Inflation and Diversification

I find myself somewhat disengaged today, not enjoying much that is on the Internet. There is this Piece from the NYTimes. The operative Word here may be that Gasoline, Medical Care, and Food are robbing Core Inflation estimates of impact. Remember that We have Housing Construction up slightly–fulfilling previous Contracts, but that the issuance of Permits have slumped. Reliance on Core Inflation data to determine the amount of Inflation in the economy may be a poor Indicator, read this post by Ritholtz. The real essence of this Viewpoint lies in the very real fact conservative Economists have constructed these Models to understate Inflation, mostly to cut the real value of Welfare payments (think Social Security here). The Problem arises here lies in the poor perception of Inflation rates overall, and contention as to the Monetary and Economic policies which should be adopted.

Dani Rodrik comes in with a discerning Post concerning which is the quickest means of development: Specialization or Diversification. This may not seem important to the layperson, but Ricardian Comparative Advantage definition relies on the factor of Specialization. Present data seems to indicate best growth rates in developing nations come from expansion away from monoculture production. My own view estimates development requires the creation of a managerial Middle Class, no matter how it is devised; and a Class committed to the expansion of Individual and Business Profits.

There is absolutely no inhibiting rationale for the establishment of a diversified Trade Advantage model. This could be called Construction of Trade Advantage Specialization, where Trade allows all Participants to diversify (round out) their Productive base, through Trade of their Resources at effective Pricing, exactly like less-developed nations try to share the Capitalization Expertise of the Developed Nations. The Resource Pool created through efficient Trade brings greater overall Capitalization. The only component necessary being a Managerial Class cognizant of the value of such Trade. lgl