The General Economics Thread

This right here is why my uncle left the dairy business years ago and moved towards beef, it's just not economically sustainable.

I do however miss being able to get real fresh milk strait from the cow for my breakfast, visiting him was fun.

But yeah the problem has always been imports of milk undercutting local dairy producers, this has been a thing for years, short of protectionism or a shift to more expensive luxury "British milk" I'm not seeing a solution.

Falling milk prices is worldwide.

http://www.stuff.co.nz/business/farming/dairy/70835050/fonterras-globaldairytrade-auction-posts-10th-consecutive-fall

"Fonterra are, through their GDT platform, telling all of the global buyers they will sell farmers milk at half what it costs their farmers to produce. It's as simple as that."

Sadly, I think it's more due to overproduction than falling demand.

And my fucked up country is one the opposite trend, again...

The cheapest milk box we got here got a 40 cents price increase in a month, almost a 25% price increase.

Sounds like the real problem with dairy farmers is that they're overspecialized. When your livlihood is tied to exactly one product, your life is going to consist of extreme ups and downs as demand fluctuates.

However, milk is as close to a commodity as it gets: the demand for it is fairly inelastic. It's not like it's a luxury good.

Milk has a ton of byproducts and derivatives, but I don't know how their industry is in England, but in Brazil more often than not the supply comes short depending of the year and whatever surplus is absorbed by other sectors of the food industry.

Is that (requires refrigeration) milk or milk which is stored at room temperature in the supermarket?

If the former, I'm gonna assume that your dairy farmers are (very) subsidized. If the latter, maybe that's milk bought by the processing company when milk prices was higher.

When it comes to processed foods, the food on (room temperature) supermarket shelves may have come from animals over a year ago. Also similar for foods in the frozen section, but not as long.

edited 5th Aug '15 6:53:32 AM by probablyinsane

Apparently Brazilian cattle industry is the largest destroyer of Rainforests in the world currently.

Ugh.

Just import your dairies from New Zealand.

Wait... do you guys not have milk at supermarkets stored in coolers/fridges?

We have both. When I make yogurt, I buy local milk in the refrigerated section, but I really should learn how to make coconut milk yogurt.

Anyway, we also get refrigerated milk from USA, Australia, New Zealand. Presumably they can last for months, and apparently those expiry labels are more for persuading customers to buy because there's public hang-up with the idea of buying foods with no expiry dates.

It's like with the Mc Donald's burger which lasted a long time under a sofa. Food which does not rot or does not rot fast enough is like zombie food.

@ DeMarquis: The trouble is one cannot change the geology, and often farmers in Britain don't have much in the way of money to begin with — some would probably be classed as living in Poverty by any other measure.

And you do have to remember, they're not doing farming for the money — the money isn't good enough for that — they're doing it because they love farming. It's a way of life.

Secular Stagnation and Space: A Way Beyond Our Current Economic Plateau.

The main thrust of his argument is that developing new infrastructure and thus, new techonologies (in space, as the title implies) would do more for the economy than maintaining and expanding existing infrastructure.

This sounds like an attractive argument to me, though obviously what we already have shouldn't be neglected.

Chinese Illegal labour: Higher wages or smuggled cheap workers

edited 6th Aug '15 5:10:12 AM by AngelusNox

@Greenmantle: I can appreciate that, but one must bear in mind that the lifestyle may be economically unsustainable, unless the rest of the population is willing to subsidize it.

@optimusjamie6th: Using space as a source of economic stimulation is an old idea, but the challenge is the tremendous up-front cost, and the delayed return on investment. You have to be willing to spend a lot of money now to start making a little later on.

BTW- Piketty largely agrees with your article's author's economic analysis. If we do nothing to prevent it, we are heading for a possibly permanent era of long term low economic growth (basically growth that does not exceed population growth).

edited 6th Aug '15 7:28:02 AM by DeMarquis

(Brad DeLong, EquiBlog) on Matthew Yglesias's "Sounds like a lot of money", noting the paradox between Right-Wing economics and Right-Wing sociological behavior. Basically while conservatives complain about societal collapse and increase of corruption and graft, their favoritism towards a "A company's only obligation is to make money" model of economics ensures a lot of what they're mad about does happen.

After reading Forbes's article "Leadership in the Three Speed Economy", I started thinking about something largely unrelated.

I think many industries are changing to a totally different model. A model where there's tons of small competitors in a field with low barriers to entry, and a tiny handful of distribution platforms.

We see examples of this in ebooks, where just about anyone can publish just about anything, without having to get a publisher to do a large print run. Heck, I saw a news article a few years back about two women who paid their way through college by writing dinosaur porn. Talk about a niche audience! That said, someone (Amazon, in this case I believe) controls the platform, but the platform is largely open to almost anyone.

In video games we have Steam on the PC. True, with physical publishing and/or on consoles, there's a bigger barrier to entry, but online distribution and especially services like Steam and GOG (they're becoming a Steam competitor now) make it a lot easier for the "little guy" to put a game out there that could potentially reach an audience. I even see $3 games on there.

You Tube is doing the same kind of thing for video. I saw an indie movie called Sync that looked Hollywood-level professional, and was distributed entirely for free.

The big companies have relied on three things that helped make them difficult to compete with: the cost of creating products, the cost of distributing them, and the cost of advertising and reaching and audience. Depending on the industry, all these are going down (to various degrees). 3D printing is in its infancy, or maybe its toddlerhood since it's reaching more practical uses. Game development tools are starting to get better, and there are free 3D animating programs out there. It's not quite at "literally anyone can compete" level yet, and might never get there, but we are seeing more small companies challenge incumbents on the big platforms.

This increasing competition is gonna push out some of the big companies that can't adapt, lower their budgets appropriately, or otherwise compete. We're already seeing Capcom, Konami and Sega go mobile and move away from consoles to varying degrees.

I think as the costs of making things goes down, and platforms that enable the general public to put things up get created, we'll see some massive, epic competition in many sectors. A competition that could be considered a sea change in the economy. Even 3D printing will likely be part of it - as there already exists at least one website for people to share 3D printed designs.

What do you think? These are just my thoughts in the past few hours.

Google Inc. to be renamed to Alphabet, apparently restructuring to give its various businesses like Android, Youtube and the search engine itself greater autonomy, while giving greater visibility to investors.

China devalues yuan after poor economic data

"Greater visibility to investors" rubs me the wrong way a little. It could be good, it could be bad. If people see that things like self-driving cars will pay off eventually (I see it, for one, as a way to get people using Google Android computer systems while riding in the car and being exposed to Google ads from Google services such as You Tube and Maps), then they'll be more willing to invest.

But if they instead see things they don't like, they may want to pull out. I realize money to fund things has to come from somewhere, but I really hope Google has a lot of control over its own money.

I can respect, for instance, the fact that Nintendo has 7 billion dollars stashed away that aren't in stock. I don't know exactly how things work, but I'm guessing that even if Nintendo's stock crashes completely, they'd still have the 7 billion dollars and autonomy? Could someone explain how that works?

A company's stock price has no direct bearing on its viability as a business. Stock is a share of ownership; it's essentially a claim on a piece of the company. Its price in the market is (hypothetically) reflective of what the market thinks your company is worth, but it does not in and of itself generate any income or incur any liabilities.

As long as you have customers, sales, receipts, etc., your stock is irrelevant. On the other hand, if you are a viable concern with a stable balance sheet, then your stock price should remain healthy because the market considers you a safe risk. If your stock is tanking, it usually means your company's in trouble in some way. Stock prices are a trailing indicator, in technical parlance.

Now, in today's complex business world, stock ends up being used in ways that can tie it more directly into your business's success. One example is borrowing against your market value. This is common — a company will, in effect, put up its stock as collateral for business loans. If its stock later tanks, it still owes that money and so it can be driven into insolvency by a market failure, even if that failure is not related to its operations.

A company with weak stock can also become vulnerable to a hostile takeover, with some external entity buying a majority of it and then making a bid for ownership. Companies have ways to work around that, such as "preferred" stock that it keeps to its direct stakeholders (board members, founders) , keeping 50.1% of the common stock in the hands of the president/CEO/founder, etc. Those tactics, however, may dilute its market value and therefore make it seem less attractive to investors.

edited 11th Aug '15 8:36:21 AM by Fighteer

I'm a little confused. Stock sounds a lot like it's almost meaningless from that description, like its price is based only on faith, on people thinking it's worth something. It's like, the only reason to own stock is to sell it, unless stockholders get actual money in some other ways (and I have heard of companies doing that).

That's been my understanding. Everyday it feels more and more like the economy exists only in speculation and on paper.

You have it exactly right.

Companies will often pay dividends, which represent a share of its earnings, to their stockholders. That's a form of direct income that you get as incentive to buy stock.

Stock issuance, originally, is a means to raise investment capital for a business. You sell shares of ownership of your company in return for cash that you can use to expand operations — or, in some cases, repay your initial investors. Once that stock is in the marketplace, it acts as a vehicle for the storage and growth of money that will, ideally, be used to invest in future business.

The stock market of today, however, is more in the business of making money for money's sake, rather than directing that money into increasing production capacity. In part, this is because it has become a self-justifying entity, vacuuming money out of the economy for its own use.

You may recall how we've discouraged you from "getting in" to the market? This is one reason why. You're voluntarily taking your money out of circulation and giving it to people who will use it only to enrich themselves, leaving you crumbs.

edited 11th Aug '15 8:57:08 AM by Fighteer