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http://blogs.ft.com/the-a-list/2014...ed%2F%2Fproductquote:Let us not miss the point on Chinese defaults
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# ? Mar 23, 2014 08:34 |
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# ? May 11, 2024 14:51 |
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asdf32 posted:Why? The government is not compelled by the short term need to realize a profit on its investments. In many cases the industries that are necessary to incubate a high growth economy can be uncompetitive on the international scale for years so relying on private capital to make those investments is simply not feasible. quote:What you're asking for here, choosing high growth industries, is exactly the thing private capital is trying to do at the same time. And after accumulating a certain amount of capital it should be in a position to do exactly that. You want to have the presence of certain kinds of industry, such as high value added manufacturing, regardless of whether it can be internationally competitive in the short term. These are the industries that can provide rising wages, that utilize an educated workforce, and which can create spin off innovations. To ensure the presence of that kind of economic activity you need the government to take a more active hand in managing the economy by encouraging some uses of capital and discouraging or limiting others. quote:Government of course has an incredibly important role doing all the things government is uniquely well suited for - education, infrastructure, regulatory framework etc, but picking and choosing winning industries isn't really among them. The problem with your suggestions is that economic development is a lot more complicated than just the accumulation of capital. You need the right institutions and the right balance between economic sectors to actually create the conditions for sustainable long term growth in living standards. Having the right industries will create knock on effects that are good for the rest of the economy and the workforce, whereas following the short term dictates of capital will mean that you keep reinvesting your resources in the areas where you already have a 'comparative advantage', i.e. low productivity manufacturing, basic agriculture and resource extraction.
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# ? Mar 23, 2014 17:09 |
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I think this post does a good job zooming in on the disagreements. I'll mostly just rephrase and highlight them here.Helsing posted:The government is not compelled by the short term need to realize a profit on its investments. In many cases the industries that are necessary to incubate a high growth economy can be uncompetitive on the international scale for years so relying on private capital to make those investments is simply not feasible. Predicting what's going to pay off in several years is the hard part and generally the inherent uncertainty behind long term investments is what discourages private capital. When they decide it's worth it businesses make 5-10 year investments all the time (cars, jets, processors for example). So my problem with this argument is that government doesn't have an advantage on the prediction aspect which is actually the harder part and leaves government at just as much risk of loss. The two main points that I see on your side here are that while private firms will be focused on their specialty, government can invest without caring where the returns end up coming from. This is an argument for general purpose research for example. And separately, as I commented earlier government should at least assume that it's going to be around in 2+ decades. quote:You want to have the presence of certain kinds of industry, such as high value added manufacturing, regardless of whether it can be internationally competitive in the short term. These are the industries that can provide rising wages, that utilize an educated workforce, and which can create spin off innovations. Just to re-emphasize, while an industry requires subsidies it's costing the rest of the economy. Jobs which earn $15 an hour with a $5 subsidy are worse than jobs that earn $11 with none. When you replace the latter with the former you're losing in the immidiate. It's a real cost and it must be recouped. The key argument is diversity here which I think makes some sense from a risk perspective at the least. And again a key here is the human side - having a wider range of skills in your population makes the economy more adaptable. If this comes with a short term loss in growth or output I can see the argument that it may be worth it. quote:The problem with your suggestions is that economic development is a lot more complicated than just the accumulation of capital. No, not really*. See below. quote:You need the right institutions and the right balance between economic sectors to actually create the conditions for sustainable long term growth in living standards. Having the right industries will create knock on effects that are good for the rest of the economy and the workforce, whereas following the short term dictates of capital will mean that you keep reinvesting your resources in the areas where you already have a 'comparative advantage', i.e. low productivity manufacturing, basic agriculture and resource extraction. I agree with this because all of these things actually feed back into capital accumulation (physical and human). Countries really are poor because they're lacking capital but then the question shifts to why? That's what's complex and the answer includes most of the things here. It may be a nitpick but I think it keeps the emphasis where it ought to be. *How well capital gets used depends on management, workforce participation, working hours etc but all these things vary by only 10's of percent. While capital and skills vary by orders of magnitude and correspond to the roughly two orders of magnitude differences between economies in the world. asdf32 fucked around with this message at 18:12 on Mar 23, 2014 |
# ? Mar 23, 2014 18:10 |
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Is there not a separate thread on the Taiwan/China trade pact protests?
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# ? Mar 24, 2014 03:27 |
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So by what date should I get my money out of China?
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# ? Mar 24, 2014 03:58 |
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Arglebargle III posted:So by what date should I get my money out of China? If anyone had a definitive answer to that, they'd be richer than god. Anyhoo...check 'dis out https://twitter.com/TheStalwart/status/447913184716787712
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# ? Mar 24, 2014 04:41 |
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Arglebargle III posted:So by what date should I get my money out of China? My family has had money in China for nearly two decades. In the long run, we've made a lot more than what we could potentially lose from any sort of major adjustments (whether Japan-style, European-style, or even U.S.-style). If you've only been in there for a few years, then I can see how you might have not gained enough to make any risk of staying worthwhile. I can tell you this though, we lost a lot more during the U.S. financial crash than we ever have anywhere else, at any time. With that in mind, we're keeping the percentage of our total investments, as Chinese investments, more or less what they are. If you really don't have the stomach to stay in for the long-run, I recommend putting more of your money into safer instruments. If I remember correctly, small cap funds (in Canada and the U.S.) have been doing pretty well in recent years, so there's a place to start. I can tell you this though, some of our acquaintances that lost the most of their net worth in the last decade have been those that had most of their assets and investments in the U.S. I remember some of them lost ~50% or more. ComaPrison fucked around with this message at 08:20 on Mar 24, 2014 |
# ? Mar 24, 2014 05:11 |
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That is the worst loving anecdotal financial advice I have ever loving read. Even worse than the tripe a loving realtor would tweet.
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# ? Mar 24, 2014 05:22 |
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Cultural Imperial posted:That is the worst loving anecdotal financial advice I have ever loving read. Even worse than the tripe a loving realtor would tweet. If you're on Something Awful for financial advice, you've got a lot more serious things to worry about. I'm just a random stranger on the internet, and I can only tell you what my personal experience has been in observing the ups and downs of my family's investments since the late 90s. If you want solid advice from people that do this poo poo for a living, there are places to go for that! On top of that, this is the "China Economy Megathread", not the "ITT Goons Give Me Financial Advice I Will Take Seriously" thread. I can only tell you that there are a lot of people, my family included, that have made out quite well with investing there, and some are in it for the long haul. We're not professional economists or even econ nerds, but we've had some good judgments and some good luck since the late 90s. What more can you expect from laymen? If you want this thread to be exclusively for hardcore econ nerds to circle jerk, you should've titled it something other than "China Economy Megathread". If, on the other hand, you intend for this to be a nesting pit for bears, you should've made that clear from the title as well. From a cursory glance at your OP and other posts in this thread though, I have to question whether you have any direct stake (i.e. actual investments) in the ups and downs of the Chinese economy. More than anything else, you just seem like a bitter Canadian bear that is praying for a Chinese implosion so you can satisfy some twisted need for schadenfreude. Having spent a couple of decades in Vancouver, I can understand why you'd feel pissed about the insane bubble that is Vancouver's property. Although it's true that it's mostly due to immigrant money from China, you also have to consider that the BC government has benefited quite a bit from that inflow of cash. Yeah, it has priced a lot of locals out of the property market, but blaming China for that is as silly as blaming the WTO for hollowing out Detroit. The global economy is an amoral beast, and countless people get hosed by it if they lack some luck and some good judgement. Lastly, you should still give the Canadian government some credit for shutting SOME of the valves of that hot money inflow from China. Last I checked, the Vancouver property bubble is more or less frozen, if not gradually deflating. It hasn't been good news for people looking to sell (like we are), but it should certainly take some pressure off people who are eventually hoping to buy. ComaPrison fucked around with this message at 05:46 on Mar 24, 2014 |
# ? Mar 24, 2014 05:24 |
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Look at China getting all socialist and poo poo. http://www.ft.com/intl/cms/s/0/2038...iteedition=intl quote:Official China union raises stakes in Walmart closure programme
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# ? Mar 24, 2014 05:33 |
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asdf32 posted:Don't just parrot dumb arguments. The larger implication of the claim that business is exceedingly shortsighted is that the capitalist class is unable or unwilling peruse long term goals. I doubt that's the point you're trying to make. Maybe you can start with the fact that most private investment firms are willing to front the risk government subsidies do, which make up most long term projects.
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# ? Mar 24, 2014 06:18 |
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ComaPrison posted:I can only tell you that there are a lot of people, my family included, that have made out quite well with investing there, and some are in it for the long haul. We're not professional economists or even econ nerds, but we've had some good judgments and some good luck since the late 90s. What more can you expect from laymen? For what it's worth, the businessmen that I've had the opportunity to speak to about this issue seem very willing to bet their company's success on Chinese expansion. Nothing lasts forever, but for right now people with skin in the game are counting on China's success.
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# ? Mar 24, 2014 06:52 |
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I think a big thing for China as it starts expanding its own technological industries will be to start enforcing copyright and IP laws, even for foreign countries and businesses. While they've been able to make a big market out of reverse engineering and copying foreign designs, that time is coming to a close. They will have their own industries, technologies and intellectual properties hampered and decimated by cheap knockoffs that they themselves encourage with no enforcement of these laws.
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# ? Mar 24, 2014 22:23 |
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Tarkus posted:I think a big thing for China as it starts expanding its own technological industries will be to start enforcing copyright and IP laws, even for foreign countries and businesses. While they've been able to make a big market out of reverse engineering and copying foreign designs, that time is coming to a close. They will have their own industries, technologies and intellectual properties hampered and decimated by cheap knockoffs that they themselves encourage with no enforcement of these laws. At this point in time, I don't think they're too worried about having their technology copied. There may come a day when that will change, but I am not sure it will be anytime soon. On balance, the decision of how strictly to enforce IP laws will depend on the macro-level impact on the economy. If a few Chinese companies get ripped off on a few billion worth of IP, but a few other Chinese companies make off with tens of billions worth by reverse-engineering, we'll probably see a continuation to the very mixed record on enforcement. It's just different for the U.S. because there's a lot more to lose in having tech ripped off by foreigners than there is to gain in stealing other people's tech. ComaPrison fucked around with this message at 09:03 on Mar 25, 2014 |
# ? Mar 25, 2014 09:00 |
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ComaPrison posted:At this point in time, I don't think they're too worried about having their technology copied. There may come a day when that will change, but I am not sure it will be anytime soon. On balance, the decision of how strictly to enforce IP laws will depend on the macro-level impact on the economy. If a few Chinese companies get ripped off on a few billion worth of IP, but a few other Chinese companies make off with tens of billions worth by reverse-engineering, we'll probably see a continuation to the very mixed record on enforcement. It's just different for the U.S. because there's a lot more to lose in having tech ripped off by foreigners than there is to gain in stealing other people's tech. I think the point is that if the situation persists there will be no Chinese IP. If you are left twisting in the breeze with nothing but research costs and a bunch of knockoffs, why would you go through the trouble?
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# ? Mar 25, 2014 13:58 |
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I don't see any reason why China won't follow Japan or South Korea when it comes to developing IP in the future. They're still on the copycat phase of economic development curve. Once they develop IP worth selling, you'll see a sudden respect for legal protections and framework. Arguing that they lack some intrinsic ability to generate IP smacks of post-war criticisms of Japan being no good for anything more than producing cheap imitation goods.
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# ? Mar 25, 2014 14:25 |
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Haven't most industrialising nations followed a similar path? IP law is a scheme to create and then and protect property, it doesn't make sense to create it until you're the one who will have the property.
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# ? Mar 25, 2014 14:42 |
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Tarkus posted:I think a big thing for China as it starts expanding its own technological industries will be to start enforcing copyright and IP laws, even for foreign countries and businesses. While they've been able to make a big market out of reverse engineering and copying foreign designs, that time is coming to a close. They will have their own industries, technologies and intellectual properties hampered and decimated by cheap knockoffs that they themselves encourage with no enforcement of these laws. The current policy of mostly only enforcing laws when it benefits Chinese businesses seems to be working pretty well for them and will probably be relatively easy to expand if it starts becoming an actual issue for Chinese IP holders. Why bother with protecting foreign companies when they're throwing in all their money regardless?
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# ? Mar 25, 2014 16:24 |
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The United States industrialized through stolen "intellectual property" as did most other countries. The fact that China has a massive industrial base and technology sector, plus a large educated workforce, means they'll likely become very innovative over time. They are still in the wild growth phase of their development so its a bit premature to be speculating about when they will change their attitude toward IP. asdf32 posted:I think this post does a good job zooming in on the disagreements. I'll mostly just rephrase and highlight them here. There are substantial benefits to having a manufacturing sector in your economy even if it is relatively less efficient than the global average. Manufacturing in sectors with rising productivity and increasing returns to scale create the potential for higher wages. It also tends to create the economic clusters of activity necessary to incubate innovation and it creates a demand for skilled workers. So even absent the capability of government to anticipate which industries are going to take off, there are still very good reasons to support a local manufacturing industry that will develop the country's capability to reach middle income status. Even if you can't produce cars as well as Japan there are very real benefits to the economy from having a car manufacturing sector in the economy. Obviously there are dangers that subsidies create a permanently inefficient industry that lobbies for protection from the government rather than innovating. That may be part of the reason that export oriented industrial strategies have tended to perform better than import substitution strategies (i.e. you want an Asian industrial strategy, not a Latin America one). But, even if we recognize this danger, its important to also recognize that countries like Peru and Mexico which pursued an import substitution strategy in the post war era were much better off than they have been since they abandoned import substitution for neoliberal economic policies. So even accepting the dangers of subsidized industry, the historical record suggests very strongly that a country with a protected and somewhat inefficient advanced industrial sector is still better off than a country that merely specializes in its 'comparative advantage' and relies on capital accumulation (most of which will usually end up flowing out of the country to the firms that own the textile factories) to develop itself. quote:Just to re-emphasize, while an industry requires subsidies it's costing the rest of the economy. Jobs which earn $15 an hour with a $5 subsidy are worse than jobs that earn $11 with none. When you replace the latter with the former you're losing in the immidiate. It's a real cost and it must be recouped. If you just invest in education without investing in industries that require an educated work force then the people you train will leave the country to work elsewhere. This is why I keep emphasizing that economic development is much more complicated than the accumulation of capital stock or even just the accumulation of 'human capital'. You need the right institutions, including industries that will create employment for an educated workforce. A properly functioning economy doesn't just emerge spontaneously anymore than a farm will just emerge from a plot of uncultivated land. quote:No, not really*. See below. In order to develop the institutions and industries that will create the virtuous circle of economic development you need to encourage certain types of economic development so that you can jump start development. Otherwise a country that is currently on the bottom of the global economic order will never be able to catch up with countries that are at the top. Instead the wealthy countries will monopolize high growth industries until all the potential innovation has been squeezed out of them, at which point they'll be passed along to the poorer countries (this is what happened with textiles or shoes: as long as they were high growth industries they remained concentrated in the developed economies, once they reached the far end of their 'learning curve' however the potential for growth and innovation in the production process was exhausted and they became staples of the under developed economies of the world).
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# ? Mar 25, 2014 16:49 |
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Peel posted:Haven't most industrialising nations followed a similar path?
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# ? Mar 25, 2014 19:38 |
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http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10722032/Moodys-warns-of-Hong-Kong-risk-to-Chinese-banks.htmlquote:The growth in lending at the Hong Kong subsidiaries of China’s largest banks has led to Moody’s warning about the increased risks they pose to their parents as they increase their exposure to the mainland economy.
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# ? Mar 25, 2014 19:48 |
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Typo posted:Pretty much, the US for instance basically pirated the designs from the British textile industry for its industrialization One of the major players was a guy who memorized all the designs and was able to replicate them when he returned to the US. He was also one of the first major employers of women. Interesting fellow http://en.wikipedia.org/wiki/Francis_Cabot_Lowell_%28businessman%29
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# ? Mar 25, 2014 19:49 |
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Helsing posted:its important to also recognize that countries like Peru and Mexico which pursued an import substitution strategy in the post war era were much better off than they have been since they abandoned import substitution for neoliberal economic policies. What is the background behind this statement? Typo fucked around with this message at 19:55 on Mar 25, 2014 |
# ? Mar 25, 2014 19:50 |
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Typo posted:Now this is interesting because I've consistently heard it argued the other way but never seen this side of the argument before. As far as the track record of the neoliberal era you can refer to this document. Growth rates have been much worse since the turn toward market liberalization and the 'Washington Consensus'. Even making some allowance for the idea that different eras have different growth potential (i.e. maybe something about the 1950s-1970s made that era more amendable to growth regardless of the economic policies in place) its still quite remarkable just how lovely the real world results of market liberalization have been in contrast to the bad old days of protectionism, capital controls and Keynesian economics. As for the more specific claims on Peru, this whole paper is worth reading (and quite relevant to a thread on the Chinese economy) but I'll just make an extended quote here: Erik Reinert, The Terrible Simplifiers: Common Origins of Financial Crisis and Persistent Poverty in Economic Theory and the new '1848 Moment', December 2009, DESA Working Paper No. 88, pp. 18-21 posted:Increasing Returns and Synergies: Their Creation and their Destruction Getting back to China, I think its hilarious the way free market fundamentalists have tried to use China's economic growth as some kind of vindication of neoliberal policies or of the so called 'Washington Consensus' model of development. While China certainly represents a break from Soviet style central planning its absolutely not an example of a free market success story. Instead it exemplifies how what are basically mercantilist policies continue to be the most reliable toolkit for developing your national economy - provided that you are strong enough to resist other countries when they try to tell you that you'd be better off focusing on your 'comparative advantage' in cheap labour. Using cheap labour and low value added industries as a stepping stone toward real economic development is acceptable, but it needs to be accompanied by a conscious policy of incubating a strong manufacturing sector with a high level of value added (even if that means protection against superior foreign competitors for an extended period of time, maybe even indefinitely since you're still better off with an inefficient manufacturing sector than you are with nothing at all, as we see in the case of Peru).
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# ? Mar 26, 2014 00:28 |
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The problem with this entire argument is simple- a big part of the reason growth has been "bad" is because the ISI-fueled growth that the paper above touts above was the definition of an unsustainable bubble. Latin American governments propped up their inefficient (i.e. wages too high/productivity too low to be truly competitive on the world market) industries through heavy borrowing and the end result was a huge economic crisis when the credit ran out. Latin American countries didn't move away from ISI because they were tricked by nefarious advocates of the free market, they did so because ISI was a disaster. Growth rates in America from 2001-2007 were reasonably good, but that doesn't mean we should start another subprime bubble to boost growth. Mercantilism isn't necessarily bad, but if you the industries you protect never produce anything people abroad want you're going straight down a dead end.
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# ? Mar 26, 2014 06:10 |
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Helsing posted:Over the last five centuries there's been a fairly reliable dynamic at play where certain industries, whether its textiles or automobiles or information technology, tend to be growing at a much faster rate than any other industry. This paper gives an overview of this process. As the paper demonstrates industries tend to follow something called a "learning curve". How does this work, if at all, from a TRPF perspective?
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# ? Mar 26, 2014 09:00 |
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http://www.minyanville.com/sectors/global-markets/articles/will-China-Debt-Bomb-Trigger-US/3/26/2014/id/54329quote:On Wednesday night I had a long Twitter conversation with Larry McDonald over his latest article concerning China. You can read his piece here, but the gist of it is that
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# ? Mar 27, 2014 15:17 |
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Cultural Imperial posted:http://www.minyanville.com/sectors/global-markets/articles/will-China-Debt-Bomb-Trigger-US/3/26/2014/id/54329 The ultimate question is going to be how much the Chinese government is willing (or is able) to tap those currency reserves, and ultimately the costs of propping up the banking industry. Remember those foreign currency reserves also exist to back up the Renminbi, and if they are raiding that piggy bank it may have a long term effect on their currency. Remember, the Renminbi is not a major reserve currency, especially in comparison to the Chinese economy. Right now, their currency reserves are around 40-60% of GDP, a considerable amount but not necessarily unassailable under the right pressures.
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# ? Mar 27, 2014 15:32 |
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You can't use foreign reserves for a domestic bailout because it's all foreign currencies. The Chinese banks' liabilities are all in RMB, so if you gave them a bunch of Euro's and USDs they would have to exchange them for RMB with the central bank in order to pay back their debtors and depositors. This leaves the government with its original problem: how to get ahold of a bunch of RMB without deleterious effects. Their only real options are to print more RMB, issue debt, or increase tax revenue.
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# ? Mar 28, 2014 00:43 |
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dilbertschalter posted:The problem with this entire argument is simple- a big part of the reason growth has been "bad" is because the ISI-fueled growth that the paper above touts above was the definition of an unsustainable bubble. Latin American governments propped up their inefficient (i.e. wages too high/productivity too low to be truly competitive on the world market) industries through heavy borrowing and the end result was a huge economic crisis when the credit ran out. Latin American countries didn't move away from ISI because they were tricked by nefarious advocates of the free market, they did so because ISI was a disaster. Growth rates in America from 2001-2007 were reasonably good, but that doesn't mean we should start another subprime bubble to boost growth. Mercantilism isn't necessarily bad, but if you the industries you protect never produce anything people abroad want you're going straight down a dead end. Your comment really just illustrates how premature free trade is a recipe for keeping currently under developed countries at the bottom of the global economy. South Korea industry was less efficient than its best global competitors for many decades and had to use various protectionist measures and subsidies. The USA had a century of protectionism and Britain had several hundred years of it before those countries were able to compete effectively in a "free market". In fact it isn't a coincidence that Britain switched from protectionism to advocating 'free trade' right around the time it became the world leader in industry. The Americans did the exact same thing: they were huge advocates of protectionism and cultivating 'infant industries' until they had built up the world's most productive industry and then they suddenly became the world's fiercest advocates for free trade. All those countries also experienced major bubbles during their development, but they were able to recover from them and forge ahead because, for various reasons, they didn't end up at the mercy of foreign creditors who had a vested interest in keeping them down. I agree that the record of ISI isn't as good as the record of export lead protectionism but its still got a much better track record than "free trade" which tends to only benefit the core countries plus a small strata of elite interests in the periphery. If we actually wanted to use trade to develop the entire world then free trade would be phased in gradually, starting at the regional level and then slowly working up as countries became more efficient. We'd recognize that while a country is developing they are better off having an inefficient industrial base that is protected by government rather than having no real industry at all. OwlBot 2000 posted:How does this work, if at all, from a TRPF perspective? Reinert is a Schumpeterian, not a Marxist (though Schumpeter, despite being quite conservative, took Marxian economics quite seriously and credited Marx with having a much clearer understanding of how capitalism develops than Alfred Marshall or other neoclassicals). In the Schumpeterian perspective the focus is placed on 'entrepreneurs' (this can be an individual or a corporation or whatever) who "innovate" via "combination", i.e. they combine two inputs or services or ideas in some novel way. This could be anything from the idea of having a cafe where you can also play boardgames (i.e. you're combining the idea of a cafe with the idea of a gaming store) or it could be combining two industrial techniques to hugely improve the efficiency of your factory. To use a recent example you could think of the Blackberry, which essentially combines the functions of a computer and a phone. If this innovation is succesfull then the entrepreneur who developed it is able to charge well above the cost of production for it. This extra profit is referred to as a Schumpeterian rent. However this will cause others to copy your innovation (think of how, within a few years of Blackberry's roll out, numerous other 'smart phones' were being brought to market). As more people enter the market seeking to copy or improve on your innovation your profits will go down. Eventually your profit rate drops down to the industrial average or even below it. There's a certain resemblance here to the idea of the tendency of the rate of profit to fall since you start out with a highly profitable product and then over time the market process causes more capital to rush into this particular industry, bringing down the rate of profit. However Schumpeter was pro-capitalist (though he largely accepted the Marxian idea that capitalism was doomed in the long run) and was more interested in describing how a capitalist economy functions than he was in predicting its inevitable downfall.
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# ? Mar 28, 2014 16:50 |
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Helsing posted:Your comment really just illustrates how premature free trade is a recipe for keeping currently under developed countries at the bottom of the global economy. South Korea industry was less efficient than its best global competitors for many decades and had to use various protectionist measures and subsidies. The USA had a century of protectionism and Britain had several hundred years of it before those countries were able to compete effectively in a "free market". In fact it isn't a coincidence that Britain switched from protectionism to advocating 'free trade' right around the time it became the world leader in industry. The Americans did the exact same thing: they were huge advocates of protectionism and cultivating 'infant industries' until they had built up the world's most productive industry and then they suddenly became the world's fiercest advocates for free trade. All those countries also experienced major bubbles during their development, but they were able to recover from them and forge ahead because, for various reasons, they didn't end up at the mercy of foreign creditors who had a vested interest in keeping them down. quote:I agree that the record of ISI isn't as good as the record of export lead protectionism but its still got a much better track record than "free trade" which tends to only benefit the core countries plus a small strata of elite interests in the periphery. If we actually wanted to use trade to develop the entire world then free trade would be phased in gradually, starting at the regional level and then slowly working up as countries became more efficient. We'd recognize that while a country is developing they are better off having an inefficient industrial base that is protected by government rather than having no real industry at all. Typo fucked around with this message at 18:24 on Mar 28, 2014 |
# ? Mar 28, 2014 18:13 |
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Typo posted:I don't think he has a problem with protectionism and said as much his post. But he is correctly pointing out that if protectionism doesn't lead to competitive industries it is problematic. Whatever you have to say about protectionism in Britain or Germany or the US it did result in industries that were genuinely competitive on the world stage. If those countries had been forced to open up their industries after only a decade or two then they would have suffered the same fate as Peru. They were able to reach competitiveness because they had a much longer time to incubate their infant industries. quote:But he -is- correct though. ISI only has a better record in the sense that it borrowed money countries can't repay and kicked a economic crisis down the road. Periodic crises in Latin America where investment capital rushes in and then rushes out again are not new or unique to ISI. The downturn became an excuse for the IMF and the United States to put the breaks on the industrialization (and what was perceived to be a leftward shift) in Latin America. I agree that ISI doesn't always have the best track record but it went a lot better than the neoliberal reforms that followed it and I don't think its accurate to say it simply kicked the crisis down the road. Like I said, an economy with an inefficient industrial base is still better off than an economy without any industry at all. If the United States had been forced by international creditors to impose IMF style conditionalities on its economy following the Panic of 1873 then America never would have become a global power.
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# ? Mar 28, 2014 19:06 |
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So real estate is taking a turn. http://m.scmp.com/comment/blogs/article/1464831/hk470-million-hong-kong-apartment-just-wont-sell quote:It probably seemed like a good idea at the time. If you have trouble finding a buyer for the most expensive apartment ever listed in Hong Kong (on a square foot basis), best not worry, just hang on. One will eventually come along - probably from the mainland. Just give it some time.
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# ? Apr 4, 2014 13:08 |
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Helsing posted:As far as the track record of the neoliberal era you can refer to this document. Growth rates have been much worse since the turn toward market liberalization and the 'Washington Consensus'. Even making some allowance for the idea that different eras have different growth potential (i.e. maybe something about the 1950s-1970s made that era more amendable to growth regardless of the economic policies in place) its still quite remarkable just how lovely the real world results of market liberalization have been in contrast to the bad old days of protectionism, capital controls and Keynesian economics. Any examples are interesting but being a small country which suffered political instability at the time it liberalized makes it a difficult example to generalize from. I'd like to see more about the claims of government debt too. Though in your defence a broader discussion could be had here, but I don't think Peru is ideal for it. Wikipedia: Import Substitution posted:For the six largest south american economies the phase of import substitution between 1940 and 1980 was the highest growth period in the last century with a growth of 2.7% per year on average. In the export-oriented era from 1900 till 1939 growth was at 1.3% and in the neoliberal era from 1980 to 2000 at 0.6%.[13] One thing that's important about China for discussions like this is it's size. When China is able to grow and reduce poverty it means a significant chunk of the worldwide population is improving. We don't have to try and generalize from it (though we may want too). I still don't think you're showing recognition of the fundamental importance of trade, especially for economy like Peru which doesn't have any hope of substituting imports for, well, most things including critical items like industrial equipment, computers, telecommunications etc. And again the landscape has really changed here. Mexico manufactured 95% of it's consumer goods in the 60's - this wouldn't be possible or desirable today. And as the technological gap widens between developed and undeveloped countries comparative advantage becomes more and more powerful. China does rely on the comparative advantage of cheap labor as a major component of it's growth which is exactly why it gets brought up as an example of that. Personally, I generally don't go a whole lot beyond pointing this out. Trade is key, and a certain amount of liberalization (and not too much protection) is necessary to create it. China is a great example of this.
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# ? Apr 6, 2014 02:04 |
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asdf32 posted:One thing that's important about China for discussions like this is it's size. When China is able to grow and reduce poverty it means a significant chunk of the worldwide population is improving. We don't have to try and generalize from it (though we may want too). The issue is the possibility of a "trade bubble," many of the economies that relied on trade for growth and improved standards of living may in fact begin to hit a wall if they haven't already. A big part of the development that happened from the 90s/00s was that these economies used their comparative advantage (ie cheap labor) to offshore manufacturing and services from the first world. Ultimately, the issue becomes when demand within the first world is sapped and there are effectively more limited options for finding capital. For a while it was claimed that China could just develop from internal demand but it is clear that much of that growth was purely financed on internal debt with relatively little return. "Trade is key" in so far when the conditions are right but much of the history of ISI is also wrapped up in the Cold War and the fact many countries in the third world purposefully tried to distance themselves from the US/first world and therefore used ISI in order to maintain political independence. Edit: The countries that did cozy up (sometimes they didn't have much of a choice...like Japan) did well for a while, especially if trade barriers opened up between them and the United States but this relationship also had its own complexities. Ardennes fucked around with this message at 10:15 on Apr 6, 2014 |
# ? Apr 6, 2014 09:27 |
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ProfessorCurly posted:I think the point is that if the situation persists there will be no Chinese IP. If you are left twisting in the breeze with nothing but research costs and a bunch of knockoffs, why would you go through the trouble? So would you say you are "not very familiar" with the Chinese tech industry or would "not at all familiar" be a better way to describe your level of knowledge?
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# ? Apr 6, 2014 11:38 |
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At that point not at all, I was just responding to the general point of the person I quoted - that apparently in China there is an atmosphere of 'no big deal if someone else copies my idea' with the theory being that so long as the copy-cat companies make more than the developer lost it will be a net gain for society. If that is really the situation on the ground then I don't find it logical for there to be developers who are apparently surrounded by people waiting to rip off their idea with lax standards of enforcement. Decided to do a bit of reading on it and apparently China has been moving towards a strong IP law system, and the areas with the best local enforcement of those laws are also where a lot of the best ideas/developments are coming from. Is this a bad assessment of the situation? I didn't mean to step into the thread to share my vast wealth of knowledge, just to point out the immediate flaw in a given post.
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# ? Apr 6, 2014 13:50 |
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asdf32 posted:Any examples are interesting but being a small country which suffered political instability at the time it liberalized makes it a difficult example to generalize from. I'd like to see more about the claims of government debt too. Another example would be Mexico. The Mexican government adopted ISI policies in the 1940s and maintained them up until the end of the 1970s, a period referred to as the "Mexican Miracle". Growth averaged around 6% during the ISI period before dropping to around 1.5% during the 1980s and 1990s. Also note that this period of growth the share of GDP taken up by manufacturing rose substantially while the share taken up by agriculture shrank. Also note that one of the factors involved in the eventual end of the miracle period was when the government began to invest heavily in oil exports (i.e. the Mexican economy's "comparative advantage" in oil) which created difficulties when the price of oil suddenly dropped in the early 1980s. Like I said above, there are identifiable patterns here. Building and maintaining a manufacturing sector promotes healthy economic growth and rising wages. It isn't some kind of magical policy that will guarantee success but it is clearly a necessary step for achieving middle or high income status as a nation. It also takes a long and sustained period of protectionism mixed with trade to achieve middle or high income status, something that is evidenced by the historical example of just about every high or middle income country in the world today. Typo argued above that the ISI period merely propped up industries that weren't competitive internationally, but this ignores the fact that all successful countries do this, often for extended periods of time, before their industries are ready to compete. The first Japanese car sold in America, the Toyopet Crown, was a disaster. It was too heavy and it had a weak motor that meant it could barely climb some hills, and it was more expensive than other economy cars. Japan also had a reputation for shoddy goods and there was left over bad feelings from the war. The car performed so poorly in the American market that it was withdrawn. Observers at the time, both in Japan and abroad, pointed to this as an example of why Japan should stay focused on producing textiles and electronics rather than sinking capital into its uncompetitive automobile manufacturing. When South Korea decided to pursue self-sufficiency in steel construction it established POSCO in 1968 as a State Owned Enterprise. Since South Korea hadn't possessed any modern steel plants up until that time and since it lacked iron ore or coking coal the World Bank and most international lenders refused to loan money for the project and condemned it as an extravagant waste. However the South Korean government persisted and POSCO has become one of the world's largest corporations and possibly the world's most efficient producer of steel. It takes many decades to achieve competitive status internationally and during that period you need all kinds of government support to keep the industry alive. This example is clear in country after country. You need to consciously encourage industries with the potential for high productivity growth even if this means protecting your own relatively inefficient industrial base from foreign competition for an extended period of time. quote:One thing that's important about China for discussions like this is it's size. When China is able to grow and reduce poverty it means a significant chunk of the worldwide population is improving. We don't have to try and generalize from it (though we may want too). I'll just note that China is an extremely protectionist economy. It is in no way a vindication of free trade arguments or neoliberal policy. quote:I still don't think you're showing recognition of the fundamental importance of trade, especially for economy like Peru which doesn't have any hope of substituting imports for, well, most things including critical items like industrial equipment, computers, telecommunications etc. And again the landscape has really changed here. Mexico manufactured 95% of it's consumer goods in the 60's - this wouldn't be possible or desirable today. And as the technological gap widens between developed and undeveloped countries comparative advantage becomes more and more powerful. I fully recognize the importance of trade, but I also recognize that so called "free trade" is a policy that strong countries impose upon weak countries to prevent them from emulating the successful development strategies that basically all wealthy countries have relied upon. If you go back to the 19th century when Britain pioneered "free trade" and economic liberalism and you actually examine the arguments made by the British at that time then you'll note that the people arguing in favour of free trade advocated that policy because they thought it would retard the growth of manufacturing on the European continent. The argument basically ran as follows: since we have such an advanced manufacturing sector we should open up our market for agricultural imports from the continent. This will encourage the continental economies to focus on the short term profits they can achieve by selling us their agricultural produce and will thus discourage them from emulating our industrial growth. Likewise in the 19th century USA there was a saying "don't do what the British tell you to do, do what the British did", i.e., encourage and protect infant industries rather than prematurely liberalizing the economy. Trade is great. Countries on a relatively equal footing like France and Germany can gain plenty by trading with each other with relatively few restrictions. And economies at different levels of development can also gain a lot from trading with each other. This trade, however, should be pursued as part of a balanced approach that prioritizes development. It shouldn't be about blind adherence to the fake ideology of 'free trade' which, historically, has been a rhetorical excuse for powerful countries to maintain control over weaker economies. quote:China does rely on the comparative advantage of cheap labor as a major component of it's growth which is exactly why it gets brought up as an example of that. Personally, I generally don't go a whole lot beyond pointing this out. Trade is key, and a certain amount of liberalization (and not too much protection) is necessary to create it. China is a great example of this. China is a heavily protectionist country. Sure it uses cheap labour to its advantage, but it does so in the context of a very aggressive development strategy in which the freedom of foreign capital is greatly restricted and in which massive subsidies and protections are extended to strategic industries. Nothing about China supports the conventional 'free trade' agenda. I mean obviously international trade is an important part of development. Nobody is denying that. But that doesn't in any way vindicate the idea that the path to prosperity comes by abandoning industrial strategy in favour of "comparative advantage".
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# ? Apr 6, 2014 17:53 |
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http://ftalphaville.ft.com/2014/04/07/1820562/both-a-lender-and-a-borrower-be-china-property-edition/ Chinese developers are investing in Chinese banks whom they borrow from. They're deeply in debt with them so they're.... Well who knows why.
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# ? Apr 7, 2014 13:41 |
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# ? May 11, 2024 14:51 |
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steinrokkan posted:Tsarist Russia wasn't medieval. For instance the giant hydroprojects realised at the Aral Sea were originally drafted by a Tsarist commission. And there was an industrial basis already present throughout Russia - how else do you think the country survived the WWI? Russia manifestly did not survive World War I. The government collapsed, everything became warring factions from before the end of WWI all the way up til the 20s. Numerous components of former Imperial Russia had their independence, already secured by force of arms in 1917 and early 1918, confirmed by the same terms that brought the November armistice for the central powers.
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# ? Apr 7, 2014 14:38 |