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The Race To The Bottom- In Everything.

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Embedded here is the zero sum argument that in other contexts is vehemently denied. So the argument goes that living standards in the west must decline so that those in the east can rise- funny how this paradigm does not apply to CEO's and Bankers whose living standards have massively increased in a world of global competition.

Again the issue here is not wealth creation but power- we are not seeing a transfer of the earnings of the western worker into the pockets of his eastern counterpart, we are seeing a power struggle between capital and labour being won by capital who now allocate to themselves a far larger share of the cake.

The wage demands of the eastern workforce are regarded as a pathology, not social progress- it's a disease to which automation is the cure.

If productivity is rising then there is no trade off to be made between the living standards of the western worker and that of the eastern- unless, of course, those increases in productivity are being skimmed off by the people at the top, whose greed seems to know no bounds.

You pose an interesting question : Are we winners globally if living standards, in absolute rather than relative terms, rise very slowly in the so called First Wolrd and rise very quickly in the rest of the world?

My anawer is an unequivaocable yes. Many so called liberals would disagree with me.

Edited by LuckyOne

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Oh, not this again!

If you want to start a business, start a business. If you want to only work for dividends, join a cooperative.

Do you believe that people should be paid according to the wealth they create or according the ease with which they can be replaced?

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Do you believe that people should be paid according to the wealth they create or according the ease with which they can be replaced?

They are exactly the same thing.

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OK - NYT decided to pick the post war period when most of the world were in pieces and US was the only manufacturer left and accounted for 50% of the world GDP.

Of course it can only suffer from relative decline from that point.

Oddly enough the very rich in the US don't seem to have suffered from the increase in productivity (while other groups - particularly the lowest paid have). How do you explain that?

Edited by StainlessSteelCat

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You pose an interesting question : Are we winners globally if living standards, in absolute rather than relative terms, rise very slowly in the so called First Wolrd and rise very quickly in the rest of the world?

My anawer is an unequivaocable yes. Many so called liberals would disagree with me.

Absolutely. Let's all live a better lives and let's us all have enough to eat and nice cloth to wear because of the super productivity.

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You pose an interesting question : Are we winners globally if living standards, in absolute rather than relative terms, rise very slowly in the so called First Wolrd and rise very quickly in the rest of the world?

My anawer is an unequivaocable yes. Many so called liberals would disagree with me.

I think this is a bit of a straw man really- what people care about is how they are doing relative to their neighbours or their own past experience- they neither know nor care about the lives of people on distant continents.

The proposition is set like this- you western people must have less so that those eastern people can have more- this argument usually being advanced by someone whose own income has mysteriously grown massively even as they preach the inevitable decline in other peoples income. Funny how that works.

Yet if productivity is growing strongly, as it is, and capitalism is not supposed to be a zero sum game, which it isn't- then what is the basis of this argument?

It seems to me that those who are creaming off the added value are looking to point their finger somewhere else to avoid this creaming off becoming noticed.

It's like a variation of an old joke;

A Western worker, an Eastern worker and a Capitalist sit down at a table with ten biscuits on a plate.

The western worker takes his usual three, the eastern his usual one.

'Now now Fred"- says the Capitalist, taking one of the western worker's biscuits and giving it to the eastern worker, ' You can't expect to keep on having more biscuits than Chan here, can you?

Fred looks at the remaining six biscuits- "What about giving Chan one of those instead?"

The Capitalist looks at him sadly, shaking his head, "Those six are mine" he says.

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Do you believe that people should be paid according to the wealth they create or according the ease with which they can be replaced?

They are exactly the same thing.

I was trying to think of a good answer to this, but Injin has already hit the nail on the head with that pithy one liner.

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Oddly enough the very rich in the US don't seem to have suffered from the increase in productivity (while other groups - particularly the lowest paid have). How do you explain that?

Globalisation creates super winner, winner, losers and super losers. The superrich are the super winner and they more or less live in a different world - that is a problem, but a different one - can't really blame China/emerging for their rise (a lot to do with flaw in banking and finance system, but that is for another day).

What concern most people is what happened to the average - an average American today certainly live better than an American in 1971. Cars a better, more variety of food, they live longer, have more entertainment, they now all get a cell phones. If you go back further, many US superrich died of simple illness back in the 18xx (e.g. Railroad tychoon Jay Gould died of TB). Pretty sure many superrich or poor who would have died in 1970 will survive today because of improvement in medical technologies.

Don't think the poor in American will do better if they were transported back into the 1971. You wouldn't really want to be back to 1971 'golden era' either.

As for the expanding wealth gap - that is for another thread.

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I think this is a bit of a straw man really- what people care about is how they are doing relative to their neighbours or their own past experience- they neither know nor care about the lives of people on distant continents.

The proposition is set like this- you western people must have less so that those eastern people can have more- this argument usually being advanced by someone whose own income has mysteriously grown massively even as they preach the inevitable decline in other peoples income. Funny how that works.

Yet if productivity is growing strongly, as it is, and capitalism is not supposed to be a zero sum game, which it isn't- then what is the basis of this argument?

It seems to me that those who are creaming off the added value are looking to point their finger somewhere else to avoid this creaming off becoming noticed.

It's like a variation of an old joke;

A Western worker, an Eastern worker and a Capitalist sit down at a table with ten biscuits on a plate.

The western worker takes his usual three, the eastern his usual one.

'Now now Fred"- says the Capitalist, taking one of the western worker's biscuits and giving it to the eastern worker, ' You can't expect to keep on having more biscuits than Chan here, can you?

Fred looks at the remaining six biscuits- "What about giving Chan one of those instead?"

The Capitalist looks at him sadly, shaking his head, "Those six are mine" he says.

If someone can make hand mode pottery for £10 a pot in the developing world, but it costs £50 in the developed world, clearly the latter is going to lose out to the former. In short, the latter is going to see his standard of living reduced due to less sales, while the former is going to have more sales.

At the same time, those not making pottery, get to buy cheaper pots, improving their* standard of living. This is why it is both a zero sum game (for the pot makers) but not a zero sum game for everyone else.

I often get the feeling that you're trying to read more into things than there is. It's as if you're trying to find new and complex reasons to justify changes which are in fact quite obvious conclusions.

EDIT: * Who may not be in the developed world either.

Edited by Traktion

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I think this is a bit of a straw man really- what people care about is how they are doing relative to their neighbours or their own past experience- they neither know nor care about the lives of people on distant continents.

Yes they do - but that is probably best solved by via cheap video-psychology and video-counselling sessions via Skype staffed by well trained and emphatic lovely lady based in India or China.

The proposition is set like this- you western people must have less so that those eastern people can have more- this argument usually being advanced by someone whose own income has mysteriously grown massively even as they preach the inevitable decline in other peoples income. Funny how that works.

Not sure why it is hard for you to get the concept of relative decline. To rephrase what you say, it should read " the average nothing special Western Joe who have had it so easy and so good for so long will now have to get rich a little bit slower so other people who work hard will be able to catch up."

The rise of the superrich has nothing to do with the rise of the middle class in the Emerging world. The superich may sometime eliminate your job, but they are certainly not competing with you for the same job - it is the 'lower floor' billions who want to better themselves who are competing with you.

Yet if productivity is growing strongly, as it is, and capitalism is not supposed to be a zero sum game, which it isn't- then what is the basis of this argument?

It is NOT. World economy is growing at real rate of around 5% even through the crisis. A lot of people in the world are living better than they were in 2008

and nearly all are living better than they were in 2000 (except maybe a few dictators who got thrown out or bankrupt property developers).

'Now now Fred"- says the Capitalist, taking one of the western worker's biscuits and giving it to the eastern worker, ' You can't expect to keep on having more biscuits than Chan here, can you?

Fred looks at the remaining six biscuits- "What about giving Chan one of those instead?"

The Capitalist looks at him sadly, shaking his head, "Those six are mine" he says.

Perhaps that is because the Western worker doesn't have the ability to program a HFT algorithm. Otherwise, I am sure Fred will reconsider.

Mind you, many entrepreneur actually earn less (sometimes for many years until the business takes off, or never) than their workers where they have to pay market rates for.

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They are exactly the same thing.

A wheeright in a village makes excellent wheels and charges a good price. Ten other wheelrights arrive the next day, set up shop and they too make excellent wheels.

The price that the original wheelright can charge for his wheels declines after the the ten other wheelrights arrive in the village.

Question: Was this drop in price caused by a decline in the workmanship of the original wheelright- or was it a consequnce of the increased competition?

They are not the same thing.

Once again- pricing power is a function of scarcity, not value added. Value added can create scarcity, but it is scarcity relative to demand that determines price.

In the above example the practical value of the wheel was the same- but the reduction of scarcity reduced it's exchange value and thus it's 'price'.

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I was trying to think of a good answer to this, but Injin has already hit the nail on the head with that pithy one liner.

To a hammer all problems look like a nail.

You need to able to embrace the idea that value in terms of exchange and value in terms of practical application are not always identical.

For example- a bottle of evian water- exchange value what? £1.50?

Now, you are lost in the desert and dying of thirst- how much is it worth to you now? It's 'shop price' is unchanged but it's 'value' to you at that moment is measured in a different frame of reference.

So which frame of reference do we use to pay someone- by the value they create or by how easy they are to replace?

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I think this is a bit of a straw man really- what people care about is how they are doing relative to their neighbours or their own past experience- they neither know nor care about the lives of people on distant continents.

True this.

but

So what?

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Don't think the poor in American will do better if they were transported back into the 1971. You wouldn't really want to be back to 1971 'golden era' either.

Well the poor don't do very well in any era do they. Over here we do not have the kind of poor they have in America , over there you really can end up on your knees . As for living longer due to medical improvments does that make you better off because it can make you live in poverty longer. How many do still die an earlie death as they cannot get access to basic health care ?

A better way to judge is to look at the average . When looking at them it is not just about what gadgets they have . This stuff is cheap as chips to what it was , but to look at how much the average person has to work to pay for the essentials . I don't know that much about life in America for the average now compared to 71. But I can look back at the average here and can compare to how they are now. Again gadgets are cheap and plentiful , but the old chesnut rears it's head again the COST OF PUTTING THE ROOF OVER THE HEAD AND PAYING THE BILLS THAT GO WITH THAT. The average person/couple/family are far worse off when it comes to this than in 71. My Dad had an average paying job with a non working wife and four kids to support , yes we had few gadgets and holidays were always taken in this country we owned a 3 bed semi in a nice area just outside London .

How many average people could do that now ? where I grew up the area was full of average people doing the same thing as my family , very few working wives and men in average jobs. People on average wages today without a wife working would have no hope to do what my Dad and others did in 71. Even with both parents in average jobs it would be almost immpossible reguardless of how many gadgets they may have .

Edited by miko

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To a hammer all problems look like a nail.

You need to able to embrace the idea that value in terms of exchange and value in terms of practical application are not always identical.

For example- a bottle of evian water- exchange value what? £1.50?

Now, you are lost in the desert and dying of thirst- how much is it worth to you now? It's 'shop price' is unchanged but it's 'value' to you at that moment is measured in a different frame of reference.

So which frame of reference do we use to pay someone- by the value they create or by how easy they are to replace?

If you are in a desert, the price goes up.

There aren't different types of value - only the one. That ios, the value that people ascribe to things.

This value is unknowable in the same way that peoples thoughts are unknowable because they are the same thing.

What we can know is price, as that is the point at which two different people meet and trade.

if I have water in a desert and I value it at £1.50 and some guy offers me £1.50 and we swap, we both win according to our own subjective value systems. The big mistake marxists like yourself make is to imagine that in this scenario one person wins and one person loses. They both win.

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I think this is a bit of a straw man really- what people care about is how they are doing relative to their neighbours or their own past experience- they neither know nor care about the lives of people on distant continents.

The proposition is set like this- you western people must have less so that those eastern people can have more- this argument usually being advanced by someone whose own income has mysteriously grown massively even as they preach the inevitable decline in other peoples income. Funny how that works.

Yet if productivity is growing strongly, as it is, and capitalism is not supposed to be a zero sum game, which it isn't- then what is the basis of this argument?

It seems to me that those who are creaming off the added value are looking to point their finger somewhere else to avoid this creaming off becoming noticed.

It's like a variation of an old joke;

A Western worker, an Eastern worker and a Capitalist sit down at a table with ten biscuits on a plate.

The western worker takes his usual three, the eastern his usual one.

'Now now Fred"- says the Capitalist, taking one of the western worker's biscuits and giving it to the eastern worker, ' You can't expect to keep on having more biscuits than Chan here, can you?

Fred looks at the remaining six biscuits- "What about giving Chan one of those instead?"

The Capitalist looks at him sadly, shaking his head, "Those six are mine" he says.

The politics of envy, which are the only remaining weapon of the left, seem to be rising again.

I am extraordinarily happy to be slightly better off this year than last year.

Many of those on the left seem to disreagrd their absolute position and only care about their relative position even if a small number of people are relatively worse off while a large number of people are massively better off in absolute terms on a global basis.

As a person who was raised in the Third World amongst absolute and abject poverty, I find smug, self centred relativism to be sickening.

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A wheeright in a village makes excellent wheels and charges a good price. Ten other wheelrights arrive the next day, set up shop and they too make excellent wheels.

The price that the original wheelright can charge for his wheels declines after the the ten other wheelrights arrive in the village.

Question: Was this drop in price caused by a decline in the workmanship of the original wheelright- or was it a consequnce of the increased competition?

Neither.

They are not the same thing.

Yeah, they are.

Once again- pricing power is a function of scarcity, not value added. Value added can create scarcity, but it is scarcity relative to demand that determines price.

In the above example the practical value of the wheel was the same- but the reduction of scarcity reduced it's exchange value and thus it's 'price'.

There is no "practical value" just value and price.

Your replacement value is identical to your wealth creation.

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To a hammer all problems look like a nail.

You need to able to embrace the idea that value in terms of exchange and value in terms of practical application are not always identical.

It's irrelevant. It doesn't matter what value you think is associated with the item, it's what people will pay for it that is important.

For example- a bottle of evian water- exchange value what? £1.50?

Now, you are lost in the desert and dying of thirst- how much is it worth to you now? It's 'shop price' is unchanged but it's 'value' to you at that moment is measured in a different frame of reference.

So which frame of reference do we use to pay someone- by the value they create or by how easy they are to replace?

The value of the stuff they create is defined by the price it is sold for. How could it be any other way, unless people are forced to pay what the creator dictates, whether they want it or not?

Therefore, the value they create is defined by whether competition can offer something cheaper or not. If others can, then they will be replaced, unless they can reduce their price to the value of what they create. Which brings us back to Injin's pithy one liner.

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Yet another inconvenient truth ......

Not truth- just a failure of framing.

It's perfectly possible to argue that a given application of skill will create a consistent practical value in the real world while at the same time accepting that it's exchange value as a commodity will fluctuate.

For example would you refuse treatment from a skilled surgeon just because a sudden glut of skilled surgeons had pushed the going rate for his work down? Would he suddenly be a worse surgeon as a result of this decline in the market value of his skills? Obviously not.

So you can see that it's pefectly possible to say that a given worker can add a consistent value in practical terms even as his share of profits declines due to a lowering of his scarcity value

These are not the same thing.

Edited by wonderpup

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A better way to judge is to look at the average . When looking at them it is not just about what gadgets they have . This stuff is cheap as chips to what it was , but to look at how much the average person has to work to pay for the essentials . I don't know that much about life in America for the average now compared to 71. But I can look back at the average here and can compare to how they are now. Again gadgets are cheap and plentiful , but the old chesnut rears it's head again the COST OF PUTTING THE ROOF OVER THE HEAD AND PAYING THE BILLS THAT GO WITH THAT. The average person/couple/family are far worse off when it comes to this than in 71. My Dad had an average paying job with a non working wife and four kids to support , yes we had few gadgets and holidays were always taken in this country we owned a 3 bed semi in a nice area just outside London .

How many average people could do that now ? where I grew up the area was full of average people doing the same thing as my family , very few working wives and men in average jobs. People on average wages today without a wife working would have no hope to do what my Dad and others did in 71. Even with both parents in average jobs it would be almost immpossible reguardless of how many gadgets they may have .

OK..but the high property prices has nothing to with globalisation/outsourcing/emerging market/ex communist block workers or the superrich right ? (more to do with British family trying to out compete each other, planning, lending criteria etc)

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To a hammer all problems look like a nail.

You need to able to embrace the idea that value in terms of exchange and value in terms of practical application are not always identical.

For example- a bottle of evian water- exchange value what? £1.50?

Now, you are lost in the desert and dying of thirst- how much is it worth to you now? It's 'shop price' is unchanged but it's 'value' to you at that moment is measured in a different frame of reference.

So which frame of reference do we use to pay someone- by the value they create or by how easy they are to replace?

In the context of your question, the answer is not at all complicated.

In a homogenous world where everyone is trying to sell bottles of Evian, the vendor is worth almost nothing as he or she is very easy to replace.

In a heterogenous world where there is only one person selling Evian in the middle of the desert, the venor is priceless.

As a country, we need to to learn how to compete. We need to stop trying to be like the Chinese and start trying to be like the Germans and the Swiss.

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It's irrelevant. It doesn't matter what value you think is associated with the item, it's what people will pay for it that is important.

The value of the stuff they create is defined by the price it is sold for. How could it be any other way, unless people are forced to pay what the creator dictates, whether they want it or not?

Therefore, the value they create is defined by whether competition can offer something cheaper or not. If others can, then they will be replaced, unless they can reduce their price to the value of what they create. Which brings us back to Injin's pithy one liner.

Indeed.

And Hayek says the value of thing can only be as perceived by a man/women's mind. Someone who hate the taste of Evians will perhaps have to be paid (A negative price) to drink it, while a thirsty man will pay much money to have it.

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OK..but the high property prices has nothing to with globalisation/outsourcing/emerging market/ex communist block workers or the superrich right ? (more to do with British family trying to out compete each other, planning, lending criteria etc)

It does

High property prices push the cost of everything up in this country . Including the cost of premisis for bussiness , wages , taxes benefits ect the list is endless. Which makes our companies outsource their manufacturing and services. To compete in this global market we need to get our costs down the best and biggest way to do this is cut the cost of housing.

I don't think the average British family out compete each other they just have to pay the false market price for the best place that they can afford.

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I am under the impression that the one key reason for improving standards of living for the masses was the rise of communism in other parts of the world.

Is this something you think is well off the mark?

Yes - any destruction of your competitors is beneficial to you.

However, outsourcing was not invented in year 2000 though. Britain has been outsourcing to the colonies as soon as it had the chance (probably since 1700) and yet we don't witness a 'race to the bottom' (else by 1900, British wage would have been the same as wages in say, The Crown Dominion of India). Further, an average man/women lived as time passes.

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  • 317 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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