Joe Stiglitz: Why the world economy's malaise continues

Thu Jan 14 17:58:32 CST 2016

That piece (the Japan Times op-ed from 2012) is gobbledegook.  In the right
circumstances, it makes a lot of sense to talk about a bubble creating over
investment in certain areas, leading to an excess of supply over what a
market in equilibrium (not a bubble) will demand.  Arguably, you have had
this situation in the auto industry, where national governments subsidize
their own makers. But to say that this is happening across the global
economy is nonsense, a slick label without a story behind it.

The author says there is "excess labor"?  What does that mean?  Too many
people have been born?  Persuaded to enter the economy instead of loafing
in unemployment.  You have high unemployment because there aren't enough
jobs, which is to say there is insufficient demand for the labor we have.

The author also talks about excess capacity.  How does he know the problem
is excess capacity instead of absent demand?  "Prices of digital home
appliances are going down at an accelerating speed, and a new model is sold
at a 50 percent discount within six months of its launch. This is proof
that the global economy is in excess supply."  If you think that's proof of
anything other than sloppy thinking, I have a bridge to sell you.

His third problem is excess debt, and there the reason for this piece is
clear.  The author is hostile to fiscal stimulus, and clearly has reasoned
backwards to attack the case for it.  The case for stimulus, and what we
could do about the secular stagnation, can be another conversation, but the
only way to read this piece and to think that it rebuts what Stieglitz
wrote is to have started with that as a belief and to have searched for
confirmation.

On Thu, Jan 14, 2016 at 3:19 PM, ish mailian <ishmailian at gmail.com> wrote:

> Maybe this will help?
>
>
> http://www.japantimes.co.jp/news/2012/11/05/business/excess-supply-not-lack-of-demand-weighing-on-the-global-economy/#.VpganfkrIb1
>
> On Thu, Jan 14, 2016 at 5:41 PM, Mike Weaver <mike.weaver at zen.co.uk>
> wrote:
>
>> It's not really about production, it's about distribution.
>>
>> On 14/01/2016 22:12, David Morris wrote:
>>
>> Does the article say deceased demand isn't the cause of over supply?
>> Since I can't read it...
>>
>> David Morris
>>
>> On Thu, Jan 14, 2016 at 4:08 PM, ish mailian <ishmailian at gmail.com>
>> wrote:
>>
>>> OK, but if demand is not declining, the price level is not increasing,
>>> the story is supply. That's the story, Gerry.
>>>
>>> On Thu, Jan 14, 2016 at 4:59 PM, David Morris < <fqmorris at gmail.com>
>>> fqmorris at gmail.com> wrote:
>>>
>>>> Lack of demand is one of the basic causes of over-supply (glut), and
>>>> that lack of demand might be caused by any number of things, like lack of
>>>> money (liquidity). Overproduction (exceeding demand) might be another
>>>> cause.  Cheap money would not be one of its causes.
>>>>
>>>> David Morris
>>>>
>>>> On Thu, Jan 14, 2016 at 3:42 PM, Robert Mahnke <rpmahnke at gmail.com>
>>>> wrote:
>>>>
>>>>> When demand exceed supply, how do you distinguish between "a supply
>>>>> story" and a demand story?
>>>>>
>>>>> On Thu, Jan 14, 2016 at 1:31 PM, ish mailian < <ishmailian at gmail.com>
>>>>> ishmailian at gmail.com> wrote:
>>>>>
>>>>>> Sorry about that; I thought it was a free article. It's an excellent
>>>>>> article. And yes, it is focused on China, but the overproduction is not
>>>>>> just a China story.
>>>>>>
>>>>>> The super capacity that was built to meet the expected super demand
>>>>>> of the developing and emerging growth economies, in China and elsewhere, is
>>>>>> the story, a supply story.
>>>>>>
>>>>>> On Thu, Jan 14, 2016 at 4:07 PM, David Morris < <fqmorris at gmail.com>
>>>>>> fqmorris at gmail.com> wrote:
>>>>>>
>>>>>>> This article is behind a paywall, but if the first two sentences
>>>>>>> portend its content, then it seems to be saying that a glut of Chinese
>>>>>>> goods is slowing growth.  More demand would be the solution to this
>>>>>>> problem.  Lack of demand is its cause.
>>>>>>>
>>>>>>> David Morris
>>>>>>>
>>>>>>> On Thu, Jan 14, 2016 at 2:56 PM, ish mailian <
>>>>>>> <ishmailian at gmail.com>ishmailian at gmail.com> wrote:
>>>>>>>
>>>>>>>> Because it's true.
>>>>>>>>
>>>>>>>>
>>>>>>>> <http://www.wsj.com/articles/glut-of-chinese-goods-pinches-global-economy-1433212681>
>>>>>>>> http://www.wsj.com/articles/glut-of-chinese-goods-pinches-global-economy-1433212681
>>>>>>>>
>>>>>>>> On Thu, Jan 14, 2016 at 3:49 PM, Robert Mahnke <
>>>>>>>> <rpmahnke at gmail.com>rpmahnke at gmail.com> wrote:
>>>>>>>>
>>>>>>>>> Why do you say that?
>>>>>>>>>
>>>>>>>>> On Thu, Jan 14, 2016 at 12:37 PM, ish mailian <
>>>>>>>>> <ishmailian at gmail.com>ishmailian at gmail.com> wrote:
>>>>>>>>>
>>>>>>>>>> The world is not not suffering from too little demand but with
>>>>>>>>>> too much supply and with too much capacity.
>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>> On Thu, Jan 14, 2016 at 3:00 PM, David Morris <
>>>>>>>>>> <fqmorris at gmail.com>fqmorris at gmail.com> wrote:
>>>>>>>>>>
>>>>>>>>>>> The economics of this inertia is easy to understand, and there
>>>>>>>>>>> are readily available remedies. The world faces a deficiency of aggregate
>>>>>>>>>>> demand, brought on by a combination of growing inequality and a mindless
>>>>>>>>>>> wave of fiscal austerity. Those at the top spend far less than those at the
>>>>>>>>>>> bottom, so that as money moves up, demand goes down. And countries like
>>>>>>>>>>> Germany that consistently maintain external surpluses are contributing
>>>>>>>>>>> significantly to the key problem of insufficient global demand.
>>>>>>>>>>>
>>>>>>>>>>> At the same time, the U.S. suffers from a milder form of the
>>>>>>>>>>> fiscal austerity prevailing in Europe. Indeed, some 500,000
>>>>>>>>>>> <http://thinkprogress.org/yglesias/2011/07/08/263588/the-conservative-recovery-continues-2/> fewer
>>>>>>>>>>> people are employed by the public sector in the U.S. than before the
>>>>>>>>>>> crisis. With normal expansion in government employment since 2008, there
>>>>>>>>>>> would have been two million more.
>>>>>>>>>>>
>>>>>>>>>>> On Thu, Jan 14, 2016 at 1:39 PM, Robert Mahnke <
>>>>>>>>>>> <rpmahnke at gmail.com>rpmahnke at gmail.com> wrote:
>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>> <http://www.huffingtonpost.com/joseph-e-stiglitz/world-economy-2016_b_8908560.html?utm_hp_ref=world>
>>>>>>>>>>>> http://www.huffingtonpost.com/joseph-e-stiglitz/world-economy-2016_b_8908560.html?utm_hp_ref=world
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>
>>>>>>>>
>>>>>>>
>>>>>>
>>>>>
>>>>
>>>
>>
>>
>
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