Krugman is starting to see change...

[Gulo Blue]

...but he still doesn't see the big picture.

http://www.nytimes.com/2013/11/18/opinion/krugman-a-permanent-slump.html?_r=0

He's starting to see the symptoms of a society with a disconnect between labor and demand. An economy so driven by intellectual work and global business services, manual labor suffers from something analogous to Dutch Disease. He doesn't touch on the forces that I think are driving it, but he's starting to question the idea that this is regular cyclical business as usual.

 

[Sbee]

I saw this yesterday, similar to what i said in a different thread where productivity is up, wages down. companies found more reasons to offshore and outsource in 2007-2010 and they're happy with what they got.

 

[Gulo Blue]

I saw this yesterday, similar to what i said in a different thread where productivity is up, wages down. companies found more reasons to offshore and outsource in 2007-2010 and they're happy with what they got.

Productivity:
http://data.bls.gov/timeseries/PRS85006092

The news is "m'eh"

http://business.time.com/2013/11/14/u-s-worker-productivity-rises-at-modest-pace/

The headlines says "U.S. Worker Productivity Rises at Modest Pace", but if you read the article, it also says

"Productivity growth is flat over the past year. But that?s because the gains from the past six months have been offset by declines in previous six months."

and

"Still, productivity growth has slowed in the past three years after jumping in the aftermath of the recession."

 

[Michchamp]

whatever point you're trying to make here, GuloRed, it's wrong.

 

[jswain]

whatever point you're trying to make here, GuloRed, it's wrong.

Because michchamp says so

 

[Michchamp]

Because michchamp says so

You are correct, sir!

 

[Gulo Blue]

whatever point you're trying to make here, GuloRed, it's wrong.

There are 2 points. I've been raising the ideas for years.

1) The Dutch Disease thing. Dutch Disease is a term for something that involves a natural resource, but I point to it for analogy. If you have a vast and valuable natural resource and you export a lot of it, your economy does well and the value of your currency rises. Because the value of your currency rises, all the other industries have a tougher time competing internationally. The success of the one industry impedes the rest of your nation's industries.

In the US, the successful industries don't involve labor. Intellectual property and financial services drive the bus more than manufacturing. But our success at these things makes it tough for industries that involve labor to be competitive. At least for anything where the product can be exported.

2) At some point, technological progress will allow us to meet the needs of the entire population with the labor of just a fraction of the population. In that scenario, capitalism leaves some people in the dark. I can't get a straight answer out of my go-to econ guy to address this possibility. That's not something you hit overnight, it's something that gradually gets worse. We're not there globally by a long shot, but I think we're on the edge of it as a nation.

 

[Michchamp]

There are 2 points. I've been raising the ideas for years.

1) The Dutch Disease thing. Dutch Disease is a term for something that involves a natural resource, but I point to it for analogy. If you have a vast and valuable natural resource and you export a lot of it, your economy does well and the value of your currency rises. Because the value of your currency rises, all the other industries have a tougher time competing internationally. The success of the one industry impedes the rest of your nation's industries.

In the US, the successful industries don't involve labor. Intellectual property and financial services drive the bus more than manufacturing. But our success at these things makes it tough for industries that involve labor to be competitive. At least for anything where the product can be exported.

2) At some point, technological progress will allow us to meet the needs of the entire population with the labor of just a fraction of the population. In that scenario, capitalism leaves some people in the dark. I can't get a straight answer out of my go-to econ guy to address this possibility. That's not something you hit overnight, it's something that gradually gets worse. We're not there globally by a long shot, but I think we're on the edge of it as a nation.

you can't equate IP with a natural resource. IP laws are currently specific to a country. a natural resource can't be copied and resold.

"financial services" aren't really a resource. what Goldman Sachs does doesn't benefit anyone except Goldman Sachs employees. if you think otherwise, you are a freaking muppet.

as far as part 2 goes... I think your head is somewhere else, maybe up your own anus, and on top of that you're asking the wrong question. In ohio, Walmart recently started a food drive... to benefit its own employees. Walmart... the most efficient, low-cost, successful retailer in the world. So yeah. there's another concern here.

 

[Gulo Blue]

you can't equate IP with a natural resource. IP laws are currently specific to a country. a natural resource can't be copied and resold.

"financial services" aren't really a resource. what Goldman Sachs does doesn't benefit anyone except Goldman Sachs employees. if you think otherwise, you are a freaking muppet.

as far as part 2 goes... I think your head is somewhere else, maybe up your own anus, and on top of that you're asking the wrong question. In ohio, Walmart recently started a food drive... to benefit its own employees. Walmart... the most efficient, low-cost, successful retailer in the world. So yeah. there's another concern here.

This is why I don't teach. I'm not trying to say IP is a natural resource. In fact, IP is easier to exploit than a natural resource. The point is that all the things that push the value of the dollar higher, make competition tougher for all the industries that aren't a part of that. This fact has been well-illustrated in the case of natural resources. That's the only reason I mention natural resources. It's because that's where history offers a clear example that success in one industry impedes other industries in the same nation.

What are the things that keep the US dollar as high as it is? Financial services, insurance, and business services make up 20% of the US GDP. That's not a statement about the value of financial services to to nation, it's just a reason dollar are worth what they're worth. The US Banking industry is huge and globally powerful and profitable. US IP and technology is exported everywhere. Of course, there's also the fact that the US dollar is considered a stable and safe global standard trading currency. All these things keep the dollar at a price that make it very difficult for anyone to set up shop manufacturing chairs or TVs of anything that involves a lot of labor. There's no one thing that the US excels at, but all the things we do excel at and export are very 1% friendly; industries where a few entities can dominate. Industries where very high levels of education are required, and a relatively small number of people create products that can be massively copied and exported through paper and electrons. Of the goods we export, you're talking high tech devices, agricultural products, and raw materials; all highly mechanized industries.

 

[Michchamp]

This is why I don't teach. ...

because you don't understand how exchange rates work?

I think you should stick to doing science.

leave econ to the economists.

 

[Gulo Blue]

because you don't understand how exchange rates work?

I was just politely implying that it was my explanation that was the reason you failed to understand how our financial services industry (among other) could apply similar pressure to the exchange rate as abundant natural resources have for other nations in the past.

 

[deathroh]

I was just politely implying that it was my explanation that was the reason you failed to understand how our financial services industry (among other) could apply similar pressure to the exchange rate as abundant natural resources have for other nations in the past.

Maybe you should have started by teaching him the definition of "analogy".

 

[Michchamp]

Maybe you should have started by teaching him the definition of "analogy".

I knew what he was doing.

I ignored it to take on his more foolish characterization of the value of the dollar being based on american service industries, instead of exchange rate theory.

I guess I could've spelled it out better. I should've said: "Are you sure that's the reason you don't teach? because it seems like you better brush up on your source material first." I forgot you like to go through every post with a microscope.

 

[deathroh]

I knew what he was doing.

I ignored it to take on his more foolish characterization of the value of the dollar being based on american service industries, instead of exchange rate theory.

I guess I could've spelled it out better. I should've said: "Are you sure that's the reason you don't teach? because it seems like you better brush up on your source material first." I forgot you like to go through every post with a microscope.

And I forgot you're a sensitive baby sometimes!

 

[Mitchrapp]

 

[Michchamp]

And I forgot you're a sensitive baby sometimes!

resorting to namecalling is so unsophisticated.

 

[Gulo Blue]

I knew what he was doing.

I ignored it to take on his more foolish characterization of the value of the dollar being based on american service industries, instead of exchange rate theory.

I'm not saying American service industries determine the value of the dollar. A service between two Americans doesn't play much of a role unless some foreigner wants to invest in the business involved. I'm saying that of the things that increase the value of the dollar (according to exchange rate theories), America has great strength in places that don't involve labor, to the detriment of labor. The view that American investments are globally viewed as safe and the success of American banks are bigger factors than US exports.

The problem is that we don't want these driving forces to go away. That really sucks for US employment rates.

 

[Sbee]

I like krugmans beard. You need a full beard to be taken seriously as an intellectual

 

[Gulo Blue]

I like krugmans beard. You need a full beard to be taken seriously as an intellectual

He needs more length at the chin. I'd rather have a goatee long enough to do the thinking stroke than a full beard too short for the job.

 

[Sbee]

He needs more length at the chin. I'd rather have a goatee long enough to do the thinking stroke than a full beard too short for the job.

It has to be the right length. Too short and you're a mma fighter or night club bouncer, too long you're duck dynasty. Mid length screams college professor/op ed writer