America is falling apart

[Lamagoodle]

Your Grace, If Krugman gives you orgasm, I wonder what the radical marxist economists of the 1950s will have done to you! The likes Of Giovanni Arrighi, Samir Amin, Emmanuel Raul Prebish, C Furtado not to mention, the man himself, Karl the Man Marx.

See the list below and have as much orgasm you like I hope you read all about them and their contributions to the dismal science called economics; enjoy weeks of pure orgasms. Do not forget to yell; Merci Lamagoodle . Je ne vous oublierai jamais

http://en.wikipedia.org/wiki/List_of_Marxian_economists

Read the works of Arthur Lewis, the first black economist that was granted the Nobel prize and you will understand the chinese growth. He wrote this while working at the Uni of Manchester, UK.

His seminal work on abudant labour:
ftp://ftp-tei.uic.edu/pub/depts/econ/wp ... 0Lewis.pdf

USA= large population = demand. No wonder it has been protectionist nation. Many countries have 60-70% GDP derived from exports.

But the USA also attracts capital and goods/services are traded across borders not to mention creative financial instruments with its epicentre in wallstreet. All those who hate America or pray for its downfall have their money there.

But as the Adam Smith and later on Ricardo wrote trade is panacea of economic development. But, it is no longer about comparative advantage; competitive advantage it is.



P.s. the arguments used by our fadhi-ku-dirir brethren i.e. government infrastructure, is called the BIG PUSH approach and was devised by Paul Rosenstein-Rodan. It did not work in the soviet union, so how will it work in the USA?

http://en.wikipedia.org/wiki/Big_push_model

[gurey25]

P.s. the arguments used by our fadhi-ku-dirir brethren i.e. government infrastructure, is called the BIG PUSH approach and was devised by Paul Rosenstein-Rodan. It did not work in the soviet union, so how will it work in the USA?

I see the problem now, when i mention public investment in infrastructure you see " The Big Push" you see Stalins 4 year plans,
You see Gosplan, you see the soviet fetish for massive industrial projects.

I acknowledged that spending On infrastaructure projects is a make work schem in the short term, and is only minimally effective in creating jobs
today, but it is essential for the jobs that will be produced in the future, and future growth.
I was not refering to Gosplan, or all those failed Import Substitution Industrialization efforts across the developing world, and all those white elephant projects.
I was referring to the TVA(Tennesse Valley Authority), you cannot deny its contribution to the US economy, most of the benefits occured during the 50-'s and 60's and only minimum job creation was made during the depression and WW2.

The Same with its Australian copy cat the Snowy River Project.
This Project contributed to the industrilization of australia through the 50's- 70's.
Even today %40 of its agricultural exports area direct result of this project.

Even though the Soviets failure cannot alone be ascribed to the Big Push,
Other countries did it more effectivley but followed the model of Freidrich List, i.e Protection of infant industries, Government direction and control of finance as opposed to private banking, and large infrastructure investment.
Ofcourse you need to trade , you will need to pull down your trade barriers eventually so that you can access markets,
the industries that were protected need to grow up and compete out there in the world market.

This is why Finland that had state owned corporations , a state led industrilization and an attempt at the Big Push
is a successfull country. At Independence they were a poor and under developed country with 1/4 the average income of Germany in 1918.
In 1950 even after 5 years of a titanic struggle with the Soviet Union and Massive destruction and death,
It was equal to Sweden in levels of development.
It only got rid of its huge state owned Steel, and Engineering Plants in the 80's.
Finland pulled a Korea early on, and Korea is another example.

When South Korea decided to go into the steel business it did not have the technology or the money,
Borrowing such large amounts for this was considered a fools errand.
But they took a massive gamble, bought the technology and Today Pusan Steel is a World leader
and competes with the same Japanese companies that it purchased its first technologies from in 1964.

Infrastaructure is not only transport and utilities, its creating the foundation to build on.
Taiwans state investment in large Technology parks, like the one in Kaishing is a reason for Taiwans performance in IT today.

[Lamagoodle]

^^^^ The western model prevails. All talk of the death of western (read USA) hegemony in dictating economic growth are premature. Ppl talk about China and its growth. The reality is the in per capita terms ( the USA economy is tenfold that of China). The dollar has a first mover advantage; the size of the USA economy, its financial institutions, history and leverage is enough to make it the currency of the world. It is a question of institutions and the BRICTS have weak institutions.

Government intervention is important; regulations, as a buyer/investor etc.


The case of Finland is not a good case. Sweden maybe but state corporations is not the underlying reason; it is a combination of several factors

BTW, Big push was successful in the begining. To industrialise

[LiquidHYDROGEN]

Lamagoodle, you're a smart and learned individual. But, no offense, when it comes to economics you suck. You are just regurgitating the same neo-liberal invisible hand nonsense which you have imbibed and operates as a state religion in the west. Policies which have been debunked and shown time and again how detrimental they are. Since the adoption of these policies, Western countries, especially America have been getting 0-2% annual growth. The biggest boom era in US history was the Post-war period where protectionism, tarriffs and state led investment were the dominant policies.

China's GDP per Capita is irrelevant. It is a nation that has only been seeing real economic growth since the late 80s and it is also a country which has over a billion human beings. You can't compare it to the west. If you want a real example of how the policies you propagate are bullshit, just look at South Korea. It's state-led investment in steel, automobile, ship-building and chemical plants was vital for growth not just I those sectors but for the whole country. Park Chung Hee's Steel-plant building was a joint excercise with road and highway construction companies. He had full control over most banks and ensured a steady supply of interest-free/zero-interest loans to companies he strategically wanted to succeed on the international stage. His admin raised tarriffs to 25% and sometimes 45% in order to shield growing businesses from more established foreign brands that had advantages of time and money. He provided tax-reductions and rebates as well as government funding for R&D depts of companies as an incentive to do well not just domestically and internationally. These policies were carried on by his immediate successors after his assassination and only until the late 90s and the Asian Financial Crisis of 1997 (thanks to foreign speculators) did they make changes. Up until then, South Korea was one of the fastest and most robust emerging economies in the world. These policies have been replicated or adapted in Taiwan, Hong Kong and other east asian tigers.

The western model hasn't "prevailed" because the model have illustrated above is the same one that iniated the industrial revolutions of Britain, Germany and the US. Just because those economies are richer than other economies doesn't mean their current practices are sound. It just means they have a head-start over other people and have ahd more time to accumulate wealth.

[Lancer]

So much Anti-Americanism on here I'm guessing you guys all watch RT the Russian propaganda channel.
The U.S. will stay on the top for many years to come and I rather be under American hegemony than Russian or Chinese.

[Lamagoodle]

Liquid H saaxib,
Celso Furtado, a Brazilian radical economist of the 1960s(he became the finance minister) asserted that the whole notion of economic/development rests on methodological dogmatism dictated by western empirical observations.

As long as the language, model and perspective of economic theorising is based on western view, the west will prevail and USA will be its leader.

Per capita is an important measurement; and all other measures including the development indices of the UN give the western model thumbs up.

Read my earlier post on how China’s growth could be explained by Arthur Lewis’s classical essay.

True, the USA and many other developed countries have not been experiencing growth compared to almost every country outside the western hemisphere; Turkey has experienced unprecedented growth (even on per capita terms); Many African countries have doubled their GDPs; but it is one thing to start from zero and another when you have a platform.

You took the case of South Korea. It is interesting but it is half-truth at best. As is the case in Sweden, beneath the so-called state ownership are other factors. Both these countries have had their fair share of state-owned companies to industrialise but they have also had a competitive industry that produced for the export market. Steel, Iron, paper and pulping, Ship building etc underwent a tough time in the 1970s; Sweden has closed most of them.

You need to read more on the literature on welfare states in the north.

True my knowledge is limited but I read a lot saaxib. There are several indicators of economic development/growth; when you look at the top ten countries, “western nations” dominate it. The Gino-coefficient mostly speaks against developing countries because resources are in the hands of few individuals.

From a historical context, the notion of the end for the western model and in the extension the dollar is purely wishful thinking.

The Brentwood system (and agreement) on convertibility and its subsequent death by the USA in the beginning of the 1970s (the so called Nixon chock) has resulted in the dollar becoming a “fiat currency”. Today, it is the global currency.

Please note that I am only stating the facts. What I believe in or hope for is entirely different. It is an intellectual crime to base our analysis on our world views (utopia) when reality speaks volumes

[LiquidHYDROGEN]

Per capita is not a useful measurement because, while America's per capita income is one of the highest in the world, it's income disparity is also one of the highest in the world. It doesn't tell the whole story.

HDI is a more useful indication of a country's standing.

[Lamagoodle]

Per capita is not a useful measurement because, while America's per capita income is one of the highest in the world, it's income disparity is also one of the highest in the world. It doesn't tell the whole story.

HDI is a more useful indication of a country's standing.

It is debatable whether per capita is a useful measurement. But, almost all other indicators (even if you discard pc) indicate western countries are leading.

A challenge saaxib; show me any indicator of growth/development that puts the USA and its western friends in the bottom? GDP (size and annual growth) say nothing. Gino, GDP/capita, industrial production/productivity/ education/institutions and competitiveness all point to the USA and the western models success.

Inta kale waa fadhi-ku-dirir

HDI confirms my point

[LiquidHYDROGEN]

I think you and I are arguing about two different things. This topic, and your posts, are about the decline of the West. I wasn't talking about that. I have no interest in that. I cannot say whether the dollar will fall or wha will happen if it did. I was simply correcting your erroneous explination of current economic policies as the basis for why the west is richer than other nations.

[Lamagoodle]

HD,
You are the one who wrote HDI is better;

Check this map saaxib:
http://hdr.undp.org/en/countries

Almost all the western countries have high HDI

Saaxib; if you are to quote me please do that in a good way; I have never claimed that "current economic policies as the basis for why the west is richer than other nations." . The whole thread is about the wishful thinking of the demise of the USA dollar/economy. True, the USA(west )has strong institutions. My point when I started participating in this thread was that government expenditure in infrastructure is not enough for economic growth

[gurey25]

Celso Furtado, a Brazilian radical economist of the 1960s(he became the finance minister) asserted that the whole notion of economic/development rests on methodological dogmatism dictated by western empirical observations.

As long as the language, model and perspective of economic theorising is based on western view, the west will prevail and USA will be its leader.

This is really insightfull thinking, the worlds economy is defined through western mirrors, the world economy is infact a western eco-system.
What China and Russia are doing is not attacking the status quo, as any desruption will hurt them more than the west at the moment.
What they are doing is building parralell institutions like the AIIB, a complimentary system that serves their interests and will hopefully in the future mature into a replacement for the current system.
The West will not fall overnight, or even fall at all, due to their populations, their level of development they will continue to have a massive impact in the world.
What will change is changing is that the rest o the world will catch up, and their current hegemony will be no more.

I enjoyed Arthur lewis essay on labour and Chinas growth, but the labour supply is not the full picture
Chinas inforcement and direction of huge levels of private savings something like more than 50% of income has created a huge pool of capital to be invested. This capital accumulation and investment is responsible primarily for chinas growth, with the labour supply and productivity increases playing a smaller part.
There is reliable data on this available.

You were talking about the western model remaining.
I believe there is one successfull model of development , pioneered by Friedrich List.
This model was responsible for The US's industrilization, and Germanies through the zollverin, and Mieji Japan.
Finland, Sweden, Austria, even Franco era Spain used this model.

The world economy divided into Soviet and Western zones after WW2,
allowed the rest of the world freedom to try this model with various levels of success and failure.
With the bretton woods system and fixed exchange rates till 1971 when nixon ended it, developing countries were free to use this model.
Some were successes like South Korea, Taiwan, Malaysia.
Others were disasters like the African and middle eastern attempts at ISI.

Only Hongkong and Singapore had the free trade model and instead courted Multinational Corporations and investment to fuel industrialization.

[Lamagoodle]

Gurey, good that we agree on some points; Friedrich List 's ideas on economic systems were actually not that new; A Hamilton and Adam smith (although he was against Smith's notion of individual economics which was later developed by Say).

One of the most dreaded quotes of your hero was on slavery; He claimed that some people may do very well in carrying on the slave trade and in holding slaves"

Building competing institutions does not happen overnight. The chinese and others could try as much as they want but as long as their money is in the global financial system (western), it remains a rhetoric.

You should read the works of the radical economists of the 1960s saaxib; the ones I suggested for Basra. This is not a new discourse.