I’m going to celebrate Easter by taking a break from the computer. Feel free to chat among themselves, or to post your own thoughts at any (reasonable length). Please remember to be particularly polite and friendly in my absence.
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John Quiggin 
Monkey’s Uncle, the actual reality is that small nations all over the globe and especially in the 3rd world have been destroyed by Western so-called “free trade” and driven into ever greater poverty. This was even the experience of India and China until they threw off Western domination.
Of course, what the West calls “free trade” is actually the various forms of imperialism. To believe that economics exists outside of politics is the most naive stance imaginable. So-called free market economics has always been backed by political and military power.
Nations which get tricked into the trap of only being primary producers of foods and raw materials are in the weakest position imaginable with respect to global power politics. They lack self-sufficiency. The “foods” grown are often monoculture cash crops for the international market (like coffee, sugar cane), leaving the local populace unable to feed itself except by imports.
The lack of manufactures means the tools of primary production need to be imported. The overall lack of heavy industry means no industrial base to support itself in times of trade emabargoes, blockades or wars. Such a nation is totally at the mercy of international conditions in general and the manufacturing military powers in particular.
This is the position China is seeking to place the rest of the world in as the world’s manufacturing capacity gravitates to China. China are seeking to make this the Chinese century. They will fail however just as the Americans failed to make it the American century. History shows that no single imperialist nation can ever dominate the entire globe.
I call Australia a small nation due to our small population. Anything much smaller than Australia is a non-starter in this debate; a nation in name only. We definitely need to reimplement protectionism, albeit selectively, as we decide which industries we need to have to be a well-rounded, predominantly self-sufficient nation.
BilB
One can only hope for a future economy based on a ‘circular flow’ that actually balances without requiring a trend for increasing per capita debt.
Sraffa certainly attempted this.
Empowering citizens and workers through self-management also helps. Edvard Kardelj attempted this.
Tariffs against unfair competition also help.
But the key issue is getting rid of the root causes of “macroeconomic imbalances”. It seems to me that, uniquely, capitalism is to blame for these.
SeanG @ #21 says…
“There are a lot of people on this forum who like to bash capitaliam, ignoring that the computer they are using is only brought to them via the capitalise system so…”
However, the Internet was born when the US Government gave taxpayers money to universties and the US military…bit of a win for the public sector.!!
hi john after a very long and pleasant weekend I find myself wondering why dont we have more public holidays? My friend replied “it would be too expensive”. Is it really true that the quality of life for an average australian would be noticably affected by say 50% more national public holidays?
That is not clear enough, Chris. So far you have said that I am not allowed to use machinery and I am not allowed to make a profit. You’ve intimated that if I make a profit at all it is really the property of workers (your Fred Wright story). You’ve also said that if I did make a profit from the use of machinery that it would be temporary, and I would be straddled with debt long after the profit had disappeared. By your opinion I am not allowed to buy any further machinery, should I have the money in the bank saved, from overseas, which, presumably, also means that I am not allowed to sell the machines that I make overseas as this would be unfair to the economy of those countries.
You’ve left me completely unclear as to how I am allowed to proceed. You have to tell me what I am allowed to make, who I am allowed to sell it to, what methods I am allowed to use, and how I am going to earn money to feed my family since I am now not allowed to make any profit. I will also need to know what “fair competition” is, in case I am being unfair to someone else’s business.
Ikonoclast,
Would you favour high tariffs on the trade of manufactured goods between Australian states. If not, why not?
BBB
Tariffs should be applied when the full costs of trade have not been accounted for.
By full costs I mean carbon/AGW costs, pollution costs, resource depletion costs, future costs of new technology needed because of the forementioned, all human costs such as loss of livelihood or poor working conditions, costs to future generations such as an impoverished ecosystem and excessive debt, there’s probably more.
For example, because very few of these costs are accounted for in the transport of milk from Qld or Vic into SA, and SA is quite capable of growing its own milk, there should be a tariff on imported milk to SA or a return to a regulated milk industry.
BilB
I suppose finally, as a last resort capitalists always misrepresent others views.
Please compare your statement:
So far you have said that I am not allowed … to make a profit.
With my statement on earning profit at #43 above where the exact opposite was stated.
Please provide evidence for any statement of mine saying that:
So far you have said that I am not allowed to use machinery …
At this stage you are simply reinterpreting my words in a nasty, vexatious manner, for provocation.
This is a game I will not play.
I am sorry but I do not think I can help you any further.
Bingo bango
tariffs between states cannot be supported as, presumably, labour rates and environmental standards are the same between states.
However if one state setup a special export processing zone (say the Kimberly, or Christmas Island) where Vietnames wages and Indian working conditions applied, then tariffs would have to apply immediately between this export zone and the rest of Australia.
Thanks
“By full costs I mean carbon/AGW costs, pollution costs, resource depletion costs, future costs of new technology needed because of the forementioned, all human costs such as loss of livelihood or poor working conditions, costs to future generations such as an impoverished ecosystem and excessive debt,”
Apart from pollution (including CO2), how are you going to measure these costs?
“tariffs between states cannot be supported as, presumably, labour rates and environmental standards are the same between states.”
They’re not. Wages vary a lot for the same work.
Jarrah, if it’s too hard to measure costs then whack a tariff on and end the trade. My position is that there is far too much trade back and forth across the world for the reasons I mentioned. It’s likely that a practical aproximation can be made for all of the costs but the real problem is the political will to apply them.
Australia farms unsustainably and is severely damaging it’s own ecosystems to feed countries which have long ago over-extended their ability to feed themselves.
On a slighly different but related topic, Sir David Attenborough has become a patron of the Optimum Population Trust, a group seeking to cut the growth in human population. Onyer Sir Dave.
http://news.bbc.co.uk/2/hi/uk_news/7996230.stm
John, a belated happy Easter to all.
Noting the comments about various companies going belly up.
If you were a well ran profitable company actually making things .. you were ate. Either by a multi-national or by a leveraged buy out into a private company.
Then you were shut down, loaded with debt, etc, etc, sadly very etc. Even the ‘best’ takeovers were starved of R&D and investment, plus had lots of debt.
This was the final phase of ponzi capitalism eating itself. Success meant you were a target for, as we now see, destruction. Though some people individually cleaned up.
Essentially success meant failure. Even if, somehow (e.g. Qantas) you escaped this fate it was only by copying the methodology, so you became the same anyway.
Which is why, now all the chickens have come to roost, so many companies are just going belly up seemingly overnight. They are loaded by debt, have no reserves and ran by people who have no ideas beyond their next bonus payments.
Sadly this means that we haven’t even started the collapses. Whole sections of the economy are going to disappear, including some very big names. Ford and Holden are gone for example. At least a couple of the smaller banks and possibly one major.
But the real damage is going to come from all the medium sized manufacturing businesses and retail. Just those alone will push unemployment into the 15% region (reported, true rate = 25%).
This creates a destructive cycle for a debtor nation like ourself. The import replacement/export industry crashes increase our current account deficit. People being fearful and not increasing debt means retail goes under.
The tension between the 2 will continue for a while (one reduces imports, the other increases the net deficit).
Eventually we face rising interest rates to protect the dollar as the current account completely blows out and external finance dries up. Then we go into 20%+ reported unemployment (actual = 30%+).
Nothing new about this, it happened back in the 30’s. Along with the US and Germany, Australia suffered worse than most other countries, a debtor nation dependent on declining commodities, with low skills and a moronic elite plus up to its eyeballs in debt = a 3rd world nation.
Maybe, just maybe this is not a Minsky event, rather a Marxian one.
In figurative terms, we didn’t just put on heaps of fat, while our muscles shrank, skeleton thinned and our brain atrophied. We then decided to eat our arms and legs.
Further to my comment about cancellations of the Brisbane-Longreach train service on the Easter long weekend due to track maintenance, I can now report that I attempted to book the same journey for the Labor Day long weekend, only to be informed that the service would also not be running on that weekend, once again because track maintenance had been scheduled for that weekend. The email informing me of this fact very kindly informed me that I would be able to make the journey on the four working days after the Labor Day weekend, which is a fat lot of good for someone who is working full-time in circumstances where I can’t absent myself from work for four working days in May without seriously discommoding my students and colleagues.
The computer I am looking at was not funded by the Government.
The internet started life as a means of communication between a few – but then those nasty entrepreneurs and engineers put together code that allowed people around the world to come together in a way never before imagined.
Do you think Apple is a government-owned enterprise?
The great thing about a capitalist economy is that government funding in basic research can be employed to by the private sector, improved, expanded upon and indeed the private sector themselves often my paradigm changes in technology!
But my question stands to those who like to bash the capitalst system: what do you replace it with?
Sorry for the second last paragraph above.
It should end “the private sector themselves often make paradigm changes in technology!”
Sorry for any confusion.
Leaving aside the absurd equation of “engineers” and “entrepreneurs” (the first group, not the second, were responsible for TCP/IP etc), which pieces of Internet code contributed by for-profit companies do you have in mind? The code on which the Internet runs was, and remains, non-proprietary, and the same is true for the other key elements such as the domain name system.
“if it’s too hard to measure costs then whack a tariff on and end the trade”
But if you don’t know the costs, how do you know that’s the right course of action?
ProfQ,
The code for using browsers made the internet accessible to millions of people. The algorithms and other codes used by companies such as eBay, Amazon, Google etc expand on what the internet can achieve from the basic sending messages to buying and selling goods and services, allowing niche markets to find a consumer base, and actually leading to a greater specialisation of jobs with commoditised work (eg. basic accouunting) being sent offshore with the internet used as a means of communication between the offshore office and the headoffice specialising in higher value-adding services.
I added entrepreneurs and engineers because what we have found is that in the first few years of the internet boom there were many people who were tech-savvy but lacked that understanding of how to run a business but now that is changing with entrepreneurs who are not as tech-savvy finding both capital and technical experts (software engineers etc) who can carry out a lot of the manual work.
Further, it is the free flow of capital in the form of seed, venture and equity capital which has allowed the internet to flourish. The idea of communicating between two parties is larger than the internet with firms such as Bloomberg experimenting with online communication before the web browser but with technical experts, financiers who are prepared to accept risk and a rapidly growing market of internet users, the capitalist system transforms a mode of communication from a select few to being in the homes and businesses of millions.
You’ll need to do better than that, Sean. The first web browser (NCSA Mosaic) was developed by the public sector, and the main commercial browsers (Netscape and IE) were either direct derivatives or close copies. The first search engines were also created at universities. None of this depended significantly on venture capital, which didn’t arrive in a big way until after the Internet was well established.
Moving to the more recent past, the projects funded by venture capital in the dotcom era were mostly flops, while the most exciting innovations (blogs) for example, did not depend on these sources.
Obviously, in a mixed economy, for-profit enterprises like Amazon and eBay will take advantage of infrastructure, like the Internet, provided by the public sector. That’s as it should be. But it doesn’t change the fact that the services on which the Internet is based are derived almsot entirely from the public sector and the non-profit open source sector.
Underlying all of your confusion is the problem that you are using “capitalism” to refer both to the existing mixed economy and to an idealised market economy. As regards the first sense of the term, I’m not suggesting abandoning the mixed economy you call capitalism, just expanding the role of the public sector. If you want to make a case for moving in the opposite direction, talking about products of the public sector like the Internet (or computers) won’t help you. Why don’t you focus on all the marvellous innovations from the financial sector, like CDO-squareds :-).
“just expanding the role of the public sector.”
The old Soviet Union, North Korea and NSW are good examples of what happens when you expand “the role of the public sector”. The GFC is an example of the public sector asleep at the regulatory wheel.
ProfQ,
Firstly, venture capital did fund some bad projects. That is what is referred to as risk. That is, the risk that projects are completely worthless. This is something which is endogenous to any venture capitalist and to the economic system – private or public does not matter in those circumstances. Also, there is a difference between seed and venture capital. The former is far smaller the latter more significant. The former can be enough money for someone to buy equipment, for instance.
Secondly, the internet is a method of communication but it is one method of communication. Bloomberg terminals have been around for years and are another method of communication. As is wireless technology. Did Mike Bloomberg need government intervention to help him establish himself? No. But Bloomberg terminals were an early way of establishing connections between different parties. They were far less pretty than the model constructs but they did work.
Thirdly, explorer programmes which were improved by the private sector did more to turn the internet away from the domain of a few than anyone else. Can you categorically state that the public sector would have done a better job? If not, then what you are saying is that the private sector has managed to innovate faster (and better?) than the public sector. It took an idea and expanded it to it’s full potential.
Fourthly, the private sector in the United States during the boom years laid down billions of dollars worth of fibre optic cable… all without the internvention of the public sector. This private sector innovation (fibre optics have been around for a while) was thought to be wasted because of the internet bubble bursting but have lead to the increasing commoditisation of certain types of jobs (think of Schumpeter’s creative destructionism).
Fifthly, the private sector has innovated beyond that into wireless technology and communication. Did the government dictate that there should be wireless technology or did a group of engineers come up with a good idea?
Finally, non-profit open source systems are not public sector directed systems.
——————————————
The private sector has created some horrible products. But like natural selection these products will die out to be replaced by something else.
The capitalist system has led to innovations that cannot be dreamed of if we had the large public sector that ProfQ and others have advocated. The reason is that it is only in a private-sector focused mixed market economy can ideas from the public sector be filtered through to the private sector to be taken to it’s full potential or logical conclusion. That is why the Soviet Union invested heavily in education, research and development only to have tractors from the 1920s still used, people queuing up for food and to have a worse standard of living than those in the west.
The Government is needed and for no other reasong that the basics in education can be provided to make these innovations possible. But government alone cannot diktat innovation.
I just love to see this sort of one-sided argument. This is Tony G at #71
“The old Soviet Union, North Korea and NSW are good examples of what happens when you expand “the role of the public sector”. The GFC is an example of the public sector asleep at the regulatory wheel.”
But why wouldn’t you use the Japanese, Icelandic, and American economies of examples of what happens when you expand capitalism?
No one believes that the GFC is an example of the public sector being asleep at the wheel. Attempts at public sector regulation were opposed (and in fact prevented) by well funded capitalist lobby groups and political interests (and media).
Tony G is not a sophisticated punter – so is not aware that the North Korean system is not representative of a “public sector” as we understand it in the West. He is engaging in base opportunism.
In Australia, the transfer of the Commonwealth and State Banks from the public sector to the private sector, has left the Australian interest jeopardised by capitalist greed.
Economists in Treasury, the Industry Commission, and the university lecturers who peddled nonsense economic theories to them as students, have to share the blame.
Any economic system can produce wonderful growth and consumer goods if it just piles up debt to the tune of $11.6 trillion (the current amount of bailout needed and for just one crappy capitalist state). See:
11.6 Trillion Link. Citing Bloomberg.
The only solution is to get rid of capitalism, because it is trying to get rid of you.
And this has to occur firstly at the level of economic theory.
Ah Chris what we see is ‘capture’. Govt’s (local, State & Federal become captured by vested, and always rich, interests.
Capture is not just corruption, though there is a lot of that, it is also the dominant belief system, the prism that the ‘leaders’ see the world through. Remember that old slogan “what is good for General Motors is good for the US”, well it wasn’t really, but it did show capture.
Corruption can become systemic – where the whole system is corrupt. This does not mean everyone is one the ‘direct’ take, it can be indirect in many ways. From the senior bureaucrat thinking about directorships after they retire. The politician needing campaign finances. The young Treasury or RBA intern, watching that if you spout John Quiggan or Steve Keen how quickly your career prospects plummet to nothing .. or McDonalds if you are lucky. The ‘think tanks’, of some clown does not spout their rubbish in Latetline, then they will be replaced by someone who does … ditto the ‘industry economists’ you keep seeing on the TV all the time. Academics who don’t follow the party line don’t get funds or tenure.
Piece by piece a dominant view become entrenched. Nothing new about it, we have just taken 30 years to achieve what Hitler, Stalin and Mussolini achieved in a much shorter time.
TINA – There Is No Alternative.
Tina – to massive and ever growing income disparity.
Tina – to endless wars.
Tina – to ‘there is no global warming or resource limits’.
Tina – to the ‘national security state’, where, including ours although we are not the worst, Govt’s can ‘disappear, torture, kill, monitor people’ at will. In the UK, the first free country in the World to become a total Police State in the 21st century, where even local councils can spy on you or bug you at will. Where anything that deviates from the ‘norm’ (translated whatever someone rich and powerful doesn’t like) means you become a target of MI5, FBI, CIA, ASIO and all those other letters that all spell the same thing .. ‘Gestapo’.
Japan became systemically corrupt in the 60’s. The UK in the late 90’s, the US in the 70’s. Us? Mid 90’s (though NSW has always been systemically corrupt for decades).
Once you get to that place rational decisions are impossible, because only decisions that benefit, for a short term, small groups of the elite are allowed, better options are not even conceived of. Eventually this leads to collapse and then oppression as the only way that the ‘system’ can continue .. though that only works for a while .. e.g. East Germany, Soviet Union, etc. Then final collapse.
Imagine what was inconceivable even a few years ago: Japan with people living in cardboard boxes on the street. Closer to home Victoria: a pipeline to nowhere, a desal plant that there is no money for and 1 .. yes one .. new train for a collapsing train system … while more plans are drawn up and billions are spent on toll roads. Nationally .. the Murray dying .. taking 40% of our agricultural produce with it .. while increasing population at breakneck pace .. and water reserves at historic lows.
I rest my case. And there is only one way this can end.
I should add that this is not a reason to give up.
Mainly because it is better to go down fighting .. because we are going to go down anyway .. might as be with at least a curse on our lips.
SeanG
When I walk around most capitalist economies (ie the Third World) I do not see the wonderful things you see.
You are only looking at the top of the iceberg – the West, which exploits the rest of the whole.
Consequently you totally misrepresent the capitalist system. Fibre optics, and other technology, in the West are luxuries for the enjoyment of global financial vampires.
When your wonderful venture capitalism shares its wealth with ALL of its families – not just the whites – get back to me.
But until then, try an alternative argument.
Once again I find myself sharing Oldskeptic’s views (63 and 74);
“Once you get to that place’ ( OS refers to systemic corruption) ‘rational decisions are impossible, because only decisions that benefit, for a short term, small groups of the elite are allowed, better options are not even conceived of.”
We,in Australia, already see many signs of this. Worse in the U.S. now. There is, as you suggest, only one way this can end Oldskeptic…systemic failure.
Chris Warren said @ 73,
But why wouldn’t you use the Japanese, Icelandic, and American economies of examples of what happens when you expand capitalism?
Most people (except Chris) would accept that there is a major difference between the living standards of the so called capitalist countries that you mentioned and your comrades in North Korea. If you weren’t so deluded , you might see that when the government is the economy as is the case in North Korea, you don’t have an economy.
No one believes that the GFC is an example of the public sector being asleep at the wheel. Attempts at public sector regulation were opposed (and in fact prevented) by well funded capitalist lobby groups and political interests (and media).
Chris what is the point of having a government if they are only to attempt
to govern.
Modern economic systems are regulated by governments through monetary policy.
When the government contracts out the creation of money utilising the practice of fractional-reserve banking, it is the governments responsibility to regulate that system and to ensure money supply is not corrupted by the creation of exotic financial instruments and dubious lending practises.
It is pretty stupid of the government to give the banks their own printing press and only attempt to regulate them. It was inevitably there would be a crash and now after the the driver (Chris’ regulatory mates) have done the bolt, they are back asking for a new turbocharged V8, well forgive me for not wanting to give them one.
Tony G
People cannot follow this. You were trying to make a onesided point using just Soviet Union, NSW, and North Korea.
Why now try to pin all your hopes on the most extreme, non-representative case?
If your argument cannot be sustained by using your own choice of examples, including NSW, then there is something wrong with the rigor of your logic.
Jumping and changing like this is far too opportunistic to worry about.
People do not argue for any political or economic policy based on knowledge or events in North Korea. This is childish.
Anyway the substantive issue still remains – why pick NSW, Soviet Union and North Korea to construct a onesided argument and ignore Japan, America, and Iceland to see the other side?
A balanced approach is useful.
If I wanted to look at living standards (seeing as you have jumped there) – I would look at the sheer desperation of the many millions slaving away under capitalism in Africa, Bangladesh and elsewhere.
Calling people deluded is unsophisticated and gets you nowhere.
Chris,
The debate is about “expanding the role of the public sector”.
If your argument cannot be sustained by using your own choice of examples, including NSW, then there is something wrong with the rigor of your logic
Are you promoting the virtues of NSW and expanding them? Chris that is sophisticated.
I sympathise with people slaving away in Africa, Bangladesh and elsewhere, but excessive government is not going to help them. China is an example of how productively employed capital can increase living standards. I think they also rejected expanding the socialist model you are promoting Chris.
“Calling people deluded is unsophisticated and gets you nowhere.”
People who live in glass houses shouldn’t throw stones.
Alice correct (as usual, keep up the skeptical thinking, every idea should be challenged by asking for hard data),
The US is arguably unsavable now in its current form, Obama is Bush with a smile as Rudd is Howard with less personality. And, what in the past would have been extremely low probability events, are now becoming more probable by the day. Who would have imagined (except me, as I have privately predicted this to other people) that a Govr of Texas would openly talk about succession? How long now?
Similar Japan and the UK.
Now what is going to happen: left wing takeovers, right wing militaristic (my prediction for Japan = war) takeovers, breakup or military takeover of the US, watch Petraeus carefully, it must have crossed his mind and he really, I mean really, wants to become President, if it takes a few tanks what the heck.
Now this really is the end of the last 30 years of capitalism, but it is not going to end well. There will be military takeovers, war .. a lot of war .. actually a lot of war. Social breakdowns, starvation, death, et al.
So called ‘civilised and advanced’ countries will go under in large numbers. The Anglo Saxon nations and their emulators (ie Japan), historically the most brutal and warlike nations that have ever existed .. will return to their real roots.
Such as the UK. Hint, you don’t get the biggest empire in the World by being nice .. Hitler admired them, as gifted amateurs admire real professionals, .. need I say more. Now a brutal police state moving towards becoming the 21st century East Germany (where 30% of the population were informers).
So it is over, now the choices are:
(1) Become UK lite, as we did in the Great Depression, read your history books folks it was brutal. Actually that’s unfair to the UK, the GD was much worse and far more brutal in OZ that it was in the UK.
(2) Become US lite: breakdown, succession (if I was in WA I’d pull out tomorrow). Repression, then brutality. Don’t say it cannot happen, boat people anyone, that demonstrates the ‘inner brutality’ of our society, let alone the slow genocide of Aborigines that we practice (yes really it is). Plus we love war, name a war we have not been involved in the last 100 or so years … yes right. At heart this is not a ‘nice’ country or society.
(3) Become something else that is unique: to have a free and good society and be reasonably wealthy. Nah, that would require intelligence .. and Oz has worshipped at the alter of stupidity for far to long to break the habit now.
So bad, really bad times are coming. And there is sod all we can do to stop it, except, after we get out of the concentration, sorry detention, camps we will be needed to try and put the whole mess back together again (as Stalin did after Germany attacked).
“The US is arguably unsavable now in its current form…Now what is going to happen: left wing takeovers, right wing militaristic (my prediction for Japan = war) takeovers, breakup or military takeover of the US, watch Petraeus carefully, it must have crossed his mind and he really, I mean really, wants to become President, if it takes a few tanks what the heck.”
This site must be slipping to attract such paranoid schizos.
Chris,
Fibre Optics helped to ship commoditised jobs to India which have lead to high economic growth and improving living standards for mny (but it is obviously not enough, just look at the poverty). Therefore third world gets improvements and the first world specialises in higher value adding goods. Might not be a complete win-win but it is better than before.
SeanG
Yes, ensuring all nations get these opportunities should benefit all.
However, there are underlying issues which can result in negative outcomes as well.
If these are explicitly brought out into view, there should be no problem. But if they are ignored, the well being of societies can be jeopardised.
The key issues are:
the unfair comparative advantages obtained by oppressed working conditions and ecologically expedient production; and
the issue of equitable access to credit.
You can follow these issues by looking at real unit labour costs (RULC) between economies.
Economies with no trade unions nor occupational health and safety costs etc, will have lower RULC if everthing else is the same.
Economies with no ecological protections will also have lower RULC – everything else remaining the same.
Both of these are artificial competitive advantages, and the gains for the Third World, are unsustainable in the long run.
“Both of these are artificial competitive advantages, and the gains for the Third World, are unsustainable in the long run.”
They’re also just waypoints along the path of development. Lower RULCs attract investment and promote economic growth, wages rise and working conditions improve. See China. As people get richer, they get more concerned about their environment. Again, see China (a particularly horrible example of how lack of property rights worsens environmental outcomes).
Jarrah #82 on Oldskeptic at 81#,.
With the weapons and concentrated segments of power out there now – consider even the drug cartels (that can barely be stopped from infiltrating the highest levels of government in a number countries) – outside the control of Obama and US govt even given the guns go south and the drugs go north.
Jarrah, what makes you accuse others of being “paranoid schizos” ?? (notwithstanding your comment had not a slither of an argument to go with it) for presenting realistically the ultimate outcomes of the failures of the capitalist system we see around us. It is indeed fairly inevitable that the market system will outrun the sustainability of its own ability to deliver resource inputs.
If you think people (individuals, commmunities, regions and nations) are not going to end up fighting with other people or engaging in war over access to resources – seriously it is you who are mistaken and could do with a bit of Oldskeptics skepticism.
Capitalism works fine when there are plenty of resources and not too many mouths to feed. Unfortunately as it progresses it fails to adequately protect the former whilst overproducing the latter. Capitalism is on a collision course with itself or humankind (or both) and that is the nature of it, unless you consider war and starvation an acceptable market adjustment for the perpetuation of capitalism.
If you think this form of “adjustment” (war, starvation etc) is fine then consider the advanced state of weaponry and quietly shudder (dose of a phosphorous bomb or some depleted uranium in the morning anyone? Check the child cancer rates in Southern Iraq – brain tumours, leukemias etc where depleted uranium was spread around in the first and second wars). Look at the offspring of Hiroshima or Chernobyl etc
There is nothing quite like the romanticism of “market or capitalism perfectionists” Jarrah but realism it aint.
Jarrah
Obviously lower RULC attracts investment. Obviously there are waypoints. This is not the point.
By definition, lower RULC means unfair comparative advantage.
This means higher wages for some, come at the cost of unemployment (or wage cuts) for others.
Artificially lower wages costs – for the same productivity – is the issue.
Quaint observations and anecdotes from China are not relevant. You can always get economic growth by cutting wage costs.
But this is unsustainable.
Jarrah #85 said “As people get richer, they get more concerned about their environment.” ROFLOL!
You mean after they exploit and lay waste the ecosystem, paved and polluted it they eventually become a little bored with the Macmansion, boats and plasmas, look around and say, “where the bloody hell have all the trees gone?”
Salient#88…vewwy funny!
“Jarrah, what makes you accuse others of being “paranoid schizos” ?? ”
OK, I was being a tad harsh. I should not have used ‘schizo’, and I apologise. But it’s clearly paranoid nonsense (or bad satire) to predict a coup by Petraeus, or Japanese civil war.
“If you think people (individuals, commmunities, regions and nations) are not going to end up fighting with other people or engaging in war over access to resources”
I never said it wasn’t a possibility. A while ago I predicted water wars in Africa and Central Asia within 30 years. But I’m sceptical of Oldskeptic’s delusions of imminent “lot of war”, and your hand-waving about capitalism’s supposed future.
“By definition, lower RULC means unfair comparative advantage.”
Why?
“This means higher wages for some, come at the cost of unemployment (or wage cuts) for others.”
How so?
“You can always get economic growth by cutting wage costs.”
You missed my point, that Chinese economic growth caused wages to increase.
Salient Green, that’s one way to put it. It’s nothing like reality, but then you had a point to make, and why let facts get in the way of being vewwy funny?
Jarrah
I don’t understand…why ask why?
If you have the same good – eg a TV, and it is produced by oppressed labour at $10 hour (with one RULC) and another produced by Western labour at $100 per hour, then clearly, the oppressed labour artificially creates unfair comparative advantage.
Its pretty simple.
And if $10 TVs are imported into the West – unemployment (or wage cuts) increase.
Its pretty simple.
So what is your problem????
“Its pretty simple.”
And requires a pretty big assumption to work – that low wages are always due to oppression. That’s obviously not true.
Chris is at it again with his sophisticated views.
So my teenage son who earns $7.50 per hour @ McDonalds is an oppressed worker. He is not someone who gets of his butt to pay his way in the world.
Jarrah
If someone is producing the same item – the same commodity – a TV – then low wages relative to alternative producers – can only be due to oppression.
A free market (ie no oppression) would ensure their wages were the same.
Low wages – for the same production – are ONLY caused by oppression (or unfree market if you like).
For the same production – what else can possibly cause low wages?
Why do you say its obviously not true???
These unthinking, unexplained, comments are not helpful.
Tony G
What is your point?
Workers in Australia are generally not oppressed compared to global standards – or haven’t you noticed.
Who said $7.50 was oppressed?
What are you trying to say??
“These unthinking, unexplained, comments are not helpful.”
Then stop making them.
Jarrah
What?????
Everything has been explained.
If you think some of my comments have not been explained, please point out which, and I will happily explain it to you.
I do not make unexplained comments and I am happy to fill in any gaps.
Chris Warren said;
“Who said $7.50 was oppressed?”
and Chris Warren also said @ 93;
“and it is produced by oppressed labour at $10 hour”
So $10 per hour is oppressed but $7 is not.
Chris, more to the point “What are you trying to say?”
If your argument cannot be sustained by using your own choice of examples, including including simple arithmetic, then there is something wrong with the rigor of your logic.