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Old December 8th, 2016, 11:06 AM   #21

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@Entreri @AlpineLuke Right, I had it wrong. I did economics at Matriculation level which is equivalent to school leaving certificate and my knowledge is patchy. Thanks .
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Old December 8th, 2016, 12:32 PM   #22

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The most annoying misconception probably is the market, or the "forces of the market". Some annoying derivatives thereof are theorems like workers are paid by their marginal productivity, or that greed is good.
Same here.

The idea that "the market will regulate ... "
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Old December 8th, 2016, 12:40 PM   #23

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These are all economical measures with their proper usage. I think here the matter is more about not understanding their nature and their proper usage. Politicians in this have made a chaos using, politically, economical measures, indexes ...

Now, to make a comparison, if we evaluate two corporations the first thing we note is the global turnover.

Then we could wonder which is the mean turnover per employee.

Do these two measures tell us which is the life style of the employees of the two corporations?

No, the turnover tells us how a corporation is economically big, the turnover per employee is an important index of economic efficiency of the corporation. For any economical sectors there is a minimum suggested turnover per employee. Usually in the sector of the services the turnover per employee is well higher than in the sector of production in Western countries. This is also why we outsource production to countries where workers earn well less money than here.
My beef is that due to CNN and other big media houses people think GDP is aabout how wealthy a country is. I defy anybody to say how China has better average living standards than Taiwan or South Korea, or Japan, or Germany, even though is has a bigger economy than them.
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Old December 8th, 2016, 12:41 PM   #24
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And there is no inherent good in manufacturing industry. The only "good" industry for any country is its sustainability in many ways, for jobs, living standards, foreign trade issues like FOREX/FDI. Service industries can be "mundane" things, but then so can manufacturing industries. Making pet food is mundane, but people still value/demand it. As is making nails or paper cups. Many of the biggest industries in the world are service industries, entertainment, financial services, ICT, and retail are all service industries.
I thought a little bit about this and I think that this isn't so much of a misconception as a matter of historical specificity. Until, maybe, only a decade ago, a national economic policy promoting manufacturing would have been a sound strategy. Between the late 19th to the early 21st century, manufacturing exhibited technological productivity gains, massive economies of scale and scope, a division of labour conducive to (relatively) highly paid jobs, and high demand elasticises of price and income.

With technological progress, this has changed tremendously in the last years, and the Financial Crisis of 2007 onward was also a result of this structural problem. First, productivity gains and scale economies have led to such efficiency that labour is crowded out of manufacturing at a high rate. Second, the division of labour is not widening as new technologies are both efficient and flexible so that capital goods do substitute labour instead of helping people specialise. Third, the majority of new manufacturing jobs take the form of low wage factory labour that is employed to cover temporary order peaks, or investment shortages. Fourth, as global markets are saturated or served by middle-income industrial nations, elasticises aren't as good as they used to be. The fact of the matter is that there is only so much people need, and manufacturing companies across the world over-produce on a massive scale.

Trying to save manufacturing jobs is a battle against wind-mills. Now, one could argue that the service sector is as good as manufacturing, but that wouldn't be true, either. It is true that the bulk of jobs are in services, but wages and growth there depend on manufacturing for orders. First, it is growing manufacturing companies and well paid manufacturing labour that have a lead role in creating demand for services. Second, as long as wages in manufacturing are high, there is at least some pressure on service sector employers to not lower wages too much. Except finance, air transport and a handful of other service industries, most service branches do not pay well, are not really productive, and not innovative. As a matter of national strategy, thus, service promotion does not seem to be as promising for income equality at a high level as it was with the goods producing sector.

I will not engage in a speculation of what would be a sound strategy, my point is that for over a century, manufacturing was better than services in terms of overall economic benefits, but now, it is not, anymore.
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Old December 8th, 2016, 12:49 PM   #25
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My beef is that due to CNN and other big media houses people think GDP is aabout how wealthy a country is. I defy anybody to say how China has better average living standards than Taiwan or South Korea, or Japan, or Germany, even though is has a bigger economy than them.
Well, GDP is a measure of how wealthy a country is. What it is not is a measure of how well this wealth is diffused through society, or, indeed, of how good living standards might be. When media cites GDP figures in regard to China, at least in my experience, they do so to show the strength of Chinese manufacturing and exports. And in this context, using GDP is perfectly fine as competitiveness does not have to correspond with income equality or quality of living.
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Old December 8th, 2016, 01:07 PM   #26
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One misconception I have seen people do many times and even been guilty of myself is to think it is worth it to leave a place of business you are patronizing--are currently at--and driving to another some miles away simply to save a buck or two.

I mean, sure, if you're buying a, say, flat screen TV and you're at a place that wants $30 or more than does BestBuy, that is within 10 miles or so, then this drive is probably worth it.

But to leave a supermarket and drive five miles or more to save $1.00 on a loaf of bread or a six-pack of imported beer? Or to drive 10 miles to a gas station that sells gas for 3 cents a gallon cheaper? No..do the math. A twenty gallon tank if totally empty will only save you 60 cents. A 10 mile drive, and maybe 20 round trip if you're getting back to the gas station closest to your house, will cost you more in the long run in both gas, vehicle wear, and your time.

Back when I was in college and worked retail I had customers do this all the time. "Oh...I can get this screwdriver for $1.50 less at the Home Depot over on Elm Street." Which was sometimes across town, as far as 15 miles away or so.

This myth of mine becomes more true and the practice of it more silly in direct proportion to a person's wealth, of course. Why? Because their time is worth more as well as the fact the amount of money saved with a trip to another business is of a smaller percentage of their monthly or weekly disposable or discretionary spending.
So...we get to the point where even that aforementioned example of saving $30 on a TV is not worth a half-hour round trip drive.
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Old December 8th, 2016, 02:42 PM   #27
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One of the main misconceptions I have a gripe about is the misuse of the term trickle down economics. The term was not really advanced by the right, but rather a snearing term used by the left. Trickle down economics is basically supply side economics by another name. Supply side economics is really just the success story of capitalism since the Industrial Revolution onwards; cheaper production techniques benefits society in the long term. It's not about tax cuts for the rich trickling down to the poor.
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Old December 8th, 2016, 03:40 PM   #28
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One of the main misconceptions I have a gripe about is the misuse of the term trickle down economics. The term was not really advanced by the right, but rather a snearing term used by the left. Trickle down economics is basically supply side economics by another name. Supply side economics is really just the success story of capitalism since the Industrial Revolution onwards; cheaper production techniques benefits society in the long term. It's not about tax cuts for the rich trickling down to the poor.
Tax cuts for the rich do not trickle down (as we all understand). The rich just keep the proceeds since they do not have to invest them. The rich do not need health insurance, pensions or educational funding. They have all that covered.

For the rich, the poor do not exist in their world. The poor are merely trickled on as it may be convenient.
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Old December 8th, 2016, 07:00 PM   #29
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What about FDR and the New Deal and the idea that it was a good thing?

What about the misconception that WW2 ended the Great Depression?
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Old December 8th, 2016, 07:03 PM   #30
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Tax cuts for the rich do not trickle down (as we all understand). The rich just keep the proceeds since they do not have to invest them. The rich do not need health insurance, pensions or educational funding. They have all that covered.

For the rich, the poor do not exist in their world. The poor are merely trickled on as it may be convenient.
Mellon cut taxes and the economy boomed.
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