I think this article that summarizes Cecchetti's main idea that the financial sector may be currently too big for the current economic models is a good read - I really recommend it, especially as the plumbing analogy really helps one to understand the problem.
Wednesday, 11 March 2015
Monday, 2 March 2015
Over the past few years I have seen a striking silence over one of the biggest changes the world is seeing.
Over the last decade, the weight of Labour in countries' income has been shrinking considerably, while Capital has been gaining steady ground. And this under a complete silence from the educated European Left (not Syriza and Podemos, but the socially educated Left that is the backbone of Europe's social status and welfare state) that prefers to focus on Greece's debts (mainly caused by a poor economic management from the country at micro and macro-economical levels).
This is a global trend, let's be honest. The world global population still grows faster than global GDP, and that drives a Supply surplus on the economy, that tends to be compensated by Labour costs. Not even the fact we currently claim we are in a talent economy disguises it - that is true for a short number of professionals (IT engineers are typically the best example) and countries (niches in South-East Asia, Africa,...), but not for the whole population that fits in Labour extensive production networks.
But the silence that we all hear on this subject is deafening. Instead of renewing its approach to focus on salary gains indexed to productivity gains, the European Left tends to focus on less working hours, high pensions or fixed salaries - that are impossible to bear on the long term. And this puts in an extra weight on the global economy, that depends greatly on the economical power of the masses for Consumption.
Posted by Ricardo at 13:18
Monday, 23 February 2015
"If a country really wants to be independent, it should avoid debts". This sentence is from a Spanish economist, quoted in this article from Jorge Almeida Fernandes. From my end, it seems a great principle.
And it is even more painful when those debts are incurred, not for growth related projects, that would generate higher income for a country, but just to face current expenses, due to the inability to control them.
Posted by Ricardo at 14:33
Tuesday, 17 February 2015
Tuesday, 20 January 2015
Paul Krugman says that China keeps him up at night, pointing a number of reasons for that:
1) The need to transition from an investment to a consumption economy, and how difficult that will be
2) A shrinking work force - to which I would add its low qualification
3) And poor quality of data
To these, though, I would add just 2 more:
4) Low return on investment in many of Chinese investments, that are poorly linked to an effective economy. Let's just think about the huge amounts that are being spent on real estate projects that are then left empty or on the incredible percentage (30%?) of wind power generators that are not connected to the electric grid.
5) The rigid and extremely uncertain ability of the current Governmental regime to actually manage the transition from a capital extensive economy to an intensive, imaginative one.
Yep. China also keeps me up at night.
Posted by Ricardo at 11:57
Monday, 19 January 2015
A world in which a elite possesses more than 50% of the wealth and dictates norms and laws to 100% of it is a nightmare that we should all the be fighting hard. Even that elite should be massively worried about it - this situation is not sustainable and will lead to a social rupture, in which everyone will lose too much. The clock is ticking.
Posted by Ricardo at 10:41
Sunday, 4 January 2015
The predictions that 3D printing will disrupt the economy are not new. Typically, they focus on the shift of manufacture from lower production costs' countries to anyone who owns a 3D printer and knows how to operate it. Everybody could do their own objects, based on files it would upload to its 3D printer.
Now, this poses a different question - how was that file acquired. And it is here that the play will be over the next 2 years. The strength of copyright will play a key role in the 3D printing industry, as file ownership and availability to use will be central. If the industry can own files (and prevent their usage from anyone who didn't buy them), then a market will arise on objects blue-prints - and probably Apple, Google, Amazon and Alibaba, who operate major digital stores will dominate the industry especially after an initial period where hardware development will still be the focus. Now, if such a copyright strength is not enforced in the files themselves, the industry will be mainly a hardware oriented one.
This will have major implications and is not a straight forward play. Just think about points such as files' standards development (remember the VHS vs Beta fight?), hacking (just think about the European countries where political parties advocating the free usage of entertainment files, like movies and music, and their role on this ground) and personal creativity. This will be an incredibly interesting market to look at over the next 2 years. Stay tuned!
Posted by Ricardo at 18:18