----- Original Message -----
From: Ed Weick
To: [email protected]
Sent: Wednesday, July 14, 2010 11:08 AM
Subject: Re: [Ottawadissenters] Fw: More dismal stuff
The main trends I see are continuing population growth, continued urbanization
(see Mike Davis's Planet of Slums for example), reduced employment per unit of
output (increasing efficiency in production), a continuing shift of production
to the low wage world, and the increasing importance of the financial sector as
opposed to the goods producing sector in the advanced world. All of this means
an exacerbation of the unemployment problem we have now. I don't think that
the world we're moving into will be a pretty place.
A little over a decade ago I spent a month in a vast slum of Sao Paulo, then a
city of 20 million people. Many, perhaps most, of the families of that slum
were migrants from the countryside who had lost jobs on plantations because
machinery had replaced them. They were stuck; there was no way that they could
go back to the land and grow their own food. The people I worked with lived in
a third stage favela (slum). Accommodation consisted of very crowded but solid
brick-block buildings. People in second stage favelas lived in shacks cobbled
together out of whatever wood and tin could be found. First stage favelados
slept in cardboard boxes under overpasses.
People did whatever they could to stay alive. Quite a few worked in hotels
downtown, others ran local shops, but many sold drugs and turned to petty or
even major crime. Standoffs and shootings between the police and drug dealers
or criminals were commonplace.
I'm not suggesting that our situation will be like that of Sao Paulo, but given
the kinds of changes now apparent, we will go some distance in that direction.
Our kids won't have the kinds of opportunities we had, and it will likely be
worse for our grandkids. We increasingly hear the word "deflation", which
suggests a prolonged slump and falling prices because people cannot or will not
spend as they did before. Paul Krugman argues that if people are not spending,
the government must, but governments already have high debts and their powers
to tax are diminishing.
Sorry that this posting is a downer, but I'm not an optimist so I might as well
say it how I see it.
Ed
----- Original Message -----
From: balfourarch
To: [email protected]
Sent: Monday, July 12, 2010 11:11 PM
Subject: Re: [Ottawadissenters] Fw: More dismal stuff
Ed
That kind of scenario cannot play out; post oil food if not raised locally is
not coming from afar.
The economy that allows the city state to exist collapses. The dregs cannot
exist if the flotsam above has sunk; the folks will be busy trying out how to
raise a little food inner city wise or moving to the hinterland to take over
the monoculture abandoned fields. Or die.
As in the latter day urbanization as saviour days are not sustainable. The
inner city has nothing to trade for the food from the hinterland. They have to
get their hands dirty.....
No room left for the drug culture.
rb
On 2010.07.12, at 3:14 PM, Ed Weick wrote:
----- Original Message -----
From: Ed Weick
To: Keith Hudson
Sent: Monday, July 12, 2010 5:40 PM
Subject: Re: More dismal stuff
Keith, I understand what you are saying, but I'd still maintain that the
world has changed greatly over the past half century. Production takes place
over a much larger part of the globe, container ships and aircraft move what is
produced around much more rapidly, communications are instant and America and
Europe have lost much of their economic clout. Because production has become
more efficient it needs fewer people per unit of output and yet the global
population continues to grow and its growth is expected to continue. I see the
question of how increasingly urbanized populations will make a living as a
major problem. Increasingly via drugs and crime probably.
Ed
----- Original Message -----
From: Keith Hudson
To: Ed Weick ; RE-DESIGNING WORK, INCOME DISTRIBUTION, , EDUCATION
Sent: Monday, July 12, 2010 1:45 PM
Subject: Re: More dismal stuff
Ed,
At 11:34 12/07/2010 -0400, you wrote:
There's been a lot of discussion, too much in fact, on Keynes and Hayek
on the list recently. I recall reading them, and others like Friedman, a very
very long time ago. They understood the world from the perspective of their
times, but now they're all dead. Well Krugman, essentially a Keynesian, isn't
dead, but the kinds of things he keeps saying in his columns, which I've
characterized as "spend, spend, spend", seems out of place too as belonging to
a past era rather than now.
What kind of a world do we live in now and how might we think about it?
One of the greatest differences between the worlds of Keynes and Hayek is the
extent of globalization.
There was as much, if not more, globalized trade (as between many
different importers and exporters in different countries)(as a percentage of
total world GDP) in the 1870s/80s as now. A very great deal of globalized
"trade" today is the shifting of components and sub-components within and
between large corporations.
Economic decisions and actions that are now made a very long distance
from us can have a huge effect on our well being. When Keynes and Hayek lived,
and thought, unemployment in a particular country was seen as caused by a fall
in effective demand in that country or by market imperfection such as too much
monopolization and too little competition. I don't think that is the case now.
Many Americans for example are unemployed because a large chunk has been
ripped out of their economy and shipped off to China.
But it's still the case that most high-value components (with higher
profit margins) are made elsewhere and only assembled in China. Even so,
Chinese wage rates are rising rapidly now -- just as they did in Japan and
Korea in the 1960s and the 1980s respectively -- and will be equivalent to ours
in the not too distant future. Chinese firms will then start to move to the UK
and the US just as the Japanese and the Koreans have done.
Another major difference between the world of Keynes and Hayek and our
world is that of the efficiency of the productive process. Even if production
has or has not been shifted to China and the BRICs, the productive process
employs far fewer people than in would have in Keynes' and Hayek's day. But
because of population growth there are far more people needing work. Even the
production of an increasing proportion of consumers goods in China has done
little to increase the proportion of the Chinese population that is employed.
And globally, while the efficiency of production has increased greatly, so has
the proportion of the global population needing employment. In 1950, global
population was approximately 2.5 billion; by 2000 it had increased to over 6
billion. And a much larger proportion of global population lived in cities
where they would be less able to fend for themselves if they did not find jobs.
Yet another major difference between our world and that of Keynes and
Hayek is the greatly expanded role of the financial sector, which can play a
very large role in global economic illness or health, as the US subprime
mortgage debacle has demonstrated. Yes indeed, as James Galbraith argues,
catch the bastards, incarcerate them, apply tough laws, etc., but will that
stop them? Hardly, given the vast number of hiding places that electronic
communications now provide them.
So, let us nod respectfully in the directions of Keynes and Hayek and
earlier economic thinkers like Adam Smith, Jean Baptiste Say, David Ricardo,
etc., but let’s not forget that we live in a very different world than they did.
But the basic nature of economic transactions remains exactly the same as
then -- and probably the same as in 75,000BC when sea-shell necklaces were
traded over long distances.
My greatest fear is that our world of growing population, job
shrinkage, and the growth of nefarious practices could, in a couple of decades,
resemble the world portrayed in Soylent Green, a very classic movie about a
world gone totally out of kilter.
All the signs are that when people are in Soylent green scenarios -- as
they surely will be in many regions of the world -- then fertility rates go way
down. There'll also be a huge amount of starvation but, within a generation or
so, the world population should start to sink. I think the basic technologies
will be extremely sophisticated by then so the big issue within the advanced
countries (not necessarily those of today) will be whether they can educate
their children up to a standard to be able to force job sharing on the adults
with interesting.
Keith
Ed
Keith Hudson, Saltford, England
balfourarch
[email protected]
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