Joe Stiglitz: Why the world economy's malaise continues

Fri Jan 15 01:06:02 CST 2016

Yeah, he's right about the war on demand, but I'm not talking about that.

On Thu, Jan 14, 2016 at 8:02 PM, Robert Mahnke <rpmahnke at gmail.com> wrote:

> 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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