Exactly and the fact that, for example, West and Central Africa are waking up [1] to the fact that France has been scamming them out of untold billions, probably trillions is going to shift power significantly.
This is happening now. Senegal are following Chad in cutting ties with French military.
Zero sum game means for someone to benefit someone else must be worse off, but a positive sum game doesn't mean that everyone must benefit. It only opens the possibility that the total sum can go up, but that can still be because every time one player gets 10 points another player loses 3.
Many people don't realise. America has been exporting inflation around the world while China has been exporting deflation through cheaper goods. China is the main reason for World's prosperity.
And China was able to scale up the mass manufacturing of cheap goods because rich western companies dumped their money into China to capitalize that manufacturing. It's all interrelated
When you boil it all down, the economy mostly is about ownership and use of resources, and those are naturally limited. So if we're talking about doing well in terms of having greater claims to the world's resources, then it essentially is zero sum.
The primary sector is only a very small part of the economy though. Prices for raw materials are low because it's easy to mine etc vast quantities nowadays and there is a lot of competition in global commodities. Most minerals are found in a LOT of places all over the world.
Land. Total value of it is about 25 trillion in the US alone I believe. If I'm not wrong, globally stock markets are around 100 trillion (and that will include a lot of assets in the form of land).
25 trillion is just 1 year worth of GDP. With interest rates of 5%, that's only further evidence for my point.
Edit: as an exercise, consider the land value of a typical office, and compare to the annual income of the part of the company based there, and the personal income of the employees who work there.
Most parts of the global economy are. If you're selling cars for example, there's a fixed amount of drivers on the road you can sell cars to, so if you're VW, you're now competing with cheaper cars from Asia for those same drivers.
You can't create new drivers out of thin air to expand the market demand for cars. Once the market is saturated, without having any moat, you enter in a race to the bottom.
And that's what Germany's economy is discovering right now and why Europe's share of global GDP has been declining for the past 20 years.
If other countries are doing better, they will want to buy status symbols as well. This is how Germany profited from China developing in the first place. As long as markets continue to develop, chances will continue to appear.
Also, we shouldn't care about Europe's share of global GDP. We should care about how the poor people in our countries are doing. Like I said, we should maintain or improve our quality of life. Producing cars is just a means to an end.
I think what you're really getting at is that the more efficient a market it, the closer to the Pareto frontier it is, and things become competitive instead of cooperative there.
This is exactly where manufacturers like SAIC, BYD, and Dongfeng are winning. Building cheaper cars than were previously available and selling them in countries where "premium" brands like BMW, Toyota, Ford, Fiat, Volvo, GM, etc... don't try very hard to compete.
Head to any country without a domestic auto industry to protect and see what new cars people are importing. Sure there will be some rich people buying the brands you recognize, but call an UberX and they're going to show up in a Chinese brand you've never heard of. Or some zombie brand like MG.
Because of the travle game(1) I learned that it was/is common for the leader of the former French colony to send hundreds of thousands in bribes to the president of France...
(1) Travle posted here on hn months ago, but unfortunately a Webapp that downloads so I can't give you a url
You are correct but it’s also more complex than that since competitive can mean many things. Currently the vast majority of government income for European countries is income tax, and income tax is usually more profitable when the market is actually competitive. Which means you need small local businesses and local production.
Having completely optimised and global logistics and value chains isn’t necessarily good for wages. We can tax the wealthy and fortunes more than we do, and we probably should, but within the current systems it wouldn’t change that much.
So in some sense many European countries are better prepared for economic downturns than the US even though European countries don’t have a lot of major corporations which don’t produce anything locally.
Obviously it’s even more complex than this. Part of what is bringing down the economies in France and Italy is workers rights. Being able to retire at 60 is great, but it was also something that was obtained when people didn’t live as long and have as few children. Though Greece seems to have managed ok without having new public management plunder their country.
>Being able to retire at 60 is great, but it was also something that was obtained when people didn’t live as long and have as few children.
Short aside this reminds me of:
In the US, my Boss's neighbor is an 85 year old woman who retired 42 years ago. And still gets a paycheck twice a month (with CoL increases) and full health insurance. She became a municipal clerk when she turned 18, worked 25 years to get a full pension, then retired at 43. The optimism (maybe pessimism?) people had back in the day was wild. I nearly fell out of my chair when he told me this.
It's crazy how so many people don't get this basic economic fact and think public welfare in EU just rains from the sky for free. No, EU welfare state is not some magical hack nobody else thought of, it's just paid from the working class' wages and then redistributed to those in need.
Without innovations and highly profitable industries generating well paying working class jobs, with what will you pay for that welfare and quality of life? Billionaires and corporations certainly aren't gonna pay for it out if their profits, so the working class has to. But if the working class has no more high paying wages anymore due to stagnating growth , then your welfare budget also goes bye-bye.
You can't just vote yourself more welfare and higher public sector salaries and pensions out of thin air without an economic growth to back that up. I mean, you technically can, but it doesn't end well as was proven every single time this was tried.
Well paying job just mean that the primary distribution mechanism of wealth is through having a job, rather than only creating only jobs that are necessary. That's grossly inefficient. I rather pay people to stay at home rather than gunk up our industries with make-work, or worse actively making things worse.
Innovation is important sure, but also efficient use of resources, including cramping down on negative externalities. That increases welfare and quality of life, ideally with no need to spend an extra dollar.
Stop thinking in terms of dollars. Think in terms of stuff - that's the actual wealth. You can move dollars around with or without jobs, but somebody has to make the stuff. Someone has to grow the food. Otherwise, you have dollars but not food, and you can't eat dollars.
So the thing about jobs is, we really need jobs that actually produce stuff. We don't just need jobs, we need somebody to create the wealth. First it has to exist, then we can worry about how it gets distributed.
So if you have a bunch of people who are not necessary, then the best thing to do is not to let them starve (which is also immoral), nor to give them pointless jobs (which is soul-destroying), but to find something useful for them to do.
We have had the capacity to produce more stuff than we can consume for almost a century now. Take cars for example. We could easily produce one for every man woman and child. If someone can’t afford a car it isn’t because we can’t make it, it is because we have decided not to make it.
This isn’t a production problem, it is a social problem.
>If someone can’t afford a car it isn’t because we can’t make it, it is because we have decided not to make it.
Its because the person making the car doesn't want to make one for someone who isn't making something of equal value in return. It makes them a sucker for being the one to make the car.
You cannot legislate, policy change, indoctrinate, or force your way around this. It's why all attempts to do so always have failed. Every single time. Always.
The only way to create actual value is to put in actual work.
That's some idealistic stuff that's not gonna happen. The real world doesn't work like that.
Yeah it's ineficient but it's the one we got right now. You're not gonna change it with your comments and beliefs. Meanwhile rent is due next month and you need to pay up by using these "ineficient" mechanisms set in place by powers higher than you.
Idealistic? So what? I am just pointing out the contradiction of people's thought. I perfectly know well it's not how things should work but how it works right now, but if people believed silly things I am going to point it out.
You are welcome to point out flaws in my thinking.
> Without innovations and highly profitable industries generating well paying working class jobs, with what will you pay for that welfare and quality of life
I don't think anyone is seriously claiming that there is no innovation whatsoever in the EU. Falling behind the US doesn't mean there is absolutely nothing. I think a lot of people in the EU would be fine with being 3rd on "productivity" if it was enough to maintain a high standard of living and decent competitiveness.
>I don't think anyone is seriously claiming that there is no innovation whatsoever in the EU.
I never said that. Please follow HN rules and reply to the strongest interpretation of one's argument, not the weakest.
The EU economy was at the same level as the US economy 15-20 years ago., now it's only half the US. The EU missed out on all the major technological innovations in that time and therefore missed out on a lot of income for welfare while welfare expenses only grew due to ageing population and increasing cost of living.
>Falling behind the US doesn't mean there is absolutely nothing.
No, it means less money for welfare. Especially with an ever increasing ageing population. If you want to take care of all of those people at a high quality of life, it's gonna cost you, and we don't have that kind of money anymore.
So you either get Europeans to accept slowly sliding into poverty due to declining welfare and rising CoL, OR, you need to bring in more money to the state somehow. Previously it was done in Europe via slavery and theft through colonialism, but since that conveyor belt of free money is gone and what's left to bring in more money is innovation in highly profitable high-growth industries where EU is almost absent. No, ASML, Airbus and some struggling German mittlestand companies can't support a whole continent like they did in the 1980's.
>I think a lot of people in the EU would be fine with being 3rd on "productivity" if it was enough to maintain a high standard of living and decent competitiveness.
They would be fine, if those losses would come out of the pockets of tax dodging corporations, but they're not, they're being eaten up by the working class and the taxpayer who still expects the same welfare quality like in the good ol' days when the EU economy was as strong as the US.
Do you you see how this level of welfare is unsustainable without matching economic growth?
> Without innovations and highly profitable industries generating well paying working class jobs, with what will you pay for that welfare and quality of life
Without presumes with none, and you're saying it like it's true.
> The EU economy was at the same level as the US economy 15-20 years ago., now it's only half the US. The EU missed out on all the major technological innovations in that time
Really, all major technological innovations? Why is the leading music streaming provider Swedish (Spotify)? Leading and most advanced airplane manufacturer European (Airbus)? Why are there so many fintechs which are a decade ahead of US counterparts (Revolut, Monzo, MyPOS, SumUp, Bunq, Qonto) and why is finance-related tech so much ahead - you can pay contactless pretty much anywhere in most of the EU and UK, you can accept card payments with your phone and just an app, all banks have to have an API with Oauth to be able to aggregate accounts and whatever? Also I'd like to add advancements in nuclear fusion. Also I haven't experienced healthcare in the US, but from what I've seen it doesn't look like there's anything even close to the seamlessness of Doctolib in France.
The EU is indeed falling behind, IMO mostly due to lack of capital, risk/gambling averseness, and the much smaller individual markets. But to say it has missed all innovations, or that it has no innovation is simply untrue. We need more of them, we need to invest into more of them, because there's a lot of potential that needs to be nurtured and grow.
Innovation means stock market growth? So no innovation happens at any university for instance? Or private companies? And the stock of e.g. United Healthcare Group going up doesn't mean that any innovation happened whatsoever.
Why do so many people, especially on HN, confuse market cap or GDP growth for innovation? Surely, especially here, people can realise that innovation can come in different forms, and some do not move the needle of a stock market or won't show up in GDP graphs. Is CERN not innovative because it's not a public company whose stock is growing?
> Why do so many people, especially on HN, confuse market cap or GDP growth for innovation?
It's not confusion. It's rather an acknowledgement to the reality that to fund a generous welfare state, one needs taxes. To tax, you first need a dynamic private sector economy. Taxing public sector is like shifting money from the left pocket to the right pocket.
GDP or stock market caps are just a proxy for the size of the private economy. Europe has lagged on both. Maybe there is something else which would indicate that European private sector is growing fine and dandy. I am not aware of it. Are you?
CERN innovation is awesome but it will need to be translated into private sector economic activity in order for the society to benefit from it; either directly via products and services, or indirectly via taxation and welfare programs based on that.
The innovation that happens at university level in the EU is mostly a means to get a degree. Most university research leads to nothing but a piece of paper that no one will read. Certainly when someone picks a bachelor, masters or PhD, it's not done out of the wish to later start a company around it.
Only if you want to be a sticker and take things literally while deliberately ignoring the context to score a cheap shot gothca, then sure, it then means without.
> Leading and most advanced airplane manufacturer European (Airbus)?
Because of government intervention, and moat of a highly regulated and expensive to enter industry that keeps new players out. Why is SpaceX ahead of EU aerospace companies?
>Why is the leading music streaming provider Swedish (Spotify)?
Spotify wasn't even profitable until recently and only made it where it is today, due to to massive capital investments form the US, not from EU investors.
>Why are there so many fintechs which are a decade ahead of US counterparts
Are they also ahead in earnings/profits too? Because you fund welfare with taxes on profits and on wages. You can't tax innovations that bring you no money.
That's where
While you keep blabbering on about Airbus, Monzo and Spotify , have a look at the top 100 companies in the world by market cap and see how many are from the EU and how many from the US and that's case closed. AIrbus, Spotify, etc are the rare exceptions, not the norm for Europe.
“A system of non-competition clauses enforced by the European Space Agency’s (ESA) workforce suppliers is allegedly trapping aerospace professionals who work at ESA’s facilities across Europe in a professional dead-end street” [1].
Europe is absolutely riddled with this crap, and it tends to come top down from the EU.
Well, not many viable orbitial launch sectors in continental Europe - that by itself is already a blocker. :P And arguably USA was also quite lucky to end up with SpaceX, given how many traditionalists in the industry were so full of "this can't be done!". :P
I didn’t read that whole comment but wow, you must be delusional. If you think that European companies in the last 20 years hold a candle to American companies in the last 20 years delusional.
"There are four types of economies: developed, developing, Argentina, and Japan."
One must be very careful drawing conclusions for other societies based on Japan as a sole example. I somewhat agree that Japan illustrates that massive infrastructure investment, combined with diligence in maintaining functioning societal systems, does in fact yield a high quality of life that appears sustainable even if the metrics of economic growth look terrible. That's because GDP as a measure of "quality of life" is a shitty indicator IMO, but that's a whole 'nother rabbit hole to go down...
Japan is a monoculture that acts almost like one big family. Economic rules and values kinda go out the window similar to the way they do when you are selling your brother your old car or repairing your grandmother's sink.
> It's crazy how so many people don't get this basic economic fact and think public welfare in EU just rains from the sky for free. No, EU welfare state is not some magical hack nobody else thought of, it's just paid from the working class' wages and then redistributed to those in need.
If the US took the entire medicare/medicaid budget and split it evenly per person it would be left with more money than the UK spends on healthcare.
Its not just how much you spend, its how much you waste.
Road infrastructure in the United States might as well be a form of digging holes and then refilling it back up again. Grossly inefficient when we could invest the infrastructure money into world class public transit.
I think you fail to grasp just how big the US is. Driving from Chicago to Minneapolis is ~430 miles/ 6.5 hours depending on weather and traffic. Every 10 miles or so there is an exit and usually some small town. Every 50 to 100 miles a bigger town.
As I recall, after the Chicago suburbs you hit Rockford, Janesville, Madison, Baraboo, Tomah, Eau Claire, Menominee, and Hudson before you get to the St Paul collar communities.
So 9 stops on on a single track running between two major cities, with only 1600 more miles to Seattle. And while the distance between stops increase, the population greatly decreases as you head west.
Now road construction could be better. Because while Illinois has 300k lane-miles of road, it seems like they only have 200k of asphalt and 100k under construction at any given point in time.
I think you fail to grasp just how big the US is. Driving from Chicago to Minneapolis is ~430 miles/ 6.5 hours depending on weather and traffic. Every 10 miles or so there is an exit and usually some small town. Every 50 to 100 miles a bigger town.
Why do people trot this out every time? Driving or traveling across the US isn't particularly relevant to most people's life experience. Ok, I'll bite.
Yes, the United States is big, but some areas are more dense than other and would need good heavy investment in public transit infrastructure. For example, the north eastern corridor would in particular benefit from investment in true high speed rail.
There's also the need for investment in freight infrastructure, especially if we want to take off more trucks off the road. This is a safety benefit too. Less vehicles on the roads just mean less people risking their neck.
Now let's talk more local public transit.
Atlanta for example, really need to expand heavy rail. Traffic there is one of the worst in the country. MARTA at time outpaces cars, even with all the stops they have to make. Rather, a lot of time is eaten up just waiting for the train. A more frequent schedule would help here, but Georgia would need to actually contribute funding to make this possible. If they extend it more into the surburb, I would have less of an incentive to move. As now, I am considering moving because of how frequent I commute into Atlanta.
We talk about long distance travel because it's the only thing that makes sense. None of the cities parent listed outside maybe Chicago are walkable. You WILL need a car at all those destinations. So why wouldn't I drive my own car? It's a requirement to own one in the Midwest (I live there). I'd love rail but it just doesn't make sense as none of our cities are walkable and the bus routes are either once an hour at best or non existent. If you put a rail line from Chicago to Madison to Twin Cities, I highly doubt it would get any use because all of these people already own cars and would get there faster and more conveniently.
That's great but it's not going to happen for a generation or two even if people wanted it. This isn't SimCity, we can't just rip everything up and start over. The fight to make cities walkable will take sustained efforts for the next 100 years.
> I can drive nearly 200km on any given weekend to visit friends
In a typical vehicle that's about 50kg of CO2. 100kg if it doesn't include the return leg.
Not having a dig at you, but this is a big part of our problem. We believe that because we can do something, we are entitled to do it. Not only that, but we've structured our society in such a way that it's actually necessary for people to do these harmful things just to get by like commuting distances that would have been considered absurd 100 years ago. They are still absurd.
This is a bit misleading as those countries tend to have the vast majority of the population crowded into a handful of cities that are fairly close together and then a vast untamed wilderness where close to nobody lives. It's easy(ish) to have rail between Oslo and Bergen, less practical to extend that rail to Oldervik.
I have had this niggling feeling for a long time that money (and capitalism) gets increasingly more divorced from reality, particularly as money is printed and these astronomic speculative stock market valuations are created based on some optimistic future scenario.
This is not some pearl clutching moralistic argument, but a practical observation based on:
- Transfer of ownership is not necessarily possible. You can't buy a technologically sensitive company because of regulations. Even if you can buy a foreign firm, transferring the talent, operational base etc. might not be possible. A CEO can't sell off his share of stocks even if they're worth billions because the loss of investor confidence.
- Physical limitations on quantities of goods. There is a finite supply of real estate. If everybody in the world wanted a new car suddenly (and had money for it), car prices would go through the roof, and only a small fraction would actually get it.
Imo capitalism is not flawed in the way that it is incapable of handling these situations, but it is very flawed in that money is an increasingly poor proxy for the abstract concept of value.
This flawed nature of capitalism has been long since endemic (and dare I say integral) to the system, much more value has existed on paper than in reality (see banks), but I think there might be a breaking point at which the system might collapse and hyperinflation would set in.
It is precisely because individuals suck so much at correctly perceiving the allocation of value that free market economies ("capitalism") completely blow centrally planned ones ("socialism") out of the water.
So the fact that you think money is divorced from reality is a very normal, mundane misconception.
All "capitalist" economies have very large amounts of central planning for them to function (not to mention state subsidies and other protections from failing to make money), and use taxation and the national debt for that. Socialism plans centrally to the same extent that capitalist economies do, but also has the state owning the infrastructure that the economy relies upon. So it doesn't need to tax for that purpose. Socialism in that sense has never actually been practiced historically though, in the same way as there has never been "capitalism" in the sense of no central planning or regulation. Luckily.
"capitalists" have many central planners each planning the same thing but coming up with different results. Then we reward the ones who are right. Socialism features one planner - they may have helpers, but just one. If one planner gets it wrong in capitalism you can go with a different one.
cost of acquisition sets a floor on price. Value sets a ceiling on the price. Supply/demand sets the price you pay. (in economics we further talk about curves - there many oil wells and some costs more to run than others, there are also many buyers and some value oil more. Similar for water where it is often free from a nearby faucet but people will pay a lot of it in bottle form anyway.
You're taking my argument in the direction I never intended, then taking the dicothomy to the extreme, and then claiming victory unsupported by evidence.
- I never wanted to contrast 'capitalism' and 'communism' or whatever. I merely wanted to point out that the fundamental absurdity of capitalism requiring infinite growth in a finite system has been resolved by having the growth of wealth coming from speculation on future unrealized value. Since I (or anyone else) can't predict the future, it might happen that things do not come to pass as they were expected and that future value might not be realized. Money is divorced from reality, it derives its value from the collective trust and belief by the people participating in the system that it can be exchanged for goods and services. In a system of rational and impartial actors, that belief is backed by chiefly existence of said goods (which is the real size of the economic pie) and less by the speculation of future potential that might or or might not happen. So in summary my argument is not between communism or capitalism, but a captialism that is backed by real world value and one that is backed by future speculation. Even if the former can create less economic growth, we can be certain that growth is real.
- Central planning works. Great public works certainly are dreamt up and funded by governments yet they contribute enormously to the wealth of nations and enable a lot of value to be created. The moon landing was centrally planned and executed by a country whose per capita wealth was on par with modern day Poland, yet is considered the greatest achivement in history.
- There are no real 'centrally planned' or 'free market' economies, as all countries employ both concepts to some degree. But if we were to make a argument, we could say that the US belongs to the 'free market' camp and China belongs the 'centrally planned' camp. Both countries are doing extremely well, this very discussion is about finding which one is actually doing better.
