The Next President.

1. With China and India growing, demand for resources are gradually shifting away from the West. Those who demand, and know that they shall demand more in the future, would like to secure their sources of supply. In other words they would like to ensure that the sources of supply are not monopolized. This creates tensions with those existing firms which presently supply resources. Many of these firms are strongly tied to the political economy of the West. Their ventures into China, India, Brazil, Eastern Europe, Russia etc. have not been fast, easy or smooth. Apart from facing different political ethos they are also facing competition from entrenched local firms. Peripheral countries like Venezuela, and even countries like Mexico which are till date strongly tied to the US, are making side deals with non-Western companies at an amazingly fast rate. Competition is finally threatning the monopolistic hold on global trade in resources. Though competition is good for the masses, it induces uncertainty for entrenched companies. Uncertainty and risk affect welfare negatively.

2. Capital has become increasingly mobile and measures of "home country bias" are decreasing all across the West! Firms in China, India etc. are being able to procure liquidity from the West with increasing ease even as firms in the West face greater liquidity constraints. The lowering of barriers to capital flows have increased uncertainty for individual firms as they have lead to increases in efficiency.

3. The last time the world saw such dramatic changes in global competition was in the 1920's. Again it resulted in uncertainty and the quest for firms to collude with local political authorities to "stop" "foreign" firms. Policies were changed, competition declined and so did GDPs. "Protective" policies lead not only to the carving up of then peripherel states like China but also to plans for carving up the Ruhr. Ultimately "great" wars had to be fought.

4. The world has learned. Weaponary has changed. The concept of war itself has perhaps changed. Wars of attrition are the wars of choice. Human bombs are being viewed as the most effective weapon. One has also learned much about the production of such weaponary. They are to be produced in religious factories. Tomorrow they may well be produced in other ideological factories. Furthermore, wars need not be fought in New York, Shanghai or Moscow. Resources of enemies can be drawn out to places like Pakistan and Afghanistan to be spent on brown body counts. Tomorrow, they can be spent in Sudan and Nigeria.

5. Whoever wins the Presidential candidate will have to fight this war of attrition. No candidate has shown any sign of being able to fight this war on the behalf of the "American people". But that is all right. They will be advised by appropriate advisors with effective institutional support. But will the advisors be "appropriate" and will the institutions be "effective"? Can the produced human bombs be made to change direction? Or should they be fought with human bombs produced elsewhere? Or should production be reduced by taking over the factories? Should potential bombs be interned, or should factories be totally destroyed? How would opponents react? These are only avery small number of policy questions that the next President has to deal with.