The Estonian economy may be in the midst of the most solidly based recovery in the world and it is certainly the best amongst all of the European states. It has also based its recovery on classical principles and has totally discarded any thought of using a Keynesian approach.
A twitter war has now broken out between the President of Estonia, Toomas Hendrik Ilves, and the Nobel Prize winning New York Times columnist, Paul Krugman. Krugman chose to take on Ilves and may live to deeply regret the decision. Ilves has responded with a barrage of twitter attacks on Krugman to which Krugman has thus far said nothing at all. Beyond any personal loss Krugman may endure, he will also have highlighted the phenomenal recovery of the Estonian economy which has based its entire economic strategy on classical economic principles. This from The Huffington Post:
The president of Estonia chewed out Paul Krugman on Wednesday, using Twitter to call the Nobel Prize-winning economist ‘smug, overbearing and patronizing,’ in response to a short post on Estonia’s economic recovery.
Krugman’s 67-word entry, entitled ‘Estonian Rhapsody,’ questioned the merits of using Estonia as a ‘poster child for austerity defenders.’ He included a chart that, in his words, showed ‘significant but still incomplete recovery’ after a deep economic slump.
What Krugman needs to do is find somewhere that is doing better. Every recovery at this stage is incomplete, but a very small number of economies are actually on a road to recovery while most are not. The phenomenal recovery of the Estonian economy was discussed in an earlier post, but I will bring a couple of bits up from that earlier comments thread. This is from Jack Lacton:
I love the story about Mart Laar’s transformation of the Estonian economy post the fall of the Soviet Union.
Laar’s area of expertise were Europe’s 19th-century national movements. ‘It is very fortunate that I was not an economist,’ he says. ‘I had read only one book on economics – Milton Friedman’s “Free to Choose.” I was so ignorant at the time that I thought that what Friedman wrote about the benefits of privatisation, the flat tax and the abolition of all customs rights, was the result of economic reforms that had been put into practice in the West. It seemed common sense to me and, as I thought it had already been done everywhere, I simply introduced it in Estonia, despite warnings from Estonian economists that it could not be done. They said it was as impossible as walking on water. We did it: we just walked on the water because we did not know that it was impossible.’
And this was from JC:
When I read the Prez’s twitter attacks, I thought to myself this dude has living in America before because he’s attacking The Krugster like an American would.
The Estonian prez has a decent educational pedigree and is getting stuck into the Krugster like an American would.
Ilves was born in Stockholm, Sweden; his parents were Estonian refugees. He grew up in the United States in Leonia, New Jersey and graduated from Leonia High School in 1972 as valedictorian. He received a bachelor’s degree in psychology from Columbia University in 1976 and a master’s degree in the same subject from the University of Pennsylvania in 1978. In addition to his native Estonian, he is fluent in English, German and Spanish.
Keynesian economics is dying right before our eyes but this stoush with Krugman will be an important footnote within the full story when it is eventually told in years to come.
It’s the Quayle vs Havel/Zappa scenario all over again
Dan
7 Jun 12 at 7:11 pm
Do not underestimate the role of culture in this; Estonia is culturally very suited to a free market economy.
It was very much a part of the Hanseatic League when it existed, and in their heart and souls Estonians still are.
2dogs
7 Jun 12 at 7:20 pm
if fiscal expansions are the way to go, the decisive test is the election of a left-wing greek govennment would make greek bonds a safer buy.
money left on the table for the true believers. a futures contract could be written as per Julian Simons.
Jim Rose
7 Jun 12 at 7:55 pm
krugman needs to grow some balls, get a divorce, and find a woman who doesn’t tell him what to think.
Irving J
7 Jun 12 at 8:03 pm
Estonia certainly went through a lot of short term pain to recover earlier, whereas countries that relied on stimulus countries have not really recovered, but did not have the same pain.
What is best in life?
entropy
7 Jun 12 at 8:10 pm
It’s the old story, Ent. Nobody wants delayed gratification, except for the Estonians.
Gab
7 Jun 12 at 8:17 pm
Estonia went into the GFC with a govt. debt/GDP of about 4% which ‘ballooned’ out to a ‘staggering’ 7% in 2010 and has now declined to 6%.
Greece went into the GFC with a govt. debt/GDP of 100% which is now around 165%.
Australia went into the GFC with a govt. debt/GDP of 10% which is now 23% and looks like going up due to lax policy .
The empirical evidence suggests that if stimulus spending by government in hard times works at all, it has to start from a healthy fiscal position and quickly withdrawn.
manalive
7 Jun 12 at 8:19 pm
As the Hubby of a wife that speaks Japanese 1st, English and German. Anyone who is conversant in more than 2 languages is a legend.
Carpe Jugulum
7 Jun 12 at 8:28 pm
you’re so right Irving. He’s really deteriorated since he’s been with her. He needs to dump her asap.
JC
7 Jun 12 at 8:28 pm
manalive
Where you start from makes all the difference.
A lot of countries started the recession at break point, all they are doing is coasting till they either lose government (and blame the new party for the bust) or the IMF (or similar) takes control and makes the changes, again leaving the IMF as the bad guys.
God only knows where the US will end up, with theirs still being the reserve currency and all.
thefrollickingmole
7 Jun 12 at 9:12 pm
“despite warnings from Estonian economists that it could not be done.”
According to legend the German miracle was launched with a “bonfire of regulations” on a Sunday afternoon when the US occupying administration was off duty and could not abort the reforms.
Erhard liked to say that the US authorities phoned up on Monday and said “our advisors say it won’t work”, and he replied “mine told me the same thing”.
Poor Old Rafe
7 Jun 12 at 9:12 pm
i would like to read the story about that.
entropy
7 Jun 12 at 10:13 pm
Who cares about Estonia. It’s about as economically significant as Penrith.
Les Majesty
7 Jun 12 at 10:19 pm
I miss Tillman he loved Estonia
Tal
7 Jun 12 at 10:24 pm
Has it? Whoa, I hadn’t heard about that.
sdog
7 Jun 12 at 10:33 pm
Apparently Western Samoa’s per capita GDP increased by 1.5 goats when they banned fractional reserve banking.
No one cared about that either.
Les Majesty
7 Jun 12 at 10:45 pm
No you’re lying.
It’s that no one cared, it’s that no one knew about it. Big difference.
Gab
7 Jun 12 at 10:49 pm
Well , tell that to the bearded clam then. He started the fight, Les.
JC
7 Jun 12 at 10:50 pm
It’s not that no one cared etc
Gab
7 Jun 12 at 10:50 pm
Yeah, I’ve known about Ilves for a little while now but what I’m not sure about is his actual political leanings. He was the leader of the Social Democratic Party and sat with the Party of European Socialists when he was a member of the European Parliament.
So what exactly would he call himself now? If he’s still a lefty, then he’s probably the most important lefty in the world right now.
Alex Pundit
7 Jun 12 at 11:06 pm
Ah, no it wasn’t, it was lifted directly from Wikipedia
SteveC
7 Jun 12 at 11:09 pm
Keynes, b 1883
Ilves b 1953
Hmmm, wonder who will still be remembered 100 years from now
SteveC
7 Jun 12 at 11:12 pm
Fuckface, Steve? Lifting means I didn’t place quote marks around it. I did.
Now fuck off.
JC
7 Jun 12 at 11:12 pm
We got another leftard here named Steve?
Alex Pundit
7 Jun 12 at 11:15 pm
For all the wrong reasons.
You really are a fucking imbecile. Why would you want to be remembered for touting a clownish theory that only mentally feeble idiots relate to it. Jim Jones will also be remembered too and look at his following.
JC
7 Jun 12 at 11:15 pm
There’s an entire litter of of them. Someone dumped the idiots in our front yard and won’t leave.
JC
7 Jun 12 at 11:16 pm
This is a quote from Ilves in a speech at the Hoover Institute talking about the EU. I think from that comment it’s pretty clear he’s no longer a socialist.
Alex Pundit
7 Jun 12 at 11:18 pm
Wikipedia says Estonia’s whole workforce is 600,000 people, which is about equal to Australia’s unemployment. Why is Estonia a useful example of anything, exactly?
SteveC
7 Jun 12 at 11:20 pm
And this was from JC: …
blame Steve Kates, not me
SteveC
7 Jun 12 at 11:21 pm
Fuckface, the size of an economy within reason (like it’s not 5 people and 3 cats) isn’t always determining criteria to assess if economic policy works or not. You can test economic hypothesis in small countries.
If you had done elementary economics in your TAFE course you wouldn’t be asking such a stupid question you brainiac.
JC
7 Jun 12 at 11:25 pm
Blame? You’re the only one that seems to care fuckfcae.
JC
7 Jun 12 at 11:26 pm
Not that you care….
SteveC
7 Jun 12 at 11:30 pm
wikipedia.
Let’s have some commentary on the ACT economy then?
SteveC
7 Jun 12 at 11:33 pm
Why is Estonia a useful example of anything, exactly?
Do you actually have an answer to the question?
SteveC
7 Jun 12 at 11:33 pm
The collective noun is SCoaMF.
“A SCoaMF of Steves.”
You’re welcome!
sdog
7 Jun 12 at 11:34 pm
steveC, that is the beauty of objectively based economics. It applies to Robinson Crusoe. It applies equally to Robinson Crusoe and Man Friday. It applies equally to a village. It applies equally to a municipality. And so on. Thus the lessons of Estonia, and places like the unsung, spectacular Hong Kong 1950 – 2012 apply to a land of 22.3 million Robinson Crusoes, such as Australia.
Hugh
7 Jun 12 at 11:36 pm
If only it were possible, we should cross Ilves with Borg immediately, and their cloned progeny would save the world.
perturbed
7 Jun 12 at 11:37 pm
I didn’t notice it till you mentioned it. But, no I really don’t give a shit, fuckface. Those sorts of things don’t really worry me. In any event most people would know I never wrote it. In fact I mentioned the quote came from wiki in my comment.
JC
7 Jun 12 at 11:39 pm
John Maynard Keynes,
JC: A fuckwit (and wannabe anaesthetist) who comments on a nondescript blog
SteveC
7 Jun 12 at 11:39 pm
Except you have commented on it three times. If you don’t want to be accused of plagiarism you should ask SK to update his post
SteveC
7 Jun 12 at 11:41 pm
Interesting that you felt the need to excerpt Keynes’ partial bio, which shows you have no fucking idea about economics, as everyone here would know his background pretty well. So why are you on this thread other than to troll, Fuckface.
There’s plenty of material countering this fools economic theories throughout this blog, so I suggest you get started reading it and stop annoying people.
Look fuckface, most of you leftwing idiots show up here with a political ideology and no understanding of economics and what the discussion is about. So you approach things from the simplistic political angle or the appeal to emotion interspersed with the occasional sneer. There is no point for most of you to be here, as you have nothing to offer. Zilch. And you prove my point.
Now fuck off.
JC
7 Jun 12 at 11:47 pm
I just foubd your comment at 7 Jun 12 at 11:28 am, and in fact no you didn’t.
Liar is , I believe, the word you are fond of using.
SteveC
7 Jun 12 at 11:48 pm
No I haven’t exactly commented on it, fuckface. I have responded to you stupidity.
You know, you could always make an accusation like that to my face if you wish. I’d crack your facial bones in two.
JC
7 Jun 12 at 11:50 pm
You really have nothing to offer.
1. Keynes’s bio.
2. ‘Estonia is small’
Keynes wasn’t even an economist.
.
7 Jun 12 at 11:50 pm
Accusation?
SteveC
7 Jun 12 at 11:51 pm
If I didn’t I missed it, Fuckface.
You do realize you’ll get booted by wrecking the thread.. again right?
JC
7 Jun 12 at 11:51 pm
It takes two (munch munch)
SteveC
7 Jun 12 at 11:56 pm
Steve has all the charm of that Handyman who used to come round to flog solar panels.
Token
7 Jun 12 at 11:58 pm
Steve C
You disgusting lying little leftwing turd. I went back and took a look at what I posted and this is exactly how I posted the comment.
When I read the Prez’s twitter attacks, I thought to myself this dude has living in America before because he’s attacking The Krugster like an American would.
The Estonian prez has a decent educational pedigree and is getting stuck into the Krugster like an American would.
In other words the bio was in quote marks that I placed around it, although I made no mention it from wiki because it would be mostly assumed it would be.
You lying, dishonest little fuckhead. You are exhibit A why I have no time for left sacks of shit like you.
As I said, I’d break your face bones in two given the chance.
JC
8 Jun 12 at 12:00 am
Estonia is about as big as Adelaide. And as important.
No one has refuted Krugman’s main point, which was that Estonia went into a deep recession before it clawed back half the losses and plateaued at a much lower GDP level than it reached pre-GFC, so it’s hard to see how it can be held up as an economic miracle that proves austerity works.
m0nty
8 Jun 12 at 12:01 am
Moderator..
Steve C.. is wrecking threads again.
JC
8 Jun 12 at 12:01 am
mummy mummy, he started it
SteveC
8 Jun 12 at 12:05 am
That is precisely the point. You need to clear out the malinvestments, hence they have an enviable average GDP growth rate.
Their trading partner is Europe.
We’d face similarly abysmal GDP figures if China went to shit. Roughly their sales are 15% of GDP, and mining and agriculture have the highest multipliers of any industry.
.
8 Jun 12 at 12:05 am
Monster, you fucking moron.
The point that you missed is that Estonia is climbing back, In other words the economic arrow is pointing in the right direction and has little debt relative to the rest.
Contrast that to the rest of the EU. The arrow is pointing downward and debt levels are astronomical. Moreover this relatively poorer EU country is being asked to bail out the richer ones.
You fucking failed Monash economics because you have absolutely no analytical abilities, you moron. And all you do is clog the place up with worthless crap.
Now get lost and take that other putrid leftarded idiot with you, you worthless clown.
JC
8 Jun 12 at 12:07 am
That’s all very nice in the spreadsheets of macroeconomists, but on the ground people don’t tend to like unemployment jumping from 4% to 19% in 18 months, then stabilising above 10%. If that’s the best austerity can do for unemployment, it’s a failure in that metric.
m0nty
8 Jun 12 at 12:11 am
Here dickhead, Monster.
It has a debt level of 6.6% of GDP
and it’s GDP is growing at 8%. In other words its prospects are enviable.
If only the rest of the EU had prospects 1/4 as good as that.
Now stop wasting people’s time and shoo off Monster as you’re not equipped to be here.
JC
8 Jun 12 at 12:15 am
Another thread derailed by newbie troll, C-Man.
Abu Chowdah
8 Jun 12 at 12:15 am
Why do leftists get everything wrong?
Infidel Tiger
8 Jun 12 at 12:18 am
Those of course are the spreadsheets you were unable to figure in first year Monash of course.
Really? It’s a failure? It’s basically at average with the rest of Europe, virtually no government debt and an economy that grew at 8% in 11 which is enviable but typical of the growth rate we see after a deep recession when an economy isn’t mired in debt. You fucking moron Monster. You failed 1st year economics and you’re passing judgement on what is and isn’t good. Get out of here.
JC
8 Jun 12 at 12:20 am
It’s very clear monty hasn’t bothered to read any of the material provided by Steve Kates and others.
Gab
8 Jun 12 at 12:20 am
mOnty couldn’t understand the material if we pounded it into him with an industrial meat tenderiser. He’s a thicko. A real dummy. If he understood the concept of shame he’d hang himself in the ladies lavatory with a borrowed necktie.
Infidel Tiger
8 Jun 12 at 12:24 am
He has no basic understanding of what is being discussed, then pushes his fat little body into the room and when he mowed down he goes away again and licks his wounds.
He had no fucking idea what is being talked about and why that particular country is being focused on.
Both these two morons are a waste of space. It’s not economics they are discussing as they can’t. It’s all politics to them.
Steve C wants his government welfare and monster is peddling the NBN because it may help his kiddies website.
JC
8 Jun 12 at 12:25 am
Getting back to the thread.
It’s really appalling what Krugman did. It’s perhaps the worst example of economic analysis seen for a while. Here’s a place with little to no debt, a growth rate of 8% in 2011 after the 08 downswing and the lunatic is suggesting it’s economic prospects are about the same as the rest of the EU?
He ought to be fired by Princeton for incompetence.
JC
8 Jun 12 at 12:29 am
The point you (deliberately) missed, JC, was that its growth rate is a nice looking number but when you put it in perspective with the massive 18% jump off a cliff it took in the GFC year of 2009, as illustrated by Krugman’s graph, it doesn’t look so good.
Imagine if Australia’s GDP fell by 18% in a year. What a disaster. It would be like the entire state of Queensland being continuously flooded and contributing nothing to the economy.
m0nty
8 Jun 12 at 12:35 am
But mOnty they are recovering! The nations practising Keynesian Zombieism aren’t.
Infidel Tiger
8 Jun 12 at 12:39 am
It’s like tryimg to herd slugs.
Gab
8 Jun 12 at 12:40 am
Yes. 15% of the population losing their job over an 18 month period is the sort of thing that in a robust democracy would get a government bounced out. Ilves is fortunate that his subjects are so cowed by decades of Soviet oppression that they don’t ark up under such hardships.
Then again, we are talking about a country the size of Adelaide here, so that’s less than 100,000 jobs lost. It’s a minor backwater, barely worth talking about.
m0nty
8 Jun 12 at 12:42 am
WTF?
Dickhead, the point that dishonest Krugman didn’t tell you is that Greece’s GDP for instance, is down 20% since 07/08, have no prospects and debt up the ying yang.
Estonia grew at 8% in 11 but the bearded clam thinks that’s no good? You’re out of your fucking mind.
Yes Imagine. What’s your point monster, you fathead? Imagine a hammerhead shark. It’s about as relevant.
JC
8 Jun 12 at 12:46 am
How’s austerity working for the UK?
Les Majesty
8 Jun 12 at 12:49 am
You blockhead, he’s the president, not the government. He’s the head of state. Fuck, you’re an idiot.
This is just turgid crap. My lord you’re an imbecile.
No it’s not. It is worth talking about, because it’s valid to compare.
Fuck off Monster. You failed !st year economic and have no business talking about this stuff.
JC
8 Jun 12 at 12:49 am
?
Give us a call when they start practicing it.
Infidel Tiger
8 Jun 12 at 12:51 am
What orsterity is that Les? They have barely touched spending.
You know what orsterity they are all practicing and that’s raising taxes. So they have really been austere as raising taxes is a form of fiscal tightening. No wonder they have all gone to the wall.
JC
8 Jun 12 at 12:52 am
Turkey is doing even better, and they had a stimulus package. Sweden clawed back all of its GFC loss in GDP, and it had a big stimulus package, notwithstanding your mob’s laughable recent attempt to hold them up as a model of austerity.
Estonia’s recovery should always be framed in the perspective that its crash was among the worst in Europe. Latvia and Lithuania were the only ones worse.
m0nty
8 Jun 12 at 12:53 am
How would cancelling trash collection help the UK, JC?
Les Majesty
8 Jun 12 at 12:53 am
British austerity:
http://www.dailymail.co.uk/news/article-2146571/Cuts-What-cuts-Ignore-BBC-Left-public-spending-HIGHER-Labour.html
Infidel Tiger
8 Jun 12 at 12:53 am
It wouldn’t. But firing 50% of the civil service, particularly say 80% the administration in the education and health sectors would help immeasurably. Freezing all spending then for 10 years and promising to do so would help.
JC
8 Jun 12 at 12:57 am
1.5% of GDP, dickhead.
No they didn’t and it was very small. You’re lying.
Sweden used monetary policy in huge way whereas the EU didn’t.
They are in relative terms you dickhead.
You’re lying Greece fell by 20% from the peak and debt up to its neck.
Monster, you have no head for this stuff.
JC
8 Jun 12 at 1:01 am
I’ll try to explain it in terms you can understand.
A man is a fan of imported Italian jeans. Let’s call him Joe. Joe has 100 pairs of imported Italian jeans in his home, of all designs and fashions. Someone breaks into his house and swipes 18 pairs of imported Italian jeans. Joe is sad. The next day, the police come and say they caught one of the robbers, and they returned eight pairs of jeans. Is Joe satisfied now that he now has 90 pairs of imported Italian jeans to wear and admire, and does he tell the police to forget about the other ten?
Does he bollocks. Joe wants those other ten pairs of imported Italian jeans, because those jeans mean the world to him. He won’t be satisfied until he has all 100, and then he’ll start adding to his collection once more.
The moral of the story is: JC really likes imported Italian jeans.
m0nty
8 Jun 12 at 1:02 am
Gab
8 Jun 12 at 1:03 am
Greece is different because it didn’t have one single crash like the others, but kept bleeding all the way through at an accelerating rate. It is pretty damning that Greece has had four years of negative growth and only now has gone past Estonia’s humungous crash of 2009 in total GDP loss.
m0nty
8 Jun 12 at 1:05 am
Monster, are you having a stroke?
JC
8 Jun 12 at 1:05 am
I think your imported Italian jeans are constricting blood flow to key parts of your anatomy, JC.
m0nty
8 Jun 12 at 1:06 am
Yea? You really want to go there, Monster? You really want to be discussing clothes and attire after your golfing excursion….. shorts, black work socks and sneakers. It’s the most disgusting pic I’ve ever seen.
JC
8 Jun 12 at 1:14 am
I’ll Gladly Pay You Tuesday
by Toomas Hendrik Ilves
http://www.hoover.org/publications/policy-review/article/111786
Nanuestalker
8 Jun 12 at 2:01 am
My analysis from earlier in the week stacks up here. Estonia went down in the GFC due to the imprudent banking sector, tied mainly to poorly performing overseas parent banks.
But Estonia recovered brilliantly, having some of the softest climate change policies in the EU.
2dogs
8 Jun 12 at 4:31 am
My analysis from Samuel j’s post earlier this week stands up here.
Estonia went down with the GFC due to the banking sector, mainly imprudent overseas parents.
It recovered brilliantly, having some of the softest climate change policies in the EU.
2dogs
8 Jun 12 at 4:34 am
Winning the thread here means way too many of the comments are by or in response to the trolls. Tedious. But without a discriminating moderation that is prepared to oust purely vexatious and vaccuous interjectors, the above is what you end up with.
Blogstrop
8 Jun 12 at 6:26 am
They’d get their trash collected more cheaply, and more frequently, and they wouldn’t have to pay for an army of little Hitler’s to lecture and fine them for putting rubbish in the wrong bin.
The benefits to general wealth and well being should be obvious.
Eddystone
8 Jun 12 at 7:18 am
Hopefully at some future time Keynes’s contributions in economics will put him right up there with Trofim Lysenko and his contributions to genetics.
Eyrie
8 Jun 12 at 8:00 am
M0nty make a very important point here. I understand the logic of how the economy benefits from the “creative destruction” of capitalism.
As he notes, politically within the broader community the loss of this many jobs would cause serious political unrest. The people that lose their jobs will not see the broader benefits of the creative destruction, they will look at their day to day situation first.
We see in Greece the vultures that feed of the chaos that have no solutions (i.e. the far left & right) taking advantage of the chaos. This is a legitimate concern.
It would be valuable to understand what strategies are seen as the best way to address this concern. I don’t mean slabs of money from the givernment, I mean real strategies.
I have heard that in the US when bigger companies lay off workers / shut down plants they set up departments to assist workers find new employment, up skill, and most importantly relocate.
Token
8 Jun 12 at 8:20 am
The same ideas could be applied to schools & hospitals. Most activities can be privatised, cleaning, cooking, staff can be contracted. The idea that government can run anything more than a vote buying squandocracy has been killed by GFC.
Irving J
8 Jun 12 at 8:26 am
Entropy, it’s one of the most famous lines in modern economic history, and my absolute favourite.
You can get a glimpse of it in “The Fourth and Richest Reich.” by Edwin Hartrich, page 4. ISBN 0-02-548480-x.
‘General Clay quickly came to the heart of the matter. “Herr Erhardt, my advisors tell me what you have done is a terrible mistake! What do you say to that?”
The German reply came swiftly and without hesitation. “Herr General, pay no attention to them! My own advisors tell me the same thing!”
Winston SMITH
8 Jun 12 at 9:19 am
I agree, blogstrop.
People, that includes you JC, leave these trolls alone. You know they do not mean what they say. They only say it to wind you up. You guys are smart enough to know that, so why do dumb yourselves down to their level.
johno
8 Jun 12 at 9:24 am
I’m staggered any sane person would put Estonia up as a role model.
Are people here actually agreeing that a country must have a depression to have a recovery.
Friedman thought that was madness. Hayek eventually recanted on that in 1936 and it certainly isn’t classical economics.
The budget retracted from demand as output fell and then boosted demand as output rose.
That is very stupid fiscal policy.
Classical economic theory has attempts by the Government for the budget to be balanced gaining the result of increased output.
This did not happen in Estonia. They had a depression.
It isn’t in the classical handbook for the government to boost output as recovery eventuates either.
John Doe
8 Jun 12 at 9:41 am
Nicely put, Eyrie. Hopefully, the ‘right up there’ bit will be in front of the UN for crimes against humanity.
Winston SMITH
8 Jun 12 at 9:42 am
Can’t you count? Their average growth rate since the reforms has been excellent, despite their downturn. Their recession was caused by the financial crisis and their trading partners falling apart. Exports are 80% of GDP. Do you think they should engage in a stimulus of 80% of GDP, ever? Do you think or can you prove that in 2008 and 2009 they could have spent 4% and 8% of GDP with perfect timing to counteract the downturn and get a trend figure of 2% real growth?
They are one of the most productive countries in the world. What exactly where they going to build with Government borrowings?
No. You need a downturn of sorts. You need to clear the malinvestments.
No he didn’t. The classical economists didn’t “think” you needed a recession – just adjustments to downturn and a change in the capital structure.
80% of GDP is from exports – this explains a lot, Homer – even if you are too dumb to realise that Keynes cannot work in an open market economy.
So a year later than the downturn and they start building useless crap – please tell us what the multiplier effects would have been and what their net budget impact would have been – you are inferring that Keynes does work with an open economy (it doesn’t) and they would have been able to raise finance during the GFC (not possible) and that a Government in deficit merely has to wait until the economy turns sour, then it can spend its way out of a hole as money they spend will be returned many times over in new productivity and come back as booming tax receipts.
This is just a ludicrous fantasy written by a famous non-economist.
.
8 Jun 12 at 9:59 am
Thank you Token, at least someone sees the point I’m trying to make here.
I also see the value of creative destruction, believe it or not. I see the logic behind Keating uttering the words “recession we had to have”. I get what dot says about clearing away malinvestments.
The problem is that austerity inevitably leads to extended periods of high unemployment, which as Token says allows extremism of either side to flourish. No wonder commentators are drawing analogies with the period before the Great War.
It sounds like Estonia’s population is not bolshie enough, pun intended, to make that a problem in that country. Other countries won’t be so quiescent.
m0nty
8 Jun 12 at 10:53 am
They have yet to get back to the level of GDP they had prior to the GFC. Only a madman would call that a success.
They had ONE year of solid GDP growth.
They have net debt levels close to ours yet have double digit levels of unemployment.
They will still have double digit unemployment when their output gap is closed.
The difference between our GDP growth rate and theirs in the future will be negligible. Which nation is far better off?
what malinvestment? It came from the US.
They have to suffer a depression because of US problems? That is madness
Keynesian economics does work in open economies. It works under the conditions he showed which were happening during the GFC.
Ever wonder why Ergas and Makin got it so wrong about Australia.
Henry knew and told the Senate committee why.
We are obliged to Steve Kates for again showing why classical economics is a load of old codswallop.
Estonia shows the economy worsening when the government detracted from demand and then increasing when it boosted demand.
They got it the wrong way round just as Keynes said so in 1936.
more proof of the Dunning-Kruger effect here.
John Doe
8 Jun 12 at 10:59 am
No, prove it!
Most countries used austerity during the long depression (“worse” than the great depression, price adjustments saw things get better – although balance sheets looked worse off).
Sustained unemployment didn’t exist. Output actually grew.
It is entirely to do with allowing markets to clear.
By 1930, currencies and labour markets could not clear.
.
8 Jun 12 at 11:11 am
No, I am referring to since the reforms were done by Mart. That was obvious. Stop being facetious.
You are excluding Australian Government off balance sheet liabilities.
If you adjust the participation rate for constancy along with the discouraged workers, our unemployment rate is heading that way too.
No. We trend at 3.5%. Take out the crisis since the reforms and they trend well over 6%.
It doesn’t exist, but it came from x…really Homer?
US problems were also European problems. 80% of their GDP is trade. Why can’t you understand this you dullard?
This is an outright lie. It CANNOT work in an open economy. The Government can recpaitalise banks by building bridges and rail links in sync with the downturn can it?
They were right, Henry was wrong.
How can they boost demand for exports? In the Australian context, how, for example, could the Government boost demand for coal or produce which we have a surplus of?
Keynes? He was an untrained mountebank. He did a semester of economics. Why should we listen to him? His crackpot theory only works – in theory – if you have closed borders.
Really Homer, you, want to start sledging us?
You have a laundry list of academic sins which you must recant before you get a shot.
.
8 Jun 12 at 11:19 am
What? In that world you live “John Doe”, how did Friedman/Hayek suggest the mal-investments get cleared from the system?
Token
8 Jun 12 at 11:24 am
I understand this point, as the people in Estonia have not locked in dozens of fixed costs (from phone contracts to mortgages), they do not fear short periods of unemployment like people in the west.
The point I was trying to make is that in a country with large welfare system / many people who have made irrational economic decisions over a long period of time, I see resistance from a large amount of the body politic who will wear the consequences of their bad “investment” decisions (as if taking an inflated mortgage or phone contract is an investment).
To people like that, any unemployment creates a crisis. When you allow it to rise past 10%, there will be substantial political fallout.
Add to that the number of people who will refuse jobs as they will not be at the level of their commitments.
I believe a political movement like the Tea Party is a critical part of this change as it reflects a change of values in society to unwind the social assumptions that would create the turmoil we are seeing in Greece & Europe.
Token
8 Jun 12 at 11:32 am
Estonia – unemployment capital of Europe.
The lovechild of the cranks from Catallaxy.
Anon
8 Jun 12 at 11:39 am
Unemployment rates:
Greece: 22%
Ireland : 15%
Portugal: 15%
Spain: 24%
Anon: a crank from nowhere.
Gab
8 Jun 12 at 11:45 am
Lefties are very spiteful, Gab. Very, very spiteful people.
Lets hope that with the advent of the Finkelstein laws spite will be banned.
JC
8 Jun 12 at 11:48 am
And all are running forced austerity. Yay!
m0nty
8 Jun 12 at 11:58 am
What “forced austerity” has been implemented?
Gab
8 Jun 12 at 12:00 pm
Reary, Monster.
The IMF and every single EU fund with every acronym you can think of is lending these countries money because they are unable to borrow in the public markets any longer. Please explain how lending them money at preferential rates (Greece is loaned money at 4% when its bond market suggests 70%) is orsterity.
Monster you failed 1st year economics because you were no good at it. Why do you continue to post comments here on subjects you simply don’t understand.
JC
8 Jun 12 at 12:06 pm
I love the new leftism. Being asked to live within your means is now officially evil.
Infidel Tiger
8 Jun 12 at 12:07 pm
EU austerity drive country by country
m0nty
8 Jun 12 at 12:09 pm
Here monster… Greek 10 year bonds closed at a yield offering 28%
http://www.bloomberg.com/quote/GGGB10YR:IND
their five year rate is 61%
http://www.bloomberg.com/quote/GGGB2YR:IND
their two year bonds are trading at the rate of 225%
http://www.bloomberg.com/quote/GGGB2YR:IND
You appalling little clown, Monster.
JC
8 Jun 12 at 12:09 pm
Now?
Has this been the case since Keynes gave social democrats and statist a pseudo-economic reason for countries to build political systems around that falicy?
Token
8 Jun 12 at 12:10 pm
…that fallacy?
Token
8 Jun 12 at 12:11 pm
Well they’ve never really done it, as most of them are now skimming off the public sector like the Wisconsin trogs.
JC
8 Jun 12 at 12:11 pm
No, it is evil to even ask. No one would actually make you live within your means.
Infidel Tiger
8 Jun 12 at 12:12 pm
Hey dot
The 10 year rate looks wrong to me. How can you have a bond yielding 225%? That must be on annualized basis surely?
Jc
8 Jun 12 at 12:13 pm
European austerity myth.
There has been no austerity. The drunken spending orgy continues on unabated.
Infidel Tiger
8 Jun 12 at 12:14 pm
From Monty’s article on “austerity measures”
lol
Gab
8 Jun 12 at 12:14 pm
It’s the cognitive dissonance trying to shield itself
Irving J
8 Jun 12 at 12:14 pm
monty
I don’t know about the others so much but I know the Greek “austerity” is a gin show.
Do you really think Greece would be better off if they borrowed more to finance public works?
.
8 Jun 12 at 12:16 pm
Gosh where do we start from with Mark’s inaccuracies.
I am comparing apples with apples and using IMF figures on net debt. You are confusing off balance sheet with off budget. They both stat with B so I guess people around here do get confused a lot.
Are you serious in trying to compare Unemployment here and in Estonia. Have you read anything about it at all?
They trend well above 6% eh. A pity they wil have no output gap after two years of 3% growth then. Reason labour market problems!!!
Of course it can work in an open economy. That is why it worked here. It didn’t dissipate into imports at all as Henry explained in his senate committee address.
Here is another example of Marky madness. He simply makes up stuff about what happened.
Banks are in a much healthier state when the economy is growing not in a depression.
I see you are confused about government contribution to GDP growth.
Just for simpletons Estonia detracted from growth when the economy was falling and then added to it when it was growing.
Just the opposite of what Steve Kates was saying. we we have another example of Kates being badly wrong on something.
so we have two more nutters here Marky and Steve.
John Doe
8 Jun 12 at 12:18 pm
I trust that all future versions of the Oxford Dictionary they will have a new meaning for “austerity”:
An sustained increase in outlays by social welfare states that is well above inflation and beyond the level that is sustainable according to their tax base, but remains below the irresponsible and irrational level that was previously in place.
Token
8 Jun 12 at 12:19 pm
Estonia – unemployment 18%
http://www.indexmundi.com/map/?t=0&v=74&r=xx&l=en
Min wage at: 290 EUR p.mnth.
Estonia – bloody economic serfdom.
Anon
8 Jun 12 at 12:20 pm
This may have something to do with how Estonia is performing so well?
Splatacrobat
8 Jun 12 at 12:24 pm
Homer doe
Can I offer you some friendly advice for your new bank job. Don’t write like that.
If I was your boss and you submitted something to me in that diction and level of incoherence you’d be bank on the Woolies nightshift stacking shelves faster that you can say “you’re fired”. Make sure the diction app checks everything you submit to your superiors as we don’t want another statistic in next month’s employment numbers… or in your case… unemployment numbers.
JC
8 Jun 12 at 12:24 pm
Estonia unemployment rate 11.5%
Where’s the Mortein, or a fly-swatter?
Gab
8 Jun 12 at 12:24 pm
LOL, that article quotes Estonia, Latvia and Lithuania as poster children for austerity, who had the three biggest crashes in Europe in 2009. The unemployment rates in Latvia and Lithuania followed the same trajectory as Estonia, going from around 5% to around 20% within 18 months of the crash, and stabilising under austerity at 15%. Austerity: the numbers only look decent if your economy has already gone to ELL.
m0nty
8 Jun 12 at 12:26 pm
So Estonia has a lot of off balance sheet or budget stuff does it Homer?
You are, I continued the narrative. You didn’t like the results.
You have measured their output gap have you, idiot?
No it cannot, it is theoretically impossible and only an incompetent fool would say that.
The economy doesn’t grow with stimulus. It is simply waste that makes an accounting figure look good. What was the return on investment of the stimulus, or the multiplier effect in Australia? Banks are healthy if there are public works projects, and monetary policy is ineffective? really? So in late 2008, the banks would have been better off with a strong rail building project and not a deep cut to the overnight cash rate?
Sheer bloody lunacy.
No I am not, take this dishonest insult back. You think that Estonia can substitute G for exports? Exports are 80% of their GDP you twit.
No, it was export driven, unless you think a Government can create demand for products which are in a surplus and exported as a vent for surplus. GDP and tax revenues are driven by exports – 80% of GDP – this massive component of GDP is just lost on a dullard like you.
Anon – you twit, your figure is nigh on two years old.
You must be a self aggrandising retard like Homer who thinks you can substitute 80% of privately produced GDP with Government expenditure on public works…or by creating further internal demand for products which are in surplus and exported as a vent for surplus.
They are a trade exposed economy and have to cop it sweet. If their exports fall by 10%, they nominally have a 8% decline in GDP. They cannot create extra demand – none exists.
.
8 Jun 12 at 12:30 pm
Just stack the shelves, buddy, and stop playing with the fruit.
Infidel Tiger
8 Jun 12 at 12:31 pm
The austerity miracle!
m0nty
8 Jun 12 at 12:33 pm
The numbers have not stabilised at those levels.
Again monty – if Estonia’s exports decline by 10%, how do you propose to make the situation of a 8% drop in GDP better?
The only way is to liberalise prices, which is the reason why the long depression saw wages and employment growth, despite being “recessionary”.
You haven’t said how binging on public spending would have “saved” Estonia. it didn’t save the PIIGS – none of which have taken on austerity anyway.
.
8 Jun 12 at 12:34 pm
monty – stop trolling and answer some questions.
.
8 Jun 12 at 12:34 pm
Hmmm, review this table of GDP rates. Estonia has been creating something through the process. Its neighbours which have kept to the same old measures have not.
Token
8 Jun 12 at 12:36 pm
Also – add in the EU and you see what is going on.
They are sensitive to EU unemployment and output.
The EU is trending up, but the general trend in the Baltics is now to trend down.
.
8 Jun 12 at 12:36 pm
Estonia
A flat tax rate where everyone contributes equally and the Government lives within their means. Unlike the left socialist Governments whose “house of cards” economics rape the successful to provide for wastrels and rent seekers.
Splatacrobat
8 Jun 12 at 12:38 pm
Yes indeed. falling unemployment and GDP growth. Now let us look at Greece, Spain…..
Infidel Tiger
8 Jun 12 at 12:44 pm
You’re right Dot, Latvia and Lithuania’s unemployment has started going up again. Viva austerity!
After decades of Soviet rule (and probably neglect), surely there were some nation-building projects that could have employed some of those 90,000 Estonians who lost their jobs in 2009. No one is saying that all of that 18% drop of GDP could have been avoided, but some attempt to cut down on the fact that one in six Estonians became unemployed in 2009 might have helped the situation.
That table only goes back to 2010, which is singularly unhelpful when talking about the 18% drop in GDP in 2009. “The process” includes 2009, Token, you can’t ignore it.
m0nty
8 Jun 12 at 12:48 pm
Maybe they could have built school sheds or a government funded hole digging competition.
Infidel Tiger
8 Jun 12 at 12:51 pm
Yes, you numbnut , Monster. Estonia’s unemployment is falling while it’s rising in the rest of the EU, you numbskull.
Analysis was never your strongest point which is why you were asked to leave after failing 1st year economics.
In your chart add in the European Union and look at the direction EU vs Estonia. They are basically converging with EU pointing straight up while the Estonia’s is pointing straight down. And Estonia has no debt while the EU average is around 85%
Monster, you aren’t any good at this shit which is why you’re now becoming spiteful and a low level troll.
JC
8 Jun 12 at 12:53 pm
LOL, JC thinks I’m being spiteful. That’s practically a compliment.
m0nty
8 Jun 12 at 12:56 pm
With Europe monty. Remember how I keep on saying 80% of their GDP is exports, for Estonia anyway?
You are basing your argument on an adverb. “The Soviet Union didn’t work and it ruined the economy so what we need is more Soviet era ‘nation building’”…?
Yes it does. Now refer back to the long depression. Wages and prices were flexible. The economy grew during a depression.
The market system is a marvel, when it is allowed to work.
.
8 Jun 12 at 12:58 pm
Well yes. You’re getting shitcanned and simply exhibiting the girly like leftie trait of spite. No surpirse.
Well of course it would be seeing you’re a leftwing idiot. you’d feel complemented if for being spiteful.
Talk about redundancy. Stop filling the thread with stuff we already know and obvious Monster, you fathead.
JC
8 Jun 12 at 12:59 pm
Estonia – godawful unemployment over 11%. They would do better following the example of Belgium – 7%.
But Australia’s even better – 5%
So Catallaxy wants to espouse Estonian dictates for Australia.
Crazy Catallaxy!
Anon
8 Jun 12 at 1:12 pm
A non
buzz off before I find the Mortein.
Gab
8 Jun 12 at 1:15 pm
Anon, you leftwing clown.
Estonia experienced a material downturn. Their economy grew at 8% in 2011 and they will surpass the growth rates of the average EU.
Try and focus you, clown. This isn’t art history 101 at the rural TAFE you went to.
JC
8 Jun 12 at 1:17 pm
Another spiteful leftwing troll Gab. They all eventually go into spite mode.
JC
8 Jun 12 at 1:18 pm
what was the keynesian counter-factual for estonia? what was strictly forbidden?
Jim Rose
8 Jun 12 at 1:19 pm
That isn’t the argument at all.
Estonian exports are roughly 80% of their GDP.
How do they react when exports fall by 40% or so in early 2009? Should they binge on debt equal to 32% of GDP?
.
8 Jun 12 at 1:20 pm
Well try this:
1.Debt/GDP of 85% – EU average.
2. Deficit of 7% EU average
3. The third Estonian Finance minister in a year unable to see his family for weeks on end as he flies around the place begging for bailouts.
JC
8 Jun 12 at 1:22 pm
Eurostats for April 2012:
Compared with a year ago the unemployment rate fell in eleven Member States, increased in fifteen, and remained stable in Ireland. The largest falls were observed in Estonia (13.6% to 10.8% between the first quarters of 2011 and 2012), Lithuania (16.0% to 13.8%) and Latvia (16.8% to 15.2% between the first quarters of 2011 and 2012).
and
GDP in Estonia grew by 4% pa to March 2012, cf with EU zone ave of -0.1%. Apart from Latvia (5.5%), Lithuania (4.4%) and Norway (4.1%) no other economy in the EU27 grew faster.
Capitalist Piggy
8 Jun 12 at 1:23 pm
All this talk about Estonia. It’s an interesting place with a history full of being beaten up by larger neighbours.
The average Estonian has had their fill of socialists with the Soviets and the Nazis systematically purging their population for years, the Russians tried a forced settlement during the soviet years. As a result, it’s illegal to advertise in Russian in shops in Tallinn (not sure about the rest of the country).
As a result of all that being beaten around by socialism, it’s not surprising they’ve given two fingers to any sort of socialist influence, although they did join the EU which was a bit silly after spending all that time trying to kick out the Russkies.
Estonia is a major exporter and one of the fastest growing economies of the world, certainly of the former USSR states. Skype was written by Estonian software developers.
Anyone with curiosity should check out the wikipedia page: http://en.wikipedia.org/wiki/Estonia
And I can thoroughly recommend a visit. A german style roast-pork with dumplings and the strange dark bread they serve, all washed down with some of their excellent local beer is what you need to get into.
Oh, and being a Nordic country, all the women are total babes. Just watch out for drunken Finns on the way back to the Ferry.
brc
8 Jun 12 at 1:48 pm
ray morgan calls out aust gov fake figures.
real unemployment 9.3%
http://www.roymorgan.com/news/polls/2012/4789/
Irving J
8 Jun 12 at 1:49 pm
JC
Cry-baby.
Anon
8 Jun 12 at 2:03 pm
Don’t feed the tr0ll
WARNING: DO NOT FOLLOW LINK IF YOU JUST HAD LUNCH
Nanuestalker
8 Jun 12 at 2:08 pm
Yea, anon, you clown. You two bit TAFE educated clown grade A clown.
JC
8 Jun 12 at 2:10 pm
“Anon” your arguments have been destroyed. You are going home and taking your ball with you.
.
8 Jun 12 at 2:11 pm
Low wage economies often exhibit this pattern.
What’s the point? Keynesians pay fair wages? Is this what you hate?
Crazy Catallaxy.
Anon
8 Jun 12 at 2:16 pm
JC
Blubbering gets you nowhere.
The throbbing in your head is your own.
Anon
8 Jun 12 at 2:19 pm
Really? Often? The lowest wages are in parts of Africa and they don’t exhibit any of this pattern at all, TAFE boy.
You’re talking crap.
You’re asking what the point of the thread is now? You fucking class A clown.
WTF?
Do you even understand the most basic points here?
Fuck off.
JC
8 Jun 12 at 2:19 pm
Spiteful when losing now? How unique. Lol
JC
8 Jun 12 at 2:20 pm
Source: Wikipedia
D’oh.
People arguing about what happened in 2008 or 2009 are missing the big picture. In 10-20 years, it’s going to be the Estonians flying into London to get drunk on bucks parties and puke all over the place, while the low-wage English workers mop it all up and hope for tips.
For a country that started from scratch in 1991 and had significant environmental and economic challenges to overcome, what they have achieved in 20 years is remarkable. It’s the kind of model special economic zone of open laws, high freedom, low taxes and obvious prosperity that socialists have to try and invent all sorts of reason why they have to ignore it.
brc
8 Jun 12 at 2:23 pm
This is not true (Singapore, Hong Kong, it is to do more with entrepot trade) and even if it had anything to do with it – what is your point? In a few years their wages will be comparable to Western Europe. They have annualised wage growth of 7% p.a at present.
I notice before you inferred a low minimum wage was “serfdom”. You seem to think we can legislate our way to material wealth.
The point of Keynes is actually to reduce real wages without “labour” knowing it is happening by creating inflation and thus clearing the market.
You really are a lunatic.
Again, your “arguments” have been destroyed.
.
8 Jun 12 at 2:24 pm
So – only Catallaxy thinks you cannot legislate out of serfdom?
True lunacy.
John Howard and Malcolm Fraser reduced wages, the Keynesian’s response was to boost the social wage.
The point of capitalism is to reduce wages without “labour” knowing it is happening by creating surplus inflation and thus clearing markets.
Anon
8 Jun 12 at 2:38 pm
Dude.
Do you even know what the fuck you are talking about?
Real wages rose under Howard…and you’re saying the Keynesian response was to increase a universal welfare benefit we don’t have in Australia?
Huh?
No sorry mate that is Keynesian. They’re actually quite proud of that.
.
8 Jun 12 at 2:48 pm
Sorry dumbo – but you do not increase real wages by having Harper deny min wage increase just before you are kicked out of Government.
What universal welfare benefit are you talking about?
Where is there evidence Keynesians are “quite proud” of surplus inflation to reduce wages?
Anon
8 Jun 12 at 2:55 pm
Oh God, another Leftist mouth-breather. No, real wages went up 16% under Howard; real hourly wages up 21%. I know you won’t do this, but if you want to check it for yourself, go here http://www.rba.gov.au/statistics/tables/index.html
then click on G6 Labour Costs. Copy and past over the CPI data from their Prices and Inflation charts to adjust for inflation, and you’re done.
Fisky
8 Jun 12 at 2:57 pm
I like Anon.
When I first read his stuff I thought he was a really stupid c**t.
Infidel Tiger
8 Jun 12 at 2:58 pm
No, you made an empirical claim about wages under John Howard. This is contradicted by the evidence from the RBA.
Fisky
8 Jun 12 at 2:59 pm
John Howard and Malcolm Fraser reduced wages!
they were in power for 20 years. would be easy to spot.
Jim Rose
8 Jun 12 at 3:01 pm
Real wages are increased by increasing the capital to labour ratio and work processes.
Minimum wages have got very little if anything to do with this.
You were talking about social wages. I think you meant a “living wage” – which has nothing to do with capital accumulation directly.
Because that is the whole point of the general theory. Please read it, otherwise, get an education.
You are calling me dumb – perhaps, but not on economics – where you are exhibiting ignorance and explosively sloppy thinking.
.
8 Jun 12 at 3:07 pm
…work processes–> improving work processes
.
8 Jun 12 at 3:08 pm
gosh our Marky still hasn’t worked out what the difference is between off balance sheet and off budget.
By the way the NBN is ON the Balance sheet. It always has been.
As I said if you compare apples with apples as the IMF does then we are roughly the same as the wunder-economy.
the IMF has figures on the output cap but then I wouldn’t expect you to do any research on knowing that.
Just parade your ignorance as usual.
Banks making money from companies working on infrastructure are in a lot stronger position than in an economy in a depression and either losing money or going belly-up.
you are confusing exports being 80% of growth with what adds to growth.
Net exports did so but government detracted from demand when the economy was in depression and then added to it when it was growing.
you do get confused with basic econmic concepts.
If most nations are hit by a economic problem like the GFC then it doesn’t really affect fiscal policy.
After-all the biggest detraction from net exports here was in 2011 when the government was detracting from growth.
don’t you ever get sick of being wrong and not understnding the subject.
John Doe
8 Jun 12 at 3:16 pm
OK just for slow learners. Increased capital to labour ratio increases profits if min wages are held fixed as under Howard or there is a wage pause as under Fraser.
Where is there evidence that Australian real wages are increasing in line with capital to labour ratios. In fact GOS is increasing as % of GDP. So it appears any benefits are flowing to GOS and not to wages.
So who was the Catallaxy idiot who started prattling on about “universal welfare benefit”????
So where in the General Theory does Keynes indicate that he is “quite proud” of using surplus inflation to reduce wages without workers knowing. Which chapter? Page?
Anon
8 Jun 12 at 3:27 pm
LOL Homer
So if the revenue and expenditure is OBS, you can still put the asset on balance sheet? Um yeah that’s some good accounting principles!
Except that we have half of their average growth rate.
They also reckoned we were going to have -2% GDP growth in 2009. Why should I care?
So this is the Homeric solution to the great depression: build a lot of roads and the banking crisis sorts itself out. You really have no idea on what creates wealth. The Estonians, let alone Australia, can create demand that is lost when exports fall as the exports are a vent for surplus.
No I am not. I said they were roughly 80% of GDP and I am correct. Your idea that the Estonian Government could create growth by manufacturing demand out of what they sell as a surplus to themselves is just nutty.
“We have sufficient X. We sell X overseas to supplement our income, to the point that the sale of X is our main source of income. If we lose our exports, we’ll just buy it off ourselves”
Your woeful understanding of trade theory, let alone what the amateur economist Keynes said about imports and exports is lost on you. I feel sorry for you Homer, You are a vast intellectual wasteland.
So where do you think 80% of their revenue base derives from? Trade declined by 40% – yet income didn’t fall by 32%. The Government contracted and the loss in income was significantly less than 32%.
Thus, the austerity was a success.
Except that they need to borrow or expand credit, and they can’t do the former and you are opposed to the latter.
Also when the stimulus was being done and this put upward pressure on the exchange rate – after a monetary led devaluation which saw exports stablise – which you apparently do not understand.
You really are proof that an MBA is a licence to shout nonsense over the top of other more educated and qualified competent people.
.
8 Jun 12 at 3:32 pm
It also increases wages. Minimum wages are not market wages. You dolt.
Well they increased, Fisk pointed this out. I know capex increased.
Truly, if John Howard could raise real wages as capital accumulation fell by simply holding down the minimum wage – he’s a bloody miracle worker and we should make him President for life.
But we shouldn’t, anon, because you are dribbling nonsense.
You. You brought it (social wage) up because you didn’t know what the “living wage” was.
You and I were both referring to Keynesians. sdfc (a commentator here) advocates this and calls himself a true keynesian.
Your reference is in the GT, Ch 20 Part IV, 2nd last para, (basically a summary, part one):
For a time at least, rising prices may delude entrepreneurs into increasing employment beyond the level which maximises their individual profits measured in terms of the product. For they are so accustomed to regard rising sale-proceeds in terms of money as a signal for expanding production, that they may continue to do so when this policy has in fact ceased to be to their best advantage; i.e. they may underestimate their marginal user cost in the new price environment.
Which is a crock of shit, anyway.
.
8 Jun 12 at 3:42 pm
What a preposterous chain of reasoning. That would only be the case if everyone were on the minimum wage AND if the minimum wage were totally fixed. Only a fraction of Australian workers are on the minimum wage, and about 1/6 are on awards. And the minimum wage rose from 1996-2007.
Fisky
8 Jun 12 at 3:45 pm
No, you have already had your errors pointed out to you empirically and yet you persist with this nonsense. According to the RBA stats, there was a 47% increase in real wages over the last 40 years, 23% over the last 20.
Fisky
8 Jun 12 at 3:48 pm
Dear god I’ve never come across such bloviating, bile spewing morons outside of Rush Limbaugh’s radio show…
I was having a friendly debate with a friend of mine about the nature of economics and the efficacy of austerity in an already depressed economy when he sent me this.
Needless to say I’ll be highlighting the crass, abusive and monotonous nature of the adherents to the debate here in my response – particularly the chap named JC, who seems to confuse the excessive use of bad language and personal insults with facts.
In any case, judging by how long you’ve all been bickering over such irrelevant twaddle, I’d say it is safe to assume that the Australian economy – in spite of the generally good data out -isn’t offering enough jobs to keep you all busy doing any real work.
Reason
8 Jun 12 at 3:53 pm
So we now have a double-dolted slow-learner. Min wage determinations flow through to much of Australia’s wage-earners. Have you heard of flow-through? Australian wages are not set by a free market – this is a Catallaxyian fantasy.
John Howard could never:
He could however raise profits.
Only fools think the social wage is a “universal welfare benefit”. They then tie themselves up in knots. Tough luck chum.
Love this brain dead attempt:
When the question was – where in the General Theory does Keynes indicate he is “quite proud” of using surplus inflation to reduce wages without workers knowing.
Entrepreneurs acting on false expectations will obviously not tend to their own ‘best advantage’. This is does not address the question. It is not using inflation to reduce real wages.
Using surplus inflation to reduce wages does not repair any underestimating in (Keynes’) “marginal user costs”. And Keynes does not claim this.
How does any variation in real wages (either by Howard’s dictates or by sneaky inflation) bear on marginal user costs?
Workers are quite aware when capitalists try to reduce their wages based on the logic espoused at GT Ch 20 Part IV, 2nd last para.
Your quote is irrelevant.
Anon
8 Jun 12 at 4:27 pm
Marky,
There is a large difference between being off-budget and off balance sheet.
the NBN is counted as part of debt s it is ON the Balance sheet.
As I said the IMF compare apples with apples and knows , unlike you, the difference between off-budget and off balance sheet.
No we don’t have half their growth rate.
We will be growing roughly at the same rate over coming years but without their inflationary fears.
The Government assists in helping out banks but profitable banks need less help than unprofitable or bankrupt ones in a depression.
Yes you are confused. go to the last IMF report.
It has a nice little graph on what contributed to growth. you can actually see how you are wrong.
Net exports has detracted from growth in Estonia. It did so in part of 2007.
you really are not very bright are you.
just because they are 80% of GDP doesn’t mean they always contribute to growth.
What adds or detracts from growth has little to do with trade theory. you are off with the fairies again.
There was no devaluation. Only governments can do that. you would know that if you ever learnt economics.
the exchange rate rising is something that always happens when a country grows faster than another or others.
However you and others said it dissipated growth entirely.
It didn’t. the largest detraction from growth of net exports was in 2011 when the Government was also detracting from growth.
now be a good boy and go to High school and ask to study econmics.
The government of Estonia was incompetent in allowing its economy to fall by 3.7% in 2008 and then by a whopping 14.3% in 2009. It rose by 2.3% in 2010.
A person who lauds this disgrace is simply a nutter.
John Doe
8 Jun 12 at 4:30 pm
Fisky
The fact that there was a 47% increase in real wages over the last 40 years, 23% over the last 20 is consistent with
Any increase in any measure of 47% over 40 years, or 23% over 20 years is essentially static or glacial.
You cannot even interpret your own text. I suggest you stick with Catallaxy.
Anon
8 Jun 12 at 4:33 pm
We suggest you stick your head up a dead bear’s bum.
Infidel Tiger
8 Jun 12 at 4:34 pm
Sorry, are we to take that last post as a denial of the empirical evidence or not? Rather than filibustering, it would be much more honest of you to simply come out and say “no, I don’t believe the Reserve Bank data showing an increase in real wages over any time period, let alone the Howard Government, because I am an anti-scientific crank”.
Fisky
8 Jun 12 at 4:35 pm
No no, your original contention was that Howard reduced wages, not that GOS is increasing (so what if it is?). That claim has been shown to be wrong.
Fisky
8 Jun 12 at 4:38 pm
Go easy on him, Fisk. His sourced reference material befuddles him somewhat.
Gab
8 Jun 12 at 4:39 pm
No they don’t. The gains are mostly inflated away.
You are inferring a significant proportion of Australians are paid the minimum wage and there is no inflation – which is what most of the increases actually deal with. it tries to be a living wage, as you tried to describe but couldn’t remember.
That’s right in the first instance because it is nonsense, however, you inferred it was so.
Wages and profits increased. Look at the data. Are you feeling okay today? Real wages and real profits rose. Both of which had little to do with wage fixing.
You dummy, that was Keynes, not me.
Stop shifting the goalposts. You and I were both referring to Keynesians. I am also sure Keynes was proud of this theory as he was made a Lord and accepted the title.
Yes it is. The prices have risen before there is an increase in output. The ratio of nominal wages to prices has therefore fallen.
Yes he does. I showed you where he claims it. You don’t understand what real wages are.
So blame Keynes, not me, you twit.
.
8 Jun 12 at 4:57 pm
Oh really? And if real wages had fallen by say a third over 40 years, rather than increasing by nearly half, would you be calling this “static” and “glacial” too, or would you be saying that it represented a massive assault on working people, best rectified by executing the bourgeoisie? Don’t lie on here please, our BS meter is pretty acute.
Fisky
8 Jun 12 at 5:00 pm
It’s a crock and would never be tolerated in the more honest private sector accounting rules.
What? We were going to have -2% growth in 2009? How did that turn out?
Yes we do. I referred to an average in context of the post Mart reforms. Be honest Homer, I know it is hard for you but try.
This is dishonest. 4.5% growth in Australia is unsustainable outside of mining. Inflation has been skewed downwards since the CPI survey data re-weighting from consumption in the GFC when consumer spending dropped significantly.
By how? Giving money to part foreign owned construction management firms?
No I am not, you are lying and the IMF publishes a plethora of reports. Given your record on Tooze, Nazis, your theories on how retailers don’t try to make high profit margins on impulse items, Skan Kee Ho…reference please.
I am referring to exports and have never referred to net exports until now. Their purchasing power increased, so they spent more in imports than they exported? Why can’t they do that? Their trade is almost balanced at zero, it is not a problem at all.
Are you suggesting they ought to increase Government debt on public works by the amount that their trade deficit increases by? Then wouldn’t they have to cut if they had a trade surplus? How about letting prices do their job – if they have a set currency let internal revaluation occur. You are arguing for a bizzare macroeconomic policy. Rather than losing monetary independence, you want Estonia to lose any fiscal independence. If Europe goes into a long recession (to which they were strongly correlated to but have started to decouple from), then you want public works to make up the difference. If Europe goes into a prolonged four year recession, you want them to create a surplus for goods that doesn’t exist (trade is a vent for surplus) and perhaps rack up 80% of GDP as debt. Please tell us the average ROI on stimulus projects.
Note that GDP and income didn’t fall as much as trade did – and so the austerity was a success.
Yet you advocate a trade driven deficit – when convenient you ignore the vent for surplus.
They devalued, internally, you stupid prick.
Tough shit they are in the Eurozone so internal devaluation is the relevant policy.
Bullshit, the trade deficit was virtually balanced. You are either lying, incredibly stupid or both.
Exports €12.021 billion (2011)
Imports €12.631 billion (2011)
Real GDP growth 8%
So a trade deficit of 610 mn EUR created 960 million Euros (roughly) of new incomes for that year?
Erm Homer you were whinging about how bad trade deficits were and that we need a trade deficit driven deficit to make up for deficient demand.
Clearly you do not understand the role of vent for surplus nor productivity paying for trade deficits.
Given that trade makes up 80% of it’s GDP and trade fell 40% that year, it is a very admirable effort.
I of course laud this because I am sane. Your diction says otherwise.
.
8 Jun 12 at 5:19 pm
No it is not. Wages and profits can both increase at the same time, with varying shares or constant shares of total incomes increasing (or unlikely but possible, decreasing).
No, because these are REAL measures. Not nominal. They could be better. We could be like Estonia.
Don’t tr to pass yourself off as an expert of something you are not then. You didn’t even know what the living wage was yet you are attacking me for correcting your incorrect use of a “social wage”.
You halfwit.
.
8 Jun 12 at 5:22 pm
OMG
So an estimate if wages rising aby almost 50% means it’s static to a leftwing clown.
I’ve fucking seen it all now. Medic!
Then of course there’s Homer the banker bottlewasher.
Of course it’s on balance sheet you massive idiot. But that isn’t the argument, is it? It’s off budget, which is the real point.
Homer, you’ve been banned twice now for stupidity at this site. You’re heading in the same direction.
JC
8 Jun 12 at 5:37 pm
Unfortunately your quote does not relate to your assertion:
This is not supported by GT Ch 20 Part IV, 2nd last para.
So try again.
Hint: you may find evidence in reports of Keynes’ oral presentations to various committees.
You will not find this in Keynes’ formal economic tracts, but it is evidenced, as a political means, in other side papers such as letters and presentations to Committees.
The supposed inflation-erosion-of-real-wages is not part of Keynesian economics. It is an opportunist tactic that flows through all capitalist models. Modern Keynesians would only admit inflation into their schema to the point that it (supposedly) does not erode real wages.
Reducing real wages (by inflation or otherwise) does not address any underestimating of marginal user costs. It makes as much sense as bulldozing your house because you underestimated your power bill.
Anon
8 Jun 12 at 5:39 pm
Infidel Tiger
But you are the dead bear. You can stick whatever you want, up wherever you want.
You need no help from me.
Anon
8 Jun 12 at 5:43 pm
Yes, it is, if you know that Real wages = nominal wages/prices. How dare you direct me to a “better source” if you don’t even know basic definitions? Furthermore, you are being dishonest, you know you were changing goalposts but that backfired.
Yes, it is.
Except that real wages have risen fairly constantly everywhere since industrialisation or the end of communism.
You are a fantasist.
Fisk has shown you the evidence. We know that Obama’s dream team made egregious errors about US wages growth. We know that real wages rose 400% in great Britain from 1801-1900.
Hence why Keynes is crap.
.
8 Jun 12 at 5:44 pm
Dot says
The clown anon says:
But it is supported on page 9 of the stupid book, The GT.
Here’s what the good lord says:
You’re a clown anon. A total and complete clown.
JC
8 Jun 12 at 5:51 pm
Well I’m right JC (Ch 20 simply reinforces p. 9) but anon clown doesn’t know what real wages comprise of.
Anyway, this blows apart the communist nonsense that capitalism leads to falling real wages.
http://mises.org/Community/forums/t/15824.aspx
It’s from Mises so lefties might shit themselves but the data is from the US Fed or Census Bureau etc.
.
8 Jun 12 at 5:54 pm
JC
[slowlearner mode on]
I know 50% is a very big number that impresses little boys like you, but if you ask your Mummy or Daddy they will explain that the magnitude of the increase depends on how long it takes.
50% over 50 years is less than 1% compounded.
[slowlearner mode off].
In economics, any trend less than 1% pa is glacial and essentially static.
Anon
8 Jun 12 at 5:56 pm
It was 47% over 40 years. You cannot round facts down to naught. This is outrageously dishonest.
You want to go back to 1972?
Actually, you probably do.
.
8 Jun 12 at 5:59 pm
Anon, you clown a 1% compound rate over an sea of time is meaningful.
No it’s not as it depends on the time frame, you appallingly stupid person.
Anon, clown, you’ve fucked up every single argument you’ve put up here. 11th grade TAFE economics has worked well for you.
JC
8 Jun 12 at 6:02 pm
JC
[slow learner mode on]
Workers entirely know when GT pg 9. applies. They then front up with a Log of Claims. If they do not get justice via the log of claims, then contrary to Keynes’ view, they do withdraw their labour.
[slow learner mode off]
Anon
8 Jun 12 at 6:02 pm
Actually there is something in what Anon. Idiot says.
The last 20 years have had better growth than the previous 20. The last 20 was over 1%…and thus must be considered as a growth period whereas 1972-1992, Anon. Idiot says, we must consider as a zero growth phase.
We had microeconomic reform under Keating and then Howard and Costello, before the miserable Rudd and robotic Gillard.
Prior to that, we had Gough and Fraser before Keating and Hawke started to make big changes that benefitted us all.
.
8 Jun 12 at 6:03 pm
Yes Anon. Idiot, we’re saying Keynes is crap.
Thankyou. This argument is now over.
.
8 Jun 12 at 6:04 pm
The clown Anon asks earlier:
To repeat, right there on page 9 of the GT.
Here’s what the good lord says:
JC
8 Jun 12 at 6:16 pm
Apparently the quote was ‘my advisors say it’s a crazy idea’ and he replied ‘mine said the same thing.
What a great man!
Sean
8 Jun 12 at 6:23 pm
Can someone explain to JC what quote marks around words actually means.
Anon
8 Jun 12 at 6:28 pm
No one is rounding down to naught. This is your falsification.
I am just pointing out to Catallaxyian slow-learners that this is less than 1%. I know dumb people like to get excited by big numbers, so sometimes this needs to be explained several times.
A 1% growth, in economics, is essentially static or glacial.
Anon
8 Jun 12 at 6:32 pm
Mind-blowing dishonesty and stupidity.
.
8 Jun 12 at 6:41 pm
Poor old Gab;
Still trying to understand the world through your reference material?
Anon
8 Jun 12 at 6:45 pm
Retard.
Infidel Tiger
8 Jun 12 at 6:45 pm
Outside Catallaxy – growth of less than 1% is not naught.
For educated people, naught is 0.
Print this out and stick it on your fridge. You need the help.
Anon
8 Jun 12 at 6:47 pm
Um okay.
This guy isn’t a troll – he is off his head. Bath salts I presume?
.
8 Jun 12 at 6:50 pm
Infidel Tiger
You probably will not understand the following, but for the record:
100 * (1.01)^40 > 147.
QED
You are the retard.
Anon
8 Jun 12 at 6:52 pm
anon, you lying clown, the argument inside Catallazy by the regulars has actually been that.. 1% isn’t zero.
You’re the one who suggests 1% means it’s “static”.
See here
Anon the clown says:
It was only after we pointed it out to you that began lying about.
As I said, you’re a complete clown.
Are there any numerate lefties around as I have yet to see one here. lol.
JC
8 Jun 12 at 6:53 pm
Anon, some friendly advice:
Stop digging.
.
8 Jun 12 at 6:54 pm
I don’t get it.
Infidel Tiger
8 Jun 12 at 6:55 pm
Snap Dot.
It’s truly fucking amazing how every single one that shows up here ends up in the garbage, mentally pulverized and unable to function anymore. We’re going through them like doughnuts at a fatties convention.
Look at this one for instance. He first argues 1% is zero and then suggests everyone else here is doing it.
For heavens sake, we need a better quality of leftard here.
JC
8 Jun 12 at 6:57 pm
It’s not sport, JC, when the “opponent” is unarmed.
Gab
8 Jun 12 at 6:58 pm
IT
It some shorthand he learnt at the TAFE he went to. Who knows what he’s saying, but I think clown anon is implying he knows more than you, which in itself is highly offensive.
JC
8 Jun 12 at 6:59 pm
Who cares gab, There’s dozens of scalps in my office of bozos I skinned that were unarmed. Less effort.
JC
8 Jun 12 at 7:00 pm
Infidel Tiger
In simpler terms: 1% over 40 years is more than 47%.
1.01 is the factor you need for a 1% growth. The 100 is just a convenient base.
^40 is the exponentiation (ie compounding) over 40 periods.
This shows that gaining 47% over 40 years is less than 1%. Such growth is not ‘zero’ or ‘naught’ but is still essentially static or glacial.
Anon
8 Jun 12 at 7:03 pm
Static = zero growth
Idiot.
.
8 Jun 12 at 7:05 pm
Ohhh… I thought you were drawing a cat.
Infidel Tiger
8 Jun 12 at 7:06 pm
JC
Ha ha Ha!
I have not argued that 1% is zero.
I have not argued that less than 1% is zero.
Ha ha ha!
Catallaxy dumbos are arguing against their own imaginations.
Tsk, tsk, tsk.
Anon
8 Jun 12 at 7:07 pm
Yes you have, after being hammered on economics, you are clutching at straws.
I am so over this bullshit, you colossal halfwit.
.
8 Jun 12 at 7:09 pm
Given its levels of government revenue and spending, Estonia is a rather bizarre country to be using as an example against Keynes.
sdfc
8 Jun 12 at 7:19 pm
oh really?
Here’s what you said:
Static: Not in physical motion
glacial: frozen.
But clown anon wasn’t arguing 15 is zero. of course not. On no. Lol
Keep digging you dishonest moronic dickhead.
SDFC
Please don’t add to the stupids here.
we’re already had.
Monster,
Steve C,
Homer,
Clown anon
and now you. This is about as this about the limit the site can take on one thread.
JC
8 Jun 12 at 7:31 pm
oops.. 15 should read 1%
JC
8 Jun 12 at 7:32 pm
Just pointing out how funny it is. Couldn’t help it.
sdfc
8 Jun 12 at 7:35 pm
SDFC..
I believe their level of government spending is around 40% plus, which isn’t exactly libertaria , that is true.
However the argument on this thread has been about the effectiveness of Keynesian pump priming in order to get the economy moving again and that is what you’re talking about. You nonsnese is irrelevant to the overall discussion.
Please don’t become another fatality like Clown anon, Homer the skank, Monster, or dumb steve C. It’s not worth it.
JC
8 Jun 12 at 7:40 pm
JC
glacial means exceedingly slow, not frozen, but I pick nits occasionally.
Louis Hissink
8 Jun 12 at 7:40 pm
Could any of our resident Christians please ask Lord Jesus what on earth we have done to deserve this influx of retarded trolls?
Fisky
8 Jun 12 at 7:42 pm
Poor Catallaxy
“essentially static” (me) is not the same as “static” (you).
“essentially static” is not zero, it is not naught.
Essentially is glacial.
Glacial is not zero.
Glacial is not naught.
Poor Catallaxy, only able to rant when they falsify other peoples words.
Anon
8 Jun 12 at 7:43 pm
Static means not moving. You’re saying 1% is virtually zero.
Fucktard.
.
8 Jun 12 at 7:45 pm
You still have not answered my question as to what your response would have been had wages fallen by a third. Would that too be ‘glacial’?
Fisky
8 Jun 12 at 7:46 pm
clown anon.. you are starting to hardcore troll now.
Please fuck off.
We’re done with you. (into the garbage you go).
JC
8 Jun 12 at 7:51 pm
Come off it JC general government spending was 43% of GDP in 2011. Government spending is cash flow. Revenue was 41% including fiscal transfers from the EU. Good on them for maintaining a low level of public sector debt ahead of the crisis though.
Whose a troll Louis you colossal peanut.
sdfc
8 Jun 12 at 7:57 pm
Anon did say “essentially static”, meaning may as well be, as opposed to “is static” i.e. excatly zero.
Either way 47% over 40 years is 0.96% p.a., which sounds pretty glacial to me. Does anyone know what the real increase in per capita GDP was over the same period?
steve
8 Jun 12 at 7:59 pm
Bum. Who’s that should be.
sdfc
8 Jun 12 at 7:59 pm
An argument could be made that JC, Fisk and Mark Hill are the thread wrecking trolls.
Les Majesty
8 Jun 12 at 7:59 pm
Who’d have thought an Estonia-themed thread would have so much (236 so far) blood in it?
blogstrop
8 Jun 12 at 8:02 pm
It’s a hot topic.
sdfc
8 Jun 12 at 8:02 pm
It could be made, Les, however people would then see it came from you and therefore be disregarded as totally hypocritical.
JC
8 Jun 12 at 8:03 pm
It depends on the timeframe.
As over time the basket of commodities varies, ie where once we had B/W TV’s we now have colour, a very slow decline in a real wage might not be visible. Color TV’s can be cheaper as a % of basic wage than B/W TV’s were in the 1960′s.
If profits also decline at the same rate, such a fall would be a statistical artefact more than any perceived reality.
In general a annual variation of less than 1% is essentially static or glacial. However if wages fall by just 1% but profits increase 1% – the movement in relativity between these two changes at 2%. this could be of concern.
So it depends. I wonder whether statements of 47% over 40 years even have the statictical accuracy necessary. Do we have data to accurately measure to the nearest 1% over 4 decades?
Anon
8 Jun 12 at 8:03 pm
Fixed my name.
Who is Mark Hill?
SteveC
8 Jun 12 at 8:06 pm
What’s the friggen difference?
“This may as well be zero”
i.e, let’s disregard the absolute value and treat it as zero.
This is just innumeracy as a convenience.
.
8 Jun 12 at 8:10 pm
Yes
Steve’s 0.96% is correct.
Anon
8 Jun 12 at 8:11 pm
No.
Government spending is A series of cashflows.
.
8 Jun 12 at 8:12 pm
Steve, you nincommpoop..
Go back and read what Dot said. The 40 years commenced with Whitlam and Fraser who between them rooted the economy. We came off the commodity price boil from the 80′s onwards, however as a result of the Hawke and Howard economic reforms (with that nasty but thankfully short intermission when Keating became PM and went luvvie spastic) those reforms took a great deal of time to work through the economy as we prepared for the next commodity upswing, which the Alliance is rooting up again.
so yea, overall it was a pretty decent result, you mental midget.
JC
8 Jun 12 at 8:12 pm
Finally, but without an apology from the splastic clown anon.
Apologize to the thread for being a total moron, Clown anon.
JC
8 Jun 12 at 8:14 pm
What in the hell are you talking about.
Are you claiming this?
Are you suggesting others are?
WTF – your imagination loose again?
Anon
8 Jun 12 at 8:15 pm
Does anyone know how we can access GDI for the past 40 years?
JC
8 Jun 12 at 8:16 pm
Right so a 1/3 drop in real wages over 40 years is no biggie if we have colour TVs. Thanks for clearing that up. Hey dot can you send your email via Sinc – got some data to send your way.
Fisky
8 Jun 12 at 8:17 pm
JC,
The 19th century also had higher wages growth than now.
Oh the horrors of the industrial era…not really. It dragged hundreds of millions out of poverty.
These clowns are whinging that those who take on risk get rewarded more than those who do not take on debt, risk their own equity and prefer a more stable income with less responsibilities.
.
8 Jun 12 at 8:17 pm
You are you friggen idiot. WTF do you think “essentially static” growth means? It means virtually zero growth –> ‘may as well as be zero % GDP growth’
If you can’t understand this, you ought to have yourself institutionalised and disenfranchised.
Fisk, just ask Sinc.
.
8 Jun 12 at 8:20 pm
Shorter Dot: They desire a public sector job.
JC
8 Jun 12 at 8:20 pm
The thread was so convoluted (and interspersed with another long discussion between dot and John Doe) it was a bit hard to follow.
So if we start in 1983 what was the real wages growth in that 30 years?
SteveC
8 Jun 12 at 8:21 pm
Fme. He’s as stupid as Homer on a bad day.
JC
8 Jun 12 at 8:21 pm
John Howard averaged 1.3 percent annual wage growth and anon says he reduced wages. What a clown.
Fisky
8 Jun 12 at 8:22 pm
Only Dot try and argue against a tautology.
sdfc
8 Jun 12 at 8:22 pm
Fuck off, SteveC. Go do your own digging around the web, you moron.
JC
8 Jun 12 at 8:22 pm
SteveC wages growth over 30 years was slower as it was starting from 10% U/E. You can’t move from that to 4% without moderating wages growth.
Fisky
8 Jun 12 at 8:26 pm
And there were huge structural changes in the 80s too. We basically started afresh from 91 and have done swimmingly. 23% wages growth with even better colour TVs than ever!
Fisky
8 Jun 12 at 8:29 pm
JC, google has a lot of data here, which may include what you want
SteveC
8 Jun 12 at 8:30 pm
The recession of the early 90s was a watershed in Australia’s economic history.
sdfc
8 Jun 12 at 8:31 pm
No just go to the Reserve Bank historical stat tables and tack the CPI onto the labour costs table. Piece of piss.
Fisky
8 Jun 12 at 8:32 pm
Steve – I used total weekly earnings from natl accs and CPI for Mar 1983 to Mar 2012 and I got 4.4%.
.
8 Jun 12 at 8:32 pm
Jesus where did I fuck up?
.
8 Jun 12 at 8:33 pm
Dot – way too low. Closer to 20 for that period.
Fisky
8 Jun 12 at 8:36 pm
Dumbo, “essentially static” is not, and has never been, and will never be, the same as “zero”.
All your misrepresentatioins have been in vain.
Enjoy your silly tangent about “virtually zero”. You are just attempting to cover one mistake with another.
Anon
8 Jun 12 at 8:36 pm
Thanks Fisky makes sense. Although 23% over 20 years is nearly identical to 47% over 40 years (0.96 vs 1.04). I guess the hawke/ACTU wages accord in the 80′s helped there.
SteveC
8 Jun 12 at 8:36 pm
Ok SteveC
GNI on PPP dollars per cap went from 9,000 to around $37,000 in the present day and Clown anon is suggesting it’s essentially static. Fucking static? That’s 4.5% compound growth.]
In my Finkelstein world you two ought to be hung by the neck until you and Clown anon are dead.
JC
8 Jun 12 at 8:36 pm
Mother’s birth canal?
Anon
8 Jun 12 at 8:38 pm
Fisk
Col B in table G2
Col I in B6
Okay now we get the first and final figures and factor down for 29 periods.
I just realised that I need to go from Jun 1983 as well.
.
8 Jun 12 at 8:38 pm
that’s from 1980
JC
8 Jun 12 at 8:39 pm
Although 23% over 20 years is nearly identical to 47% over 40 years
Must be Groundhog Day at the Cat.
Gab
8 Jun 12 at 8:41 pm
It is when you are talking about growth.
You are just hideously dishonest.
No Princess. JC confirms my result. About 4.4% growth in real wages.
“I guess the renewed fanatical communism of Andropov helped too”
No, it was the microeconomic reform and the IR process started by Button that killed the accord.
.
8 Jun 12 at 8:41 pm
THIS. When I come back to a thread after having worked all day and there are over a hundred new comments to read, most of them by seagull (fly in, make a lot of noise, shit all over the place, then fly out again) trolls with screen names I don’t recognise from other threads or responses to those no-name trolls, I just can’t be bothered catching up.
Too many posts which might have generated interesting comments threads get derailed like this, and it’s a shame.
sdog
8 Jun 12 at 8:41 pm
4.4% annualised growth to the left wing trolls and dullards that make hay out of crumbs.
.
8 Jun 12 at 8:42 pm
Anon is not Homer.
C.L.
8 Jun 12 at 8:46 pm
I see SDFC has stumbled in here mistakenly believing Catallaxy is his AA meeting.
Infidel Tiger
8 Jun 12 at 8:46 pm
No, But I think I know who he is. I just need a little more time to confirm it.
JC
8 Jun 12 at 8:47 pm
John Doe is Homer.
Infidel Tiger
8 Jun 12 at 8:47 pm
Dog the best way to have fruitful discussion is to be challenged. Who’s a troll and why?
sdfc
8 Jun 12 at 8:47 pm
Nice effort from your boys against Peel last week IT.
You a dad yet?
sdfc
8 Jun 12 at 8:48 pm
Sorry, you lost me there. 4.4% growth p.a.?
That’s 136% over 20 years. I though the original point was the RBA said 23% over 2 years.
SteveC
8 Jun 12 at 8:50 pm
JC said:
Sinc 10:14 Suffer the little children to come unto me and forbid them not, for of such is the kingdom of Catallaxy Files.15 Verily I say unto you, Whosoever shall not receive the kingdom of Catallaxy as a center right child, he shall not enter therein. 16 And JC took them up in his arms, put his hands upon them, and kicked their leftard arse.
Splatacrobat
8 Jun 12 at 8:51 pm
Yep! All going very well.
Wasn’t that a shocker? Don’t think they’ll go back to back.
Infidel Tiger
8 Jun 12 at 8:51 pm
Congratulations. It’s a huge event.
sdfc
8 Jun 12 at 8:52 pm
Of course. Jason picked it up first.
Notice that false sense of confidence and arrogance in his step. He’s off the Woolies shelf stacking night shift and quite possibly doing his best now in sending a credit union broke.
If you ask me, the shelf stacking was way over his head.
JC
8 Jun 12 at 8:52 pm
They’re still on top though. Arseholes.
sdfc
8 Jun 12 at 8:52 pm
Oh sorry.
LOL. Yep, John Doe is Homer.
C.L.
8 Jun 12 at 8:53 pm
Bird and Homer have the two most distinctive writing styles on the planet. Far more distinctive than a Dickens or Shakespeare.
Infidel Tiger
8 Jun 12 at 8:54 pm
Lord knows the damage he’s done to the credit union. Just imagine. APRA won’t believe it when they are forced to move in.
JC
8 Jun 12 at 8:56 pm
Yes, birdie at least in his madness is verbose and interesting. Homer is like a wet cold pancake. Sometimes he can be a little hard to recognize because he’s using the translation app he’s bought that converts Eastwoodlish to regular English. But sometimes his bad diction still gets through.
JC
8 Jun 12 at 8:59 pm
You tell me Steve C
Jun 1983
AWE (all employees) 296.7 CPI Index 62.9
Mar 2012
AWE (all employees) 1050.2 CPI Index 179.5
If you use adult AWE you get Jun 83 367.7 and Mar 2012 AWE is 1341.3
.
8 Jun 12 at 8:59 pm
Isn’t the moniker just too bland for Homer?
It’s a sign of end-stage decay if he switches to bland in quiet desperate fear of the Doomlordian debridement of all infected posts?
It does sound mad enuff to be him tho’
JamesK
8 Jun 12 at 9:10 pm
Ok, so the 4.4% is nominal increase, not real. The real is 24% over 30 years, or about 0.7% p.a. real.
If Fisky’s quoted 23% over the last 20 years is right, then the increase from 83 to 93 must have been very close to zero. From a labor government, interesting.
Where do you look up those numbers?
SteveC
8 Jun 12 at 9:14 pm
Oh it’s him alright with that new spring in his step after the Woolies job.
JC
8 Jun 12 at 9:14 pm
This site needs alternative view points. Why was Homer worse than any number of commenters on here?
sdfc
8 Jun 12 at 9:15 pm
Agreed SDFC. I think Homer’s view that the Gestapo are the equivalent of Roy Morgan was a superb piece of analysis.
Infidel Tiger
8 Jun 12 at 9:19 pm
RBA
http://www.rba.gov.au/statistics/tables/index.html
Col B in table G2
Col I in B6
Go nuts.
.
8 Jun 12 at 9:20 pm
So what IT. There are loads strange arguments made on this site. No one else seems to get banned.
sdfc
8 Jun 12 at 9:22 pm
Times change SDFC.
6 months ago my belief that we must publicly execute leftists was derided as “hysterical” and “extreme”. Now we are just arguing over the method of execution. It’s very pleasing.
Infidel Tiger
8 Jun 12 at 9:27 pm
sdfc
Homer was getting away with misquoting a book (Tooze) until Fisk went out and bought it and exposed his sheer bullshitting.
That’s pretty dishonest.
.
8 Jun 12 at 9:28 pm
sdfc,
Don’t you remember Skan Kee Ho?
Homer seriously reckons Mark Latham was referring to a “Chinese warlord’s mistress”, not Janet Albrechtsen.
“I got it from urban dictionary” LOL
.
8 Jun 12 at 9:29 pm
Okay. I think I worked it out. It looks like 3.5% since 1970. Dunno from 1983.
GDP paid to employees from the RBA site you linked to shows it went from around $4.1 billion to last quarter of $180 billion.
I thought it would be better using GDP paid to employees because it helps retarded leftwingers to accept it more.
It rose unadjusted by 9% CPI for that period was around 5.5%
this is all compounded.
JC
8 Jun 12 at 9:32 pm
Homer’s stupidity and dishonesty.
http://clubtroppo.com.au/2011/11/19/the-inevitabilty-of-blog-tribalism/
.
8 Jun 12 at 9:33 pm
More recent data
http://www.commerce.wa.gov.au/labourrelations/Content/Publications/Labour_Market_Statistics/Real_Wages_-_Western_Australia.html
http://www.theaustralian.com.au/business/economics/salary-growth-lowest-in-decade-as-fair-pay-commission-freezes-pay/story-e6frg926-1225834053285
Wow. The public sector are pigs.
This makes sense. It clicks with my memories in my old job.
.
8 Jun 12 at 9:45 pm
Fisky
“Average” wages probably did behave like this. However the income distribution is very skewed so the average is distorted to the high side.
Howards 16% probably covers First Q – 1996 to 4th Q – 2007 ie 12 years.
This is growth of just over 1% (1.25%).
It is easy to Check:
100 * 1.0125^12 = 116 (a 16% increase).
Average wage increases were not replicated in rates of pay pegged to Minimum Wage determinations.
==========================
I usually use ABS data series A2734023X and etc. but I assume your calculations are OK.
===========================
Anon
8 Jun 12 at 10:31 pm
The minimum wage determination does not drive real wages growth. FFS.
.
8 Jun 12 at 10:39 pm
How many times do I have to tell you? Minimum wage earners are a small fraction of total employees. The vast majority of workers were much better off under Howard.
Fisky
8 Jun 12 at 10:42 pm
Fuggedaboutit Fisky.
It’s a nonsense theory. Even left wing Andrew Leigh estimated a moderate sensitivity of employment to wages. Raising the minimum wage just puts people out of work. It doesn’t raise real wages at all.
All that matters is capital accumulation.
.
8 Jun 12 at 10:48 pm