Thursday, March 15, 2007

North Korea, Cuba, etc.

Free the money free the people

Recent news is that the US Treasury Dept. is going to 'free' frozen N. Korean assets. This is good, it is common economic wisdom that sanctions don't work. The corrupt governments of places can always get what they need to live laviously, it is the people without political connections who suffer when trade & investment & wealth-creation is curtailed.

But unfortunatley reading the fine print one finds that the USA is not loosening its embargos, it is tightening them, therefore the bank which had frozen assets can now unfree them because US citizens are now not able to trade with the bank (Banco Delta Asia in Macao). This of course is a stupid move because $2 trillion gets traded every day in currency through the flip of switch (mouse click) - it is not really regulatable. So again it is those lower on the food chain who suffer eg dont have the experience or connections in money circles to circumvent bad laws.

What happened in China after its economic reform is that the government grew in size but the private sector grew much more quickly, becoming a larger portion of the economy and therefore less under the influence of politics, e.g., more free. Because less people now depend on the government for their livelihoods. This could happen everywhere. But sanction and embargos don't help.