16 ms·

What's holding back the world economy?

67 points by akg_67 11y ago

nextweek2 11y ago
At the time everybody called BS on giving to the banks and trickle down economics. Hindsight even proved it. Problem is, politicians don't have the courage. Bankers tell them if the change the system, there'll be an economic crisis.
- grp 11y ago
  Politicians just need to be electable, not courageous. Why we ask them more?
  - Qwertious 11y ago
    Hmm, that's an interesting question - if you're unable to be fired, do you still have a moral obligation to do your job? Well, I'd say yes.
    - grp 11y ago
      I share your opinion and bankers abuse it. I'll look for the definition of moral obligation for politicians. Hoping that there is one.
    - TeMPOraL 11y ago
      But still - ceteris paribus, which politician will win? The one slightly more upstanding, or the one slightly more charismatic? There's a strong selection pressure in democracy that favors populism and short-sightedness.
- deleted 11y ago
  [deleted]
- deleted 11y ago
  [deleted]
whatwillbe2016 11y ago
The world economy is being held back by debt and bad investments. Personal Debt. Deceitful monetary practices by lenders or investors. (ie real estate brokers encouraging debt) Corporate Debt. Government Debt. (city, county, State, Country, etc) Economies based on sky-high commodity prices. (prices relative to cost of living and relative to debt) Commodity producers financed by lots of debt. Basically, many people and entities have financed growth by massive debt. The US is now comparatively better and has reduced QE and increased interest rates. This has caused commodities to plunge. (minus the fear-buying precious metals) A strong US dollar and faltering global markets have caused commodities to sink. Oil producers continue to produce in hopes that they can continue to finance their debt obligations. In my opinion, the economic outlook will get worse-- especially in domestic and international markets where shale oil and tar sand oil is produced. These resources are much more expensive to extract and refine than traditional oil wells. Once these economies fall further (corporate and personal forclosures), the economic outlook will worsen. The biggest problem is investing in expensive resources, financed by large debts. This is why companies are socking money away at astounding rates- debt is crippling the global economy.
- darkr 11y ago
  Debt, in and of itself is not necesserily a bad thing, at least at the micro level. If that debt is at a low interest rate, and used to finance something that stimulates economic growth then that is a net positive. One problem with debt is the long-term effects caused by the method in which much modern debt is created: I.e the bank creates capital out of 'thin air' and it costs them nothing other than some liability for the value of that debt, and conversely when money is paid back to the bank, that money (minus a small cut) is effectively destroyed. Usually you can only pay back that money by receiving money from someone else who has gone into debt in order to raise that capital. At the macro level, this means that effectively all money is debt. It is very hard (some would say impossible) to make any sizable reduction in levels of debt without causing a recession. The pessimist in me has some sympathy for the viewpoint that bailing out the banks in 2008-2009 only served to delay an inevitable and long overdue correction in the global economy.
  - 11y ago
dibbsonline 11y ago
AFAIK there is still an ecomony, economising, and has been the whole time. 1. Mainstream (maybe lobbied) view that growth is constant and without it we're all going to die. 2. Incurred debt trying to achieve #1
ordbajsare 11y ago
Goverments!
rewqfdsa 11y ago
Malthus. Malthus, or more specifically, declining returns on investment in science and technology, is holding back the economy. It's not debt levels or bad interest rate policy or currency manipulation; these effects are all second-order. The primary cause of the slowdown is that there's just not much more to _do_. This lack of opportunity is reflected in the very low interest rates available today combined with low growth. This technological stagnation is reflected in the massive funding of SV-area tech companies, which are shitty opportunities for a return on investment in a world full of even shittier opportunities. Investors are desperate for a return anywhere. That it's so hard to find a good ROI is against indicative of technological development petering out. After 300 years, we've reached the end of super-Malthusian growth, and we're going to return, hopefully peacefully, to the normal steady-state conditions of human existence, albeit at a higher baseline technology level. There are no major advances left. Physics can predict everything except the most extreme conditions at the largest and smallest scales, and there are no more bugs in the universe to exploit. Computing will see incremental improvements, but all the really hard problems have already been solved or proved impossible. Quantum computing will make some problems a square-root function easier, but won't change anything. Biotechnology may help us live longer, but research that might change the human condition --- germ-line genomic editing --- has _already_ been banned. Sure, you might argue, we're still going through the technology revolution. But that's petering out. Cell phone sales growth slipped into the single digits last year. Tablets are dead. Desktop sales have been declining forever. The commercialization of technology we've already developed --- e.g., self-driving cars, automated personal assistants, and high-efficiency power generation --- will decrease costs by some constant factor, but also put a lot of people out of work. It's remarkably, really, that the laws of the universe are such that humanity was able to elevate itself from ape to thinking ape, and then from thinking ape to calculating machine. It's remarkable that we can compute. Why should we expect the universe to be further more compliant?
- RobertoG 11y ago
  This sentence "Investors are desperate for a return anywhere." and this sentence "The world economy is being held back by declining returns on investment in science and technology." are not the same that "The primary cause of the slowdown is that there's just not much more to _do_." There is a big different between "there are not easy profits in perspective" and "there is nothing more to do". There are a lot of things to do. A lot of people is living in need and wherever you look you can see possible improvements in education, infrastructure, investigation, etc. The fact that those things don't have a return of 15% shouldn't be a justification for, we, as a society, not doing them.
JohnDoe365 11y ago
24 hours and mens necessity to get some sleep. And it's time for a new truly disruptive technology past micro optimisations.
bigsteve78 11y ago
Goldman Sachs, rothschild banks, the world bank, 0 interest loans for the 1%, speculators, the idiotic spectacle of "trickle down theory".
hackercomplex 11y ago
Globally a very large percentage of construction materials, vehicle parts, and plastics are currently produced from petrolium sources because of rules and regulations which restrict our civilization from utilizing the sun optimally via nature's most highly optimized solar fiber/oil generation system also known as industrial hemp. Although it's possible to obtain hemp fiber and oil now it's price is artifically high because hemp farming is restricted on most of the surface area of earth. This artifically high price pevents this plant from being used in building construction and consumer plastics which keeps us locked into a petrol economy. In addition there is a vast amount of rough terrain in US and elsewhere which is suitable for hemp production but not for agricultural crops. This land currently sits unused which it could be absorbing co2 at a high rate while contributing to the global economy. Also a reduction in the price of hemp would cause it be used more as the world's primary source of cellulose which would help neturalize the wholesale destruction of biodiversity in both the rainforests and marine environments.
- guard-of-terra 11y ago
  To even start to replace petroleum, hemp oil has to be very cheap. This means using optimal land for growing it - plains, well-lit, well-rained. Where it would compete with wheat and other food grown. Trying to grow hemp (for hemp oil) on rough terrain won't work - far too expensive given the implications of manual labor.
  - hackercomplex 11y ago
    1. Hemp oil does not have to become cheaper than petrol in order to become widely used globally because consumer behavior is likely to change to accomodate it. What I mean is educated consumers are willing to pay more for the "green alternative" of their disposable plastic product because they recognize they will see that the extra value is created when the product does not create a destructive externality. 2. Wheat is not an ideal primary food crop in terms of nutrition for an advanced civilization that has the technology to scale distributed food production of much more nutritious plants. Instead we could scale out verical farming, aquaponics technology, permaculture, etc. Still I don't believe industrial hemp would effect large scale wheat production. I think that's a misnomer based on calculations centered around the idea of what it would take to replace petrol completely. You can certainly grow hemp on flat terrain that is not optimal for food crops, but how much can be realistically harvested on truly rough terrain is debateable. It helps to remember that since you don't need insect repellent or petro-fertilizers it's signficantly easier to grow. I estimate that it could at least double the amount of land that can be used for productive farming in the US, and another thing is that hemp actually helps add nitrogen back into the soil.. in other words it's an excellent "cover crop". In addition it only needs to be rotated once every 70 years.
deciplex 11y ago
It seems the main thing holding back the world economy is the mistaken assumption that a sliver of the population hoarding all the capital constitutes an economy in the first place. It does not.
bamie9l 11y ago
The economist has a good article on this with a number of hypotheses: http://www.economist.com/blogs/buttonwood/2016/02/markets-and-economics http://www.economist.com/blogs/buttonwood/2016/02/markets-an...
sebastianconcpt 11y ago
States getting in the middle of individuals
- bsbechtel 11y ago
  Here is a good post from Mark Cuban written just last week regarding onerous reporting requirements for public companies and the changing mindset of entrepreneurs, and how much it hurts wealth creation in this country: http://blogmaverick.com/2016/02/04/the-pre-cognitive-anti-trust-violationhow-the-decimation-of-the-ipo-market-has-hurt-the-economy-and-worse/?utm_campaign=Mattermark+Daily&utm_source=hs_email&utm_medium=email&utm_content=26043812&_hsenc=p2ANqtz-8gf4QV0APHZED4_4se-cWXLoyhSC4amNhlGFi9SaladmuwpthkMHP2V-qMVi9InEHehYwFeyw3N3IBQILt5bds4zmg6A&_hsmi=26043812 http://blogmaverick.com/2016/02/04/the-pre-cognitive-anti-tr...
sprash 11y ago
The article is beating around the bush: The answer is LACK OF DEMAND. Since the ordinary person can't afford jack shit and already exceeded all levels of debt he/she can take nobody buys anything besides bare necessities. This is what you get if productivity rises sky high over decades and at the same time wages stagnate.
- arethuza 11y ago
  That reminds me of a statement that the CEO of the multinational I used to work for made in 2008, he said: "Management best practice is to 'cut fast and deep' at the start of a recession" "We're really surprised how quickly demand has dropped" I wasn't daft enough to point out to the CxO who passed this message along to us that if everyone is doing the first of these then surely the second shouldn't come as a surprise? [NB this wasn't a criticism of the CEO implementing a 'cut deep and cut fast' policy - he was exceptionally good at his job, just surprise that given he was so obviously extremely bright that he didn't make the obvious inference.]
  - static_noise 11y ago
    Micro-economy and Macro-economy have two totally different goals. This is the reason why the state takes on more and more debt to cover the monetary failings (in the macro-sense) of the private industry.
- yummyfajitas 11y ago
  LACK OF DEMAND...wages stagnate. You seem to be wildly misunderstanding Keynesian economics - the entire purpose of stimulating demand is to create inflation and lower real wages. Further, all your premises are definitively false in the US. Debt levels are falling, and aggregate demand (i.e. NGDP) has been steadily rising. https://research.stlouisfed.org/fred2/series/GDP https://research.stlouisfed.org/fred2/series/GDP http://www.businessinsider.com/deutsche-bank-lavorgna-americas-debt-to-gdp-pre-crisis-2012-6 http://www.businessinsider.com/deutsche-bank-lavorgna-americ... https://research.stlouisfed.org/fred2/series/HDTGPDUSQ163N https://research.stlouisfed.org/fred2/series/HDTGPDUSQ163N https://research.stlouisfed.org/fred2/series/TOTDTEUSQ163N https://research.stlouisfed.org/fred2/series/TOTDTEUSQ163N Globally GDP also is rising: https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_pcap_cd&scale_y=lin&ind_y=false&rdim=region&idim=country:GBR:RUS:FRA:CHN:IND:NGA:ZAF:DEU&ifdim=region&hl=en&dl=en&ind=false https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&... This is what you get if productivity rises sky high over decades and at the same time wages stagnate. Employee compensation has been rising, it's just shifted from taxable wages to untaxed benefits. https://research.stlouisfed.org/fred2/series/ECIALLCIV https://research.stlouisfed.org/fred2/series/ECIALLCIV Why don't you do even a tiny bit of research before posting? Literally every word of your post is false.
jmckib 11y ago
Relatively simple article from the New York Fed explaining why everything Stiglitz says here is wrong: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr380.pdf https://www.newyorkfed.org/medialibrary/media/research/staff... Not sure if Stiglitz is aware of these points because he doesn't address any of them. Or it's possible I'm misunderstanding something, Stiglitz' article is very complex and is clearly intended for economists, I'm not sure why it's appearing in the Guardian.
jld89 11y ago
The solution is a universal basic income for everyone. It will encourage employment and spending. There should also be a fix for the "1% of the population having more than 60% of total wealth" problem.

67 points by akg_67 11y ago

At the time everybody called BS on giving to the banks and trickle down economics. Hindsight even proved it. Problem is, politicians don't have the courage. Bankers tell them if the change the system, there'll be an economic crisis.

grp 11y ago
Politicians just need to be electable, not courageous. Why we ask them more?
- Qwertious 11y ago
  Hmm, that's an interesting question - if you're unable to be fired, do you still have a moral obligation to do your job? Well, I'd say yes.
  - grp 11y ago
    I share your opinion and bankers abuse it. I'll look for the definition of moral obligation for politicians. Hoping that there is one.
  - TeMPOraL 11y ago
    But still - ceteris paribus, which politician will win? The one slightly more upstanding, or the one slightly more charismatic? There's a strong selection pressure in democracy that favors populism and short-sightedness.
deleted 11y ago
[deleted]
deleted 11y ago
[deleted]

whatwillbe2016 11y ago

The world economy is being held back by debt and bad investments. Personal Debt. Deceitful monetary practices by lenders or investors. (ie real estate brokers encouraging debt) Corporate Debt. Government Debt. (city, county, State, Country, etc) Economies based on sky-high commodity prices. (prices relative to cost of living and relative to debt) Commodity producers financed by lots of debt. Basically, many people and entities have financed growth by massive debt. The US is now comparatively better and has reduced QE and increased interest rates. This has caused commodities to plunge. (minus the fear-buying precious metals) A strong US dollar and faltering global markets have caused commodities to sink. Oil producers continue to produce in hopes that they can continue to finance their debt obligations. In my opinion, the economic outlook will get worse-- especially in domestic and international markets where shale oil and tar sand oil is produced. These resources are much more expensive to extract and refine than traditional oil wells. Once these economies fall further (corporate and personal forclosures), the economic outlook will worsen. The biggest problem is investing in expensive resources, financed by large debts. This is why companies are socking money away at astounding rates- debt is crippling the global economy.

darkr 11y ago
Debt, in and of itself is not necesserily a bad thing, at least at the micro level. If that debt is at a low interest rate, and used to finance something that stimulates economic growth then that is a net positive. One problem with debt is the long-term effects caused by the method in which much modern debt is created: I.e the bank creates capital out of 'thin air' and it costs them nothing other than some liability for the value of that debt, and conversely when money is paid back to the bank, that money (minus a small cut) is effectively destroyed. Usually you can only pay back that money by receiving money from someone else who has gone into debt in order to raise that capital. At the macro level, this means that effectively all money is debt. It is very hard (some would say impossible) to make any sizable reduction in levels of debt without causing a recession. The pessimist in me has some sympathy for the viewpoint that bailing out the banks in 2008-2009 only served to delay an inevitable and long overdue correction in the global economy.
- 11y ago

dibbsonline 11y ago

AFAIK there is still an ecomony, economising, and has been the whole time. 1. Mainstream (maybe lobbied) view that growth is constant and without it we're all going to die. 2. Incurred debt trying to achieve #1

ordbajsare 11y ago

Goverments!

rewqfdsa 11y ago

Malthus. Malthus, or more specifically, declining returns on investment in science and technology, is holding back the economy. It's not debt levels or bad interest rate policy or currency manipulation; these effects are all second-order. The primary cause of the slowdown is that there's just not much more to _do_. This lack of opportunity is reflected in the very low interest rates available today combined with low growth. This technological stagnation is reflected in the massive funding of SV-area tech companies, which are shitty opportunities for a return on investment in a world full of even shittier opportunities. Investors are desperate for a return anywhere. That it's so hard to find a good ROI is against indicative of technological development petering out. After 300 years, we've reached the end of super-Malthusian growth, and we're going to return, hopefully peacefully, to the normal steady-state conditions of human existence, albeit at a higher baseline technology level. There are no major advances left. Physics can predict everything except the most extreme conditions at the largest and smallest scales, and there are no more bugs in the universe to exploit. Computing will see incremental improvements, but all the really hard problems have already been solved or proved impossible. Quantum computing will make some problems a square-root function easier, but won't change anything. Biotechnology may help us live longer, but research that might change the human condition --- germ-line genomic editing --- has _already_ been banned. Sure, you might argue, we're still going through the technology revolution. But that's petering out. Cell phone sales growth slipped into the single digits last year. Tablets are dead. Desktop sales have been declining forever. The commercialization of technology we've already developed --- e.g., self-driving cars, automated personal assistants, and high-efficiency power generation --- will decrease costs by some constant factor, but also put a lot of people out of work. It's remarkably, really, that the laws of the universe are such that humanity was able to elevate itself from ape to thinking ape, and then from thinking ape to calculating machine. It's remarkable that we can compute. Why should we expect the universe to be further more compliant?

RobertoG 11y ago
This sentence "Investors are desperate for a return anywhere." and this sentence "The world economy is being held back by declining returns on investment in science and technology." are not the same that "The primary cause of the slowdown is that there's just not much more to _do_." There is a big different between "there are not easy profits in perspective" and "there is nothing more to do". There are a lot of things to do. A lot of people is living in need and wherever you look you can see possible improvements in education, infrastructure, investigation, etc. The fact that those things don't have a return of 15% shouldn't be a justification for, we, as a society, not doing them.

JohnDoe365 11y ago

24 hours and mens necessity to get some sleep. And it's time for a new truly disruptive technology past micro optimisations.

bigsteve78 11y ago

Goldman Sachs, rothschild banks, the world bank, 0 interest loans for the 1%, speculators, the idiotic spectacle of "trickle down theory".

hackercomplex 11y ago

Globally a very large percentage of construction materials, vehicle parts, and plastics are currently produced from petrolium sources because of rules and regulations which restrict our civilization from utilizing the sun optimally via nature's most highly optimized solar fiber/oil generation system also known as industrial hemp. Although it's possible to obtain hemp fiber and oil now it's price is artifically high because hemp farming is restricted on most of the surface area of earth. This artifically high price pevents this plant from being used in building construction and consumer plastics which keeps us locked into a petrol economy. In addition there is a vast amount of rough terrain in US and elsewhere which is suitable for hemp production but not for agricultural crops. This land currently sits unused which it could be absorbing co2 at a high rate while contributing to the global economy. Also a reduction in the price of hemp would cause it be used more as the world's primary source of cellulose which would help neturalize the wholesale destruction of biodiversity in both the rainforests and marine environments.

guard-of-terra 11y ago
To even start to replace petroleum, hemp oil has to be very cheap. This means using optimal land for growing it - plains, well-lit, well-rained. Where it would compete with wheat and other food grown. Trying to grow hemp (for hemp oil) on rough terrain won't work - far too expensive given the implications of manual labor.
- hackercomplex 11y ago
  1. Hemp oil does not have to become cheaper than petrol in order to become widely used globally because consumer behavior is likely to change to accomodate it. What I mean is educated consumers are willing to pay more for the "green alternative" of their disposable plastic product because they recognize they will see that the extra value is created when the product does not create a destructive externality. 2. Wheat is not an ideal primary food crop in terms of nutrition for an advanced civilization that has the technology to scale distributed food production of much more nutritious plants. Instead we could scale out verical farming, aquaponics technology, permaculture, etc. Still I don't believe industrial hemp would effect large scale wheat production. I think that's a misnomer based on calculations centered around the idea of what it would take to replace petrol completely. You can certainly grow hemp on flat terrain that is not optimal for food crops, but how much can be realistically harvested on truly rough terrain is debateable. It helps to remember that since you don't need insect repellent or petro-fertilizers it's signficantly easier to grow. I estimate that it could at least double the amount of land that can be used for productive farming in the US, and another thing is that hemp actually helps add nitrogen back into the soil.. in other words it's an excellent "cover crop". In addition it only needs to be rotated once every 70 years.

deciplex 11y ago

It seems the main thing holding back the world economy is the mistaken assumption that a sliver of the population hoarding all the capital constitutes an economy in the first place. It does not.

bamie9l 11y ago

The economist has a good article on this with a number of hypotheses: http://www.economist.com/blogs/buttonwood/2016/02/markets-and-economics http://www.economist.com/blogs/buttonwood/2016/02/markets-an...

sebastianconcpt 11y ago

States getting in the middle of individuals

bsbechtel 11y ago
Here is a good post from Mark Cuban written just last week regarding onerous reporting requirements for public companies and the changing mindset of entrepreneurs, and how much it hurts wealth creation in this country: http://blogmaverick.com/2016/02/04/the-pre-cognitive-anti-trust-violationhow-the-decimation-of-the-ipo-market-has-hurt-the-economy-and-worse/?utm_campaign=Mattermark+Daily&utm_source=hs_email&utm_medium=email&utm_content=26043812&_hsenc=p2ANqtz-8gf4QV0APHZED4_4se-cWXLoyhSC4amNhlGFi9SaladmuwpthkMHP2V-qMVi9InEHehYwFeyw3N3IBQILt5bds4zmg6A&_hsmi=26043812 http://blogmaverick.com/2016/02/04/the-pre-cognitive-anti-tr...

sprash 11y ago

The article is beating around the bush: The answer is LACK OF DEMAND. Since the ordinary person can't afford jack shit and already exceeded all levels of debt he/she can take nobody buys anything besides bare necessities. This is what you get if productivity rises sky high over decades and at the same time wages stagnate.

arethuza 11y ago
That reminds me of a statement that the CEO of the multinational I used to work for made in 2008, he said: "Management best practice is to 'cut fast and deep' at the start of a recession" "We're really surprised how quickly demand has dropped" I wasn't daft enough to point out to the CxO who passed this message along to us that if everyone is doing the first of these then surely the second shouldn't come as a surprise? [NB this wasn't a criticism of the CEO implementing a 'cut deep and cut fast' policy - he was exceptionally good at his job, just surprise that given he was so obviously extremely bright that he didn't make the obvious inference.]
- static_noise 11y ago
  Micro-economy and Macro-economy have two totally different goals. This is the reason why the state takes on more and more debt to cover the monetary failings (in the macro-sense) of the private industry.
yummyfajitas 11y ago
LACK OF DEMAND...wages stagnate. You seem to be wildly misunderstanding Keynesian economics - the entire purpose of stimulating demand is to create inflation and lower real wages. Further, all your premises are definitively false in the US. Debt levels are falling, and aggregate demand (i.e. NGDP) has been steadily rising. https://research.stlouisfed.org/fred2/series/GDP https://research.stlouisfed.org/fred2/series/GDP http://www.businessinsider.com/deutsche-bank-lavorgna-americas-debt-to-gdp-pre-crisis-2012-6 http://www.businessinsider.com/deutsche-bank-lavorgna-americ... https://research.stlouisfed.org/fred2/series/HDTGPDUSQ163N https://research.stlouisfed.org/fred2/series/HDTGPDUSQ163N https://research.stlouisfed.org/fred2/series/TOTDTEUSQ163N https://research.stlouisfed.org/fred2/series/TOTDTEUSQ163N Globally GDP also is rising: https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_pcap_cd&scale_y=lin&ind_y=false&rdim=region&idim=country:GBR:RUS:FRA:CHN:IND:NGA:ZAF:DEU&ifdim=region&hl=en&dl=en&ind=false https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&... This is what you get if productivity rises sky high over decades and at the same time wages stagnate. Employee compensation has been rising, it's just shifted from taxable wages to untaxed benefits. https://research.stlouisfed.org/fred2/series/ECIALLCIV https://research.stlouisfed.org/fred2/series/ECIALLCIV Why don't you do even a tiny bit of research before posting? Literally every word of your post is false.

jmckib 11y ago

Relatively simple article from the New York Fed explaining why everything Stiglitz says here is wrong: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr380.pdf https://www.newyorkfed.org/medialibrary/media/research/staff... Not sure if Stiglitz is aware of these points because he doesn't address any of them. Or it's possible I'm misunderstanding something, Stiglitz' article is very complex and is clearly intended for economists, I'm not sure why it's appearing in the Guardian.

jld89 11y ago

The solution is a universal basic income for everyone. It will encourage employment and spending. There should also be a fix for the "1% of the population having more than 60% of total wealth" problem.