Posted by ampontan on Thursday, June 16, 2011
A READER sent in a comment passing along word that he and a friend have launched what they intend to be a group blog called Pacific Rim Shots, which you can find here. They now have two primary writers, one from Sweden living in Beijing, and another from San Diego, who has lived and worked in Taiwan, Shanghai, and several other places in the region. They also say they have new writers lined up in China and Hiroshima. Most of the content focuses on culture, music, and art, but there are a few political pieces too. There seems to be some time lag between individual posts, but presumably that will change. See what you think.
Reader Marellus also sent in a comment pointing out a website post that he discovered. It’s worth reading, if only for seeing how people keep missing the point. Here’s how it starts:
“Japan’s attempt to restimulate the economy through consumer spending (something that has so far failed in the US and everywhere else courtesy of a third consecutive year of global household sector deleveraging) appears to be going horribly wrong. Exhibit A: ‘Japanese safe maker Eiko Co. says sales jumped more than 40 percent after the March earthquake and tsunami, a sign that consumers will hoard more cash at home and restrain an economic rebound…’.”
No, safe sales do not mean that “consumers will hoard more cash at home and restrain an economic rebound”. The temporary increase is one of many event-specific responses to the Tohoku earthquake that is an example of the way people everywhere respond emotionally to shocking occurrences. It won’t be much longer before safe sales return to normal levels, when the memory fades and they again get used to living without catastrophic natural disasters.
In fact, a passage quoted later in the piece explains that the Japanese have always been more likely to stash their cash at home than people elsewhere:
“In the devastated northeastern Tohoku region, safes recovered since the data have indicated the scale of tansu yokin. In Ishinomaki, a stricken city, about 700 are stored at a police station, officer Yoshiaki Fukushima said. Officials there have reports of another 750 missing, claimed to contain an average of about one million yen each.
“’I was stunned by the amount of cash I was seeing,’ said Fukushima, who found as much as 70 million yen ($870,000) in one of the boxes. In another case, he couldn’t get the bills out because they were swollen with water.
“At least 500 are at a police station in Kesennuma city, and one contained as much as 40 million yen in cash, said Hiroki Sato, a local police commissioner…”
Bloomberg explains that tansu yokin is “keeping mattress money”. The phrase literally means “savings in a chest of drawers”.
But the real problem is what other people say in that Bloomberg article:
“While output is bouncing back, weak demand may slow an economic recovery as officials struggle to boost consumer spending after decades of deflation.
“’It’s absolutely essential for Japan to get people to spend,’ said Robert Feldman, head of Japan economic research at Morgan Stanley in Tokyo. ‘Weakness in consumer spending is one of the reasons for the economy contracting — it’s crucial for the government and the Bank of Japan to work together properly to end deflation’.”
Ugh — as in ugly. What does it take for a “head of economic research” to do some research on the failures of the Keynesian philosophy of the government getting the people to spend? You know – the ideas of John Maynard Keynes, the man who disliked thrift and savings so much, he wrote:
“The love of money as a possession -as distinguished from the love of money as a means to the enjoyments and realities of life -will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.”
(One wonders how much of his philosophy is derived from a dislike of homo sapiens. He also wrote that eugenics was “the most important, significant, and, I would add, genuine branch of sociology which exists”. But I digress.)
The author of the post linked here, Tyler Durden, starts with the observation that attempts to stimulate consumer spending have failed everywhere. It will never occur to some people that instead of focusing on what is termed “nominal expenditures”, or the amount of money circulating in the economy, attention should be given to the production of goods and services useful to consumers.
Only one factor can be counted on to drive economic growth, and consumer spending ain’t it. Rather, it is private sector net capital investment. Here’s a discussion of consumer spending and the American economy, but it applies just as well to Japan:
“It must be a condition of employment that a journalist who writes about the current recession include in his article the statement, ‘consumption makes up more than two-thirds of the economy’ or ‘consumption spending accounts for 70 percent of GDP.’ This seemingly simple, factual statement, however, is nearly always intended to carry some explanatory weight, and on occasion the writer spells out this explanation by adding a statement such as, ‘unless consumers begin to open their wallets and spend more, recovery from the current recession will be impossible.”… One does not need a Ph.D. in economics, however, to discover that something must be wrong with this way of thinking about prosperity and recession…As every student of the business cycle learns early on, the most variable part of aggregate expenditure is private investment…The ups and downs of the business cycle are obviously driven not by consumption spending, but by investment spending….
“The vulgar Keynesian focus on consumption unfortunately tempts politicians to approve ‘stimulus’ measures aimed at pumping up this part of total spending…Such arguments, however, fail to grasp the true nature of the boom-bust cycle, especially the central role of investment spending in driving it—and, more important, in driving the long-run growth of real output that translates into a rising standard of living for the general public. Politicians, if they truly wish to promote genuine, sustainable recovery and long-run economic growth, need to focus on actions that will contribute to a revival of private investment, not on pumping up consumption.”
This will be ignored by the leadership of both the Democratic Party and the Liberal Democratic Party, who would rather promote genuine prosperity by raising taxes. Some of them favor greater governmental cash confiscation because the Finance Ministry’s bureaucratic lobbyists have blown so much smoke in their direction they’ve become convinced it’s the best way to solve Japan’s economic problems — despite one lost decade already — and others because they’re Big Government social democrats, regardless of party label. As we’ve seen before, they’re loathe to let a crisis go to waste, and view the recovery/reconstruction of the Tohoku region as an excellent opportunity to hike tax rates, even though, as we’ve also seen before, there are plenty of good suggestions to fund those efforts without a tax increase. But that would require prying money out of the government’s clenched fist.
Meanwhile, the natives are still restless in China. It does not seem to be as if this will be the Chinese version of the Summer of Love, as this article suggests:
“Beijing remains terrified that the fast-rising tally of localised protests could be linked via mobile social networking and Twitter-style websites.
“Some Chinese academics believe that the true number of protests in the country last year was more than 180,000. After several big clashes in recent weeks the names of half a dozen big towns have been eradicated from the search engines of the country’s most popular microblogging sites.
“One of the ‘disappeared’ cities, Dongguan, is the fourth-largest producer of exports in the country and has a population only slightly smaller than London’s.
“The recent violence, however, has exposed the limits of the government’s ability to control the urban population using internet censorship, (which) party leaders refer to as ‘social management’.”
I’d like to know what term they use to refer to their one-child policy, a close relative of eugenics that would surely have met with Keynes’s approval. (A century ago the fascisto-progressives thought eugenics was an important element of “social control”. “Management” is a more appropriate euphemism for our bathetic age.) But then Keynes also thought that private sector capital investment and government deficits had the same effect.
One more from John Maynard
From John Maynard Keynes’s introduction to the 1936 German edition of the General Theory:
“The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state (eines totalen Staates) than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire. This is one of the reasons that justifies the fact that I call my theory a general theory. Since it is based on fewer hypotheses than the orthodox theory, it can accommodate itself all the easier to a wider field of varying conditions.”
A reminder to readers who want to send in links and story ideas — please keep sending them in, I read them all, but send them to the e-mail address as explained on the right sidebar.
Apropos of nothing, this has got to be in the Global Top 10 of classic music videos. The song is called ส้ม อมรา, and it’s performed by Thai singer Play Girl with rapper Joey Boy. PG can come over to my house and play anytime she wants, or I’ll go over to hers. I’m flexible and I can bring the toys. The first game we could play is rub-a-dub-dub in the tub to see if that tattoo on her left shoulder washes off or is real. If it’s the latter, that won’t be what I’ll hold against her.
If you don’t care for what happens at any particular point in the video, wait two or three seconds. Something else will be happening by then.