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Expecting the return of the British Empire..

..any day now.  Maybe I'll get a job as a smithy or maybe I could be a tulip farmer.  Hey, it's all just a cycle right?

I hope I live long enough.

drinking the kool aid
Sunday, June 15, 2003

All roads lead to Bangalore and St. Petersburg.

I don't think Joel has a f#$king clue what is going on in the corporate world these days.

Comrade Binar
Sunday, June 15, 2003

Yeah, because someone running a successful, profitable company in an industry full of failed and failing businesses couldn't possibly know what he's talking about.

Whapow!
Sunday, June 15, 2003

My uncle runs a milk bar. Maybe I should ask him for advice on what the fortune 500 companies are going to do too?

And the horse you rode in on
Sunday, June 15, 2003

I think he does have a fucking clue, because he's right. The US economy is poised for a massive surge in both employment and economic growth, with the problems on the upside, not the downside.

The stock market is climbing, despite a number of bad economic and socal reports. The US dollar has decreased in value, making doing business in the US more attractive, especially in manufacturing. Temp and contract companies are seeing a year-over-year increase of 10%. Multiple tax cuts to both individuals and businesses. The ability to write off a larger portion of assets over a longer period of time (including software). A recession that's 2 years long - signifigantly longer than the average.

This all adds up to "good times ahead". So you can spew FUD, but the reality is that there is a cycle, and we're at the end of a bad one and the beginning of a good one.

FWIW, we've had 6 months of unheard of sales (on the upside) of our software, in an industry that's the hardest hit by a recession: employment. It's only getting better (this is going to be a record month for us).

Tim Sullivan
Sunday, June 15, 2003

Comfortable people often pontificate about the plight of the average man, citing statistics and trends to their pals while they smoke cigars in the local club.  Tulip craze over? All those lazy whiners should retool for the next craze!  As if millions of people can simply flip a switch or turn their lives on a dime to suit current economic trends.

The reason the belief "things will never change" is an indicator of an upturn, is because it reflects of desperation.  It means enough people have given up or have sold everything and are now pimping themselves out for $8.50 an hour that it fuels economic growth.  Of course, in the meantime it means that many people have had their lives destroyed permanently. But hey, I'm alright jack!

There is a confusion between cycles in themes and cycles in economies.  An economy may return and surpass its previous measure, but that doesn't guarantee that any particular segment of an economy will return to its previous state.  A bust in an industry doesn't automatically mean it will boom again.  Cycles don't guarantee that an economy won't bust and stay bust, how are the japanese doing these days?

What I find most absurd is the implication that the economy is somehow independant of reality. It's almost as though growing food is entirely unrelated to eating, that even though we may grow nothing populations will continue to rise.  The Incas were once a booming civilization, until they overworked the land and starved themselves into oblivion.

There is also this contradictory notion that economic cycles continue in perpetuity, in other words, nothing ever changes. If that were the case then history would not be replete with examples of fallen civilizations and crumbled economies. Change mostly happens slowly enough for people to fool themselves into thinking that nothing changes.

Another question is, who is to say where we are in the boom-bust cycle?  Perhaps we are still in a post WWII boom, and this current recession is the beginning of a long slide back to poverty.  Depending on your perspective the entire boom-bust cycle becomes essentially meaningless.

cycle-o-matic
Sunday, June 15, 2003

milk bar?

X. J. Scott
Monday, June 16, 2003

was under the impression it was still going strong - they re-branded - new name, new logo (same colours mind), moved headquarters and wrote a new 'vision statement' ...

if you need proof - the french spent their last 500 years of foreign policy avidly disrupting anything the British did, they've just noticed the rebranding and started against the new co.

blargle
Monday, June 16, 2003

>>Another question is, who is to say where we are in the boom-bust cycle? 

People in the future.

Yanwoo
Monday, June 16, 2003

"As if millions of people can simply flip a switch or turn their lives on a dime to suit current economic trends."

For better or worse, this is the American Way.  And it has resulted in the most powerful and most prosperous country in the history of the world.  In Europe, and to some extent Japan, they try to maintain more stability in people's lives by making it hard to fire people and creating immense social safery nets.  The downside is less risk-taking, a less responsive economy, and therefore less total wealth.  Japan is trying to avoid major disruptions in their own way by continuing to prop up a collapsed banking system.

As the saying goes:  Capitalism is the unequal distribution of wealth.  Socialism is the equal distribution of the lack of wealth.

Jim Rankin
Monday, June 16, 2003

"Another question is, who is to say where we are in the boom-bust cycle?"

It would be interesting to see where Joel gets his stats that tell him that the economy has been cyclical for 100's of years.  Joel?  Anyone?

Jim Rankin
Monday, June 16, 2003

Every new military empire thinks it's the latest and greatest in the history of the world.  Blah.  WWII was great for the US.  Let's see what China's like in some decades.

anonymous
Monday, June 16, 2003

The stats go back to 1811 at least. They are normally asynchronous however. The Great Depression never touched most of Asia.

Keynes developed a way of mitigating them, based on governments spending when the economy is in depression and saving when it is not. This broke down to some extent because of globalization, but even more so because governments didn't bother to save when the going was good, and so had nothing to spend when it got bad.

In general recessions in the US and Europe are much less pronounced than in other parts of the world. Russia's GNP declined vertiginiously during most of the nineties, and the effects of recession in the Asian economies and parts of Latin America have been brutal.

I would like to know where the idea that the US's supposed lack of a safety net has resulted in it being much richer. Comparative figures are hard to draw meaning from because the dollar fluctuates so wildly, but I have not noticed a big increase in the difference between GNP per capita in the EU and the US over the last 30 years. And what is worth remembering is that the average real wage in the US is lower now than in 1970. Nearly all the increase in wealth has gone to the already well-off.

Stephen Jones
Monday, June 16, 2003

Why is it that it is all right for people to work at $8.50 an hour (or even $5.50 an hour 'cos we can't increase the minimum wage) unless they are the same kind of people as you, in which case it suddenly becomes "pimping themselves out "?

Stephen Jones
Monday, June 16, 2003

Perhaps we should all commit suicide now, to save some resources for the rich.

Basil Brush
Monday, June 16, 2003

"Comparative figures are hard to draw meaning from because the dollar fluctuates so wildly, but I have not noticed a big increase in the difference between GNP per capita in the EU and the US over the last 30 years."

Well here's some figures from http://www.worldbank.org/depweb/english/modules/economic/gnp/data.html (you need to click on each region individually), for 1998.

The U.S. is number one in GNP/capita of $29,240 and "purchasing power" of $29,240 (the U.S. is evidently the benchmark).

Some other countries "purchasing power" per capita:

France  $21,214
Germany $22,062
Italy $20,365
Norway $26,196 (GNP $34,310)
Switzerland $26,876 (GNP $39,980)
UK $20,314
Japan $23,592 ($32,350)
Singapore $25,295 (GNP $30,170)

Interesting that there are countries with higher GNP, but none considered to have higher purchasing power than the U.S.  Also, things may have changed over the last 5 years.  And there may be other advantages to living in some of these countries.  But according to WorldBank, the most purchasing power resides in the U.S., which was my point.

Jim Rankin
Monday, June 16, 2003

Dear Jim,
                These figures vary tremendously according to the exchange rate of the dollar.  But that is irrelevant because your claim is that the US gains because unlike Europe it does not have a welfare system in place or protect workers rights. Yet Europe has only had most of these things since the 1950's and if you were right there would be an ever increasing gap between the US and the rest of the world since that time, and if anything we are seeing the opposite.

Stephen Jones
Monday, June 16, 2003

"For better or worse, this is the American Way.  And it has resulted in the most powerful and most prosperous country in the history of the world."

The prosperity America enjoys is due to the historical solidarity of it's citizens.  Americans created relatively fair legal and economic system which provided the stability for growth.  People forget that a lot of the wealth and priveleges people enjoy today is due to the pre war union movement.

Welfare systems exist to stop hungry people TAKING what they need to survive.  Welfare is a small price to pay for social order.  Greedy people complain about losing a few extra dollars in tax, and then whine about being mugged in the street.  They'd rather paw two hundred dollars for more police than fifty in welfare.

Too many people talk about economies as if they are an end in themselves.  Have we lost sight of the fact an economy exists to provide for the well being of it's citizens?

cycle-o-matic
Monday, June 16, 2003

"Why is it that it is all right for people to work at $8.50 an hour (or even $5.50 an hour 'cos we can't increase the minimum wage) unless they are the same kind of people as you, in which case it suddenly becomes "pimping themselves out "? "

Nobody can "get ahead" on $8.50 an hour.  People only take $8.50 an hour jobs because they have no choice, hence "pimping themselves out".  It's OK for kids just starting out, but there is no way you can support a family and send your kids to college on $8.50 an hour.

cycle-o-matic
Monday, June 16, 2003

"But that is irrelevant because your claim is that the US gains because unlike Europe it does not have a welfare system in place or protect workers rights."

OK, then what's your explanation for why the U.S. is the richest country (both per capita and in abolute terms) in the world?

Jim Rankin
Monday, June 16, 2003

USA!  USA!  USA!


Monday, June 16, 2003

You mean it's not because the USA cynically allowed all its rivals and "allies" to be destroyed or at least heavily damaged in WWII?

mysterion
Tuesday, June 17, 2003

"OK, then what's your explanation for why the U.S. is the richest country (both per capita and in abolute terms) in the world?"

Because its citizens work themselves into an early grave?
From the same site, we see that Americans shuffle off this mortal coil:

  4 years before the Japanese;
  2 years before e.g. Canadians, Swedes;
  a year before the inhabitants of other (mainly EU) countries "burdened" with comprehensive welfare systems, e.g. Belgians, French, Italians.

Sleepy
Tuesday, June 17, 2003

"the U.S. is the richest country (both per capita and in abolute terms) in the world"

Bzzzt! Wrong.

I really can't be bothered to go through all of the countries to find out, but I was always most amused by these facts:
                        USA            Luxemburg
GDP - per capita: $36,300      $44,000

The population of Luxemburg is less than half a million, living on an area smaller than Rhode Island. To put US "success" completely into perspective, a higher proportion of its population (13%) lives below the poverty line than that of that economic giant the Republic of Ireland (10%).

Of course, maybe the CIA is completely wrong about these things.


Tuesday, June 17, 2003

Stephen,

Where did you get the numbers that state:

"And what is worth remembering is that the average real wage in the US is lower now than in 1970. Nearly all the increase in wealth has gone to the already well-off. "

Mark Hoffman
Tuesday, June 17, 2003

Dear Mark,
                It's one of those statistics that I keep hearing repeated in books, and never actually bother to write down the reference. I'll try and find out the best I can. What is clear is that income inequality in the US increased drastically between 1970 and 1992; whether the trend is continuing or will continue appears open to debate, but there is certainly no evidence that it is narrowing. This reference might be some good for starters.

http://www.census.gov/prod/2000pubs/p60-204.pdf

Stephen Jones
Tuesday, June 17, 2003

Here is the link to the actual income figures per household.
http://www.census.gov/hhes/income/histinc/ie1.html

Not quite as dire as my original quote; here are the incomes per quintile from the lowest to the highest in 2001 dollars giving first of all the figures for 1970, then for 2001 and then the percentage increase.

$8,010          $10,136          +25.6%
$21,299        $25,468          +19.6%
$34,300        $42,629          +24.3%
$48,350        $66,839          +38.3%
$85,607        $145,970        +70.5%

Stephen Jones
Tuesday, June 17, 2003

"                        USA            Luxemburg
GDP - per capita: $36,300      $44,000"

I guess I missed Luxemburg in my original post.  But what's the cost of living in Luxemburg?  Does your source have a "purchasing power" stat like the world bank?

Jim Rankin
Tuesday, June 17, 2003

D'oh!  $44,00 is the "purchasing parity" stat (http://www.cia.gov/cia/publications/factbook/fields/2004.html)

My bad.  So we can now say "Luxembourg is the wealthiest country in the world".  What's their secret?

Jim Rankin
Tuesday, June 17, 2003

Banking; being an independent state in the middle of another so there is plenty of money to be made from smuggling.

Cost of living is quite high, but you don't actually have to live there. Plenty of people commute. There are also an amazing number of Spanish working there.

I'm sure you can find parts of cities in the States with a population of half a million and a GDP greater than Luxembourg's though.

Stephen Jones
Tuesday, June 17, 2003

It's common among US economists to justify their particular brand of capitalism (which tends to produce greater social inequalities than the European versions) by pointing to the economic successes of the US. Consequently a lot of Americans believe this reasoning.

But from outside the US, we see a country where people are hard-working, enthusiastic, strongly identified with their work, take few and short vacations, and where managers are more often than not professionally qualified (though doubtless still imperfect).

Over here in the UK, people are cynical about their work, more interested in what they do when they get home, do as little as they can to get paid, and think that five weeks off a year is pretty average. And they are managed by people who (e.g.) left school at 16 and spent the next ten years in the Army, and think the secret of good management is to crush insubordination.

Somehow the economic system doesn't seem like the most important factor...

(I am over-generalising and exaggerating slightly. But not much.)

Dave Hallett
Wednesday, June 18, 2003

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