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#21 Baron Siegfried

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Posted 23 July 2013 - 01:12 PM

Ah, as with the Soviets, it's a Potempkin economy. That was one of the things that convinced Gorbachev to throw in the towel on communism - he tried like hell to find out what the REAL economic numbers were, and all he could get were reports that were totally unrelated to reality. The simple fact of the matter is that no command economy is capable of yielding accurate data, as it's massaged to reflect expectations and ideological dogma (and to make whoever look good).
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#22 indy

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Posted 23 July 2013 - 01:30 PM

All you need to know about china's statistical methods for the economy is that most financial operations are run by the state and people who both work for the state and displease the state tend to die.

#23 Traveler

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Posted 23 July 2013 - 02:31 PM

Aw I wouldn't be so hard on the Chinese. They just be corrupt now. Things are different in China these days. Its just another kleptocracy trying to wind down its investment in the kleptocrat's SOEs. So the leadership has the unique problem of trying to sensibly divest its own interests in order to save the economy and avoid the threat of massive unrest. (BTW, I consider the latter overrated. Chinese people really appreciate their gubmint, and are very nationalistic. Nor are they are idiots by any means. They know what the story is.)

That said, I do think the bubble is about to deflate quite a bit. I dont anticipate a burst, but anyone betting on 7% growth for the next decade is going to be disappointed. Building more bullet trains aint gonna do it. But it will provide an infrastructure to beat the band when the economy actually becomes self sustaining. Compared to us, where we cannot even sustain the crappy transit we have already. No surprise when POGers in the countryside think transit is some wealth transfer scam. But thats another story.....
"Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing had happened."-- Winston Churchill
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#24 J-CA

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Posted 23 July 2013 - 05:06 PM

View PostTraveler, on 23 July 2013 - 02:31 PM, said:

.. I consider the [threat of massive unrest] overrated. Chinese people really appreciate their gubmint, and are very nationalistic. Nor are they are idiots by any means. They know what the story is.
Whipping people up into a nationalist fury is as trivial now as it ever was, history on the other hand indicates that massive unrest is a predictable outcome of poor governance. China was in something close to a constant state of turmoil from about 1800 (White Lotus) until the communists took over. On top of that you must consider that Han resettlement into other ethnic areas (promoted by the government) has been keeping old resentments stoked for the last few decades of China's development (where the vast majority of the improvements have come to the coast). Don't even start with the wildcat strikes that have become so popular there.
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#25 indy

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Posted 23 July 2013 - 05:28 PM

I think unrest is in their not too distant future. I don't remember now where I read it, but the line of reasoning which I found pretty convincing, is this:

1. The limit on children means that many Chinese can't rely on them for support in old age the way they traditionally have.

2. Vast sums of money have been saved in anticipation of this relatively recent problem.

3. The government has been using these savings (since the government is basically the only depository) to fuel growth and line pockets.

4. There is no way it can be repaid if growth slows significantly AND inflation remains low.

5. Result: If growth slows then either default happens or heavy inflation is induced. Either way lots of Chinese savers are going to be very, very unhappy about their retirements going up in flames.

#26 Traveler

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Posted 23 July 2013 - 05:33 PM

I'll grant you that the locals in Tibet, Xinjiang and Qinghai are not happy campers for sure. As for the Han, while there have been perhaps a hundred thousand mass "incidents" annually, the vast majority are against the local kleptocrats, which are getting a beat down from the central gubmint these days. Very few are against the CCP itself. Yet. So my take based upon the coastal and central Chinese may be overly optimistic, but I just dont see widespread revolt happening. I think they realize that they are kind of stuck with the system.

Now that I just saw your last post, I gotta change my tune. Re no. 4, maybe that is what they could with all their US treasuries without dumping them on the market?
"Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing had happened."-- Winston Churchill
"Anyone who has the power to make you believe absurdities has the power to make you commit injustices" Voltaire

#27 gmat

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Posted 28 July 2013 - 07:18 AM

View Postindy, on 23 July 2013 - 05:28 PM, said:

I think unrest is in their not too distant future. I don't remember now where I read it, but the line of reasoning which I found pretty convincing, is this:

1. The limit on children means that many Chinese can't rely on them for support in old age the way they traditionally have.

2. Vast sums of money have been saved in anticipation of this relatively recent problem.

3. The government has been using these savings (since the government is basically the only depository) to fuel growth and line pockets.

4. There is no way it can be repaid if growth slows significantly AND inflation remains low.

5. Result: If growth slows then either default happens or heavy inflation is induced. Either way lots of Chinese savers are going to be very, very unhappy about their retirements going up in flames.

More on point number one here:

http://www.zerohedge...res-storm-ahead

Richard Koo:"the nation will grow old before it grows rich."

#28 gmat

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Posted 28 July 2013 - 07:34 AM

View PostBaron Siegfried, on 23 July 2013 - 01:12 PM, said:

The simple fact of the matter is that no command economy is capable of yielding accurate data, as it's massaged to reflect expectations and ideological dogma (and to make whoever look good).

I think a lot of that goes on in the US economy as well.

There's a lot of happy talk about the US "recovery", complete with numbers. In my small town there's a beggar in the median at every intersection. Lived here almost 50 years and never saw anything like it.

There's a whole subculture residing on the Appalachian Trail near here.

#29 indy

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Posted 29 July 2013 - 11:56 AM

I think it's absolutely correct to say that the middle class and below has seen very little or no benefit from the (modest) recovery. That is a completely different measure, however, then whether or not the economy is improving overall. Both can happen simultaneously. Even when the economy was in pretty good shape, the middle class and lower weren't really seeing the benefit of that either, and the resulting debt overhang was partially responsible for the crash. Obviously the recovery needs to broaden but whether or not that happens is going to be a function of policy, and the GOP intransigence in that area almost guarantees that those people aren't going to see much opportunity to improve their lot.

#30 dsp

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Posted 29 July 2013 - 12:08 PM

It's not because of GOP intransigence. It's because Obama and the Democrats in Congress who matter want it this way. They're fully on board with ensuring they have little or no opportunity to improve their situations. Obama and most of the top Democrats support the whole gamut of neo-liberal policies. Bill Clinton did too.

#31 indy

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Posted 29 July 2013 - 12:41 PM

Well, you'll have to define your terms then. Either neoliberalism isn't what you think it is, you've defined it so it encompasses anyone who advocates for any particular neoliberal position irrespective of their other positions (Clinton falls into this group), or you can't distinguish between differences in degree. Democrats may be too supportive of oligarchic policies you dislike and are too much in the pocket of big business, which are fair criticisms, but that doesn't make them the same as Republicans.

#32 Traveler

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Posted 29 July 2013 - 02:30 PM

View Postdsp, on 29 July 2013 - 12:08 PM, said:

It's not because GOP intransigence. It's because Obama and the Democrats in Congress who matter want it this way. They're fully on board with ensuring they have little or no opportunity to improve their situations. Obama and most of the top Democrats support the whole gamut of neo-liberal policies. Bill Clinton did too.
You are absolutely full of it. Dems did put forth a jobs bill. POGers didnt. Dems proposed much more infrastructure in the stimulus. POGers cut it out. They are still proposing more. The only funding POGers have passed is a farm bill giving away more subsidies to the 1%.

I agree its a matter of degree when you get down the plutocrat support to both parties, but to claim its not due to POGer intransigence in the face of Dem proposals is breathtakingly counterfactual.
"Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing had happened."-- Winston Churchill
"Anyone who has the power to make you believe absurdities has the power to make you commit injustices" Voltaire

#33 dsp

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Posted 29 July 2013 - 03:05 PM

It is perfectly clear the top democrats are on board with neo-liberalism. Just review the support Reagan had from democrats, Bill Clinton's record in pushing neo-liberal policies, and Obama's record in doing the same, especially from 09 - 11. You and others have got quit falling for this charade.

The Republicans have moved the Overton window in this policy area so far to the right the fact that the Democrats are not "as bad" doesn't mean much. Is not as bad as Paul Ryan good? It's how you end up with a Heritage health plan that would have been considered right-wing in the late 80s/early 90s being pushed as liberal in the late 2000s.

#34 Traveler

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Posted 29 July 2013 - 03:38 PM

You got a point about the window, but who's pushing it there? The Dems problem is that they are wusses without a spine that wont fight back. POGer intransigence is the tactic. See thread DC and I had on the topic some time ago on DFDB.
"Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing had happened."-- Winston Churchill
"Anyone who has the power to make you believe absurdities has the power to make you commit injustices" Voltaire

#35 indy

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Posted 29 July 2013 - 04:16 PM

I'm just going to guess you don't really know what constitutes economic neoliberalism. Stripping away all the academic overlays, at its core is the idea that government interference in market operations can only make them worse. So the various ideas that flow out of that central tenent include free trade, privatization, open markets, and deregulation. For example, any form of health care reform which brings a heavy government involvement into a highly deregulated and open market such as the health insurance one cannot possibly be considered a neoliberal policy, whether promoted by the left or the right.

Are the Democrats, for example, promoting privatization as part of their platform? How about deregulation? Only one of the parties promote those ideas. Only one of the parties is truly neoliberal (not that I necessarily consider that a bad thing). The other party just bends over from time to time to accept ... the dollars. They aren't as rigid in their economic policies as Republicans, so they do wander from one side of the road to the other a little.

#36 gmat

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Posted 29 July 2013 - 04:40 PM

View Postindy, on 29 July 2013 - 11:56 AM, said:

I think it's absolutely correct to say that the middle class and below has seen very little or no benefit from the (modest) recovery. That is a completely different measure, however, then whether or not the economy is improving overall. Both can happen simultaneously. Even when the economy was in pretty good shape, the middle class and lower weren't really seeing the benefit of that either, and the resulting debt overhang was partially responsible for the crash. Obviously the recovery needs to broaden but whether or not that happens is going to be a function of policy, and the GOP intransigence in that area almost guarantees that those people aren't going to see much opportunity to improve their lot.

I agree, and I was also speaking to Baron's remark about not being able to get good numbers in a command economy.

Just looking at unemployment, it's politically reinforcing for U-3 to be 7-something instead of 10-something, and for U-6 to be down a little. But neither one takes into account discouraged workers who have been in that category for more than a year, they just cease to exist statistically, and I believe that number is rising steadily, inferring from workforce participation.

As to your observation that you can have a recovery that doesn't help everybody, absolutely, but I'm suggesting that the numbers being used to justify even talking about a "recovery", are politically rigged. Recovery means positive GDP growth, and GDP growth looks like it's at stall speed to me, ie, not keeping up with population growth.

#37 indy

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Posted 29 July 2013 - 05:27 PM

The important point here is that the BLS measures U3-U6 exactly the same way as it always has measured it. It doesn't change methods or make up numbers as it goes along like China does. You may not think they adequately capture the state of the unemployment in the country (and you'd be right because no measure can actually capture it). It's the nature of it to be imprecise. However, I think the labor force participation discussion has been blown out of proportion and that it's due to demographics and cyclical factors, and is actually higher than it would have been without a recession. From this link at the Atlanta fed:


Quote

But the chart also reveals something that may be underappreciated. Including a measure of labor market conditions in the projection of the LFPR, as well as a depiction of prerecession behavior (the green line), indicates that the LFPR should be much lower than it actually is. The message from this exercise is that the actual LFPR in 2012 was above what would have been projected had each demographic group exhibited the same labor force participation behavior after the recession as before the recession.

As it turns out, women, ethnic minorities, older people, and individuals with small children were much more likely to participate in the labor market after the recession than before it. These workers are often referred to as "added workers," or workers who join the labor force to make up for lost income elsewhere in the household. As I noted above, if these demographic groups had not increased their participation in the labor force, the aggregate LFPR would be much lower than it is.


#38 Traveler

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Posted 29 July 2013 - 06:20 PM

Leave it to Indy to keep us honest, and informed. DSP....
"Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing had happened."-- Winston Churchill
"Anyone who has the power to make you believe absurdities has the power to make you commit injustices" Voltaire

#39 dsp

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Posted 29 July 2013 - 06:53 PM

Obamacare is consistent with neo-liberal policy under some definitions. In this case, the government didn't have to privatize health care, because it was already private. The purpose of Obamacare was and is to ensure that it stays that way and that a single payer or a medicare for all approach never happen. Obamacare locks the whole country into a private, for-profit insurance model, and moves all the cost-shifting onto consumers and off of business and insurance.

#40 indy

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Posted 29 July 2013 - 08:06 PM

No, there is no definition of neoliberalism in which massive government intervention is the desirable outcome. Even if you believe that Obamacare is some sort of stealth corporate welfare, as you seem to, that's not neoliberalism. Neoliberals believe in free and open markets, not government controlled and subsidized ones. It's an actual word with an actual (although somewhat nebulous) definition, but it's not a catchall for anything short of total appropriation of the marketplace.





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