[CarlosFerreira]

Dear phaster,

I'm afraid I will be cracking down on some of the issues of your post. Please beware I am doing it form an ideological point of view, and that even if I sound harsh at some point, I respect your opinion and thank you for creating this thread.

Now. First we agree that symptoms, either in markets or in the environment don't come out of nowhere. They are mostly man-made. And I agree these problems are - as you said twice - small. They will, however, turn to big problems as energy and raw materials grow more expensive (the cost of extraction grows higher because the cheaper, easier to extract stuff was extracted earlier, and growth in demand causes "Peak Everything"). Here our agreement starts to fade. Social darwinism brought about a lot of ideas - like fascism(s) - that I believed were long extinct. Social darwinism is nothing but a metaphor created by those on the top of the social and economic "food-chain" to rationalize the exercise of power over the ones "below". Pretty much like a lion telling a gazelle to stop running, since it is below on the food chain.

Darwinist evolution, in itself, is just a description of a natural process. It cannot be translated to human social life. Culling the herd is not an option.

A real free market, with not externalities, would see everyone start with the same value of a resource and compete from there. I predict most would easily kill for the resource in such a competitive, rules-free environment. Hell, much easier than negotiation, and bound to produce better ROI!

We absolutely agree that environment and economy are related. This is probably the first crisis where than fact is really visible for everyone. "People", that undistinguished mass of greyness, will not act to counter it; as MrBill and others have remembered us all, if there are no incentives, people's behavior won't change. The system is still programed (today, as we speak) to reward consumerism and punish powerdown. Why? Simple: if it wasn't, we wouldn't be consuming our way to nothingness. When incentives come, powerdown will ensue. Ideology is (mostly) a product of real, physical conditions. As Marx (or was it Lenin?) put it, it's the objective conditions. The recycling example was a particularly happy one: you have examples of places where recycling is taken as a boring, dull thing, because the government takes care of it, and examples where it was turned into a profitable activity, giving jobs (albeit, not desirable and happy jobs, that fulfill human nature) to a lot of people. So, that's an example where government intervention can be, in fact, worse. People "forget" externalities. If the government takes care of something, we forget that thing and give the responsibility to someone else. No information about value from the market.

On the other hand, government relaying all the responsibility about things on private initiative can be very harmful. My grandma used to tell than, during the fascist regime, there was no garbage, no overgrowth around trees in the forest - people became real scavengers, pretty much like those people in Cairo, and would take anything that resembled wood to use as fuel for stoves. Do we desire that kind of future? I, for sure, don't.

A word about apple: I am a marketeer. I say, screw "fashion" companies. Sure, that's just a personal opinion BUT brands (they're not companies) like apple, Harley-Davidson, Ferrari or Manolo's are just living in a (long-term) lie. Of course, they provided value and differentiation, and the market responded buying their increase in value. Great profits and margins, great investor return, great value. But I don't see them investing that capital in development of real value, alternative ideas for when the economy comes tumbling down. They are spending it on brand awareness, consumer satisfaction, communication, selling the dream. They create tribes around them; the tribe will starve when the leaders neither provide nor encourage sustainability.

The illusion of free markets has produced a debt and growth-addicted economy, one that is deeply unsustainable. I understand, however, that stopping growth and defaulting on debt will cause a serious systemic implosion, the possibility of massive unemployment, disruption in the supply and distribution chains and will leave a lot of people (like me), that probably can't provide for themselves, looking for answers and solutions that aren't there. All I know is this regime. That scares me a bit. Social collapse is probable if we stop current "free" markets too quickly, and inevitable if we keep on blindingly growing and accelerating.

As for the Doha rounds, I posted a thread on its collapse around here somewhere. Care to merge?

[MrBill]

No, I cannot post in your Doha Round thread because I disagree so fundamentally with the propagana posted by posters like Jotapay that there is no room for discussion between us. The gulf is too wide and I simply will not waste my time. Besides I could not remain civil in such an argument. Therefore, it is best that I not even try. Sorry because it is an important issue and it deserves debate, but not by me!

[coyote]

MrBill, thanks for your response a couple of pages ago. I'm sorry I didn't catch it earlier.

I'm interested in your views on a steady-state free market economy, but first I will browse some more of your previous posts to see what you've already posted on, and so that I know the right questions to ask!

[Canuk]

Most of the democratic Western nations have regulated markets for various reasons and this as been successful in raising our standard of living and civil liberties. Free markets without adequate regulations can be brutal as can be evidenced by the illegal drug trade (the best example of the free market on the planet). But on the other hand market interventions through hidden subsidies cause unforeseen effects and skew the market. The problem to me is how can we charge all the costs of consumption including the externalities to allow the market to function properly while still controlling the market enough to prevent the drug trade style capitalism.

[MrBill]

Hi coyote, I agree with canuk, in order for a market economy to function best in a social-democracy we need transparency and fairness. That means that the government on behalf of the electorate needs to decide within which parameters business can operate freely. Not political interference in the market economy.

It is perfectly legitimate for government to set emissions targets for business or tax consumption to limit demand. If governments served no purpose they would be an expensive waste of scarce resources. What is not acceptable is for governments to try to pick winners and hand out subsidies that distort competition. Especially if those are not based on sound cost-benefit analysis.

Business needs a clear set of guidelines within to plan and to operate efficiently. The government must regulate and enforce its own laws against market manipulation, financial fraud and anti-competitive practices. That is their primarly role.

All highly successful economies have strong property rights; enforce commercial contracts; have a clear separation between the state and the courts; apply the law uniformly; and remove impediments to the free flow of goods and services within the economy. All less successful economies do not to a greater or lesser degree. They instead suffer from what I call BIC Syndrome - bureaucracy, incompetence and corruption. Those are self-reinforcing and have complex feedback loops. They characterize all poor nations.

Many may disagree with me (not that I care), but on this last point is where the BRICs of this world will stumble and fall. Not their lack of resources that the world needs, but how they structure their basic legal and administrative infrastructure. Let me make this clear. Competition creates winners and losers. That cannot be avoided. But the answer is to tax wealth creation only after it is created to transfer it to those unable to compete successfully. Poor public policy is putting in place restrictions on wealth creation before it is created in the name of fairness. It is anything but! ; - ))

[bodigami]

$this->bbcode_second_pass_quote('Canuk', 'T')he drug trade is essentially a free market - there are no government controls (other than banning) and there is free and open competition including removal of competitors. The cartels and organizations that work in it are examples of the market at work.

[Canuk]

$this->bbcode_second_pass_quote('anagami', '')$this->bbcode_second_pass_quote('Canuk', 'T')he drug trade is essentially a free market - there are no government controls (other than banning) and there is free and open competition including removal of competitors. The cartels and organizations that work in it are examples of the market at work.

[MrBill]

Brazilians will probably learn their lesson the hard way. They will keep buying and taking on additional credit until inflation has eroded their earnings so much that they will have to choose between buying bread or making the next installment payment on the toaster.
$this->bbcode_second_pass_quote('', 'B')razilians engage in these foolish financial transactions every day. Even those more educated and better versed in the art of making and spending money can be lured into buying a 50-inch flat-screen television with a sales pitch that promises the same $3,000 price whether you pay for it in cash or in 12 monthly installments. Never mind that the interest costs are built into the deal.

Brazil has an inflation-adjusted, or real, annual interest rate of almost 7 percent, among the world's highest. If you think about that, you know that a TV paid for with cash today can't cost the same as one financed over 12 months.

As for deferred gratification, Brazilians want none of it. They prefer buying today and paying tomorrow. And as long as the installment fits within the monthly paycheck, why bother with interest charges, right?

Financial illiteracy is one of the reasons fighting inflation can be so complex and costly. If consumers behave as if interest rates don't matter, aggregate demand becomes less responsive to monetary policy or takes longer to react to policy shifts.

Brazil's annual consumer inflation rate doubled to 6.1 percent in June, from 3 percent in March 2007. This has prompted the central bank to increase the Selic benchmark interest rate by 175 basis points since September, to 13 percent.

Brazil already has the fourth-highest nominal benchmark rate among the 52 central-bank rates tracked by Bloomberg, behind only Venezuela (23 percent), Turkey (16.75 percent) and Iceland (15.5 percent). More rate increases are expected. Last week, Brazilian central bankers said they will act ``vigorously'' to control inflation.

[cube]

$this->bbcode_second_pass_quote('MrBill', '[')b]Brazilians will probably learn their lesson the hard way. They will keep buying and taking on additional credit until inflation has eroded their earnings so much that they will have to choose between buying bread or making the next installment payment on the toaster.

[MrBill]

[align=center]Its always the market's fault. Never the fault of political interference in the economy[/align]

A Politburo meeting on July 25 replaced the previous national economic goal, preventing overheating of the economy and controlling inflation, with a new target. As enunciated by President Hu Jintao in recent appearances, the objective now is to seek fast and sustained economic growth while still keeping inflation under control.

"We must maintain steady, relatively fast development and control excessive price rises as the priority tasks of macro adjustment," he said at a rare news conference on Friday.

$this->bbcode_second_pass_quote('', 'A')ny slowing of growth, which has been spurred in part by China's herculean investment program to showcase the Olympic Games that open this week, could prove a shock to Chinese workers who have been receiving double-digit pay increases each year. Wages have been rising briskly as companies have struggled to find enough labor to keep factories open.

China's economic growth is not going to stop, of course. But any significant slowing below its recent pace of 11 percent or more a year would also make it much harder to find jobs for the millions of people moving from rural areas to cities each year in search of work. Economists have been forecasting growth of 9 percent to 10 percent over the coming year, and these estimates are being ratcheted downward.

Because of China's large role in the global economy, the country's decelerating growth is already having a ripple effect elsewhere, for better and for worse.

It is one of the reasons gasoline prices have fallen in the United States - reduced Chinese demand allows prices on commodities like oil to fall. World prices for metals like copper, tin, zinc and aluminum have tumbled in the past several weeks - and dropped sharply Monday in London - as Chinese factories have closed or cut back production.

But while China's difficulties are starting to help in the fight against inflation, they also threaten to slow a weakening global economy even further.

The Chinese government has responded by abruptly changing gears and starting to worry more about lagging growth and less about inflation.

[CarlosFerreira]

That last text, on the Chinese economy, has a few interesting points.

So, they have hit a sort of (temporary, I should expect) "peak coal". They haven't been able to mine coal fast enough to respond to growth in demand, so several areas have felt power shortages - although the economy is slowing something. However, the text said before that decreases in raw materials' prices (such as oil and metals) were due to the economic slowdown of China.

My question is whether, considering the shortages in coal, shouldn't the Chinese be buying more oil and LNG for electricity generation - and if this shouldn't be driving prices up?

[Canuk]

A significant portion of the demand growth in energy and raw materials in China is a result of shifts from the First world as our goods production and its associated requirements in resources and energy have moved to China and other developing countries. This has reduced the perceived growth in energy and resource usage in the countries that import the products since the production did not occur there but does not reflect the true picture.

Just a thought, since they are making the products for external markets isn`t the energy and resources actually being used by the end consumer not China and for all our blame of China aren`t we just exporting our carrying capacity issues onto them and therby masking the true consumption problem.

[phaster]

like it or not "Culling the herd" is the natural selection response of an economic or environmental system out of wack (i.e. unsustainable).

I was just trying to point out using a darwin observation, that survival of the strong over the weak has always happened in the past and morality questions aside, in the future the strong (physically, economically and intellectually) will survive at the expense of the physically weak, economically poor and intellectually challenged...






$this->bbcode_second_pass_quote('CarlosFerreira', 'D')ear phaster,

I'm afraid I will be cracking down on some of the issues of your post. Please beware I am doing it form an ideological point of view, and that even if I sound harsh at some point, I respect your opinion and thank you for creating this thread.

Now. First we agree that symptoms, either in markets or in the environment don't come out of nowhere. They are mostly man-made. And I agree these problems are - as you said twice - small. They will, however, turn to big problems as energy and raw materials grow more expensive (the cost of extraction grows higher because the cheaper, easier to extract stuff was extracted earlier, and growth in demand causes "Peak Everything"). Here our agreement starts to fade. Social darwinism brought about a lot of ideas - like fascism(s) - that I believed were long extinct. Social darwinism is nothing but a metaphor created by those on the top of the social and economic "food-chain" to rationalize the exercise of power over the ones "below". Pretty much like a lion telling a gazelle to stop running, since it is below on the food chain.

Darwinist evolution, in itself, is just a description of a natural process. It cannot be translated to human social life. Culling the herd is not an option.

A real free market, with not externalities, would see everyone start with the same value of a resource and compete from there. I predict most would easily kill for the resource in such a competitive, rules-free environment. Hell, much easier than negotiation, and bound to produce better ROI!

We absolutely agree that environment and economy are related. This is probably the first crisis where than fact is really visible for everyone. "People", that undistinguished mass of greyness, will not act to counter it; as MrBill and others have remembered us all, if there are no incentives, people's behavior won't change. The system is still programed (today, as we speak) to reward consumerism and punish powerdown. Why? Simple: if it wasn't, we wouldn't be consuming our way to nothingness. When incentives come, powerdown will ensue. Ideology is (mostly) a product of real, physical conditions. As Marx (or was it Lenin?) put it, it's the objective conditions. The recycling example was a particularly happy one: you have examples of places where recycling is taken as a boring, dull thing, because the government takes care of it, and examples where it was turned into a profitable activity, giving jobs (albeit, not desirable and happy jobs, that fulfill human nature) to a lot of people. So, that's an example where government intervention can be, in fact, worse. People "forget" externalities. If the government takes care of something, we forget that thing and give the responsibility to someone else. No information about value from the market.

On the other hand, government relaying all the responsibility about things on private initiative can be very harmful. My grandma used to tell than, during the fascist regime, there was no garbage, no overgrowth around trees in the forest - people became real scavengers, pretty much like those people in Cairo, and would take anything that resembled wood to use as fuel for stoves. Do we desire that kind of future? I, for sure, don't.

A word about apple: I am a marketeer. I say, screw "fashion" companies. Sure, that's just a personal opinion BUT brands (they're not companies) like apple, Harley-Davidson, Ferrari or Manolo's are just living in a (long-term) lie. Of course, they provided value and differentiation, and the market responded buying their increase in value. Great profits and margins, great investor return, great value. But I don't see them investing that capital in development of real value, alternative ideas for when the economy comes tumbling down. They are spending it on brand awareness, consumer satisfaction, communication, selling the dream. They create tribes around them; the tribe will starve when the leaders neither provide nor encourage sustainability.

The illusion of free markets has produced a debt and growth-addicted economy, one that is deeply unsustainable. I understand, however, that stopping growth and defaulting on debt will cause a serious systemic implosion, the possibility of massive unemployment, disruption in the supply and distribution chains and will leave a lot of people (like me), that probably can't provide for themselves, looking for answers and solutions that aren't there. All I know is this regime. That scares me a bit. Social collapse is probable if we stop current "free" markets too quickly, and inevitable if we keep on blindingly growing and accelerating.

As for the Doha rounds, I posted a thread on its collapse around here somewhere. Care to merge?

[phaster]

I think you should add another variable and call it BICS Syndrome - bureaucracy, incompetence, corruption and secrecy, this is the general case for identifying "economic and political" systems that are unsustainable over the long haul, and will eventually implode from "economic and political" social pressures (or rather the lack thereof).









$this->bbcode_second_pass_quote('MrBill', 'A')ll less successful economies do not to a greater or lesser degree. They instead suffer from what I call BIC Syndrome - bureaucracy, incompetence and corruption. Those are self-reinforcing and have complex feedback loops. They characterize all poor nations.

Many may disagree with me (not that I care), but on this last point is where the BRICs of this world will stumble and fall. Not their lack of resources that the world needs, but how they structure their basic legal and administrative infrastructure. Let me make this clear. Competition creates winners and losers. That cannot be avoided. But the answer is to tax wealth creation only after it is created to transfer it to those unable to compete successfully. Poor public policy is putting in place restrictions on wealth creation before it is created in the name of fairness. It is anything but! ; - ))

[NTBKtrader]

I think unsustainable is an overused word on this forum. Everything is unsustainable i.e. human life, clean teeth, your new car, your new horse, your food, earth itself. Sometimes the thought on this forum is anything unsustainable isn't worth the effort, in that case, nothing has value and thats just garbage.

[phaster]

Point taken, all systems no matter if they are environmental or economic are always in a state of flux trying to find an equlibrium point.

BUT "unsustainable" does denote an environmental or economic system that apt to come crashing down in the short term, so until a better word comes around I feel compelled to continue using the term. In addition "unsustainable" suggests to be there are choices and policies that can be made to make the environmental or economic systemlast longer if that is the objective.



$this->bbcode_second_pass_quote('NTBKtrader', 'I') think unsustainable is an overused word on this forum. Everything is unsustainable i.e. human life, clean teeth, your new car, your new horse, your food, earth itself. Sometimes the thought on this forum is anything unsustainable isn't worth the effort, in that case, nothing has value and thats just garbage.

[MrBill]

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('MrBill', 'M')in Hwa, a real estate broker in Shenzhen, a city of at least 12 million people near Hong Kong, said that residential real estate prices had dropped by 10 percent over the past year in good neighborhoods near the city center, and have fallen by up to 40 percent in outlying neighborhoods.

"We have seen a lot fewer prospective buyers in recent months," he said.

[chrispi]

The Invisible Hand is invisible precisely because it doesn't exist.

[MrBill]

$this->bbcode_second_pass_quote('chrispi', 'T')he Invisible Hand is invisible precisely because it doesn't exist.