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Noah Smith: Will the World Ever Boom Again?

gavinfielder

gavinfielder

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Noah Smith said:
What if China is the last country to follow the tried-and-true path of industrialization?

There is really only one time-tested way for a country to get rich. It moves farmers to factories and imports foreign manufacturing technology. When you move surplus farmers to cities, their productivity soars -- this is the so-called dual-sector model of economic development pioneered by economist W. Arthur Lewis. So far, no country has reached high levels of income by moving farmers to service jobs en masse. Which leads us to conclude that there is something unique about manufacturing.
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Interesting article; the point has some merit to it, though it makes me think that a few economies of the future, if they develop at all, might be transitioning straight from agricultural to the knowledge economy. But it's obviously not that simple--or is it? The knowledge economy is still rather nebulous, or at least I'm not sure I understand the concept completely, nor understand whether it could possibly produce an economic boom. He's obviously correct that the service economy isn't going to cause any booms--a country has to build wealth before affording a robust service sector.

The main premise of the article is that the world might never see another economic boom, and like all absolutes, it's almost certainly wrong, but it's difficult/impossible to imagine the boom of the future, except maybe for the coming space resources boom. I just can't imagine poor economies going industrial as the only source of boom there is, even if that may be historically accurate.
 
The problem is you needs farmers just as much as you need industry.

industry really cannot survive without farmers.

it is a symbiotic relationship.
 
Ancient Herald said:
The problem is you needs farmers just as much as you need industry.

industry really cannot survive without farmers.

it is a symbiotic relationship.
Click to expand...

The problem is that we are producing more and more, with less and less human labor. At the beginning of the 20th century something like 80% of all work involved the production of food, now that's down to just a few percent of all work. Like farming, manufacturing may increase production, but don't expect it to ever be a big job creator again.
 
imagep said:
The problem is that we are producing more and more, with less and less human labor. At the beginning of the 20th century something like 80% of all work involved the production of food, now that's down to just a few percent of all work. Like farming, manufacturing may increase production, but don't expect it to ever be a big job creator again.
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I am aware of that problem too. The downside to that is less jobs, more people out of work, more people homeless and on the streets.
 
Ancient Herald said:
I am aware of that problem too. The downside to that is less jobs, more people out of work, more people homeless and on the streets.
Click to expand...

The upside could be more people having more time to do whatever it is that floats their boat: art, sports, learning for the sake of learning, watching tv, or enjoying meaningful conversation with others.

We just have to come up with a system which can distribute the fruits of or technology fairly.

If we have a need for human labor, but not enough need so that there are enough jobs for every family to have at least one 40 hour per week job, seems to me that the best solution would be that we move to the 20 hour per week system, then maybe the 10 hour per week, etc.

George Jetson worked a 4 hour workday...1 day a month. We just have to figure out how to insure that the fruits of automation are passed on to workers, and to figure out a way to prevent workers from wanting to work a paid job more than X hours a week, and to figure out a way to prevent employers from wanting workers to work more than X hours a week. The result is that part time becomes the new full time, thus whatever jobs remain are "shared" between more workers, who then get paid just as much per year as their predecessors did who worked 40+ hours/wk.
 
imagep said:
The upside could be more people having more time to do whatever it is that floats their boat: art, sports, learning for the sake of learning, watching tv, or enjoying meaningful conversation with others.

We just have to come up with a system which can distribute the fruits of or technology fairly.

If we have a need for human labor, but not enough need so that there are enough jobs for every family to have at least one 40 hour per week job, seems to me that the best solution would be that we move to the 20 hour per week system, then maybe the 10 hour per week, etc.

George Jetson worked a 4 hour workday...1 day a month. We just have to figure out how to insure that the fruits of automation are passed on to workers, and to figure out a way to prevent workers from wanting to work a paid job more than X hours a week, and to figure out a way to prevent employers from wanting workers to work more than X hours a week. The result is that part time becomes the new full time, thus whatever jobs remain are "shared" between more workers, who then get paid just as much per year as their predecessors did who worked 40+ hours/wk.
Click to expand...

In order to have something like that, you have to have s system of checks and balances, to help keep greed and corruption out of the equation.

And, of course, you have to have incentive, and social and political will to have that kind of system.

As well as not infringing upon peoples inalienable rights.
 
Ancient Herald said:
The problem is you needs farmers just as much as you need industry.

industry really cannot survive without farmers.

it is a symbiotic relationship.
Click to expand...
Sure, but I think part of the question is, in a nutshell, whether farmers will ever be wealthy. Could agriculture ever create a boom, an influx of wealth? What industries could cause a boom? Noah Smith seems to think only manufacturing can create a boom.
 
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gavinfielder said:
Sure, but I think part of the question is, in a nutshell, whether farmers will ever be wealthy. Could agriculture ever create a boom, an influx of wealth? What industries could cause a boom? Noah Smith seems to think only manufacturing can create a boom.
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Why should farmers have to be wealthy?

Corporations are making millions of dollars off of farming.

And to answer your question, here s an article for you:

Business | 6 Million -- Idaho Farmer Among World's Richest Men | Seattle Times Newspaper
 
Ancient Herald said:
Why should farmers have to be wealthy?

Corporations are making millions of dollars off of farming.
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But would that produce a boom?

The anatomy of a boom is such that consumers having more money enables them to support new sectors of economy.
 
gavinfielder said:
But would that produce a boom?

The anatomy of a boom is such that consumers having more money enables them to support new sectors of economy.
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Well, with what little I know, too much money also devalues the currency that is currently being used.
 
gavinfielder said:
Sure, but I think part of the question is, in a nutshell, whether farmers will ever be wealthy. Could agriculture ever create a boom, an influx of wealth? What industries could cause a boom? Noah Smith seems to think only manufacturing can create a boom.
Click to expand...

Anything can create a boom, especially if you can export it. Plenty of decent economies have strong agriculture sectors. The problem with agriculture is that your land limits you, and an efficient ag sector (like ours) only uses a small portion of the labor force, because efficiency/productivity is a must. So that leaves most of your labor force looking for something else to do.
 
Ancient Herald said:
Well, with what little I know, too much money also devalues the currency that is currently being used.
Click to expand...

I've never known anyone who thought they had too much money. I've certainly never thought that I had too much money. So I think that's a little bit of a myth.

Inflation is caused by inadequate production to meet demand.
 
gavinfielder said:
Interesting article; the point has some merit to it, though it makes me think that a few economies of the future, if they develop at all, might be transitioning straight from agricultural to the knowledge economy. But it's obviously not that simple--or is it? The knowledge economy is still rather nebulous, or at least I'm not sure I understand the concept completely, nor understand whether it could possibly produce an economic boom. He's obviously correct that the service economy isn't going to cause any booms--a country has to build wealth before affording a robust service sector.

The main premise of the article is that the world might never see another economic boom, and like all absolutes, it's almost certainly wrong, but it's difficult/impossible to imagine the boom of the future, except maybe for the coming space resources boom. I just can't imagine poor economies going industrial as the only source of boom there is, even if that may be historically accurate.
Click to expand...
Macro economic principles favor world participation in full employment with everyone doing what they do best on lands that are best for it.

Agriculture, meat production, fishing, water resources, spices, textiles, leather goods, bicycles, automobiles, aircraft, ships, transportation, communications, data processing, banking, finance, education, science, exploration, petroleum, mining, energy, housing, medical and dental care, old age care, retirement facilities, childcare, police and military, justice and corrections, drug interdiction, political administration, infrastructure construction and maintenance, waste disposal, food processing, entertainment, sports -- each of these sectors provide for needs of populations and when everyone participates then you have full employment and prosperity and economic growth.

If your region does not provide any one of them then it must import services and/or goods.

Importing is ok as long as you have something to export for it in exchange, otherwise your community will go bankrupt.
 
imagep said:
I've never known anyone who thought they had too much money. I've certainly never thought that I had too much money. So I think that's a little bit of a myth.

Inflation is caused by inadequate production to meet demand.
Click to expand...

Inflation is caused by excess money not backed by production. With modern monetization of paper money and it's indiscriminate dissemination through the banking process, inflation is created when producers must pay out incrementally more in paper money to their factors of production.

Producers must then charge these higher costs to their consumers, and the cycle of inflation begins. The cycle cannot end until the amount of paper money in circulation equals the amount of goods and services in demand.

Only a slacking in demand such as people doing belt tightening can ever slow down or stop inflation.

Taxation and rents are at the root of inflation, with labor costs being driven from there.

Everyone must pay taxes and/or rent. Everyone must also pay for repairs and medical/dental expense. Everyone must also pay transportation costs, for clothing and food. Their children must become educated or they will not be able to find jobs.

These are what drive inflation -- human needs as paid for by monetized paper money.
 
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Ancient Herald said:
The problem is you needs farmers just as much as you need industry.

industry really cannot survive without farmers.

it is a symbiotic relationship.
Click to expand...

And not just that ... see my summary supra.

A national economy is a complex phenomenon.

I think nations should carefully monitor their production industries and tariff any imports that are predatory.

Doing this right requires a very sophisticated board of trade however.
 
Riveroaks said:
Inflation is caused by excess money not backed by production.
Click to expand...

Do you have excess money? Have you ever had excess money? Do you spend your excess money or do you save/invest it?

If you save or invest your excess money, then it's not chasing after goods, so by your definition, it can't be inflationary. If you spend your money, then obviously its not excess, it's either just the right amount or less than you really need.

So there is no such thing as "inflationary excess money". What does that leave in your equation? Inadequate production.

My post 12 stands.
 
imagep said:
Do you have excess money? Have you ever had excess money? Do you spend your excess money or do you save/invest it?

If you save or invest your excess money, then it's not chasing after goods, so by your definition, it can't be inflationary. If you spend your money, then obviously its not excess, it's either just the right amount or less than you really need.

So there is no such thing as "inflationary excess money". What does that leave in your equation? Inadequate production.

My post 12 stands.
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I put all my money in the bank.

Wells Fargo Bank.

Safe as Fort Knox.
 
Riveroaks said:
I put all my money in the bank.

Wells Fargo Bank.

Safe as Fort Knox.
Click to expand...

Then it's not causing inflation because it's parked and not chasing production.

But congratulations for having excess money. That's something that most of us never have.
 
imagep said:
Then it's not causing inflation because it's parked and not chasing production.

But congratulations for having excess money. That's something that most of us never have.
Click to expand...

When I was a kid my sisters used to beat me in Monopoly all the time by keeping a stash.

All my life I have been living within my means and stashing money into the bank.

Meanwhile my sisters live hand to mouth.

But you can congratulate my sisters for me.
 
A cheap, renewable (or inexhaustible) supply of energy...

...raw products (minerals and such)...

...and a bit of ingenuity.

Those are the ingredients of a food supply that needs no "growing" or "raising."

What we should be aiming for is a world in which the machines do ALL the work...

...and humans get to contemplate their navels until the machines get intelligent enough to realize humans are no longer needed.

We humans have the makings of a Utopia to make fictional Utopias seem like sewers...and all we do is to think of ways to screw it up.
 
About China: "It moves farmers to factories and imports foreign manufacturing technology. When you move surplus farmers to cities, their productivity soars"

It's nice that some think that, it seems like magic. It is nonetheless wholly simplistic. In the Far East this has not been magic. In fact, having moved out of rural communities, many of the young have found jobs paying-a-pittance. They are hoveled in triple-decker beds, five to a room, common shower and kitchen.

They do it because back on the farm they were earning nothing. It is only now, a quarter-of-a-century later (the Bamboo Curtain came crashing down in 1991, lest we forget), that some - certainly not all - have forged a middle-class existence.

So, puh-leeze, let's not think that all the production that left the US and EU for China has enriched that country equitably. And the new emphasis in Economics - after the work of Professors Piketty (School of Economics, Paris) and Domhoff (U Cal.) - is upon the distribution of Income, and Income that trickles-up to Wealth so very inequitably.

Consider this - both the US and China have the same Gini Index value. Let's understand therefore that Income Disparity in both nations are equal, and the reasons are similar. Far too little taxation of upper-incomes. In fact, in China such incomes are reserved for a billionaire Plutocrat Class that is exclusively designated/formulated by the Chinese Communist Party. These individuals decide their own tax-rates, and no Tax Authority would dare challenge them.

Now, that's not exactly the same fashion as in the US or Europe, but the result is nonetheless the same, that is: Too Much of the Economic Benefit is Going to Too Few ... ! (And as regards Income, Europe is far better at sharing than the US.)
 
Frank Apisa said:
Those are the ingredients of a food supply that needs no "growing" or "raising."

What we should be aiming for is a world in which the machines do ALL the work...
Click to expand...

As an ex-engineer, I am not "utopic". We might be able one day to create "artificially" in a spaceship the sort of food-independence that you suggest.

But I see COP-21 as a process showing how difficult it is to get human beings to agree on anything.

We are celebrating a "victory" resulting from the recent Paris meeting. Only the French see it for what it was: A "success" that flatters a French President desperately in need of good reelection polls.

I hope, like many others, that COP-21 will obtain the success in reducing carbon emissions that everybody wants. But the specifics of the matter, even if expressed numerically are still "all hope" with little real incentive. You cannot punish nations for not meeting "hoped-for levels of reduction in carbon emissions".

And the same for food-production. China - this "Great Nation" - has a population of 1.4B people, tantamount to twice that of the EU and more than four times that of the US. And it does not have the arable land to support that population. What's it gonna do? What it has done, buy land and create plantations elsewhere - like mostly Africa.

Now, if the technology existed for China to grow foods for its population "at home" employing some new technology, I am sure they would be all over said technology. But, no, nothing all-that-important is really happening in terms of the technological development necessary.

Unless, of course, if I am mistaken - in which case the response to this post will be "enormous"!!!!

PS: And yes, I know all about the "lab grown bacon with your eggs". Not impressed ...
 
imagep said:
Do you have excess money? Have you ever had excess money? Do you spend your excess money or do you save/invest it?

If you save or invest your excess money, then it's not chasing after goods, so by your definition, it can't be inflationary. If you spend your money, then obviously its not excess, it's either just the right amount or less than you really need.

So there is no such thing as "inflationary excess money". What does that leave in your equation? Inadequate production.

My post 12 stands.
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Tbf, the issue isn't whether any particular person has excess money, but whether the economy has excess money. A modest percentage of people starving doesn't actually matter to inflation.

Lafayette said:
About China: "It moves farmers to factories and imports foreign manufacturing technology. When you move surplus farmers to cities, their productivity soars"

It's nice that some think that, it seems like magic. It is nonetheless wholly simplistic. In the Far East this has not been magic. In fact, having moved out of rural communities, many of the young have found jobs paying-a-pittance. They are hoveled in triple-decker beds, five to a room, common shower and kitchen.

They do it because back on the farm they were earning nothing. It is only now, a quarter-of-a-century later (the Bamboo Curtain came crashing down in 1991, lest we forget), that some - certainly not all - have forged a middle-class existence.

So, puh-leeze, let's not think that all the production that left the US and EU for China has enriched that country equitably. And the new emphasis in Economics - after the work of Professors Piketty (School of Economics, Paris) and Domhoff (U Cal.) - is upon the distribution of Income, and Income that trickles-up to Wealth so very inequitably.

Consider this - both the US and China have the same Gini Index value. Let's understand therefore that Income Disparity in both nations are equal, and the reasons are similar. Far too little taxation of upper-incomes. In fact, in China such incomes are reserved for a billionaire Plutocrat Class that is exclusively designated/formulated by the Chinese Communist Party. These individuals decide their own tax-rates, and no Tax Authority would dare challenge them.

Now, that's not exactly the same fashion as in the US or Europe, but the result is nonetheless the same, that is: Too Much of the Economic Benefit is Going to Too Few ... ! (And as regards Income, Europe is far better at sharing than the US.)
Click to expand...

+1 for Piketty. I have Capital on the shelf (if not in the bank).

I would certainly disagree with Smith in that there isn't actually anything special about manufacturing in that it alone can create economic growth and prosperity. Your point, also, is well taken. We are reasonably assured that strong economic growth is only built on decent wages which support the broad-based increase in money velocity--after all, if the money doesn't spread, how can the food or housing or standard of living in general? I'm prepared to accept that social structures favoring the elite are the primary factor that hamper economic growth.

New technologies and disruptive innovation has the potential to reverse the trend, I think. That's what happened with the internet.

Lafayette said:
PS: And yes, I know all about the "lab grown bacon with your eggs". Not impressed ...
Click to expand...
One day my bacon trees will come.
 
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