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On July 21 2015 08:06 Wolfstan wrote:Show nested quote +On July 21 2015 08:01 Evil_Sheep wrote:On July 21 2015 07:52 Wolfstan wrote:
Are balanced budgets and export surpluses synonymous? They have nothing to do with each other. Balanced budget is government spending = income. Export surpluses are to do with a country's trade balance. Export surplus = exports > imports therefore normally meaning there is a net inflow of money into the country. Are austerity, balanced budgets and responsible government spending interchangeable then?
Austerity as a definition is literally "cut spending while trying to maintain the same amount of income". Reason behind austerity and the means of achieving it depends on each country since successful austerity measures in one country would have zero effect or make no sense for another country so its highly individual.
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On July 21 2015 14:50 Banaora wrote:Show nested quote +On July 21 2015 14:38 RenSC2 wrote:On July 21 2015 14:06 Banaora wrote:On July 21 2015 08:28 Evil_Sheep wrote:On July 21 2015 08:06 Wolfstan wrote:On July 21 2015 08:01 Evil_Sheep wrote:On July 21 2015 07:52 Wolfstan wrote:
Are balanced budgets and export surpluses synonymous? They have nothing to do with each other. Balanced budget is government spending = income. Export surpluses are to do with a country's trade balance. Export surplus = exports > imports therefore normally meaning there is a net inflow of money into the country. Are austerity, balanced budgets and responsible government spending interchangeable then? Also there are times when it would be a good thing for a government to run a deficit for the economy: this is Keynesian economics. Keynes's idea was to smooth out the business cycle by having the government spend during recessions and save during booms. There is an enormous quantity of evidence to support this idea yet it is still not accepted by everyone, particularly Germany. The criticism of Germany's policy during this crisis is that it has been pro-cyclical: forcing governments to save during a recession has only made the recession deeper, turning it into a depression. This was warned of by economists when Germany began the austerity policy, and the outcome in Europe years later seems to be pretty convincing evidence that Keynes was right. Responsible government spending isn't an economics term, it's in the eye of the beholder. Keynes theory is a theory that does not work in practice. Keynes says the government should restrict spending in the good times and spend in the bad. The problem is with restrict spending in the good times. There is just no democratic government that can plausibly explain to average Joe why when there is a budget surplus and the economy is running we should not use this money to finance for example free education, health care, etc. Even if Keynes theory were enforced by rules - which could be done for the Eurozone in theory - it is very hard for a politician to not fall into the trap and make costly promises before elections. Who will be voted into office? The guy that will ensure free health care/education when he can argue the state has the money right now or the guy that says NO we have to follow Keynes and save money for more difficult times. The real problem I have with Keynes is that his theory is always popular only when the times are bad... There are some automatic Keynesian programs. Think about Welfare. When times are bad and lots of people are unemployed, the government through Welfare spends more to keep unemployed people from going hungry or being homeless. When times are good, less people are unemployed and thus the government doesn't have to spend as much on Welfare. A smart government can craft many automatic Keynesian programs like Welfare so that spending automatically goes down when times are good (no cuts need to be made) and automatically spends more when times are bad (without the need for further political wrangling). This may be correct now, but will it be correct in the future? A future where automation/robotics become dominant. And in a capitalist society they will become dominant because machines are cheaper than humans. So how should we define work in the future? Where will people get their money from once automation really kicked in in maybe 20-30 years from now? In my opinion these are the big questions that should be taken into consideration and where I don't have an answer right now.
Hah, you're really asking a lot of me. I do agree that automation will continue to replace jobs. Not in a complete sense, but instead in the sense that a single worker can do the job of 10 or 50 workers with the aid of technology and thus the other 9 to 49 workers won't have jobs. I just recently posted on this in the US Politics thread. http://www.teamliquid.net/forum/general/383301-us-politics-megathread?page=2108#42157
I think we're already seeing signs of the problem in Europe. I don't think that 20% unemployment will be odd in the future. 50% unemployment could even be the norm in my lifetime. My guess is that there will be quite a bit of pain at first. Governments won't properly take care of their citizens and we won't have the tax laws and strong welfare systems in place to take care of people while maintaining balanced budgets.
The problem is not of a lack of resources, but instead on how they're distributed. I could see an eventual situation (whether we get there through revolution or gradual evolution) where the government of each country puts a floor on living conditions for everyone. Everyone, whether they work or not, is offered free medical care (already done in many countries), free youth education (already done in most 1st world countries), free police and fire protection (already done in most 1st world countries), free basic internet access, free minimal housing, free minimal food, and a basic stipend for things such as clothes and simple entertainment. People would not be forced to work and could instead put their efforts into charity or arts efforts at their choice (or just waste their lives away playing video games).
For those who do work, they'd make money above what the government hands out, so they'd be able to live in a nicer house if they choose, get better food if they choose, and buy all the other niceties in life that people want. You could potentially even get rid of the minimum wage if the government is already guaranteeing free food, shelter, and a livable stipend for everyone. Let labor truly be a free market, but only once the threat of poverty has been taken off the table by the government.
In order to achieve this, the government would be required to create and enforce a heavy graduated tax code. It would need to be able to hold all citizens to it and that may be the toughest part. What's to stop a billionaire from hiding his money overseas or even moving to a more tax friendly area? How do we hold multinational corporations to local tax laws? I'd say in the case of corporations, tax them on gross sales within your country. If they claim they can't make a profit with those taxes, then it's their choice to not do business in your country. That makes room for local (less efficient, but more jobs) companies to come in and rebuild the middle class.
It's an idea that uses socialism as a livable floor for everyone, but capitalism as the way to a better life. I believe many parts of it are also very Keynesian. The government handing out more food and shelter in downturns would be an automatic increase in spending. The tax code works in a very Keynesian way as well (which modern tax systems normally do). When things are going well economically, the government takes more money out of the economy through taxes to pay for when things aren't going well and they aren't collecting as many taxes.
It's an incomplete idea, especially on how to enforce taxes, but that's my general view of where the future will eventually go. In certain countries (like my country, the USA), getting to that point will be extremely painful. However, I think a few (such as Sweden) may lead the way in a natural evolution to that point.
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On July 21 2015 17:39 RenSC2 wrote:Show nested quote +On July 21 2015 14:50 Banaora wrote:On July 21 2015 14:38 RenSC2 wrote:On July 21 2015 14:06 Banaora wrote:On July 21 2015 08:28 Evil_Sheep wrote:On July 21 2015 08:06 Wolfstan wrote:On July 21 2015 08:01 Evil_Sheep wrote:On July 21 2015 07:52 Wolfstan wrote:
Are balanced budgets and export surpluses synonymous? They have nothing to do with each other. Balanced budget is government spending = income. Export surpluses are to do with a country's trade balance. Export surplus = exports > imports therefore normally meaning there is a net inflow of money into the country. Are austerity, balanced budgets and responsible government spending interchangeable then? Also there are times when it would be a good thing for a government to run a deficit for the economy: this is Keynesian economics. Keynes's idea was to smooth out the business cycle by having the government spend during recessions and save during booms. There is an enormous quantity of evidence to support this idea yet it is still not accepted by everyone, particularly Germany. The criticism of Germany's policy during this crisis is that it has been pro-cyclical: forcing governments to save during a recession has only made the recession deeper, turning it into a depression. This was warned of by economists when Germany began the austerity policy, and the outcome in Europe years later seems to be pretty convincing evidence that Keynes was right. Responsible government spending isn't an economics term, it's in the eye of the beholder. Keynes theory is a theory that does not work in practice. Keynes says the government should restrict spending in the good times and spend in the bad. The problem is with restrict spending in the good times. There is just no democratic government that can plausibly explain to average Joe why when there is a budget surplus and the economy is running we should not use this money to finance for example free education, health care, etc. Even if Keynes theory were enforced by rules - which could be done for the Eurozone in theory - it is very hard for a politician to not fall into the trap and make costly promises before elections. Who will be voted into office? The guy that will ensure free health care/education when he can argue the state has the money right now or the guy that says NO we have to follow Keynes and save money for more difficult times. The real problem I have with Keynes is that his theory is always popular only when the times are bad... There are some automatic Keynesian programs. Think about Welfare. When times are bad and lots of people are unemployed, the government through Welfare spends more to keep unemployed people from going hungry or being homeless. When times are good, less people are unemployed and thus the government doesn't have to spend as much on Welfare. A smart government can craft many automatic Keynesian programs like Welfare so that spending automatically goes down when times are good (no cuts need to be made) and automatically spends more when times are bad (without the need for further political wrangling). This may be correct now, but will it be correct in the future? A future where automation/robotics become dominant. And in a capitalist society they will become dominant because machines are cheaper than humans. So how should we define work in the future? Where will people get their money from once automation really kicked in in maybe 20-30 years from now? In my opinion these are the big questions that should be taken into consideration and where I don't have an answer right now. Hah, you're really asking a lot of me. I do agree that automation will continue to replace jobs. Not in a complete sense, but instead in the sense that a single worker can do the job of 10 or 50 workers with the aid of technology and thus the other 9 to 49 workers won't have jobs. I just recently posted on this in the US Politics thread. http://www.teamliquid.net/forum/general/383301-us-politics-megathread?page=2108#42157I think we're already seeing signs of the problem in Europe. I don't think that 20% unemployment will be odd in the future. 50% unemployment could even be the norm in my lifetime. My guess is that there will be quite a bit of pain at first. Governments won't properly take care of their citizens and we won't have the tax laws and strong welfare systems in place to take care of people while maintaining balanced budgets. The problem is not of a lack of resources, but instead on how they're distributed. I could see an eventual situation (whether we get there through revolution or gradual evolution) where the government of each country puts a floor on living conditions for everyone. Everyone, whether they work or not, is offered free medical care (already done in many countries), free youth education (already done in most 1st world countries), free police and fire protection (already done in most 1st world countries), free basic internet access, free minimal housing, free minimal food, and a basic stipend for things such as clothes and simple entertainment. People would not be forced to work and could instead put their efforts into charity or arts efforts at their choice (or just waste their lives away playing video games). For those who do work, they'd make money above what the government hands out, so they'd be able to live in a nicer house if they choose, get better food if they choose, and buy all the other niceties in life that people want. You could potentially even get rid of the minimum wage if the government is already guaranteeing free food, shelter, and a livable stipend for everyone. Let labor truly be a free market, but only once the threat of poverty has been taken off the table by the government. In order to achieve this, the government would be required to create and enforce a heavy graduated tax code. It would need to be able to hold all citizens to it and that may be the toughest part. What's to stop a billionaire from hiding his money overseas or even moving to a more tax friendly area? How do we hold multinational corporations to local tax laws? I'd say in the case of corporations, tax them on gross sales within your country. If they claim they can't make a profit with those taxes, then it's their choice to not do business in your country. That makes room for local (less efficient, but more jobs) companies to come in and rebuild the middle class. It's an idea that uses socialism as a livable floor for everyone, but capitalism as the way to a better life. I believe many parts of it are also very Keynesian. The government handing out more food and shelter in downturns would be an automatic increase in spending. The tax code works in a very Keynesian way as well (which modern tax systems normally do). When things are going well economically, the government takes more money out of the economy through taxes to pay for when things aren't going well and they aren't collecting as many taxes. It's an incomplete idea, especially on how to enforce taxes, but that's my general view of where the future will eventually go. In certain countries (like my country, the USA), getting to that point will be extremely painful. However, I think a few (such as Sweden) may lead the way in a natural evolution to that point.
Thanks for this post Ren, I really enjoyed reading it and it lead me to look up basic income on wikipedia https://en.wikipedia.org/wiki/Basic_income where I found out that something like that has been discussed in the U.S. in the late 1960s. And is discussed in several countries all over the world.
It was not implemented then probably because the majority of the population could not live with the idea that people get money just for existing and not for working, but with further automation and a massive increase in unemployment things might change.
Besides the examples you give in your linked post I also think of transportation i.e. autonomous driving which will probably put taxi, bus, truck drivers out of work and is likely reality 20-30 years from now. I mean Google car is already driving on the streets of California. Or think of the military - the infantry we know from the past will likely be mostly replaced with robots. I also thought for example that hair dressers could be made dispensable - if you let a robot do it and just choose on a display how you would like to look like. Unimaginable today but in the future who knows.
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One thing people usually omit during these consideration are resources constraints. Worlds Tin and Nickel reserves are already running low. Scarcity of rare earth metals is a well known fact. In 20-30 years we might find out that high grade steel and nickel alloys are scarce and super expansive. And while on the one hand it drives the push for substititiutes in form of new alloys and high grade polymers but on the other hand everything has its limits. Industry as we know it cannot run without high/super alloys. Unless those billions of robots You guys are afraid of are made of aluminium and are sun/nuclear powered i dont see it happening.
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On July 21 2015 16:54 Integra wrote:Show nested quote +On July 21 2015 08:06 Wolfstan wrote:On July 21 2015 08:01 Evil_Sheep wrote:On July 21 2015 07:52 Wolfstan wrote:
Are balanced budgets and export surpluses synonymous? They have nothing to do with each other. Balanced budget is government spending = income. Export surpluses are to do with a country's trade balance. Export surplus = exports > imports therefore normally meaning there is a net inflow of money into the country. Are austerity, balanced budgets and responsible government spending interchangeable then? Austerity as a definition is literally "cut spending while trying to maintain the same amount of income". Reason behind austerity and the means of achieving it depends on each country since successful austerity measures in one country would have zero effect or make no sense for another country so its highly individual.
Just to clarify, a lot of people consider raising taxes also to be austerity. Most EU countries never cut spending post 2008, they have raised taxes in some instances.
Greece is an exception, because they collapsed.
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On July 22 2015 02:14 Silvanel wrote:
One thing people usually omit during these consideration are resources constraints. Worlds Tin and Nickel reserves are already running low. Scarcity of rare earth metals is a well known fact. In 20-30 years we might find out that high grade steel and nickel alloys are scarce and super expansive. And while on the one hand it drives the push for substititiutes in form of new alloys and high grade polymers but on the other hand everything has its limits. Industry as we know it cannot run without high/super alloys. Unless those billions of robots You guys are afraid of are made of aluminium and are sun/nuclear powered i dont see it happening. I think this problem gets exaggerated. The reserves are not that low.
What did change is the production location. Nowadays it's almost exclusively done in China and West Africa. It became 'uneconomical' in the rest of the world. If we really run into supply problems (or political problems), than prices will rise and old deposits will be opened again. Also, there are a bunch of known deposits that were never touched, like North Korea for example.
And lastly, for a lot of these 'rare earths' alternative materials do exist, they are just not as ideal or cheap. So it is not like we have to stop all production because we run out of Nickel.
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Yeah, for instance, there is actually huge amounts of rare earth metals. It's not actually that rare. Unfortunately, the majority is concentrated in China.
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On July 22 2015 05:44 Dangermousecatdog wrote:
Yeah, for instance, there is actually huge amounts of rare earth metals. It's not actually that rare. Unfortunately, the majority is concentrated in China.
Not even that is true. There's plenty in other places. It's just that the infrastructure is set up in China and labor is cheap. Other places one of the two is missing.
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"Plentiful" and "cheap" are the combination that's always hard to find.
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On July 22 2015 08:56 Taf the Ghost wrote:
"Plentiful" and "cheap" are the combination that's always hard to find.
No.. Its not.
Its just exploiting poor workers/countries that shit on savety regulations... Like we do for our Phones/Clothing and basically everything we let them produce for us there..
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On July 22 2015 16:33 Velr wrote:Show nested quote +On July 22 2015 08:56 Taf the Ghost wrote:
"Plentiful" and "cheap" are the combination that's always hard to find. No.. Its not. Its just exploiting poor workers/countries that shit on savety regulations... Like we do for our Phones/Clothing and basically everything we let them produce for us there..
We were talking about natural resources...
One of the interesting things, especially when you look at Oil, is that if demand dropped by 90%, it really would be insanely cheap. Some of the Middle East wells run at around $2 per Barrel, even after capital costs.
There's also undersea mining as a possibility in the future. And mining asteroids. (Truly, being able to mine in the asteroid belt beyond Mars *should* be the goal of Manned Space Flight.)
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Iirc we were talking about mining rare earhts? Which aren't actually rare or anything special. Its just that getting it while actually paying a decent price for it is not desireable as long as China and others are willing to sacrifice People for it.
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On July 22 2015 17:44 Velr wrote:
Iirc we were talking about mining rare earhts? Which aren't actually rare or anything special. Its just that getting it while actually paying a decent price for it is not desireable as long as China and others are willing to sacrifice People for it.
Miner pay isn't a huge part of the costs of mining. All of the heavy machinery, extraction method and transport costs are the big issues.
As for a large collection of "Rare" Earth Elements, a lot of it has to do with several of the mines hitting their End of Life around the 2010-12 range. There are other mines that'll be online in a few years.
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On July 22 2015 17:57 Taf the Ghost wrote:Show nested quote +On July 22 2015 17:44 Velr wrote:
Iirc we were talking about mining rare earhts? Which aren't actually rare or anything special. Its just that getting it while actually paying a decent price for it is not desireable as long as China and others are willing to sacrifice People for it. Miner pay isn't a huge part of the costs of mining. All of the heavy machinery, extraction method and transport costs are the big issues.
As is the workforce in the clothing industry. Yet we rather have Bangladeshies work in deathtraps than produce the stuff here and pay a halfway decent price for it.
Seriously, all this stuff is way too cheap atm or, depending on the product, the earnings of the company are ridiculously high. Your Iphone or whatever wouldn't even become necessarily more expensive, but apples (or whoevers) profits would shrink.
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They do because it's better than the alternative.
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I am pretty sure, the Chinese miner is not that different than all other miners.
One generation ago, it was considered normal, that as a miner you would not make it to 65. Although they took pride in their work. And they protested bitterly against the closures of their mines, because socially it was a catastrophe. But in actuality, if you would ask former miners now, they are happy to be out of the pits. Ultimately a job is not worth more than your health.
If the Chinese could, I am sure, they would prefer an other job.
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On July 22 2015 05:27 lord_nibbler wrote:Show nested quote +On July 22 2015 02:14 Silvanel wrote:
One thing people usually omit during these consideration are resources constraints. Worlds Tin and Nickel reserves are already running low. Scarcity of rare earth metals is a well known fact. In 20-30 years we might find out that high grade steel and nickel alloys are scarce and super expansive. And while on the one hand it drives the push for substititiutes in form of new alloys and high grade polymers but on the other hand everything has its limits. Industry as we know it cannot run without high/super alloys. Unless those billions of robots You guys are afraid of are made of aluminium and are sun/nuclear powered i dont see it happening. I think this problem gets exaggerated. The reserves are not that low. What did change is the production location. Nowadays it's almost exclusively done in China and West Africa. It became 'uneconomical' in the rest of the world. If we really run into supply problems (or political problems), than prices will rise and old deposits will be opened again. Also, there are a bunch of known deposits that were never touched, like North Korea for example. And lastly, for a lot of these 'rare earths' alternative materials do exist, they are just not as ideal or cheap. So it is not like we have to stop all production because we run out of Nickel.
Long before we run out of certain element the raise in price will result in moving to cheaper alternative. Thats how capitalism works. However in some cases there is no alternative or alternative has significantly lower performance and properties. This has already happened in some areas for example solders: low tin supplies and ban on lead (in EU) resulted in moving to different type of solders which are in fact of lower quality than the ones used in XX century. Hastallloys/Inconels and maraging steels are already very expansive while constant growth of chemical/aviation industry results in constant rise in demand for them. Can titanium or carbon based materials replace them? Perhaps. If not, we might see some major changes in the way some industries work.Not necessarily in the diraction of increased productivity.
I guess we will see.
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Varoufakis"[German finance minister Wolfgang] Schauble believes that the eurozone is not sustainable as it is. He believes there has to be some fiscal transfers, some degree of political union. He believes that for that political union to work without federation, without the legitimacy that a properly elected federal parliament can render, can bestow upon an executive, it will have to be done in a very disciplinary way.
"And he said explicitly to me that a Grexit is going to equip him with sufficient terrorising power in order to impose upon the French that which Paris has been resisting: a degree of transfer of budget-making powers from Paris to Brussels."
http://www.telegraph.co.uk/finance/economics/11764018/Varoufakis-reveals-cloak-and-dagger-Plan-B-for-Greece-awaits-treason-charges.html
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On July 27 2015 18:53 unsaeglich wrote:Varoufakis Show nested quote +"[German finance minister Wolfgang] Schauble believes that the eurozone is not sustainable as it is. He believes there has to be some fiscal transfers, some degree of political union. He believes that for that political union to work without federation, without the legitimacy that a properly elected federal parliament can render, can bestow upon an executive, it will have to be done in a very disciplinary way.
"And he said explicitly to me that a Grexit is going to equip him with sufficient terrorising power in order to impose upon the French that which Paris has been resisting: a degree of transfer of budget-making powers from Paris to Brussels." http://www.telegraph.co.uk/finance/economics/11764018/Varoufakis-reveals-cloak-and-dagger-Plan-B-for-Greece-awaits-treason-charges.html
Varoufakis has talked so much BS i wouldn't take a single word he says serious. The guy had his 15 minutes of fame and it got in his head.
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EPT
