of finance) from all corners of the earth. While we can't totally control this ocean, we can respect it, and we can improve on the system and improve the ground rules. There will be ups and downs, and we shouldn't destroy this system during the 'downs' because overall it's a great wealth creator. Although not always stable and predictable, we can continue the prosperity of the last 25 years and build on it. The alternative is to fall back into protectionism and excessive nationalism. In this scenario, maybe there would be more stability, and maybe more enforced equal outcomes in people's incomes, but at the expense of the prosperity of the last 25 years. Less wealth generation would result as the ocean shrinks or goes to other countries.

I give the book five stars.

Robert Eberle of CA 1:17AM October 05, 2008