Real Economics. (What the ACTUAL Experts say):

@Thinkerbell Sadly, I agree with you. Though maybe for different reasons.I think the Democrats have been bought by the same group that own the Replicans. The lobbiests travel both sides. But remember, Stiglitz is an academic, which means he deals in principles, rather than practicalities.. And economics only works if people keep their sticky fingers out of the machinary.
My exposure was more at the practical level, answering questions of "What happens if.....?"Democrat policies as they are written would be better for more Americans, no doubt. But getting the people to accept the lower living standard and loss of international status is virtually unthinkable, this side of "The Walking Dead".😷

@whowasthatmaskedman

Well, economics is not called the dismal science for nothing.

One thing one learns in the hard sciences is that if a theory (in the colloquial sense) does not work in practice, then it's not a good theory.

@Thinkerbell Maybe Economics needs to be thought of as a map reading exercise. Stray from the path at your peril.. But I can use it to show anyone with a reasonable IQ how America took a world dominating hand and blew it..😷

@whowasthatmaskedman

When reading a poem by Frost,
'Tis best to pay heed to the cost.
If I hadn't forsaken
That worn road not taken,
I WOULDN'T be SO f — cking lost ?

Actually, the impression I've always had with long-term economics is that when too many people start following the prescribed path, the path changes, often unpredictably.

@Thinkerbell "By George! I think you've got it!" Just about everyone (and I wont play favourites here. This applies to left and right) Thinks they can "improve " on the free market. Especially free Marketeers. After the dot com bubble burst, Clinton decided to save the nation from recession by stimulating Real esate and contruction. Enter Freddy and Fanny and Ninja loans And the nation was bouncing from one crisis to the next since then. And before. The only way to mess with the economic levers is long term. And then only with money you actually have to invest. Keynsian economics says its OK to borrow in hard times. But it has to be paid back. Like War Bond drives..But the economy is like a giant super complex pin ball machine. And you cant shift the table or it knows and tells everyone you are cheating, no matter what the score..
Building barriers to entry, applying tariffs, allowing subsidies are all "tilts"😷

@whowasthatmaskedman

I have a question, Kemo Sabe:

How do the Japanese get away with having a national debt that is 2x their annual GDP?

@Thinkerbell Well, I am glad you asked, because the answer highlights how America did it so long..Japan have an global economic empire that manufactures things like cars all over the world. Thailand, Brazil, America all have last export driven industries where a Japanese car never sees Japan.. And the profits are repatriated and the operating costs defrayed globally. Then there are operators like Sony. And banks.. Now there is more to it in that Japanese society has different characteristics. The size of the country V transport and infrastructure allow different solutions and expectation and the government has more say through the culture of the people in price gouging by some businesses. There was a famous example of an MRI machine being installed in a large US hospital costing ten times what the same spec machine make in Japan cost a similar Japanese hospital. But thats old now..
The relevence to America is that the US used to have a similar octopus grip in world industry with Ford GM and Chrysler (not to mention Coca Cola and Pepsi) in many countries And when your companies profit overseas and sell to third parties, those numbers usually dont show in the GDP of the parent company. They show in the production of the host nation. So America used to have a global business empire that repatriated profits to the US. But a lot ot that is gone now, while Japan has much of theirs...And that turbocharges their GDP..😷

@whowasthatmaskedman

Well, let's see now, Kemo Sabe.

America is in trouble because (among other things) the national debt is about equal to its annual GDP.

But Japan's debt is about 2x GDP. Are you saying that Japanese enterprises abroad are fully equal to (or greater than) their domestic enterprises in production? Aside from cars, I am not aware of many products manufactured in the US by Japanese firms.

@Thinkerbell Because this is how lightly debt is perceived on the global stage. What exactly are the options for countries that are owed $$ from other countries? There are no suitable remedies.

@Thinkerbell This might help give you some background. However, Japan does this globally, with plants all through Asia and South America, where they are powerful player in the local economy and their production is shipped globally. So a Thai made Toyota cen end up in the US, or South Africa. and the profits end up in Japan.. I might also add that until recently Japan had by law a fantastically low spend on its own defence..😷
https://www.jetro.go.jp/ext_images/usa/2023/Japan-US-Investment-Report/Japans_US_Investment_Dynamics2023.pdf

@whowasthatmaskedman

Yes, but my question was, does the TOTALITY of Japanese production conducted outside of Japan (not just in the US) equal or exceed Japanese domestic production? This is what I understood your explanation of Japan's "shadow GDP" to be all about.

And having to spend more on its own defense will certainly exacerbate Japan's national debt, unless cuts are made in other areas or taxes are raised.

@Thinkerbell I dont have the full numbers. But my gut tells me, Yes..Or close. Bear in mind the Japanese economy has been fragile internally. with the price of real estate/housing being horrendous there for some time. So there is a cost to the population.😷

@whowasthatmaskedman

I'm having a hard time understanding this.
According to this table I found, Japan's outward Foreign Direct Investment (FDI) is about 36% of its GDP, about the same as that of the US. Japan's balance of trade is better than the US's, but the BIG difference is that the inward FDI is only 4.4% in Japan, but it's over 44% in the US.
Is THAT what is making the difference?


https://worldinsight.com/news/business/globalization-of-japanese-economy-reality-and-impacts/

P.S. Off the subject, but I noticed that the World balance of trade shows more exports than imports.
Does the difference come from lost or stolen goods? Or is there perchance a trade surplus with Mars? 🤭

@Thinkerbell That difference in the world balance of trade simply means that more nations rely on export for GDP than import.. The two numbers are not supposed to balance.Some nations manufacture a lot in country for their own consumption and some nations "export" services they charge for, But no physical exchange takes place. And again. If a car is built in Brazil and shipped to Saudi Arabia, it may appear in Brazils GDP, even though it was a Toyota and the parent nation repatreated profits.. Sony can release a movie that makes hundreds of millions worldwide.I have no idea if all that money passes through America on its way to Japan, or is transferred direct..😷

@whowasthatmaskedman

But according to THIS website (below), there are more world IMPORTS than exports, rather than vice versa.

"According to the World Trade Organisation, the total value of world trade in goods was over $15 trillion in 2016. Beneath the surface, the figures are a little bit more interesting showing that all the countries in the world imported $350 billion more goods than they exported. Despite the economist Paul Krugman working out the (tongue in cheek) economics of interstellar trade, this difference is not because we are importing goods from extra terrestrial life forms.

Rather there are some long-standing challenges in properly measuring trade flows. These problems are even more obvious when looking at the trade measured by each country: there are often ‘asymmetries’ when one country’s imports do not match up with the exports of another country. For example, the UK’s exports to Australia might not match with the Australian estimates of imports from the UK."

https://blog.ons.gov.uk/2017/07/18/measuring-trade-why-does-the-world-seem-to-import-more-than-it-exports/

So according to this source, the difference is simply a matter of different (or faulty? or fudged?) methods of estimating exports and imports.

I have a creeping suspicion that (much like individual countries' carbon emission estimates) there is a LOT of politics involved. 🤫

@Thinkerbell Carbon Credits as you say are fraught. We have all this coal that we can dig up and sell. To anyone willing to cop the carbon penalties for us. And when value is added in more than one place, how is that apportioned with vertically integrated business. An Indian company in Australia mines coal, and ships it to China to be moved to Europe and the US as car components..The point is that in the end all this trade gets expressed as money. And thats a whole new can of worms, with money being treated as a commodity in one place, a store of value in another and "created" in yet another by printing it.. Until we can agree a single common language for these things keeping track of the whole picture is impossible. However, returning to the Japanese example, the world agrees that Japan can pay its bills.. And the more or less steady exchange rate situation Japan enjoys seems to back that claim..😷

@whowasthatmaskedman

Well, the US hasn't defaulted on its debts yet either, unless you consider currency inflation a form of default (Japan isn't free of that either).

Speaking of inflation, I'm currently reading a book, Germany 1923, by Volker Ullrich, a practically week-by-week study of the year of the hyperinflation in Germany. I find it spellbinding.

And particularly astonishing to me is how suddenly the inflation was ended with the establishment of the Rentenmark (i.e., the "mortgage mark"), when the new currency was somehow backed by land and other property; I'm not sure yet exactly how that worked, but work it did, and made possible the golden six years of the Weimar Republic, until the Great Depression spelled its doom. 😢

@Thinkerbell Yes. Any event that breaks the cycle is able to freeze the moment. But this was well before the days of the global economy and the rise of the $US..And it had the will of everyone to escape that hyperinflation and the force of law to back it. It really was a last resort.. I can give you a thousand words on why it could never happen to America in its current form. But the bottom line is, not while the country is being run by the people running it, who are profiting the most from this,😷

@whowasthatmaskedman

@Thinkerbell Exactly. Who would have thunk the the nation that put men on the moon 50 years ago would be in this state right now..😷