Recent comments by Stephen Pain

• American Pie in the Sky

  There is an offshore economy which amounts to trillions in loss taxation, organized crime the same, the US sovereign debt of nearly 100 trillion or more - and so many other holes in the notion of an organized, rational, civil, efficient economic system. It is leaky as hell.
  
  I would much prefer that instead of talking of double-dip recessions - one of the most ridiculous terms ever - if it were scoops of icecream fine - but two dips - is a euphemism for a depression.

• The Price of Inequality

  Inequality and immobility have the hallmarks of a feudal system, not a postmodern economy. We know that in Russia for example that a small percentage control the distribution of wealth and make sure that their money is secured in offshore accounts - often not in the interest of Russia at all. Similarly, the super rich and rich barring a few, seek ways to make sure that their capital makes a maximum profit - and that again is not always in the interest of the US - if it were - why does the US have the largest sovereign debt in the entire history of mankind? Moreover the super rich seek not to invest in manufacturing, but in leverage or speculative ventures.

• The Price of Inequality

  I am totally in agreement with this article. The US has one of the greatest gaps between those with and without. The tax system needs to be overhauled. Every day we are confronted with pictures of absolute poverty in a nation that professes to be rich. We see an incredible number of people in prison, numerous without proper housing, welfare, education - and on the other hand we see the super rich, an estate who own and govern the rest, who wallow in wealth. A terrible, terrible situation. Poverty is not a matter of ideology - it is a matter of facts - those who deny that l- are ideologues.

• After Austerity

  I believe we should look to W. Edwards Deming who aside from his anti-humanist approach - was sound in terms of manufacturing. One can save a huge amount and pay off the debts by reducing waste throughout the system. There is tremendous waste. Secondly, if one goes for quality rather than quantity, then one can reduce the trade deficit. On top of this, since many countries are seeking a green future - why the hell are they advertising a future with bigger and faster cars - why not bicycles? So Deming is one key figure. Another is E. F. Schumacher. In China they are currently building like there is no tomorrow - bigger and bigger buildings - and aiming for the sky - yet they cannot build a motor car that meets international standards? Why is that? They need to stop and think about their direction and take an initiative to rethink and reform their society to understand that the American Dream has led to a waste land. Why not see what you have? Value that? It is not a question of austerity - it is a question of vision and recognizing that happiness is not waste. With regard to the theories of economics - well it is like someone going down to the races - except billions of lives are at stake. It would be much better to stay home and think what exactly is going on? The rocket science of recent years has disguised debt - if the US has a sovereign debt ranging from 60 to 200 trillion US dollars - why do we hear its bond traders and credit rating companies baying against the Eurozone? Why do they seek to get Germany which has had a rather sensible and prudent economy that is export led, with good service to manufacturing ratio, tight control over credit and property market, to go against its successful approach? I find such baying and advice coming from a country that has bankrupted itself as they say... a bit rich.

• Chinese Values?

  I believe that many of the problems facing China - and there are problems undoubtedly has been due to the country being effectively divided by manufacturing for and against itself. We see today an enormous trade imbalance between China and other countries. Obviously the subprime fiasco and hedging helped to bring about this imbalance. The demand for goods shot up as the apparent liquidity rose. People were using the property equity to buy as if there were no tomorrow. The financial institutions were pumped up to massive bubbles through the repackaging of debt into credit – and their wealth led to an increase of expenditure in the service industry. Added value philosophy reigned supreme as cheap imports were bought from China. So much of manufacturing was now carried out in China – even Veblen goods. The consequence of the speculation in the West was that China had managed to catch up quickly. She was becoming increasingly more technologically advanced. The West had become dependent upon China – a dependency that would be costly to both partners. In the boom years China overheated and her factories were overworked. They were manufacturing for the West and manufacturing their own cheaper products too. In some insane way China was competing against herself. On the one hand she had the Western companies demanding quality (Veblen goods), while on the other hand she sought to manufacture domestic products (Giffen goods) that could in quantity match the quality. In other words you can buy five pair of socks for the price of one quality pair – and in terms of utility, durability, longevity they would be the same, however if we were to examine the corporate social responsibility and green issues, then they are far more costly. Unfortunately, after the economic paradigm shifted from the “added value” philosophy of Starbucks to the Wal-Mart discount approach, there has been a tendency to seek to reduce costs in the Veblen goods, which means that they are being manufactured more like Giffen goods with cheaper materials and their utility, durability and longevity have been effectively compromised, this tying in with the built-in obsolescence of electronic products which have today due to neophilic drives very short lives. The fact the top-end Veblen goods producers have with those in the middle quality range opted to go down the quantitative road has led to a deplorable state of affairs for all concerned.
  The only remedy to help both the West and China is to bring into effect stringent quality controls through taxation. Often pollution taxes had been placed on the manufacturers. Here we can place taxes on products themselves. The idea would be that products which are Giffen goods would not be bought if they were taxed on grounds of utility, durability, longevity as well as CSR and Green factors. This would restore craft into products, ensuring that all involved in manufacture would be of a higher quality. It would also reduce the trade deficit and motivate the West and others to return to manufacturing – and as a result decreasing dependency on China . China for her part would need to reform its manufacturing and the context of production, leading to a better environment and healthier and happier population.