Comments on: Bad ideas spawn Lesser Depression http://blogs.reuters.com/edward-hadas/2012/05/16/bad-ideas-spawn-lesser-depression/ Wed, 07 Oct 2015 17:23:32 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: DifferentOne http://blogs.reuters.com/edward-hadas/2012/05/16/bad-ideas-spawn-lesser-depression/comment-page-1/#comment-534 Fri, 18 May 2012 12:27:27 +0000 http://blogs.reuters.com/edward-hadas/?p=238#comment-534 Having voiced some highly speculative theories about South Korea that apparently lacked any basis in fact, and having subsequently eaten my words in public, I am now back from a long, brooding bathroom sulk to ask some questions. I sincerely hope someone knowledgeable will provide a convincing answer:

Given that USA consumer markets have been conquered by one Asian tiger after another in recent decades, with considerable impact on the USA economy, it would clearly be advantageous to understand the Asian Tiger phenomenon in depth.

What puzzles me in particular is how South Korea has recently replaced Japan as the leader in consumer products. For example, Samsung, Hyundai, and LG have come to the fore, while Sony, Panasonic, and Sharp now struggle. This cannot be a mere coincidence.

Is the relatively high value of the Japanese yen the main factor? If so, what is causing the yen value to remain so high? Shouldn’t the Bank of Japan allow some inflation, to devalue the yen and stimulate the economy? And … is the South Korean won undervalued?

No discussion of the western economies can be complete without considering the corrosive impact of currency manipulation by aggressive trading partners who seek an unfair advantage. Some people denigrate the European peripheral nations, calling them PIGGS, but that derogatory term might not even exist if Europe and the USA had not lost so many jobs to China.

Reclaiming some of those jobs would increase EU and USA tax revenues, allowing national debts to be serviced more comfortably. Higher employment would also support the real estate market, and the banks. And it would help students pay off their debts.

Perhaps if we acted decisively to stop currency manipulation now, we could stop worrying altogether about the disintegration of the EU, and the supposed necessity for draconian austerity measures in the USA.

So, what are we waiting for?

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By: Sanity-Monger http://blogs.reuters.com/edward-hadas/2012/05/16/bad-ideas-spawn-lesser-depression/comment-page-1/#comment-533 Fri, 18 May 2012 12:19:13 +0000 http://blogs.reuters.com/edward-hadas/?p=238#comment-533 Hooray for Mr. Hadas for bringing this up for discussion. I propose a corollary to the old adage about insanity: insanity is continuing to follow advice from persons who are essentially batting zero.

Let’s see, we have managed to concoct the following quandary (and this is just a smattering of the ways in which our way of life is nuts):
– a production system capable of producing what everyone needs and what most everyone could reasonably want using only a fraction of our labor capacity. The result should be a society living in plenty with plenty of spare time. Instead, we have a huge labor pool chasing very few productive opportunities.
– so policy makers look at ways to increase our productive capacity thereby creating lots more job opportunities. But we already have a natural world teetering on the brink of collapse due to non-sustainable resource exploitation.
– a crumbling social safety net encourages all who can to squirrel away as much as they possibly can if they want to have any retirement years. This is inefficient — far more retirement savings are needed to insure everyone individually than collectively through social security and/or private pension.
– in the meantime, the world is awash in investment money looking for someplace to invest. It should be clear to all but the most fundamentalist free marketeers that we have long suffered from too much investment money chasing far too few investment opportunities. The housing bubble was but one result (huge demand for those CDOs encouraged dubious mortgage loans, and the rest, as they say , …). The Bush tax cuts can thus be seen as having only exacerbated a bad situation by channeling even more productive output to investments. The dot-com bubble also likely had the same roots.
– our entire way of life is completely dependent on fast dwindling supplies of fossil fuels (yes, there’s plenty more, but it is in increasingly expensive places. Shale oil costs: take the price of Saudi crude and multiply by 100 and that doesn’t even take into account the huge environmental damage).
– so shouldn’t we be developing alternative forms of energy? Well, click your heels and pretend for a moment that we have this alternative energy technology in place. It’ll rely on some combination of natural resources — we can’t build windfarms or solar panels out of thin air, and even thin air is a natural resource. So soon we’ll find ourselves at Peak-New-Energy-Resource, whatever it is.

The idea of infinite growth, both of population and per capita consumption, needs to be put to rest. We should decide to leverage all this productive capacity and use it to distribute output in a sane manner and at the same time free up some of our time. Clearly, this is not the whole answer, but it’ll take us closer.

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By: trevorh http://blogs.reuters.com/edward-hadas/2012/05/16/bad-ideas-spawn-lesser-depression/comment-page-1/#comment-531 Thu, 17 May 2012 20:47:30 +0000 http://blogs.reuters.com/edward-hadas/?p=238#comment-531 The lesser world problem:

Too many incompetent people and false elites who want to play God, to be the savior and think they can solve the world problem. False hope, false God.

And the people are always fooled by their charismatic appearance.

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By: ptiffany http://blogs.reuters.com/edward-hadas/2012/05/16/bad-ideas-spawn-lesser-depression/comment-page-1/#comment-529 Thu, 17 May 2012 18:41:10 +0000 http://blogs.reuters.com/edward-hadas/?p=238#comment-529 This article keeps referring to unidentified “economists” and “experts”, a habit too easily adopted by financial reporters. Who are these sources of economic punditry? They don’t seem at all like the bona fide economists who would never make such assumptions or make such wild predictions. The analysis and reasoning is interesting, but set against a backdrop of ideologies pushed by pseduo economists and self-proclaimed experts.

The CBOE announced two years ago (without substantiation) their answer to a question debated by economists for four decades: What is the breakeven point in GDP growth that would account for the growth in the labor pool, variously estimated between three to five percent. Their answer: 2.75%. This means that definining a recession as at least two quarters of less than breakeven growth and a depression as at least two years of less than breakeven growth.

This means that the United States (and much of the Euro Zone) has been in a depression for over four years.

Then, there’s the unemployment statistics variously reported by the United States Labor Department’s Bureau of Labor Statistics (BLS). The artificially low official unemployment rate was mandated by Congress years ago to present a more rosy picture of unemployment and most of the media followed like sheep.
But, the BLS also reports the underemployment rate accounting for part-timers and the real unemployment rate that includes the varying labor participation rate – excluded by other measures as “no longer in the labor pool” and “no longer looking for work”, an insulting and blatant lie. The BLS has stated for many years that the real unemployment – laborers who did work, can work and no longer work – as typically 70% higher than the official rate in “good” economic times and 100% or more in bad times. Some estimate that it is currently more than 200% higher. That’s a lot of unemployed people who are “too lazy” to look for work. Let them eat cake.

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By: DifferentOne http://blogs.reuters.com/edward-hadas/2012/05/16/bad-ideas-spawn-lesser-depression/comment-page-1/#comment-528 Thu, 17 May 2012 17:17:57 +0000 http://blogs.reuters.com/edward-hadas/?p=238#comment-528 To be factually correct, US aid to South Korea ended in the 1960s, and South Korea even pays for the US troops stationed there.

http://www.politifact.com/truth-o-meter/ statements/2011/apr/01/donald-trump/dona ld-trump-says-south-korea-doesnt-pay-us- troop-/

Perhaps the USA really did prove their point that capitalism is better than communism.

On the other hand, some have claimed the won has been artificially undervalued. If true, this is just one more example of how undervalued currencies hurt the USA economy, which is an issue that deserves more attention.

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By: DifferentOne http://blogs.reuters.com/edward-hadas/2012/05/16/bad-ideas-spawn-lesser-depression/comment-page-1/#comment-527 Thu, 17 May 2012 13:02:38 +0000 http://blogs.reuters.com/edward-hadas/?p=238#comment-527 We should also ask why Samsung is able to challenge Apple in the cellphone market. Well, Samsung is based in South Korea, and so has benefited enormously from the adversarial politics in that region.

Clearly, many prominent South Korean companies would not be nearly as successful if the USA were not so determined to give South Korea every advantage they need to prove that capitalism is better than communism.

Perhaps if the USA were willing to withdraw from South Korea, we could persuade China to stop supporting the North, and encourage reunification instead, under the leadership of South Korea.

Think of the billions of tax dollars that would save. Think how USA companies could be more competitive if they were not always subsidizing their Korean rivals with USA tax dollars.

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By: DifferentOne http://blogs.reuters.com/edward-hadas/2012/05/16/bad-ideas-spawn-lesser-depression/comment-page-1/#comment-525 Thu, 17 May 2012 01:59:22 +0000 http://blogs.reuters.com/edward-hadas/?p=238#comment-525 I am intentionally being provocative on this, because we need to think about it now, as the problem will only grow if we do nothing.

Consider the Scarborough Shoal, in the Pacific ocean near the Philippines, where vast oil resources are believed to exist.

China is using our Wal-Mart money to build its military. Why? So that it can claim such resources as the Scarborough Shoal against the will of other claimants, such as the Philippines, which is a USA ally.

Here’s a plausible scenario: China relentlessly bullies its neighbors to intimidate them, climaxing in a naval military standoff. To break the impasse, China unleashes its crazy mad-dog puppet North Korea, who threatens a missile attack on major Pacific cities, including LA, San Francisco, and Seattle.

To avert a disaster – and avoid appearing irresponsible – US negotiators make numerous concessions to China that would otherwise be unthinkable. Victorious, and much richer, China puts North Korea back in its cage. And it starts planning for the next international extortion event, whether for fishing rights, energy resources, or political influence.

This will be enormously profitable for China, and economically disastrous for the other industrialized nations.

So let’s recognize that losing our jobs to China is just the start of a massive transformation of the globe in which totalitarian China become the new imperial master, to our lasting regret.

Welcome to the 21st century, if we let it unfold this way.

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By: DifferentOne http://blogs.reuters.com/edward-hadas/2012/05/16/bad-ideas-spawn-lesser-depression/comment-page-1/#comment-524 Thu, 17 May 2012 00:38:36 +0000 http://blogs.reuters.com/edward-hadas/?p=238#comment-524 @matthewslyman

Two factors keep North Korea strong:

1. Our willingness to cave in to their demands.

Consider that North Korea might create a credible nuclear missile force soon, even within a decade. Then, would they be crazy enough to use it? Maybe if they have nothing to lose, which could easily be the case. Then we would be forced to give them whatever resources they demand, helping them continue to survive. Otherwise, we would have call their bluff, at great risk, hoping China would/could intervene. Or we would have to fight them.

2. China’s support.

North Korea is China’s bad boy Frankenstein puppet. And North Korea will continue to behave as it does as long as that suits China’s purposes. No matter how backward North Korea is, it will survive if China wants it to.

And it is certainly a useful bargaining chip. Every time we push China to play fair with their currency, or improve their human rights etc, they can loosen the leash on North Korea as a scary diversion. Then we must beg them to please keep North Korea in control, (and not send nuclear technology to Iran, etc etc.)

So will North Korea collapse any time soon? No way. That would be a disaster for China. Hence, China simply will not allow it.

Here’s another way to think of this: Every time you buy cheap products made in China – and you have very little choice – you support China, which is a dictatorship. And you also support North Korea, because North Korea is China’s puppet.

Many thanks to all the politicians who have gotten us into this mess.

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By: matthewslyman http://blogs.reuters.com/edward-hadas/2012/05/16/bad-ideas-spawn-lesser-depression/comment-page-1/#comment-523 Wed, 16 May 2012 22:43:52 +0000 http://blogs.reuters.com/edward-hadas/?p=238#comment-523 …Addendum…
Solution #1* Increasing taxation over time, as a proportion of GDP… I think this might necessary, on a modest scale; to rebalance the economy for the long-term coming market; in light of the disruptive effects of increasing economies of scale conferred upon ever decreasing numbers of people by ever improving manufacturing & information technology. The winds have changed and we need to collectively change tack…

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By: matthewslyman http://blogs.reuters.com/edward-hadas/2012/05/16/bad-ideas-spawn-lesser-depression/comment-page-1/#comment-522 Wed, 16 May 2012 22:40:12 +0000 http://blogs.reuters.com/edward-hadas/?p=238#comment-522 @DifferentOne: “Otherwise, North Korea will inevitably grow stronger” – Hardly! They may grow “stronger” in absolute terms (all of a sudden, after growing weaker over the last two decades); but a Stalinist near-absolute command economy will never grow as fast as a free market economy with basic social safeguards. North Korea is becoming weaker, relatively speaking; and there is nothing they can do about this except to reform for the better.

Excellent article and comments.

> “It is much easier to destroy jobs, with labour-saving devices and more efficient procedures, than to create them by starting up enterprises, finding customers for new services or creating new bureaucracies. The employment asymmetry accounts for the persistent pain in the labour market.”

Thank you for giving me new terminology for a concept I have been struggling to express concisely. “Employment asymmetry” – I like that.

My concerns for long-term economic growth stem from the fact that the absolute necessities in life are gradually being made to require less and less labour. So, taking into account other factors (such as human greed, “free” market economics etc.); we have three roads to choose between, for the future economy:
1* Increasing differences between rich and poor, with increasing numbers of people working to produce ever more opulent and excessive luxury experiences e.g. electronics, space travel joyrides etc. OR:
2* Increasing involvement of the public sector in economics, with increasing standards of social care e.g. education, health care, support for the disabled etc. (with new technology and paradigms of accountability to improve public-sector efficiency, which might be built on modern communications systems); OR:
3* Increasing exploration, expanding our horizons in space, science, etc.; and thereby forever increasing the domain of competitive entrepreneurial activity (so that employment can keep up with technology) – forever revising our cultural outlook w.r.t. the minimum standard of living that we consider acceptable and dignified for any human being. OR:
4* Some combination of the above.

In any case; it’s clear that the only way to reach any acceptable macroeconomic outcomes (2, 3, 4) involve us SHARING THE WEALTH. In my personal opinion, this will require two things:
#1* Increasing taxation over time, as a proportion of GDP, to counteract the possibility of abusive & undeserved accumulation of “personal” wealth (please note that I would not support confiscatory tax rates; I believe in giving people a chance for #2);
#2* Culturally encourage voluntary giving (kudos to Gates and Buffett for this).

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