The Editor, Sir:

The collapse of the American economy should surprise no one. When the fundamentals are wrong, it is only a matter of time that reality will step in and put an end to the mirage created by 'paper wealth'.

Profits made from peddling paper is illusionary and inflationary, so any period of prosperity that is based on paper peddling will be followed by a meltdown.

If it is accepted that wealth can only be created by increased production of goods or services, it should be recognised that to shut down factories and outsource production, then proceed to import the finished goods will make more profit for the holders of capital but will surely make the economy poorer.

Shopkeepers

If we assume that the acknowledged father of capitalism, Adam Smith, knew what he was saying when he said, "A nation that buys from others and sells to itself is a nation of shopkeepers and will get poorer;" he should be taken seriously.

An economy that is largely driven by credit, and jobs are sacrificed as part of the enlightened globalism ideology, that economy is bound to suffer severely when unemployment rises.

When these factors are compounded by the debilitating expenditure of a questionable war, the negative economic consequences could be protracted beyond recession and go as far as a depression.

Real correction

The current United States crisis may be temporarily ameliorated by the Federal bailout, but real correction will only come with restoration of the productive sector of the economy.

Those who believe in the omniscience of the unregulated market should now be having second thoughts. Paper peddlers have crashed the financial institutions and they are still unbridled to continue to destabilise the world economy by their manipulation of oil prices.

The dogmatism that accompanies ideologies has prevented timely intervention by governments to regulate or control these purported practitioners of the free-market system. Welcomed as the regulation of the financial institutions may be, the stability in the world economy cannot be realised where speculators, rather than supply and demand, determine the price of such vital commodities as energy and food.

Make adjustments

We should accept that no single system has the answers to our every problem, so we should be prepared to make adjustments to any system to make it efficient to serve our purpose.

If we are not to be destroyed by the orthodoxy of left or rightwing economic theories, the appropriate balance of a mixed economy must be found. We are already seeing the homogenised/monolithic globalised economic system bringing greater pain and poverty for more people while increasing the wealth of a few.

As the reality of this new world order comes closer, if we are wise, we will improve our food base and lower our dependence on imported energy. The need for urgency is intensified by the fact of the unhealthy state of the American economy and the saying still holds true that "when America sneezes, Jamaica catches a cold".

I am, etc.,

LUCIUS C. WHITE

1 Tankerville Avenue

Kingston 6