The Economics Thread
 

Since this subject is coming up a lot lately, and tends to derail other threads, let's put it all in one thread for fun and....profit? :heh:

Here's an interesting one to start with, courtesy of the Huffington Post:

These 10 companies control enormous number of consumer brands

I urge everyone to follow these links, also in the article:

Media consolidation.
Bank merging history.

I'm sure there are other charts out there to show other industries, and by no means are any of these charts comprehensive. Feel free to add, comment, etc.

Here are a few more links :

Visual Economics
Place To Find How Much Your Food/Fuel Is Going To Cost In The Next Few Months
Marketwatch

I rarely listen to such urging.

I see some clear systemic risks with the current model of globalisation. I just finished reading a book recently and it explains the risk quite well. Basically the global economy is structured around the US. The main market for consumers is in the US and most countries, particularly Asia have capitalised on this by developing export driven economies. The US has allowed this to happen and has been running chronic trade deficits which have basically acted as subsidies to the exporting nations.

As dollars leave the US the money stimulates growth in those exporting economies. However when lots of money enters these economies it can create a lot of inflation as those dollars are converted into the countries local currency. This excessive money can lead to high inflation if not properly managed or worse yet bubbles in various asset classes such as stocks, commercial/residential real estate to overcapacity in various manufacturing firms.

To prevent this from happening a lot of the dollars are invested back into the US through various means either through direct foreign investment, buying of government or corporate bonds or the purchase of stock. Problem is this dynamic cannot persist indefinitely as the longer it goes on the more indebted the US becomes and the more dependent the Asian economies will be on exports. Also as mentioned earlier the other major risk with this model is the amount of hot money entering the country can lead inflation of various asset classes leading onto bubbles. When those bubbles burst a major crisis will result as proven with the Japanese real estate bubble in the 80s and the Asian crisis of the 90s. More recently there would appear to be another real estate bubble developing in China which maybe even more extreme than the Japanese one as the income to price ratio is even higher (it is around 15 in the major cities as opposed to 7 at the peak of the bubble in Japan).

Also another issue to be aware is while the Asian economies are growing rapidly there is also a lot of credit creation. Now extra credit may not necessarily be a bad thing but the problem is rapid growth can easily disguise the problem of non-performing loans. It is becoming more apparent that China carries a lot of poor quality loans that is unlikely to be paid back and should growth slow or god forbid go to zero or even contract then there will be major problems in servicing these bad loans.

At the end of the day though this model cannot go on indefinitely and is unsustainable. The Asian economies cannot continue to be export driven economies. They must transition into consumer economies or there will be large negative repercussions. The problem with the transition however is it has never been done before and if it were to happen it would mean a period of hardship as most of the things that help a economy become consumer driven have a detrimental effect on export manufacturers.

"Too big to fail" is a slogan that should never exist. But alas, it does. Businesses get too big - because - government fails to regulate (either by incompetence or intention).

I'll stop you right there and quote the more relevent portion of what VonMises defines it as:

Laissez faire does not mean: Let soulless mechanical forces operate. It means: Let each individual choose how he wants to cooperate in the social division of labor; let the consumers determine what the entrepreneurs should produce.

As opposed to a "planned society":


Planning means: Let the government alone choose and enforce its rulings by the apparatus of coercion and compulsion.

Laissez-Faire does NOT mean no regulation of economic practices.
It means that the government cannot, or more correctly, should not intervene in the division of Labour.

In other words, in a Laissez-Faire system the government cannot tell you what to grow, what to buy, or what products you are allowed to produce.
The consumers determine that by either buying or not buying your products, services, or goods.

Please refer to the 1st Chapter of Adam Smith's "The Wealth of Nations."

What "libertarians" like Rothbard Murry and co. have been pushing is not Laissez-Faire, it's anarchy.

In a Laissez-Faire system the government can require permits (as for doctors), safety standards, health standards, etc. provided they do not become tools used to favor one group or another or to become so restrictive as to prohibit the free excercise of a legitimate business (like Farming).

It is perfectly acceptable within a Laissez-Faire system to impose anti-monopoly laws of a draconian nature if those laws promote freedom in the market by preventing political corruption and/or dictatorial coersion by government on behalf of a powerful monopoly.

While I agree that the theory was created at a time when transportation was mostly by "water-carriage" and "land-carriage"--to use Adam Smith's terms--and thus is wholely inadequate in its 18th century form for use today; I see no reason why it cannot be modified, and upgraded for use in today's society.

That is how I know that Scott Alexander Siskind is dead wrong about Laissez-Faire.
I'm not surprised though.
I checked out his website and his blog.
It spoke volumes about what kind of person he is. :rolleyes:

It is very difficult to draw a line to what extent regulations and laws should touch though. Anti-trust laws, for example, often leave a lot of space for judges to interpret. They can easily become laws that punish legitimately successful companies.

Take the telecom industry as example. The field is dominated by a few players primarily because the start-up cost is so high. It's also difficult to have too many service providers laying their own fibre optic cables and occupy the same wireless spectrum. One way to get around this is to force the companies to open up their network and rent to other operators. But that is effectively "telling companies what to do".

We also see Google sued for monopolistic practice in the form of prejudice in search ranking. Some years ago in Europe Microsoft was found guilty of not including other browsers in default Windows installation. There just isn't a line that we can confine the extent of laws and regulations.

All the insights to be gained from Laissez faire have been incorporated in economic thinking by the classical economists already. Competition theory in economic science has moved on considerably since that time. From the 1950s and onward game theory has been the primary field for new ideas and insights on different forms of competition.

These days, the term is only in use by political ideologies to assign a particular role to the state in society.

The undermining rationale for economics is psychology. What really amazes me is how politicians can quote terms like "sustainable" while allowing big companies to use legal loopholes to buy up smaller ones.

This just came up today.

Wage shock therapy too risky, says PM Lee

While he has his point about risk, he is not offering any alternative and opting to "stay at it is". With rising costs of living and slowed wage growth, it is going affect sales - and that makes up a large component in a first-world consumer-based economy.

What hurts me even more is to see people unable to afford the simplest whole life insurance plan just because they risk retrenchment - companies are more willing to hire foreign workers and not have to pay CPF and standard wage levels for the locals; how is that going to boost productivity when consumers can't even afford to buy?

And there they go ranting about the need for these foreign workers because the younger generation is not producing enough babies - the wannabe parents work extra hours just to support their parents and themselves, can't barely support a baby for education, clothing, food for the next 20 years. This is a deathward spiral being swept under the carpet; there is no motivation for productivity anymore when self-sufficiency is barely met.

P.S As a local citizen, I am partly to blame for the lack of consumption, sales and productivity. I have been spending less than I should in the past 5 months.......about 75% less. No wonder the businesses out there can't make any money. :heh:

... another discouraging news for 0bama

http://www.washingtonpost.com/busine...U1T_story.html

how is the economy?
 

I can't find the topic for this when I did a search function. But how is the economy lately? Trying to go back to school but after hearing horrid stories about how there are lay offs and such. Is anybody in a tough economy state? Feel free to discuss on these issues.

Bad.




Oh, were you looking for more than that? What do you mean by your question- personally? Nationally? Which countries?

Well anywhere actually.

Please be more specific.

It's pretty shit here in Ireland.

As far as I'm aware, the only good places are Australia and Canada.

I've been quite the fan of Robert Reich, as he spells things out so simply.

So, here's his economic view on the Paul Ryan choice:
http://robertreich.org/post/29215926175

This sums this idea up:

Didn't notice this thread before. Anyway, since you brought up the topic of media consolidation, I might as well add this little tit-bit (pun intended) on media economics:

Why porn and journalism have the same big problem

Interesting article. The problem with both, imo, is that they both offer something anyone can do. Get a camera and a willing partner(s), and voila, sex video. Ditto with news, with the advent of camera phones and blogging sites, anyone can be a journalist.

Of course, you get what you pay for. A lot of free porn is terrible, with questionable image quality and even more questionable morality (some of the fringe stuff isn't as fringe anymore and often very disturbing, some of it illegal if not real close to it). This is the danger of "everyman" news as well: there's no system to root out bad journalism, so mis/disinformation spreads rapidly and "news" feels more like "gossip". For example, as much as I enjoy reading Huffington Post, it is terrible for accurate news. Likewise for sites like Daily Caller. CNN's "iReport" has been a mixed bag as well.

The need to turn a profit is the problem, but this is the "downside" of disruptive technologies in that they tend to destroy previous profit models. The digital age is destroying the old gatekeeper profit models. iTunes found a niche, and I think because of it the micro-transaction model has snowballed into a savior for the entertainment industries, but I also think that is short lived as initial content quality drys up in favor of extended content through things like DLC. Plus there's a huge risk in laying all your fortunes on such a model: people are getting tired of the Skinner Box.

This is irrelevant, but is there such a thing as good porn, regardless of price? :uhoh:

Anyway, it all comes down to something simple: people won't pay for something they can get for "free". That's the fundamental challenge to all media-content producers, regardless of genre (yes, that includes anime).

I did some amateur Journalism for a student newspaper a while back.

Doing "proper" Journalism is a lot harder then it looks. A lot of hard work goes into it.