There was talk about renaming the Krugman thread for this purpose, but that seems to be going nowhere. Besides which, I feel the Krugman thread should be left to discuss Krugman while this thread can be used for more general economic discussion.
Discuss:
- The merits of competing theories.
- The role of the government in managing the economy.
- The causes of and solutions to our current economic woes.
- Comparisons between the economic systems of different countries.
- Theoretical and existing alternatives to our current market system.
edited 17th Dec '12 10:58:52 AM by Topazan
Lost in Space
An economy is never really completely gone as long as people are still alive and trading for things, but in general you want to look for a currency that has near zero value — nobody will accept it. If people stop taking your money, you know you're pretty much screwed.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Beware the Crazy Man.
Then why would a government allow its currency to devalue? Pakistan is using all its funds to keep the rupee pegged at 100 to the dollar or less.
Final Fantasy, Foreign Policy, and Bollywood. Helluva combo, that...
I think it's supposed to make one's currency cheaper on the international exchange market or whatever, and therefore more attractive to foreign investment.
Direct all enquiries to Jamie B Good
Lost in Space
There's a difference between devaluation and hyperinflation. As long as you have goods to trade, a weaker currency increases your exports and, correspondingly, your inflow of cash. This is good up to a point; for developing economies it means a lot of money to invest in improving the lot of your people.
Of course, when the money isn't used for that, but instead to enrich businessmen and politicians who turn around and use it to buy luxury imported goods, then you aren't getting any real value out of it.
Artificially holding its currency down is a good strategy for a country that is dependent on exports to improve its local economy, but it has downside risks, as China has been discovering. Specifically, if you gear your economy to producing stuff for wealthier countries, you still haven't addressed your internal supply and demand shortages. All the foreign capital is doing is propping up your investment sector, which is only investing in making more stuff to sell outside your borders. It's a classic inflation bubble.
edited 20th Mar '14 1:46:51 PM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
V
Sir Peter Tapsell: 'My biggest mistake in politics was to listen to Mrs Thatcher'
A great deal has changed since then, but not Sir Peter. Now 84, he is father of the House of Commons and, even as it yesterday emerged he will stand down as an MP at the next general election, still firing on all cylinders.
Eventually, however, Mrs Thatcher persuaded Sir Peter to join her Treasury team in opposition. He explained to her that he was a Keynesian who disagreed with her monetary views. Mrs Thatcher told him it didn’t matter. And so "very such to my regret, the single biggest mistake I made in politics in my life, I agreed".
He recalls how miserable he felt at private meetings with Thatcherites like Sir Keith Joseph, Geoffrey Howe, Nick Ridley and Nigel Lawson, where he argued that monetarism would have terrible consequences. "My father was unemployed in the 1930s. He couldn’t go to work and I can remember standing in a queue with him, when he was unemployed, and my mother crying in the kitchen because we didn’t have money for the rent and all that."
It was not long before he quietly resigned. Two years later, in the famous Budget of 1981, Sir Peter Tapsell became the first Conservative since Harold Macmillan in the 1930s to vote against a Budget, a brave move which turned him into an internal political exile.
I put it to Sir Peter that monetarism had worked and that Mrs Thatcher’s tough medicine had saved the economy. He refuses to accept this. "It destroyed British industry. The whole of the West Midlands was wiped out and has never recovered."
And, any thoughts on Fiscal Drag?
edited 22nd Mar '14 4:59:45 AM by Greenmantle
Keep Rolling On
Lost in Space
The basic idea of fiscal drag seems appropriate, but the article, short as it is, spends too much time dwelling on tax policy and seems to ignore deficit/surplus spending through borrowing and/or money creation.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
V
That's the point of the article.
Anyhow, I'm certain Fiscal Drag has been used as a way of raising taxes by stealth — especially when those in the higher tax bands by Fiscal Drag are people that are definitely not rich, but merely well-paid; for example nurses, train drivers, middle managers and military officers, that sort of thing?
Keep Rolling On
Lost in Space
All along, we've been framing this conversation as a war between the very rich and everyone else. Those 80th and 90th percentile wage earners are still on the short end of the socioeconomic stick, despite not having to worry about food insecurity or whether they can get healthcare. They have far more in common with the poor than the wealthy politically, but are deceived by the dangling carrot of class mobility that their position offers them a glimpse of.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Professional Forum Ninja
Time for oil prices to skyrocket.
edited 23rd Mar '14 11:45:15 PM by tclittle
"We're all paper, we're all scissors, we're all fightin' with our mirrors, scared we'll never find somebody to love."
V
Co-op Bank wants £400m more capital
The biggest contributors to these £400m costs, according to the chief executive Niall Booker, are restitution for PPI mis-selling, breaches of the Consumer Credit Act and a variety of lapses in the provision of mortgages. Which some will see as not bad going for a bank whose public branding was all about being ethical.
With all those additional costs included, Co-op Bank's losses for 2013 were in the region of 1.2bn to £1.3bn (which needless to say is a record for the group). One important question is why these misconduct costs did not come to light last year, when the bank only narrowly escaped collapse after uncovering huge losses on loans that went bad and from write-offs of a failed IT project. It has already raised £1.1bn of capital. And Co-op Group promised to inject another £266m into the bank - a sum completely separate from the £400m now needed.
After the rescue last year, Co-op Group's shareholding in the bank was cut from 100% to 30%. The rest of the shares are held by investment institutions, led by a group of hedge funds. The largest shareholder, after Co-op Bank, is the hedge fund Perry Capital. How the shareholders will react to being asked for another £400m, so soon after they put in around £1bn, will be interesting to see.
And on the subject of Co-Operatives, two articles from The Guardian:
- Comment: The Co-op can thrive if it sticks to its fundamental principles
- The Co-op Group is in turmoil: the cooperative movement isn't ...and a US example:
edited 24th Mar '14 12:54:05 AM by Greenmantle
Keep Rolling On
And we see the problem with anarchism: even "horizontal" organizations are vulnerable to capture by management, whatever form that management takes.
Lost in Space
It's possible for any organization, whether horizontal, vertical, or diagonal (whatever that would look like) to be run poorly. Individual successes and failures should not necessarily be taken as support for or against the organizational structure that's being applied; what you look for are trends — specific points in the structure that tend to lead to problems. Then you revise your model with the aim of shoring them up.
Edit: Krugman's latest column, "Wealth over Work", collates everything he's been saying lately about Piketty's work and its importance for our era.
edited 26th Mar '14 7:16:32 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
V
![[up]](https://static.tvtropes.org/pmwiki/pub/smiles/arrow_up.png "[up]"){kind=icon}
I've just read that article and the same could be said about Politicians as well — look at the Kennedys, Bushes and all the other political dynasties that exist around the world, since to them, Politics is their family businessnote .
Lost in Space
Politics is one of those "industries" where there is a comprehensible rationale for dynastic succession, in that the qualities that make a good politician aren't necessarily best learned from the ground up with each new generation.
After all, we've seen in the United States the problems that come from bringing in a fresh wave of ideologically "pure" neophytes to politics. They gum up the works, because politics is at its core about working together, scratching backs, and greasing palms to get real work done.
Of course, you still have the problem of your political dynasties getting out of touch with the people that they notionally represent, but there's a very direct solution to that in representative democracy: vote them out. We can't vote out the Koch Brothers.
edited 24th Mar '14 7:30:30 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
@Fighteer: I never knew you were a closet monarchist 
And you're right that any organization is vulnerable to potential mismanagement. I just bring it up in the context of cooperatives and anarchism because having management inherently means having management, so trying to go without "bosses" in the classic sense strikes me as a particularly tricky tightrope.
But then, quite a few medieval universities were run by the students' guild, so it can't be too impossible.
Then you weren't paying attention ![[lol]](https://static.tvtropes.org/pmwiki/pub/images/lol2v12_4863.png "[lol]"){kind=small}
Someone did a study once on "leaderless groups", esp. in protest movements, and discovered that almost always, groups with no formal leader were dominated by an informal leader of some kind, who, since they were not restricted by any formal or procedural limitations on their behavior, could be even more authoritarian than formally appointed ones are.
Lost in Space
I consider myself a humanist, but I'm under no illusions about the wisdom of the average consumer and/or voter. Democracy may be better than authoritarianism, but only in as much as it's steered by people of wisdom who are able to persuade the voting body to go along with their ideas. When it starts being steered by stupid people for their own self-aggrandizement, it heads downhill rapidly.
Heck, it may be that all forms of government inevitably become ruled by oligarchies with only a tenuous relationship to what the people they serve want, but there must be some way to select decent ones; we've managed it a few times, at least.
This is also only tenuously related to economics, except in as much as it impacts on how we pick the people who run our economic policy.
edited 24th Mar '14 8:15:00 PM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Fuck you, Fascist sympathizers
As i've said before, democracy simply enables transition to a new order without having to... transition to a new order, as well as allowing the old order enough of a voice that they usually don't feel threatened enough to try something foolish. Of course, it only works if both sides are playing fair, as many of the most brutal civil wars of the last century were due to election returns that one side refused to accept
I've been reading this article on how a social safety net based on charity is simply unrealistic. I haven't finished it yet.
My brother is a big liberterian (well, fiscally anyway, but let's leave it at that for now) who thinks that the less government we have, the better off we'll be, and he's reading lots of economics books written by libertarians. He argued that, for instance, if health insurance doesn't exist, some doctors would provide free healthcare to the poor, and that decades ago, that's what was expected of them. I just find the idea so absurd. But anyway, let's discuss why this whole "charity will take care of the poor" thing is nonsense. Or not nonsense, if you believe it's true and can back up why.
Lost in Space
Empirically, it doesn't. End of story. Remember the 30's? Poorhouses. Soup kitchens. People burning newspapers in trashcans. All that was no social safety net.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Even if there are doctors kindhearted enough to give free care(I doubt there are many by the way) their equipment and office still cost money. How are they going to pay for that stuff?
Visiting from the Hoag Galaxy
Honestly, that just sounds really naive. Or the people saying that are trying to dupe everyone. "Oh, I'm sure there are doctors dumb *cough, cough* I mean, nice enough to still help the poor!"
edited 26th Mar '14 2:05:42 PM by Zendervai
Not Three Laws compliant.
V
Does the US have medical care charities like the Red Cross or St. John Ambulance?
Keep Rolling On
Yes, but they arent major health care providers.
As you can see from this chart, charitable giving in the US has never been more than 350 billion dollars in one year for all causes.
US Federal Gov't Entitlement spending (Medicare, Medicaid, and Social Security) equaled about 2 trillion dollars in 2013. And that doesnt count federal spending that arent individual entitlements (community funds, development grants, etc.). If we converted to private charities for all social services and support for the poor, we would have to somehow find a way to increase giving by an order of six, or cut such spending by about 85%. That just isnt realistic.
edited 26th Mar '14 4:02:32 PM by DeMarquis
how does one know when an economy is collapsed? Is it announced, are there tell tale signs on its imminence?
Final Fantasy, Foreign Policy, and Bollywood. Helluva combo, that...