[Phil №❶]

Alan's thread highlighting the price difference between different makes of car inspired me to start this discussion. I don't have any academic qualifications to qualify my theories, but I would be interested in hearing from our members who also have an interest in this subject.


It seems to me that there is a cycle of poverty / war, rebuilding, production then unemployment and financial deficit.

Unfortunately, many countries have experienced the effect of war. The penalty for war is to have your country rebuilt by the victorious countries. With low wage rates these countries become production centres for the rest of the world.

Japan is an example. Many good products came from Japan but the increased standard of living and wealth which comes with full employment, has put Japan's production capability in serious trouble. We see Japanese brands now produced in Malaysia, Thailand etc. Unemployment is rife also which in turn stresses their economy which will lead to rec ession etc.

Australian production is reducing by the day, we no longer produce tyres in this country. Mitsubishi has left our shores, Heinz foods also, we simply have priced ourselves out of the production market, just like Japan. Most other countries have experienced the same cycle with the big winners being India & China & SE Asia. Notice that China is now a player in the world oil market, which is why oil is AU$100.00 per barrel.

Korea, still at war BTW, is able to produce these vehicles for the moment but I suspect, as Alan does too, that this situation won't remain as their standard of living increases as well.

My questions are

1. If this cycle is so obvious, why do countries continuously fall into the same trap.

2. Why can't you get 2 economists to agree on what is the best solution to this  cycle. 

[bumpkin]

You pose some interesting questions there, which I am sure will be answered by opinion rather than fact for the simple reason that we dont actually get to know all the facts.

I agree, chances are in ten years time we will be extolling the virtues of the latest Chinese built MG or Indian built Tata.  Watch too for companies such as Proton and Ssangyong taking over from the Koreans in the budget, quality stakes whilst we bemoan the fact that our Hyundais and Kias are as expensive as Toyota and Nissan.

Looking at world economics we see for example that whilst India pursue a space programme the United Kingdom is busy sending millions of pounds per annum to them in aid payments for their poverty stricken areas.  People here are (rightly?) questioning that occurring, we are having to endure austerity measures and rising unemployment, yet we are sending money to areas which could arguably at the moment be better used locally.  The politicians tell us that in order to give entire countries the same chance and their populace an "equal" standard of living that aid payments are required and this is a compelling argument, until you examine whether your own country has an "equal" standard, the chances are they don't (although it may be closer?)

In my opinion the worlds finances are so inextricably linked that our respective governments (our being whichever country you live in in the world) REQUIRE the boom/bust loops, wars, famines, disasters, aid etc etc etc in order to justify their (and to a certain extent our) existence.  How inconsequential a country would for example the UK be on the world stage if we didn't intervene in Iraq and Afghanistan, if we didn't send foreign aid to areas which "require" it?  We would be nothing, a tiny fish in a huge pond and would probably be more fully embroiled in the EURO mess and be speaking Belgian (with apologies to our Belgian members, it's not your fault that Brussels was chosen as the capital of Europe!)

Perhaps we should not lose sight of the fact that we all have a stake in the finances of the emerging markets and therefore the economists probably can't agree as the best that can be done because of the financial links which exist across the world is that they tinker with a couple of ideas which probably won't make a huge difference one way or another, the paths have already been laid by successive governments of all colours over very many years, it just depends which colour takes left, right or straight on at the intersections.

Need a coffee now

[AlanHo]

Germany falls into the category you outline - rebuilt after WW2 with considerable aid from the USA. It's factories had been reduced to rubble and were rebuilt to high standards and equipped with the latest production equipment. In addition, new labour laws provided a stable labour relations base and considerable investment in education and training combined to make Germany highly competitive with Britain and other European countries.

The result is that their motor vehicle and machine tool industries flourished and they are still the volume, turn-over, profit and technical leaders in their respective European industries. Meanwhile the UK manufacturing base has become a shadow of its former self  - the car industry now being foreign owned.

Germany is facing increasing competition from East Europe and the Far East, but present signs are that they are well equipped for the fight. I suspect that they will successfully buck the trend and remain the manufacturing power-house in Europe for decades to come, despite valiant attempts by upstarts like Hyundai to knock them off the pedestal.

On your second point - economists are no different to any other profession. Since when did 2 politicians, 2 bankers, 2 footie managers or 2 whatevers agree all the time.

[Phil №❶]

Couldn't have said it better Alan, thanks. The I30 is German designed isn't it. 

Germany is the big player in sorting out the Greek financial crisis too, subject to some strict guidelines. I see the Greeks didn't take too kindly to the German requirements though. You'd think that at some point the Greeks would have to admit that just maybe, someone else knows a little bit more about economics than they do, after all they're responsible for the mess they're in. 

[Surferdude]

You pose some interesting questions there, which I am sure will be answered by opinion rather than fact for the simple reason that we dont actually get to know all the facts.

Looking at world economics we see for example that whilst India pursue a space programme the United Kingdom is busy sending millions of pounds per annum to them in aid payments for their poverty stricken areas.  People here are (rightly?) questioning that occurring, we are having to endure austerity measures and rising unemployment, yet we are sending money to areas which could arguably at the moment be better used locally.  The politicians tell us that in order to give entire countries the same chance and their populace an "equal" standard of living that aid payments are required and this is a compelling argument, until you examine whether your own country has an "equal" standard, the chances are they don't (although it may be closer?)

I heard a guy talking a while back along the lines of, "Well England lived off the back of Indian riches for a couple of centuries so why shouldn't they give back now?"
It made some sense but ....... I'd have liked someone to ask him to continue to justify it (the aid) based on, as you say, their space program, their nuclear program, their continued war (albeit undeclared) on Pakistan and their treatment of their poor and the still dominant caste system.

[bumpkin]

You pose some interesting questions there, which I am sure will be answered by opinion rather than fact for the simple reason that we dont actually get to know all the facts.

Looking at world economics we see for example that whilst India pursue a space programme the United Kingdom is busy sending millions of pounds per annum to them in aid payments for their poverty stricken areas.  People here are (rightly?) questioning that occurring, we are having to endure austerity measures and rising unemployment, yet we are sending money to areas which could arguably at the moment be better used locally.  The politicians tell us that in order to give entire countries the same chance and their populace an "equal" standard of living that aid payments are required and this is a compelling argument, until you examine whether your own country has an "equal" standard, the chances are they don't (although it may be closer?)

I heard a guy talking a while back along the lines of, "Well England lived off the back of Indian riches for a couple of centuries so why shouldn't they give back now?"
It made some sense but ....... I'd have liked someone to ask him to continue to justify it (the aid) based on, as you say, their space program, their nuclear program, their continued war (albeit undeclared) on Pakistan and their treatment of their poor and the still dominant caste system.

Absolutely, which is what I was trying to say with the "chances are we don't actually get to know all the facts"
So much of what the world does is "hidden" from us, almost as if we are too stupid to understand, I often wonder if humans were given all the information and asked to deal with it accordingly where we would be?  Sure there are some "idiots" in the populace which may make things difficult, but sometimes these "idiots" pull the wool over our eyes enough to become our representatives due to our belief in their lies and lack of transparency. 

[Phil №❶]

Thank you everyone for your replies, I'm enjoying this discussion so far.

This is the value of this forum. there is nowhere you can raise a topic like this and get such sensible discussion without swearing and abuse. 

Thanks Dazz & Shambles for providing it. 

[Dazzler]

All a bit deep for me i'm afraid .. I try and leave the stressful topics for others..

My Eldest Daughter Ashley has a strong opinion on everything (I think she got it from my mum) not from me 

[Phil №❶]

All a bit deep for me i'm afraid .. I try and leave the stressful topics for others..

My Eldest Daughter Ashley has a strong opinion on everything (I think she got it from my mum) not from me 

So, buy her an I30 so she can post. 

[Dazzler]

I'm not that generous...

But if you'll be my friend on facebook you'll see what i mean 

[Phil №❶]

You're denying forum members the benefit of her opinion though. 

[Dazzler]

I have to keep telling her to chill out