Downsides of an export economy

[KrazyHorse]

My point was that at present, resource extraction is that ATM, while I agree that in the past other things worked just as well. Well, the illicit drugs and other illegal stuff works on a smaller scale for non-state actors.

Some of the things in the past like physical capital, silkworms, etc. were inherently more mobile than natural resources, even if their owners had a great interest in limiting that mobility. I seem to recall the Brits (unsuccessfully) trying to prevent designs for machinery from leaking out. It's considerably harder to steal someone's oil deposits without establishing a medium- or long-term presence there.

If your point is that it's hard for, in the modern world, things to get as extreme as in SA, then that is true (though China proves an interesting counterexample!).

But the point has, again, little to nothing to do with Canada. Thus little to nothing to do with whether Canada "naturally" runs a trade surplus or deficit. In the past, when Canada's NIIP was like -75% of GDP then we had to run a trade surplus just to avoid running massive current account deficits. But we're close to NIIP = 0 now. And most of our trade is with similarly developed (or even more capitalized!) countries. Not really much to say about it.

[TCO]

The only point I'd make is that Canada didn't become rich off of exporting resources. Canada was already wealthy.

No. Canada imported capital like nobody's ****ing business during its development. Foreigners basically owned the country during the early part of the 20th century. What Canada had was a level of social capital (trust, confidence in the future) and some significant human capital which did not exist in the non-white colonies. The importance of this cannot be overstated. But as far as physical capital, Canada was far poorer, for instance, than the US for a very long time (and still is, actually).

It's all frozen and all. 90% of people live a 100 miles from US border. It is the 51st state. Not even worth breaking out when doing segmentations of a business.

[KrazyHorse]

Not quite. Under a gold standard, being forced to export your gold means your monetary base shrinks. Running a trade deficit imposes contractionary monetary policy on your country.

Too late. Already said it in simpler way

[KrazyHorse]

It's all frozen and all. 90% of people live a 100 miles from US border. It is the 51st state. Not even worth breaking out when doing segmentations of a business.

Economic and political integration don't have to go hand in hand.

[TCO]

Not quite. Under a gold standard, being forced to export your gold means your monetary base shrinks. Running a trade deficit imposes contractionary monetary policy on your country.

If you look at it from a single actor point of view. But if the acounts balance is being driven by free individuals, who cares? Maybe they value what they get for their gold more? And trade deficits generally refer to overall activity. Not that of a specific actor.

[Victor Galis]

But the point has, again, little to nothing to do with Canada. Thus little to nothing to do with whether Canada "naturally" runs a trade surplus or deficit. In the past, when Canada's NIIP was like -75% of GDP then we had to run a trade surplus just to avoid running massive current account deficits. But we're close to NIIP = 0 now. And most of our trade is with similarly developed (or even more capitalized!) countries. Not really much to say about it.

Sorry, I guess I didn't make it clear enough I wasn't talking about Canada anymore.

Too late. Already said it in simpler way.

No... you said that eventually the gold runs out. You neglected to mention the economic impact in the meantime. In practice, the latter dampens imports long before the gold actually runs out.

If you look at it from a single actor point of view. But if the acounts balance is being driven by free individuals, who cares? Maybe they value what they get for their gold more? And trade deficits generally refer to overall activity. Not that of a specific actor.

Yeah, but that actor suffers when he finds it difficult to obtain credit or when the economy contracts around him. (Unless he's somehow magically unaffected by local conditions.)

[Dinner]

The Chinese government is now offering a subsidy of 13% on all Chinese made durable goods. I have no idea how such a subsidy is legal since if the US offered it a million people would whine. Supposedly it has doubled the domestic sales of durable goods (cars, washing machines, dishwashers, refrigerators, etc).

[KrazyHorse]

No... you said that eventually the gold runs out. You neglected to mention the economic impact in the meantime. In practice, the latter dampens imports long before the gold actually runs out.

You really aren't familiar with how this works, are you? I simply have to demonstrate that there is a situation where things DON'T work the same way. I don't have to figure out the whole solution.

My argument is elegant. Yours reveals additional levels of complexity which may be worth study but which are not relevant in the current discussion.

[Dinner]

Ignoring bastard.

Someone quote me.

[Aeson]

Ignoring bastard.

Someone quote me.

Ok.

[Naked Gents Rut]

Please don't quote people that are on ignore lists.

[Dinner]

Please don't quote that Nebraskan bastard, period.

[Aeson]

Please don't quote people that are on ignore lists.

No. (See, there I did it again!)

[Victor Galis]

No... you said that eventually the gold runs out. You neglected to mention the economic impact in the meantime. In practice, the latter dampens imports long before the gold actually runs out.

You really aren't familiar with how this works, are you? I simply have to demonstrate that there is a situation where things DON'T work the same way. I don't have to figure out the whole solution.

My argument is elegant. Yours reveals additional levels of complexity which may be worth study but which are not relevant in the current discussion.

Suppose we were talking about bungee jumping. You observe that the downward motion must end at some point because the ground imposes a lower bound. I observe that the cord tied around the jumper eventually slows them then pulls them back upwards. Your observation is technically correct, but it is hardly the most elegant.

[DanS]

Small indications that some inventories are being worked off. Sharp is now getting LCD panel orders from China and has partially restarted production.

One hell of an industrial pause.