Joe Stiglitz: Why the world economy's malaise continues

Thu Jan 14 19:02:48 CST 2016

It's a little dated, but this post is still quite relevant, apparently:

http://krugman.blogs.nytimes.com/2011/01/24/the-war-on-demand/

On Thu, Jan 14, 2016 at 4:19 PM, David Morris <fqmorris at gmail.com> wrote:

> That's what I thought.  A very biased author without a story, confusing
> everything in order to attack excess debt.
>
> Thanks,
> David Morris
>
>
> On Thursday, January 14, 2016, Robert Mahnke <rpmahnke at gmail.com> wrote:
>
>> 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>
>>>>> 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>
>>>>>>> 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>
>>>>>>>> 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
>>>>>>>>> > 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> wrote:
>>>>>>>>>>
>>>>>>>>>>> Why do you say that?
>>>>>>>>>>>
>>>>>>>>>>> On Thu, Jan 14, 2016 at 12:37 PM, ish mailian <
>>>>>>>>>>> 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> 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> 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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