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OPEN CHALLENGE TO CONSUMPTION-DRIVEN ECONOMISTS - REFUTE THIS, IF YOU CAN! [Copy link] 中文

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Post time 2015-9-27 05:57:30 |Display all floors
This post was edited by abramicus at 2015-9-27 06:06

Watch this educational video produced in the USA, which you should really believe, since USA is your self-declared source of authority in everything you do, to show you are more up-to-date than the commen sense businessman and worker on Main Street.  Except, this video demonstrates the fallacy of your borrowed "wisdom" of "Consumption-Driven Growth".  So, post your refutation, if you can.  

This video is titled "Deck the Halls with Macro Follies" -- https://www.youtube.com/watch?v=7uKnd6IEiO0.

The following article further explains the circular reasoning behind the FALLACY OF CONSUMPTION-DRIVEN-GROWTH, http://www.forbes.com/sites/belt ... onomy-think-again/.

It says:


"Before I Can Consume, I Must Produce for Others

By definition, GDP is a summary of final sales for new goods and services and not of all economic activity. Raw materials, intermediate goods and labor costs, which comprise the bulk of business spending are not treated in GDP, but are rather rolled up in the final sale price of the “consumer” spending. Only capital equipment, net inventory changes and purchase of newly constructed homes constitute “investment” according to GDP. This framing of the data makes the “consumption drives the economy” a foregone conclusion. But this is circular reasoning.


Where do these “consumers” get their money to spend? Before we can consume, we need to produce and earn a paycheck. And paychecks have to flow to productive — that is value-creating — behavior, or value is simply being transferred and destroyed. Our various demands as consumers are enabled by our supply as workers/producers for others. That’s the classical “Law ofMarkets”, often referred to as Say’s Law, in a nutshell.


For employees, those paychecks are income, but for the  employers, wages represent most business’ single largest expense. Yet GDP does not treat employee wages or materials as “investment spending” — even though any business owner regards salaries as the most important and largest investment that they make. Instead, employee wages appear in GDP data as consumption when income is spent on final goods like food, clothing, gadgets, and vacations. Moreover, since GDP is an accounting summary, it adds consumption and investment spending together. But this summarizing masks the fact that these two activities are actually in opposition in the short run. In order to invest more today, we have to save more and consume less. As a result, GDP in-and-of-itself reveals nothing about what grows an economy; at best, it demonstrates how large the economy is and whether it’s growing or shrinking.


Digging below the surface of GDP reveals a structure of value-adding production far more complex than the simplistic analysis given by most media reports. According to government data, more than 70% of Americans earn their incomes from employment in domestic business. Yet the retail sector of our economy, for example, only contributed 6% of GDP. Bureau of Labor Statistics (BLS) data on employment show that only about 11% of employed Americans work in “sales and related occupations”.  That leaves a great deal of economic activity and employment to the “business to business” sector, which composes most of the real economy.


Most of the value-adding activities occurred between a vast structure of businesses and workers starting with raw materials and blueprints and coming together over months (sometimes years when R&D is included) before a final sale can be made. At each stage, the activity is funded not by current “consumer spending” but through a combination of new investment and savings such as each company’s reinvested earnings. The farther from a final good a business’s output is, the more it relies on credit markets and the more it is subject to distortions on the savings and investment side. And since employment is spread across this time structure with relatively few working in final retail stage, savings and investment changes have dramatic impacts on employment."



DENG XIAOPING'S PRODUCTION-DRIVEN ECONOMICS REMAINS THE TRUE PATH OF ECONOMIC REFORM.  HE HAS 4 TRILLION DOLLARS TO SHOW FOR IT.


CONSUMPTION-DRIVEN ECONOMICS IS ANTI-REFORMIST, ANTI-CHINA, PRO-JAPANESE (ABE JUST ANNOUNCED HE DOES INTEND TO REPLACE CHINA AS THE GROWTH ENGINE OF THE WORLD WITH TARGET OF 20% ANNUAL GDP GROWTH) AND THE SUREST PATH TO NATIONAL SUICIDE.  


WHAT HAS "CONSUMPTION-ECONOMICS" ACHIEVED?  THE LOSS OF ONE TRILLION DOLLARS OF FOREIGN RESERVES, AND INCREASING.  THE CLOSURE OF THOUSANDS OF FACTORIES.  THE LAYING OFF OF HUNDREDS OF THOUSANDS OF WORKERS.


HOW DOES ABE PLAN TO FINANCE IT?  BY TAKING OVER CHINA'S SELF-SURRENDERED EXPORT MARKET, AND ITS DYING MANUFACTURING SECTOR, THANKS TO OUR GREAT "REFORMERS" - OR, TRAITORS.









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Post time 2015-9-27 17:15:16 |Display all floors
Henry Ford have proven that Consumption driven economy will stimulate factory production, by increasing salary for his factory workers.

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Post time 2015-9-28 07:39:53 |Display all floors
Every strategy has its time, it's all about the timing.



The real question is........what next if nothing works?



I've made my living, Mr. Thompson, in large part as a gambler. Some days I make twenty bets, some days I make none. There are weeks, sometimes months, in fact, when I don't make any bet at all because ...

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Post time 2015-9-28 13:26:59 |Display all floors
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Post time 2015-9-29 02:51:29 |Display all floors
This post was edited by abramicus at 2015-9-29 03:13
bushier Post time: 2015-9-27 17:15
Henry Ford have proven that Consumption driven economy will stimulate factory production, by increas ...

Steve Jobs quoted Henry Ford, who said, “If I’d asked the consumer what they wanted, they’d have said ‘a faster horse.'”  A consumer driven economy would be full of buggies, not cars, and certainly no Ford Motors.  And most phones today would still be flip tops or blackberries with keyboards, and little else.

You are adept at using fallacies, it seems.  Is this the official line?  This is called the FALLACY OF COMPOSITION, that what is true of the part, must be true of the whole.  It proves nothing.  

Increasing the salary of a car production factory worker does not prove anything.  He is getting paid not just to consume, but to produce, so it also proves that investment in the factors of production, land, labor, capital or technology, does increase production.  To prove that increasing salaries in general leads to increased production in general, takes more than Ford increasing the salary of his workers.  He should increase the salary of all workers.  And we know what that leads to, it lead to inflation, because consumption demand exceeds production supply.  To afford it, the country as a whole has to dip into its savings, like China is now doing, having used up half a trillion dollars of its foreign currency reserves, or borrow from foreign creditors, which has added at least one trillion dollars of foreign-currency-denominated debts on the balance sheets of Chinese factories, businesses and banks, or print fiat money that other countries must accept as payment for China's imports, on pain of regime change, which China cannot do, even for tiny Vietnam, or even its own Diaoyudao (Heavens forgive its defenders).  So, China has been spending its savings, and incurring more than a trillion dollars of new debt, in order to follow the ERRONEOUS MODEL OF CONSUMPTION-DRIVEN ECONOMY, while giving Japan a lifeline to take over its export market, and make inroads into China's import market.


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Post time 2015-9-29 09:17:59 |Display all floors
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Post time 2015-9-29 11:27:53 |Display all floors
This post was edited by abramicus at 2015-9-29 13:20
abramicus Post time: 2015-9-29 02:51
Steve Jobs quoted Henry Ford, who said, “If I’d asked the consumer what they wanted, they’d have ...

INNOVATION . . . the centerpiece of Xi's economic revival strategy is actually based on production.  Investors and producers come together to find out what society wants, not just in terms of known products, but also in terms of functionalities and objectives.  Take the Henry Ford example, as Ford himself stated it, if Ford had merely focused on existing consumer demand, it should be producing buggies and fitting them for the fastest horses, which may require breeding them in mass, using the best genetic selection parameters.  That is another ill-effect of Consumer-Driven-Growth.  There is little innovation involved, only embellishments of an old idea.  Innovation, as the centerpiece of the economic growth of a country, requires that investment and production take the lead, which means, also taking the risk of failure, while at the same time taking the necessary actions to minimize failure (such as doing due research) and maximize the chance of success (such as by focusing financing on every step of product development, distribution and marketing).

INNOVATION is production-driven growth, and cannot be consumer-drivien growth, because the average consumer does not have the knowledge of what can be innovated, nor does it know in advance whether such an innovation will induce it to use it, i.e., consume it, all of which risks and responsbilities can only be shouldered by the production side, which starts with investment, through R&D, production, distribution and marketing, before the consumer market is CREATED by the innovator-producers, of which Ford and Jobs stand out as the best examples.

It is time to JUNK the CONSUMER-DRIVEN GROWTH ECONOMIC MODEL that even USA economists discredit, and use only for teaching purposes of the economists of other countries who are gullible enough to take the bait, and end up as the dinner.  If the US economy can afford to consume 70% of the time, and produce only 30% of what it consumes, then understand that this model is NOT FOR CHINA, because unless China can force Saudi Arabia to accept Yuans as payment for its oil imports, and Australia, Yuans as payment for its iron and mineral imports, it will have to produce far more than it consumes, in order to continue to grow at 7% GDP per year.  And the cost of maintaining a global military network to effect regime changes and affect election outcomes (as in Japan), is at least one trillion dollars a year, officiallly, and probably twice as much, unofficially, which will bankrupt China, as the time to break-even for such an investment for China may be ten years or more, too long for even China to sustain.

THE KEY MECHANISM OF IMPOSING THE CONSUMER-DRIVEN-ECONOMY ON CHINA, IS NOT THE CONSUMER, BY THE WAY.  IRONICALLY, IT IS THE PBOC AND THE MONETARY POLICY TEAM.  CURRENT CHINESE ECONOMY IS DRIVEN BY THE YUAN OVERVALUATION, WHICH, NOT THE CONSUMER, IS CAUSING PAIN TO PRODUCERS AND CONSUMERS ALIKE.  THE OVERVALUING THE YUAN HAS CAUSED THE OVERPRICING OF CHINESE PRODUCTS ABROAD WHEN PRICED IN DOLLARS AND ALSO INSIDE CHINA WHEN PRICED IN YUANS, WHEN COMPARED TO FOREIGN PRODUCTS.  THIS LEADS TO MANUFACTURING SECTOR LOSSES OF REVENUES AND PROFITS. LEADING TO FACTORY CLOSURES, RESULTING IN STOCK MARKET CRASHES, AND IS PAID FOR WITH FOREIGN CURRENCY RESERVES.  FOREIGN CURRENCY RESERVES ARE USED TO PATCH UP ALL THE PROBLEMS CAUSED BY THE OVERVALUED YUAN, AND IS ALSO USED DIRECTLY TO BUY UP YUANS WITH HARD-EARNED DOLLARS, DOUBLING THE SPEED OF ITS DECLINE.

THE CULPRIT IS NOT THE PRODUCER, NOR IS IT THE CONSUMER, BUT THE OVERVALUED YUAN, WHICH IS USED TO FAKE THE EFFECTS OF "TRANSITION TO A CONSUMER-DRIVEN ECONOMY", WHEN IN TRUTH, THE CONSUMER CANNOT DRIVE THE ECONOMY, BUT THE PRODUCER-INNOVATOR CAN, BUT IS NOW UNABLE TO, BECAUSE HIS PRODUCTS ARE AUTOMATICALLY OVERPRICED BY THE PBOC AND ITS POLITICAL HIGHERUPS.  

THE ECONOMIC CRISIS IS CHINA IS ENTIRELY MANUFACTURED BY ITS ECONOMIC PLANNERS, AND THEIR OBJECTIVE IS SIMPLY TO DISMANTLE CHINA'S MANUFACTURING SECTOR, AND REPLACE FACTORY JOBS WITH A MAJORITY OF LOW-PAYING NON-PRODUCTIVE JOBS OF COOLIES, BUTLERS, AND BELLMEN, PLUS A FEW WELLPAYING PARASITIC JOBS OF ECONOMISTS, PLANNERS AND POLITICIANS..  IF IT IS AN HONEST MISTAKE, IT IS TRAGIC.  BUT SINCE IT IS INTENTIONAL, IT IS TREASON.






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