Saturday, March 30, 2013

Comparative Advantage?


Even Ricardo never suggested that Britain give up making wine altogether, or Portugal textiles.

In fact no country has ever succeeded on exports alone, without a healthy internal economy.

And no country has ever succeeded in benefiting from an export economy without State support of the export sector.

Of course, our pursuit of pure free markets has worked so well? How much has our number of people in poverty increased by, again?
Ha-Joon on free trade.
""Almost all of today’s rich countries used tariff protection and subsidies to develop their industries. Interestingly, Britain and the USA, the two countries that are supposed to have reached the summit of the world economy through their free-market, free-trade policy, are actually the ones that had most aggressively used protection and subsidies.

Contrary to the popular myth, Britain had been an aggressive user, and in certain areas a pioneer, of activist policies intended to promote its industries. Such policies, although limited in scope, date back from the 14th century (Edward III) and the 15th century (Henry VII) in relation to woollen manufacturing, the leading industry of the time.  England then was an exporter of raw wool to the Low Countries, and Henry VII for example tried to change this by taxing raw wool exports and poaching skilled workers from the Low Countries.

Particularly between the trade policy reform of its first Prime Minister Robert Walpole in 1721 and its adoption of free trade around 1860, Britain used very dirigiste trade and industrial policies, involving measures very similar to what countries like Japan and Korea later used in order to develop their industries. During this period, it protected its industries a lot more heavily than did France, the supposed dirigiste counterpoint to its free-trade, free-market system. Given this history, argued Friedrich List, the leading German economist of the mid-19th century, Britain preaching free trade to less advanced countries like Germany and the USA was like someone trying to “kick away the ladder” with which he had climbed to the top.""

Monday, March 25, 2013

Kean on the "Roving Cavaliers of Credit" or How Bankers got to Rule the World.


For anyone who is still wedded to the idea that banks do not “print money” and push up the price of assets, totally unrestrained by the size of the economy.

Kean on the "Roving Cavaliers of Credit" or How Bankers got to Rule the World.
“”In some ways these conclusions are unremarkable: banks make money by extending debt, and the more they create, the more they are likely to earn. But this is a revolutionary conclusion when compared to standard thinking about banks and debt, because the money multiplier model implies that, whatever banks might want to do, they are constrained from so doing by a money creation process that they do not control.
However, in the real world, they do control the creation of credit. Given their proclivity to lend as much as is possible, the only real constraint on bank lending is the public’s willingness to go into debt. In the model economy shown here, that willingness directly relates to the perceived possibilities for profitable investment—and since these are limited, so also is the uptake of debt.
But in the real world—and in my models of Minsky’s Financial Instability Hypothesis—there is an additional reason why the public will take on debt: 

the perception of possibilities for private gain from leveraged speculation on asset prices.”"

Kean describes exactly the real world effects of current monetary policy.

Both Cyprus and Greece show how  Democracy can be overturned at the wim of bankers trying to protect their income, from pushing up asset prices, with loans they should never have been allowed to make, with money they have produced out of thin air. A power only a democratically controlled Government should have.

Recent moves towards legislation, to take money from us to bail out failing banks, again, by the New Zealand Government , shows who our politicians really work for!

Refuting false arguments against democracy.


"I don't think referenda should be binding".

If a referenda is not binding. THEN WE DO NOT HAVE DEMOCRACY.
All the arguments against BCIR and real democracy are the same ones that were made by those in power at the time against citizens, women, non-aristocracy or non-landowners having a vote, at all.
There is absolutely no moral, or justifiable arguments against democracy.
Just self serving bullshit from those who want their turn in Dictatorship.
As NRT says. ” Even if they are wrong they are still our decisions to make”.
Why should 160 odd marginally competent, power hungry, ill educated twits in Parliament rule the rest of us.
We still let them do it despite constant reminders of how incapable politicians, of all stripes, really are.

"We should not allow mob rule".

In fact management studies tell us that good decision making happens when as many alternatives as possible are considered.

Decisions are made by those who have to implement them.

The more people involved in a decision the better it is likely to be.
Funny that the most successful economies have workers representatives on their boards.

The most successful economy, Switzerland has had BCIR and democratic control of Government for a century.
And the most successful corporations are co-ops. Fonterra!
And the NZ old boys club of self selected directors, overpaid managers and incompetent politicians are heading us for the third world.

Time we had democratic control of the self serving incompetents who are arrogant enough to think they should dictate to the rest of us. Changing our Government to a democracy, Swiss style, instead of a three yearly rotating dictatorship, would be a good start.
"Government by referendum will make decisions that are wrong".

As if Government by politicians doesn't. 
What these people are really saying is the majority may make decisions they do not agree with.
Well. If they genuinely think the majority are wrong then they are as free as anyone else to pursuade them otherwise.

Evidence shows that, where decisions are made by referenda, outcomes are better than when they are made by any minority, including those with political power. Those which turn out to be wrong are more likely to be reversed and there is much more consideration given to legislation when it may be overturned by a vote.