I don't understand why you think the Chinese wouldn't want washing machines (they don't run around naked over there do they?) or flat screen TVs? I'd imagine their goals, aspirations, and desire for creature comforts are very similar to our own.
How China will collapse in a bloody mess (Its only a matter of time, WF)
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I don't understand why you think the Chinese wouldn't want washing machines (they don't run around naked over there do they?) or flat screen TVs? I'd imagine their goals, aspirations, and desire for creature comforts are very similar to our own.
The TV may cost $35 in labor but the materials costs hundreds and millions of dollars goes into R&D before the first unit comes off assembly line.
I have no doubt that China own economy will grow and be less dependant on exports in future. However in the world of today it is a global economy and true power comes from other countries being dependant on you financially.
Hard to understand what point you're trying to make when your posts make no sense. You implied that the only cost to make a $500 TV is the labor cost of $7 a day for 5 days, or $35, which is stupid. So no, I really don't know what your point is.
But those are the current levels of profit that the Plasma TV Production industry in China is currently sustaining itself at. Could they operate at margins low enough to appeal to the Chinese consumer and sustain itself (its current size and growth) at the same time?
Again, simple questions. Keep in mind that when it comes to economics, I am retarded. So bear with me please, if my questions seem stupid.
OK. The TV's costs $160 for materials and RnD.
Let's say it takes the Chinaman 20 days to make the TV, or $140 in labour.
Right now Chinaman works 20 days, and receives $140.
The product is sold to the US for $500, so the Chinaman would have to work 72 days to buy it. The profit of $200 (say if it goes 100% to a chinese company) goes mostly into buying US treasuries.
If he bought the very product he made, in China, without the US existing, it would probably cost him $350 and $50 would go to a chinese company (money which would be reinvested in China).
He only has to work 50 days. Why does he need america? To stockpile US treasuries? Woohoo.
I still think my point is the same, but yes this is more realistic.
Let's say it takes the Chinaman 20 days to make the TV, or $140 in labour.
Right now Chinaman works 20 days, and receives $140.
The product is sold to the US for $500, so the Chinaman would have to work 72 days to buy it. The profit of $200 (say if it goes 100% to a chinese company) goes mostly into buying US treasuries.
If he bought the very product he made, in China, without the US existing, it would probably cost him $350 and $50 would go to a chinese company (money which would be reinvested in China).
He only has to work 50 days. Why does he need america? To stockpile US treasuries? Woohoo.
I still think my point is the same, but yes this is more realistic.
Who the fuck is going to work 50 days to buy a TV?
The average American makes about $150 a day. So 3-4 days of work to buy that $500 TV.
If the average American had to work 50 days to buy a TV, only rich people would own TVs.
(And American would be a better place)
The median income in China is about 1/20th of the median income in the US.
THEY CAN'T AFFORD THE SHIT THAT THEY MAKE.
The average American makes about $150 a day. So 3-4 days of work to buy that $500 TV.
If the average American had to work 50 days to buy a TV, only rich people would own TVs.
(And American would be a better place)
The median income in China is about 1/20th of the median income in the US.
THEY CAN'T AFFORD THE SHIT THAT THEY MAKE.
Why did people burn witches? Why did people all over the world practice slavery? Why did the Russians put up with bread and potato lines for decades?
Humans put up with a lot of crap. They put up with a lot if they buy into the reasons behind it (fear, insecurity, envy etc).
I am not a fan of the Chinese. I just think writing damning articles about the Chinese economy based on bad reasoning is propaganda. Suggestion that trade wars (reducing trade) will only hurt China greatly, but have acceptable losses to the US demonstrates a lack of understanding about protectionism, and the historical effects of similar ideas like the Smoot Hawley tariff during the Depression.
The Chinese people are seeing better conditions, albeit very slowly. The average city dwelling Chinese has a much better life than his parents did. So while they do put up with a lot of crap, they are also seeing small enough gains, that they continue to go along with the crap. It's the carrot vs. the stick.
People act rationally within the limits of their understanding. That is why education is important. If people are raised to believe a very narrow set of facts, then they will tend to act within the limitations of that understanding. Someone who never learned how to read and write, is unlikely to produce a great novel. If someone is raised under strict Sharia law, then they might not be able to conceive of, or act towards, a liberal society.
Likewise, if enough "experts" tell you that the Chinese cannot buy their own production (sounds silly just to type it), many people tend to believe it, just like if enough experts tell you ResV will help you lose weight, live forever and painlessly cleanse your colon, a lot of people are willing to give it a shot even if it sounds like snake oil. We want to believe in miracles of science and government and God.
Of those, only God can deliver miracles, and I don't think he is taking phone calls from any world leaders or economists (Austrian or otherwise).
I thought we were talking about the Chinese.
To try and explain yet again, there are two factors to consider, the price an american is willing to pay for a TV, and what a chinese person earns.
If American is taken out of the equation, and american debt isn't financed by Chinese money, either chinese wages would go up, or the price of TVs would come down, OR a chinese company would earn the profit from the TV and reinvest that money in China (rather than financing US debt).
Hence the hours a chinese person has to work for a TV would fall, which is why suddenly the chinese would want plasma TVs as well.
To try and explain yet again, there are two factors to consider, the price an american is willing to pay for a TV, and what a chinese person earns.
If American is taken out of the equation, and american debt isn't financed by Chinese money, either chinese wages would go up, or the price of TVs would come down, OR a chinese company would earn the profit from the TV and reinvest that money in China (rather than financing US debt).
Hence the hours a chinese person has to work for a TV would fall, which is why suddenly the chinese would want plasma TVs as well.
Yes, we agree 100%. What I am trying to say is that until we live in the current world, people like us have to be informed and consider current economic and political factors (say if we want to invest). You can't assume everything will work as you predict due to austrian economics understand of free markets.
(and the Schiff point here is great. What if the government made a secret deal with the banks that they HAD to create a new bull market in return for the bailouts). Schiff could never ever predict this, neither could any economist. It is a massive distortion that could easily be occurring right now.
Yes the system will fall eventually, but yes people are so dumb that the carrot and stick works for a long time.
And as I am trying to prove in my other posts to the other poster, I don't see any reason why the chinese wouldn't want to buy their own products. That part of the article is not true, but it is conventional wisdom unforunately.
You can't produce a plasma TV at a cost low enough to supply the entire Chinese market. China's per capita GDP is lower than South Africa, the Dominican Republic, Jamaica, Namibia, El Salvador, Algeria, Albania, and many other countries.
Just because Shanghai, Hong Kong, Guangzhou, etc are nice large cities doesn't mean all the people in China live like that. Don't be fooled. Stratfor is far more right than wrong.
Just because Shanghai, Hong Kong, Guangzhou, etc are nice large cities doesn't mean all the people in China live like that. Don't be fooled. Stratfor is far more right than wrong.
el oh el bro. politics/religion is most fun thing to debate about. Its like fucking drugs without the side effects. you should try this, flip a coin, pick a side. Oh yea and its addicting too.
Last one.
It's a rhetorical question.
Your production is your purchasing power. If you earn $1000 a day, you can purchase $1000 worth of goods. So if you make a TV, how can you not afford a TV?
The issue is not that the Chinese make goods they do not want, but the claim from STRATFOR (among others) that the Chinese have no domestic demand or purchasing power for their own labor and capital, and so they are FORCED to export it.
How could you not afford what you produce?
It's a rhetorical question.
Your production is your purchasing power. If you earn $1000 a day, you can purchase $1000 worth of goods. So if you make a TV, how can you not afford a TV?
How do you know that? I don't know that. I agree, they might prefer different types of furniture, different types of TVs or none of this stuff at all. But to say that the Chinese have no need or desire for a higher standard of living makes them almost sound like a different species.
The issue is not that the Chinese make goods they do not want, but the claim from STRATFOR (among others) that the Chinese have no domestic demand or purchasing power for their own labor and capital, and so they are FORCED to export it.
It's all good. PM me if you have more Qs, I have to do some work today.I'm not arguing or calling you out, just seeking clarification for my own good
Perhaps not. But these conversations extend much further than this forum.
My friends and I discuss these topics over coffee every morning (I know, we're a lively bunch). And here's the kicker... the group is growing.
From what I've seen, there's a real appetite off-forum for understanding how this stuff works. I know it seems as if these threads are a waste of time, but they're actually valuable. To me, at least.
How many billions of dollars does China hold in foreign currencies and gold?
If china goes down, so does everyone else.......Economic MAD.
If china goes down, so does everyone else.......Economic MAD.