What Germany and China have in common

(Will be home in a few days, until then this post from a week back will have to do.)

Here’s a ranking of per capita GDP (PPP)

1  Luxembourg 91,388 2012
 Macau 87,765 2012
2  Qatar 83,460 2012
3  Norway 65,640 2012
4  Singapore 61,803 2012
5   Switzerland 53,367 2012
6  Brunei 53,348 2012
 Hong Kong 51,946 2012
7  United States 49,965 2012
8  Kuwait 45,455 2011
9  Australia 44,598 2012
10  Austria 44,208 2012
11  Ireland 43,592 2012
12  Netherlands 43,198 2012
13  Sweden 43,180 2012
14  Canada 42,533 2012
15  Denmark 42,086 2012
16  United Arab Emirates 42,080 2012
17  Germany 40,901 2012
18  Belgium 39,788 2012
19  Finland 38,655 2012
20  Iceland 37,852 2012
21  United Kingdom 36,901 2012
22  France 36,104 2012

Notice that 14 of the 22 richest countries are in Europe.  Western Europe to be more specific. Northwestern Europe to be even more specific.  (I define “north” as “most people live north of the Alps,” but if you drop France, nothing much changes.)  Northwestern Europe is relatively rich. No surprise. What might be a surprise is that Germany is not relatively rich for a northern European country.  There’s actually nothing at all particularly notable about the German economy.  Even its current account surplus is not very large (in per capita terms) by northern European standards.

The only reason why Germany attracts so much attention is because it has a big population.  But even that factor is overstated.  As the following table shows it’s population is larger that that of other European countries, but not dramatically larger.

16  Germany 80,523,700 December 31, 2012 1.13% Annual official estimate
17  Iran 77,066,000 November 19, 2013 1.08% Official population clock
18  Turkey 75,627,384 December 31, 2012 1.06% Official estimate
19  Democratic Republic of the Congo 67,514,000 July 1, 2013 0.95% UN estimate
20  Thailand 65,926,261 September 1, 2010 0.93% 2010 census result
21  France[9] 65,806,000 October 1, 2013 0.92% Monthly official estimate
22  United Kingdom 63,705,000 July 1, 2012 0.89% Official estimate
23  Italy 59,829,079 May 31, 2013 0.84% Monthly official estimate

If the German states became independent countries, essentially nothing would change in Europe.  Affluent Baden-Wurttemberg (home of Mercedes) borders France and Switzerland, two countries with vastly different income levels.  Baden-Wurttemberg’s per capita income is about midway in between the two. Even wealthier Bavaria (home of BMW) borders Austria and Switzerland, and is richer than Austria but poorer than Switzerland. Eastern Germany is richer than Poland but poorer than West Germany, etc, etc. For some reason northwestern Europe is richer than average, and for some odd reason the region just north of the Alps is the richest part of Northern Europe, despite being on the southwestern edge of that region.

China differs from Germany in that it is relatively poor.  But in terms of size it stands out even more.  Just as the Nordics don’t get criticized for their huge CA surpluses, the smaller East Asian states are ignored. Germany and China are the villains.  And although Thailand is about as rich as China, no one pays any attention to how much aid Thailand sends to the Philippines.  But they do pay attention to how much aid China sends.

If you squint your eyes and look at the world a certain way then national boundaries don’t matter, or I should say they matter less and less (as China catches up to the rest of East Asian countries with similar cultures.  They still matter a lot in “Korea”)  But national borders are how the media and most economists organize information.  I share that weakness, often talking about “China” or “Germany” when I really ought to be talking about “Guangdong province” or “Bavaria” on the one hand, or “East Asia” and “Northwestern Europe” on the other hand.  Most articles talking about “Germany” are actually talking about the Nordic/Teutonic region, they just don’t know it.

PS.  A few technical points.  The richest part of Europe is actually Norway, not the region just north of the Alps, but oil affects that result. Bavaria is actually not the richest part of Germany–two small city states and the region containing Frankfurt are wealthier.

PPS.  In a recent post I argued that the China of 2043 will be very different from the China of today, in ways the current government has no control over.  This article hints at the speed of cultural change:

In Beijing’s suburban Daxing district, where several garment factories are located, young workers now flaunt smartphones and sport embroidered jeans, permed hair, and painted fingernails—a far cry from the standard work wear of a decade ago, when many strolled around factories in slippers and pajamas. 21-year-old garment worker He Xiaoje, who resembles a heavily moussed-up young John Travolta and earns 3,000 yuan ($485) per month, seems incredulous that anyone was ever content with just a dumb phone. “If it’s not a smartphone, who will use it?” Like many of China’s migrant workers born after 1980, he has higher aspirations than his predecessors.

“The first generation of migrant workers generally had no chance to get a good education; they didn’t have adequate knowledge or skills to seek better jobs,” says Huang Leping, director of the Beijing Yilian Legal Aid Center, which often assists migrant workers. “But those born after 1980 are different: they have a strong desire to be integrated into city life, and they focus on whether their career can provide social security and other benefits to root them in the cities.” In short, they expect more.

Gone are the days when simply posting a job notice on a bulletin board could bring a wave of fresh applicants to a factory gate. John Liu, the owner of Harderson International, a Dongguan factory that applies paint and decals to glass and ceramics, says he understands why assembly-line work has lost its appeal. “Living conditions in China have improved quickly. Young people now don’t have to work so hard to earn a living, and many have parents who will support them.” As China’s service sector has grown, a range of new employment opportunities have opened up, affording more choices. “A lot of those born in the 1990s can’t stand this kind of repetitive [factory] work, so they choose to stay home or do very simple cashier work,” says Liu. “It’s getting harder to find workers.”

In another 20 years the next younger generation will pity the living conditions of this generation, who pity the living conditions of the workers of 1993.


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39 Responses to “What Germany and China have in common”

  1. Gravatar of Left Outside Left Outside
    26. November 2013 at 14:16

    Apologies for this being totally off topic, but I was reading around Islamic central banking and wrote it up and thought you may find it interesting: http://leftoutside.wordpress.com/2013/11/26/everything-you-never-knew-you-wanted-to-know-about-islamic-central-banking/

    In short, charging interest is halal so Islamic central banks have no zero lower bound. Thought this might be down your street. Go to Pakistan and Iran and pitch NGDP level targeting as a haram monetary policy.

  2. Gravatar of Pietro Poggi-Corradini Pietro Poggi-Corradini
    26. November 2013 at 14:50

    Some regions of Northen Italy, like Lombardia and Veneto, are also pretty well off, or at least it was once said they were.

  3. Gravatar of Vivian Darkbloom Vivian Darkbloom
    26. November 2013 at 15:04

    If the measure is GNP (PPP) or GNI (PPP) the standings change somewhat. In particular, Luxembourg falls from first place to third when GNI is the measure. I believe that is due to the importance of Luxembourg as a financial switching center due to their favorable tax rules for holding companies, finance companies and royalty companies.

    http://en.wikipedia.org/wiki/GNI_(PPP)_per_capita

    Similarly, Ireland ranks 11th on GDP but only 22nd on GNI.

    Perhaps it doesn’t matter that much for your monetary targeting purposes; but, I don’t recall reading here why GDP as opposed to GNP or GNI would be the preferred measure.

  4. Gravatar of Felipe Felipe
    26. November 2013 at 15:37

    The only reason why Germany attracts so much attention is because it has a big population. But even that factor is overstated.

    I’m not so sure I’d read it that way. Rather, I’d read that for a rich country Germany is pretty large. In fact, it is the second largest in your list behind the US (you left Japan out, then it would be the third). Once you include Japan, you have to go all the way into the PPP$ 23k range to find another country larger than Germany (Russia). Moreover, the rich countries “similar” in size to Germany are actually quite smaller: France 82%, UK 79%, Italy 74% are the closest in size.

    I’ve joined the wikipedia tables here (I’ve just discovered this google app, pretty cool).

  5. Gravatar of kebko kebko
    26. November 2013 at 16:15

    I’ve tried, unsuccessfully, to push the meme that whenever someone references production moving to places where labor is cheap, that they should be corrected. Production doesn’t move to where labor is cheap. Production moves to where labor wages are rising.

  6. Gravatar of ChrisA ChrisA
    26. November 2013 at 17:28

    Funnily enough when I go to Frankfurt it does not seem as rich as it should by PPP measures, the restaurants are average and the houses not grand. Really a lot of the US is way ahead in terms of living standards. You can have a very large house, pool, triple garage with two to three cars and other toys in say Dallas or Houston quite easily on a middle class salary. This would only be possible for the very richest in Frankfurt. Note I am neither American or German and I don’t live in either country.

  7. Gravatar of Benjamin Cole Benjamin Cole
    26. November 2013 at 22:08

    1. Ever fascinating China. I think the world’s last large low-cost manufacturing base will disappear in the 20 years. This will result in more manufacturing in the USA and also Thailand. The Japanese are already moving production to Thailand, as they struggle in China for cultural reasons. Or maybe they sense China is becoming too expensive. Meanwhile India is just to clogged up, and other nations are smaller and corrupt, or have horrible infrastructure. Not that many places in the world anymore to get things made cheaply.

    2. Poor ol’ Europe–except that their per capita GDPs are not that far from the USA’s, and the average worker gets national health insurance and six weeks off a year. If you ever had a real job, you know that two weeks off is often the norm. I hate to say it, but the average guy in the Netherlands might have a nicer life than the average guy in the USA. Certainly European cities are more pleasant places to live.

    More than one way to skin a cat, as they say….

  8. Gravatar of Saturos Saturos
    27. November 2013 at 01:28

    Positive noises from the BoJ http://www.afr.com/p/world/boj_shirai_says_more_easing_may_onbYH5AoU2XeAeAwxxEmKI

  9. Gravatar of Saturos Saturos
    27. November 2013 at 03:37

    Greg Ip worries that Obamacare will reduce G and worsen the liquidity trap: http://www.economist.com/blogs/freeexchange/2013/11/health-spending-slowdown

  10. Gravatar of Saturos Saturos
    27. November 2013 at 03:43

    Free Exchange also has an interesting retrospective on Keynes: http://www.economist.com/blogs/freeexchange/2013/11/economic-history-2?fsrc=scn/fb/wl/bl/Keynesallseaons

  11. Gravatar of Brian Donohue Brian Donohue
    27. November 2013 at 05:26

    Vivan,

    Good question. I’d be interested in a primer from anyone on what GDP vs. GNI tells us.

    benjamin cole,

    Great comment. #1. A world not dominated by desperately poor people will be our salvation.

  12. Gravatar of Brian Donohue Brian Donohue
    27. November 2013 at 05:27

    Also, Germany, unlike other NW Euro countries, was saddled with a poor Eastern bloc population.

  13. Gravatar of mike smitka mike smitka
    27. November 2013 at 07:56

    The ranks change quite a bit if (PPP) consumption per capita is used, particularly for Luxembourg and similar countries — I did that as a quick calculation for claims that Japan was behind Korea and others. In general, too, consumption is less volatile than GDP. My recollection is that I went to the ICP [intl comparison project] for data.

  14. Gravatar of Chuck E Chuck E
    27. November 2013 at 08:33

    Benjamin,

    I have a friend who used to work for Nike. According to him, they have plans to chase cheap labor west. He says according to their projections, in 30 to 40 years, the US will be the low cost labor center of the world. Interesting times…

  15. Gravatar of Mikio Mikio
    27. November 2013 at 08:48

    I’m not sure PPP per capita says much about the wealth of the average person. I live in in Hong Kong and have lived many years in Singapore, which have double or more the PPP per capita GDPs of Japan.

    I have also lived and worked in Switzerland and Austria. Living and working and socializing in Switzerland and Austria, which also have lower pc GDP PPP than either SG or HK, feels and far wealthier and more sophisticated and egalitarian than in either of the city states, although SG is making an effort to raise general well-being and succeeding if I may make a guess.

    It is so different it seems ridiculous to even compare them.

    And the interesting observation is that life in Japan, which doesn’t even make the above list at 35K per capita GDP (PPP) feels much more than life in Switzerland or Austria except perhaps for the average size of apartments in big cities, and that Shibuya is more crowded than any place in the Alps, except for the Christmas markets at Christmas.

    But yes, Germany is big and rich and has a huge trade surplus (unlike Japan), which annoys some people – just like Japan did when it had a huge trade surplus.

  16. Gravatar of Doug M Doug M
    27. November 2013 at 08:49

    Vivan Darkbloom,

    Regarding Lux, I have been told that part of the reason that per capita GDP is so high is that there are more people who work in Lux than live in Lux. This inflates the numerator and reduces the denominator in GDP per capita.

  17. Gravatar of Mikio Mikio
    27. November 2013 at 08:56

    Apologies, I mean life in Japan feels more like life in Switzerland or Austria…

  18. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    27. November 2013 at 09:44

    Kevin Erdmann has a new post which is (loosely) related;

    http://idiosyncraticwhisk.blogspot.com/2013/11/labor-share-of-income.html

    ‘ I think we tend to have an aesthetic response to these issues that leads us astray. If we see a shrinking labor share of income, we think of the poor worker, putting in long days and barely making ends meet. We don’t have a comparable image when capital’s share of income shrinks. (Why don’t we think of our widowed grandmother, trying to extend her nest egg in the face of negative real interest rates?) But, the tip of the hump in my model is not utopia. It’s a place where there will still be, for now, working poor families. This is unrelated or tangentially related to labor share of income. We shouldn’t be led by the realities of our current distribution of scarcity away from the most effective means to improve it. Some of those solutions may be redistributional, but it might be worthwhile to aim for policies that reduce the drag on universal returns to capital as opposed to policies intended to increase that drag, in some sort of misplaced attempt at fairness.’

  19. Gravatar of Luis Pedro Coelho Luis Pedro Coelho
    27. November 2013 at 09:49

    Doug, you are partially right about Lux (it’s only true for the City of Luxembourg; but that’s where the wealth is).

    Luxembourg is, however, significantly wealthier than any of its neighbours. You cross a border into any of its neighbours and you feel the relative poverty (the cars change, the houses are not as new or well-maintained, the public benches don’t shine, the playgrounds are not as full of excellent children’s games &c).

    That’s what you get when you have low taxes [the state is smaller than in the US], super-efficient regulation [these people know how to regulate properly; unlike, the US or the PIGS], and a generally well-educated population [like the US, actually, against the stereotype].

    And there’s no NHS over there (in fact, the only public health-care facilities are the ones who treat prisoners, no kidding). There are also no public buses [privately run, thankfully] and the postal office was recently privatized. The current prime-minister is a conservative happily-engaged gay man.

    *

    One of my frequent conversation themes is “Germany is not a rich country, it has a few rich states”. I especially tell this to the Southerners who want to get bailed out and imagine that Munich is representative of Germany.

    *

    Mikio, more recently high-income regions will be less wealthy than historically high-income regions; so it’s normal that Vienna feels richer than SG: they were wealthy 100 years ago and you can still feel that.

    Wealth takes a while to build up from income.

  20. Gravatar of Benny Lava Benny Lava
    27. November 2013 at 10:26

    I’ve seen evidence that manufacturing will move to Africa. China has done a lot to build the infrastructure there and there are a few bright spots of better governance and economic progress. There are signs that a middle class is emerging in Senegal for the first time. It is hard to find reliable news stories about Africa these days but labor costs couldn’t be cheaper and the raw materials are there.

    I can’t help but look at the charts above and think of the “resource curse” which I think is a myth and seems to be so just looking at the chart here.

  21. Gravatar of Vivian Darkbloom Vivian Darkbloom
    27. November 2013 at 10:51

    Doug M,

    That could well be part, perhaps a good part, of the explanation for Luxembourg. I don’t think it would be the case for Ireland. One reason for the large Irish difference is likely their national debt. (Net) Interest payments owed to foreigners would reduce GNP (or GNI) but not GDP. In this respect, GNP or GNI may be an interesting measure of the fiscal health of a country. In fact, the St Louis Fed publishes GDP to GNI ratios. It’s interesting to see how the long term trends vary from country to country.

    http://research.stlouisfed.org/fred2/categories/33108

    GDP has become the preferred measure since about 1991 (before that the US used GNP). One of the reasons is practical—GNP takes longer to calculate due to the fact that it depends on foreign profit reporting, currency conversions, etc. I guess that’s one reason GDP was chosen as the monetary yardstick, too.

  22. Gravatar of TravisV TravisV
    27. November 2013 at 10:58

    Great find from Patrick Sullivan:

    “The only response we can have if Boeing executives do not agree to keep the plant here is for the machinists to say the machines are here, the workers are here, we will do the job, we don’t need the executives. The executives don’t do the work, the machinists do,” she said.

    http://hisstoryisbunk.blogspot.com/2013/11/i-think-we-tend-to-have-aesthetic.html

  23. Gravatar of Negation of Ideology Negation of Ideology
    27. November 2013 at 14:18

    Patrick Sullivan – Thanks for posting that link, it was interesting.

    People confuse the distributional issue with the labor/capital split. The ideal obviously is for Capital to receive 100% of national income and labor to receive 0%, and the ownership of Capital to be very widespread. Then we live off our dividends and are free to use our time how we want.

    Now, since the vast majority of people own little capital, and in fact borrow a lot to buy deprecating assets we have a problem. The answer is not to lay excessive taxes on Capital to pay for make work jobs as the Left proposes. The answer is to find ways to get the poor and middle class to be capital owners. Then whenever machines replaced humans in the workplace we would all celebrate.

    If a farmer that owns his own farm gets a tractor that cuts his workload in half is he angry?

  24. Gravatar of Benjamin Cole Benjamin Cole
    28. November 2013 at 02:45

    Chuck E and Brian Donahue–

    As both of you say, something to watch. If the China miracle continues, and the demographics play out in China as they must, China will not be cheap pretty quickly.

    As manufacturing techniques improve, labor may not be so important in the equation. I heard that 20 years ago though.

  25. Gravatar of dtoh dtoh
    28. November 2013 at 03:04

    The choice between labor in the US or labor in China does not exist. The choice is a machine in the US or labor in China.

    Labor is much less important in manufacturing, that’s why the volume of manufacturing in the US has gone up and the number of manufacturing jobs has gone down. Just like agriculture 150 years ago.

  26. Gravatar of Morgan Warstler Morgan Warstler
    28. November 2013 at 03:18

    Why do we spend time even talking about labor? Why the focus on income?

    What is it is that keeps us from focusing on the consumer and consumption?

    Why don’t we just call consumption, happiness in order to short circuit the oddballs trying to measure happiness?

    You might think the life change for a Chinese worker in 1993 to today is a big leap, but as consumption / happiness goes how in the hell aren’t all Americans better off relatively to the Chinese worker?

    Now we have in front of us a data / machine driven answer to al the pressing issues of labor in the US… GI / CYB

    It’s not clear to me, that manufacturing labor isn’t headed towards 2.3% of workforce in US AND CHINA and EVERYWHERE.

    That laborer has a $60 US smartphone. As Fred Wilson notes kids today ALL will choose a smart phone vs a car.

    It’s not clear to me that we shouldn’t thus COUNT all smartphones as worth $6K US per year in happiness consumption – the price of a cheap new car / insurance.

    To verify my claim, ask this of kids: if we gave you $6K a year to never use the Internet, how many US kids would take that trade? And if you found any, how long would it take before they cracked?

    So if that smartphone creates $6K+ of value for 150M users in US and climbing….

    WHERE DOES THAT $900B (and growing) in annual value show up in our GDP?

    I think I’m starting to get radicalized about this stuff… because not enough MM are focusing on this, it doesn’t need to overtake the concept, but NOMINAL GDP and Money Illusion…

    These are strong economic concepts, but far more fundamental to economics is SCARCITY.

    And it’s time MM ADMIT SCARCITY is done.

    I don’t mean this mealy mouth post-scarcity stuff.

    I mean that MM need to say Summers Secular Stagnation is a joke, BUT we are experiencing 1-2%+ deflation relentlessly driven by people CHOOSING the smart phone over the car.

    Choosing free Harvard online is real.

    Not having student loan debt to sell to the investor class in 10 years is real.

    And NGDPLT ought to be about how to stabilize the total overturn of past economic principles of the past….

    1% NGDPLT is 2% deflation and 3% RGDP, right?

  27. Gravatar of Morgan Warstler Morgan Warstler
    28. November 2013 at 03:36

    Isn’t targeting income to DEBT focused?

    Doesn’t measuring it encourage a debt based system?

    Doesn’t measuring consumption in the land of no scarcity, establish monetary policy that punishes debt? and moves us to the glorious future?

  28. Gravatar of Mike Sax Mike Sax
    28. November 2013 at 06:38

    Morgan is Tyler Cowen’s Great Stagnation also a joke? I think he’s saying what you’re criticizing more than Summers himself is.

    If there’s a flaw in your analysis I think it’s that you’re too optimistic about the power of low wages and low prices to lead us to the promised land. This is the mistake that Supply Siders make.

    http://diaryofarepublicanhater.blogspot.com/2013/11/michael-lind-on-mirage-of-sensible.html

  29. Gravatar of Morgan Warstler Morgan Warstler
    28. November 2013 at 06:58

    Tyler was wrong then, and I view his 2nd book as a mea culpa, no matter his protestations that they fit together.

    1993 until now is categorically the single best time in human history.

    When kids choose smart phones over cars and third worlders choose them over plumbing, Tyler was simply wrong.

    How can he help it if he grew up thinking toilets and cars are super cool?

    Now we are beginning to see, ALL FUTURE econ will focus on the shift from Atomic (the only kind of property) to Digital (free and non-scarce replacement for property)

    For economists, it’ll be like Before and After Christ.

    Apart from BTC, you literally cannot OWN the digital. A copyable thing makes the concept of ownership MOOT.

    Saxie, think about how DRM etc fails at limiting copies, and BTC is architected to be not copyable, only by making ownership something no govt. can title does BTC’s “ownership” of digital come close to being possible.

    It’s yours ONLY if someone doesn’t take it. Thats a close as the digital can get to being owned.

    So yes, Summers was wrong.

    When you get this best time in human history GLORIOUS massive boost productivity gains, and you FAIL to measure it because you TRY TO MEASURE IT NOMINALLY….

    Well thats how you end up with Summers sounding so goofy talking about we need negative interest rates to keep unemployment up.

    TRY TO FORGET the structure of debts and contracts in the future.

    And say, ‘well the best possible way to get everyone thru their painful unwinding” is to get them consuming more digital free stuff as fast as humanly possible.

  30. Gravatar of Mike Sax Mike Sax
    28. November 2013 at 07:14

    Don’t get me wrong I certainly agree with you rather than Cowen on technology-the idea that all the important tech had happened by 1959 is just a surreal claim. I would tend to agree with you about the post Interenet era as the time ‘After Christ.’

    How exactly do you measure these massive productivity gains from the data revolution though?

    I can agree that we love the Internet but still at the end of the day if a kind doesn’t have enough to eat for breakfast it remains a problem.

  31. Gravatar of Mike Sax Mike Sax
    28. November 2013 at 07:26

    “1% NGDPLT is 2% deflation and 3% RGDP, right?”

    See this is why I mention Supply Siders. The reason you think 3% RGDP and 2$ deflation is preferable to say 3% RGDP and 2% inflation is because you think that that helps consumers by giving them lower prices. However, as this goes with lower wages it’s at best a wash.

    I know that many people think that Walmart is somehow a friend of workers by giving them low wages but low prices to spend their meager wages on. Yet I’d love to conjecture a natural exerpiment where you compare a worker at Wallmart to one at say JcPeeney’s or Target.

    I mean would you rather make $12 an hour and pay a little more for a bottle of soda-maybe $.20-or would you rather make $8 an hour but save the $.20. I think the back of the envelope math would clearly favor the former.

    I think that the ‘model’ or image of the economy you have in mind is where deflation-lower prices is a total net gain in the economy. Where we get all these productivity gains by lower wages.

  32. Gravatar of Mike Sax Mike Sax
    28. November 2013 at 07:43

    I didn’t just offer a rhetorical question. I mean I mentioned $.20 cents on a bottle of soda. However, to make the best case for the Wallmart effect you could look at clothes. Arguably a married woman with 2 kids could be helped considerably by lower prices for her kids and lower prices on snacks for them.

    However, I still think we can ask at the end of the day that if she has to pay for it with lower wages than she’d make at Filene’s along with being discriminated against as she’s a female-which is Wallmart standard operating procedure to pay women less for the same work-if she’s really better off.

    I’d love to see someone actually do a study on this: low wages and low prices vs. high prices and high wages. I argue the second is better.

  33. Gravatar of Saturos Saturos
    28. November 2013 at 09:33

    According to the IMF, elderly households prefer to avoid risk and feel more comfortable with safe assets such as Japanese Government Bonds; so much so that the downward effect on rates from elderly purchases has a bigger impact than purchases by the Bank of Japan.

    http://soberlook.com/2013/11/3-key-facts-about-japans-deteriorating.html

  34. Gravatar of Saturos Saturos
    28. November 2013 at 13:00

    Scott, market monetarists have *got your back* on Twitter: https://twitter.com/Theo_Clifford/status/405859731501105152

  35. Gravatar of Morgan Warstler Morgan Warstler
    28. November 2013 at 17:12

    Saxie, GI / CYB sets a floor on wages AND stuff gets cheaper.

    Look, its VERY SIMPLE:

    Imagine right now we have a poor block with 10 houses and each is on welfare.

    Tomorrow, we make each one go to their next door neighbor’s house and work all day.

    Production / Consumption amongst the poor has increased and they are still getting the same amount of money.

    Now take 30M+ and employ data analytics – just for fun lets say they are no more innovative than Match.com or Netflix “For Saxie” – they will be hella lot stronger bc the human greed factor, tons of eyeballs on both sides of trade, seeking better labor, better job week after week.

    Now you have the best babysitters found, the best gardners, the best bloggers, singers, kitchen staff, in short you have PRODUCTIVITY GAINS, and since you have the WORLDS BEST clearinghouse ever created, you also have serious education benefits, bc labor gets to try lots and lots of stuff from an early age…

    So Sax, pls stop thinking about the current economy as if we have a demand problem or a supply problem, we have structural problem:

    We are giving away $750B a year in welfare and not making them work for one another… the vast majority of them are not going to be working for you and me.

    And since work IS the best education, and broken windows and all the rest, many of our social ills will GO AWAY if we will STOP lying to ourselves with the econ jibber-jabber.

    More on 1% vs 3% etc later.

  36. Gravatar of Jim Glass Jim Glass
    28. November 2013 at 18:56

    Off topic but on season:

    Christmas Shopping Idea: Federal Reserve Action Figures

  37. Gravatar of ssumner ssumner
    29. November 2013 at 07:09

    Luis, That’s a very interesting description of Luxembourg. I’m surprised other libertarians don’t talk about it more often.

    And that’s a very astute comment on Singapore and Vienna.

    Everyone, No time to answers all the individual comments today. I agree with many of the criticisms (GDP vs. GNP etc) but still think my basic point is right—Germany and China receive more attention than they deserve.

    My next post might address a few of the comments.

  38. Gravatar of Saturos Saturos
    29. November 2013 at 07:37

    Free Exchange on the Euro vs. the gold standard: http://www.economist.com/blogs/freeexchange/2013/11/euro-zone-prospects

    Funny how they basically come out and say that the ECB is failing its mandate, then switch to proposing different ones instead of castigating for breaking the law.

  39. Gravatar of ssumner ssumner
    1. December 2013 at 06:52

    Saturos, Good point, but I do the same. They are failing to hit 2% inflation, and ought to switch to NGDP in any case.

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