Olympic Gold and the Price of Gold
Posted on August 19, 2008
The United States is trailing the Chinese in Olympic gold, but is leading the world in all Olympic medals. And as the Russians invaded Georgia, the dollar strengthened, not because of some great resurgence in the dollar’s value but because other currencies weakened.
People buy American dollars in times of international crisis, because they know that we are the strongest nation on earth. In other words, we still got it.
French President Nicholas Sarkozy wrote an op-ed in the Washington Post taking credit for bringing peace to Georgia and Russia, but let’s not kid ourselves. Those agreements weren’t worth a whole lot, and confused an already confusing situation. This is not to say that Sarkozy’s heart isn’t in the right place. But without U.S. heft, the Europeans would be powerless to stop the Russian bear from eating chunks of the E.U., one bite at a time.
Bush recovered nicely after a slow start in responding the Georgian situation. He let Vladamir Putin know that the United States was not going to let the French handle this crisis themselves. I understand why Bush spent so much time in Beijing. China will be a useful ally against a Russian bully who threatens to play rough with the world’s natural gas and oil supplies.
If anybody needs gas and oil more than we do in the next couple of decades, it is the Chinese. So I understand why Bush gave the Chinese great face by hanging out at the beach volleyball court. I just didn’t like the pictures of Bush and Putin hanging out at the opening ceremonies. Not good feng-shui.
India presents another opportunity (and challenge) in this most complicated of situations. The Pakistanis are terrified of Indian influence in Afghanistan, and are fighting a low-level war against the Indians in Kashmir. Add the nuclear arsenals of both countries, and you get what we call a situation. How we can use this to our advantage is beyond me, and Musharraf’s exit makes a complicated situation even more so, but India’s concerns with Russian energy bullying could be useful to us as we look for ways to pen in the Russians.
The fact of the matter is that India and China find the U.S. to be better place to do business than Russia, because the Russians don’t actually believe in the rule of law. They believe in the law of the mafia. Nothing personal. It’s only business.
The global marketplace is at a very fragile point. Global trade-rule negotiations broke down in Doha. Protectionist sentiment is rising in the United States, of all places. Mass piracy infects products ranging from compact discs to prescription drugs, and the black market undermines property rights and free commerce. Russia’s piracy is state-sanctioned, and the Chinese government looks the other way while Chinese gangs pirate the newest movies.
But the American marketplace still acts as a beacon for the rest of the world. Our rules of the road, our respect for patents and trademarks, our low tariffs and our consumers are the reason that other countries want to do business here. And the promise of America can compel other countries (Columbia for example) to turn from illicit products (like cocaine) to legitimate products (like flower and coffee). That is all the more reason that the Democrats refusal to extend a free trade agreement to Columbia is so frustrating.
We might not be winning in gold medals in the current Olympics, but we are winning in a diversified medal marketplace. And America might have some problems, but the world still turns to us in times of crisis, and still wants to do business here.
The naysayers might thing America is doomed. I think the naysayers are dumb.