So how is globalization of capitalism good for the world?

Discussion in 'Off-Topic' started by Syterion, Jan 16, 2010.

  1. Cutlass

    Cutlass The Man Who Wasn't There.

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    It is extremely rare for a person to act completely rationally. How can you say that normal human behavior is 'not even imaginable'?
     
  2. Verbose

    Verbose Deity

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    And the concept of rational apparently.
     
  3. Cutlass

    Cutlass The Man Who Wasn't There.

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    So you think that people are rational in that they act on subjective feelings?
     
  4. SS-18 ICBM

    SS-18 ICBM Oscillator

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    But not acting against nations that are an integral part of your economy who violate human rights and international law is realpolitik.
     
  5. Racsoviale

    Racsoviale Smoke me a kipper!

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    I know, I just thought my post came of a little too naive.
     
  6. BasketCase

    BasketCase Username sez it all

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    Valuation is subjective but not arbitrary. A market price is indeed a sum of valuations, but is still not arbitrary.

    You will never see a functional Lotus Esprit on sale for ten bucks; you will never see an Intel Core i7 for five bucks; you will never see Levis jeans on sale for one dollar (or a million dollars, for that matter); you will never see Hostess Twinkies for a penny. Because people dumb enough to do the above things go out of business faster than you can say "BasketCase is a basket case" (which actually happens a lot in here).

    Market prices are not arbitrary. Times triple infinity.

    Edit: in case the topic we were arguing got forgotten:
    I was just trying to help out, and look what happens. :D
     
  7. SpiritWolf

    SpiritWolf Warlord

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  8. SS-18 ICBM

    SS-18 ICBM Oscillator

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    Well, that depends on the "real value" of the money. The denomination known as a "dollar" might have been worth much more before.
     
  9. JerichoHill

    JerichoHill Bedrock of Knowledge

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    That's not true. I haggle alot. In fact, if you pick up the Washington Post this Sunday I will be in a feature article on haggling.
     
  10. fugazi

    fugazi King

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    Awesome, but you know that many stores have a no-haggle policy right? I like haggling when I'm at the market or abroad, but if I tried doing it in a fashion store here they'd just laugh at me. At the same, you often can haggle down prices at music stores. You can get a few simbals or a stool for free with that drumkit you bought, etc. So it seems that you just need to know the right moments and opportunities for haggling. Alas, that's a bit offtopic.

    Capitalism and globalisation are good things. Problems only arise when the group of suppliers gets too little, and when countries or unions of countries start putting in restricting import and export policies and taxes. How can the EU claim to be a supporter of Free Market thinking when we are actively closing down the free market? An easy example of this is the relationship with Africa. In capitalism, a big threat needs to be tackled down by many smaller ones. That ain't happening right now. Or maybe those big ones are simply too big..
     
  11. BasketCase

    BasketCase Username sez it all

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    Have you ever haggled a box of Twinkies for a penny? A pair of jeans for ten cents? A car for twenty bucks?

    Didn't think so. The system isn't 10,000% precise. It doesn't have to be. There are definite limits on what you can haggle--unless you manage to haggle with a complete idiot, but as I said earlier on, people who are idiots lose their goods very quickly and do not haggle for long.

    The dollar is as good a measure as any of how much stuff a person has--and as long as you stay within the United States, it will work perfectly for the definition I provided: there are many people in the U.S. (again, NOT including myself) who think every person in the U.S. should get the same number of dollars, and who define "greed" as having more than your fair share of dollars.
     
  12. El_Machinae

    El_Machinae Colour vision since 2018 Retired Moderator

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    No, it's not dumping. But it's close. The Walmart opens in a location where it will negatively impact the profits of the other Walmart store, because it's competing with itself. This causes a clear-cutting of competitors within its radius. This, in itself, it's entirely bad.

    However, the 'competitive' store can then be shut down after an effective clear-cutting, and the consumers will then be dependent upon the remaining Walmart. In the end, the affected consumers might very well end up paying more for their goods, once you factor in travel time, etc.
     
  13. neutrino

    neutrino Warlord

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    It feels like this thread is more about the growing inequality.

    1. Perhaps the type of inequality that has the most effect on each individuals: There has been literatures written about this and it is also known as the 'Superstar Effect'. For example, you survey one particular economic sector, such as the law firms. On one hand, there are a handful of attorneys who takes in the lion's share of income, but there are far many more attorneys out there who makes far less. The same thing within pro sports: Only a handful of stars with huge contracts but there are many more who makes the league minimum or a bit higher. Still the same phenomenon at work in the entertainment industry: While there is Jay Leno, there are far larger number of local comedy clubs and their income pales in comparison. It goes on and on .... and also includes the disparity within the realm of business executives.

    2. Those handful who takes in the lion's share have acquired fame, and fame translates into loads of $$$. Not surprisingly, they have the national and even global media reach. They are the ones in the best position to take advantage of market expansion, courtesy of globalization.

    3. Basically, these rare ones carry very stiff price tag, because the marketplace perceive them at very high value. Whatever a person takes in is more or less whatever the marketplace is willing to pay.

    4. Several forces at work: a) Globalization which means expansion of potential market (which is more beneficial to big players); b) Erosion of traditional manufacturing sector (we use less land, labor, and capital to produce one 'production unit' today compared to yesterday), c) Growth of the service sector (much weaker labor union compared to traditional manufacturing sector, plus even greater disparity in types of service jobs).

    Anyway .... the marketplace ...

    1. The market is neither good nor evil; it is merely a large social mechanism involved in the game of maximizing return on investment.

    2. Traditionally, each market player has been considered rational, insofar as the pursuit of self-interest is concerned. However, after series of financial and economic scandals and disasters, we may have a newer crop of economists questioning this belief. (I think the first one to write about it in detail was Keynes ... 'the animal spirit' which was the term he used in his papers!) At the least, we may not be as rational as we think we are? (Which gets into issues like 'the Tragedy of the Commons' and 'the Moral Hazard'.)

    Globalization ... not a new concept after all ...

    1. The pre-WW1 economies were quite globalized. Two world wars and series of economic and political crises crippled pre-WW1 variant. This level of globalization was not reached back until the '70s.

    2. Pre-WW1 Great Britain was the most globalized: As much as 40% of its GDP was in exports. No one has come close to this level ever since. Today's UK is nowhere as export-centric, and neither the US. (In case of today's US, only about 13% of its GDP is involved in exports - imports.)

    3. While there has been a lot of talk about globalization, it is not quite the way it appears to be. Pre-20th century Chicago was heavily involved in trades. (Chicago was the key to the US trade back then, as it was the focal point of great rail network spreading out into the American heartland, then it connects to the East Coast.) Perhaps as much as 40% of its workforce consisted of manufacturing, butchery, and transportation jobs. A much smaller fraction is involved in these jobs today. A 21st century metropolis like Los Angeles has only a small fraction of its workforce involved in global trade. The great majority of the workforce deal with the locals, not the rest of the world: Restaurants, hair salons, grocery stores, etc.. The most significant manufacturing job involving global trade in the LA area has been aircraft manufacturing, but it has been on decline since the end of WW2 and especially so after the end of the Cold War.
     
  14. Masada

    Masada Koi-san!

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    Cross competition isn't close to dumping. There's a difference between operating below your cost curve, which could get you sent before the corporate regulator in most western countries and simply out-competing everyone by dint of your lower cost curve and capturing market share by running some stores at an (often) persistent loss.

    You often end up with that same process happening in the absence of the second store as local retailers and larger chain stores bail out in the face of the lower price competition. This merely accentuates the trend.

    I hardly think that's a new occurrence, or indeed that it has been taught past introductory economics for the last decade at least. I don't think any of my lecturers believed that or taught it seriously either.

    That goes back even before Keynes, certainly as far back as the proto-Austraians and even proto-Keynesians, just saying.
     
  15. Flying Pig

    Flying Pig Utrinque Paratus Retired Moderator

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    Free trade, as a rule, means that the people who can make the best goods for the lowest prices get the customers. This isn't a problem when there is only one country, in fact it's a good thing since it means that in total the country will make more profit and thus more tax money. However, in a globalised system like we have now there is a very real risk of a whole country losing out to foreign competition (as the UK's companies seem to have all done recently) and so in my view some protectionist measures are needed.
     
  16. civ_king

    civ_king Deus Caritas Est

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    can you PM me a link of the article?
     
  17. Cutlass

    Cutlass The Man Who Wasn't There.

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    The problems is that wages always fall more than price does. That's inevitable. So the low wage people in the high wage nations always lose until the job market changes to get them new jobs.
     
  18. BasketCase

    BasketCase Username sez it all

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    How does that change anything?? Within a single country, the people who make the best goods for the lowest prices get the customers--and everybdy else making the same item loses out.

    Foreign competition, domestic competition. It's all people. Somebody is going to lose out somewhere. Without free trade, however, EVERYBODY loses out because stuff is being made by complete idiots and a huge percentage of human labor is wasted.
     
  19. Arwon

    Arwon

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    The problem there is the whole comparative advantage thing, which is the world's least intuitive important economic concept, near as I can tell. It's not actually technically possible for a country to be "uncompetitive in everything" vis a vis another.

    Even if one country (A) has absolute advantage in everything (makes everything better and cheaper and with less opportunity costs), it's still more efficient for the universally disadvantaged country (B) to produce whatever it does best and sell that. And it's better for country A to forgo making that product and import it instead while making something else - even if A got absolute advantage in everything, it still has relative opportunity costs between products. There's something it makes more efficiently than something else, and so it should focus on that instead. What this means is it's impossible to actually be "uncompetitive in everything", as unintuitive as that sounds.

    There are of course other problems. A bigger problem is, I guess, only being competitive in industries which aren't real conducive to development and becoming richer. Agriculture and mining seems to not enrich many countries which are actually quite efficient at it.

    Then there's structural problems - a country may be efficient in something, but that says nothing about the distribution of power or income in that country. A lot of decolonised countries are inegalitarian monocultures because colonial policies deliberately created that situation, and then the local elites just inherited that land and industrial situation.

    Then there's the oil curse which is related to this, but the result of the discovery of a resource as opposed to a colonial legacy. The risk there is that one really efficient and productive sector makes all the others less efficient and productive.

    Of course, protectionist measures can also be used to build comparative advantage in a particular sector.
     
  20. Gustave5436

    Gustave5436 Emperor

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    Europe and the US are rapidly losing all of their industry to overseas labor, which is cheaper not because of the manner it is done, but in spite of it. Superior American/European factories are far more efficient than those in developing countries, but since trade unions have so little influence in them (thanks, in part, to government repression in many places, such as the PRC), labor costs are significantly lower.

    We lose out by losing our industrial power, they lose out by sending all the goods they produce to us. If, instead, we produced everything we could locally and only traded for those we could not otherwise procure (of more import for smaller nations than the US, since they are statistically more likely to lack e.g. uranium reserves), we would have high-paying manufacturing jobs supplying all the goods we need, whilst developing countries could put their productive energies towards further development, rather than sustaining our de-industrialization.
     

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