American / Western Superiority (?)

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neverfail
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Re: American / Western Superiority (?)

Post by neverfail » Tue Feb 09, 2021 10:55 pm

Doc wrote:
Tue Feb 09, 2021 1:44 pm
Wealth is created in three ways Mining minerals, Manufacturing, and Farming. What exactly is Mined, Manufactured, or Grown in the social media industry? It more like theft than anything else.
You are no economist, are you doc?

Had you done economics even at junior high school level then you would be aware of the fallacy in your above contention.

Ellen
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Re: American / Western Superiority (?)

Post by Ellen » Wed Feb 10, 2021 4:52 am

NF,

I will defend Doc, because - for the most part he is correct. Yes, in advanced countries service industries occupy most of the labor force and "produce" most of the wealth in the form of GDP. Frankly, I always wondered, when considering some of the people who supervised me, what precisely they were producing and why that falls into the GDP column, as opposed to "doing nothing and getting paid a lot to do it." This is the problem when one calculates the wealth added by service industries in the same way as wealth added by manufacturing, mining, and agriculture.

In the latter category, you have substantial, tangible, and meaningful products. (Yes, eating food is a meaningful experience, as is turning on the light in a room because one has the oil to produce power). Listening to over-credentialed and undereducated masters of wokeness bloviate at weekly status meetings somehow doesn't pass the laugh test as a form of GNP. Nonetheless economists (part of the overcredentialed and undereducated crowd) insist that service industries be considered on par with M/M/A in creating national wealth.

I had an argument on the old forum with a poster who claimed that there are small countries that have no M/M/A at all, and yet they have a high GDP because they have banking and tourism and other so-called service industries. My counter was that if you are Luxembourg or Monaco, you can get away with producing nothing and living well off of these service industries. But a large country like Britain cannot, let alone a very large country like the US. One of Britain's big economic weaknesses in recent decades is that it has lost much of its M/M and replaced it with finance and tourism, which is a very tenuous economic base that doesn't create as many derivative jobs or income. It also leads to a two-tier income structure - some high and many low salaries and many fewer in the middle class.

M and M are really necessary to produce a high income society with job growth and upward mobility. In a big country service industries can spread the wealth around and create many some jobs and additional wealth, but much less than a country with M/M. This is the big problem with off-shoring so much manuf. to China and elsewhere.

neverfail
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Re: American / Western Superiority (?)

Post by neverfail » Wed Feb 10, 2021 8:58 pm

Ellen wrote:
Wed Feb 10, 2021 4:52 am
NF,

I will defend Doc, because - for the most part he is correct. Yes, in advanced countries service industries occupy most of the labor force and "produce" most of the wealth in the form of GDP. Frankly, I always wondered, when considering some of the people who supervised me, what precisely they were producing and why that falls into the GDP column, as opposed to "doing nothing and getting paid a lot to do it." This is the problem when one calculates the wealth added by service industries in the same way as wealth added by manufacturing, mining, and agriculture.

In the latter category, you have substantial, tangible, and meaningful products. (Yes, eating food is a meaningful experience, as is turning on the light in a room because one has the oil to produce power).
It seems to me that Doc would be quite capable of defending himself: though if you get satisfaqction from playing mother hen then I can't stop you. :lol:

:roll: Two and one half years ago I and some companions were driving up California's San Joaquin (pron. like san har-kwin) Valley which, combined with the tributory Sacrimento River Valley to the north forms California's Central Valley. This region has been hard hit by years of drought yet despite this I believe it still manages to produce one third of all the fruit, vegetables and nuts grown in the USA. Even drought afflicted it still looks like one of the lushest farming region on Earth. Apart from fruits native to the humid tropics and sugar maples virtually every form of edible food seems to grow there.

Yet all of its prodigious crops would be left to rot in the firlds were it not for one factor: there is a market out there to sell it in to. Indeed, the farmers stay in business only in response to that market demand. So were is that demand coming from? Predominantly from cities, of course.

To get the food crops to the market requires trucking businesses and railroads but that is far from the end of the story. First the harvested crops have to be stored until pickup; then after transportation to distant markets warehoused by the wholesaler. Then from wholesaler to distributor - which means more often these days supermarket chains than greengrocer shops. All of this distributoion, bringing the food to consumers, falls under the heading of SERVICE.

Yet even that is not the beginning nor the end of the story. Before the farmer can even plant he first has to turn over and fertilise the soil. Fertiliser costs money as does the service of an crop dusting company should his crop need a spray of pesticide. Then as most crops grown in this valley cannot be harvested using combine harvestors there is the cost of employing the pickers. Since the farmer is not paid until after the crops are delivered where does the money come from to civer these running costs? From banks. Banking is likewise considered a SERVICE.

Ellen: multiply that by all of the forms of tangable production (ignore your past mystifying work experience) you can think of and then it becomes clear just how crucial the role played by services becomes. Indeed, without a viable and efricent services sector to connect production to market the agriculture, mining and manufacturing sectors would likely atrophy and die.

That is the reason why in any advanced economy worldwide the services sector in terms of the employment provided, business generated and contribution to GDP it provides is by far the largest - usually bigger than agriculture, mining and manufacturing combined.

And that dear Ellen is the reason why it is valid to include it in any assessment of GDP.

Ellen
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Re: American / Western Superiority (?)

Post by Ellen » Wed Feb 10, 2021 10:00 pm

"And that dear Ellen is the reason why it is valid to include it in any assessment of GDP."

I am not disagreeing that services are important, and in fact, vital to the success of a modern economy. Your detailed description explains why quite convincingly. Getting back to Ethiopia, as a counter example: the reason why there were so many famines in Ethiopia for so many decades was not actually that the peasant farmers were not producing enough food in the fields. By some calculations they were (even with their primitive rain-dependent techniques). The problem was, as you describe the scene in California, there were no service sectors to help transport the crops to market and sell them. Meaning what precisely?

1. The roads would get washed out during the rainy season so the farmer could not transport his produce in a horse and cart to the local market
2. No grain silos to store grain in, so some of the crop was lost to locusts and other vermin
3. No electricity or phone service to find out which local markets needed produce to sell and which were already saturated
4. No reliable merchant class to handle the buying and selling of crops from the farmer to the consumer.

The extremely primitive service and retail sector doomed the farming sector, and the result was famine, which was often misinterpreted as a lack of agricultural capacity.

For the moment, I will not carry on and defend Doc's argument further, because I would prefer to conclude with a further comment on some of my previous supervisory experience.

So, dear NF, we can both agree what a nice bunch of grapes looks like and place a value on it. Also a bunch of bananas, and lush-looking basket of apples, and freshly pumped milk from a ruminating cow. Can you define for me and put a specific dollar value on a good manager? Are "good managers" the ones that get promoted to the top of a hierarchy in a typical service sector industry like finance, insurance, medical communications (my industry). Sometimes yes but sometimes definitely NO. In some of my past jobs I have been shocked to discover what the salaries were of some of the managers in companies I have worked in. Clearly way above any consensus on what they were actually worth. I doubt you and I would have a big disagreement over the real value of a bunch of bananas. It's very difficult to value much of the labor in a service sector industry, hence GDP calculations in advanced countries are - let us say- a bit of a fake calculation of wealth.

That's why Spengler always says that when political and economic life become unstable with potential breakdown ahead, people buy gold. Why gold? Because it always has some tangible value. The skill set of John Kerry, Samantha Powers, Obama, and that ilk can fluctuate between millions of dollars and absolute zero, depending on the stability of a country or a politico-economic system. Which would you rather rely on? Mining wealth or the "talent" of Ivy League blabber mouths?

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Doc
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Re: American / Western Superiority (?)

Post by Doc » Wed Feb 10, 2021 10:50 pm

neverfail wrote:
Tue Feb 09, 2021 10:55 pm
Doc wrote:
Tue Feb 09, 2021 1:44 pm
Wealth is created in three ways Mining minerals, Manufacturing, and Farming. What exactly is Mined, Manufactured, or Grown in the social media industry? It more like theft than anything else.
You are no economist, are you doc?

Had you done economics even at junior high school level then you would be aware of the fallacy in your above contention.
Three college econ courses and you?

But since you seem to feel you know so much about economics, give an example of something outside of Mining manufacturing and farming that creates actual wealth... I'll wait.... ;)
“"I fancied myself as some kind of god....It is a sort of disease when you consider yourself some kind of god, the creator of everything, but I feel comfortable about it now since I began to live it out.” -- George Soros

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Doc
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Re: American / Western Superiority (?)

Post by Doc » Wed Feb 10, 2021 10:54 pm

Ellen wrote:
Wed Feb 10, 2021 4:52 am
NF,

I will defend Doc, because - for the most part he is correct. Yes, in advanced countries service industries occupy most of the labor force and "produce" most of the wealth in the form of GDP. Frankly, I always wondered, when considering some of the people who supervised me, what precisely they were producing and why that falls into the GDP column, as opposed to "doing nothing and getting paid a lot to do it." This is the problem when one calculates the wealth added by service industries in the same way as wealth added by manufacturing, mining, and agriculture.

In the latter category, you have substantial, tangible, and meaningful products. (Yes, eating food is a meaningful experience, as is turning on the light in a room because one has the oil to produce power). Listening to over-credentialed and undereducated masters of wokeness bloviate at weekly status meetings somehow doesn't pass the laugh test as a form of GNP. Nonetheless economists (part of the overcredentialed and undereducated crowd) insist that service industries be considered on par with M/M/A in creating national wealth.

I had an argument on the old forum with a poster who claimed that there are small countries that have no M/M/A at all, and yet they have a high GDP because they have banking and tourism and other so-called service industries. My counter was that if you are Luxembourg or Monaco, you can get away with producing nothing and living well off of these service industries. But a large country like Britain cannot, let alone a very large country like the US. One of Britain's big economic weaknesses in recent decades is that it has lost much of its M/M and replaced it with finance and tourism, which is a very tenuous economic base that doesn't create as many derivative jobs or income. It also leads to a two-tier income structure - some high and many low salaries and many fewer in the middle class.

M and M are really necessary to produce a high income society with job growth and upward mobility. In a big country service industries can spread the wealth around and create many some jobs and additional wealth, but much less than a country with M/M. This is the big problem with off-shoring so much manuf. to China and elsewhere.
Service are not the source of wealth. IE where do those paying for services get their wealth to pay for them from? Note I did say "created" not "earned".

Outside of Mining, Manufacturing, and farming everything else is doing each other's laundry
“"I fancied myself as some kind of god....It is a sort of disease when you consider yourself some kind of god, the creator of everything, but I feel comfortable about it now since I began to live it out.” -- George Soros

Jim the Moron
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Re: American / Western Superiority (?)

Post by Jim the Moron » Thu Feb 11, 2021 2:26 am

"The skill set of John Kerry, Samantha Powers, Obama, and that ilk . . .Which would you rather rely on? Mining wealth or the 'talent' of Ivy League blabber mouths?" (Ellen) Do I get to vote?

neverfail
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Re: American / Western Superiority (?)

Post by neverfail » Thu Feb 11, 2021 4:23 am

Ellen wrote:
Wed Feb 10, 2021 10:00 pm
"And that dear Ellen is the reason why it is valid to include it in any assessment of GDP."

I am not disagreeing that services are important, and in fact, vital to the success of a modern economy. Your detailed description explains why quite convincingly. Getting back to Ethiopia, as a counter example: the reason why there were so many famines in Ethiopia for so many decades was not actually that the peasant farmers were not producing enough food in the fields. By some calculations they were (even with their primitive rain-dependent techniques). The problem was, as you describe the scene in California, there were no service sectors to help transport the crops to market and sell them. Meaning what precisely?

1. The roads would get washed out during the rainy season so the farmer could not transport his produce in a horse and cart to the local market
2. No grain silos to store grain in, so some of the crop was lost to locusts and other vermin
3. No electricity or phone service to find out which local markets needed produce to sell and which were already saturated
4. No reliable merchant class to handle the buying and selling of crops from the farmer to the consumer.

The extremely primitive service and retail sector doomed the farming sector, and the result was famine, which was often misinterpreted as a lack of agricultural capacity.
Brilliant deduction about Ethiopia Ellen and I an certain every word is true. But you seem to have overlooked something: the effects of periodic drought on farm production - something that humans have no control over. It was such a drought and the resultant regional famine ( I seem to recall in Tigre province) in 1975 that brought down their Emperor Haile Selasse. That and the failure of his government to do anything in time to remedy it - like approaching international food aid donars for help.

Not that it would have been easy to move food to where it was needed given the inaccessability of so much of his domain. Like all semi-arid regions of the World Ethiopia is susceptable to annual fluctuations in rainfall and with that annual disparities in crop yield.


For the moment, I will not carry on and defend Doc's argument further, because I would prefer to conclude with a further comment on some of my previous supervisory experience.

So, dear NF, we can both agree what a nice bunch of grapes looks like and place a value on it. Also a bunch of bananas, and lush-looking basket of apples, and freshly pumped milk from a ruminating cow. Can you define for me and put a specific dollar value on a good manager? Are "good managers" the ones that get promoted to the top of a hierarchy in a typical service sector industry like finance, insurance, medical communications (my industry). Sometimes yes but sometimes definitely NO. In some of my past jobs I have been shocked to discover what the salaries were of some of the managers in companies I have worked in. Clearly way above any consensus on what they were actually worth. I doubt you and I would have a big disagreement over the real value of a bunch of bananas. It's very difficult to value much of the labor in a service sector industry, hence GDP calculations in advanced countries are - let us say- a bit of a fake calculation of wealth.

That's why Spengler always says that when political and economic life become unstable with potential breakdown ahead, people buy gold. Why gold? Because it always has some tangible value. The skill set of John Kerry, Samantha Powers, Obama, and that ilk can fluctuate between millions of dollars and absolute zero, depending on the stability of a country or a politico-economic system. Which would you rather rely on? Mining wealth or the "talent" of Ivy League blabber mouths?

Re. the "value" of grapes or bananas versus that of managers. The price of any category of fruit is decided by people - usually by the demand/supply baalance - but managers with a CV that demonstrates that they get things done have a dynamic that no inaminate object has; bargaining power. If they are convincing they can virtually name their own price.

I knew a man employed in our civil service who was incompetitent in every job he was promoted into yet he earned himself one promption in rank after another until an early death put a premature end to his career. How did he do it? He had an exceptional talent for drafting convincing job applications along with impeccable interview technique - so he always favourably impressed the interview panel as to his worth.

We do not live in a fair world Ellen.

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Sertorio
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Re: American / Western Superiority (?)

Post by Sertorio » Thu Feb 11, 2021 5:02 am

Doc wrote:
Wed Feb 10, 2021 10:50 pm

But since you seem to feel you know so much about economics, give an example of something outside of Mining manufacturing and farming that creates actual wealth... I'll wait.... ;)
You seem to think that wealth is necessarily attached to physical things, while in fact it is associated to utility. And while physical things may deliver utility, so do services. Mining, farming or manufactured goods only deliver wealth when they are used by someone, who is willing to pay for them. But an intangible thing like transportation also creates wealth because it enables a good to reach the person who wishes to acquire it. If you have a raw log it may be worthless, and planting and cutting the tree does not create wealth. But let someone transform through skill that log into a table, and it will have acquired value. The skill which changes the log into a table is a service and it creates wealth...

beatnik
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Re: American / Western Superiority (?)

Post by beatnik » Thu Feb 11, 2021 6:05 am

Services may provide added value that can be extracted from goods but in the absence of productive capacity, i.e. physical capital, they lose their value and disappear. When I used to cover the Israeli diamond industry most of the employment in the sector was in services, i.e. dealers, but the leadership of the exchange was adamant about retaining manufacturing capacity for high-value diamonds in Israel.

Otherwise, they feared, who would need/want to go to Israeli diamond dealers when everybody in the industry knows 90% of the worlds diamonds are polished in India. Moreover, how would the diamantaires in Israel gain experience in sorting and valuing rough and polished diamonds if they had no exposure to how the polished diamonds are made. Even the advanced technology that is used today by polishing factories around the world was made based on the investment of Israeli diamond manufacturers 20-30 years ago. The leadership said explicitly that they didn't want to end up like America.

The same is true of the semi-conductor industry in Israel, where Intel receives generous tax incentives to build some of its fabrication plants. The reason is because not only does it provide employment for factory workers but it also generates a lot of surrounding businesses and R&D activity that specialize in microchip design. These are high value service jobs that probably wouldn't exist here if there wasn't also a manufacturing base for the relevant goods.

In the West, the boom in service sector jobs in recent years has happened in low value employment like health care aides because it's not tied to productive physical capital.

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