Monday, December 23, 2013
Why it pays to be uncompetitive.
Hudson on form. He says 75% of family budgets go on housing, debt service, taxes and medical care. No longer does the price of grain/bread determine the price of labour (as in Ricardo). Relevant now is a rent theory of international trade instead of a cost of production theory of international trade competitiveness. The 1% make capital gains and interest by owning land and lending money. 'Economies of scale' now means the ability to control the market and extort economic rent. Every country is trying to be high cost (and uncompetitive) because being high cost means that somebody can borrow money against expensive assets and leave somebody else holding the bag, And now when bankruptcy looms the 1% (bondholders) are first in line for payment, ahead of depositors and pension funds.