James Fallow - How the World Works

This is a very good article explaining why the Anglo-American economic systems do not seem to work as well as the Eastern ones. The Eastern systems are based on the German model, and are more collective. What's good for the individual might not be good for the majority, and in the long run, not good for the individual either.

The collective tends towards more long-term planning, even though some individuals may lose in the present. In this way, a collective economic system appears to be more effective than a neoliberal one.

Neoclassical economics says its best to buy products globally from nations and companies that specialise in certain products. Why make cars when you can buy top quality ones at good prices from European countries? Other countries may be better at producing raw products, IT, financial services, or software, etc. But in the long run, relying too much on foreign products can dumb a country down and even entually make it poorer. If we keep buying fish we may never learn how to fish.

Not everything is wrong about the Anglo-Saxon system, however: Adam Smith taught that business was not a zero-sum game, and that we can all win from business transactions. I might exchange some of my wheat for someone else's cheese, and so both of us gain, which sometimes means the pie gets bigger.

How the World Works

Americans persist in thinking that Adam Smith's rules for free trade are the only legitimate ones. But today's fastest-growing economies are using a very different set of rules. Once, we knew them—knew them so well that we played by them, and won. Now we seem to have forgotten

The Atlantic 

James Fallow - How the World Works