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ElPapasito

#138: Inflexion point - NOW WE KNOW – WORLD PROSPERITY IS FALLING

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A must read from the briliant Tim Morgan on Surplus Energy Economics

https://surplusenergyeconomics.wordpress.com/

Here is a small quote, but do go and read the whole article, and support alternative economic thinking...

[snip] World prosperity, thus calibrated, was $83.5tn last year, an increase of 24% since 2000.

Unfortunately, two other things have happened over that period – debt has more than doubled (+125%), and population numbers have expanded by 22%. The former number means that, worldwide, people have 85% more debt now than they had in 2000. The population increase means that they have become only marginally (+2.4%) more prosperous over the same period.

The plateau in overall world prosperity per person since 2000 has, of course, masked starkly divergent regional trends. Whilst people have become 120% more prosperous in China, and 87% better off in India, the citizens of most Western economies have been getting poorer, typically since the early 2000s.

Prosperity in the United Kingdom, for example, was 10.2% lower last year than it was in 2003, whereas Americans have become 7.3% less prosperous since 2005. The average Italian is 13% poorer now than he or she was back in 2001.

[snip] We can, though, conclude that, from here on, prosperity becomes at best a zero-sum game, stripping away the logic of ‘mutual benefit’ founded on the Ricardian calculus of comparative advantage.

This “transition to zero-sum” logically marks the start of three new trends -the retreat of ‘globalism’, the rise of more nationalistic politics, and a new and growing emphasis on redistribution. Beyond redistribution, the political emphasis now is likely to swing towards opposition to immigration, based on perceptions that this process dilutes prosperity.

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53 minutes ago, ElPapasito said:

The population increase means that they have become only marginally (+2.4%) more prosperous over the same period.

124/122 = 1.016 = 1.6%

 

54 minutes ago, ElPapasito said:

political emphasis now is likely to swing towards opposition to immigration, based on perceptions recognition that this process dilutes and destroys prosperity.

 

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16 minutes ago, Locke said:

political emphasis now is likely to swing towards opposition to immigration, based on perceptions recognition that this process dilutes and destroys prosperity.

no the snowflakes do not get it sadly

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1 hour ago, ElPapasito said:

A must read from the briliant Tim Morgan on Surplus Energy Economics

[snip] We can, though, conclude that, from here on, prosperity becomes at best a zero-sum game, stripping away the logic of ‘mutual benefit’ founded on the Ricardian calculus of comparative advantage.

Comparative advantage relates to trade. How does he know we have become poorer due to trade? For one thing we don't have free trade. We do have various other interventions and deviations from Richardianism which could have made us less prosperous.

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2 hours ago, Kosmin said:

. We do have various other interventions and deviations from Richardianism which could have made us less prosperous.

You mean like absolutely ridiculous low interest rates which drop for any excuse whatsoever , and lead to crowding out of real investments with price speculation?

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6 hours ago, ElPapasito said:

A must read from the briliant Tim Morgan on Surplus Energy Economics

https://surplusenergyeconomics.wordpress.com/

Here is a small quote, but do go and read the whole article, and support alternative economic thinking...

[snip] World prosperity, thus calibrated, was $83.5tn last year, an increase of 24% since 2000.

Unfortunately, two other things have happened over that period – debt has more than doubled (+125%), and population numbers have expanded by 22%. The former number means that, worldwide, people have 85% more debt now than they had in 2000. The population increase means that they have become only marginally (+2.4%) more prosperous over the same period.

The plateau in overall world prosperity per person since 2000 has, of course, masked starkly divergent regional trends. Whilst people have become 120% more prosperous in China, and 87% better off in India, the citizens of most Western economies have been getting poorer, typically since the early 2000s.

Prosperity in the United Kingdom, for example, was 10.2% lower last year than it was in 2003, whereas Americans have become 7.3% less prosperous since 2005. The average Italian is 13% poorer now than he or she was back in 2001.

[snip] We can, though, conclude that, from here on, prosperity becomes at best a zero-sum game, stripping away the logic of ‘mutual benefit’ founded on the Ricardian calculus of comparative advantage.

This “transition to zero-sum” logically marks the start of three new trends -the retreat of ‘globalism’, the rise of more nationalistic politics, and a new and growing emphasis on redistribution. Beyond redistribution, the political emphasis now is likely to swing towards opposition to immigration, based on perceptions that this process dilutes prosperity.

Big fan of Dr Tim. The only technical nitpick I have with the argument here is that he seems to be treating GDP as if it were a stock rather than a flow. Monetarists commit the same cardinal error, which is why monetarism has failed wherever it's been attempted. It's the flows and accelerations of credit that make the difference between growth and contraction, not the (static) quantum of debt. I'd love to see the above written in the language of hydrodynamics, perhaps with laminar and turbulent flows replacing the terms 'clean GDP' and 'credit effect'?

His conclusions re. relative prosperity are manifestly correct, however. The idea that privatisation and imported profits would generate service sector jobs in sufficient quantity to replace the manufacturing jobs transplanted via globalisation to the Far East was never supported by anything more than wishful thinking. The Chinese and Japanese in particular have grown rich by exploiting the open-ness of western economies while fiercely maintaining the insularity of their own.

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I find Tim Morgan's work very interesting too.  I bought his book as a present for quite a few of my friends!

Like any good scientist, he has observed a phenomenon, constructed a hypothesis to describe it and used that hypothesis to make a prediction.  Now all we have to do is wait to see whether, when and how that prediction will come to pass.

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7 hours ago, Will! said:

I find Tim Morgan's work very interesting too.  I bought his book as a present for quite a few of my friends!

Like any good scientist, he has observed a phenomenon, constructed a hypothesis to describe it and used that hypothesis to make a prediction.  Now all we have to do is wait to see whether, when and how that prediction will come to pass.

Or not

he seems a mediocre theorist, just wants to make his fortune by selling books

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On 21/11/2018 at 13:33, ElPapasito said:

A must read from the briliant Tim Morgan on Surplus Energy Economics

https://surplusenergyeconomics.wordpress.com/

Here is a small quote, but do go and read the whole article, and support alternative economic thinking...

[snip] World prosperity, thus calibrated, was $83.5tn last year, an increase of 24% since 2000.

Unfortunately, two other things have happened over that period – debt has more than doubled (+125%), and population numbers have expanded by 22%. The former number means that, worldwide, people have 85% more debt now than they had in 2000. The population increase means that they have become only marginally (+2.4%) more prosperous over the same period.

The plateau in overall world prosperity per person since 2000 has, of course, masked starkly divergent regional trends. Whilst people have become 120% more prosperous in China, and 87% better off in India, the citizens of most Western economies have been getting poorer, typically since the early 2000s.

Prosperity in the United Kingdom, for example, was 10.2% lower last year than it was in 2003, whereas Americans have become 7.3% less prosperous since 2005. The average Italian is 13% poorer now than he or she was back in 2001.

[snip] We can, though, conclude that, from here on, prosperity becomes at best a zero-sum game, stripping away the logic of ‘mutual benefit’ founded on the Ricardian calculus of comparative advantage.

This “transition to zero-sum” logically marks the start of three new trends -the retreat of ‘globalism’, the rise of more nationalistic politics, and a new and growing emphasis on redistribution. Beyond redistribution, the political emphasis now is likely to swing towards opposition to immigration, based on perceptions that this process dilutes prosperity.

Putting numbers to "prosperity" is nonsense. Depending on how you cut it you could get any answer from -20% to +20%. Meaningless. Even the total amount of debt in the world, which is at least in principle well defined, is unlikely to be accurate. There's no way anyone can know everyone else's dealings and at best it's just going to be a vague statistical estimate with uncertain uncertainties. 

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  • 140 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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