Sunday, May 09, 2004

Oil so expensive

Just came back from a long trip. Driving to Washington DC, New York, and Boston, I found gas prices so high. Paul Krugman explains about the oil crunch. He argues, "...We can neither drill nor conquer our way out of the problem. Whatever we do, oil prices are going up. What we have to do is adapt...". He also mentions that oil prices hike has something to do with big populations in China and India: "...Lately we've been hearing a lot about competition from Chinese manufacturing and Indian call centers. But a different kind of competition — the scramble for oil and other resources — poses a much bigger threat to our prosperity...". The latter bothers Tyler Cowen, who thinks Krugman is being inconsistent with his stand on free trade: "...I am surprised to see Krugman so qualifying his former belief in the virtues of free trade. Keep in mind that the core theory of international theory is a barter theory. "The Chinese buying oil" and "the Chinese selling bicycles" are just two sides of the same coin. If you don't think one can harm the U.S., you shouldn't, in general, think the other will harm the U.S. either. (Of course if your vision of free trade is we get the bicycles but give up nothing in return, we are worse off relative to that state of affairs!)..."

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