by Ramin Mazaheri for The Saker Blog
With the recently released data that the Eurozone’s 2017 growth rate was 2.5%, the Eurozone has officially achieved a “lost decade”: its average annual growth rate from 2008 to 2017 was 0.6%.
Wow…that’s bad. That’s even worse than “Japan Lost Score” bad.
Japan’s two “lost decades” both actually surpassed the Eurozone’s recent performance:
Japan 1991-2000: 1.4% growth rate.
Japan 2001-2010: 0.7% growth rate.
Computing these numbers, in the Internet age, required about 10 minutes of searching and the use of 4th-grade-level math.
Nobody doubts that Japan had a “Lost Score”, but this is likely the first article which has clearly stated that one “lost decade” is forever in the books for the Eurozone. How is that possible, when the mainstream media had hundreds of opportunities to put two and two together?
The message from the English-Language mainstream media was – invariably, universally, almost amazing in its apparent conspiratorial coordination/delusion – “Eurozone growth hits highest figure in a decade.”
Essentially: who cares about 2008-2016? Don’t live in the past – 2017 was a decent performance, so focus on that!
It’s as if – after 40 years of neoliberal economics – 2017 was finally the year that wealth started trickling down for good!
Yeah, well…the 99% cares about 2008-2016, so shame on the mainstream media for not knowing how to report on economics with even a modicum of responsibility towards the average person.
Am I being unfair?
Is economic growth rate the best way to determine if there is a “lost decade”, or not?
A fair question, as there is no agreed-upon definition.
Certainly, capitalist media is more obsessed with annual GDP growth than any other statistic, and the Eurozone is as (corrupt, undemocratic) capitalistic a bloc which can be found. Therefore, I am doing them a favor by playing by their preferred measurement.
Frankly…I think that pro-capitalists should just accept my use of growth rate and not push their luck, because it looks much worse with more appropriate gauges.
GDP per capita is a slightly better statistic than GDP, and it should also be close to a capitalist’s tiny heart: The Eurozone average was €29,400 in 2008, and soared by some €33 a year all the way to €29,700 in 2016. That is 0.1% annual growth. Of course, with year after year of austerity in the Eurozone – which passes the buck for social services from the government to the taxpayer – it’s laughable that €33 more per year was enough for the average person to stay afloat.
What about nominal GDP, which is better than real GDP because it includes inflation? It went from €14.1 trillion in 2008 all the way down to €11.9 trillion in 2016. That’s a whopping 16% drop, ouch!
How about another favorite capitalist instrument, debt-to-GDP ratio. It’s a stupid statistic because it makes no distinction between good debt (education, R&D, more efficient infrastructure, etc.) and bad debt (banker bailouts, compound interest payments, etc.), but let’s use it anyway because the Eurozone’s capitalists are getting hammered: The bloc’s debt-to-GDP ratio stood at 68.6% in 2008 and – despite all those years of austerity for all us everyday, profligate Eurozone sinners – has ballooned up to 89.2% in 2016. Certainly not a lost decade for the bankers, that’s for sure.
Yes, I have not compiled all the 2017 data for these statistics, but (spoiler alert) there will not be a miracle which magically pulls all these numbers in the right direction, or even out of the red in many cases…even though that is rather how the mainstream media reported on the “banner year” of 2017, LOL!!!
Journalists used to know good GDP rates from bad GDP rates
(I’ll tell you what happened: they started firing the experienced, bold 50+ year old journalists who starting talking about pensions and replaced them with cheap, dumb 25-year olds….)
In my work as a daily reporter I occasionally have to interview high financiers. I have recently taking to asking them: “Is meager 2% growth on a long-term basis now acceptable?” And the answer was, invariably, “Sure it is.”
No it’s not. But high finance does not care if growth remains slow because their sectors – finance, insurance, real estate (the FIRE sector) – have been completely untethered from the economy thanks to the deregulation of neoliberalism. I may as well be asking them if 3% growth in green tea production in Shangdong Province is good enough for them – they do NOT care because it is not relevant to their world.
All they care about right now is that Quantitative Easing/bailouts go to their FIRE sector and not to improving the life of the average citizen…and we all know they are. Bonds, stocks, real estate, luxury goods/valuables like Da Vinci paintings – are all at insanely record highs…which is proof that they are truly untethered to the real economy of economic growth rates.
Sadly, these high financiers own the private media in the Eurozone. And they now also own Europe’s governments. Many mainstream journalists have no idea about these realities…the ones that do know they cannot really talk about them if they want to keep their job.
Even though it’s the best rate in the last decade, 2017’s 2.5% is, quite simply, not good enough…and we used to all know that in journalism. (Sidebar: It won’t even be sustained at that level – Eurozone contraction to 2.4% predicted for 2018.)
In fact, 2.5% used to be considered near-recession-level growth. From 1975-1987 the US, UK, Germany and France all had between 1.8-2.5% annual average growth, and this era is universally considered a recession era.
France gives us a good example of why their 1.9% – which had some (rather clueless) journalists wondering who should “claim the credit” – is similarly not good enough: France has had near-record unemployment for years, and economists say that 1.5% growth is needed to even start creating jobs. France surpassed 1.5% and yet their unemployment rolls still increased by 3% in 2017 (nobody in France besides me reported that correctly either, LOL).
Yes, 2.5% growth is actually very weak! It is barely maintenance level, and I mean: barely enough to maintain infrastructure, and certainly not enough to build new infrastructure. All one has to do is look around the countries of the West over the last few decades to see that this is true.
What is a good enough rate?
Well, the old people know it, because they’ve seen it: For example, from 1945-1975 France’s growth rate dipped below 4% in less than a handful of years.
It’s a common ploy to blame the post-1975 Western economic slowdown on increased oil prices, but if you can show me proof that oil prices alone are responsible for taking a combined 100 points off a nation’s GDP (2.5 points annually for 40 years), then please enlighten me in the comments section below.
The real reason is not the higher price of oil and those damned Muslims – the reason is the neoliberal agenda, which began to be implemented starting around 1980. But this is something which can never be said in the mainstream media, because they couldn’t even properly define what “neoliberalism” is if you asked them – all they know is TINA: there is no alternative. And they may not be able to do 4th-grade math. (Also, blaming Muslims sells more papers/gets more viewers.)
When can we agree that capitalism produces lower growth rates than socialism?
What is a rate which should be expected?
As a socialist and anti-capitalist, I point to a much different model. One which relies on central planning, which avoids the rocky crises that are guaranteed in capitalism, which aims to uplift the poorest first, which considers speculation of all kinds immoral, which sees capitalism only as a means to end and never the end – I point to the economic model of socialism, and I suggest simply looking at the facts in an intelligent manner.
Let’s start with the elephant in the room, for which you have no explanation other than “they are secret capitalists” – China:
During the Mao era of 1949-1978 – or rather, the “early Chinese socialist era”, because Mao was no authoritarian ruler but the leader in a democratic-socialist model – China’s growth rate was 7% annually. That was on par with the US over their same blockbuster era, and despite being subject to a brutal blockade, and also despite not having all of the cultural and financial advantages already enjoyed by the US. From 1978 to 2012, despite more international opposition and the West’s two long recession eras which slowed global growth, China centrally-planned their way to 9.4% annually.
The early Chinese socialist era was characterized by a superb Gini coefficient, which measures income inequality levels in a society. The post-Mao era has seen a worsened Gini coefficient, yes, but socialist planning has led to the massive lifting of the nation’s poorest thanks to a 17% increase in manufacturing wages since 2002. Neoliberalism has ensured that not only are the West’s wages not exceeding their paltry annual economic growth rate, they have remained flat or falling for 4 decades (except for the 1%). Thus, China created the world’s largest middle class just as the West’s middle class lost their share of the pie.
I have China’s growth rate from 2008-2017 at 7.4%. I thought capitalists were supposed to make more money, goods and services than inefficient, lazy socialists?
“Ah, but China is different,” you’ll say. “Why China’s GDP Growth Rate Tells Us Nothing About Its Economy”, and its many variations, can be found in many a capitalist media like Fortune (skip to 3:35 for a Chinese person’s view on why that headline is nonsense – Fortune’s journalists don’t even read their own bull!). LOL, should we now hold our breath waiting for an article titled, “Why the Eurozone’s GDP Growth Rate Tells Us Nothing About Its Economy” from Fortune?
You capitalists never want to play by the rules, even when I use your rules! There’s no winning with you guys, unless you win, LOL! But, yes, the continent of China is different: it is well-run.
Iran is different, too. They have what I call an “Iranian Islamic Socialist” model, and they have produced 3% growth over the last 10 years, which is 5 times better than the Eurozone. And Iran’s growth has come despite the incredibly immoral (and anti-capitalist) strengthening of a truly murderous international blockade which Iran does not have the resources to combat anywhere as much as China did.
Cuba is another country which is different, and which has even less resources than Iran to combat an incredibly immoral and truly murderous international blockade…and they have averaged 2.8% growth over the last 10 years.
Take the foreign-imposed shackles off Iran and Cuba – which are expressly designed to create economic hardship, foment civil war, and re-install imperialist puppets – and there’s little doubt that their economic philosophies would have led them up to China’s stratosphere.
The superiority of the socialist economic model is obvious to all, except to the capitalist 1%. And to the media, which they own…which is probably why nobody is talking about the Eurozone’s “Lost Decade”.
But it’s already done.
I predict the term “Lost Decade” will be used for the Eurozone, and not just Japan, once the Eurozone Sovereign Debt Crisis reappears. The irony of the mainstream media’s bad reporting is that it is leading them to openly encourage the European Central Bank to end its policy of Quantitive Easing. However, QE has to end this fall, per the Eurozone’s rules, and per the fact that they will have literally run out of bonds to buy.
Last fall I published a 7-part, 130-page examination of what will happen when the ECB stops QE (all 7 links are at the bottom of this article). You can even skip to the middle, to part 4 – “The Eurozone: still as primed for collapse as ever” – but for those who don’t have time I will sum it up briefly here:
Because the ECB’s QE has not created economic growth in the “real economy” (as evidenced by this official “lost decade” of poor annual growth rates) and has instead fuelled record bubbles in stocks, bonds and real estate (the domain of the 1%), I conclude that the Eurozone, the world’s largest macro-economy, is no fundamentally different from where it was at during the peak of the European Sovereign Debt Crisis in 2012. Indeed, QE has only paid for a temporary stay of execution from the 1% and the speculators, but the reckoning is coming. This reckoning is compounded by the atrocious, truly murderous policies of austerity and QE, which have been forced bloc-wide since 2012. Sadly, things are actually much worse in the Eurozone than in 2012, despite the absurd propaganda that 2.5% is a sign of great economic health. When bond rates start to rise this fall it will affect everyone, but the capitalist countries the most of all.
There is central planning in capitalism – it is done by the 1%. In the various forms of socialism – Chinese, Cuban, Iranian, etc. – whatever you may thank of those countries, at least their planning is not done by the 1%, and their superior results are obvious.
Ramin Mazaheri is the chief correspondent in Paris for PressTV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. His work has appeared in various journals, magazines and websites, as well as on radio and television. He can be reached on Facebook.
What a wonderful article. I like many things about Mazaheri’s splendid writing style, but his perfect grasp of economics is the key to the substance of his articles that show socialism as the better way.
I shall bookmark this article as a reference for showing me the obvious thing I was missing – that other countries can challenge the neoliberal capitalist doctrine simply by their performance. We don’t have to defeat or overturn predatory capitalism in its own terms, we simply point to the better systems.
What a great hope this brings to the battlefield.
Ramin Mazaheri, keep ’em coming!
still they have to watch Uncle Satan – according to this book by Naomi Klein – it was because countries like Chile and Argentina were quite successful (but socialist I think) that the US of AIPAC initiated their CIA-sponsored installation of military dictatorship with all the people killed etc. Even Mercedes and Ford had their own private jails there to torture and kill prominent union members. I went to that museum in Buenos Aires recently. It was the Catholic church that opened the door for Americans to infiltrate (they agreed to open a western university to teach Friedman-inspired crony capitalism – no other university there was interested).
Americans like to destroy any evidence of better, more humane ways – that’s how totalitarians and psychopaths roll.
Could you please share what was happened with Russia?
https://tradingeconomics.com/russia/gdp-growth-annual from this site it seems that Russia is not performing as well as eurozone, is it Russia not socialist?
“Having said all this, strong and sustained growth of the sort of which the Russian economy is fully capable can only come when real interest rates fall to more realistic levels.
I have been making this point ever since 2015, and following what happened in 2017 that fact ought to be self-evident.
To reiterate, real interest rates of more than 5% (actually currently around 7-10%) are simply incompatible with sustained increases in demand and investment of the sort which are needed if the economy is to grow strongly.
This is especially so given that no support for demand is coming from the fiscal side, with the government planning to run a budget surplus this year.
Whether this fact will finally be acknowledged within the government this year remains to be seen.
What I would say is that if Russia does face sustained deflation this summer then the predicted cuts of 2% in the Central Bank’s key rate this year will be nowhere near enough. “
The Russian CB did exactly the right thing in 08 and 2014. The CB is supposed to just take the edge off of big moves. Its not supposed to dictate exange and interest rates. That’s what they do in the US and Japan and that’s why those societies are crumbling and will face what the USSR faced in the 80’s and 90’s soon
Russia is not Socialist since the 90s
One of the things I love about western propaganda is this constant reinforcement of the notion that Russia is still socialist or even still communist.
Back after the fall of the Soviet Union (and yes, it did fall), Yeltsin and the Russian leaders were convinced to let in a group known as ‘the Harvard boys’ who gave the awful advice that the best thing for Russia would be to do ‘shock therapy’ and convert to capitalism with very little of a transition period.
Most of the Russian ‘oligarchs’ date to this period, as they were able to buy sections of state owned enterprises for a fraction of what they were worth.
The end result was a disaster for the Russian people as a whole. Standards of living and even life expectency fell noticeably. For the western pop-culture view of Russia, this was the era of the Russian gangster.
In the last decade or so, Mr. Putin has reversed this economic collapse and led a general recovery of the Russian economy from the ‘shock therapy’. This is one of the reasons why Putin is rather popular in Russia, as he turned the economy around during his time in power from a declining wreck resulting from the shock therapy to a somewhat growing (even under sanctions/blockade) economy where life is getting better.
So, no Russia is not a ‘socialist’ nation. Not even close. Its a capitalist economy that was originally designed by a bunch of Harvard advisers.
Exactly. Russia, unfortunately, is no longer socialist. Growth rates in the Soviet Union were consistently higher 5% I believe.
As the governing elites in the West threw the notion of the General Well-being (I won’t use the word “welfare” because that’s a word too effective at getting the slipping middle class to blame the poor….instead of their actual elite looters…..LOL) under the bus, their rate of enrichment suddenly went off the charts.
The party-privileged governing elites in the Soviet Union gasped in astonishment and envy, and one fine day, realized they could never keep up, the way things were going, and declared “We are all capitalists now!”
I think there are variants of capitalism, communism and socialism that work and don’t work, to varying degrees depending on real intent to raise the productivity of labor….or to loot labor. What they call themselves is a lot less important than what the intent and competency to fulfill the intent really are.
Well said Bro 93, all these definitions have become too general.
The word Capitalist is sprayed like acid throughout this good article and because the authors view of it is so obvious it behoves to point out that there is no real “Capitalism” as defined, in the world today.
What he is referring to is more akin to “Debtism” (my name for it) and it is more because of this ridiculous burden and the outrageous wish to “have tomorrow today” that a system not designed for this is not working.
The middlemen have to go; Money has to become HONEST again. Then all these metrics will achieve the meaninglessness they deserve.
Another great piece, Mr Mazaheri, your last, short paragraph says it all.
I think the author has deep flaws in his economic understanding and is unaware of the so called ‘catch up effect’ or great convergence or he deliberately blends it out.
One example: How has Mao managed to achieve such growth rates, from a rural, backward and war ravaged country in 1949 to 1976? The author first criticizes GDP as a measure of economic well-being when applied to the EU but then uses the same number to show how Mao’s oppressive regime produced miracle growth numbers. In 1958, the year the disastrous ‘Great Leap Forward’ was initiated by the ‘Socialist Commrade Mao’, China published 21% GDP growth, an astonishingly high figure. Even the next year the country reported 9% growth from the previous year. I think I do not need to inform readers about the human sacrifices this ‘experiment’ caused all over China.
Today’s financialized rentier capitalism is at the heart of our problems in the west, however, this does not justify Cuban or Maoist totalitarian rule. Also the author seems to equate Socialism with Communism, while both political currents have their roots in the same movement from the mid 19th century, they markedly diverged in the early 20th century.
What is needed is the right distribution of control and contribution in our economic system, between market actors and the state. Productive, innovative industries where there is little to no rent to be had should be left to entrepreneurs and market actors. Innovation cannot be forcibly created or only to a very limited extend (Soviet Union managed to do this in the military/space sphere). Rent providing industries such as resource extraction, control over land, real estate, finance and insurance all need to be state controlled and taxed accordingly. These industries add no real value to the progress and advancement of society, yet extract a disproportionate amount of rent from it.
I highly recommend the author familiarize himself with Michael Hudson who has studied human economic history and published many books on the subject matter. I suspect Hudson’s understanding of Socialism is markedly different from the one this author is referring to.
totally devout of any content, just using the usual catch words: “totalitarian”, “oppressive”, convincingly forgetting the ultimate oppressors and exploiters are the soc called West who can only achieve growth via exploitation. The facts are in and simple: Communism works, capitalism only works via exploitation and human misery.
I have a problem with anti EU economics articles. Because unlike the Anglo dual debtor scum (US UK Canada Australia) Europe, the Euro zone is a net CREDITOR with no trade deficit. The EU has 1 trillion plus in FX reserves and 10k tons of gold. Under 90% debt to GDP. Germany, Netherlands , even Italy and Spain recorded trade surpluses in the last 12 months.
The USA hasn’t recorded a trade surplus since the Ford admin. The USA has 120 billion in FX reserves. The USA is an utter joke. A fraud of an economy.
@Paulv. According to this link USA holds a bit more gold than the EU’s 10kton, and they each hold about 6 times more than Russia or China.
So why is USA “a fraud” and EU not; is it only the trade surplus?
Can the USA actually show its gold reserves? IIRC, no.
I do remember a rather noticeable case a couple of years ago where Germany told the US Fed that they wanted their gold (stored in Fed faults) returned to Germany. The US Fed was rather embarrassed by this request, because they could not fulfill it. At least not immediately. They had to tell Germany something like “give us a couple of years” to get the gold that Germany already owned and wanted returned.
That example does not paint a picture of a USA with large gold reserves.
Yes Germany called in its gold from the US. Then Libya and Ukraine’s gold went missing.
Trade surplus is everything ! You are either a contributor to the stock of capital in the world or you are not. The EU is. Russia is. China is. The US is not.
The US is a black hole that sucks in and destroys real capital and goods continuously. And it is only this way because of a fluke at Bretton Woods.
The Soviets, the French and the British opposed the USD as a reserve currency. They wanted the Bancor. What we understand as economics today, is unlike anything in history. The biggest creditors in the world normally rule the world. The Dutch did. Then the Brits. The Brits were the worlds biggest creditors in 1914. But today, the worlds biggest debtor rules the world. For now. As I said, it was a fluke. This debtor’s empire is an aberration.
Today China is the biggest creditor in the world. And Russia is actually number 6. Not bad. And one of these times, China is going to have to pull the plug on the US. After this, economics will get back to normal and normal is, whoever produces more than they consume, has commensurate wealth and power. And that’s all in the trade balance.
Predatory commerce is never good for anybody. I found predatory behavior behind socialism, liberalism and any other ism. In front of those ism’s are politicians and behind their mouthpieces the journalists. I trust neither.
Bottom line, human values seems a difficult concept for humans let alone agree upon. I did the political merry go round and it took me 60 years to understand that politics amounts to nothing, values do.
Seems Western world is bent on throwing values under the bus and becoming more inhuman inch per inch.
@Paulv. PS this link gives 10Year-Av GDP growth pa. Top with 8%pa upwards include China and India; midd0le 2-5%pa include Australia, Pakistan and ME countries; bottom 0-2% include USA, Russia and EU countries, Iceland, Switzerland, Iran, Canada, South Africa and Brazil.
I never understood economics. All I know is what my Professor in the School of Mines summed up from vast experience: he had seen modern mines and antiquated mines, automated mines and mines driven by slave labour, mines for all sorts of materials in all parts of the world; with only one thing in common: they all seemed to be making a living.
My take on the US economy is this.
Too much money is being stolen from an otherwise productive economy.
The two main thiefs are …. Wall Street, which rakes in tons of money in a game they rigged in favor of themselves and produces nothing of value.
The second thief is the US military, which takes over a $trillion a year as skim off the top of the productive economy.
If someone would take a bullwhip to those thieves and drive them from the temple, then US citizens would enjoy life in a wealthy and productive economy.
@Anon (the one with the bullwhip). Agreed. “Thou shalt not steal (Thou shalt not even skim)” — whatever thy political system.
dear mr. Mazaheri,
I am curious on your opinion on the degrowth concept. Did you write anything about that? Or -if not- could you link something that corresponds to your ideas?
As Paul Revere Abbey said:
“Capitalism is great in theory, but it just doesn’t work.”
Thanks, RM, and great job.
you quoted Edward Abbey’s father! Comrade! And I don’t mean the facetious use of “comrade” which capitalists use to parody socialists; I mean “comrade” genuinely. Anyone who reads Edward Abbey well enough to quote his father is a comrade of mine. Thank you.
Abbey’s writing is a great informal of leftism, libertarianism, and environmentalism.
Yes, Abbey’s writings are as you say. I owe him a great educational debt; he was so generous with his praise of other authors and artists, to which he introduced his readers: B.Traven, Peter Mathiessen, Joseph Wood Krutch, John de Puy, and many others.
I met him just once, in 1988 in Prescott AZ, where he gave a public reading from The Fool’s Progress, which was a work-in-progress at the time. He died less than a year later. I was very lucky.
Cheers, and well-met, vot.
From the NBER working paper, which is used to buttress the idea that China had robust growth during the time period in question: “Our two main sources of data on China national accounts are the yearly “China Statistical Yearbooks” (CSY) and the “60 Years of New China” (60Y). Both sources are published by the Chinese National Bureau of Statistics (NBS).” Now, we can argue whether the Chinese (or EU) governments have provided us with honest numbers or not, but what cannot be argued is that the statistics supplied from the EU and from China are not the same source, and therefore a case can be made of apples/oranges.
But even if we assume that the stats are accurate, at what cost? No mention made of the millions of dead Chinese needed to introduce this “miracle” at all, but the evil capitalist’s “brutal blockade” is highlighted. That doesn’t seem like exactly a balanced perspective.
Then there is this leap of faith:
“Take the foreign-imposed shackles off Iran and Cuba – which are expressly designed to create economic hardship, foment civil war, and re-install imperialist puppets – and there’s little doubt that their economic philosophies would have led them up to China’s stratosphere.” No, there’s plenty of room for doubt. Maybe they would, maybe they wouldn’t, but what’s clear is that the author has let his ideological blinders affect his hyperbole. A game not played isn’t a game won, IOW.
As for the Chinese middle class, such as it is, yes, the US middle class has indeed been decimated by low cost wages paid by Chinese companies to their new “middle class”, thanks to cutthroat and traitorous corporate greed, but no one in the US middle class or even the working poor would trade their lifestyle for a middle class (Chinese)[edited] if given the chance.
None of which is to say that unbridled capitalism is a good thing, but what we have in the USSA isn’t capitalism, it is cronyism, and it is made possible by an unholy alliance between the media/banking oligarchs, the MIC, foreign PACs, and the government. We do need to make major changes, but we don’t need to have a totalitarian government.
BTW, the real reason (for lower GDP growth) may not be “the higher price of oil and those damned Muslims”, but it surely doesn’t help. Hard to imagine why Merkel and her EU cronies felt like the perfect time to introduce tens of millions of military-age men from a hostile and alien culture was in the middle of such an economic slump (or at anytime, actually) was the right thing to do, but they did it anyway. Almost like they were told to.
The EU is a copy of the American Federation. Both have central banks controlled by private bankers. Once the EU was created, it automatically became the civilian component of NATO, pushing towards the East.
If my memory is correct, before the EU was created, the economies of European states were on the rise. The word austerity was unknown. During the 1970’s analysts were not sure which country would become the chief economic power house of Europe, France or the then West Germany. Look at France now.
There was not one political, economic, financial and historical reason why the EU should have been created. What has it brought ? Nothing but trouble.
true, all of European countries and especially France can only dream of the financial growth they were enjoying during the 1970s. I grew up in 1970s Eruope. it was heven compared to today’s Europe. Poor Europeans, I genuinely thought were were smarter than to fall for the BS.
What is regarded is growth – rising asset prices – is nothing of the sort. The rise in prices of stocks, property and bonds enabled by QE pushed up the the paper value of these assets. Share buy-backs had a very important role in this process. This process was simply asset-price inflation not growth. Come the down-turn and these ‘gains’ will disappear as quickly as they came into being.
Doesn’t even touch the slightest upon concepts such as credit-adjustments and monetary base-adjustments to GDP. Socialist and Communist nations achieved “growth” by inflating currency and credit supplies. But GDP increases do not equal technological advancements, real productivity and quality of life.
In fact, it was only as China introduced more-and-more free-market capitalism into its system, that they begun developing higher quality of life than before. Still, the Chinese experiment involves huge amounts of extremely bad credit, and it might ultimately crash catastrophically, it remains to be seen (I’m agnostic on that for now…).
All the technological advancements of modern times have come from (relatively) free-market capitalist nations, and none have come from backwards socialist regimes. That’s also a fact – proving once again that GDP and GDP changes YoY are largely irrelevant.
You see, technology is deflationary, and thus, while Commie and Socialist nations such as Venezuela print a zillion bolivar which increases GDP in nominal terms, the West’s deflationary pressure is not solely due to socialistic welfare programs that burden the productivity of the Western private sector with high taxation (see, the author’s lack of economic knowledge means he has checkmated himself…), but also due to technological advancements, which push down GDP because of higher efficiency and lower costs. :-)
Anyone wanting to counter-argue shall provide credit-and-monetary-base adjusted GDP numbers for any “socialist wonder-nation”, and also explain why solely GDP YoY changes are to be considered to be growth, when you can achieve a high GDP without concomitant increases in living standards and available technolgy, and vice versa, have a declining GDP due to deflationary new technology being rolled out. Good luck with that.
“Doesn’t even touch the slightest upon”
“Socialist and Communist nations achieved “growth” by inflating currency and credit supplies.”
“All the technological advancements of modern times have come from (relatively) free-market capitalist nations, and none have come from backwards socialist regimes.”
“while Commie and Socialist nations”
“the West’s deflationary pressure is not solely due to socialistic welfare programs that burden the productivity of the Western private sector with high taxation (see, the author’s lack of economic knowledge means he has checkmated himself…)”
These are the operative sections of that piece of neocon spam. A bunch of zionazi talking points supported by zero supporting evidence, the bs written in the usual “don’t question my propaganda, I’m the expert here” style of webspamming these things rely upon. No links to material supporting their fascism, just empty talking point propaganda one finds on israel’s neocon propaganda disbursement websites.
“Anyone wanting to counter-argue shall provide”
Always making demands of others, while providing zero basis for the claims. The calling card of the zionazi webspammer. These things never change…
Not true. China has HUGE legitimate savings deposits. 17 trillion way back in 2007. So this “bad credit” thing about China is nonsense. Real deposits are not bad credit.
Sure China has over-extended its financial sector since 2008. But just like Germany or Japan, (and not like the USA) , there’s still a solid wealth producing industrial base there.
It boggles my mind how ppl can analyze economies like Russia, China or the EU and just skip over the black hole that is the US “economy”.
Maybe losing more trade due to sanctions on Iran and Russia will improved their GDP. It seems the sanctioned countries are doing better. On the other hand, Trump has declared a trade war on the rest of the world including the Euro Zone. Looks like the answer will be five euro a day immigrants!
You make a common mistake of calling it “capitalism” when the correct terms would be “crony capitalism (corruption)” or “financial capitalism (where financial “instruments” are rated above actually making physical things)”.
Perhaps a nice mix of “social capitalism” would work best? That is where individual effort is rewarded but the social basics (central bank, infrastructure, health, security) are publicly owned and managed.
Oh if anyone wants to know the difference between 1945-75 and 76 onward just look at productivity and wage growth. They were moving together until 76. Then wages stagnated while productivity was continuing to increase.
Real wages have been eaten into by inflation so people have less to spend. More debt at all levels is the economists’ answer but that ends badly at some point.
GDP is almost useless as a true
measure of the economy. It has too many flaws but the establishment uses it nevertheless.
For example, if there are many car accidents and many deaths / injuries the GDP will rise because of increase in spending for medical costs, insurance, car repairs etc. Is this gdp increase really good for the society ?
Secondly, It measures only market transactions and ignores home production and home consumption . For example, if the population of country A produces wine for home consumption (that is not sold in the market) then it is not counted in the GDP (but this wine is truly produced and consumed). if in country B, (imported) wine is sold at retail shops then GDP is increasing….
Thirdly, it does not measure technological progress and the type & quality of products produced in the economy . If country A produces $1000 cars and country B $1000 restaurant meals, then their GDP are the same….
If both countries produce $1 billions value of cars but the first country produces “Ferrari’s” and the other “Skoda” , GDP is both $1 billion but the car technology is very different …
And there are many other issues with gdp, that is mentioned in everyday economic textbooks
The frightening thing is that politicians implement policies based on GDP
Real economic growth is driven by demand for goods and services. In China, Iran, Cuba and the developing world, demand for improved quality of life is high, ergo growth is high as well. In the western bloc, the damages of the two world wars were repaired by the late 70s and by the late 90s most people achieved a quality of live that left not much to desire. As a result, I expect the economy to follow approximately the population number. This outcome is independent of the economic model.
Given increasing productivity but stagnating demand, less labor is required to sustain the populations’ needs. How the consequences are dealt with very much depends on the economic model. Capitalism drives down wages and concentrates the remaining labor onto fewer shoulders: until demand collapses because too many people have no money to sustain themselves. Socialism would/should seek to redistribute the labor and/or productivity gains on all shoulders, such that every member of the society gets a fair share of the pie.
Unfortunately, neither capitalism nor socialism are prepared for a stagnating economy. Hence the appeals and prayers from all sides to “jump-start the economy”, to “increase growth”, and so on. Bullshit! We desperately need a system that allows us to scale back our economies to the sustainable level of Earth’s resources! As a first, timid step, we should at least be able to enjoy life in an era of stagnating economy. Anything less drives us mad and makes us go extinct.
An interesting post, as always.One question: according to official data, GDP per capita in Eurozone was 32,003 EUR in 2016, and 29,756 EUR in 2012 (https://www.focus-economics.com/country-indicator/eurozone/gdp-per-capita-EUR). As I have enough of MSM false claims about “economic recovery” in the Eurozone, could you please explain the difference with the numbers you mentioned in the post? Thanks.
if you continue to claim that Germany is the obstacle in Europe you need to review history urgently.
Pre-WW1 imperial Germany wanted a non-agression pact with Russsia. 1905 or so it got signed by both emperors but not ratified – in Russia.
There are Churchill quotes from 1913 stating that latest by fall of 1914 there would be war with Germany.
A new York Cardinal named John Farley stated a few days before the war started in 1914 the reason.
Big finance was fighting dynasties because it wanted nobody above them.
If you believe that the British rulers are nice and trustworthy, ask in Iran about history.
Later some Austrian clown came to power in Germany. If you follow the money, look in London and Wall Street for sources.
He or his bankers created money without paying interest to international bankers on a big scale. The scheme was called “MEFO Bill”
It was started a year before on a small scale, called “Oeffa Bill”
During the war the Austrian private made several decisions that were obviously bad for Germany. There is even a book around claiming that he was a Britisch Agent, certainly he acted several times like one.
If you want to dig deeper you can look at the spiritual affiliations of Hitler and his private Army, the SS. One typical symbol there is a _distorted_ skull.
At Yale University is a well known fraternity that uses a _distorted_ skull as symbol, for sure a random coincidence.
I could go on here but you get the idea.
Later on Germany was and still is occupied, there is still no peace treaty but a “Chancellor file”
Officially it does not get acknowledged but the chancellor has to do what the Americans want.
Then check who attends a Bilderberg Meeting and who gets into power.
Interpret facts in a socialist way, but get the relevant ones.