I think this thread is interesting, but now I'm depressed.
Global economic downturn
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pawnzischeme wrote:
I think this thread is interesting, but now I'm depressed.
It is depressing, but only in so much as the last decade has been uplifting! We all now face an adjustment to our living standards and how that develops is down to individual governments. Perhaps Obama is a great lifter, by rhetoric if nothing else, and perhaps not, only time will tell. Either way, it is up to us as individuals, nationalists and patriots of whatever persuasion to make good on the promises to our children!
You know i am not feeling the down turn yet but i have plenty of friends that are hurting. I'm a therapist and i have to say that there are a lot more clients coming to see me because of alcohol and drug addiction. let's hope it all calms down soon.
ncpharaoh wrote:
You know i am not feeling the down turn yet but i have plenty of friends that are hurting. I'm a therapist and i have to say that there are a lot more clients coming to see me because of alcohol and drug addiction. let's hope it all calms down soon.
Sounds like your day has come :-)
Interestingly though, do you think the downturn will bring back the concept of personal responsibility? For me, too much of the worlds ills have become societies fault not the fault of the perpetrator which I have to say I abhor!!!
Mar 5, 2009
0
#66
Evil_Homer wrote:
pawnzischeme wrote:
I think this thread is interesting, but now I'm depressed.
It is depressing, but only in so much as the last decade has been uplifting! We all now face an adjustment to our living standards and how that develops is down to individual governments. Perhaps Obama is a great lifter, by rhetoric if nothing else, and perhaps not, only time will tell. Either way, it is up to us as individuals, nationalists and patriots of whatever persuasion to make good on the promises to our children!
Great analysis! I agree and so does Kasparov (but I think he's drunk).
pawnzischeme wrote:
Evil_Homer wrote:
pawnzischeme wrote:
I think this thread is interesting, but now I'm depressed.
It is depressing, but only in so much as the last decade has been uplifting! We all now face an adjustment to our living standards and how that develops is down to individual governments. Perhaps Obama is a great lifter, by rhetoric if nothing else, and perhaps not, only time will tell. Either way, it is up to us as individuals, nationalists and patriots of whatever persuasion to make good on the promises to our children!
Great analysis! I agree and so does Kasparov (but I think he's drunk).
Wow, snap!
ParadigmBLU3 wrote:
One of the most worthwhile threads I have seen on here in a long time.
I would like to add weight to what ericmittens has said here: "If you work for a government bureau your department is given a set budget every year. Now, say your department works hard and does their job very efficiently and comes in under budget. Whats going to happen? Your budget is going to get cut!
Now say you're all lazy and inefficient and you go over budget? What happens then? Your budget is increased! Because clearly you lack the man-power or monies to do your job!"
I work for a government contractor in the defense industry. I can tell you from personal experience that this is exactly what happens. Everyone tells you to spend spend spend, so that their budget won't be cut, even if you aren't doing anything. This results in, I kid you not, mandatory overtime at this very moment, so that we can spend our money as fast as possible.
But what is the most efficient model? I know lots of private enterprise that work on the same basis!
Mar 5, 2009
0
#69
Re: Paradigm BLU3 comment: I worked for the Army (civil service) for 3 years. Yours was my experience exactly. Very little to do until the end of the fiscal year -- then overtime to spend the money.
Even when the economy's not in the tank, lots of people in the US have this ideological opposition to government spending and all that. In some cases that can come in handy, but I think in this case a lot of the countries in the world feel they have no choice, and sadly they're probably right. After all, if a government can't afford to put money back into circulation and keep basic programs running, then who can?
How does everyone think this will affect the chess community?
Foodle wrote:
When the government builds something it isn't creating wealth, since it always has to take money away from the private sector. Sure, the government can build a school, but to do so they have to tax (steal) money from private hands, thus depriving others of the ability to build something.
The government never creates wealth, they only redistribute it.
Probably the worst thing about the government spending money is that they spend it so inefficiently. How does the government know what should be built and when and for how much? The market should be determining these things not a bunch of bureaucrats.
Central government planning never works. They tried it in the Soviet Union and look where it got them. The US has been trying it since 1913, and look where they've ended up.
Of course, building schools for a national education system will hardly profit the entrepreneur in the short term. However, the wealth created by a well-educated society is real, immense and immeasurable. Just as the wealth created by a healthy society. By the way, the privately owned and operated health-care system of the United States the costliest in the world. (http://www.jhsph.edu/publichealthnews/press_releases/2005/anderson_healthspending.html)
To me, that's not generating but substracting wealth
Furthermore, the idea of "leaving everything to the hands of the market" because it knows better created this whole mess, starting with the sub-prime mortgage crisis. Here is just one of many articles critisizing the extensive deregulation that has occured in the last decades:
(http://www.morganhilltimes.com/opinion/248916-deregulation-is-reason-for-subprime-mortage-crisis)
Of course, the public can't be as efficient as the private sector. It never will. That is the cost of making a decision benefiting the common good.
As for the stimulus packages helping the economy, well i guess it depends. If it invests in durable, long-lasting projects they can easily help the economy. For example, most countries (including Canada) are gearing up for infrastructure projects. Surely, building and improving roads will benefit the economy in the short-term, by creating jobs, and in the long-term by making trade faster and easier.
First of all, the US medical system is neither private nor public, it is some unholy abomination of the two which pays off for no one but the super rich and/or those high up on the corporate ladder. Oddly enough it only got that way after Nixon passed the Medicare bills in the early 70s...but thats a whole other discussion altogether.
Secondly, the free market had absolutely nothing to do with the US housing collapse. The reason the housing bubble came about was because of the Federal Reserve setting interest rates below where the market would. Also, this coincided with the government guarantee of mortgages. Once again the government, through its implied guarantee, takes all the risk out of a venture and allows greed to run amuck. For all those interested I strongly suggest you watch this video which I have shown before...it really is amazing.
http://www.youtube.com/watch?v=6G3Qefbt0n4
Great stuff. My opinion:
Concerning govt spending versus tax cuts, I look back to 2001. The US had a balanced budget. Bush comes in and decides, govt doesn't need this extra money, let's give it back to "the productive folks in the economy" (rich people).
What did they do with the money? They put it into the financial system. Funky new accounting. Banks with so much money, they were giving it away.
Didn't turn out well.
My economic understanding is limited. I like what one post said, though, about "anthropomorphizing" the economy.
According to the US systemic ideals, selfishness=efficient economy. One view is to get govt out of the way to increase efficiency.
Didn't turn out well, either. Greed & amorality has to be taken into account.
Anyway, I'm Utah and work as a supervisor in a laundry detergent factory. We're doing OK here but things are tight. Everybody's nervous. One bright spot: I'm appreciating my job more!!
For those of you who think government infrastructure spending is a good idea, here is a short chapter from Henry Hazlitt's classic "economics in one lesson"
http://jim.com/econ/chap04p1.html
The videos are actually pretty imformative. But it's interesting how when things get bad, there are always so many rich people who immediately step in wanting to tell us what to do with our money.
Money is such an important thing nowadays, more so than ever, I think (though that's definitely up for debate). Maybe the problem is that money has actually become too important. Especially money that doesn't actually exist (eg, off-balance acounting). One of the biggest causes of this whole mess was people who couldn't contain their greed and literally wote assets onto their books that didn't exist. Of course, the former American president Bush wasn't going to do anything about it. He might not have been able to even if he wanted to, with so many people screaming their heads off about how their precious free market system was going to be destroyed if they had to follow any rules.
Money does strange things to people. It's exactly like poison.
It may be interesting to watch the consumer price index (CPI) over this next year. My prediction is that is will fall like it did during the depression and may contunue to do so as we experience deflation. Now this means that our money will buy more but, of course, we have to have money. Deflation can be both good and bad as it means more buying power but that is due to falling demand for goods and services which may be due to people keeping their money. The result of deflation can be loss of jobs due to lowered demand. In the case of the U.S. depression, there was deflation but people also had less money to spend so taking advantage of the lower prices was still out of reach for people.
With the big recession in the US it carried onto Canada. I don't see things getting better in Canada until they do in the US. I think we'll start to see the economy rebuilding in about two years. Some tough times ahead...
Mar 6, 2009
0
#77
ParadigmBLU3 wrote:
One of the most worthwhile threads I have seen on here in a long time.
I would like to add weight to what ericmittens has said here: "If you work for a government bureau your department is given a set budget every year. Now, say your department works hard and does their job very efficiently and comes in under budget. Whats going to happen? Your budget is going to get cut!
Now say you're all lazy and inefficient and you go over budget? What happens then? Your budget is increased! Because clearly you lack the man-power or monies to do your job!"
I work for a government contractor in the defense industry. I can tell you from personal experience that this is exactly what happens. Everyone tells you to spend spend spend, so that their budget won't be cut, even if you aren't doing anything. This results in, I kid you not, mandatory overtime at this very moment, so that we can spend our money as fast as possible.
I agree this is the way most public systems work, but does it have to remain so ?
In a private company, you can set a target and an indicator to see if you have reached the target. Governments could decide to work that way too... They don't have to be inefficient.
Governments are evil, some say a necessary evil... sorta like dentists. 
hicetnunc wrote:
I agree this is the way most public systems work, but does it have to remain so ?
In a private company, you can set a target and an indicator to see if you have reached the target. Governments could decide to work that way too... They don't have to be inefficient.
It will always be that way in government, because they are spending somebody else's money. The government will always get paid no matter what it does, it will always have it's tax base. If a corporation screws up one too many times it goes out of business (until just recently).
It's all about incentives. Private business, through risk and competition, has a great incentive to do things efficiently. Government has no such incentive, as it carries no risk and allows no competition.
To quote Milton Friedman:
"You know, over and over again in government policy, good intentions go awry, and the reason good intentions go awry is because you're spending somebody else's money"
Mar 6, 2009
0
#80
ericmittens wrote:
hicetnunc wrote:
I agree this is the way most public systems work, but does it have to remain so ?
In a private company, you can set a target and an indicator to see if you have reached the target. Governments could decide to work that way too... They don't have to be inefficient.
It will always be that way in government, because they are spending somebody else's money. The government will always get paid no matter what it does, it will always have it's tax base. If a corporation screws up one too many times it goes out of business (until just recently).
It's all about incentives. Private business, through risk and competition, has a great incentive to do things efficiently. Government has no such incentive, as it carries no risk and allows no competition.
To quote Milton Friedman:
"You know, over and over again in government policy, good intentions go awry, and the reason good intentions go awry is because you're spending somebody else's money"
Eric, I understand your point. I can't develop my thoughts more without crossing the 'political' line. But to summarize them, I don't think a government has to work that way : how do you properly use democracy to control the government ? But that's a political question, so full stop.
From an economical point of view, I'd like to suggest that the paradigm "greater value (welath) stems from an increased efficiency in the use of resources" needs a healthy questioning on the meaning of "value" and "resources".
If value = GDP and resources = capital, then you're completely right.
Lack of oversight,allowing banks to also become investment banks, and slicing and dicing the sub-prime mortgages into investment securities, among other things, puts us where we are. We all likely have an opinion as to where the fault lies. However, initially we were told the solution was to prop-up the dubious/unknown value of the mortgage securities, reverse "mark to market" valuation, and get liquidity into the banks to promote lending. Small banks, in my area, are backed up with loan applications. People are finding loans for homes, cars, and refinancing: if they qualify (as in the old days). Unemployment is a problem everywhere.
By the way, none of the initial solutions were done, except to print huge amounts of money. My grandson will likely earn $100,000 in an average job. Of course, his refrigerator will cost $6,000, house $450,000, and chess.com monthly fee $250. Excuse me, Kasparov wants another sherry.
You see, I don't have a problem with an average job paying $100k per annum. What is a truism though is that must feed its way into the economy as a whole. I think the unfortunate thing is that a very few people have gotten rich over the last few years, prices have increased, but he average joe has only moved up slightly.
When I came home to Ireland a few years ago, we were the self confessed third richest country in the world. Now perhaps I had a unique perspective having just left Switzerland, the richest country in the world, but everything to me was second world, the salaries, the health service, the roads, so I thought this doesn't add up! I was a heretic for a few years, but hey, now I have proven to be spot on, the world is in turmoil, but Ireland is in deep doggy do dah, go figure!