7 ms·

If there is any person who finds this funny - and it is funny - know that is this is where the WORLD economy is heading. Europe is already half-way there, amer

If there is any person who finds this funny - and it is funny - know that is this is where the WORLD economy is heading. Europe is already half-way there, america is stalling it due to immigration, China is going to be there once it hits the demographic cliff.

deleted 10y ago
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deleted 10y ago
[deleted]
pcurve 10y ago
Very true. These countries are all showing syptoms of first-world economy disease; low-birth rate, government budget deficit, high healthcare expenditure, bureaucracy, gutting of manufacturing jobs, and local labor market and education systems that fail to recognize that not everybody has IQ of 120+ and benefit from getting bachelors and masters degrees. America can thank its dollar as world reserve currency. Billions it spends on military bases around the world and foreign aids is part of its effort to keep its reserve currency status. But at some point, the party is going to be over. American labor force is already very uncompetitive and overpaid compared to its European and Asian counterparts. Yet we enjoy one of the highest standards of living. That gravy train won't last forever. The only thing that will get the developed countries out of their impending doldrums is 10/100x energy and technological breakthrough. Until then, we'll get our own version of 60 yen Garagari-kun. And don't think deflation hasn't been happening already in the U.S. The only difference is, unlike Japan, unscrupulous U.S. food companies have been cutting ingredient quality and content size, rather than raising price for the past 10 years. Check out Breyer's fake ice cream, Haagen Daaz, McCormick pepper content size, Mars shrinking chocolate bar sizes. https://consumerist.com/category/grocery-shrink-ray/ https://consumerist.com/category/grocery-shrink-ray/ http://www.dailymail.co.uk/femail/article-3037688/Shrinkflation-sneaky-firms-making-favourite-products-smaller-NOT-shrinking-price.html http://www.dailymail.co.uk/femail/article-3037688/Shrinkflat...
- ktRolster 10y ago
  And don't think deflation hasn't been happening already in the U.S. The only difference is, unlike Japan, unscrupulous U.S. food companies have been cutting ingredient quality and content size, rather than raising price for the past 10 years. You seem to have gotten confused between inflation and deflation. With deflation, prices decrease, not increase.
  - pcurve 10y ago
    Your last paragraph is correct, but I was using the term in more macro environment context. 25 year of unchanged nominal price is symptom of deflationary environment. The reluctance by the Japanese company to raise price even when costs were going up speaks volume about the strong downward pricing pressure in the Japanese market. Though not to the same degree, similar environment has been brewing here in the U.S. for awhile. Companies don't want to raise prices, and only do so as a last resort. If economy was better, they would do so without fear that their competitors would not follow suit.
    - mindslight 10y ago
      > strong downward pricing pressure in the Japanese market Downward pricing is what one would expect in any stable market, given that price optimization is the primary market mechanic. Technology is getting ever-better, so it takes ever-larger efforts to erase its gains and create the artificial inflation prescribed by the central banksters.
- jseliger 10y ago
  These countries are all showing syptoms of first-world economy disease; low-birth rate, government budget deficit, high healthcare expenditure, bureaucracy There are two other major problems in parts of the U.S. and Europe (in particular) that're underrated: 1. insane land-use control laws that make it illegal to build reasonably price housing (see Matt Yglesias's The Rent is Too Damn High for more: http://www.amazon.com/TheRent-Too-Damn-High-Matters-ebook/dp/B0078XGJXO http://www.amazon.com/TheRent-Too-Damn-High-Matters-ebook/dp...) and 2. transfer payments to older people that were originally conceived and executed when the number of workers to retirees was much different than it is now. The first is important because it impedes family formation and innovation. The second is important because it makes not having children easier, because other people's children will be forced to support you through their contribution to transfer payment programs. Yet neither issue gets much play in the press.
chfjdjcjdjd 10y ago
Some would say that arguments based on demographics are missing the point. Japan has been cannibalizing itself in order to protect its zaibatsus, squeezing every last ounce of productivity from its workers to the point at which they longer reproduce, and enacting corporate welfare policies in the form of QE and ZIRP/ NIRP. The EU and US have been following suit with quantitative easing and stagnant wages, and now we're beginning to experience the same economic decay that Japan has before us. This whole situation is completely avoidable if someone would just have the courage to stop coddling elites and big business.
- eru 10y ago
  Outside of export oriented manufacturing, Japan doesn't have high productivity.
fiatjaf 10y ago
What does immigration has to do with price deflation? (I know you can come up with some relation, of course everything is related, but again, it is not straightforward, and you shouldn't just assume that saying a bunch of buzzywords and stating some facts stands out as an explanation)
- pcurve 10y ago
  Immigration staves off demographic time bomb, which is cited as one of the causes (or symptoms depending on who you ask) for Japan's no-growth economic environment.
  - internaut 10y ago
    Although I lean libertarian I don't see how you can control monetary policy without also needing to control population size. Lots of awkward ethical questions nobody wants to talk about here.
    - eru 10y ago
      I don't get it? Just print money? (Or more formal, do QE?)
      - internaut 10y ago
        What I mean is that there must exist an elemental relationship (min-max limits) between population size and the depth of the division of labour (how complex production can become). Pairing population to production optimally is a synchronization problem. Cybernetics I suppose, not usually how economists think. Economic growth and recession could be modulated if there were enough people when we needed them, and there were not, when we did not. Recessions won't go away but they wouldn't be compounded by demographic issues. Currently this is solved in a haphazard way e.g. using illegal immigration of people like fruit pickers (deporting them when inconvenient) or by green belt zoning and class siloing. That can't be efficient. It couldn't possibly make humans happier. Most actually adopted solutions appear to be quite damaging to humans. How much of this is consciously orchestrated is also hard to ascertain. I suspect it is mostly Scott Alexander's Moloch at work. Every central banker ought to read that poetry because it's quite recognizable. Since it is unethical to force children to exist (Ceausescu) and also wrong to murder people or prevent them having offspring when demographic issues arise, we need a plausible solution to allow for a world in which people have a realistic chance of having sustenance and purpose in their lives. Most people really don't like this topic! It is understandable. We prefer not to think of ourselves as elements of production and supply. Of course we are, we're just a special case of it. All of the problems are ultimately rectified by markets, or failing them, mother Nature. You know what they say about Nature being a mother. My point is that we don't necessarily need to let it get to market corrections if we think ahead. Suppose you were a Communist official in charge of the One Child policy who anticipated the female infanticide rate. You'd have solved for a good deal of human suffering decades later on with perhaps an afternoon's work. Right place, right time. Monetary policy tools work on a similar lever principal to this which is a large part of the reason I'm talking about them in the same vein. I'm not confident I know what to do, only that it is a factor. And now; tell me how I'm wrong!
internaut 10y ago
Stagnation is the main threat the world is waking up to. People will blame other things of course. Things like MENA immigration, climate patterns, crop failures, these are second order affects of stagnation. The peripheral fails before the center. Never forget that. I have to congratulate Peter Thiel. He has managed to see a lot of this ahead of almost anybody else I can think of and this is despite being at the heart of the cozy bubble that is Silicon Valley. One of his expressions is that you can have instances of success in an ocean of general failure or something to that effect. Even on HN a few hours ago I saw a WSJ article proclaiming that everything is smashingly good these days, that three/four decade wage stagnation is a mere blip on the radar. Though I agreed with the substance of the historical facts she stated I also think this is an utterly clueless point of view on human nature that is shared by huge swathes of the middle class. I didn't live in 1850 and I cannot be expected to appreciate the good fortune of the years since then! If you live in a downcycle then that's all you know. You see the contradictions at their most dire with the pension funds. They require either massive hikes in funding or 6-7 real percent per year. Wages will have to rise suddenly and dramatically and/or else we need massive massive technological changes. Somehow I see Larry Summers getting called back into Court. Whether monetary policy is enough, that is another question.
- deleted 10y ago
  [deleted]
- mrep 10y ago
  Wages have not been stagnating [1]. Median wage has stagnated but that is due largely to the polarization of the labor market of which has been talked about long before Peter Thiel [2]. [1]: http://www.tradingeconomics.com/united-states/wage-growth http://www.tradingeconomics.com/united-states/wage-growth [2]: https://www.researchgate.net/profile/Melissa_Kearney2/publication/4981174_The_Polarization_of_the_U.S._Labor_Market/links/0fcfd50bd66be2418b000000.pdf https://www.researchgate.net/profile/Melissa_Kearney2/public...
  - internaut 10y ago
    I agree with those statements. I'm not sure we agree on what they mean though. World becomes more zero sum when growth plateaus. Only now it is proposed that everybody and their dog get PhDs in god only knows what. Diminishing returns are exactly stagnation. I know blue collar workers making more money than people who took extensive study and got 'good' jobs. This is despite the fact those workers haven't actually had wage increases themselves! They're just working long hours for more pay. We're stuck in a rut. It could be the case that technological stagnation is created by technology itself. A hairy subject! If I remember rightly wage increases for the higher percentile aren't that great either. I mean they are better than zero but not as great as they used to be. Makes sense since their market of consumers is drying up as everybody becomes cash poor except for those making toys for the actual rich.
ArkyBeagle 10y ago
Yep. We'd rather slowly become more and more sclerotic rather than face so much as a tiny increase in price level.
eru 10y ago
The world doesn't have to head there. Central banks can produce any amount of inflation they want to, if they have the guts. See nominal GDP level targeting: http://www.economist.com/blogs/freeexchange/2011/10/monetary-policy-3 http://www.economist.com/blogs/freeexchange/2011/10/monetary...
rosege 10y ago
Exactly, they can see that the policies of the US and Europe will lead to lost decades like it has in Japan. You can see it already happening. I believe the problem is the bail outs from the financial crisis and the ongoing belief that nothing can be allowed to fail which is why interest rates have been kept so low. I think they would be much better off raising rates (Fed and ECB simultaneously) - this will lead to some short term pain as businesses that arent very profitable are forced to close. But from the ashes of these 'bad' businesses you will get better ones rising. The metaphor here is of fire which destorys but also clears the way for regrowth.

deleted 10y ago

[deleted]

deleted 10y ago

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pcurve 10y ago

Very true. These countries are all showing syptoms of first-world economy disease; low-birth rate, government budget deficit, high healthcare expenditure, bureaucracy, gutting of manufacturing jobs, and local labor market and education systems that fail to recognize that not everybody has IQ of 120+ and benefit from getting bachelors and masters degrees. America can thank its dollar as world reserve currency. Billions it spends on military bases around the world and foreign aids is part of its effort to keep its reserve currency status. But at some point, the party is going to be over. American labor force is already very uncompetitive and overpaid compared to its European and Asian counterparts. Yet we enjoy one of the highest standards of living. That gravy train won't last forever. The only thing that will get the developed countries out of their impending doldrums is 10/100x energy and technological breakthrough. Until then, we'll get our own version of 60 yen Garagari-kun. And don't think deflation hasn't been happening already in the U.S. The only difference is, unlike Japan, unscrupulous U.S. food companies have been cutting ingredient quality and content size, rather than raising price for the past 10 years. Check out Breyer's fake ice cream, Haagen Daaz, McCormick pepper content size, Mars shrinking chocolate bar sizes. https://consumerist.com/category/grocery-shrink-ray/ https://consumerist.com/category/grocery-shrink-ray/ http://www.dailymail.co.uk/femail/article-3037688/Shrinkflation-sneaky-firms-making-favourite-products-smaller-NOT-shrinking-price.html http://www.dailymail.co.uk/femail/article-3037688/Shrinkflat...

ktRolster 10y ago
And don't think deflation hasn't been happening already in the U.S. The only difference is, unlike Japan, unscrupulous U.S. food companies have been cutting ingredient quality and content size, rather than raising price for the past 10 years. You seem to have gotten confused between inflation and deflation. With deflation, prices decrease, not increase.
- pcurve 10y ago
  Your last paragraph is correct, but I was using the term in more macro environment context. 25 year of unchanged nominal price is symptom of deflationary environment. The reluctance by the Japanese company to raise price even when costs were going up speaks volume about the strong downward pricing pressure in the Japanese market. Though not to the same degree, similar environment has been brewing here in the U.S. for awhile. Companies don't want to raise prices, and only do so as a last resort. If economy was better, they would do so without fear that their competitors would not follow suit.
  - mindslight 10y ago
    > strong downward pricing pressure in the Japanese market Downward pricing is what one would expect in any stable market, given that price optimization is the primary market mechanic. Technology is getting ever-better, so it takes ever-larger efforts to erase its gains and create the artificial inflation prescribed by the central banksters.
jseliger 10y ago
These countries are all showing syptoms of first-world economy disease; low-birth rate, government budget deficit, high healthcare expenditure, bureaucracy There are two other major problems in parts of the U.S. and Europe (in particular) that're underrated: 1. insane land-use control laws that make it illegal to build reasonably price housing (see Matt Yglesias's The Rent is Too Damn High for more: http://www.amazon.com/TheRent-Too-Damn-High-Matters-ebook/dp/B0078XGJXO http://www.amazon.com/TheRent-Too-Damn-High-Matters-ebook/dp...) and 2. transfer payments to older people that were originally conceived and executed when the number of workers to retirees was much different than it is now. The first is important because it impedes family formation and innovation. The second is important because it makes not having children easier, because other people's children will be forced to support you through their contribution to transfer payment programs. Yet neither issue gets much play in the press.

chfjdjcjdjd 10y ago

Some would say that arguments based on demographics are missing the point. Japan has been cannibalizing itself in order to protect its zaibatsus, squeezing every last ounce of productivity from its workers to the point at which they longer reproduce, and enacting corporate welfare policies in the form of QE and ZIRP/ NIRP. The EU and US have been following suit with quantitative easing and stagnant wages, and now we're beginning to experience the same economic decay that Japan has before us. This whole situation is completely avoidable if someone would just have the courage to stop coddling elites and big business.

eru 10y ago
Outside of export oriented manufacturing, Japan doesn't have high productivity.

fiatjaf 10y ago

What does immigration has to do with price deflation? (I know you can come up with some relation, of course everything is related, but again, it is not straightforward, and you shouldn't just assume that saying a bunch of buzzywords and stating some facts stands out as an explanation)

pcurve 10y ago
Immigration staves off demographic time bomb, which is cited as one of the causes (or symptoms depending on who you ask) for Japan's no-growth economic environment.
- internaut 10y ago
  Although I lean libertarian I don't see how you can control monetary policy without also needing to control population size. Lots of awkward ethical questions nobody wants to talk about here.
  - eru 10y ago
    I don't get it? Just print money? (Or more formal, do QE?)
    - internaut 10y ago
      What I mean is that there must exist an elemental relationship (min-max limits) between population size and the depth of the division of labour (how complex production can become). Pairing population to production optimally is a synchronization problem. Cybernetics I suppose, not usually how economists think. Economic growth and recession could be modulated if there were enough people when we needed them, and there were not, when we did not. Recessions won't go away but they wouldn't be compounded by demographic issues. Currently this is solved in a haphazard way e.g. using illegal immigration of people like fruit pickers (deporting them when inconvenient) or by green belt zoning and class siloing. That can't be efficient. It couldn't possibly make humans happier. Most actually adopted solutions appear to be quite damaging to humans. How much of this is consciously orchestrated is also hard to ascertain. I suspect it is mostly Scott Alexander's Moloch at work. Every central banker ought to read that poetry because it's quite recognizable. Since it is unethical to force children to exist (Ceausescu) and also wrong to murder people or prevent them having offspring when demographic issues arise, we need a plausible solution to allow for a world in which people have a realistic chance of having sustenance and purpose in their lives. Most people really don't like this topic! It is understandable. We prefer not to think of ourselves as elements of production and supply. Of course we are, we're just a special case of it. All of the problems are ultimately rectified by markets, or failing them, mother Nature. You know what they say about Nature being a mother. My point is that we don't necessarily need to let it get to market corrections if we think ahead. Suppose you were a Communist official in charge of the One Child policy who anticipated the female infanticide rate. You'd have solved for a good deal of human suffering decades later on with perhaps an afternoon's work. Right place, right time. Monetary policy tools work on a similar lever principal to this which is a large part of the reason I'm talking about them in the same vein. I'm not confident I know what to do, only that it is a factor. And now; tell me how I'm wrong!

internaut 10y ago

Stagnation is the main threat the world is waking up to. People will blame other things of course. Things like MENA immigration, climate patterns, crop failures, these are second order affects of stagnation. The peripheral fails before the center. Never forget that. I have to congratulate Peter Thiel. He has managed to see a lot of this ahead of almost anybody else I can think of and this is despite being at the heart of the cozy bubble that is Silicon Valley. One of his expressions is that you can have instances of success in an ocean of general failure or something to that effect. Even on HN a few hours ago I saw a WSJ article proclaiming that everything is smashingly good these days, that three/four decade wage stagnation is a mere blip on the radar. Though I agreed with the substance of the historical facts she stated I also think this is an utterly clueless point of view on human nature that is shared by huge swathes of the middle class. I didn't live in 1850 and I cannot be expected to appreciate the good fortune of the years since then! If you live in a downcycle then that's all you know. You see the contradictions at their most dire with the pension funds. They require either massive hikes in funding or 6-7 real percent per year. Wages will have to rise suddenly and dramatically and/or else we need massive massive technological changes. Somehow I see Larry Summers getting called back into Court. Whether monetary policy is enough, that is another question.

deleted 10y ago
[deleted]
mrep 10y ago
Wages have not been stagnating [1]. Median wage has stagnated but that is due largely to the polarization of the labor market of which has been talked about long before Peter Thiel [2]. [1]: http://www.tradingeconomics.com/united-states/wage-growth http://www.tradingeconomics.com/united-states/wage-growth [2]: https://www.researchgate.net/profile/Melissa_Kearney2/publication/4981174_The_Polarization_of_the_U.S._Labor_Market/links/0fcfd50bd66be2418b000000.pdf https://www.researchgate.net/profile/Melissa_Kearney2/public...
- internaut 10y ago
  I agree with those statements. I'm not sure we agree on what they mean though. World becomes more zero sum when growth plateaus. Only now it is proposed that everybody and their dog get PhDs in god only knows what. Diminishing returns are exactly stagnation. I know blue collar workers making more money than people who took extensive study and got 'good' jobs. This is despite the fact those workers haven't actually had wage increases themselves! They're just working long hours for more pay. We're stuck in a rut. It could be the case that technological stagnation is created by technology itself. A hairy subject! If I remember rightly wage increases for the higher percentile aren't that great either. I mean they are better than zero but not as great as they used to be. Makes sense since their market of consumers is drying up as everybody becomes cash poor except for those making toys for the actual rich.

ArkyBeagle 10y ago

Yep. We'd rather slowly become more and more sclerotic rather than face so much as a tiny increase in price level.

eru 10y ago

The world doesn't have to head there. Central banks can produce any amount of inflation they want to, if they have the guts. See nominal GDP level targeting: http://www.economist.com/blogs/freeexchange/2011/10/monetary-policy-3 http://www.economist.com/blogs/freeexchange/2011/10/monetary...

rosege 10y ago

Exactly, they can see that the policies of the US and Europe will lead to lost decades like it has in Japan. You can see it already happening. I believe the problem is the bail outs from the financial crisis and the ongoing belief that nothing can be allowed to fail which is why interest rates have been kept so low. I think they would be much better off raising rates (Fed and ECB simultaneously) - this will lead to some short term pain as businesses that arent very profitable are forced to close. But from the ashes of these 'bad' businesses you will get better ones rising. The metaphor here is of fire which destorys but also clears the way for regrowth.