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The Horror, the Horror: Hungarian Xenophobia Is Raising Standard of Living of Hungarians
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“Won’t somebody please think of the Daimler-Benz corporation?”

From Bloomberg:

Hungary’s Labor Woes May Trigger Wage Explosion, Minister Says
Zoltan Simon

August 4, 2016 — 3:49 AM PDT

Hungary’s labor shortage is getting so dire that a wage explosion appears inevitable, posing risks to the nation’s ability to attract and keep foreign investors drawn by affordable, qualified labor, Economy Minister Mihaly Varga told Figyelo weekly.

With unemployment at a record low, the government is working on steps that will shift state efforts from job creation to raising productivity, Varga told Figyelo in an interview published Thursday. Average monthly salaries after taxes rose 8.4 percent in January-May compared with last year to 180,800 forint ($646), including a 12.3 percent jump for state employees, according to statistics office data excluding public works jobs.

“I think in the next one-and-a-half years there will be a radical increase” in wages, which “won’t be because of productivity gains but fundamentally because of labor market demand,” Varga told Figyelo. “We need to come up with a development plan this year, if possible, to react to this changing environment.”

Hungary’s jobless rate plunged to a record 5.1 percent in the second quarter. …

The economy minister’s statement last month that he agreed with employers on the need to import workers to fill vacancies caused a stir in Hungary, where Prime Minister Viktor Orban has gained support by advocating a “zero immigration” policy amid the biggest refugee wave to Europe since World War II. The government will hold a referendum on Oct. 2 as it seeks the popular mandate to oppose the settlement of migrants within the European Union via mandatory national quotas.

The government needs to take steps to improve the flow of workers to the regions facing the most dire shortages. The dearth of available labor most recently prompted a company in the car industry to invest elsewhere, Varga said, without naming the investor.

On the other hand, Daimler AG’s Mercedes-Benz unit picked Hungary last week as the site of a second factory, which it will build next to an existing one in the central city of Kecskemet for an estimated 1 billion euros ($1.1 billion).

 
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  1. God forbid wages soaring to $646 a month.

    What would come next? Prosperity for the working man? Can’t have that!

    • Replies: @Buffalo Joe
    Dad, I don't think $646 is a decent weeks wages let alone a month's wages, hell that just makes a decent day's wages.
  2. Meh, that can’t be right. Local wages are not permitted to rise in any case, but certainly not in excess of the inflation rate, so we are clearly not importing enough foreign labour from cheaper locales. Capitalism as has been portrayed to the vast majority of us is dependent on cheap labour from abroad to negate the effect of imported labour.

    BTW, the black death of the 12th through 15th centuries was responsible for labour gaining a competitive edge in the local markets. Without it, we would not have experienced 8 centuries of improved living standards and the development of a middle class.

    The aggregation of wealth to the top 0.1% through the debasing of the value of the labour of the 99.9% over the last 50 years or so has unwound 8 centuries of gains. Serfdom really seems to be the normal state of affairs.

    • Replies: @FX Enderby
    Solution... we need a new Black Death. Another great reason for open borders. Foreign diseases to do the job domestic diseases just won't do.
    , @AnotherDad

    BTW, the black death of the 12th through 15th centuries was responsible for labour gaining a competitive edge in the local markets. Without it, we would not have experienced 8 centuries of improved living standards and the development of a middle class.
     
    The plague in Europe is more like 14th-17th centuries. The plague showing up in European ports in late 1346 or 1847 and spreading rapidly across Europe the next few years. The last great outbreak being the Great Plague of 1664-67.
    https://en.wikipedia.org/wiki/Black_Death

    From Cochran's book, i think the plague did substantially raises wages--hence living standards--in the immediate aftermath of the initial hit. Life was much better in the 1400s, than it had been in the early 1300s. But after this the plague is just very temporary noise in this era when people were dying all the time from disease. (The plague had nothing significant to do with the industrial revolution breakout. Read Cochran's "Farewell to Alms" for some insight into the takeoff for that.)

    One must remember that population can recover quickly to their Malthusian limits when women are not on the pill, Facebook, Twitter, Instagram.
  3. Why would Nonwhites want to live in close proximity to xenophobic Hungarians? Xenophobic people create xenophobic racist dirt.

    Magic dirt only exists in countries where most Whites are super Left Wing and full of White guilt, like Sweden for example.

    • Replies: @Maj. Kong
    I disagree, if xenophobes didn't make magic dirt, liberals would never complain about "white flight" and "gentrification".
  4. • Replies: @WhatEvvs
    Watson is very bright and the entirety of his words isn't "dey tryna kill us" NOI lunacy. His words are subtle and eloquent.

    But what he says, out of the mouth of a white conservative, would be dismissed as "cucking" - wouldnit?

    I happen to be in favor of birth control, especially for those who don't know how to control themselves. And I believe the Af-Am birthrate is only just below replacement. Anyone have more up to date stats?
  5. @The Alarmist
    Meh, that can't be right. Local wages are not permitted to rise in any case, but certainly not in excess of the inflation rate, so we are clearly not importing enough foreign labour from cheaper locales. Capitalism as has been portrayed to the vast majority of us is dependent on cheap labour from abroad to negate the effect of imported labour.

    BTW, the black death of the 12th through 15th centuries was responsible for labour gaining a competitive edge in the local markets. Without it, we would not have experienced 8 centuries of improved living standards and the development of a middle class.

    The aggregation of wealth to the top 0.1% through the debasing of the value of the labour of the 99.9% over the last 50 years or so has unwound 8 centuries of gains. Serfdom really seems to be the normal state of affairs.

    Solution… we need a new Black Death. Another great reason for open borders. Foreign diseases to do the job domestic diseases just won’t do.

    • LOL: MEH 0910
    • Replies: @WhatEvvs
    What's your opinion of Zika?
    , @Kyle
    Maybe we need to reintroduce hyenas to the north American continent.
  6. Any day Sailer channels the venerable Col. Kurtz is a good day!

  7. I’ll admit to being a tad dense/gullible, but falling unemployment and rising wages? Is this from The Onion?

    • Replies: @Bill Jones
    It makes perfect sense. A market with an effectively unlimited supply of labor now has restraints: wages rise to attract what labor there is, and, watch for this, those who have "left the workforce" will be attracted back in.
    In the US all the gains in productivity over the past several decades have gone to capital, not labor simply because of an unlimited supply of the latter.
    It's why corporate America has gone apeshit about Trump.
  8. Is this Mihaly Varga guy a politician? If so he needs to stop taking lessons from Paul Ryan, Eric Cantor and Jeb! Dump this guy pronto, Mr. Orban.

  9. I literally cannot believe what I’m reading sometimes. Too few workers in Hungary, making salaries too high, which will lead to less foreign investment, which will lead to what…higher unemployment?

    “We need to make X occur, otherwise Y will happen, which will cause X to occur.”

  10. Anonymous • Disclaimer says:

    Rising wages were regarded as a good thing when Keynesianism dominated. Rising wages boosted aggregate demand, and rising wages and living standards were regarded as the whole point of the economy. This was until the 80s, when Friedmanite monetarism took over and replaced Keynesianism. Friedmanite monetarism is basically a money lender’s view of the economy, whose purpose is to make money accrue money, which is at cross-purposes with rising wages.

    • Replies: @The Anti-Gnostic
    No. It's the other way around. Keynes pondered the problem of 'unemployment,' and concluded that wages were too high ('sticky wages'). Solution: lower real wages via the printing press. Of course, it doesn't work that way because money is not neutral in the short term. But people still swear by Keynes.
  11. jtgw says: • Website

    The Black Death also killed a lot of people. It reminds me of arguments that we should start lots of wars to help our economy. Or just break a lot of windows.

    The point about rising wages coming from labor shortage rather than productivity is actually very important. When wages rise because productivity rises, then everyone enjoys the benefits of the higher wage, since higher productivity also means cheaper goods. But when they are due to labor shortages, whether from immigration restrictions or some other cause, then the higher wages are offset by rising prices, without a net benefit for everybody.

    This isn’t to say Hungary should throw open its borders; there are cultural, social and political reasons not to let themselves be demographically swamped. But they would do well to allow immigration from culturally similar countries (easier said than done, I know), or at least adopt a free trade policy.

    • Replies: @Anonymous
    No, because high wages and high prices encourage technological innovation to lower production costs.
    , @gruff

    It reminds me of arguments that we should start lots of wars to help our economy.
     
    The theory that the US military-industrial complex has been doing exactly that since shortly after 1945 has been floating around for years. The US does indeed seem to be making excellent progress in turning the entire Middle East into a killing zone/munitions testing range.
    , @Sal Paradise
    Jtgw, no that means a person's boss will have to pay them more to keep them. So bad for the boss but good for the employee.
    , @This Is Our Home
    If wages are rising, unemployment is falling and productivity is static in a country with a very open (or even just fairly open) goods and services market then one of your data sets is very likely wrong. Normally that will be productivity as it is hard to measure.

    Their high wages with no possibility of inporting cheap labour will and will have already increased the incentive to increase the use of capital in the production process in order to boost labour unit productivity.

    Hungary will now get a high tech economy with cheap housing and rich people. The opposite of the modish ezpensive housing, low wage western economy.
    , @AnotherDad

    This isn’t to say Hungary should throw open its borders; there are cultural, social and political reasons not to let themselves be demographically swamped. But they would do well to allow immigration from culturally similar countries (easier said than done, I know), or at least adopt a free trade policy.
     
    This "more immigration" must be some sort of bizarre primitive reflex tic--like you kicking when the doc bangs your knee.

    There is absolutely no need for immigration. Your paragraph above about wages makes most of the relevant points. The final point is rising wages actually *motivates* capitalists to innovate and deploy capital to get more productivity from their workers. It's a virtuous cycle.

    Of course, the prime example of this is the United States. It industrialized behind high tariffs and with--despite periodic immigration surges--the highest wages in the world. (Open land for settlement meant that capitalists had to pay high wages to keep workers.) The high wages forced American capitalists to always be innovating and rolling out new processes and technologies to improve the productivity of their high wage workforce.

    Capitalism--essentially capitalist competing with other capitalists to produce more efficiently--is far and away the most dynamic and productivity and hence prosperity enhancing economic system the world has seen. All that's required from the politicians is *not screwing it up* by letting capitalists cheat by importing cheap labor, instead of innovating and employing capital and labor more efficiently.
    , @Dana Thompson
    Are you sure you don't have this backward? I would have said that productivity rises because wages rise, not the the other way around. And I would call higher productivity an unqualified benefit to society.
  12. Hungary already has enough phenotype diversity. They have Gypsies, some Hungarians look slightly Asian, and some Hungarians look Mediterranean. No need for open borders.

    • Replies: @slumber_j

    Hungary already has enough phenotype diversity. They have Gypsies, some Hungarians look slightly Asian, and some Hungarians look Mediterranean. No need for open borders.
     
    My wife is a quarter Hungarian, and her eyes are so slitty she can't open them as wide as any of our East-Asian friends can open theirs. It's a funny party trick.
  13. “With unemployment at a record low, the government is working on steps that will shift state efforts from job creation to raising productivity, Varga told Figyelo in an interview published Thursday. Average monthly salaries after taxes rose 8.4 percent in January-May compared with last year to 180,800 forint ($646), including a 12.3 percent jump for state employees, according to statistics office data excluding public works jobs.”

    Government wages increased roughly 1.5 times as much as average wages, and a government employee is telling the people that these wage increases are problematic somehow. I hope the Hungarian people remember Mr. Varga on election day.

  14. It looks like Mihaly Varga is a member of Fidesz, so why is he calling for more cheap labor? Reading the article, it’s not clear that’s what he’s doing. It looks like the Bloomberg reporter is the one trying to make this sound like a bad thing.

    • Replies: @The Ghost of John Von Neumann
    He IS calling for cheap labor.

    Sadly, Varga's mandate is for Hungarian labor to remain attractive for FDI. In other words, 'competitive' relative to other places (Slovakia comes to mind) global auto manufacturers might build factories.
    , @Bill
    Fidesz is not the right wing party. Fidesz is the cuckservative party. Their current attack of spine is out of sheer terror that the actual right wing party might take their lunch money. The spine will dribble away after the crisis passes.
  15. A labor shortage is the best thing that can happen to workers.

    Whenever a politician or journalist refers to it as a bad thing, you know whose side they are on – not the side of working people.

    • Replies: @Richard A.
    The market solution to a labor shortage is for the employer to raise wages. The pro business solution is for the government to increase the number of workers to hold down wages.
  16. @FX Enderby
    Solution... we need a new Black Death. Another great reason for open borders. Foreign diseases to do the job domestic diseases just won't do.

    What’s your opinion of Zika?

    • Replies: @gruff
    That weird clear malt beverage? Disgusting.
  17. WhatEvvs [AKA "Mipchunk"] says:
    @Brutusale
    OT: outlier Ben Watson, another Belichick draftee.

    http://www.breitbart.com/sports/2016/08/08/sports-medias-muted-mouths-agape-response-to-nfls-smartest-man-on-planned-parenthoods-racism/

    Watson is very bright and the entirety of his words isn’t “dey tryna kill us” NOI lunacy. His words are subtle and eloquent.

    But what he says, out of the mouth of a white conservative, would be dismissed as “cucking” – wouldnit?

    I happen to be in favor of birth control, especially for those who don’t know how to control themselves. And I believe the Af-Am birthrate is only just below replacement. Anyone have more up to date stats?

  18. @jtgw
    The Black Death also killed a lot of people. It reminds me of arguments that we should start lots of wars to help our economy. Or just break a lot of windows.

    The point about rising wages coming from labor shortage rather than productivity is actually very important. When wages rise because productivity rises, then everyone enjoys the benefits of the higher wage, since higher productivity also means cheaper goods. But when they are due to labor shortages, whether from immigration restrictions or some other cause, then the higher wages are offset by rising prices, without a net benefit for everybody.

    This isn't to say Hungary should throw open its borders; there are cultural, social and political reasons not to let themselves be demographically swamped. But they would do well to allow immigration from culturally similar countries (easier said than done, I know), or at least adopt a free trade policy.

    No, because high wages and high prices encourage technological innovation to lower production costs.

  19. Anonymous • Disclaimer says:

    Big Business (global modern version) is on the cusp of winning the world wide war against labor. They did it by teaming up with governments. Which is a form of partnership with the Left. It’s planetary fascism which is apparently cool with hipsters because there’s no racial element.

    Globalism really boils down to the Left’s abandonment of labor worldwide. Lefties today have open contempt for the workers, the drones, the nobodies. They love the idea of disempowering the proles everywhere.

    There is a populist revolt afoot. Is it a blip? Trump declared war again today on globalism. Amazing word choices in his speech.

    Besides his speech check out the Trump response to the 50 GOP national security people no confidence letter that came out this a.m. Trump called them out as The Perps We’ve Been Search in For!

    What a day.

    http://thehill.com/blogs/ballot-box/presidential-races/290801-trump-slams-gop-leaders-national-security-letter

    • Agree: dfordoom
    • Replies: @Massimo Heitor

    Globalism really boils down to the Left’s abandonment of labor worldwide. Lefties today have open contempt for the workers, the drones, the nobodies.
     
    No.

    Support for open border immigration where host nations are forbidden to oppose, clearly benefits migrants who are exercising choice to migrate, so I wouldn't say that advocates are completely heartless. There are major downsides to immigration for the host people. This post deals with the job opportunity loss to low wage earners. Honestly, I think this is one of the weaker arguments. The bigger arguments are that the host people aren't allowed to keep their culture or their political structure and possibly negative impact of much higher population density.

    Secondly, open border advocates are often right-wing as well as left-wing, the issue doesn't fall along a traditional left-right axis. Fox News owner Rupert Murdoch has been a die hard open borders advocate as have the right wing Koch brothers.
  20. @WhatEvvs
    What's your opinion of Zika?

    That weird clear malt beverage? Disgusting.

  21. Noooooooooooooooooo!

    The globalists and multicultists should leave a few countries alone to pursue their nativist, xenophobic, racist, nationalist, protectionist, backwards ways as an example to show the horror of what happens when you don’t follow their advice. jk.

    • Replies: @FX Enderby
    Lucky for us, great humanitarians like Soros, the Clintons, and a small clique of wonderfully kindhearted bankers will not allow that to happen.
  22. @jtgw
    The Black Death also killed a lot of people. It reminds me of arguments that we should start lots of wars to help our economy. Or just break a lot of windows.

    The point about rising wages coming from labor shortage rather than productivity is actually very important. When wages rise because productivity rises, then everyone enjoys the benefits of the higher wage, since higher productivity also means cheaper goods. But when they are due to labor shortages, whether from immigration restrictions or some other cause, then the higher wages are offset by rising prices, without a net benefit for everybody.

    This isn't to say Hungary should throw open its borders; there are cultural, social and political reasons not to let themselves be demographically swamped. But they would do well to allow immigration from culturally similar countries (easier said than done, I know), or at least adopt a free trade policy.

    It reminds me of arguments that we should start lots of wars to help our economy.

    The theory that the US military-industrial complex has been doing exactly that since shortly after 1945 has been floating around for years. The US does indeed seem to be making excellent progress in turning the entire Middle East into a killing zone/munitions testing range.

    • Replies: @Kyle
    The Cia is propping up the Syria rebels just enough to keep the war going. If any one group gets too much power, they set another group against them. I was reading an article about a Cia backed militia getting into skirmishes with a pentagon backed militia. I believe our involvement in the war is mostly to collect intelligence on Russian military capabilities. I have no proof of this, just my belief. The CIA doesnt nees to answer to anyone, All the CIA has to do is remain silent and people like me seem like insane conspiracy theorists.
    , @Anon
    This wouldn't be happening in the Middle East if the locals weren't happy to oblige. Without modern weapons, they'd be killing each other with swords and knives.
  23. Under communism, E Germany had labor shortages and brought in guest workers from USSR. At least, I read this in a book about Kruschev. Apparently, Russians were not always happy about being sent to Germany to “clean toilets” when they had recently defeated them in the great patriotic war.

    ISteve readers from the former communist bloc please comment to verify/call BS on labor mobility in Warsaw Pact.

    • Replies: @Immigrant from former USSR
    Can you give a reference on the book about Kruschev ?
    , @Glossy
    Growing up in Moscow I occasionally heard of Soviet people visiting East Germany, as well as other Warsaw Pact countries, but never to work, only for vacations. And even that was rare. Most Soviet vacations were to the Soviet part of the Black Sea coast - Crimea, Sochi, Georgia.
    , @Glossy
    In general, Western literature about the USSR is mostly propaganda. Fantasy. In big things and small.
    , @Peter Akuleyev
    E. Germany and Czechoslovakia did bring in lots of Vietnamese "guest-workers". And a lot of them are still there, you can get a great bowl of pho in Prague pretty easily. Vietnamese were safer than other Warsaw pact workers because everyone assumed they wouldn't assimilate or pick up "bad" pro-Western ideas from the locals (like Soviets working in E. Germany or Poland might do). Poland imported North Koreans to work on farms (and apparently still does!) but the numbers were small and the North Koreans were/are completely segregated from the Polish community.
  24. @Harold
    Noooooooooooooooooo!

    The globalists and multicultists should leave a few countries alone to pursue their nativist, xenophobic, racist, nationalist, protectionist, backwards ways as an example to show the horror of what happens when you don’t follow their advice. jk.

    Lucky for us, great humanitarians like Soros, the Clintons, and a small clique of wonderfully kindhearted bankers will not allow that to happen.

  25. @FX Enderby
    Under communism, E Germany had labor shortages and brought in guest workers from USSR. At least, I read this in a book about Kruschev. Apparently, Russians were not always happy about being sent to Germany to "clean toilets" when they had recently defeated them in the great patriotic war.

    ISteve readers from the former communist bloc please comment to verify/call BS on labor mobility in Warsaw Pact.

    Can you give a reference on the book about Kruschev ?

    • Replies: @FX Enderby
    Volume 2 of Khruschev's Memoirs as dictated to his son, Sergei.
  26. >The government needs to take steps to improve the flow of workers to the regions facing the most dire shortages. The dearth of available labor most recently prompted a company in the car industry to invest elsewhere, Varga said, without naming the investor.<

    because the free flow of peeps in the eu is the heart of the current "refugee crisis". so there's no Greeks, Italians, Spaniards et al available for hungary to import. globalist propaganda .

  27. The idea that competition for workers causes wages to rise has to be false. If what Bloomberg writes is really happening in Hungary, that would mean that the law of supply and demand applies to wages. We know, thanks to our betters and the left in general, that only haters believe in the law of supply and demand.

    • Replies: @kaganovitch
    Tovarisch, you are stuck on the concept of bourgeois truth. You have yet to internalize the importance of Revolutionary truth i. e. that which serves the Revolution.
  28. the central city of Kecskemet

    Must be the Protestant work ethic.

    My wife spent two years living there studying at it’s Kodlay Institute. I visited a couple years ago – delightful town. Features a statue of John Calvin in the Town Square.

  29. @Immigrant from former USSR
    Can you give a reference on the book about Kruschev ?

    Volume 2 of Khruschev’s Memoirs as dictated to his son, Sergei.

  30. the perverse welfare incentives of the various euro gov’ts make it difficult to move if you are already making “to 180,800 forint ($646)” doing nothing.

  31. Neighbouring Romania has a large ethnic Hungarian population. In some parts of Transylvania Hungarians form a clear majority and control the local authorities.

    Maybe they would be interested in moving back to the Motherland now.

    • Replies: @Bill

    Maybe they would be interested in moving back to the Motherland now.
     
    Pretty sure they would prefer the Motherland move back to them.
    , @Kevin O'Keeffe

    Neighbouring Romania has a large ethnic Hungarian population. In some parts of Transylvania Hungarians form a clear majority and control the local authorities.

    Maybe they would be interested in moving back to the Motherland now.
     
    Yeah, Hungary's doing great, so let's get them bogged down in yet another war over the status of Transylvania. BRILLIANT!
    , @TomSchmidt
    That IS their motherland. Hungary got screwed at Versailles, losing territory to Serbia, Slovakia, and Romania. Timisoara is a largely Hungarian town, and one reason the revolt against Ceaucescu got started there was ethnic Hungarian oppression.
  32. Quick we better get that unemployment rate back up or pretty soon those Hungarians (unemployment ~6%) will be making like S.Koreans (unemployment ~5%) or Japanese (~3%) and then they’ll really be screwed.

    The trick is to get them all squabbling among themselves, looking out for Mo immigrant over the shoulder and settling for less on the race to the bottom. The trick is to set them at each others’ throats. And pretty soon there’s nothing much left of anything for anyone to care a whit for. When one generation knows it will be leaving behind a worse-off place for the next, things start to gather a momentum of their own. By then, what’s the point?

    Once we leave social trust and intergenerational stewardship behind, we may as well all live in Rio, Jo’burg, Molenbeek or London 2026. Me and mine and be damned the rest.

    • Replies: @utu
    "Quick we better get that unemployment rate back up or pretty soon those " - For this exactly reason Volcker was forced on Carter and started cranking up interests rates to increase unemployment. They called it fighting inflation. For the bankers inflations = high wages. Reagan started busting unions (the only unions he liked were in Poland) and deindustrialization of the Rust Belt. This was the beginning of triumphant march of neoliberalism. The same was going on in Thatcher's UK. The process continues since: NAFTA, revoking Glass-Steagal, attacking currencies of Asian countries to force on them the same process...TPP, TTiP...
    , @Bleuteaux
    For me, the future is an Indian slum. The H1B's (or whatever) to my area have simply overwhelmed it. The status-obsessed subcons live in the best part of town, and make up at least 20% of the population. Grade school, they're an easy majority.

    People don't realize what's coming. I see grandmas all over the place in full native garb walking their grandchildren. Truly zero English. You think they're not on every social welfare mechanism imaginable? What incentive would stop them?

  33. OMG, a wage explosion? How many people were killed? I bet some loan sharks and minorities were harmed, that’s for sure. Just think, if that racist xenophobe Trump becomes President we might be hit by waves of wage explosions. Oh the horror. Higher wages, disposable income, balanced budgets from an expanding tax base, and maybe business expansion and job creation as an indirect result of more spending by wage earners. This is why xenophobia is so terrible for countries. It prevents the need for police states and higher tax rates. It increases prosperity for working people without incurring debts to enrich banks. This kind of catastrophe could go global and wreck the dreams of oligarchs and corporations for continued borrowing and endless debt slavery. Why would anyone want to support that?

    • LOL: Bill
  34. @Jefferson
    Hungary already has enough phenotype diversity. They have Gypsies, some Hungarians look slightly Asian, and some Hungarians look Mediterranean. No need for open borders.

    Hungary already has enough phenotype diversity. They have Gypsies, some Hungarians look slightly Asian, and some Hungarians look Mediterranean. No need for open borders.

    My wife is a quarter Hungarian, and her eyes are so slitty she can’t open them as wide as any of our East-Asian friends can open theirs. It’s a funny party trick.

  35. @FX Enderby
    Solution... we need a new Black Death. Another great reason for open borders. Foreign diseases to do the job domestic diseases just won't do.

    Maybe we need to reintroduce hyenas to the north American continent.

  36. @FX Enderby
    Under communism, E Germany had labor shortages and brought in guest workers from USSR. At least, I read this in a book about Kruschev. Apparently, Russians were not always happy about being sent to Germany to "clean toilets" when they had recently defeated them in the great patriotic war.

    ISteve readers from the former communist bloc please comment to verify/call BS on labor mobility in Warsaw Pact.

    Growing up in Moscow I occasionally heard of Soviet people visiting East Germany, as well as other Warsaw Pact countries, but never to work, only for vacations. And even that was rare. Most Soviet vacations were to the Soviet part of the Black Sea coast – Crimea, Sochi, Georgia.

  37. @FX Enderby
    Under communism, E Germany had labor shortages and brought in guest workers from USSR. At least, I read this in a book about Kruschev. Apparently, Russians were not always happy about being sent to Germany to "clean toilets" when they had recently defeated them in the great patriotic war.

    ISteve readers from the former communist bloc please comment to verify/call BS on labor mobility in Warsaw Pact.

    In general, Western literature about the USSR is mostly propaganda. Fantasy. In big things and small.

  38. @TheBoom
    The idea that competition for workers causes wages to rise has to be false. If what Bloomberg writes is really happening in Hungary, that would mean that the law of supply and demand applies to wages. We know, thanks to our betters and the left in general, that only haters believe in the law of supply and demand.

    Tovarisch, you are stuck on the concept of bourgeois truth. You have yet to internalize the importance of Revolutionary truth i. e. that which serves the Revolution.

  39. When Varga says wages will increase b/c of labor market demand and not b/c of productivity, he is communicating that the labor shortage in Hungary is caused by Hungarians working en masse elsewhere in the EU, typically in England or Germany.

    A young Hungarian can get a crummy job as a hotel waiter or bellboy or cook in London, better their language skills, make 10x (if not more) what they would make at home, and have better working conditions, less surly customers, bigger tips etc etc

    A lot of Hungarian small business folks (including some of my relatives) have been complaining about this — my comments to them about raising local wages helping to ameliorate this were met with scowls.

  40. @Hepp
    It looks like Mihaly Varga is a member of Fidesz, so why is he calling for more cheap labor? Reading the article, it's not clear that's what he's doing. It looks like the Bloomberg reporter is the one trying to make this sound like a bad thing.

    He IS calling for cheap labor.

    Sadly, Varga’s mandate is for Hungarian labor to remain attractive for FDI. In other words, ‘competitive’ relative to other places (Slovakia comes to mind) global auto manufacturers might build factories.

  41. @jtgw
    The Black Death also killed a lot of people. It reminds me of arguments that we should start lots of wars to help our economy. Or just break a lot of windows.

    The point about rising wages coming from labor shortage rather than productivity is actually very important. When wages rise because productivity rises, then everyone enjoys the benefits of the higher wage, since higher productivity also means cheaper goods. But when they are due to labor shortages, whether from immigration restrictions or some other cause, then the higher wages are offset by rising prices, without a net benefit for everybody.

    This isn't to say Hungary should throw open its borders; there are cultural, social and political reasons not to let themselves be demographically swamped. But they would do well to allow immigration from culturally similar countries (easier said than done, I know), or at least adopt a free trade policy.

    Jtgw, no that means a person’s boss will have to pay them more to keep them. So bad for the boss but good for the employee.

    • Replies: @jtgw
    Let's walk through the steps of what happens. Immigration is restricted, so employers now compete over a limited supply of labor. However, the quality and productivity of the labor hasn't changed. So where will the money come from to pay the higher wages? It comes out of the capital that employers would otherwise plow into expanding production, repairing deteriorating facilities or, yes, raising wages to attract more skilled workers. Don't think that it comes out of employers' personal consumption; any businessman, to stay competitive in a free market, must put as much capital to work as possible. More lavish consumption is just a small part of what he does with profits.

    So the artificially increased demand for labor results in a depletion of capital. This depletion puts a general brake on economic progress, as there is now less money around for making those investments needed to increase production, which is what lowers the prices of goods and raises living standards.

    You should study the economic history of the period between the Civil War and WWI. This was a time of high immigration and relatively laissez-faire economics, but productivity and wages were increasing throughout the period. This is because, although immigration lowers the quantity demanded of labor, it allows businessmen to accumulate more capital at an even faster rate, giving them the means to raise wages to attract workers. Marx was really totally wrong about the inherent trends of capitalism; there is constant pressure in a free market to raise wages as far as possible, while maintaining the going rate of profit. Increases in productivity, meanwhile, constantly provide new means to businessmen to invest more capital and raise wages even further.

    I highly recommend George Reisman's book "Capitalism" on this subject.
  42. @Jefferson
    Why would Nonwhites want to live in close proximity to xenophobic Hungarians? Xenophobic people create xenophobic racist dirt.

    Magic dirt only exists in countries where most Whites are super Left Wing and full of White guilt, like Sweden for example.

    I disagree, if xenophobes didn’t make magic dirt, liberals would never complain about “white flight” and “gentrification”.

    • Replies: @Jefferson
    "I disagree, if xenophobes didn’t make magic dirt, liberals would never complain about “white flight” and “gentrification”.

    Nobody on the Left complains about White flight anymore, that's so 20th Century.

    In 2016 you don't see any politicians in The Democratic Party or staff members at The New York Times actively encouraging more Whites to move to Ferguson, Detroit, Baltimore, or Inglewood for example.

    The Left encourages more Mexicans to move to majority Black cities, but not more Whites.
  43. @gruff

    It reminds me of arguments that we should start lots of wars to help our economy.
     
    The theory that the US military-industrial complex has been doing exactly that since shortly after 1945 has been floating around for years. The US does indeed seem to be making excellent progress in turning the entire Middle East into a killing zone/munitions testing range.

    The Cia is propping up the Syria rebels just enough to keep the war going. If any one group gets too much power, they set another group against them. I was reading an article about a Cia backed militia getting into skirmishes with a pentagon backed militia. I believe our involvement in the war is mostly to collect intelligence on Russian military capabilities. I have no proof of this, just my belief. The CIA doesnt nees to answer to anyone, All the CIA has to do is remain silent and people like me seem like insane conspiracy theorists.

  44. anonymous • Disclaimer says:

    Open Borders! (for white populations only)
    Noone is Illegal! (where white people live only)
    Minority rights! (when white people are the majority only)

    As ‘diversity’ is demanded in All and Only white populations,
    “Diversity is our strength” translates to “White people are our weakness”

    That’s why they say anti racist is code for Anti White
    That’s why they say diversity is code for White G-

  45. The way capitalism is structured it needs constant growth (i.e., more people).

    The capitalists won’t even reconsider it, even though eventually we’d reach the Malthusian limit.

    They have enormous power. When the sappy left is whining about “No one is illegal” AS WELL, I see no hope.

    It will take a while to reach the Malthusian limit: agriculture is far far more efficient than it used to be.

    Japan has bucked the trend. When I used to read The Economist, they’d periodically scold the Japanese over this.

    • Replies: @Anonymous
    The way capitalism is structured it needs constant growth

    No it doesn't.
  46. As I have always said immigration LOWERS wages. What you want as a worker is a tight labor market. The “labor shortage” myth is just that. Only a cheap labor shortage.

  47. Poland (population 39 million, GDP (PPP) per capita $27,654) is a bit
    richer than Hungary (population 10 million, GDP per capita $26,941),
    and is as well experiencing a shortage of workers in certain specific branches
    of the economy (in construction, tech, and agriculture). Because of its
    fast growing economy, Poland (esp. Warsaw) has become one big
    construction site. The Polish like to live in high rise buildings partly
    owing to the fact that a high rise building is effectively a gated community
    – it makes people feel safe – and so central Warsaw is beginning to look
    like a miniature Manhattan, but with healthy amounts of green
    space among the buildings.

    The shortage of workers is due to two obvious factors – low birthrates and the
    fact that several million young people, motivated by the artificially maintained
    low wages, decamped for greener pastures mostly in the UK and Germany. The
    new populist government, effectively ruled by Kaczynski, an old éminence grise
    in Polish politics, is attempting to raise the wages (and TFR at the same time)
    with the so called 500+ child benefit while simultaneously allowing the influx
    of about one million temporary workers from Ukraine and Belarus (incl many
    women who work in caregiving, babysitting, housekeeping, and even retail).
    There are already voices questioning the govt policy – adding so many extra
    workers is likely to depress wages instead of raising them.

    But there is one thing that everyone is happy about: the populist govt
    has effectively adopted a Poland First policy – Ukrainian and Belarusians
    are acceptable as they are overwhelmingly Christian (and their presence
    effectively reenacts, for better or worse, the multiculturalism of the old
    Polish-Lithuanian Commonwealth, a vast federal republic that lasted
    for 300 years). Ukrainian journalists actually seriously proposed last
    spring that Poland should annex a big chunk of western Ukraine, so
    the Polish Commonwealth can be truly reborn. Not gonna happen.
    It would mean, for example, assuming a big part the enormous Ukrainian
    debt.

    Simultaneously, having a vast supply of cheap labor from the east at its
    disposal, Poland has zero need for migrants from the MENA countries,
    who being largely Muslim are judged culturally incompatible with the
    values and traditions of the Western Christendom to which Poland has
    belonged for at least 1100 years.

    • Replies: @utu
    "The shortage of workers is due to two obvious factors – low birthrates and the
    fact that several million young people, motivated by the artificially maintained
    low wages, decamped for greener pastures mostly in the UK and Germany." - So they can help capitalists in UK and Germany to artificially keep wages there also low, right?
  48. @jtgw
    The Black Death also killed a lot of people. It reminds me of arguments that we should start lots of wars to help our economy. Or just break a lot of windows.

    The point about rising wages coming from labor shortage rather than productivity is actually very important. When wages rise because productivity rises, then everyone enjoys the benefits of the higher wage, since higher productivity also means cheaper goods. But when they are due to labor shortages, whether from immigration restrictions or some other cause, then the higher wages are offset by rising prices, without a net benefit for everybody.

    This isn't to say Hungary should throw open its borders; there are cultural, social and political reasons not to let themselves be demographically swamped. But they would do well to allow immigration from culturally similar countries (easier said than done, I know), or at least adopt a free trade policy.

    If wages are rising, unemployment is falling and productivity is static in a country with a very open (or even just fairly open) goods and services market then one of your data sets is very likely wrong. Normally that will be productivity as it is hard to measure.

    Their high wages with no possibility of inporting cheap labour will and will have already increased the incentive to increase the use of capital in the production process in order to boost labour unit productivity.

    Hungary will now get a high tech economy with cheap housing and rich people. The opposite of the modish ezpensive housing, low wage western economy.

    • Replies: @jtgw
    Concerning the housing market, you might find this interesting:

    https://mises.org/blog/housing-bubble-and-credit-crunch
  49. jtgw says: • Website
    @Sal Paradise
    Jtgw, no that means a person's boss will have to pay them more to keep them. So bad for the boss but good for the employee.

    Let’s walk through the steps of what happens. Immigration is restricted, so employers now compete over a limited supply of labor. However, the quality and productivity of the labor hasn’t changed. So where will the money come from to pay the higher wages? It comes out of the capital that employers would otherwise plow into expanding production, repairing deteriorating facilities or, yes, raising wages to attract more skilled workers. Don’t think that it comes out of employers’ personal consumption; any businessman, to stay competitive in a free market, must put as much capital to work as possible. More lavish consumption is just a small part of what he does with profits.

    So the artificially increased demand for labor results in a depletion of capital. This depletion puts a general brake on economic progress, as there is now less money around for making those investments needed to increase production, which is what lowers the prices of goods and raises living standards.

    You should study the economic history of the period between the Civil War and WWI. This was a time of high immigration and relatively laissez-faire economics, but productivity and wages were increasing throughout the period. This is because, although immigration lowers the quantity demanded of labor, it allows businessmen to accumulate more capital at an even faster rate, giving them the means to raise wages to attract workers. Marx was really totally wrong about the inherent trends of capitalism; there is constant pressure in a free market to raise wages as far as possible, while maintaining the going rate of profit. Increases in productivity, meanwhile, constantly provide new means to businessmen to invest more capital and raise wages even further.

    I highly recommend George Reisman’s book “Capitalism” on this subject.

    • Replies: @Anonymous
    Nonsense.

    There is one and one only source of productivity increase - and that is technological innovation.

    Nations with a super abundance of cheap labor have historically staid poor with very little growth in wage levels.

    However in our times, South Korea, for example, a nation that has not accepted immigration has managed to make the huge transformation from an impoverished third world nation to a prosperous first rank nation through the sheer power of Korean industry successfully adopting high technology.
    , @Black Dog the Pirate
    Even if you accept the idea that in GDP terms it's a neutral effect, the logic ignores the concept of the marginal utility of money. The worker is far better off with every incremental gain in wage vs the business owner, meaning society is overall much happier and better off when income is more evenly distributed.
    , @Anonymous Nephew
    This is nonsense on stilts. Low wages actually damage per capita productivity, for a UK example see the "hand car wash", which didn't exist 30 years ago when all car washes were automated. Now 2/3 or more of car washes are done by hand (usually the swarthy hand of some Balkan chap).

    (Hungary will do well from tourism thanks to its 'xenophobia' - Budapest is lovely and you won't be knifed or blown up there. Already picking up people who might once have done Paris or Munich. I'm trying to find a way to invest in Wizz Air, but it looks like US private equity owns it. https://en.wikipedia.org/wiki/Wizz_Air )

    , @Bill

    So where will the money come from to pay the higher wages? It comes out of the capital that employers would otherwise plow into expanding production, repairing deteriorating facilities or, yes, raising wages to attract more skilled workers. Don’t think that it comes out of employers’ personal consumption; any businessman, to stay competitive in a free market, must put as much capital to work as possible.
     
    Yes, the general level of profit in capitalist markets is always the same. Never goes up. Never goes down. No matter what. There is absolutely nothing that can be done policy-wise to make profits go down. Anything you try just immiserates workers or consumers or both or the poor or blacks or whomever it is that it is very naughty to immiserate.

    I know this because 1) capitalists never bother to try to influence policy (why would they?), and 2) those kind, Koch-supported, Austrian economists say so.
    , @AnotherDad

    Let’s walk through the steps of what happens. Immigration is restricted, so employers now compete over a limited supply of labor. ...
     

    So the artificially increased demand for labor results in a depletion of capital...
     

    jtgw ... please stop. It's getting embarassing.

    a) Employers are *always* competing over a limited supply of labor... even if there was free movement throughout the world. The world is not infinite. Labor is not infinite. Capital is not infinite. And yet capitalism works just fine.

    b) There's nothing "artificial" about some increased demand for labor from not having open immigration. Open immigration is what is deeply unnatural not the reverse. Normal people do not let other people into their territory willingly ... the human (and general biological) tendency is precisely the reverse--to go conquer someone else's territory and take it from them.


    And again, this is capitalism 101: higher labor prices in fact *motivate* (i.e. force) capitalists to innovate and roll out new capital and technologies to drive up productivity. The ones that can not--for whatever reason whether insufficient capital or insufficient IQ\skill--die. The ones the can survive. If you don't understand these basic points you don't understand anything.

    Your example of the United States shows ... nothing. First off, the early part of the post-Civil War period was a low immigration era. It was when growth recovered that immigration started ramping back up. I'd say growth *drove* increased immigration not the reverse. Obviously immigration made the total economy bigger, but this wave of growth was about technology and industrialization--steam power, the railroad, telegraph, later petroleum--and westward expansion. Immigration could have been absolutely zero and the United States would have rapidly industrialized.

    All you have to do is look about the world. This was the Meiji Period when Japan rapidly industrialized over the exact same period. Europe--notably Germany--rapidly industrialized in this same period without immigration.

    Seriously stop the immigration nonsense. It's just nonsense. And actually the *opposite* of how capitalism works--which is continually employing capital more efficiently to drive up productivity allowing for rising wages.

    I get the feeling that when the globalists have reduced the entire world to a giant undifferentiated slum .... they'll be demanding we let in cheap Martian labor to keep the crops from rotting in the fields.

  50. @Maj. Kong
    I disagree, if xenophobes didn't make magic dirt, liberals would never complain about "white flight" and "gentrification".

    “I disagree, if xenophobes didn’t make magic dirt, liberals would never complain about “white flight” and “gentrification”.

    Nobody on the Left complains about White flight anymore, that’s so 20th Century.

    In 2016 you don’t see any politicians in The Democratic Party or staff members at The New York Times actively encouraging more Whites to move to Ferguson, Detroit, Baltimore, or Inglewood for example.

    The Left encourages more Mexicans to move to majority Black cities, but not more Whites.

  51. @Frau Katze
    The way capitalism is structured it needs constant growth (i.e., more people).

    The capitalists won't even reconsider it, even though eventually we'd reach the Malthusian limit.

    They have enormous power. When the sappy left is whining about "No one is illegal" AS WELL, I see no hope.

    It will take a while to reach the Malthusian limit: agriculture is far far more efficient than it used to be.

    Japan has bucked the trend. When I used to read The Economist, they'd periodically scold the Japanese over this.

    The way capitalism is structured it needs constant growth

    No it doesn’t.

    • Replies: @yaqub the mad scientist
    It doesn't have to, but much of it currently is. Here's my fave: housing startups as an indicator of economic health. You can attack that from any perspective you want: immigration, environment, finance.
  52. This Varga sounds like a globalist mole. I think he needs an eye kept on him. Where’s reiner Tor?

    • Replies: @utu
    "his Varga sounds like a globalist mole. " - He works for Bloomberg. What do you expect?
  53. Anonymous • Disclaimer says:

    You note that Mercedes chose to invest in Hungary.

    They could have chosen to invest in any other EU state, but they chose Hungary. They chose Hungarian workers. Mercedes could have just as well invested in the banliues of France – picked up a great deal of sweetheart deals from the French authorities to get unemployed Africans off the books, but they did not. They wanted Hungarian employees.

    • Replies: @Ivy
    Hungarian workers are cheaper and less likely to strike than French workers.
  54. Anonymous • Disclaimer says:
    @jtgw
    Let's walk through the steps of what happens. Immigration is restricted, so employers now compete over a limited supply of labor. However, the quality and productivity of the labor hasn't changed. So where will the money come from to pay the higher wages? It comes out of the capital that employers would otherwise plow into expanding production, repairing deteriorating facilities or, yes, raising wages to attract more skilled workers. Don't think that it comes out of employers' personal consumption; any businessman, to stay competitive in a free market, must put as much capital to work as possible. More lavish consumption is just a small part of what he does with profits.

    So the artificially increased demand for labor results in a depletion of capital. This depletion puts a general brake on economic progress, as there is now less money around for making those investments needed to increase production, which is what lowers the prices of goods and raises living standards.

    You should study the economic history of the period between the Civil War and WWI. This was a time of high immigration and relatively laissez-faire economics, but productivity and wages were increasing throughout the period. This is because, although immigration lowers the quantity demanded of labor, it allows businessmen to accumulate more capital at an even faster rate, giving them the means to raise wages to attract workers. Marx was really totally wrong about the inherent trends of capitalism; there is constant pressure in a free market to raise wages as far as possible, while maintaining the going rate of profit. Increases in productivity, meanwhile, constantly provide new means to businessmen to invest more capital and raise wages even further.

    I highly recommend George Reisman's book "Capitalism" on this subject.

    Nonsense.

    There is one and one only source of productivity increase – and that is technological innovation.

    Nations with a super abundance of cheap labor have historically staid poor with very little growth in wage levels.

    However in our times, South Korea, for example, a nation that has not accepted immigration has managed to make the huge transformation from an impoverished third world nation to a prosperous first rank nation through the sheer power of Korean industry successfully adopting high technology.

    • Replies: @Jtgw
    But to increase productivity through innovation, you need capital to invest in research and development. This capital is instead going after scarce labor that is less productive.
    , @unpc downunder
    And technological innovation, like human capital, is one of those sticky factors which doesn't necessarily advance just because of market signals. Nigeria is a free market economy with a rapidly expanding workforce, but I don't see it coming up with many great technological advances.
  55. OMG, not the dreaded “labor shortage!!” And a “plunging jobless rate!!” Haven’t those Hungarians suffered enough!? So jobs are more easily available, and there is upward pressure on wages? Have they have been listening to that darned Trump, or something?! What will the Hungarians do, them being xenophobic racists and all, and foolishly not allowing their country to be overrun by hordes of poor, uneducated, and incompetent third worlders? Job openings can’t be filled by allowing wages to rise (rising wages!) according to market forces and increasing salaries for workers. I think I’m right on this, didn’t Paul Krugman and Steve Hayes and David Brooks put such nationalistic nonsense to rest a long time ago? Lettuce over there is going be a zillion forints/head. Sounds like they have themselves painted into a corner. Do they think they are a bunch of capitalists now? Capitalists! Didn’t they learn anything from the Russians? How can they survive without Mexicans to do landscaping and other jobs Hungarians won’t do? I feel for journalist Zolton Simon, having to wade into this and make sense of things like market forces, the poor bastard’s head must have been ready to explode.

  56. for a country which imports most of its expensive high-tech products higher wages are a really good thing.

  57. @Anonymous
    You note that Mercedes chose to invest in Hungary.

    They could have chosen to invest in any other EU state, but they chose Hungary. They chose Hungarian workers. Mercedes could have just as well invested in the banliues of France - picked up a great deal of sweetheart deals from the French authorities to get unemployed Africans off the books, but they did not. They wanted Hungarian employees.

    Hungarian workers are cheaper and less likely to strike than French workers.

    • Replies: @Anonymous
    In the overall scheme of things, I doubt whether the wage differentials between a French or Hungarian worker in a car plant - although significant - outweigh the crucial factor of the capital cost of the car plant.
    Granted, costs such as electricity, taxes etc, which no doubt are lower in Hungary, probably are more significant.

    But my point is about the *quality* of the workforce. Hard-headed mittel Europa Mercedes execs would much rather employ other hard-headed mittel-Europa Hungarians to build their cars than the feral monsters of banlieu France.
  58. Anonymous • Disclaimer says:
    @Ivy
    Hungarian workers are cheaper and less likely to strike than French workers.

    In the overall scheme of things, I doubt whether the wage differentials between a French or Hungarian worker in a car plant – although significant – outweigh the crucial factor of the capital cost of the car plant.
    Granted, costs such as electricity, taxes etc, which no doubt are lower in Hungary, probably are more significant.

    But my point is about the *quality* of the workforce. Hard-headed mittel Europa Mercedes execs would much rather employ other hard-headed mittel-Europa Hungarians to build their cars than the feral monsters of banlieu France.

    • Replies: @Ivy
    Mitttel mehr.
    Sans aucun doute.
  59. @jtgw
    Let's walk through the steps of what happens. Immigration is restricted, so employers now compete over a limited supply of labor. However, the quality and productivity of the labor hasn't changed. So where will the money come from to pay the higher wages? It comes out of the capital that employers would otherwise plow into expanding production, repairing deteriorating facilities or, yes, raising wages to attract more skilled workers. Don't think that it comes out of employers' personal consumption; any businessman, to stay competitive in a free market, must put as much capital to work as possible. More lavish consumption is just a small part of what he does with profits.

    So the artificially increased demand for labor results in a depletion of capital. This depletion puts a general brake on economic progress, as there is now less money around for making those investments needed to increase production, which is what lowers the prices of goods and raises living standards.

    You should study the economic history of the period between the Civil War and WWI. This was a time of high immigration and relatively laissez-faire economics, but productivity and wages were increasing throughout the period. This is because, although immigration lowers the quantity demanded of labor, it allows businessmen to accumulate more capital at an even faster rate, giving them the means to raise wages to attract workers. Marx was really totally wrong about the inherent trends of capitalism; there is constant pressure in a free market to raise wages as far as possible, while maintaining the going rate of profit. Increases in productivity, meanwhile, constantly provide new means to businessmen to invest more capital and raise wages even further.

    I highly recommend George Reisman's book "Capitalism" on this subject.

    Even if you accept the idea that in GDP terms it’s a neutral effect, the logic ignores the concept of the marginal utility of money. The worker is far better off with every incremental gain in wage vs the business owner, meaning society is overall much happier and better off when income is more evenly distributed.

    • Replies: @Jtgw
    Society is better off when capital is invested in production, rather than just consumption, which is why business owners need to be able to maximise their profits.

    The source of wage stagnation is excessive capital consumption by the government. Japan, which people here hold up as some kind of shining example, is suffering the same problems as we are in terms of stagnant real wage growth and poor job growth. Shutting out foreigners is not helping them overcome the burden of their bloated public sector.
  60. Another rightwing extremist catastophe! The jobless rate plunges! Wages are radically increasing! Political satire is obsolete!

  61. @5371
    This Varga sounds like a globalist mole. I think he needs an eye kept on him. Where's reiner Tor?

    “his Varga sounds like a globalist mole. ” – He works for Bloomberg. What do you expect?

  62. @Anon 2
    Poland (population 39 million, GDP (PPP) per capita $27,654) is a bit
    richer than Hungary (population 10 million, GDP per capita $26,941),
    and is as well experiencing a shortage of workers in certain specific branches
    of the economy (in construction, tech, and agriculture). Because of its
    fast growing economy, Poland (esp. Warsaw) has become one big
    construction site. The Polish like to live in high rise buildings partly
    owing to the fact that a high rise building is effectively a gated community
    - it makes people feel safe - and so central Warsaw is beginning to look
    like a miniature Manhattan, but with healthy amounts of green
    space among the buildings.

    The shortage of workers is due to two obvious factors - low birthrates and the
    fact that several million young people, motivated by the artificially maintained
    low wages, decamped for greener pastures mostly in the UK and Germany. The
    new populist government, effectively ruled by Kaczynski, an old éminence grise
    in Polish politics, is attempting to raise the wages (and TFR at the same time)
    with the so called 500+ child benefit while simultaneously allowing the influx
    of about one million temporary workers from Ukraine and Belarus (incl many
    women who work in caregiving, babysitting, housekeeping, and even retail).
    There are already voices questioning the govt policy - adding so many extra
    workers is likely to depress wages instead of raising them.

    But there is one thing that everyone is happy about: the populist govt
    has effectively adopted a Poland First policy - Ukrainian and Belarusians
    are acceptable as they are overwhelmingly Christian (and their presence
    effectively reenacts, for better or worse, the multiculturalism of the old
    Polish-Lithuanian Commonwealth, a vast federal republic that lasted
    for 300 years). Ukrainian journalists actually seriously proposed last
    spring that Poland should annex a big chunk of western Ukraine, so
    the Polish Commonwealth can be truly reborn. Not gonna happen.
    It would mean, for example, assuming a big part the enormous Ukrainian
    debt.

    Simultaneously, having a vast supply of cheap labor from the east at its
    disposal, Poland has zero need for migrants from the MENA countries,
    who being largely Muslim are judged culturally incompatible with the
    values and traditions of the Western Christendom to which Poland has
    belonged for at least 1100 years.

    “The shortage of workers is due to two obvious factors – low birthrates and the
    fact that several million young people, motivated by the artificially maintained
    low wages, decamped for greener pastures mostly in the UK and Germany.” – So they can help capitalists in UK and Germany to artificially keep wages there also low, right?

    • Replies: @Anon 2
    What I find a bit puzzling is the Brits complaining
    about the white Christian immigrants from the EU
    but not about the millions of immigrants from Jamaica,
    Africa, India, and Pakistan, at least according to the media.
    Is it the fear of being seen racist so the white immigrants
    become a safe target? Or maybe the sense of noblesse oblige
    toward the former subjects of the British Empire so when
    a Brit looks at a Hindu, his chest swells with pride as the
    Hindu is seen as a reminder of Britain's former greatness
  63. @heretic
    Quick we better get that unemployment rate back up or pretty soon those Hungarians (unemployment ~6%) will be making like S.Koreans (unemployment ~5%) or Japanese (~3%) and then they'll really be screwed.

    The trick is to get them all squabbling among themselves, looking out for Mo immigrant over the shoulder and settling for less on the race to the bottom. The trick is to set them at each others' throats. And pretty soon there's nothing much left of anything for anyone to care a whit for. When one generation knows it will be leaving behind a worse-off place for the next, things start to gather a momentum of their own. By then, what's the point?

    Once we leave social trust and intergenerational stewardship behind, we may as well all live in Rio, Jo'burg, Molenbeek or London 2026. Me and mine and be damned the rest.

    “Quick we better get that unemployment rate back up or pretty soon those ” – For this exactly reason Volcker was forced on Carter and started cranking up interests rates to increase unemployment. They called it fighting inflation. For the bankers inflations = high wages. Reagan started busting unions (the only unions he liked were in Poland) and deindustrialization of the Rust Belt. This was the beginning of triumphant march of neoliberalism. The same was going on in Thatcher’s UK. The process continues since: NAFTA, revoking Glass-Steagal, attacking currencies of Asian countries to force on them the same process…TPP, TTiP…

    • Replies: @Kyle
    The deindustrialization is purely because of enviornmental laws. American workers, American manufacturing is the best in the world. (Or at least competative). We're not competative when we have to follow labor and environmental regulations, and China and Mexico also "have to follow" labor and environmental regulations. I'm not anti trade, but I do think we should have inspectors at Chinese factories if they want a market for their cheap bullhsit wares.
  64. @Anonymous
    Nonsense.

    There is one and one only source of productivity increase - and that is technological innovation.

    Nations with a super abundance of cheap labor have historically staid poor with very little growth in wage levels.

    However in our times, South Korea, for example, a nation that has not accepted immigration has managed to make the huge transformation from an impoverished third world nation to a prosperous first rank nation through the sheer power of Korean industry successfully adopting high technology.

    But to increase productivity through innovation, you need capital to invest in research and development. This capital is instead going after scarce labor that is less productive.

    • Replies: @Anonymous
    Nonsense.

    It is generally accepted these days that the phenomenon of inflation, that is rising prices, is caused purely by governments increasing the money stock of a nation by a level greater than the rate of concomitant productivity growth of the nation.
    That is, 'scarcity' of workers in itself has no effect on inflation. A little thinking tells us that this result is obvious. An employer, any employer, is only able to pay his employees from the proceeds of what he can actually sell. If he raises his prices to cover higher wages, either he loses custom - which ultimately will deter wage rises or close the business - or customers will pay the higher prices, if the product is vital, but at the expense of not buying some other less essential product - which consequently is beaten down in price, counterbalancing the inflationary effect of the 'vital product' price rise.

    Basically, it's a closed system governed by the fixity of the money stock.
  65. Jtgw says: • Website
    @Black Dog the Pirate
    Even if you accept the idea that in GDP terms it's a neutral effect, the logic ignores the concept of the marginal utility of money. The worker is far better off with every incremental gain in wage vs the business owner, meaning society is overall much happier and better off when income is more evenly distributed.

    Society is better off when capital is invested in production, rather than just consumption, which is why business owners need to be able to maximise their profits.

    The source of wage stagnation is excessive capital consumption by the government. Japan, which people here hold up as some kind of shining example, is suffering the same problems as we are in terms of stagnant real wage growth and poor job growth. Shutting out foreigners is not helping them overcome the burden of their bloated public sector.

    • Replies: @Buck Turgidson
    So importing third worlders is the key to reducing a bloated public sector? Mmmm..... Give me the bloated public sector problem 8 days a week over the invaded by tens of millions of third worlders problem.
    , @Anonymous Nephew

    "Society is better off when capital is invested in production, rather than just consumption, which is why business owners need to be able to maximise their profits."
     
    Muh magical free market potion solves all problems, will keep your wife faithful and prevent hair loss! Buy some now! Cost - only your country!



    (In the UK the very rich "invest" their own capital in assets like property and farmland)
    , @Kyle
    Regular people start businesses, not just business owners. There needs to be a balance between good wages and good profits, and reasonable inflation.
  66. @Jtgw
    Society is better off when capital is invested in production, rather than just consumption, which is why business owners need to be able to maximise their profits.

    The source of wage stagnation is excessive capital consumption by the government. Japan, which people here hold up as some kind of shining example, is suffering the same problems as we are in terms of stagnant real wage growth and poor job growth. Shutting out foreigners is not helping them overcome the burden of their bloated public sector.

    So importing third worlders is the key to reducing a bloated public sector? Mmmm….. Give me the bloated public sector problem 8 days a week over the invaded by tens of millions of third worlders problem.

    • Replies: @Dieter Kief
    I'd agree.
    The only big problem Japan has, is being a little old in average. - Exept for that - well, I'd prefer Denmark, or Liechtenstein, or Switzerland, if urged to make a choice, but Japanese seem to be ok where they live. So: Never repair a running engine.

    The group that really seems to suffer a tiny bit, are the superrich. Not the best turf for trophy wives from eastern Europe too, I'd assume. And a constant reason for the Wall St. Journal and the like to complain about Japan: Since speculation makes hardly any sense. The boring economy there is just not dynamic enough - read: To damn stable!

    What impresses me most about Japan is the level of cicility and the absence of private weapons, that are actually being fired at someone. And Daido Moriyama.: Best Japanese Shooter ever.

    , @Jtgw
    As I said, there may be good cultural and political reasons to restrict immigration, but as far as raw economics are concerned, you always want more freedom. Free immigration from culturally similar countries would be ideal.
  67. Worth noting that after being one of the best (or rather least worst) economies under socialism – comparable to Czechoslovakia – Hungary has had a pretty unimpressive transition with the result that it has been overtaken on most economic/living standard metrics by Poland (a real backwater in the 80s) and even Romania has crept much closer to it. One could argue that it’s well overdue for a rebound.

  68. @FX Enderby
    Under communism, E Germany had labor shortages and brought in guest workers from USSR. At least, I read this in a book about Kruschev. Apparently, Russians were not always happy about being sent to Germany to "clean toilets" when they had recently defeated them in the great patriotic war.

    ISteve readers from the former communist bloc please comment to verify/call BS on labor mobility in Warsaw Pact.

    E. Germany and Czechoslovakia did bring in lots of Vietnamese “guest-workers”. And a lot of them are still there, you can get a great bowl of pho in Prague pretty easily. Vietnamese were safer than other Warsaw pact workers because everyone assumed they wouldn’t assimilate or pick up “bad” pro-Western ideas from the locals (like Soviets working in E. Germany or Poland might do). Poland imported North Koreans to work on farms (and apparently still does!) but the numbers were small and the North Koreans were/are completely segregated from the Polish community.

    • Replies: @Buck Turgidson
    I know that I am an unsophisticated, unkewl hick from flyover country, but I would much prefer to not have my native country swamped with millions of third worlders and bear the monumental associated costs -- than to have access to a great bowl of pho.
  69. @utu
    "Quick we better get that unemployment rate back up or pretty soon those " - For this exactly reason Volcker was forced on Carter and started cranking up interests rates to increase unemployment. They called it fighting inflation. For the bankers inflations = high wages. Reagan started busting unions (the only unions he liked were in Poland) and deindustrialization of the Rust Belt. This was the beginning of triumphant march of neoliberalism. The same was going on in Thatcher's UK. The process continues since: NAFTA, revoking Glass-Steagal, attacking currencies of Asian countries to force on them the same process...TPP, TTiP...

    The deindustrialization is purely because of enviornmental laws. American workers, American manufacturing is the best in the world. (Or at least competative). We’re not competative when we have to follow labor and environmental regulations, and China and Mexico also “have to follow” labor and environmental regulations. I’m not anti trade, but I do think we should have inspectors at Chinese factories if they want a market for their cheap bullhsit wares.

    • Replies: @Bill
    Factor of 10 wage differences had nothing to do with it? Are you sure?
  70. @jtgw
    Let's walk through the steps of what happens. Immigration is restricted, so employers now compete over a limited supply of labor. However, the quality and productivity of the labor hasn't changed. So where will the money come from to pay the higher wages? It comes out of the capital that employers would otherwise plow into expanding production, repairing deteriorating facilities or, yes, raising wages to attract more skilled workers. Don't think that it comes out of employers' personal consumption; any businessman, to stay competitive in a free market, must put as much capital to work as possible. More lavish consumption is just a small part of what he does with profits.

    So the artificially increased demand for labor results in a depletion of capital. This depletion puts a general brake on economic progress, as there is now less money around for making those investments needed to increase production, which is what lowers the prices of goods and raises living standards.

    You should study the economic history of the period between the Civil War and WWI. This was a time of high immigration and relatively laissez-faire economics, but productivity and wages were increasing throughout the period. This is because, although immigration lowers the quantity demanded of labor, it allows businessmen to accumulate more capital at an even faster rate, giving them the means to raise wages to attract workers. Marx was really totally wrong about the inherent trends of capitalism; there is constant pressure in a free market to raise wages as far as possible, while maintaining the going rate of profit. Increases in productivity, meanwhile, constantly provide new means to businessmen to invest more capital and raise wages even further.

    I highly recommend George Reisman's book "Capitalism" on this subject.

    This is nonsense on stilts. Low wages actually damage per capita productivity, for a UK example see the “hand car wash”, which didn’t exist 30 years ago when all car washes were automated. Now 2/3 or more of car washes are done by hand (usually the swarthy hand of some Balkan chap).

    (Hungary will do well from tourism thanks to its ‘xenophobia’ – Budapest is lovely and you won’t be knifed or blown up there. Already picking up people who might once have done Paris or Munich. I’m trying to find a way to invest in Wizz Air, but it looks like US private equity owns it. https://en.wikipedia.org/wiki/Wizz_Air )

    • Replies: @Anonymous Nephew
    http://corporate.wizzair.com/en-GB/

    "Wizz Air is listed on the London Stock Exchange under the ticker WIZZ.L and is included in the FTSE 250 and FTSE All-Share Indices. "

    They have a smaller cabin bag size than most airlines, and they charge if you exceed it. Ryanair bags are too big. But you don't need much for a week in a capital. A friend's son reports that one of the ancient spa baths in Budapest turns into a swinger/orgy type place at night!

  71. @Anonymous Nephew
    This is nonsense on stilts. Low wages actually damage per capita productivity, for a UK example see the "hand car wash", which didn't exist 30 years ago when all car washes were automated. Now 2/3 or more of car washes are done by hand (usually the swarthy hand of some Balkan chap).

    (Hungary will do well from tourism thanks to its 'xenophobia' - Budapest is lovely and you won't be knifed or blown up there. Already picking up people who might once have done Paris or Munich. I'm trying to find a way to invest in Wizz Air, but it looks like US private equity owns it. https://en.wikipedia.org/wiki/Wizz_Air )

    http://corporate.wizzair.com/en-GB/

    “Wizz Air is listed on the London Stock Exchange under the ticker WIZZ.L and is included in the FTSE 250 and FTSE All-Share Indices. “

    They have a smaller cabin bag size than most airlines, and they charge if you exceed it. Ryanair bags are too big. But you don’t need much for a week in a capital. A friend’s son reports that one of the ancient spa baths in Budapest turns into a swinger/orgy type place at night!

  72. @Peter Akuleyev
    E. Germany and Czechoslovakia did bring in lots of Vietnamese "guest-workers". And a lot of them are still there, you can get a great bowl of pho in Prague pretty easily. Vietnamese were safer than other Warsaw pact workers because everyone assumed they wouldn't assimilate or pick up "bad" pro-Western ideas from the locals (like Soviets working in E. Germany or Poland might do). Poland imported North Koreans to work on farms (and apparently still does!) but the numbers were small and the North Koreans were/are completely segregated from the Polish community.

    I know that I am an unsophisticated, unkewl hick from flyover country, but I would much prefer to not have my native country swamped with millions of third worlders and bear the monumental associated costs — than to have access to a great bowl of pho.

    • Agree: Jim Don Bob
    • Replies: @Brutusale
    What I find interesting is that most people (in the US) talking about that "great bowl of pho" wouldn't know it from a good or mediocre bowl of pho/sushi/pad thai/salt & pepper shrimp, but having it made by a native helps them convince themselves of its greatness. Meanwhile, former hack chef Tony Bourdain admits that the best sushi he's had in the US was made by a white guy.

    Meanwhile, every other ethic cuisine in this country is prepared by sullen Central Americans. Not a second thought about that from the pho purists!

    , @Peter Akuleyev
    Sure, but since no one in Communist Czechoslovakia or the GDR was ever proposing bringing in millions of Vietnamese to swamp the country, that seems like kind of an irrelevant point to make. In fact the point of Warsaw Pact guest worker policy seemed to be to bring in precisely the kind of workers who would not assimilate and not stay permanently. The Vietnamese are still in the Czech Republic only due to the historical accident of the Soviet Bloc collapsing.
  73. @Jtgw
    Society is better off when capital is invested in production, rather than just consumption, which is why business owners need to be able to maximise their profits.

    The source of wage stagnation is excessive capital consumption by the government. Japan, which people here hold up as some kind of shining example, is suffering the same problems as we are in terms of stagnant real wage growth and poor job growth. Shutting out foreigners is not helping them overcome the burden of their bloated public sector.

    “Society is better off when capital is invested in production, rather than just consumption, which is why business owners need to be able to maximise their profits.”

    Muh magical free market potion solves all problems, will keep your wife faithful and prevent hair loss! Buy some now! Cost – only your country!

    (In the UK the very rich “invest” their own capital in assets like property and farmland)

  74. @Anonymous
    Rising wages were regarded as a good thing when Keynesianism dominated. Rising wages boosted aggregate demand, and rising wages and living standards were regarded as the whole point of the economy. This was until the 80s, when Friedmanite monetarism took over and replaced Keynesianism. Friedmanite monetarism is basically a money lender's view of the economy, whose purpose is to make money accrue money, which is at cross-purposes with rising wages.

    No. It’s the other way around. Keynes pondered the problem of ‘unemployment,’ and concluded that wages were too high (‘sticky wages’). Solution: lower real wages via the printing press. Of course, it doesn’t work that way because money is not neutral in the short term. But people still swear by Keynes.

  75. The laws of supply and demand actually work?

    Well, I’ll be.

  76. @Buck Turgidson
    I know that I am an unsophisticated, unkewl hick from flyover country, but I would much prefer to not have my native country swamped with millions of third worlders and bear the monumental associated costs -- than to have access to a great bowl of pho.

    What I find interesting is that most people (in the US) talking about that “great bowl of pho” wouldn’t know it from a good or mediocre bowl of pho/sushi/pad thai/salt & pepper shrimp, but having it made by a native helps them convince themselves of its greatness. Meanwhile, former hack chef Tony Bourdain admits that the best sushi he’s had in the US was made by a white guy.

    Meanwhile, every other ethic cuisine in this country is prepared by sullen Central Americans. Not a second thought about that from the pho purists!

    • Replies: @Kyle
    Pho is shitty poor people's food.
  77. @Buck Turgidson
    So importing third worlders is the key to reducing a bloated public sector? Mmmm..... Give me the bloated public sector problem 8 days a week over the invaded by tens of millions of third worlders problem.

    I’d agree.
    The only big problem Japan has, is being a little old in average. – Exept for that – well, I’d prefer Denmark, or Liechtenstein, or Switzerland, if urged to make a choice, but Japanese seem to be ok where they live. So: Never repair a running engine.

    The group that really seems to suffer a tiny bit, are the superrich. Not the best turf for trophy wives from eastern Europe too, I’d assume. And a constant reason for the Wall St. Journal and the like to complain about Japan: Since speculation makes hardly any sense. The boring economy there is just not dynamic enough – read: To damn stable!

    What impresses me most about Japan is the level of cicility and the absence of private weapons, that are actually being fired at someone. And Daido Moriyama.: Best Japanese Shooter ever.

  78. @Buck Turgidson
    I know that I am an unsophisticated, unkewl hick from flyover country, but I would much prefer to not have my native country swamped with millions of third worlders and bear the monumental associated costs -- than to have access to a great bowl of pho.

    Sure, but since no one in Communist Czechoslovakia or the GDR was ever proposing bringing in millions of Vietnamese to swamp the country, that seems like kind of an irrelevant point to make. In fact the point of Warsaw Pact guest worker policy seemed to be to bring in precisely the kind of workers who would not assimilate and not stay permanently. The Vietnamese are still in the Czech Republic only due to the historical accident of the Soviet Bloc collapsing.

  79. @Anonymous
    The way capitalism is structured it needs constant growth

    No it doesn't.

    It doesn’t have to, but much of it currently is. Here’s my fave: housing startups as an indicator of economic health. You can attack that from any perspective you want: immigration, environment, finance.

  80. @Drake
    A labor shortage is the best thing that can happen to workers.

    Whenever a politician or journalist refers to it as a bad thing, you know whose side they are on - not the side of working people.

    The market solution to a labor shortage is for the employer to raise wages. The pro business solution is for the government to increase the number of workers to hold down wages.

  81. Hungarian workers are probably pretty productive – decently educated, and I assume reasonably willing to work. What matters, and what the government *should* focus on is societal productivity. How are the roads and rail system? Is the power system rock-solid reliable? Are the tax laws easy enough for a small businessman to figure out? Is it easy to start a small business? That Mercedes factory well do better if it doesn’t have to import everything from Germany; will Hungarian businesses supporting up to provide services for it? (And for its workers?)

    A Hungarian worker in Germany is probably about 80-90% as productive as a German worker, depending on language skill, but is less so in Hungary (hence the low wages) because there’s less of that societal capital. Maybe those well-paid government employees can be put to work building up Hungary’s societal capital.

  82. @Buck Turgidson
    So importing third worlders is the key to reducing a bloated public sector? Mmmm..... Give me the bloated public sector problem 8 days a week over the invaded by tens of millions of third worlders problem.

    As I said, there may be good cultural and political reasons to restrict immigration, but as far as raw economics are concerned, you always want more freedom. Free immigration from culturally similar countries would be ideal.

    • Replies: @Buck Turgidson
    "Raw economics." Mmmmm.... could you clarify? GDP? Per capita income? Maximum corporate profit? And who gets to define "raw economics" and set policies accordingly?" Donald Trump? Jack Welch? George Will? obama? Me?
    , @AnotherDad

    As I said, there may be good cultural and political reasons to restrict immigration, but as far as raw economics are concerned, you always want more freedom. Free immigration from culturally similar countries would be ideal.
     
    jtgw--i'm sorry you are a clueless loon.

    "raw economics" means what? If you mean total production of the global economy--then "maybe" ... in the short run. But most of that increase goes to ... the immigrants themselves.

    But if you're talking about GDP per capita--level of prosperity of the population--which is what people actually want from their economic policies--then this is absolute nonsense. Open immigration suppresses growth in living standards, it retards applying innovation to generate productivity growth.

    Open immigration is not just the obvious social and cultural disaster, but an economic one for living standards. And that's not even getting into the *long term* issues both cultural and economic of having a dumber and more balkanized population, which results in lower economic performance *and* social\cultural contention.
  83. @Jtgw
    As I said, there may be good cultural and political reasons to restrict immigration, but as far as raw economics are concerned, you always want more freedom. Free immigration from culturally similar countries would be ideal.

    “Raw economics.” Mmmmm…. could you clarify? GDP? Per capita income? Maximum corporate profit? And who gets to define “raw economics” and set policies accordingly?” Donald Trump? Jack Welch? George Will? obama? Me?

  84. George Reisman is an Ayn Rand cultist. We’re being proselytized, folks.

    Tell Jtgw what I tell Scientologists or church people who knock on my door with interesting information about Joseph Smith.

  85. @utu
    "The shortage of workers is due to two obvious factors – low birthrates and the
    fact that several million young people, motivated by the artificially maintained
    low wages, decamped for greener pastures mostly in the UK and Germany." - So they can help capitalists in UK and Germany to artificially keep wages there also low, right?

    What I find a bit puzzling is the Brits complaining
    about the white Christian immigrants from the EU
    but not about the millions of immigrants from Jamaica,
    Africa, India, and Pakistan, at least according to the media.
    Is it the fear of being seen racist so the white immigrants
    become a safe target? Or maybe the sense of noblesse oblige
    toward the former subjects of the British Empire so when
    a Brit looks at a Hindu, his chest swells with pride as the
    Hindu is seen as a reminder of Britain’s former greatness

  86. Hungary’s labor shortage is getting so dire that a wage explosion appears inevitable

    I got hit by a wage explosion in the Mekong Delta in ’68. I still can’t walk right.

    I got buddies that lost eyes, legs, arms, to wage detonations. I got friends in wheelchairs, who crap in bags, because of wage explosions.

    It’s no laughing matter, Steve.

    Hungary’s jobless rate plunged to a record 5.1 percent in the second quarter. …

    The horror…the horror.

    It reminds me of arguments that we should start lots of wars to help our economy.

    The theory that the US military-industrial complex has been doing exactly that since shortly after 1945 has been floating around for years. The US does indeed seem to be making excellent progress in turning the entire Middle East into a killing zone/munitions testing range.

    It’s more fact than theory; moving inventory off the shelves is how you get paid to make more inventory. That’s not theoretical.

    OMG, a wage explosion? How many people were killed? I bet some loan sharks and minorities were harmed, that’s for sure. Just think, if that racist xenophobe Trump becomes President we might be hit by waves of wage explosions.

    Wage-increase carpet bombing! Wage-increase firestorms! Wage-increase daisy-cutters!!! Global thermo-wage-increasing combat!!!

    In general, Western literature about the USSR is mostly propaganda. Fantasy. In big things and small.

    Guess that’s what happens when you close your society, and run it like a prison; anybody can make up anything about you, and nobody knows better. Actually, I’m being kind; we let observers into our prisons.

  87. @Hugh
    Neighbouring Romania has a large ethnic Hungarian population. In some parts of Transylvania Hungarians form a clear majority and control the local authorities.

    Maybe they would be interested in moving back to the Motherland now.

    Maybe they would be interested in moving back to the Motherland now.

    Pretty sure they would prefer the Motherland move back to them.

    • Replies: @Romanian
    The Romanian majorities in the way (half the country) would object to the reunification and go a bit beyond writing strongly worded letters to the UN Secretary General.
  88. @Kyle
    The deindustrialization is purely because of enviornmental laws. American workers, American manufacturing is the best in the world. (Or at least competative). We're not competative when we have to follow labor and environmental regulations, and China and Mexico also "have to follow" labor and environmental regulations. I'm not anti trade, but I do think we should have inspectors at Chinese factories if they want a market for their cheap bullhsit wares.

    Factor of 10 wage differences had nothing to do with it? Are you sure?

  89. @Brutusale
    What I find interesting is that most people (in the US) talking about that "great bowl of pho" wouldn't know it from a good or mediocre bowl of pho/sushi/pad thai/salt & pepper shrimp, but having it made by a native helps them convince themselves of its greatness. Meanwhile, former hack chef Tony Bourdain admits that the best sushi he's had in the US was made by a white guy.

    Meanwhile, every other ethic cuisine in this country is prepared by sullen Central Americans. Not a second thought about that from the pho purists!

    Pho is shitty poor people’s food.

    • Replies: @Brutusale
    The aforementioned hack Bourdain is constantly singing the praises of Vietnamese food, especially pho, while deriding American diners getting all gaga over "Italian peasant food" polenta. But at least he never pretended to be giving his viewers anything but his opinion. And he's always been a guy touting street food as superior to any Michelin-starred restaurant.

    I still find Bourdain entertaining, and give him full credit for admitting that he was a hack chef, as well as a smack addict.

  90. @jtgw
    Let's walk through the steps of what happens. Immigration is restricted, so employers now compete over a limited supply of labor. However, the quality and productivity of the labor hasn't changed. So where will the money come from to pay the higher wages? It comes out of the capital that employers would otherwise plow into expanding production, repairing deteriorating facilities or, yes, raising wages to attract more skilled workers. Don't think that it comes out of employers' personal consumption; any businessman, to stay competitive in a free market, must put as much capital to work as possible. More lavish consumption is just a small part of what he does with profits.

    So the artificially increased demand for labor results in a depletion of capital. This depletion puts a general brake on economic progress, as there is now less money around for making those investments needed to increase production, which is what lowers the prices of goods and raises living standards.

    You should study the economic history of the period between the Civil War and WWI. This was a time of high immigration and relatively laissez-faire economics, but productivity and wages were increasing throughout the period. This is because, although immigration lowers the quantity demanded of labor, it allows businessmen to accumulate more capital at an even faster rate, giving them the means to raise wages to attract workers. Marx was really totally wrong about the inherent trends of capitalism; there is constant pressure in a free market to raise wages as far as possible, while maintaining the going rate of profit. Increases in productivity, meanwhile, constantly provide new means to businessmen to invest more capital and raise wages even further.

    I highly recommend George Reisman's book "Capitalism" on this subject.

    So where will the money come from to pay the higher wages? It comes out of the capital that employers would otherwise plow into expanding production, repairing deteriorating facilities or, yes, raising wages to attract more skilled workers. Don’t think that it comes out of employers’ personal consumption; any businessman, to stay competitive in a free market, must put as much capital to work as possible.

    Yes, the general level of profit in capitalist markets is always the same. Never goes up. Never goes down. No matter what. There is absolutely nothing that can be done policy-wise to make profits go down. Anything you try just immiserates workers or consumers or both or the poor or blacks or whomever it is that it is very naughty to immiserate.

    I know this because 1) capitalists never bother to try to influence policy (why would they?), and 2) those kind, Koch-supported, Austrian economists say so.

    • Replies: @jtgw
    Profits tend to equalize in a free market, when conditions don't change. A businessman that takes too large a salary compared to his competitors may find himself outcompeted for labor or equipment, for example. However, there are always new perturbations in a market economy, e.g. technological innovation, which change the profit-loss calculations and nudge profits in one direction or another.
  91. @Jtgw
    Society is better off when capital is invested in production, rather than just consumption, which is why business owners need to be able to maximise their profits.

    The source of wage stagnation is excessive capital consumption by the government. Japan, which people here hold up as some kind of shining example, is suffering the same problems as we are in terms of stagnant real wage growth and poor job growth. Shutting out foreigners is not helping them overcome the burden of their bloated public sector.

    Regular people start businesses, not just business owners. There needs to be a balance between good wages and good profits, and reasonable inflation.

  92. @Hepp
    It looks like Mihaly Varga is a member of Fidesz, so why is he calling for more cheap labor? Reading the article, it's not clear that's what he's doing. It looks like the Bloomberg reporter is the one trying to make this sound like a bad thing.

    Fidesz is not the right wing party. Fidesz is the cuckservative party. Their current attack of spine is out of sheer terror that the actual right wing party might take their lunch money. The spine will dribble away after the crisis passes.

    • Replies: @Marcus
    No, they are a serious right wing party, clowns like Jobbik are kept around to divert the PC West's hysterical media's attention.
    , @Marcus
    Fidesz is the only ruling party in the EU trying to keep out rapefugees. Jobbik embraces Turanism, they would probably welcome at least some of the invaders as their Turkic brethren.
  93. @The Alarmist
    Meh, that can't be right. Local wages are not permitted to rise in any case, but certainly not in excess of the inflation rate, so we are clearly not importing enough foreign labour from cheaper locales. Capitalism as has been portrayed to the vast majority of us is dependent on cheap labour from abroad to negate the effect of imported labour.

    BTW, the black death of the 12th through 15th centuries was responsible for labour gaining a competitive edge in the local markets. Without it, we would not have experienced 8 centuries of improved living standards and the development of a middle class.

    The aggregation of wealth to the top 0.1% through the debasing of the value of the labour of the 99.9% over the last 50 years or so has unwound 8 centuries of gains. Serfdom really seems to be the normal state of affairs.

    BTW, the black death of the 12th through 15th centuries was responsible for labour gaining a competitive edge in the local markets. Without it, we would not have experienced 8 centuries of improved living standards and the development of a middle class.

    The plague in Europe is more like 14th-17th centuries. The plague showing up in European ports in late 1346 or 1847 and spreading rapidly across Europe the next few years. The last great outbreak being the Great Plague of 1664-67.
    https://en.wikipedia.org/wiki/Black_Death

    From Cochran’s book, i think the plague did substantially raises wages–hence living standards–in the immediate aftermath of the initial hit. Life was much better in the 1400s, than it had been in the early 1300s. But after this the plague is just very temporary noise in this era when people were dying all the time from disease. (The plague had nothing significant to do with the industrial revolution breakout. Read Cochran’s “Farewell to Alms” for some insight into the takeoff for that.)

    One must remember that population can recover quickly to their Malthusian limits when women are not on the pill, Facebook, Twitter, Instagram.

    • Replies: @jtgw
    It is actually free enterprise and innovation, which follow from secure property rights, that allows people to escape their Malthusian limits. This is why Malthus was proven wrong by the Industrial Revolution, not by the Pill.
    , @Immigrant from former USSR
    "A Farewell to Alms" is the book by Gregory Clark:
    https://www.amazon.com/gp/offer-listing/B00E7V98E2/
    Gregory Cochran (with late Henry Harpending) is known mostly by his book
    "The 10,000 Year Explosion: How Civilization Accelerated Human Evolution",
    https://www.amazon.com/gp/offer-listing/0465002218/
    , @Immigrant from former USSR
    "A Farewell to Alms" is the book by Gregory Clark:
    https://www.amazon.com/gp/offer-listing/B00E7V98E2/
    Gregory Cochran (with late Henry Harpending) is known mostly by his book
    "The 10,000 Year Explosion: How Civilization Accelerated Human Evolution",
    https://www.amazon.com/gp/offer-listing/0465002218/
  94. @This Is Our Home
    If wages are rising, unemployment is falling and productivity is static in a country with a very open (or even just fairly open) goods and services market then one of your data sets is very likely wrong. Normally that will be productivity as it is hard to measure.

    Their high wages with no possibility of inporting cheap labour will and will have already increased the incentive to increase the use of capital in the production process in order to boost labour unit productivity.

    Hungary will now get a high tech economy with cheap housing and rich people. The opposite of the modish ezpensive housing, low wage western economy.

    Concerning the housing market, you might find this interesting:

    https://mises.org/blog/housing-bubble-and-credit-crunch

  95. jtgw says: • Website
    @Bill

    So where will the money come from to pay the higher wages? It comes out of the capital that employers would otherwise plow into expanding production, repairing deteriorating facilities or, yes, raising wages to attract more skilled workers. Don’t think that it comes out of employers’ personal consumption; any businessman, to stay competitive in a free market, must put as much capital to work as possible.
     
    Yes, the general level of profit in capitalist markets is always the same. Never goes up. Never goes down. No matter what. There is absolutely nothing that can be done policy-wise to make profits go down. Anything you try just immiserates workers or consumers or both or the poor or blacks or whomever it is that it is very naughty to immiserate.

    I know this because 1) capitalists never bother to try to influence policy (why would they?), and 2) those kind, Koch-supported, Austrian economists say so.

    Profits tend to equalize in a free market, when conditions don’t change. A businessman that takes too large a salary compared to his competitors may find himself outcompeted for labor or equipment, for example. However, there are always new perturbations in a market economy, e.g. technological innovation, which change the profit-loss calculations and nudge profits in one direction or another.

    • Replies: @Bill
    Those aren't facts. They are slogans you are repeating like a robot.
  96. @AnotherDad

    BTW, the black death of the 12th through 15th centuries was responsible for labour gaining a competitive edge in the local markets. Without it, we would not have experienced 8 centuries of improved living standards and the development of a middle class.
     
    The plague in Europe is more like 14th-17th centuries. The plague showing up in European ports in late 1346 or 1847 and spreading rapidly across Europe the next few years. The last great outbreak being the Great Plague of 1664-67.
    https://en.wikipedia.org/wiki/Black_Death

    From Cochran's book, i think the plague did substantially raises wages--hence living standards--in the immediate aftermath of the initial hit. Life was much better in the 1400s, than it had been in the early 1300s. But after this the plague is just very temporary noise in this era when people were dying all the time from disease. (The plague had nothing significant to do with the industrial revolution breakout. Read Cochran's "Farewell to Alms" for some insight into the takeoff for that.)

    One must remember that population can recover quickly to their Malthusian limits when women are not on the pill, Facebook, Twitter, Instagram.

    It is actually free enterprise and innovation, which follow from secure property rights, that allows people to escape their Malthusian limits. This is why Malthus was proven wrong by the Industrial Revolution, not by the Pill.

  97. @Anonymous
    In the overall scheme of things, I doubt whether the wage differentials between a French or Hungarian worker in a car plant - although significant - outweigh the crucial factor of the capital cost of the car plant.
    Granted, costs such as electricity, taxes etc, which no doubt are lower in Hungary, probably are more significant.

    But my point is about the *quality* of the workforce. Hard-headed mittel Europa Mercedes execs would much rather employ other hard-headed mittel-Europa Hungarians to build their cars than the feral monsters of banlieu France.

    Mitttel mehr.
    Sans aucun doute.

  98. @jtgw
    The Black Death also killed a lot of people. It reminds me of arguments that we should start lots of wars to help our economy. Or just break a lot of windows.

    The point about rising wages coming from labor shortage rather than productivity is actually very important. When wages rise because productivity rises, then everyone enjoys the benefits of the higher wage, since higher productivity also means cheaper goods. But when they are due to labor shortages, whether from immigration restrictions or some other cause, then the higher wages are offset by rising prices, without a net benefit for everybody.

    This isn't to say Hungary should throw open its borders; there are cultural, social and political reasons not to let themselves be demographically swamped. But they would do well to allow immigration from culturally similar countries (easier said than done, I know), or at least adopt a free trade policy.

    This isn’t to say Hungary should throw open its borders; there are cultural, social and political reasons not to let themselves be demographically swamped. But they would do well to allow immigration from culturally similar countries (easier said than done, I know), or at least adopt a free trade policy.

    This “more immigration” must be some sort of bizarre primitive reflex tic–like you kicking when the doc bangs your knee.

    There is absolutely no need for immigration. Your paragraph above about wages makes most of the relevant points. The final point is rising wages actually *motivates* capitalists to innovate and deploy capital to get more productivity from their workers. It’s a virtuous cycle.

    Of course, the prime example of this is the United States. It industrialized behind high tariffs and with–despite periodic immigration surges–the highest wages in the world. (Open land for settlement meant that capitalists had to pay high wages to keep workers.) The high wages forced American capitalists to always be innovating and rolling out new processes and technologies to improve the productivity of their high wage workforce.

    Capitalism–essentially capitalist competing with other capitalists to produce more efficiently–is far and away the most dynamic and productivity and hence prosperity enhancing economic system the world has seen. All that’s required from the politicians is *not screwing it up* by letting capitalists cheat by importing cheap labor, instead of innovating and employing capital and labor more efficiently.

    • Replies: @jtgw
    Why "despite periodic immigration surges" and not "because of periodic immigration surges"? Why shouldn't the "despite" apply to, say, the high tariffs? You need a good theory of economics to interpret all these correlations and discover the true arrows of causation. The main thing to take away from the period of high immigration is that immigration does NOT dampen productivity growth and rising living standards when the other features of capitalism are in place, so critics of immigration today on economic grounds are probably barking up the wrong tree, if they want to know the true source of our malaise. I suppose the period also shows that damaging policies, like high tariffs, can often be offset by good policies, like low taxes, secure property rights and liberal immigration policy. I would say that the US would have grown even faster without the tariffs, but we did pretty well nonetheless.
  99. @Hugh
    Neighbouring Romania has a large ethnic Hungarian population. In some parts of Transylvania Hungarians form a clear majority and control the local authorities.

    Maybe they would be interested in moving back to the Motherland now.

    Neighbouring Romania has a large ethnic Hungarian population. In some parts of Transylvania Hungarians form a clear majority and control the local authorities.

    Maybe they would be interested in moving back to the Motherland now.

    Yeah, Hungary’s doing great, so let’s get them bogged down in yet another war over the status of Transylvania. BRILLIANT!

  100. @AnotherDad
    God forbid wages soaring to $646 a month.

    What would come next? Prosperity for the working man? Can't have that!

    Dad, I don’t think $646 is a decent weeks wages let alone a month’s wages, hell that just makes a decent day’s wages.

  101. @jtgw
    Let's walk through the steps of what happens. Immigration is restricted, so employers now compete over a limited supply of labor. However, the quality and productivity of the labor hasn't changed. So where will the money come from to pay the higher wages? It comes out of the capital that employers would otherwise plow into expanding production, repairing deteriorating facilities or, yes, raising wages to attract more skilled workers. Don't think that it comes out of employers' personal consumption; any businessman, to stay competitive in a free market, must put as much capital to work as possible. More lavish consumption is just a small part of what he does with profits.

    So the artificially increased demand for labor results in a depletion of capital. This depletion puts a general brake on economic progress, as there is now less money around for making those investments needed to increase production, which is what lowers the prices of goods and raises living standards.

    You should study the economic history of the period between the Civil War and WWI. This was a time of high immigration and relatively laissez-faire economics, but productivity and wages were increasing throughout the period. This is because, although immigration lowers the quantity demanded of labor, it allows businessmen to accumulate more capital at an even faster rate, giving them the means to raise wages to attract workers. Marx was really totally wrong about the inherent trends of capitalism; there is constant pressure in a free market to raise wages as far as possible, while maintaining the going rate of profit. Increases in productivity, meanwhile, constantly provide new means to businessmen to invest more capital and raise wages even further.

    I highly recommend George Reisman's book "Capitalism" on this subject.

    Let’s walk through the steps of what happens. Immigration is restricted, so employers now compete over a limited supply of labor. …

    So the artificially increased demand for labor results in a depletion of capital…

    jtgw … please stop. It’s getting embarassing.

    a) Employers are *always* competing over a limited supply of labor… even if there was free movement throughout the world. The world is not infinite. Labor is not infinite. Capital is not infinite. And yet capitalism works just fine.

    b) There’s nothing “artificial” about some increased demand for labor from not having open immigration. Open immigration is what is deeply unnatural not the reverse. Normal people do not let other people into their territory willingly … the human (and general biological) tendency is precisely the reverse–to go conquer someone else’s territory and take it from them.

    And again, this is capitalism 101: higher labor prices in fact *motivate* (i.e. force) capitalists to innovate and roll out new capital and technologies to drive up productivity. The ones that can not–for whatever reason whether insufficient capital or insufficient IQ\skill–die. The ones the can survive. If you don’t understand these basic points you don’t understand anything.

    Your example of the United States shows … nothing. First off, the early part of the post-Civil War period was a low immigration era. It was when growth recovered that immigration started ramping back up. I’d say growth *drove* increased immigration not the reverse. Obviously immigration made the total economy bigger, but this wave of growth was about technology and industrialization–steam power, the railroad, telegraph, later petroleum–and westward expansion. Immigration could have been absolutely zero and the United States would have rapidly industrialized.

    All you have to do is look about the world. This was the Meiji Period when Japan rapidly industrialized over the exact same period. Europe–notably Germany–rapidly industrialized in this same period without immigration.

    Seriously stop the immigration nonsense. It’s just nonsense. And actually the *opposite* of how capitalism works–which is continually employing capital more efficiently to drive up productivity allowing for rising wages.

    I get the feeling that when the globalists have reduced the entire world to a giant undifferentiated slum …. they’ll be demanding we let in cheap Martian labor to keep the crops from rotting in the fields.

    • Replies: @Ozymandias
    "..this wave of growth was about technology and industrialization–steam power, the railroad, telegraph, later petroleum–and westward expansion. Immigration could have been absolutely zero and the United States would have rapidly industrialized."

    Could have, yes, but what actually happened was that capital bribed government for more immigration, labor protested, capital called them racist. Same ol', same ol'.

    Big difference now is that this strategy is a lot more effective due to societal changes brought by the internet. Namely, the over-representation of the impressionable and idealistic young, who have been decieved into supporting capital's agenda; and changes in the nature of media's revenue stream, leaving it with no obligation to labor.
  102. @AnotherDad

    BTW, the black death of the 12th through 15th centuries was responsible for labour gaining a competitive edge in the local markets. Without it, we would not have experienced 8 centuries of improved living standards and the development of a middle class.
     
    The plague in Europe is more like 14th-17th centuries. The plague showing up in European ports in late 1346 or 1847 and spreading rapidly across Europe the next few years. The last great outbreak being the Great Plague of 1664-67.
    https://en.wikipedia.org/wiki/Black_Death

    From Cochran's book, i think the plague did substantially raises wages--hence living standards--in the immediate aftermath of the initial hit. Life was much better in the 1400s, than it had been in the early 1300s. But after this the plague is just very temporary noise in this era when people were dying all the time from disease. (The plague had nothing significant to do with the industrial revolution breakout. Read Cochran's "Farewell to Alms" for some insight into the takeoff for that.)

    One must remember that population can recover quickly to their Malthusian limits when women are not on the pill, Facebook, Twitter, Instagram.

    “A Farewell to Alms” is the book by Gregory Clark:

    Gregory Cochran (with late Henry Harpending) is known mostly by his book
    “The 10,000 Year Explosion: How Civilization Accelerated Human Evolution”,

    • Replies: @AnotherDad
    Of course, you're right.

    Senility is setting in early for me and any G.C. named author i've read wiggles the neurons appropriately. I ought to look everything up now before putting fingers to keyboard.

    Thanks for the correction.

    BTW, both the books
    -- Clark's "Farewell to Alms"
    and
    -- Cochran's "10000 Year Explosion"
    are worth reading.
  103. @AnotherDad

    BTW, the black death of the 12th through 15th centuries was responsible for labour gaining a competitive edge in the local markets. Without it, we would not have experienced 8 centuries of improved living standards and the development of a middle class.
     
    The plague in Europe is more like 14th-17th centuries. The plague showing up in European ports in late 1346 or 1847 and spreading rapidly across Europe the next few years. The last great outbreak being the Great Plague of 1664-67.
    https://en.wikipedia.org/wiki/Black_Death

    From Cochran's book, i think the plague did substantially raises wages--hence living standards--in the immediate aftermath of the initial hit. Life was much better in the 1400s, than it had been in the early 1300s. But after this the plague is just very temporary noise in this era when people were dying all the time from disease. (The plague had nothing significant to do with the industrial revolution breakout. Read Cochran's "Farewell to Alms" for some insight into the takeoff for that.)

    One must remember that population can recover quickly to their Malthusian limits when women are not on the pill, Facebook, Twitter, Instagram.

    “A Farewell to Alms” is the book by Gregory Clark:

    Gregory Cochran (with late Henry Harpending) is known mostly by his book
    “The 10,000 Year Explosion: How Civilization Accelerated Human Evolution”,

  104. @Bill
    Fidesz is not the right wing party. Fidesz is the cuckservative party. Their current attack of spine is out of sheer terror that the actual right wing party might take their lunch money. The spine will dribble away after the crisis passes.

    No, they are a serious right wing party, clowns like Jobbik are kept around to divert the PC West’s hysterical media’s attention.

    • LOL: Bill
  105. jtgw says: • Website
    @AnotherDad

    This isn’t to say Hungary should throw open its borders; there are cultural, social and political reasons not to let themselves be demographically swamped. But they would do well to allow immigration from culturally similar countries (easier said than done, I know), or at least adopt a free trade policy.
     
    This "more immigration" must be some sort of bizarre primitive reflex tic--like you kicking when the doc bangs your knee.

    There is absolutely no need for immigration. Your paragraph above about wages makes most of the relevant points. The final point is rising wages actually *motivates* capitalists to innovate and deploy capital to get more productivity from their workers. It's a virtuous cycle.

    Of course, the prime example of this is the United States. It industrialized behind high tariffs and with--despite periodic immigration surges--the highest wages in the world. (Open land for settlement meant that capitalists had to pay high wages to keep workers.) The high wages forced American capitalists to always be innovating and rolling out new processes and technologies to improve the productivity of their high wage workforce.

    Capitalism--essentially capitalist competing with other capitalists to produce more efficiently--is far and away the most dynamic and productivity and hence prosperity enhancing economic system the world has seen. All that's required from the politicians is *not screwing it up* by letting capitalists cheat by importing cheap labor, instead of innovating and employing capital and labor more efficiently.

    Why “despite periodic immigration surges” and not “because of periodic immigration surges”? Why shouldn’t the “despite” apply to, say, the high tariffs? You need a good theory of economics to interpret all these correlations and discover the true arrows of causation. The main thing to take away from the period of high immigration is that immigration does NOT dampen productivity growth and rising living standards when the other features of capitalism are in place, so critics of immigration today on economic grounds are probably barking up the wrong tree, if they want to know the true source of our malaise. I suppose the period also shows that damaging policies, like high tariffs, can often be offset by good policies, like low taxes, secure property rights and liberal immigration policy. I would say that the US would have grown even faster without the tariffs, but we did pretty well nonetheless.

    • Replies: @Anonymous
    You are wrong.

    Just one very very basic simple real life example for you.

    Nigeria, Pakistan, Bangladesh, India, Ethiopia,Indonesia etc etc etc.

    According to your beliefs all of these nations should be economic giants dominating the world the most innovatory, biggest, brightest, profitable capitalist enterprise the world has ever seen. Bangladeshi ion-propelled space ships should be mining Mars right now.
    And you can't tell me that Bangladesh doesn't satisfy your condition for an infinity of zero pay 'workers'.

    Your point, as far as I can tell is 'infinite superabundance of 'workers' = infinite capital accumulation = infinite production.

    Well, it's just plain WRONG. The world simply doesn't work that way.

    Other factors - which defy your simplisticism hold sway, and have always held sway.
    Hint: Study such things as medieval cathedrals and wonder how the masons - the only 'capital' they had were lumps of sharpened iron or lumps of heavy iron - ever managed to build them in the first place.
    , @Bill

    Why “despite periodic immigration surges” and not “because of periodic immigration surges”?
     
    Because he knows how to deploy economic reasoning, unlike you.
  106. @Jtgw
    As I said, there may be good cultural and political reasons to restrict immigration, but as far as raw economics are concerned, you always want more freedom. Free immigration from culturally similar countries would be ideal.

    As I said, there may be good cultural and political reasons to restrict immigration, but as far as raw economics are concerned, you always want more freedom. Free immigration from culturally similar countries would be ideal.

    jtgw–i’m sorry you are a clueless loon.

    “raw economics” means what? If you mean total production of the global economy–then “maybe” … in the short run. But most of that increase goes to … the immigrants themselves.

    But if you’re talking about GDP per capita–level of prosperity of the population–which is what people actually want from their economic policies–then this is absolute nonsense. Open immigration suppresses growth in living standards, it retards applying innovation to generate productivity growth.

    Open immigration is not just the obvious social and cultural disaster, but an economic one for living standards. And that’s not even getting into the *long term* issues both cultural and economic of having a dumber and more balkanized population, which results in lower economic performance *and* social\cultural contention.

    • Replies: @Buck Turgidson
    The US needs no more immigration. Not from culturally compatible countries, not from smart countries, not from wonderful countries, not from underrepresented countries. NONE. It is an outdated concept and time to end it. Immigration exerts downward pressure on wages, increases welfare and food stamp use, increases crime, islamic terror, and in general hoses the American worker and taxpayer something horrible. It makes our cities more polluted, less livable, and more culturally fragmented. It increases traffic congestion, drives up housing costs, and causes loss of forests, farmland, and wetlands ('environmentalists' WAKE UP). There may have been a period 100 years when we could assimilate a limited number of immigrants from select countries. Not today. Every day we are more mechanized and automated and have less need for more "workers." Further, at ~315 million and #3 in world population, it is time to think about **shrinking** the size of our population (sorry if that gives anyone the vapors. If you want to live in an overcrowded s***thole -- move to one). We have been too stupid and generous for far too long and it is time to wise up. Of course in the meantime all illegals will be deported. This will increase GDP and quality of life for all our citizens.
    , @jtgw
    That argument depends on the lump of labor fallacy. Sure, if there was only a fixed amount of work to be done, open immigration would result in only increased competition for the same number of jobs, until wages were driven down to the level of the origin country. But immigrants also increase demand for goods and services. Moreover, they enable more division of labor, as immigrants can focus in areas where they are most productive and natives can focus in areas where they are comparatively most productive.

    http://econfaculty.gmu.edu/bcaplan/e321/lab3.htm

    However, you are quite right that there are political and cultural issues to consider. Even if immigrants deliver economic growth, they may also influence local politics in a statist direction. The welfare state, too, distorts immigration patterns and can lead to greater welfare dependency; in that respect I quite agree with the immigration skeptics here.
  107. @Hugh
    Neighbouring Romania has a large ethnic Hungarian population. In some parts of Transylvania Hungarians form a clear majority and control the local authorities.

    Maybe they would be interested in moving back to the Motherland now.

    That IS their motherland. Hungary got screwed at Versailles, losing territory to Serbia, Slovakia, and Romania. Timisoara is a largely Hungarian town, and one reason the revolt against Ceaucescu got started there was ethnic Hungarian oppression.

    • Replies: @Romanian

    That IS their motherland. Hungary got screwed at Versailles, losing territory to Serbia, Slovakia, and Romania. Timisoara is a largely Hungarian town, and one reason the revolt against Ceaucescu got started there was ethnic Hungarian oppression.
     
    They will have to fight the Serbs for it first, since the Serbs have the other half of the Banat region and claim this one as well. Then the winner fights us. We're a bit threadbare in the military department, but we make up for it in the soldierly virtues and in motivation.

    I'm not aware of any proper wars we had against the Serbs, but our track record against Hungary is decent (the second time we got to occupy Budapest, we were with our Communist jailers, so it's too sad to count, but the first was a beauty, with Romanian peasant shoes flying on the mast of the Assembly House).

    Speaking seriously, if you look at the irredentist maps for Greater Serbia, Greater Albania, Greater Bulgaria, Megali Idea Greece, Greater Hungary (the 64 counties) and so on, you will see the makings of some very bloody wars, because this is what overlapping ethnic groups will eventually do, since they all have some claim to residing there historically which they want to convert into political and cultural primacy. My people are no different, except our irredentism is to the East and maintain no emotional claim on Serbian Banat, Southern Dobrogea in Bulgaria and so on.

    I would like to contradict you on Timisoara.
    https://en.wikipedia.org/wiki/Hungarians_in_Romania#/media/File:Harta_etnica_2011_JUD.png
    Its Hungarian minority has been under 10% for decades. Cluj Napoca (Klausenburg) is near 20%. If Timisoara had more than that, it would have had signposts in Hungarian and state funded Hungarian language schools and everything else our very rigorous minority rights laws entail (though nothing stops anyone from making ethnic weekend schools wherever they want and privately funded whatever, including camps where Hungarian extremists from Hungary push irredentist claims). The places where Hungarians are a majority are right in the middle of the country, Harghita and Covasna counties, with Mures having a plurality of people. If they had been on the border, things might have been settled in WW1. But Hungary can't claim them.

    As for oppression, I was in diapers back then, but I remember something in the history books about the whole country being oppressed and that (to the extent we believe the Revolution was a spontaneous process and not pre-planned and primed to go off this way by foreign powers), the Romanians had no qualms about taking their lead from a Hungarian Calvinist pastor on the secret payroll of both the Romanian and Hungarian governments whom we later sent as a MEP to Brussels. If we were specifically oppressing the Hungarians, it would seem odd for an omnipotent government with no respect for human rights to focus on a 7% Hungarian city in a historically diverse area and not only leave the near homogeneous ethnic enclaves in the middle of the country alone, but also give them their own autonomous area for a few decades. Notably, the Hungarian population was so oppressed that it rose in line with the Romanian population via natural increase over the years, though it has fallen quite a bit in recent years due to migration to Hungary, among other places. The number of mixed families has also gone up, so that may account for part of the effect, to the chagrin of reactionaries on both sides. It was also so oppressed that I still can't order a Coke in Harghita without being told the famous "nem tudom" (i don't know). I don't think Chechens are shirking on learning Russian, despite being 95% of Chechnya and having their own language.

    I readily acknowledge my country's past policies regarding Romanianization, Nazi cleansings and so on, that mirrored those of surrounding areas, but we have the best minority rights track record in the region, bar none, and the living, breathing historical minorities in appropriate numbers to prove it. Meanwhile, Romanians in Hungary are down to +30k in some dinky villages, Serbs call theirs Vlachs even when they speak Romanian to us (which wouldn't be a problem, but it's so they can classify them as a different minority and reject sporadic Romanian Gov protests regarding their rights), Bulgarians insist there are no Romanians there, so no one to grant rights to, and the Ukrainians misplaced quite a few of us. With the connivance of our government, which does not want to make waves. I can understand assimilating people to have a homogeneous country, but I dislike the double standard, especially from countries that have done the dirty deed in the past and can now play tolerant with token minority populations while poking the eye and playing Medvedev Doctrine with the people who have lived in peace and relative tolerance. Even the guy who wanted to bomb the National Day during parades in a Hungarian majority area was a Hungarian national, not a local. Anyway, we Romanians miss our long gone Germans. They're like Hungarians without the chip on their shoulder.
  108. @Immigrant from former USSR
    "A Farewell to Alms" is the book by Gregory Clark:
    https://www.amazon.com/gp/offer-listing/B00E7V98E2/
    Gregory Cochran (with late Henry Harpending) is known mostly by his book
    "The 10,000 Year Explosion: How Civilization Accelerated Human Evolution",
    https://www.amazon.com/gp/offer-listing/0465002218/

    Of course, you’re right.

    Senility is setting in early for me and any G.C. named author i’ve read wiggles the neurons appropriately. I ought to look everything up now before putting fingers to keyboard.

    Thanks for the correction.

    BTW, both the books
    — Clark’s “Farewell to Alms”
    and
    — Cochran’s “10000 Year Explosion”
    are worth reading.

    • Replies: @Immigrant from former USSR
    Thank you for your sincere response.
    I actually read both books in full, and like them.
  109. @jtgw
    Profits tend to equalize in a free market, when conditions don't change. A businessman that takes too large a salary compared to his competitors may find himself outcompeted for labor or equipment, for example. However, there are always new perturbations in a market economy, e.g. technological innovation, which change the profit-loss calculations and nudge profits in one direction or another.

    Those aren’t facts. They are slogans you are repeating like a robot.

    • LOL: Clyde
  110. @AnotherDad
    Of course, you're right.

    Senility is setting in early for me and any G.C. named author i've read wiggles the neurons appropriately. I ought to look everything up now before putting fingers to keyboard.

    Thanks for the correction.

    BTW, both the books
    -- Clark's "Farewell to Alms"
    and
    -- Cochran's "10000 Year Explosion"
    are worth reading.

    Thank you for your sincere response.
    I actually read both books in full, and like them.

  111. @AnotherDad

    As I said, there may be good cultural and political reasons to restrict immigration, but as far as raw economics are concerned, you always want more freedom. Free immigration from culturally similar countries would be ideal.
     
    jtgw--i'm sorry you are a clueless loon.

    "raw economics" means what? If you mean total production of the global economy--then "maybe" ... in the short run. But most of that increase goes to ... the immigrants themselves.

    But if you're talking about GDP per capita--level of prosperity of the population--which is what people actually want from their economic policies--then this is absolute nonsense. Open immigration suppresses growth in living standards, it retards applying innovation to generate productivity growth.

    Open immigration is not just the obvious social and cultural disaster, but an economic one for living standards. And that's not even getting into the *long term* issues both cultural and economic of having a dumber and more balkanized population, which results in lower economic performance *and* social\cultural contention.

    The US needs no more immigration. Not from culturally compatible countries, not from smart countries, not from wonderful countries, not from underrepresented countries. NONE. It is an outdated concept and time to end it. Immigration exerts downward pressure on wages, increases welfare and food stamp use, increases crime, islamic terror, and in general hoses the American worker and taxpayer something horrible. It makes our cities more polluted, less livable, and more culturally fragmented. It increases traffic congestion, drives up housing costs, and causes loss of forests, farmland, and wetlands (‘environmentalists’ WAKE UP). There may have been a period 100 years when we could assimilate a limited number of immigrants from select countries. Not today. Every day we are more mechanized and automated and have less need for more “workers.” Further, at ~315 million and #3 in world population, it is time to think about **shrinking** the size of our population (sorry if that gives anyone the vapors. If you want to live in an overcrowded s***thole — move to one). We have been too stupid and generous for far too long and it is time to wise up. Of course in the meantime all illegals will be deported. This will increase GDP and quality of life for all our citizens.

  112. @Anonymous
    Big Business (global modern version) is on the cusp of winning the world wide war against labor. They did it by teaming up with governments. Which is a form of partnership with the Left. It's planetary fascism which is apparently cool with hipsters because there's no racial element.

    Globalism really boils down to the Left's abandonment of labor worldwide. Lefties today have open contempt for the workers, the drones, the nobodies. They love the idea of disempowering the proles everywhere.

    There is a populist revolt afoot. Is it a blip? Trump declared war again today on globalism. Amazing word choices in his speech.

    Besides his speech check out the Trump response to the 50 GOP national security people no confidence letter that came out this a.m. Trump called them out as The Perps We've Been Search in For!

    What a day.


    http://thehill.com/blogs/ballot-box/presidential-races/290801-trump-slams-gop-leaders-national-security-letter

    Globalism really boils down to the Left’s abandonment of labor worldwide. Lefties today have open contempt for the workers, the drones, the nobodies.

    No.

    Support for open border immigration where host nations are forbidden to oppose, clearly benefits migrants who are exercising choice to migrate, so I wouldn’t say that advocates are completely heartless. There are major downsides to immigration for the host people. This post deals with the job opportunity loss to low wage earners. Honestly, I think this is one of the weaker arguments. The bigger arguments are that the host people aren’t allowed to keep their culture or their political structure and possibly negative impact of much higher population density.

    Secondly, open border advocates are often right-wing as well as left-wing, the issue doesn’t fall along a traditional left-right axis. Fox News owner Rupert Murdoch has been a die hard open borders advocate as have the right wing Koch brothers.

  113. oops, another Turgidson miscue. Final sentence, per capita income not GDP. Apologies

  114. @sanjoaquinsam
    I'll admit to being a tad dense/gullible, but falling unemployment and rising wages? Is this from The Onion?

    It makes perfect sense. A market with an effectively unlimited supply of labor now has restraints: wages rise to attract what labor there is, and, watch for this, those who have “left the workforce” will be attracted back in.
    In the US all the gains in productivity over the past several decades have gone to capital, not labor simply because of an unlimited supply of the latter.
    It’s why corporate America has gone apeshit about Trump.

  115. Give it up, Dad. Admit it; if America in parallel universe A is owned by 1m people, and America in parallel universe B is owned by 1t people, the Americans in universe B are much, much richer. Duh.

    • Replies: @Massimo Heitor

    Give it up, Dad. Admit it; if America in parallel universe A is owned by 1m people, and America in parallel universe B is owned by 1t people, the Americans in universe B are much, much richer. Duh.
     
    You are being sarcastic, but this seems plausible.

    Just consider global population. With double the current global population, every global business has double the scaling capacity. The worlds best exports of every category have double the audience. This is legitimately awesome.

    One major risk is fixed natural resource limitations. Environmental experts stress that moving today's population to something close to today's Western standards of living is unrealistic even with major efficiency gains. Coupled with a rapidly growing population is a major problem. The counter is that people have long warned about population problems for the past century and they were completely wrong every time. Of course, at some point they won't be wrong and there are some very big potential problems that can come out of that.

    The other more controversial risk factor is double the human population with the current ethnic/genetic mix of people is one thing, but radically shifting that ethnic/genetic mix of people may cause other effects.
  116. Anon • Disclaimer says:

    Hungary is in the EU. No tariffs.

    Hungary has its own currency.

    The EU countries do a lot of internal trade. We know that Germany has a ‘balance of payments’ surplus. But they also have the Euro.

    Like the PIIGS ….. Southern Europe.

    The whole Greece thing is about the Euro and Germany. Grexit .. which we haven’t heard a lot about lately.

    Also, Southern Europe has unemployment rates of 20% +.

    The point being that any analysis based on an equilibrium needs to take into account that the equilibrium can be at the country or the European level.

    No one in their right mind would have lent Greece a penny at the rates they were able to borrow in Euro. Therefore, Germany will always have to bail out Greece, but it isn’t like Germany didn’t get paid in advanced by exports.

    Normally, the problem if there are labor shortages and wages rise without a rise in productivity — it will show up as inflation. Which is just another way to redistribute wealth and income. Since inflation wasn’t mentioned as a problem. Or mentioned at all, I have to assume that it is good. Wages ‘deserve’ to be higher — since they are just responding to market forces. I have a feeling Hungary has taken a beatdown or two since joining the EU, and now things are adjusting back in its favor.

    The whole thing is too complicated to me. Do a mental exercise. In the US, all states are ‘countries’. Most of them use the same currency, but not all of them. All of them do ‘free trade’. And they ‘volunteer’ to be part of a joint military, but also include a few extra countries. And let another continent run it and pay for a lot of it. What happens then?

  117. @gruff

    It reminds me of arguments that we should start lots of wars to help our economy.
     
    The theory that the US military-industrial complex has been doing exactly that since shortly after 1945 has been floating around for years. The US does indeed seem to be making excellent progress in turning the entire Middle East into a killing zone/munitions testing range.

    This wouldn’t be happening in the Middle East if the locals weren’t happy to oblige. Without modern weapons, they’d be killing each other with swords and knives.

    • Replies: @gruff
    Yes, they're a lot like Europeans in that way.
  118. There is not, there never has been, there never can be, a labor ‘shortage’.

    http://globuspallidusxi.blogspot.com/2014/01/the-lie-of-labor-shortage.html

    • Replies: @Buck Turgidson
    Excellent article and thanks for sharing the link. There is no such thing as a "labor shortage" a "shortage of nurses" a "shortage of workers to pick fruit that is going to otherwise rot" and so forth, and so on. Stupid journalists moan and groan about these supposed "shortages" all the time. (supposed) shortage of this type of skill, shortage of that type of work. There is a supply of labor, and a demand. How simple can it be. We never, however, have a "shortage of journalists." I wonder if they ever stop to think (naaah) long enough why this is the case. They never stop with their communist, leftist narrative, which these days includes flooding the US with third world immigrants.
  119. @Anon
    This wouldn't be happening in the Middle East if the locals weren't happy to oblige. Without modern weapons, they'd be killing each other with swords and knives.

    Yes, they’re a lot like Europeans in that way.

  120. Fascist bigotry proven effective in real life, again? Who would’ve thought?

    Regardless, one should keep in mind that ethnic nationalism is much more important that comfort or economics, and neither should be used to justify the former.

  121. @Svigor
    Give it up, Dad. Admit it; if America in parallel universe A is owned by 1m people, and America in parallel universe B is owned by 1t people, the Americans in universe B are much, much richer. Duh.

    Give it up, Dad. Admit it; if America in parallel universe A is owned by 1m people, and America in parallel universe B is owned by 1t people, the Americans in universe B are much, much richer. Duh.

    You are being sarcastic, but this seems plausible.

    Just consider global population. With double the current global population, every global business has double the scaling capacity. The worlds best exports of every category have double the audience. This is legitimately awesome.

    One major risk is fixed natural resource limitations. Environmental experts stress that moving today’s population to something close to today’s Western standards of living is unrealistic even with major efficiency gains. Coupled with a rapidly growing population is a major problem. The counter is that people have long warned about population problems for the past century and they were completely wrong every time. Of course, at some point they won’t be wrong and there are some very big potential problems that can come out of that.

    The other more controversial risk factor is double the human population with the current ethnic/genetic mix of people is one thing, but radically shifting that ethnic/genetic mix of people may cause other effects.

    • Replies: @Bill

    With double the current global population, every global business has double the scaling capacity.
     
    You have pretty unusual ideas about scale economies. You really think they are not exhausted at current levels of output for most industries? Do you have any basis for your beliefs?

    One major risk is fixed natural resource limitations.
     
    Yeah, exactly. Once you are done exploiting scale economies, an important effect of balanced population increase is to bid up the price of fixed factors. Fixed factors are things which we cannot feasibly make more of (beachfront property, say). This is good for the owners of the fixed factors and bad for everyone else. That is, it makes most everyone poorer.

    There's also congestion. Infrastructure tends to get built to accommodate whatever the current demand is plus a bit. If you then vastly increase demands on it, you get congestion. Just build more infrastructure is not a good answer to that since expanding existing, congested infrastructure tends to be extremely expensive. Again, this makes everyone but the rich poorer. It makes the rich richer, at least to the extent that they already own advantageously located property---e.g. who gives a crap about traffic if you already live on Park Ave; plus your condo's price gets bid up!

    Finally, population growth has not been especially balanced. It's been tilted towards low skill immigration. Thus further enriching the rich and immiserating most other people.

    So, basically, unless you are rich and sociopathic (or ignorant, or crazy, or a paid shill), you aren't in favor of immigration. And, shocker, pro-immigrant sentiment is concentrated among rich sociopaths, ignoramuses, loons, and paid shills.
    , @AnAnon
    "With double the current global population, every global business has double the scaling capacity." - That is not the case. as population density goes up, consumption becomes more efficient. If you double the number of people in every house, you still have the same number of roofers, lawn care workers, electricians, plumbers, and so on. While total demand will rise, it will not rise anywhere near enough to accommodate all the new workers, much less to provide a benefit to the existing ones. The wealthiest few will have a field day in such a world, the rest of us, not so much.

    "Environmental experts stress that moving today’s population to something close to today’s Western standards of living is unrealistic even with major efficiency gains." - The third world should have used the post war prosperity were gave the world to increase their living standard rather than sending their population on an upward parabolic curve if they wanted a 1st world living standard. They chose differently, tough luck for them.
  122. The economic and overall stupidity of Sailer and his dumb conservative minions is really cute. Nice obfuscation of the facts of what really happens when countries engage in protectionist policies.

    I really hope that Trump wins and that Congress grants him extraordinary powers to do as he wants as far as economic policy is concerned. I want you to EXPERIENCE it. I wish you all harm possible.

    Trump will be America’s Evita Peron, and will ruin the country so thoroughly that the U.S will be downgraded by financial risk assessment institutions to the level of Bulgaria at best and possibly as low as Zambia. The good thing that will come out from this is that it will be another 50 years for a Republican to win a Presidential election after Trump is ousted from power.

    You people are unbelievably stupid and you deserve what’s coming to you.

    • Replies: @Roman
    Just out of curiosity Nick, can you run us through what happened after the last US credit downgrade?
  123. @AnotherDad

    Let’s walk through the steps of what happens. Immigration is restricted, so employers now compete over a limited supply of labor. ...
     

    So the artificially increased demand for labor results in a depletion of capital...
     

    jtgw ... please stop. It's getting embarassing.

    a) Employers are *always* competing over a limited supply of labor... even if there was free movement throughout the world. The world is not infinite. Labor is not infinite. Capital is not infinite. And yet capitalism works just fine.

    b) There's nothing "artificial" about some increased demand for labor from not having open immigration. Open immigration is what is deeply unnatural not the reverse. Normal people do not let other people into their territory willingly ... the human (and general biological) tendency is precisely the reverse--to go conquer someone else's territory and take it from them.


    And again, this is capitalism 101: higher labor prices in fact *motivate* (i.e. force) capitalists to innovate and roll out new capital and technologies to drive up productivity. The ones that can not--for whatever reason whether insufficient capital or insufficient IQ\skill--die. The ones the can survive. If you don't understand these basic points you don't understand anything.

    Your example of the United States shows ... nothing. First off, the early part of the post-Civil War period was a low immigration era. It was when growth recovered that immigration started ramping back up. I'd say growth *drove* increased immigration not the reverse. Obviously immigration made the total economy bigger, but this wave of growth was about technology and industrialization--steam power, the railroad, telegraph, later petroleum--and westward expansion. Immigration could have been absolutely zero and the United States would have rapidly industrialized.

    All you have to do is look about the world. This was the Meiji Period when Japan rapidly industrialized over the exact same period. Europe--notably Germany--rapidly industrialized in this same period without immigration.

    Seriously stop the immigration nonsense. It's just nonsense. And actually the *opposite* of how capitalism works--which is continually employing capital more efficiently to drive up productivity allowing for rising wages.

    I get the feeling that when the globalists have reduced the entire world to a giant undifferentiated slum .... they'll be demanding we let in cheap Martian labor to keep the crops from rotting in the fields.

    “..this wave of growth was about technology and industrialization–steam power, the railroad, telegraph, later petroleum–and westward expansion. Immigration could have been absolutely zero and the United States would have rapidly industrialized.”

    Could have, yes, but what actually happened was that capital bribed government for more immigration, labor protested, capital called them racist. Same ol’, same ol’.

    Big difference now is that this strategy is a lot more effective due to societal changes brought by the internet. Namely, the over-representation of the impressionable and idealistic young, who have been decieved into supporting capital’s agenda; and changes in the nature of media’s revenue stream, leaving it with no obligation to labor.

  124. anonymous • Disclaimer says:

    I wonder how much smart people really know about all this. A 10 second google finds as first hit:

    “Economists Say Free Market Competition Rewards Deception and Manipulation”:

    “Nobel laureates George A. Akerlof and Robert Shiller are authors of Phishing for Phools: The Economics of Manipulation and Deception, from which this article is excerpted. Akerlof is Professor of Economics at University of Berkeley. Shiller is Professor of Economics at Yale University, and the co-creator of the Case-Shiller Index of US house prices.”

    Seems they’re saying that while free markets are good, you also have to explicitly deal with the equivalent of cancer. Some sort of immune system, say, like borders?

    “…free markets do not just deliver this cornucopia that people want. They also create an economic equilibrium that is highly suitable for economic enterprises that manipulate or distort our judgment, using business practices that are analogous to biological cancers that make their home in the normal equilibrium of the human body. …

    …The slot machine is a blunt example. It is no coincidence that before they were regulated and outlawed slot machines were so common that they were unavoidable…”

    “The economics of deception: You have been warned
    Two heavyweights show how markets can turn against the unsuspecting”, The Economist, Sep 19th 2015:

    ““COMPETITIVE markets by their very nature spawn deception and trickery.” This is not the hyperbole of a diehard Marxist, but the contention of two Nobel prizewinners in economics in a new book, “Phishing for Phools”. Economic models tend to assume that people are informed about the decisions they make; in the jargon consumers have “perfect information”. This supposedly enables consumers to make markets work to their advantage. But Robert Shiller of Yale University and George Akerlof of Georgetown University argue instead that this assumption is false. There are plenty of market equilibria, the authors find, where one party is being deceived, or “phished”.”

  125. The only solution is to raise productivity, produce more “value added” stuff and increase exports. The wages need to rise slowly, 6% is still a relatively healthy level of unemployment but the key is maintaining and increasing the purchasing power. It might also be the case that there is shortage of skilled labor, not any labor. Immigration should be acceptable only from Belarus, Ukraine and Moldova – there should be training programs in place for that (if those countries wish to participate).

    Latvia also had Vietnamese guest workers in mid 80s. I’m not sure where they worked but most likely agriculture. That was brief and they disappeared after some time. We also had Carpathians (the Gutsul people), these were different from the regular Ukrainians that had migrated here, I only recently discovered who they were, they went back, too

    Never heard of Russians being sent to DDR for manual labor, maybe back in Kruschev’s time, but later on you weren’t allowed to travel there (unless you were a scientist or on some sports team).

  126. Anonymous • Disclaimer says:
    @Jtgw
    But to increase productivity through innovation, you need capital to invest in research and development. This capital is instead going after scarce labor that is less productive.

    Nonsense.

    It is generally accepted these days that the phenomenon of inflation, that is rising prices, is caused purely by governments increasing the money stock of a nation by a level greater than the rate of concomitant productivity growth of the nation.
    That is, ‘scarcity’ of workers in itself has no effect on inflation. A little thinking tells us that this result is obvious. An employer, any employer, is only able to pay his employees from the proceeds of what he can actually sell. If he raises his prices to cover higher wages, either he loses custom – which ultimately will deter wage rises or close the business – or customers will pay the higher prices, if the product is vital, but at the expense of not buying some other less essential product – which consequently is beaten down in price, counterbalancing the inflationary effect of the ‘vital product’ price rise.

    Basically, it’s a closed system governed by the fixity of the money stock.

    • Replies: @jtgw
    I agree with you about inflation, but note that a corollary of this is that closing the borders will not fix the problems caused by inflation or excessive capital consumption by the state. Please understand that I am not advocating open borders under current conditions; I am simply drawing attention to the fact that ending immigration will not solve the underlying economic problems we face. If restrictive immigration policy alone did the trick, Japan would be booming.
  127. @Anonymous
    Nonsense.

    There is one and one only source of productivity increase - and that is technological innovation.

    Nations with a super abundance of cheap labor have historically staid poor with very little growth in wage levels.

    However in our times, South Korea, for example, a nation that has not accepted immigration has managed to make the huge transformation from an impoverished third world nation to a prosperous first rank nation through the sheer power of Korean industry successfully adopting high technology.

    And technological innovation, like human capital, is one of those sticky factors which doesn’t necessarily advance just because of market signals. Nigeria is a free market economy with a rapidly expanding workforce, but I don’t see it coming up with many great technological advances.

  128. Anonymous • Disclaimer says:
    @jtgw
    Why "despite periodic immigration surges" and not "because of periodic immigration surges"? Why shouldn't the "despite" apply to, say, the high tariffs? You need a good theory of economics to interpret all these correlations and discover the true arrows of causation. The main thing to take away from the period of high immigration is that immigration does NOT dampen productivity growth and rising living standards when the other features of capitalism are in place, so critics of immigration today on economic grounds are probably barking up the wrong tree, if they want to know the true source of our malaise. I suppose the period also shows that damaging policies, like high tariffs, can often be offset by good policies, like low taxes, secure property rights and liberal immigration policy. I would say that the US would have grown even faster without the tariffs, but we did pretty well nonetheless.

    You are wrong.

    Just one very very basic simple real life example for you.

    Nigeria, Pakistan, Bangladesh, India, Ethiopia,Indonesia etc etc etc.

    According to your beliefs all of these nations should be economic giants dominating the world the most innovatory, biggest, brightest, profitable capitalist enterprise the world has ever seen. Bangladeshi ion-propelled space ships should be mining Mars right now.
    And you can’t tell me that Bangladesh doesn’t satisfy your condition for an infinity of zero pay ‘workers’.

    Your point, as far as I can tell is ‘infinite superabundance of ‘workers’ = infinite capital accumulation = infinite production.

    Well, it’s just plain WRONG. The world simply doesn’t work that way.

    Other factors – which defy your simplisticism hold sway, and have always held sway.
    Hint: Study such things as medieval cathedrals and wonder how the masons – the only ‘capital’ they had were lumps of sharpened iron or lumps of heavy iron – ever managed to build them in the first place.

    • Replies: @Jtgw
    I didn't say that an abundance of labor is the only thing. The most essential thing is secure property rights and lack of government interference. My point is that, when property rights are secure and people keep what they earn, it doesn't hurt if people are also allowed to move freely to where their labor is demanded.

    Bangladesh is actually becoming a lot richer.
  129. @Globus Pallidus XI
    There is not, there never has been, there never can be, a labor 'shortage'.

    http://globuspallidusxi.blogspot.com/2014/01/the-lie-of-labor-shortage.html

    Excellent article and thanks for sharing the link. There is no such thing as a “labor shortage” a “shortage of nurses” a “shortage of workers to pick fruit that is going to otherwise rot” and so forth, and so on. Stupid journalists moan and groan about these supposed “shortages” all the time. (supposed) shortage of this type of skill, shortage of that type of work. There is a supply of labor, and a demand. How simple can it be. We never, however, have a “shortage of journalists.” I wonder if they ever stop to think (naaah) long enough why this is the case. They never stop with their communist, leftist narrative, which these days includes flooding the US with third world immigrants.

  130. @Massimo Heitor

    Give it up, Dad. Admit it; if America in parallel universe A is owned by 1m people, and America in parallel universe B is owned by 1t people, the Americans in universe B are much, much richer. Duh.
     
    You are being sarcastic, but this seems plausible.

    Just consider global population. With double the current global population, every global business has double the scaling capacity. The worlds best exports of every category have double the audience. This is legitimately awesome.

    One major risk is fixed natural resource limitations. Environmental experts stress that moving today's population to something close to today's Western standards of living is unrealistic even with major efficiency gains. Coupled with a rapidly growing population is a major problem. The counter is that people have long warned about population problems for the past century and they were completely wrong every time. Of course, at some point they won't be wrong and there are some very big potential problems that can come out of that.

    The other more controversial risk factor is double the human population with the current ethnic/genetic mix of people is one thing, but radically shifting that ethnic/genetic mix of people may cause other effects.

    With double the current global population, every global business has double the scaling capacity.

    You have pretty unusual ideas about scale economies. You really think they are not exhausted at current levels of output for most industries? Do you have any basis for your beliefs?

    One major risk is fixed natural resource limitations.

    Yeah, exactly. Once you are done exploiting scale economies, an important effect of balanced population increase is to bid up the price of fixed factors. Fixed factors are things which we cannot feasibly make more of (beachfront property, say). This is good for the owners of the fixed factors and bad for everyone else. That is, it makes most everyone poorer.

    There’s also congestion. Infrastructure tends to get built to accommodate whatever the current demand is plus a bit. If you then vastly increase demands on it, you get congestion. Just build more infrastructure is not a good answer to that since expanding existing, congested infrastructure tends to be extremely expensive. Again, this makes everyone but the rich poorer. It makes the rich richer, at least to the extent that they already own advantageously located property—e.g. who gives a crap about traffic if you already live on Park Ave; plus your condo’s price gets bid up!

    Finally, population growth has not been especially balanced. It’s been tilted towards low skill immigration. Thus further enriching the rich and immiserating most other people.

    So, basically, unless you are rich and sociopathic (or ignorant, or crazy, or a paid shill), you aren’t in favor of immigration. And, shocker, pro-immigrant sentiment is concentrated among rich sociopaths, ignoramuses, loons, and paid shills.

  131. @jtgw
    Why "despite periodic immigration surges" and not "because of periodic immigration surges"? Why shouldn't the "despite" apply to, say, the high tariffs? You need a good theory of economics to interpret all these correlations and discover the true arrows of causation. The main thing to take away from the period of high immigration is that immigration does NOT dampen productivity growth and rising living standards when the other features of capitalism are in place, so critics of immigration today on economic grounds are probably barking up the wrong tree, if they want to know the true source of our malaise. I suppose the period also shows that damaging policies, like high tariffs, can often be offset by good policies, like low taxes, secure property rights and liberal immigration policy. I would say that the US would have grown even faster without the tariffs, but we did pretty well nonetheless.

    Why “despite periodic immigration surges” and not “because of periodic immigration surges”?

    Because he knows how to deploy economic reasoning, unlike you.

  132. @Anonymous
    You are wrong.

    Just one very very basic simple real life example for you.

    Nigeria, Pakistan, Bangladesh, India, Ethiopia,Indonesia etc etc etc.

    According to your beliefs all of these nations should be economic giants dominating the world the most innovatory, biggest, brightest, profitable capitalist enterprise the world has ever seen. Bangladeshi ion-propelled space ships should be mining Mars right now.
    And you can't tell me that Bangladesh doesn't satisfy your condition for an infinity of zero pay 'workers'.

    Your point, as far as I can tell is 'infinite superabundance of 'workers' = infinite capital accumulation = infinite production.

    Well, it's just plain WRONG. The world simply doesn't work that way.

    Other factors - which defy your simplisticism hold sway, and have always held sway.
    Hint: Study such things as medieval cathedrals and wonder how the masons - the only 'capital' they had were lumps of sharpened iron or lumps of heavy iron - ever managed to build them in the first place.

    I didn’t say that an abundance of labor is the only thing. The most essential thing is secure property rights and lack of government interference. My point is that, when property rights are secure and people keep what they earn, it doesn’t hurt if people are also allowed to move freely to where their labor is demanded.

    Bangladesh is actually becoming a lot richer.

    • Replies: @TomSchmidt
    Should people have property rights in the production knowledge they gain by working in an area? Does this production knowledge have value, even if it is not explicitly valued? Do tariffs help protect the unenumerated but nevertheless valuable production knowledge of domestic industries?

    If so, then you need to tally up: tariffs cost customers of products as customers, but benefit them as producers. You've counted the cost in increased taxes to customers; have you any estimate of the value to the producers and the production ecosystem? I would love a reference on the latter question; I simply have never seen a data-driven evaluation.
  133. @TomSchmidt
    That IS their motherland. Hungary got screwed at Versailles, losing territory to Serbia, Slovakia, and Romania. Timisoara is a largely Hungarian town, and one reason the revolt against Ceaucescu got started there was ethnic Hungarian oppression.

    That IS their motherland. Hungary got screwed at Versailles, losing territory to Serbia, Slovakia, and Romania. Timisoara is a largely Hungarian town, and one reason the revolt against Ceaucescu got started there was ethnic Hungarian oppression.

    They will have to fight the Serbs for it first, since the Serbs have the other half of the Banat region and claim this one as well. Then the winner fights us. We’re a bit threadbare in the military department, but we make up for it in the soldierly virtues and in motivation.

    I’m not aware of any proper wars we had against the Serbs, but our track record against Hungary is decent (the second time we got to occupy Budapest, we were with our Communist jailers, so it’s too sad to count, but the first was a beauty, with Romanian peasant shoes flying on the mast of the Assembly House).

    Speaking seriously, if you look at the irredentist maps for Greater Serbia, Greater Albania, Greater Bulgaria, Megali Idea Greece, Greater Hungary (the 64 counties) and so on, you will see the makings of some very bloody wars, because this is what overlapping ethnic groups will eventually do, since they all have some claim to residing there historically which they want to convert into political and cultural primacy. My people are no different, except our irredentism is to the East and maintain no emotional claim on Serbian Banat, Southern Dobrogea in Bulgaria and so on.

    [MORE]

    I would like to contradict you on Timisoara.

    Its Hungarian minority has been under 10% for decades. Cluj Napoca (Klausenburg) is near 20%. If Timisoara had more than that, it would have had signposts in Hungarian and state funded Hungarian language schools and everything else our very rigorous minority rights laws entail (though nothing stops anyone from making ethnic weekend schools wherever they want and privately funded whatever, including camps where Hungarian extremists from Hungary push irredentist claims). The places where Hungarians are a majority are right in the middle of the country, Harghita and Covasna counties, with Mures having a plurality of people. If they had been on the border, things might have been settled in WW1. But Hungary can’t claim them.

    As for oppression, I was in diapers back then, but I remember something in the history books about the whole country being oppressed and that (to the extent we believe the Revolution was a spontaneous process and not pre-planned and primed to go off this way by foreign powers), the Romanians had no qualms about taking their lead from a Hungarian Calvinist pastor on the secret payroll of both the Romanian and Hungarian governments whom we later sent as a MEP to Brussels. If we were specifically oppressing the Hungarians, it would seem odd for an omnipotent government with no respect for human rights to focus on a 7% Hungarian city in a historically diverse area and not only leave the near homogeneous ethnic enclaves in the middle of the country alone, but also give them their own autonomous area for a few decades. Notably, the Hungarian population was so oppressed that it rose in line with the Romanian population via natural increase over the years, though it has fallen quite a bit in recent years due to migration to Hungary, among other places. The number of mixed families has also gone up, so that may account for part of the effect, to the chagrin of reactionaries on both sides. It was also so oppressed that I still can’t order a Coke in Harghita without being told the famous “nem tudom” (i don’t know). I don’t think Chechens are shirking on learning Russian, despite being 95% of Chechnya and having their own language.

    I readily acknowledge my country’s past policies regarding Romanianization, Nazi cleansings and so on, that mirrored those of surrounding areas, but we have the best minority rights track record in the region, bar none, and the living, breathing historical minorities in appropriate numbers to prove it. Meanwhile, Romanians in Hungary are down to +30k in some dinky villages, Serbs call theirs Vlachs even when they speak Romanian to us (which wouldn’t be a problem, but it’s so they can classify them as a different minority and reject sporadic Romanian Gov protests regarding their rights), Bulgarians insist there are no Romanians there, so no one to grant rights to, and the Ukrainians misplaced quite a few of us. With the connivance of our government, which does not want to make waves. I can understand assimilating people to have a homogeneous country, but I dislike the double standard, especially from countries that have done the dirty deed in the past and can now play tolerant with token minority populations while poking the eye and playing Medvedev Doctrine with the people who have lived in peace and relative tolerance. Even the guy who wanted to bomb the National Day during parades in a Hungarian majority area was a Hungarian national, not a local. Anyway, we Romanians miss our long gone Germans. They’re like Hungarians without the chip on their shoulder.

    • Replies: @TomSchmidt
    Thanks for the personal history. I just met a Moldovan for the first time a few years back so I know about your irredentist parts. I guess it's nice that there's another Romance language country in the world. You former Dacians sure held on tight to Latin!

    I had my history from a biased Transylvanian. Nice to know that Romania preserves some sense of the former Hapsburg empire in its non-extermination of minorities.

    For what it's worth, the liberals I was with were shocked when Ceaucescu went against the wall in 1989 (Billy Martin died the same time), but my only thought was: good! My thought at Versailles: Louis XIV was the Ceaucescu of the 17th century, building fairytale palaces while his people starved. I'm glad to read of your equanimity.
    , @TomSchmidt
    Just read about Transylvanian Saxons, and so forth. You've lost 75% since 1992. Emigration? Death? It's a shame to lose an interesting minority like that. He article mentions a few towns as much as 30% German. Is German an official or permitted language there? I'd imagine not for much longer, in any case.
  134. @Bill

    Maybe they would be interested in moving back to the Motherland now.
     
    Pretty sure they would prefer the Motherland move back to them.

    The Romanian majorities in the way (half the country) would object to the reunification and go a bit beyond writing strongly worded letters to the UN Secretary General.

  135. I read the comments here and I want to add my 2 cents, as a local Imperial Kludd of the Klonvocation of the Hermetic Order of Economists.

    The first is that I admire the Hungarians greatly for their principled stance on protecting the Schengen borders and, after seeing the sentient enemas they were dealing with in Berlin and Brussels, protecting themselves. They shouldn’t have to bring in immigrants of any sort, even the high IQ sort, and they should definitely have the right to pick and choose who gets the very valuable possession of Hungarian citizenship.

    But the article strikes a fake note. It is perfectly possible for rising incomes to not be good economically. Incomes that rise faster than productivity are basically eating the seed corn for future growth, especially in the capital poor countries of former Communist Europe (and elsewhere). We have the same problem in Romania.

    The higher incomes are not an actual economic stimulus, especially if they are not channeled into savings to lessen dependence on outside credit for investment. What higher incomes generally do is bid up the price of real estate, which is already very high (in Romania, for sure) compared to average incomes, and provide opportunities for consumption. Now, Hungary has a very good trade balance, in the black, but a lot of the individual consumption will basically go the way of imports, so no stimulus there, except for people in other countries. And the rising incomes in a number of areas will, through the Balassa Samuelson effect, lead to higher wages in other sector of the economy, as hair dressers find they can charge more without losing their clients or improving the service. So consumption will not grow in certain areas, rather the prices will grow.

    What Hungary has to do is to keep doing what it is doing now, not enter the euro, and see to the demographic problem. The Hungarian people don’t have to suffer a lowering of wages, but rising wages should be in line with productivity growth. What people in the wider area also need is affordable family formation, meaning a generational transfer from the old to the young through measures specifically aimed at lowering the cost of housing. This is the opposite of what is happening in my country, where special interests pervert government programs for the young to act as boosters to the housing market. Any guest worker program they may implement (which I disagree with) should be mercilessly rigorous. No staying above the extra two years, no coming back, no citizenship for children born in country.

  136. @Bill
    Fidesz is not the right wing party. Fidesz is the cuckservative party. Their current attack of spine is out of sheer terror that the actual right wing party might take their lunch money. The spine will dribble away after the crisis passes.

    Fidesz is the only ruling party in the EU trying to keep out rapefugees. Jobbik embraces Turanism, they would probably welcome at least some of the invaders as their Turkic brethren.

  137. @jtgw
    The Black Death also killed a lot of people. It reminds me of arguments that we should start lots of wars to help our economy. Or just break a lot of windows.

    The point about rising wages coming from labor shortage rather than productivity is actually very important. When wages rise because productivity rises, then everyone enjoys the benefits of the higher wage, since higher productivity also means cheaper goods. But when they are due to labor shortages, whether from immigration restrictions or some other cause, then the higher wages are offset by rising prices, without a net benefit for everybody.

    This isn't to say Hungary should throw open its borders; there are cultural, social and political reasons not to let themselves be demographically swamped. But they would do well to allow immigration from culturally similar countries (easier said than done, I know), or at least adopt a free trade policy.

    Are you sure you don’t have this backward? I would have said that productivity rises because wages rise, not the the other way around. And I would call higher productivity an unqualified benefit to society.

    • Replies: @jtgw
    Higher productivity is an indeed an unqualified benefit, but higher wages are not the cause of it; capital accumulation, i.e. savings, is. Simply forcing up the price of labor, with no concomitant rise in productivity, just raises the cost of production.
  138. @Nick Diaz
    The economic and overall stupidity of Sailer and his dumb conservative minions is really cute. Nice obfuscation of the facts of what really happens when countries engage in protectionist policies.

    I really hope that Trump wins and that Congress grants him extraordinary powers to do as he wants as far as economic policy is concerned. I want you to EXPERIENCE it. I wish you all harm possible.

    Trump will be America's Evita Peron, and will ruin the country so thoroughly that the U.S will be downgraded by financial risk assessment institutions to the level of Bulgaria at best and possibly as low as Zambia. The good thing that will come out from this is that it will be another 50 years for a Republican to win a Presidential election after Trump is ousted from power.

    You people are unbelievably stupid and you deserve what's coming to you.

    Just out of curiosity Nick, can you run us through what happened after the last US credit downgrade?

  139. @Kyle
    Pho is shitty poor people's food.

    The aforementioned hack Bourdain is constantly singing the praises of Vietnamese food, especially pho, while deriding American diners getting all gaga over “Italian peasant food” polenta. But at least he never pretended to be giving his viewers anything but his opinion. And he’s always been a guy touting street food as superior to any Michelin-starred restaurant.

    I still find Bourdain entertaining, and give him full credit for admitting that he was a hack chef, as well as a smack addict.

  140. @Dana Thompson
    Are you sure you don't have this backward? I would have said that productivity rises because wages rise, not the the other way around. And I would call higher productivity an unqualified benefit to society.

    Higher productivity is an indeed an unqualified benefit, but higher wages are not the cause of it; capital accumulation, i.e. savings, is. Simply forcing up the price of labor, with no concomitant rise in productivity, just raises the cost of production.

    • Replies: @TomSchmidt
    Knowledge is a form of capital, then, right? Better knowledge of production leads to increased productivity, and you said that increased productivity results from "capital accumulation."
    , @Anonymous
    This is nonsense.

    Companies cannot and do not control the issuing of money stock within a nation.
    In order to get money, that is to be profitable, a company must be successful in selling its products - only then is it in a position to increase wages.

    The point is that workers wages are ultimately governed by company profitability and company profitibality alone - it is simply impossible for workers to bargain money out of a company which a company does not have.
    In a non inflationary environment - that is one in which the nation's money stock is not being boosted - profitability increases can only be engendered by general productivity increases.
  141. @AnotherDad

    As I said, there may be good cultural and political reasons to restrict immigration, but as far as raw economics are concerned, you always want more freedom. Free immigration from culturally similar countries would be ideal.
     
    jtgw--i'm sorry you are a clueless loon.

    "raw economics" means what? If you mean total production of the global economy--then "maybe" ... in the short run. But most of that increase goes to ... the immigrants themselves.

    But if you're talking about GDP per capita--level of prosperity of the population--which is what people actually want from their economic policies--then this is absolute nonsense. Open immigration suppresses growth in living standards, it retards applying innovation to generate productivity growth.

    Open immigration is not just the obvious social and cultural disaster, but an economic one for living standards. And that's not even getting into the *long term* issues both cultural and economic of having a dumber and more balkanized population, which results in lower economic performance *and* social\cultural contention.

    That argument depends on the lump of labor fallacy. Sure, if there was only a fixed amount of work to be done, open immigration would result in only increased competition for the same number of jobs, until wages were driven down to the level of the origin country. But immigrants also increase demand for goods and services. Moreover, they enable more division of labor, as immigrants can focus in areas where they are most productive and natives can focus in areas where they are comparatively most productive.

    http://econfaculty.gmu.edu/bcaplan/e321/lab3.htm

    However, you are quite right that there are political and cultural issues to consider. Even if immigrants deliver economic growth, they may also influence local politics in a statist direction. The welfare state, too, distorts immigration patterns and can lead to greater welfare dependency; in that respect I quite agree with the immigration skeptics here.

    • Replies: @TomSchmidt
    Even if immigrants deliver economic growth, they may also influence local politics in a statist direction
    Be careful. It's not whether they deliver economic growth. It's whether they deliver PER CAPITA economic growth, first off. Economic growth that makes the economy larger but individuals poorer is unwelcome, except if you live at the top of a pyramid and make your money on volume, not quality.

    Let's not even talk about the destruction of one major form of capital, social capital. See: Robert Putnam.
    , @TomSchmidt
    Caplan really is a Sperg. From your link: Effect #3: Reducing average American income. Low-skilled Americans who don’t own a home or other assets may gain from immigration restrictions, but only a small minority of Americans are in this category.

    A quick check of the Google shows home ownership at 64%. So 36% of American households do NOT own homes. I'd guess that 90% of those, or about 32% of American households, are low skill and don't own homes. That's a third, but those people don't count to Bryan Caplan, who sees them as a "small minority."

    Note: given the level of mortgage debt, MOST Americans don't "own" their homes. Only a small minority own property free and clear. Now THOSE people clearly gain from immigration which drives up the value of their property. We can guess from Pareto that .8% of property owners own 51.2% of property; and now you know why economists like Caplan, doing their bidding, advocate for more immigration.
  142. @Anonymous
    Nonsense.

    It is generally accepted these days that the phenomenon of inflation, that is rising prices, is caused purely by governments increasing the money stock of a nation by a level greater than the rate of concomitant productivity growth of the nation.
    That is, 'scarcity' of workers in itself has no effect on inflation. A little thinking tells us that this result is obvious. An employer, any employer, is only able to pay his employees from the proceeds of what he can actually sell. If he raises his prices to cover higher wages, either he loses custom - which ultimately will deter wage rises or close the business - or customers will pay the higher prices, if the product is vital, but at the expense of not buying some other less essential product - which consequently is beaten down in price, counterbalancing the inflationary effect of the 'vital product' price rise.

    Basically, it's a closed system governed by the fixity of the money stock.

    I agree with you about inflation, but note that a corollary of this is that closing the borders will not fix the problems caused by inflation or excessive capital consumption by the state. Please understand that I am not advocating open borders under current conditions; I am simply drawing attention to the fact that ending immigration will not solve the underlying economic problems we face. If restrictive immigration policy alone did the trick, Japan would be booming.

    • Replies: @Anonymous
    Out of all the nations of the world, the Japanese have probably got the best economy.
  143. There seems to be a widespread belief that national borders are like event horizons, where the laws of economics break down. The same person who recognizes the absurdity of restricting movement and trade within borders thinks that the economic consequences are completely different across national borders, forgetting that national borders are economically arbitrary. Borders are political, not economic entities.

    • Replies: @TomSchmidt
    Indeed. The people within the borders pay taxes to a mob whose job is to protect those people's interests. the mob creates public goods with those taxes which might be better or worse at supporting production. The question: does a high tariff policy support a production/manufacturing economy? When does it become a net negative?
  144. @Jtgw
    I didn't say that an abundance of labor is the only thing. The most essential thing is secure property rights and lack of government interference. My point is that, when property rights are secure and people keep what they earn, it doesn't hurt if people are also allowed to move freely to where their labor is demanded.

    Bangladesh is actually becoming a lot richer.

    Should people have property rights in the production knowledge they gain by working in an area? Does this production knowledge have value, even if it is not explicitly valued? Do tariffs help protect the unenumerated but nevertheless valuable production knowledge of domestic industries?

    If so, then you need to tally up: tariffs cost customers of products as customers, but benefit them as producers. You’ve counted the cost in increased taxes to customers; have you any estimate of the value to the producers and the production ecosystem? I would love a reference on the latter question; I simply have never seen a data-driven evaluation.

    • Replies: @jtgw
    That's an interesting question, but I don't know how you could go about putting a numerical value on that knowledge. I assume you're talking about the cost of retraining and reeducation if forced out a current line of work through competition with immigrants, imports, machines or simply a more productive domestic competitor. All value is ultimately subjective; even costs of production are ultimately imputed from the value that consumers put on the goods produced, which value is subjectively determined. So no, I'm not sure how one could quantify that.

    I don't think knowledge is a kind of property, since knowledge can be shared freely. If I give you something that I built, I no longer possess that thing, but if I tell you my idea for how to build something, I still possess that idea, even though now you possess it, too. Some free-market economists, like George Reisman, do believe in intellectual property, but they typically have a restrictive notion of it, e.g. it must be an original idea that you came up with yourself; if you learned it from someone else, you do not own it.
  145. @TomSchmidt
    Should people have property rights in the production knowledge they gain by working in an area? Does this production knowledge have value, even if it is not explicitly valued? Do tariffs help protect the unenumerated but nevertheless valuable production knowledge of domestic industries?

    If so, then you need to tally up: tariffs cost customers of products as customers, but benefit them as producers. You've counted the cost in increased taxes to customers; have you any estimate of the value to the producers and the production ecosystem? I would love a reference on the latter question; I simply have never seen a data-driven evaluation.

    That’s an interesting question, but I don’t know how you could go about putting a numerical value on that knowledge. I assume you’re talking about the cost of retraining and reeducation if forced out a current line of work through competition with immigrants, imports, machines or simply a more productive domestic competitor. All value is ultimately subjective; even costs of production are ultimately imputed from the value that consumers put on the goods produced, which value is subjectively determined. So no, I’m not sure how one could quantify that.

    I don’t think knowledge is a kind of property, since knowledge can be shared freely. If I give you something that I built, I no longer possess that thing, but if I tell you my idea for how to build something, I still possess that idea, even though now you possess it, too. Some free-market economists, like George Reisman, do believe in intellectual property, but they typically have a restrictive notion of it, e.g. it must be an original idea that you came up with yourself; if you learned it from someone else, you do not own it.

    • Replies: @Immigrant from former USSR
    Hello, jtgw.
    Have you ever heard about the notion of "know-how" ?
    Your F.r.
    , @TomSchmidt
    All value is ultimately subjective; even costs of production are ultimately imputed from the value that consumers put on the goods produced, which value is subjectively determined. So no, I’m not sure how one could quantify that.

    When you make something, you produce two things.: the thing itself, and the knowledge of how to make the thing. We know the value of the thing: subjective value, as you say, quoting Menger. We have traditionally assigned the knowledge a value of 0; as you write, quantifying it has been a problem.

    Assuming there is no value to production in a diversified economy, we can do the Ricardian thing and look for comparative advantage. The classic example: even if I am more efficient at producing guns and butter, I should produce only one that I am best at, and trade with you for the other. Suppose it's butter: Ricardo tells me that I should give up the skills needed to smelt metal, forge rifles, etc, and focus on making butter (a commodity, mind you,) You should make guns, and trade with me, even though you now have all the guns and I have only butter to defend myself. I'm sure you know this is foolish, but this is accepted theory.

    It's also wrong. Read Debunking Economics by Steve Keen to remove some of the clutter from the field, and especially demand curves. If you would like more on the information theory of entrepreneurship, try Knowledge and Power by George Gilder. This latter hints at an understanding of the value of knowledge, but it doesn't answer or justify tariffs (to be clear, I think there is an argument for them, but haven't seen a quantitative, unemotional presentation of one.)
  146. @jtgw
    That's an interesting question, but I don't know how you could go about putting a numerical value on that knowledge. I assume you're talking about the cost of retraining and reeducation if forced out a current line of work through competition with immigrants, imports, machines or simply a more productive domestic competitor. All value is ultimately subjective; even costs of production are ultimately imputed from the value that consumers put on the goods produced, which value is subjectively determined. So no, I'm not sure how one could quantify that.

    I don't think knowledge is a kind of property, since knowledge can be shared freely. If I give you something that I built, I no longer possess that thing, but if I tell you my idea for how to build something, I still possess that idea, even though now you possess it, too. Some free-market economists, like George Reisman, do believe in intellectual property, but they typically have a restrictive notion of it, e.g. it must be an original idea that you came up with yourself; if you learned it from someone else, you do not own it.

    Hello, jtgw.
    Have you ever heard about the notion of “know-how” ?
    Your F.r.

  147. @Romanian

    That IS their motherland. Hungary got screwed at Versailles, losing territory to Serbia, Slovakia, and Romania. Timisoara is a largely Hungarian town, and one reason the revolt against Ceaucescu got started there was ethnic Hungarian oppression.
     
    They will have to fight the Serbs for it first, since the Serbs have the other half of the Banat region and claim this one as well. Then the winner fights us. We're a bit threadbare in the military department, but we make up for it in the soldierly virtues and in motivation.

    I'm not aware of any proper wars we had against the Serbs, but our track record against Hungary is decent (the second time we got to occupy Budapest, we were with our Communist jailers, so it's too sad to count, but the first was a beauty, with Romanian peasant shoes flying on the mast of the Assembly House).

    Speaking seriously, if you look at the irredentist maps for Greater Serbia, Greater Albania, Greater Bulgaria, Megali Idea Greece, Greater Hungary (the 64 counties) and so on, you will see the makings of some very bloody wars, because this is what overlapping ethnic groups will eventually do, since they all have some claim to residing there historically which they want to convert into political and cultural primacy. My people are no different, except our irredentism is to the East and maintain no emotional claim on Serbian Banat, Southern Dobrogea in Bulgaria and so on.

    I would like to contradict you on Timisoara.
    https://en.wikipedia.org/wiki/Hungarians_in_Romania#/media/File:Harta_etnica_2011_JUD.png
    Its Hungarian minority has been under 10% for decades. Cluj Napoca (Klausenburg) is near 20%. If Timisoara had more than that, it would have had signposts in Hungarian and state funded Hungarian language schools and everything else our very rigorous minority rights laws entail (though nothing stops anyone from making ethnic weekend schools wherever they want and privately funded whatever, including camps where Hungarian extremists from Hungary push irredentist claims). The places where Hungarians are a majority are right in the middle of the country, Harghita and Covasna counties, with Mures having a plurality of people. If they had been on the border, things might have been settled in WW1. But Hungary can't claim them.

    As for oppression, I was in diapers back then, but I remember something in the history books about the whole country being oppressed and that (to the extent we believe the Revolution was a spontaneous process and not pre-planned and primed to go off this way by foreign powers), the Romanians had no qualms about taking their lead from a Hungarian Calvinist pastor on the secret payroll of both the Romanian and Hungarian governments whom we later sent as a MEP to Brussels. If we were specifically oppressing the Hungarians, it would seem odd for an omnipotent government with no respect for human rights to focus on a 7% Hungarian city in a historically diverse area and not only leave the near homogeneous ethnic enclaves in the middle of the country alone, but also give them their own autonomous area for a few decades. Notably, the Hungarian population was so oppressed that it rose in line with the Romanian population via natural increase over the years, though it has fallen quite a bit in recent years due to migration to Hungary, among other places. The number of mixed families has also gone up, so that may account for part of the effect, to the chagrin of reactionaries on both sides. It was also so oppressed that I still can't order a Coke in Harghita without being told the famous "nem tudom" (i don't know). I don't think Chechens are shirking on learning Russian, despite being 95% of Chechnya and having their own language.

    I readily acknowledge my country's past policies regarding Romanianization, Nazi cleansings and so on, that mirrored those of surrounding areas, but we have the best minority rights track record in the region, bar none, and the living, breathing historical minorities in appropriate numbers to prove it. Meanwhile, Romanians in Hungary are down to +30k in some dinky villages, Serbs call theirs Vlachs even when they speak Romanian to us (which wouldn't be a problem, but it's so they can classify them as a different minority and reject sporadic Romanian Gov protests regarding their rights), Bulgarians insist there are no Romanians there, so no one to grant rights to, and the Ukrainians misplaced quite a few of us. With the connivance of our government, which does not want to make waves. I can understand assimilating people to have a homogeneous country, but I dislike the double standard, especially from countries that have done the dirty deed in the past and can now play tolerant with token minority populations while poking the eye and playing Medvedev Doctrine with the people who have lived in peace and relative tolerance. Even the guy who wanted to bomb the National Day during parades in a Hungarian majority area was a Hungarian national, not a local. Anyway, we Romanians miss our long gone Germans. They're like Hungarians without the chip on their shoulder.

    Thanks for the personal history. I just met a Moldovan for the first time a few years back so I know about your irredentist parts. I guess it’s nice that there’s another Romance language country in the world. You former Dacians sure held on tight to Latin!

    I had my history from a biased Transylvanian. Nice to know that Romania preserves some sense of the former Hapsburg empire in its non-extermination of minorities.

    For what it’s worth, the liberals I was with were shocked when Ceaucescu went against the wall in 1989 (Billy Martin died the same time), but my only thought was: good! My thought at Versailles: Louis XIV was the Ceaucescu of the 17th century, building fairytale palaces while his people starved. I’m glad to read of your equanimity.

  148. @Romanian

    That IS their motherland. Hungary got screwed at Versailles, losing territory to Serbia, Slovakia, and Romania. Timisoara is a largely Hungarian town, and one reason the revolt against Ceaucescu got started there was ethnic Hungarian oppression.
     
    They will have to fight the Serbs for it first, since the Serbs have the other half of the Banat region and claim this one as well. Then the winner fights us. We're a bit threadbare in the military department, but we make up for it in the soldierly virtues and in motivation.

    I'm not aware of any proper wars we had against the Serbs, but our track record against Hungary is decent (the second time we got to occupy Budapest, we were with our Communist jailers, so it's too sad to count, but the first was a beauty, with Romanian peasant shoes flying on the mast of the Assembly House).

    Speaking seriously, if you look at the irredentist maps for Greater Serbia, Greater Albania, Greater Bulgaria, Megali Idea Greece, Greater Hungary (the 64 counties) and so on, you will see the makings of some very bloody wars, because this is what overlapping ethnic groups will eventually do, since they all have some claim to residing there historically which they want to convert into political and cultural primacy. My people are no different, except our irredentism is to the East and maintain no emotional claim on Serbian Banat, Southern Dobrogea in Bulgaria and so on.

    I would like to contradict you on Timisoara.
    https://en.wikipedia.org/wiki/Hungarians_in_Romania#/media/File:Harta_etnica_2011_JUD.png
    Its Hungarian minority has been under 10% for decades. Cluj Napoca (Klausenburg) is near 20%. If Timisoara had more than that, it would have had signposts in Hungarian and state funded Hungarian language schools and everything else our very rigorous minority rights laws entail (though nothing stops anyone from making ethnic weekend schools wherever they want and privately funded whatever, including camps where Hungarian extremists from Hungary push irredentist claims). The places where Hungarians are a majority are right in the middle of the country, Harghita and Covasna counties, with Mures having a plurality of people. If they had been on the border, things might have been settled in WW1. But Hungary can't claim them.

    As for oppression, I was in diapers back then, but I remember something in the history books about the whole country being oppressed and that (to the extent we believe the Revolution was a spontaneous process and not pre-planned and primed to go off this way by foreign powers), the Romanians had no qualms about taking their lead from a Hungarian Calvinist pastor on the secret payroll of both the Romanian and Hungarian governments whom we later sent as a MEP to Brussels. If we were specifically oppressing the Hungarians, it would seem odd for an omnipotent government with no respect for human rights to focus on a 7% Hungarian city in a historically diverse area and not only leave the near homogeneous ethnic enclaves in the middle of the country alone, but also give them their own autonomous area for a few decades. Notably, the Hungarian population was so oppressed that it rose in line with the Romanian population via natural increase over the years, though it has fallen quite a bit in recent years due to migration to Hungary, among other places. The number of mixed families has also gone up, so that may account for part of the effect, to the chagrin of reactionaries on both sides. It was also so oppressed that I still can't order a Coke in Harghita without being told the famous "nem tudom" (i don't know). I don't think Chechens are shirking on learning Russian, despite being 95% of Chechnya and having their own language.

    I readily acknowledge my country's past policies regarding Romanianization, Nazi cleansings and so on, that mirrored those of surrounding areas, but we have the best minority rights track record in the region, bar none, and the living, breathing historical minorities in appropriate numbers to prove it. Meanwhile, Romanians in Hungary are down to +30k in some dinky villages, Serbs call theirs Vlachs even when they speak Romanian to us (which wouldn't be a problem, but it's so they can classify them as a different minority and reject sporadic Romanian Gov protests regarding their rights), Bulgarians insist there are no Romanians there, so no one to grant rights to, and the Ukrainians misplaced quite a few of us. With the connivance of our government, which does not want to make waves. I can understand assimilating people to have a homogeneous country, but I dislike the double standard, especially from countries that have done the dirty deed in the past and can now play tolerant with token minority populations while poking the eye and playing Medvedev Doctrine with the people who have lived in peace and relative tolerance. Even the guy who wanted to bomb the National Day during parades in a Hungarian majority area was a Hungarian national, not a local. Anyway, we Romanians miss our long gone Germans. They're like Hungarians without the chip on their shoulder.

    Just read about Transylvanian Saxons, and so forth. You’ve lost 75% since 1992. Emigration? Death? It’s a shame to lose an interesting minority like that. He article mentions a few towns as much as 30% German. Is German an official or permitted language there? I’d imagine not for much longer, in any case.

    • Replies: @Romanian
    Migration to reunified Germany. We also lost a quarter of GDP immediately after Communism fell and had various social issues, so they went to the already developed West Germany. With no contraceptives or abortion, I don't see how the whole minority could have diminished in numbers through death. We did not have systematic revenge on local Germans for WW2 like in other places.

    But the migration started earlier, when West Germany was looking to bring back the Germans of the medieval Ostsiedlung to repopulate more swiftly (while the West Germans also started bringing in Turkish guestworkers). There were quite a few left as a distinct minority in Romania (the current president belongs to the community) and were very prestigious and appreciated because of the Teutonic qualities. My elderly boss is a Romanian Transylvanian whose parents managed (pulled some strings in the Romanian fashion) to send him to the German language kindergarten with the ethnic Germans for him to become fluent in German early on as a good career move for later.

    No language except Romanian has official status, but minorities have cultural rights to the maintenance of language, religion, culture so long as they also get educated in the Romanian curriculum. If you pass a certain threshold in a locality, then the state also pays for schools in your maternal language, where you just learn Romanian language and literature as an aside, with Math and so on being in your maternal language.

    You know that Communist countries were like prisons for their people, who might have emigrated in mass had they had the opportunity. It was the same for Romania, with two exceptions - the Germans and the Jews. We let the Germans go to the West for the equivalent of 2700 deutschmarks per person payable by the West German government to the hard currency hungry Romanian government. The sum was increased in the 1980s after negotiations (doubled as opposed to the ten fold growth Ceausescu wanted), because we had started on the painful road to paying down our foreign debt, which would eventually result in material privations so large that they gave rise to the Revolution and the stereotypical remembrance of Communism.

    Romanians still have some of the highest nostalgia rates for Communism, just not for the bad old 1980s. But with the Communist talent for resource mobilization and the opportunities for social mobility for the lower classes in what was previously a very rigid social class system, a lot of Romanians started living pretty well in the 1960s and 1970s, before Communism showed its inefficiency by veering into malinvestment. They had education, better access to social status positions like doctors and engineers, access to medicine, than their peasant parents ever did. We had cultural investments as well, subordinated to the ruling ideology of course, but with wiggle room. Theater, historical epics, crime flicks etc. The Communist era was also the longest period of peace in our pretty violent history as the fault line between Europe and the rest, which enabled capital accumulation in society and helped modernize it (they didn't understand it as such, because of Communism and because it did not go to consumption opportunities like in the West). Not having to rebuild your farm every few years and re-dig the well and re-populate because of war and our favored scorched Earth tactics opened up new possibilities.

  149. @jtgw
    That's an interesting question, but I don't know how you could go about putting a numerical value on that knowledge. I assume you're talking about the cost of retraining and reeducation if forced out a current line of work through competition with immigrants, imports, machines or simply a more productive domestic competitor. All value is ultimately subjective; even costs of production are ultimately imputed from the value that consumers put on the goods produced, which value is subjectively determined. So no, I'm not sure how one could quantify that.

    I don't think knowledge is a kind of property, since knowledge can be shared freely. If I give you something that I built, I no longer possess that thing, but if I tell you my idea for how to build something, I still possess that idea, even though now you possess it, too. Some free-market economists, like George Reisman, do believe in intellectual property, but they typically have a restrictive notion of it, e.g. it must be an original idea that you came up with yourself; if you learned it from someone else, you do not own it.

    All value is ultimately subjective; even costs of production are ultimately imputed from the value that consumers put on the goods produced, which value is subjectively determined. So no, I’m not sure how one could quantify that.

    When you make something, you produce two things.: the thing itself, and the knowledge of how to make the thing. We know the value of the thing: subjective value, as you say, quoting Menger. We have traditionally assigned the knowledge a value of 0; as you write, quantifying it has been a problem.

    Assuming there is no value to production in a diversified economy, we can do the Ricardian thing and look for comparative advantage. The classic example: even if I am more efficient at producing guns and butter, I should produce only one that I am best at, and trade with you for the other. Suppose it’s butter: Ricardo tells me that I should give up the skills needed to smelt metal, forge rifles, etc, and focus on making butter (a commodity, mind you,) You should make guns, and trade with me, even though you now have all the guns and I have only butter to defend myself. I’m sure you know this is foolish, but this is accepted theory.

    It’s also wrong. Read Debunking Economics by Steve Keen to remove some of the clutter from the field, and especially demand curves. If you would like more on the information theory of entrepreneurship, try Knowledge and Power by George Gilder. This latter hints at an understanding of the value of knowledge, but it doesn’t answer or justify tariffs (to be clear, I think there is an argument for them, but haven’t seen a quantitative, unemotional presentation of one.)

    • Replies: @jtgw
    I don't know what Ricardo actually said, but that does sound absurd, assuming that both you and me need both guns and butter. But, if we are trading guns and butter with each other, we both end up with guns and butter. I don't know how you get to saying that only one of us will have guns.
  150. @jtgw
    There seems to be a widespread belief that national borders are like event horizons, where the laws of economics break down. The same person who recognizes the absurdity of restricting movement and trade within borders thinks that the economic consequences are completely different across national borders, forgetting that national borders are economically arbitrary. Borders are political, not economic entities.

    Indeed. The people within the borders pay taxes to a mob whose job is to protect those people’s interests. the mob creates public goods with those taxes which might be better or worse at supporting production. The question: does a high tariff policy support a production/manufacturing economy? When does it become a net negative?

    • Replies: @jtgw
    The error I see in your reasoning is that you imagine that, without tariffs, we will not have those goods that we otherwise would have produced ourselves. But why produce them ourselves more dearly when we can import them more cheaply and focus our production in areas where we have a comparative advantage? If you could outline the scenario you have in mind where this does not happen, I would be grateful.
  151. @jtgw
    That argument depends on the lump of labor fallacy. Sure, if there was only a fixed amount of work to be done, open immigration would result in only increased competition for the same number of jobs, until wages were driven down to the level of the origin country. But immigrants also increase demand for goods and services. Moreover, they enable more division of labor, as immigrants can focus in areas where they are most productive and natives can focus in areas where they are comparatively most productive.

    http://econfaculty.gmu.edu/bcaplan/e321/lab3.htm

    However, you are quite right that there are political and cultural issues to consider. Even if immigrants deliver economic growth, they may also influence local politics in a statist direction. The welfare state, too, distorts immigration patterns and can lead to greater welfare dependency; in that respect I quite agree with the immigration skeptics here.

    Even if immigrants deliver economic growth, they may also influence local politics in a statist direction
    Be careful. It’s not whether they deliver economic growth. It’s whether they deliver PER CAPITA economic growth, first off. Economic growth that makes the economy larger but individuals poorer is unwelcome, except if you live at the top of a pyramid and make your money on volume, not quality.

    Let’s not even talk about the destruction of one major form of capital, social capital. See: Robert Putnam.

  152. @jtgw
    That argument depends on the lump of labor fallacy. Sure, if there was only a fixed amount of work to be done, open immigration would result in only increased competition for the same number of jobs, until wages were driven down to the level of the origin country. But immigrants also increase demand for goods and services. Moreover, they enable more division of labor, as immigrants can focus in areas where they are most productive and natives can focus in areas where they are comparatively most productive.

    http://econfaculty.gmu.edu/bcaplan/e321/lab3.htm

    However, you are quite right that there are political and cultural issues to consider. Even if immigrants deliver economic growth, they may also influence local politics in a statist direction. The welfare state, too, distorts immigration patterns and can lead to greater welfare dependency; in that respect I quite agree with the immigration skeptics here.

    Caplan really is a Sperg. From your link: Effect #3: Reducing average American income. Low-skilled Americans who don’t own a home or other assets may gain from immigration restrictions, but only a small minority of Americans are in this category.

    A quick check of the Google shows home ownership at 64%. So 36% of American households do NOT own homes. I’d guess that 90% of those, or about 32% of American households, are low skill and don’t own homes. That’s a third, but those people don’t count to Bryan Caplan, who sees them as a “small minority.”

    Note: given the level of mortgage debt, MOST Americans don’t “own” their homes. Only a small minority own property free and clear. Now THOSE people clearly gain from immigration which drives up the value of their property. We can guess from Pareto that .8% of property owners own 51.2% of property; and now you know why economists like Caplan, doing their bidding, advocate for more immigration.

    • Replies: @jtgw
    He said "home or other assets", not just "homes". I take your concerns about driving down per capita wealth, which is conceivable in the short-run, at least. But I think Caplan makes good points about e.g. immigration increasing total (domestic) output through further labor specialization. This is not insignificant.
  153. @jtgw
    Higher productivity is an indeed an unqualified benefit, but higher wages are not the cause of it; capital accumulation, i.e. savings, is. Simply forcing up the price of labor, with no concomitant rise in productivity, just raises the cost of production.

    Knowledge is a form of capital, then, right? Better knowledge of production leads to increased productivity, and you said that increased productivity results from “capital accumulation.”

  154. @heretic
    Quick we better get that unemployment rate back up or pretty soon those Hungarians (unemployment ~6%) will be making like S.Koreans (unemployment ~5%) or Japanese (~3%) and then they'll really be screwed.

    The trick is to get them all squabbling among themselves, looking out for Mo immigrant over the shoulder and settling for less on the race to the bottom. The trick is to set them at each others' throats. And pretty soon there's nothing much left of anything for anyone to care a whit for. When one generation knows it will be leaving behind a worse-off place for the next, things start to gather a momentum of their own. By then, what's the point?

    Once we leave social trust and intergenerational stewardship behind, we may as well all live in Rio, Jo'burg, Molenbeek or London 2026. Me and mine and be damned the rest.

    For me, the future is an Indian slum. The H1B’s (or whatever) to my area have simply overwhelmed it. The status-obsessed subcons live in the best part of town, and make up at least 20% of the population. Grade school, they’re an easy majority.

    People don’t realize what’s coming. I see grandmas all over the place in full native garb walking their grandchildren. Truly zero English. You think they’re not on every social welfare mechanism imaginable? What incentive would stop them?

  155. @TomSchmidt
    All value is ultimately subjective; even costs of production are ultimately imputed from the value that consumers put on the goods produced, which value is subjectively determined. So no, I’m not sure how one could quantify that.

    When you make something, you produce two things.: the thing itself, and the knowledge of how to make the thing. We know the value of the thing: subjective value, as you say, quoting Menger. We have traditionally assigned the knowledge a value of 0; as you write, quantifying it has been a problem.

    Assuming there is no value to production in a diversified economy, we can do the Ricardian thing and look for comparative advantage. The classic example: even if I am more efficient at producing guns and butter, I should produce only one that I am best at, and trade with you for the other. Suppose it's butter: Ricardo tells me that I should give up the skills needed to smelt metal, forge rifles, etc, and focus on making butter (a commodity, mind you,) You should make guns, and trade with me, even though you now have all the guns and I have only butter to defend myself. I'm sure you know this is foolish, but this is accepted theory.

    It's also wrong. Read Debunking Economics by Steve Keen to remove some of the clutter from the field, and especially demand curves. If you would like more on the information theory of entrepreneurship, try Knowledge and Power by George Gilder. This latter hints at an understanding of the value of knowledge, but it doesn't answer or justify tariffs (to be clear, I think there is an argument for them, but haven't seen a quantitative, unemotional presentation of one.)

    I don’t know what Ricardo actually said, but that does sound absurd, assuming that both you and me need both guns and butter. But, if we are trading guns and butter with each other, we both end up with guns and butter. I don’t know how you get to saying that only one of us will have guns.

    • Replies: @Romanian
    Ricardo was in the XIXth century, when things were simpler. But the real problem is that his model of comparative advantage bandied about today as a justification for free trade and specialization is actually quoted out of context since, in his same publication, he makes two assumptions that are invalidated by today's experience, especially between the US and Japan, as documented by Eamonn Fingleton, and the US and China. The first is that capital will stay at home, since why would businessmen leave their country and move their operations to far off lands where they may be dispossessed and unprivileged compared to the locals (unless they're going to imperial possessions, which meant internal trade). The second is that people try to hold on to the comparative advantages they have, including skills and knowledge. Ricardo would have been familiar with how the UK got its textile industry, by absorbing Dutch and Belgian weavers fleeing the war with Spain and the religious wars. If you have an edge in making airplanes, like Boeing had, by virtue of knowledge, secret sauce and so on, why would you transfer it to the Japanese?

    http://www.theamericanconservative.com/articles/boeing-goes-to-pieces/
    , @TomSchmidt
    A great illustration of Comparative Advantage is here:
    http://www.econport.org/content/handbook/productionpossibilities/Comparative-Advantage.html

    Note all the 2x2 grids, also used by Caplan in his lab assignment linked above, the one where he shows that it's more "efficient" for American women to write computer programs and hire Mexican women to do childcare, as more overall childcare can take place (especially when the immigrant childcare workers reduce the number of children needing watching).

    My very liberal class saw the problem with the illustration immediately: if they have all the guns, and we have all the butter, what would keep them from killing us and taking the butter?
  156. @TomSchmidt
    Caplan really is a Sperg. From your link: Effect #3: Reducing average American income. Low-skilled Americans who don’t own a home or other assets may gain from immigration restrictions, but only a small minority of Americans are in this category.

    A quick check of the Google shows home ownership at 64%. So 36% of American households do NOT own homes. I'd guess that 90% of those, or about 32% of American households, are low skill and don't own homes. That's a third, but those people don't count to Bryan Caplan, who sees them as a "small minority."

    Note: given the level of mortgage debt, MOST Americans don't "own" their homes. Only a small minority own property free and clear. Now THOSE people clearly gain from immigration which drives up the value of their property. We can guess from Pareto that .8% of property owners own 51.2% of property; and now you know why economists like Caplan, doing their bidding, advocate for more immigration.

    He said “home or other assets”, not just “homes”. I take your concerns about driving down per capita wealth, which is conceivable in the short-run, at least. But I think Caplan makes good points about e.g. immigration increasing total (domestic) output through further labor specialization. This is not insignificant.

    • Replies: @TomSchmidt
    As to other assets, half of black women 36-49 are worth $5 or less:
    http://www.huffingtonpost.com/2010/03/11/women-of-color-have-media_n_495238.html

    The median amount of retirement savings in the USA is $5000:
    http://www.marketwatch.com/story/the-typical-american-couple-has-only-5000-saved-for-retirement-2016-04-28

    The question has to be: does immigration make the median person wealthier, in all the forms of wealth, including social capital, or poorer? I think we are agreed that immigration will cause an increase in GDP. I wonder if it also leads to an increase in average GDP per capita, and not median GDP per capita, in other words that the increase in GDP goes to the people at the top of the pyramid.

    I recall a commentator at the DNC mentioning that Donald Trump would be a threat to people's retirement accounts. Perhaps. From the above link, HALF the people in the country have essentially NO retirement savings. Even if immigration IS beneficial, if the benefits aren't shared you get a populist revolt, as in 2016. Tread carefully.
  157. @TomSchmidt
    Indeed. The people within the borders pay taxes to a mob whose job is to protect those people's interests. the mob creates public goods with those taxes which might be better or worse at supporting production. The question: does a high tariff policy support a production/manufacturing economy? When does it become a net negative?

    The error I see in your reasoning is that you imagine that, without tariffs, we will not have those goods that we otherwise would have produced ourselves. But why produce them ourselves more dearly when we can import them more cheaply and focus our production in areas where we have a comparative advantage? If you could outline the scenario you have in mind where this does not happen, I would be grateful.

    • Replies: @TomSchmidt
    But why produce them ourselves more dearly when we can import them more cheaply and focus our production in areas where we have a comparative advantage?

    This goes to the nature of innovation, production, and survivability. I am particularly influenced by Taleb's Antifragile here, so let me quote an example he cites:

    An economist would find it inefficient to carry two lungs and two kidneys -- consider the costs involved in transporting these heavy items across the savannah. Such optimisation would, eventually, kill you, after the first accident, the first "outlier". Also, consider that if we gave Mother Nature to economists, it would dispense with individual kidneys -- since we do not need them all the time, it would be more "efficient" if we sold ours and used a central kidney on a time-share basis. You could also lend your eyes at night, since you do not need them to dream.
     
    Taleb also has a famous quote about efficiency in banking: picking up nickels in front of a steamroller. Recall that the investment banks were permitted to leverage 33-1 before the financial crisis of 2008. In other words, they were very efficient in getting returns on capital, and not very robust to changing market conditions.

    The same applies in nature. You have 4x the kidney capacity you "need" because, well, more "efficient" kidney owners who had only 1.5x DID NOT SURVIVE to leave behind their efficient genes. The argument here is from Schumacher, Small is Beautiful, that the human economy is an outgrowth of the natural economy (and the financial economy an outgrowth of that.) In a Darwinian biome, going for efficiency over robustness works well until you need the spare capacity, in which case you wind up dead.

    Jane Jacobs compares your efficient production to a monoculture cornfield, and a thriving but less efficient economy as an analogy to a rain forest, where sunlight enters and is used again and again through the whole web of life. Having people doing diverse things leads to recombination in odd ways. As Jacobs points out, Adam Smith's pin factory with its dehumanizing specialization was put out of business by a man from a different field who created a pin-making machine.

    What we agree on is we would like increased innovation and production. For new industries, building new webs of production, tariffs can protect and grow a new base of knowledge for society. For older industries, tariffs can wind up protecting inefficiency and cost society more than they earn. (You wouldn't abandon a newborn because it couldn't outrace a 15yo; you need to nurture, protect, and grow it. At the same time, by the time it's turned 45, you'd best cut the cord.) The intelligent policy finds the balance in these areas.
  158. Anonymous • Disclaimer says:
    @jtgw
    Higher productivity is an indeed an unqualified benefit, but higher wages are not the cause of it; capital accumulation, i.e. savings, is. Simply forcing up the price of labor, with no concomitant rise in productivity, just raises the cost of production.

    This is nonsense.

    Companies cannot and do not control the issuing of money stock within a nation.
    In order to get money, that is to be profitable, a company must be successful in selling its products – only then is it in a position to increase wages.

    The point is that workers wages are ultimately governed by company profitability and company profitibality alone – it is simply impossible for workers to bargain money out of a company which a company does not have.
    In a non inflationary environment – that is one in which the nation’s money stock is not being boosted – profitability increases can only be engendered by general productivity increases.

    • Replies: @Romanian
    Former Communist countries generally had bloated public sectors from the get go, everything being state controlled. In the case of Romania, we also have the double whammy of strong public sector Unions with almost no private sector equivalent. Almost a third of the people work for the state, as doctors or teachers and so on, but also public functionaries working in very inefficient bureaucracies. So when backroom dealing (by the very transparently named Cartel Alpha alliance of functionary unions) leads to an announcement of a blanket 25% increase in the salaries of all "budgetaries" (as well call them), you have no basis in productivity and no actual earned profits from which to derive the increase. It has to come from the taxpayer. Our inflation is currently low, but we have a budget deficit. We also have a public pension system of the pay as you go variety. Again, subject to political pressures for income increases.
    , @Jtgw
    I'm not sure why you think you're arguing with me. Capital simply means goods that are used to produce other goods for consumption. You're right that companies have to be allowed to profit to accumulate that capital.
  159. @jtgw
    I agree with you about inflation, but note that a corollary of this is that closing the borders will not fix the problems caused by inflation or excessive capital consumption by the state. Please understand that I am not advocating open borders under current conditions; I am simply drawing attention to the fact that ending immigration will not solve the underlying economic problems we face. If restrictive immigration policy alone did the trick, Japan would be booming.

    Out of all the nations of the world, the Japanese have probably got the best economy.

    • Replies: @Romanian
    I'd go for the Swiss.
  160. @TomSchmidt
    Just read about Transylvanian Saxons, and so forth. You've lost 75% since 1992. Emigration? Death? It's a shame to lose an interesting minority like that. He article mentions a few towns as much as 30% German. Is German an official or permitted language there? I'd imagine not for much longer, in any case.

    Migration to reunified Germany. We also lost a quarter of GDP immediately after Communism fell and had various social issues, so they went to the already developed West Germany. With no contraceptives or abortion, I don’t see how the whole minority could have diminished in numbers through death. We did not have systematic revenge on local Germans for WW2 like in other places.

    [MORE]

    But the migration started earlier, when West Germany was looking to bring back the Germans of the medieval Ostsiedlung to repopulate more swiftly (while the West Germans also started bringing in Turkish guestworkers). There were quite a few left as a distinct minority in Romania (the current president belongs to the community) and were very prestigious and appreciated because of the Teutonic qualities. My elderly boss is a Romanian Transylvanian whose parents managed (pulled some strings in the Romanian fashion) to send him to the German language kindergarten with the ethnic Germans for him to become fluent in German early on as a good career move for later.

    No language except Romanian has official status, but minorities have cultural rights to the maintenance of language, religion, culture so long as they also get educated in the Romanian curriculum. If you pass a certain threshold in a locality, then the state also pays for schools in your maternal language, where you just learn Romanian language and literature as an aside, with Math and so on being in your maternal language.

    You know that Communist countries were like prisons for their people, who might have emigrated in mass had they had the opportunity. It was the same for Romania, with two exceptions – the Germans and the Jews. We let the Germans go to the West for the equivalent of 2700 deutschmarks per person payable by the West German government to the hard currency hungry Romanian government. The sum was increased in the 1980s after negotiations (doubled as opposed to the ten fold growth Ceausescu wanted), because we had started on the painful road to paying down our foreign debt, which would eventually result in material privations so large that they gave rise to the Revolution and the stereotypical remembrance of Communism.

    Romanians still have some of the highest nostalgia rates for Communism, just not for the bad old 1980s. But with the Communist talent for resource mobilization and the opportunities for social mobility for the lower classes in what was previously a very rigid social class system, a lot of Romanians started living pretty well in the 1960s and 1970s, before Communism showed its inefficiency by veering into malinvestment. They had education, better access to social status positions like doctors and engineers, access to medicine, than their peasant parents ever did. We had cultural investments as well, subordinated to the ruling ideology of course, but with wiggle room. Theater, historical epics, crime flicks etc. The Communist era was also the longest period of peace in our pretty violent history as the fault line between Europe and the rest, which enabled capital accumulation in society and helped modernize it (they didn’t understand it as such, because of Communism and because it did not go to consumption opportunities like in the West). Not having to rebuild your farm every few years and re-dig the well and re-populate because of war and our favored scorched Earth tactics opened up new possibilities.

  161. @Anonymous
    This is nonsense.

    Companies cannot and do not control the issuing of money stock within a nation.
    In order to get money, that is to be profitable, a company must be successful in selling its products - only then is it in a position to increase wages.

    The point is that workers wages are ultimately governed by company profitability and company profitibality alone - it is simply impossible for workers to bargain money out of a company which a company does not have.
    In a non inflationary environment - that is one in which the nation's money stock is not being boosted - profitability increases can only be engendered by general productivity increases.

    Former Communist countries generally had bloated public sectors from the get go, everything being state controlled. In the case of Romania, we also have the double whammy of strong public sector Unions with almost no private sector equivalent. Almost a third of the people work for the state, as doctors or teachers and so on, but also public functionaries working in very inefficient bureaucracies. So when backroom dealing (by the very transparently named Cartel Alpha alliance of functionary unions) leads to an announcement of a blanket 25% increase in the salaries of all “budgetaries” (as well call them), you have no basis in productivity and no actual earned profits from which to derive the increase. It has to come from the taxpayer. Our inflation is currently low, but we have a budget deficit. We also have a public pension system of the pay as you go variety. Again, subject to political pressures for income increases.

  162. @Anonymous
    Out of all the nations of the world, the Japanese have probably got the best economy.

    I’d go for the Swiss.

  163. @jtgw
    I don't know what Ricardo actually said, but that does sound absurd, assuming that both you and me need both guns and butter. But, if we are trading guns and butter with each other, we both end up with guns and butter. I don't know how you get to saying that only one of us will have guns.

    Ricardo was in the XIXth century, when things were simpler. But the real problem is that his model of comparative advantage bandied about today as a justification for free trade and specialization is actually quoted out of context since, in his same publication, he makes two assumptions that are invalidated by today’s experience, especially between the US and Japan, as documented by Eamonn Fingleton, and the US and China. The first is that capital will stay at home, since why would businessmen leave their country and move their operations to far off lands where they may be dispossessed and unprivileged compared to the locals (unless they’re going to imperial possessions, which meant internal trade). The second is that people try to hold on to the comparative advantages they have, including skills and knowledge. Ricardo would have been familiar with how the UK got its textile industry, by absorbing Dutch and Belgian weavers fleeing the war with Spain and the religious wars. If you have an edge in making airplanes, like Boeing had, by virtue of knowledge, secret sauce and so on, why would you transfer it to the Japanese?

    http://www.theamericanconservative.com/articles/boeing-goes-to-pieces/

    • Replies: @Jtgw
    Actually fear of capital flight is one of the older mercantilist concerns. But think about it: capital moves abroad, where it can produce more, leading to cheaper goods that can be imported, allowing natives to save more, accumulating capital themselves. Your alternative is to force capital to remain in the country where it is less productive, leading to more expensive goods. Note that such goods are also more expensive for export, pulling in less capital from abroad.
  164. @Anonymous
    This is nonsense.

    Companies cannot and do not control the issuing of money stock within a nation.
    In order to get money, that is to be profitable, a company must be successful in selling its products - only then is it in a position to increase wages.

    The point is that workers wages are ultimately governed by company profitability and company profitibality alone - it is simply impossible for workers to bargain money out of a company which a company does not have.
    In a non inflationary environment - that is one in which the nation's money stock is not being boosted - profitability increases can only be engendered by general productivity increases.

    I’m not sure why you think you’re arguing with me. Capital simply means goods that are used to produce other goods for consumption. You’re right that companies have to be allowed to profit to accumulate that capital.

    • Replies: @Anonymous
    My point really simply could be reduced to this - 'paupers don't shit gold coins'.
  165. @Romanian
    Ricardo was in the XIXth century, when things were simpler. But the real problem is that his model of comparative advantage bandied about today as a justification for free trade and specialization is actually quoted out of context since, in his same publication, he makes two assumptions that are invalidated by today's experience, especially between the US and Japan, as documented by Eamonn Fingleton, and the US and China. The first is that capital will stay at home, since why would businessmen leave their country and move their operations to far off lands where they may be dispossessed and unprivileged compared to the locals (unless they're going to imperial possessions, which meant internal trade). The second is that people try to hold on to the comparative advantages they have, including skills and knowledge. Ricardo would have been familiar with how the UK got its textile industry, by absorbing Dutch and Belgian weavers fleeing the war with Spain and the religious wars. If you have an edge in making airplanes, like Boeing had, by virtue of knowledge, secret sauce and so on, why would you transfer it to the Japanese?

    http://www.theamericanconservative.com/articles/boeing-goes-to-pieces/

    Actually fear of capital flight is one of the older mercantilist concerns. But think about it: capital moves abroad, where it can produce more, leading to cheaper goods that can be imported, allowing natives to save more, accumulating capital themselves. Your alternative is to force capital to remain in the country where it is less productive, leading to more expensive goods. Note that such goods are also more expensive for export, pulling in less capital from abroad.

    • Replies: @Romanian
    But you gloss over the issue of metallism in mercantilism. The big problem according to the mercantilists was that having imbalanced trade led to an exit of silver and gold out of your country, leading to impoverishment. This was a principal dynamic in the Opium War. This is not an issue today. The whole point was that the British entrepreneur was not setting himself up in France or Germany to produce, but that the metallic basis of capital was exiting the country and the national economy. National entrepreneurs of the non-intermediary variety only went abroad for resource development, like mercury mines and what have you, with resources meeting the definition of absolute advantage. You either have them or you don't.
    , @TomSchmidt
    But think about it: capital moves abroad, where it can produce more, leading to cheaper goods that can be imported

    How do you define capital? Is Trust, as Fukuyama wrote about, a form of capital? I suspect you and Romanian would largely agree, but you haven't established your terms. Of course, neither have I, but I suspect my definition of capital is far more catholic than yours.
  166. @Jtgw
    I'm not sure why you think you're arguing with me. Capital simply means goods that are used to produce other goods for consumption. You're right that companies have to be allowed to profit to accumulate that capital.

    My point really simply could be reduced to this – ‘paupers don’t shit gold coins’.

  167. @Jtgw
    Actually fear of capital flight is one of the older mercantilist concerns. But think about it: capital moves abroad, where it can produce more, leading to cheaper goods that can be imported, allowing natives to save more, accumulating capital themselves. Your alternative is to force capital to remain in the country where it is less productive, leading to more expensive goods. Note that such goods are also more expensive for export, pulling in less capital from abroad.

    But you gloss over the issue of metallism in mercantilism. The big problem according to the mercantilists was that having imbalanced trade led to an exit of silver and gold out of your country, leading to impoverishment. This was a principal dynamic in the Opium War. This is not an issue today. The whole point was that the British entrepreneur was not setting himself up in France or Germany to produce, but that the metallic basis of capital was exiting the country and the national economy. National entrepreneurs of the non-intermediary variety only went abroad for resource development, like mercury mines and what have you, with resources meeting the definition of absolute advantage. You either have them or you don’t.

  168. @jtgw
    I don't know what Ricardo actually said, but that does sound absurd, assuming that both you and me need both guns and butter. But, if we are trading guns and butter with each other, we both end up with guns and butter. I don't know how you get to saying that only one of us will have guns.

    A great illustration of Comparative Advantage is here:
    http://www.econport.org/content/handbook/productionpossibilities/Comparative-Advantage.html

    Note all the 2×2 grids, also used by Caplan in his lab assignment linked above, the one where he shows that it’s more “efficient” for American women to write computer programs and hire Mexican women to do childcare, as more overall childcare can take place (especially when the immigrant childcare workers reduce the number of children needing watching).

    My very liberal class saw the problem with the illustration immediately: if they have all the guns, and we have all the butter, what would keep them from killing us and taking the butter?

  169. @jtgw
    He said "home or other assets", not just "homes". I take your concerns about driving down per capita wealth, which is conceivable in the short-run, at least. But I think Caplan makes good points about e.g. immigration increasing total (domestic) output through further labor specialization. This is not insignificant.

    As to other assets, half of black women 36-49 are worth $5 or less:
    http://www.huffingtonpost.com/2010/03/11/women-of-color-have-media_n_495238.html

    The median amount of retirement savings in the USA is $5000:
    http://www.marketwatch.com/story/the-typical-american-couple-has-only-5000-saved-for-retirement-2016-04-28

    The question has to be: does immigration make the median person wealthier, in all the forms of wealth, including social capital, or poorer? I think we are agreed that immigration will cause an increase in GDP. I wonder if it also leads to an increase in average GDP per capita, and not median GDP per capita, in other words that the increase in GDP goes to the people at the top of the pyramid.

    I recall a commentator at the DNC mentioning that Donald Trump would be a threat to people’s retirement accounts. Perhaps. From the above link, HALF the people in the country have essentially NO retirement savings. Even if immigration IS beneficial, if the benefits aren’t shared you get a populist revolt, as in 2016. Tread carefully.

  170. @jtgw
    The error I see in your reasoning is that you imagine that, without tariffs, we will not have those goods that we otherwise would have produced ourselves. But why produce them ourselves more dearly when we can import them more cheaply and focus our production in areas where we have a comparative advantage? If you could outline the scenario you have in mind where this does not happen, I would be grateful.

    But why produce them ourselves more dearly when we can import them more cheaply and focus our production in areas where we have a comparative advantage?

    This goes to the nature of innovation, production, and survivability. I am particularly influenced by Taleb’s Antifragile here, so let me quote an example he cites:

    An economist would find it inefficient to carry two lungs and two kidneys — consider the costs involved in transporting these heavy items across the savannah. Such optimisation would, eventually, kill you, after the first accident, the first “outlier”. Also, consider that if we gave Mother Nature to economists, it would dispense with individual kidneys — since we do not need them all the time, it would be more “efficient” if we sold ours and used a central kidney on a time-share basis. You could also lend your eyes at night, since you do not need them to dream.

    Taleb also has a famous quote about efficiency in banking: picking up nickels in front of a steamroller. Recall that the investment banks were permitted to leverage 33-1 before the financial crisis of 2008. In other words, they were very efficient in getting returns on capital, and not very robust to changing market conditions.

    The same applies in nature. You have 4x the kidney capacity you “need” because, well, more “efficient” kidney owners who had only 1.5x DID NOT SURVIVE to leave behind their efficient genes. The argument here is from Schumacher, Small is Beautiful, that the human economy is an outgrowth of the natural economy (and the financial economy an outgrowth of that.) In a Darwinian biome, going for efficiency over robustness works well until you need the spare capacity, in which case you wind up dead.

    Jane Jacobs compares your efficient production to a monoculture cornfield, and a thriving but less efficient economy as an analogy to a rain forest, where sunlight enters and is used again and again through the whole web of life. Having people doing diverse things leads to recombination in odd ways. As Jacobs points out, Adam Smith’s pin factory with its dehumanizing specialization was put out of business by a man from a different field who created a pin-making machine.

    What we agree on is we would like increased innovation and production. For new industries, building new webs of production, tariffs can protect and grow a new base of knowledge for society. For older industries, tariffs can wind up protecting inefficiency and cost society more than they earn. (You wouldn’t abandon a newborn because it couldn’t outrace a 15yo; you need to nurture, protect, and grow it. At the same time, by the time it’s turned 45, you’d best cut the cord.) The intelligent policy finds the balance in these areas.

    • Agree: Romanian
    • Replies: @jtgw
    Your analogies with Darwinian evolution and urban development are interesting, since both of those are spontaneous, undirected processes that nevertheless achieve optimal outcomes, which outcomes may indeed involve some built-in redundancy. But you're main argument seems to be that we cannot leave the economy to run itself; it needs direction from the center in the form of tariffs and immigration controls. I'm only arguing for treating the economy the way Jacobs would have us treat urban development.

    I don't find your arguments about the need to protect industries on economic grounds persuasive; all else being equal, we surely want all local producers to focus on those industries in which they enjoy a comparative advantage and reap the benefits of saving from importing those goods produced more efficiently abroad. Note that the savings would also provide more resources to support innovation of the sort you praise; protection, on the other hand, by depleting domestic savings would make innovation more difficult.

    I think the only persuasive example of the need for protection is indeed the arms industry, but that is because there are extraneous political and strategic considerations, rather than merely economic ones. In a free market, it may well be more efficient for producers in one country to focus on arms production, but that could very well allow a hostile government to seize those industries and employ a monopoly of force against a country in which arms production is comparatively inefficient. So even a free-market government may need to keep some arms production at home, however inefficient it may be.
  171. @Jtgw
    Actually fear of capital flight is one of the older mercantilist concerns. But think about it: capital moves abroad, where it can produce more, leading to cheaper goods that can be imported, allowing natives to save more, accumulating capital themselves. Your alternative is to force capital to remain in the country where it is less productive, leading to more expensive goods. Note that such goods are also more expensive for export, pulling in less capital from abroad.

    But think about it: capital moves abroad, where it can produce more, leading to cheaper goods that can be imported

    How do you define capital? Is Trust, as Fukuyama wrote about, a form of capital? I suspect you and Romanian would largely agree, but you haven’t established your terms. Of course, neither have I, but I suspect my definition of capital is far more catholic than yours.

  172. @TomSchmidt
    But why produce them ourselves more dearly when we can import them more cheaply and focus our production in areas where we have a comparative advantage?

    This goes to the nature of innovation, production, and survivability. I am particularly influenced by Taleb's Antifragile here, so let me quote an example he cites:

    An economist would find it inefficient to carry two lungs and two kidneys -- consider the costs involved in transporting these heavy items across the savannah. Such optimisation would, eventually, kill you, after the first accident, the first "outlier". Also, consider that if we gave Mother Nature to economists, it would dispense with individual kidneys -- since we do not need them all the time, it would be more "efficient" if we sold ours and used a central kidney on a time-share basis. You could also lend your eyes at night, since you do not need them to dream.
     
    Taleb also has a famous quote about efficiency in banking: picking up nickels in front of a steamroller. Recall that the investment banks were permitted to leverage 33-1 before the financial crisis of 2008. In other words, they were very efficient in getting returns on capital, and not very robust to changing market conditions.

    The same applies in nature. You have 4x the kidney capacity you "need" because, well, more "efficient" kidney owners who had only 1.5x DID NOT SURVIVE to leave behind their efficient genes. The argument here is from Schumacher, Small is Beautiful, that the human economy is an outgrowth of the natural economy (and the financial economy an outgrowth of that.) In a Darwinian biome, going for efficiency over robustness works well until you need the spare capacity, in which case you wind up dead.

    Jane Jacobs compares your efficient production to a monoculture cornfield, and a thriving but less efficient economy as an analogy to a rain forest, where sunlight enters and is used again and again through the whole web of life. Having people doing diverse things leads to recombination in odd ways. As Jacobs points out, Adam Smith's pin factory with its dehumanizing specialization was put out of business by a man from a different field who created a pin-making machine.

    What we agree on is we would like increased innovation and production. For new industries, building new webs of production, tariffs can protect and grow a new base of knowledge for society. For older industries, tariffs can wind up protecting inefficiency and cost society more than they earn. (You wouldn't abandon a newborn because it couldn't outrace a 15yo; you need to nurture, protect, and grow it. At the same time, by the time it's turned 45, you'd best cut the cord.) The intelligent policy finds the balance in these areas.

    Your analogies with Darwinian evolution and urban development are interesting, since both of those are spontaneous, undirected processes that nevertheless achieve optimal outcomes, which outcomes may indeed involve some built-in redundancy. But you’re main argument seems to be that we cannot leave the economy to run itself; it needs direction from the center in the form of tariffs and immigration controls. I’m only arguing for treating the economy the way Jacobs would have us treat urban development.

    I don’t find your arguments about the need to protect industries on economic grounds persuasive; all else being equal, we surely want all local producers to focus on those industries in which they enjoy a comparative advantage and reap the benefits of saving from importing those goods produced more efficiently abroad. Note that the savings would also provide more resources to support innovation of the sort you praise; protection, on the other hand, by depleting domestic savings would make innovation more difficult.

    I think the only persuasive example of the need for protection is indeed the arms industry, but that is because there are extraneous political and strategic considerations, rather than merely economic ones. In a free market, it may well be more efficient for producers in one country to focus on arms production, but that could very well allow a hostile government to seize those industries and employ a monopoly of force against a country in which arms production is comparatively inefficient. So even a free-market government may need to keep some arms production at home, however inefficient it may be.

    • Replies: @TomSchmidt
    Your analogies with Darwinian evolution and urban development are interesting, since both of those are spontaneous, undirected processes that nevertheless achieve optimal outcomes

    No one is suggesting that evolution produces an "optimal" result. Be careful about reading things into it that aren't there. Darwin's suggestion is that evolution is "natural" selection, in contrast to "artificial" or man-made selection, as for instance when border collies were bred for the purpose of herding sheep. (I wish the analogies were mine, but they originate with Schumacher and Jane Jacobs; I assume you accept the theory of evolution, and that man is a species, and that man is subject to evolution, and that the same processes of natural selection that apply to all other species apply to us? We just have the added ability to self-domesticate, as it were. I assume you have read The 10,000 Year Explosion? You will need that.) Evolutionary processes apply one simple test to species: can they survive environmental conditions, or do they go extinct? They need not be "fittest," but do need to be "fit enough," and that makes for a good rule of thumb.

    But you’re main argument seems to be that we cannot leave the economy to run itself; it needs direction from the center in the form of tariffs and immigration controls. I’m only arguing for treating the economy the way Jacobs would have us treat urban development.
     
    Jacobs was not entirely laissez faire; she saw the role for adaptive, design-centered government in urban renewal. She is the author of the idea of tariffs for baby industries, of which more anon. My main argument is that production knowledge is a form of capital, and that in protecting an infant industry, you are protecting a form of capital. Thus my earlier question to you about how you define capital; earlier, you mentioned a monetary concept of it, but you must know that this is only one form, and probably not a very important form, of capital.

    I don’t find your arguments about the need to protect industries on economic grounds persuasive; all else being equal, we surely want all local producers to focus on those industries in which they enjoy a comparative advantage and reap the benefits of saving from importing those goods produced more efficiently abroad.
     
    That's fair. I once held your opinion myself. I would ask you this question: what comparative advantage does a 7-year-old child have against even a high-school-dropout 27-year-old? Should the child abandon learning, which will have NO payoff for, say, 15 years, and pursue something where his small size WILL give him an advantage? Of course, he will only have that advantage while small, so not learning while he is exploiting his small stature will lead him to be obsolete.

    More importantly, return to the idea of evolution: species don't try to solve the general problem of living everywhere in the world, but the specific problem of surviving within a niche, protected from competition from the outside. Do tariffs create a niche? Can you create a niche without tariffs? (For this latter idea, I recommend Zero to One by Peter Thiel, who opposes any use of government force to create a "monopoly," which is the goal of any business that wants to be profitable. Thiel's history of the idea of "perfect competition" as an outgrowth of physics envy amongst economists is worth the price of entry.)

    Note that the savings would also provide more resources to support innovation of the sort you praise; protection, on the other hand, by depleting domestic savings would make innovation more difficult.
     
    I think you would agree that the goal of capitalism isn't to grow the supply of "savings," whatever that is; instead, it's that we should deploy more and more capital to improve the lives of the people in the economy. So, is knowledge a form of capital? (Hint: the word capital derives from caput, Latin for head.) Can you increase your knowledge without learning and doing new things? Do you get to do new things if your nascent industry doing new things is snuffed out by another society that might have had a 6-month advantage, because we are looking to economize on one thing, price, at the exclusion of the residual value of knowledge?(see Big Data, by Cukier, for more on the residual value of data. Hint: a LARGE amount of the value of Google is the secondary, tertiary, quatenary, etc. uses of data.)

    Once you've formulated for yourself a useful definition of capital that goes beyond "savings," you'll start to seek a mechanism that grows TOTAL capital in a society, not just the easily-quantified aspects of it.

    I think the only persuasive example of the need for protection is indeed the arms industry, but that is because there are extraneous political and strategic considerations, rather than merely economic ones.
     
    The book Freedom's Forge talks about how the US industrial complex powered US victory in World War 2. It seems that the automotive industry, the aerospace industry, metallurgy, mining, and quite a few others were both protected and required for US dominance. Recall also the Morgenthau Plan for Germany after the war, to destroy all industrial capacity and turn the country into a pastoral, agricultural land (much like our guns and butter example.), a part of which was putting Germans on a starvation diet of 1200 calories per day; see the movie Germany, Year 0, filmed in 1948/49 Berlin by an Italian socialist for some results of this policy.

    So even a free-market government may need to keep some arms production at home, however inefficient it may be.
     
    Efficiency is not a bad thing, but it is often, as Taleb writes, fragile. Robustness leads to survivability; the bank that leverages capital 10-1 will earn higher profits until it blows up on an unforeseen "black swan" disaster. Then all the efficiency in the world won't save it.

    Start with reading Antifragile, then ponder on the meaning of capital. Once you do, you might have the same opinions. Knowledge and Power will also radically change your understanding of value, especially in a knowledge economy. I'd love to hear the changes in your thoughts afterwards, though.
  173. @jtgw
    Your analogies with Darwinian evolution and urban development are interesting, since both of those are spontaneous, undirected processes that nevertheless achieve optimal outcomes, which outcomes may indeed involve some built-in redundancy. But you're main argument seems to be that we cannot leave the economy to run itself; it needs direction from the center in the form of tariffs and immigration controls. I'm only arguing for treating the economy the way Jacobs would have us treat urban development.

    I don't find your arguments about the need to protect industries on economic grounds persuasive; all else being equal, we surely want all local producers to focus on those industries in which they enjoy a comparative advantage and reap the benefits of saving from importing those goods produced more efficiently abroad. Note that the savings would also provide more resources to support innovation of the sort you praise; protection, on the other hand, by depleting domestic savings would make innovation more difficult.

    I think the only persuasive example of the need for protection is indeed the arms industry, but that is because there are extraneous political and strategic considerations, rather than merely economic ones. In a free market, it may well be more efficient for producers in one country to focus on arms production, but that could very well allow a hostile government to seize those industries and employ a monopoly of force against a country in which arms production is comparatively inefficient. So even a free-market government may need to keep some arms production at home, however inefficient it may be.

    Your analogies with Darwinian evolution and urban development are interesting, since both of those are spontaneous, undirected processes that nevertheless achieve optimal outcomes

    No one is suggesting that evolution produces an “optimal” result. Be careful about reading things into it that aren’t there. Darwin’s suggestion is that evolution is “natural” selection, in contrast to “artificial” or man-made selection, as for instance when border collies were bred for the purpose of herding sheep. (I wish the analogies were mine, but they originate with Schumacher and Jane Jacobs; I assume you accept the theory of evolution, and that man is a species, and that man is subject to evolution, and that the same processes of natural selection that apply to all other species apply to us? We just have the added ability to self-domesticate, as it were. I assume you have read The 10,000 Year Explosion? You will need that.) Evolutionary processes apply one simple test to species: can they survive environmental conditions, or do they go extinct? They need not be “fittest,” but do need to be “fit enough,” and that makes for a good rule of thumb.

    But you’re main argument seems to be that we cannot leave the economy to run itself; it needs direction from the center in the form of tariffs and immigration controls. I’m only arguing for treating the economy the way Jacobs would have us treat urban development.

    Jacobs was not entirely laissez faire; she saw the role for adaptive, design-centered government in urban renewal. She is the author of the idea of tariffs for baby industries, of which more anon. My main argument is that production knowledge is a form of capital, and that in protecting an infant industry, you are protecting a form of capital. Thus my earlier question to you about how you define capital; earlier, you mentioned a monetary concept of it, but you must know that this is only one form, and probably not a very important form, of capital.

    I don’t find your arguments about the need to protect industries on economic grounds persuasive; all else being equal, we surely want all local producers to focus on those industries in which they enjoy a comparative advantage and reap the benefits of saving from importing those goods produced more efficiently abroad.

    That’s fair. I once held your opinion myself. I would ask you this question: what comparative advantage does a 7-year-old child have against even a high-school-dropout 27-year-old? Should the child abandon learning, which will have NO payoff for, say, 15 years, and pursue something where his small size WILL give him an advantage? Of course, he will only have that advantage while small, so not learning while he is exploiting his small stature will lead him to be obsolete.

    More importantly, return to the idea of evolution: species don’t try to solve the general problem of living everywhere in the world, but the specific problem of surviving within a niche, protected from competition from the outside. Do tariffs create a niche? Can you create a niche without tariffs? (For this latter idea, I recommend Zero to One by Peter Thiel, who opposes any use of government force to create a “monopoly,” which is the goal of any business that wants to be profitable. Thiel’s history of the idea of “perfect competition” as an outgrowth of physics envy amongst economists is worth the price of entry.)

    Note that the savings would also provide more resources to support innovation of the sort you praise; protection, on the other hand, by depleting domestic savings would make innovation more difficult.

    I think you would agree that the goal of capitalism isn’t to grow the supply of “savings,” whatever that is; instead, it’s that we should deploy more and more capital to improve the lives of the people in the economy. So, is knowledge a form of capital? (Hint: the word capital derives from caput, Latin for head.) Can you increase your knowledge without learning and doing new things? Do you get to do new things if your nascent industry doing new things is snuffed out by another society that might have had a 6-month advantage, because we are looking to economize on one thing, price, at the exclusion of the residual value of knowledge?(see Big Data, by Cukier, for more on the residual value of data. Hint: a LARGE amount of the value of Google is the secondary, tertiary, quatenary, etc. uses of data.)

    Once you’ve formulated for yourself a useful definition of capital that goes beyond “savings,” you’ll start to seek a mechanism that grows TOTAL capital in a society, not just the easily-quantified aspects of it.

    I think the only persuasive example of the need for protection is indeed the arms industry, but that is because there are extraneous political and strategic considerations, rather than merely economic ones.

    The book Freedom’s Forge talks about how the US industrial complex powered US victory in World War 2. It seems that the automotive industry, the aerospace industry, metallurgy, mining, and quite a few others were both protected and required for US dominance. Recall also the Morgenthau Plan for Germany after the war, to destroy all industrial capacity and turn the country into a pastoral, agricultural land (much like our guns and butter example.), a part of which was putting Germans on a starvation diet of 1200 calories per day; see the movie Germany, Year 0, filmed in 1948/49 Berlin by an Italian socialist for some results of this policy.

    So even a free-market government may need to keep some arms production at home, however inefficient it may be.

    Efficiency is not a bad thing, but it is often, as Taleb writes, fragile. Robustness leads to survivability; the bank that leverages capital 10-1 will earn higher profits until it blows up on an unforeseen “black swan” disaster. Then all the efficiency in the world won’t save it.

    Start with reading Antifragile, then ponder on the meaning of capital. Once you do, you might have the same opinions. Knowledge and Power will also radically change your understanding of value, especially in a knowledge economy. I’d love to hear the changes in your thoughts afterwards, though.

    • Replies: @jtgw
    I know that some Austrian economists, like Robert Murphy, like Taleb's book, at least for his criticisms of mainstream economics and their obsession with mathematical modeling. The idea of knowledge as capital is certainly interesting and makes intuitive sense, but I hesitate at your implication that it must be treated differently from other kinds of capital. Unless I'm mistaken, you seem to be saying that we may not need protectionism for other forms of capital, but knowledge is a special kind that does need government protection? I suppose if you support IP laws and patent protection for economic reasons, then that might tie into this. But I'm not sure if that's what you're saying.

    There's a back and forth on free trade in the Mises.org archives between Paul Craig Roberts and various Austrian economists. I think PCR does a good job summarizing the protectionist view as follows: Ricardo's argument about comparative advantage assumes that factors of production are immobile. But if factors of production can move across borders (e.g. labor and capital), then comparative advantage falls apart. So that provides a good focus for discussion. Joe Salerno and George Reisman respond to Roberts' argument but don't really grapple with that point, although I do think they make some good arguments for free trade that go beyond comparative advantage. I'm still looking for a, preferably Austrian, free-trader who really addresses that concern about factors of production.

    I get the fear that all production will move abroad and leave us destitute, but I have a nagging doubt about that fear. If we lose our income, how will we pay for imports? And what will become of the market for cheap goods that inspires the movement of production abroad in the first place?
  174. @TomSchmidt
    Your analogies with Darwinian evolution and urban development are interesting, since both of those are spontaneous, undirected processes that nevertheless achieve optimal outcomes

    No one is suggesting that evolution produces an "optimal" result. Be careful about reading things into it that aren't there. Darwin's suggestion is that evolution is "natural" selection, in contrast to "artificial" or man-made selection, as for instance when border collies were bred for the purpose of herding sheep. (I wish the analogies were mine, but they originate with Schumacher and Jane Jacobs; I assume you accept the theory of evolution, and that man is a species, and that man is subject to evolution, and that the same processes of natural selection that apply to all other species apply to us? We just have the added ability to self-domesticate, as it were. I assume you have read The 10,000 Year Explosion? You will need that.) Evolutionary processes apply one simple test to species: can they survive environmental conditions, or do they go extinct? They need not be "fittest," but do need to be "fit enough," and that makes for a good rule of thumb.

    But you’re main argument seems to be that we cannot leave the economy to run itself; it needs direction from the center in the form of tariffs and immigration controls. I’m only arguing for treating the economy the way Jacobs would have us treat urban development.
     
    Jacobs was not entirely laissez faire; she saw the role for adaptive, design-centered government in urban renewal. She is the author of the idea of tariffs for baby industries, of which more anon. My main argument is that production knowledge is a form of capital, and that in protecting an infant industry, you are protecting a form of capital. Thus my earlier question to you about how you define capital; earlier, you mentioned a monetary concept of it, but you must know that this is only one form, and probably not a very important form, of capital.

    I don’t find your arguments about the need to protect industries on economic grounds persuasive; all else being equal, we surely want all local producers to focus on those industries in which they enjoy a comparative advantage and reap the benefits of saving from importing those goods produced more efficiently abroad.
     
    That's fair. I once held your opinion myself. I would ask you this question: what comparative advantage does a 7-year-old child have against even a high-school-dropout 27-year-old? Should the child abandon learning, which will have NO payoff for, say, 15 years, and pursue something where his small size WILL give him an advantage? Of course, he will only have that advantage while small, so not learning while he is exploiting his small stature will lead him to be obsolete.

    More importantly, return to the idea of evolution: species don't try to solve the general problem of living everywhere in the world, but the specific problem of surviving within a niche, protected from competition from the outside. Do tariffs create a niche? Can you create a niche without tariffs? (For this latter idea, I recommend Zero to One by Peter Thiel, who opposes any use of government force to create a "monopoly," which is the goal of any business that wants to be profitable. Thiel's history of the idea of "perfect competition" as an outgrowth of physics envy amongst economists is worth the price of entry.)

    Note that the savings would also provide more resources to support innovation of the sort you praise; protection, on the other hand, by depleting domestic savings would make innovation more difficult.
     
    I think you would agree that the goal of capitalism isn't to grow the supply of "savings," whatever that is; instead, it's that we should deploy more and more capital to improve the lives of the people in the economy. So, is knowledge a form of capital? (Hint: the word capital derives from caput, Latin for head.) Can you increase your knowledge without learning and doing new things? Do you get to do new things if your nascent industry doing new things is snuffed out by another society that might have had a 6-month advantage, because we are looking to economize on one thing, price, at the exclusion of the residual value of knowledge?(see Big Data, by Cukier, for more on the residual value of data. Hint: a LARGE amount of the value of Google is the secondary, tertiary, quatenary, etc. uses of data.)

    Once you've formulated for yourself a useful definition of capital that goes beyond "savings," you'll start to seek a mechanism that grows TOTAL capital in a society, not just the easily-quantified aspects of it.

    I think the only persuasive example of the need for protection is indeed the arms industry, but that is because there are extraneous political and strategic considerations, rather than merely economic ones.
     
    The book Freedom's Forge talks about how the US industrial complex powered US victory in World War 2. It seems that the automotive industry, the aerospace industry, metallurgy, mining, and quite a few others were both protected and required for US dominance. Recall also the Morgenthau Plan for Germany after the war, to destroy all industrial capacity and turn the country into a pastoral, agricultural land (much like our guns and butter example.), a part of which was putting Germans on a starvation diet of 1200 calories per day; see the movie Germany, Year 0, filmed in 1948/49 Berlin by an Italian socialist for some results of this policy.

    So even a free-market government may need to keep some arms production at home, however inefficient it may be.
     
    Efficiency is not a bad thing, but it is often, as Taleb writes, fragile. Robustness leads to survivability; the bank that leverages capital 10-1 will earn higher profits until it blows up on an unforeseen "black swan" disaster. Then all the efficiency in the world won't save it.

    Start with reading Antifragile, then ponder on the meaning of capital. Once you do, you might have the same opinions. Knowledge and Power will also radically change your understanding of value, especially in a knowledge economy. I'd love to hear the changes in your thoughts afterwards, though.

    I know that some Austrian economists, like Robert Murphy, like Taleb’s book, at least for his criticisms of mainstream economics and their obsession with mathematical modeling. The idea of knowledge as capital is certainly interesting and makes intuitive sense, but I hesitate at your implication that it must be treated differently from other kinds of capital. Unless I’m mistaken, you seem to be saying that we may not need protectionism for other forms of capital, but knowledge is a special kind that does need government protection? I suppose if you support IP laws and patent protection for economic reasons, then that might tie into this. But I’m not sure if that’s what you’re saying.

    There’s a back and forth on free trade in the Mises.org archives between Paul Craig Roberts and various Austrian economists. I think PCR does a good job summarizing the protectionist view as follows: Ricardo’s argument about comparative advantage assumes that factors of production are immobile. But if factors of production can move across borders (e.g. labor and capital), then comparative advantage falls apart. So that provides a good focus for discussion. Joe Salerno and George Reisman respond to Roberts’ argument but don’t really grapple with that point, although I do think they make some good arguments for free trade that go beyond comparative advantage. I’m still looking for a, preferably Austrian, free-trader who really addresses that concern about factors of production.

    I get the fear that all production will move abroad and leave us destitute, but I have a nagging doubt about that fear. If we lose our income, how will we pay for imports? And what will become of the market for cheap goods that inspires the movement of production abroad in the first place?

    • Replies: @TomSchmidt
    Yeah, I've started with the Austrians and wound my way through a lot of thinking. Dr. Gary North is an unrepentant opponent of tariffs, calling them taxes, which of course they are, and assuming that all taxes wind up making us poorer. (I have my doubts about that, but I am pretty sure MOST taxes make us poorer.) North is correct in the case of, say, the Fanjuls in Florida using tariffs to make us all pay higher prices for sugar, a small amount from every user but a concentrated benefit for them.

    Jacobs' scenario of protecting nascent industries via tariffs I don't think could happen in real life. Democratic politicians will not protect an industry until it is large enough to matter, by which time the protection might be moot. Of course, previously high shipping costs and distance protected local industries, but the capitalist economy has become VERY good at cutting out transportation costs, so no ocean will protect what Jacobs calls an import-replacing city. The only way to protect nascent industries is to slap a flat tariff on ALL imported goods of, say, 20%, which will shield large and small alike. This is a lot like original US tariffs, which did not require cadres of bureaucrats to design and enforce.

    I would argue that the government already offers protection to explicit forms of capital. Savings, as you enumerated one form; land; property. The Constitution created protection in ideas (which I would support for limited times, not the absurdity that US copyright law has become). Tariffs are a form of protection for the expression of a type of economic production. We are only with the Information Age coming to recognize the value of knowledge and its residuals.

    Last recommendation: take a look at the book Debt, by Graeber. He debunks a lot of myths about the creation of money, and of markets. You'll never tell people about barter again, for one thing. Let's just say that it will add perspective to an Austrian or Neoliberal economist to read.
  175. @jtgw
    I know that some Austrian economists, like Robert Murphy, like Taleb's book, at least for his criticisms of mainstream economics and their obsession with mathematical modeling. The idea of knowledge as capital is certainly interesting and makes intuitive sense, but I hesitate at your implication that it must be treated differently from other kinds of capital. Unless I'm mistaken, you seem to be saying that we may not need protectionism for other forms of capital, but knowledge is a special kind that does need government protection? I suppose if you support IP laws and patent protection for economic reasons, then that might tie into this. But I'm not sure if that's what you're saying.

    There's a back and forth on free trade in the Mises.org archives between Paul Craig Roberts and various Austrian economists. I think PCR does a good job summarizing the protectionist view as follows: Ricardo's argument about comparative advantage assumes that factors of production are immobile. But if factors of production can move across borders (e.g. labor and capital), then comparative advantage falls apart. So that provides a good focus for discussion. Joe Salerno and George Reisman respond to Roberts' argument but don't really grapple with that point, although I do think they make some good arguments for free trade that go beyond comparative advantage. I'm still looking for a, preferably Austrian, free-trader who really addresses that concern about factors of production.

    I get the fear that all production will move abroad and leave us destitute, but I have a nagging doubt about that fear. If we lose our income, how will we pay for imports? And what will become of the market for cheap goods that inspires the movement of production abroad in the first place?

    Yeah, I’ve started with the Austrians and wound my way through a lot of thinking. Dr. Gary North is an unrepentant opponent of tariffs, calling them taxes, which of course they are, and assuming that all taxes wind up making us poorer. (I have my doubts about that, but I am pretty sure MOST taxes make us poorer.) North is correct in the case of, say, the Fanjuls in Florida using tariffs to make us all pay higher prices for sugar, a small amount from every user but a concentrated benefit for them.

    Jacobs’ scenario of protecting nascent industries via tariffs I don’t think could happen in real life. Democratic politicians will not protect an industry until it is large enough to matter, by which time the protection might be moot. Of course, previously high shipping costs and distance protected local industries, but the capitalist economy has become VERY good at cutting out transportation costs, so no ocean will protect what Jacobs calls an import-replacing city. The only way to protect nascent industries is to slap a flat tariff on ALL imported goods of, say, 20%, which will shield large and small alike. This is a lot like original US tariffs, which did not require cadres of bureaucrats to design and enforce.

    I would argue that the government already offers protection to explicit forms of capital. Savings, as you enumerated one form; land; property. The Constitution created protection in ideas (which I would support for limited times, not the absurdity that US copyright law has become). Tariffs are a form of protection for the expression of a type of economic production. We are only with the Information Age coming to recognize the value of knowledge and its residuals.

    Last recommendation: take a look at the book Debt, by Graeber. He debunks a lot of myths about the creation of money, and of markets. You’ll never tell people about barter again, for one thing. Let’s just say that it will add perspective to an Austrian or Neoliberal economist to read.

  176. @Massimo Heitor

    Give it up, Dad. Admit it; if America in parallel universe A is owned by 1m people, and America in parallel universe B is owned by 1t people, the Americans in universe B are much, much richer. Duh.
     
    You are being sarcastic, but this seems plausible.

    Just consider global population. With double the current global population, every global business has double the scaling capacity. The worlds best exports of every category have double the audience. This is legitimately awesome.

    One major risk is fixed natural resource limitations. Environmental experts stress that moving today's population to something close to today's Western standards of living is unrealistic even with major efficiency gains. Coupled with a rapidly growing population is a major problem. The counter is that people have long warned about population problems for the past century and they were completely wrong every time. Of course, at some point they won't be wrong and there are some very big potential problems that can come out of that.

    The other more controversial risk factor is double the human population with the current ethnic/genetic mix of people is one thing, but radically shifting that ethnic/genetic mix of people may cause other effects.

    “With double the current global population, every global business has double the scaling capacity.” – That is not the case. as population density goes up, consumption becomes more efficient. If you double the number of people in every house, you still have the same number of roofers, lawn care workers, electricians, plumbers, and so on. While total demand will rise, it will not rise anywhere near enough to accommodate all the new workers, much less to provide a benefit to the existing ones. The wealthiest few will have a field day in such a world, the rest of us, not so much.

    “Environmental experts stress that moving today’s population to something close to today’s Western standards of living is unrealistic even with major efficiency gains.” – The third world should have used the post war prosperity were gave the world to increase their living standard rather than sending their population on an upward parabolic curve if they wanted a 1st world living standard. They chose differently, tough luck for them.

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