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I suspect that you didn't read to the end of the paper. They're using the 'seven dwarves and scrooge' example in the context of sovereign debt. They aren't cr

by philk 17y ago

I suspect that you didn't read to the end of the paper. They're using the 'seven dwarves and scrooge' example in the context of sovereign debt. They aren't criticising individuals for saving and investing. The entire thesis is that China hoarding large surpluses is essentially unsustainable and damaging to global productivity. This is probably true, unless China is willing to accept IOUs (which is what US bonds are, essentially) ad infinitum.

dantheman 17y ago
I don't agree that China is hurting the global economy in fact I think they are making the west richer by stealing from their own people. You can morally object to that, but whenever a country subsidizes exports they are improving the lot of foreigners at the expense of their own citizens.
- Retric 17y ago
  I suspect that China currency manipulation has reduced global economic efficiency. It's mostly second order effects ex: Cheap Chinese exports still require the same raw materials which drives up global commodities prices. Now if China was growing faster than other nations have when they transitioned to "modern" economy's that would be one thing. But South Korea experienced similar growth rates when they where developing and the "end state" for China is an economy that looks like US/Germany/Japan etc. So IMO, discounting their goods is keeping their population poorer for longer and harming the world economy at the same time.
  - dantheman 17y ago
    I agree it's keeping the economy poorer, but is it harming the world economy? People are getting goods at lower prices, that frees up more money for investment. So I'd say if anything it's improving the world economy. Once again, I feel the only objection is that it is unfair to chinese citizens because the are essentially being stolen from. As for you comment on 2nd order effects, I think that is incorrect -- China only competes on labor costs, they don't sell goods for less than the material costs. Now if you're saying that they can use less efficient (more wasteful) processes since the difference is made up in labor, I'll agree -- but I think they'll adopt the more efficient processes to increase their bottom line eventually.
    - comment176 17y ago
      What's the use of getting a good at a lower price if you've lost your job? To get back to your original question, I think the global economy may have been hurt due to China's mercantilist policies. Some perceive China to be adopting non-cooperative "I win, you lose" strategies that will motivate defensive and non-cooperative measures from other countries. This is bad, potentially very bad. Also, even if the global economy is better now than it was when China was undeveloped, that doesn't mean China's policies are ideal. The world economy might be even better than it is now if China changes its policies, increases its internal demand and spends down its surplus.

by philk 17y ago

dantheman 17y ago

I don't agree that China is hurting the global economy in fact I think they are making the west richer by stealing from their own people. You can morally object to that, but whenever a country subsidizes exports they are improving the lot of foreigners at the expense of their own citizens.

Retric 17y ago
I suspect that China currency manipulation has reduced global economic efficiency. It's mostly second order effects ex: Cheap Chinese exports still require the same raw materials which drives up global commodities prices. Now if China was growing faster than other nations have when they transitioned to "modern" economy's that would be one thing. But South Korea experienced similar growth rates when they where developing and the "end state" for China is an economy that looks like US/Germany/Japan etc. So IMO, discounting their goods is keeping their population poorer for longer and harming the world economy at the same time.
- dantheman 17y ago
  I agree it's keeping the economy poorer, but is it harming the world economy? People are getting goods at lower prices, that frees up more money for investment. So I'd say if anything it's improving the world economy. Once again, I feel the only objection is that it is unfair to chinese citizens because the are essentially being stolen from. As for you comment on 2nd order effects, I think that is incorrect -- China only competes on labor costs, they don't sell goods for less than the material costs. Now if you're saying that they can use less efficient (more wasteful) processes since the difference is made up in labor, I'll agree -- but I think they'll adopt the more efficient processes to increase their bottom line eventually.
  - comment176 17y ago
    What's the use of getting a good at a lower price if you've lost your job? To get back to your original question, I think the global economy may have been hurt due to China's mercantilist policies. Some perceive China to be adopting non-cooperative "I win, you lose" strategies that will motivate defensive and non-cooperative measures from other countries. This is bad, potentially very bad. Also, even if the global economy is better now than it was when China was undeveloped, that doesn't mean China's policies are ideal. The world economy might be even better than it is now if China changes its policies, increases its internal demand and spends down its surplus.