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The Forum > Article Comments > Global realist economics > Comments

Global realist economics : Comments

By Syd Hickman, published 14/11/2013

As the new Parliament opens it is clear that the Government intends to correct some of the worst errors of its predecessor but shows little recognition of the huge changes going on in the real world.

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So Russia, India, China and others have, at times, banned food exports to protect their own food supply. Poor weather and resulting poor crop yields were blamed.
OK. So what will happen when African nations suffer from poor weather and poor crop yields and yet find they cannot ban food exports because their crop land has been leased to other, bigger and more powerful nations.
What will happen is there will be a spike in the number of global refugees, and no nation will want them.
Add in water shortages and land degradation, mix with 7 billion (and counting) humans struggling to live on a finite playing field, and I just hope someone is thinking about all this. Given that many still insist on keeping their heads in the sand (a polite way of putting it) on climate change and swearing that everything is and will remain hunky-dory for ever and ever amen, and I am not optimistic.
Posted by halduell, Thursday, 14 November 2013 11:23:29 AM
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Your article covers some good points but I would take a darker view than you on some of the root causes. “Intellectual property is now critical to economic success” and “all major industries have become dominated by a shrinking number of global firms”.
The dominance of a few large firms in any industrial area is certainly a fact but I feel the causes are more political. The dominance of rare earth material supply, for example, by the Chinese of recent years is the result of subsidised Chinese production. This has allowed the sale of the product at artificially low prices and the destruction of industries in other countries.
I have been involved in manufacturing in Australia for nearly thirty years, we have had prices from China which we can easily beat by production in Australia and I won’t pass on their quality standards. Yet, when it comes to a tender situation, they are able to submit prices less than the cost of the materials involved.
A particularly good illustration of the irrational dominance of an industry by some geographic area would be the Gladstone Steel Project. This project is the best situated and has the best synergies with respect to raw material supply, transport in and out, energy supplies etc of any plant in the world. It is currently in receivership!
“The aim of Australian governments for two centuries has been to use more resources to raise the consumption levels of an expanding population. The new global realist aim is to raise the living standards of a stable population while reducing the consumption of unrenewable resources”
You are spot on here, but what hope is there with any current or recent Australian Government? All have the mantra of growth by out of control immigration, massive funding of unsustainable road infrastructure, second airports, desalination plants etc. There doesn’t appear to be any answer to this?
Posted by Imperial, Friday, 15 November 2013 2:44:36 PM
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Ye Gods ....

<blockquote>In terms of managing the financial crisis, global realist economics can accept the need for Keynesian deficit spending but absolutely rejects Keynes's idea that you could validly pay people to dig holes and then other people to fill them in. The point of such spending should be to specifically target it at achieving long-term goals such as improving productivity, generating new products or bringing forward necessary spending from the out-years when transition costs will be most onerous.

It's not about changing the settings and letting the system work its magic. It is about driving the system harder until a new stability can be achieved.</blockquote>

Driving the system harder - ie accepting debt, improving productivity, and bringing forward future spending - only makes things worse in the long run (which then recedes).

Those who call for more productivity generally fail to define productivity. It is a religious cry for an economic placebo. We have a GFC precisely because we accepted debt, artificially boosted productivity, and gambled on bringing forward future spending.

The answer is not to drive the system harder - but slow it down so that everyone can join in its benefits, without debt, and without being discriminated against based on some vague concept of productivity.

How many more people do you want to throw out of their factories, homes, and livelihoods?
Posted by Christopher Warren, Saturday, 16 November 2013 5:52:19 PM
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