Chinese Economics Thread

[AndrewS]

I agree with your basic logic, but you miss the base / starting condition for EU.

Originally there was many wealthy, national state, now there is a less fragmented, more optimal 500 million market.

So, compared to a homogen country it is way off, but compared to the starting condition it is way better.

Apart from the complete lack of central government.

Maybe the EU needs the Habsburgs : )

No, the original point was that the EU is better placed than China to grow and to address structutal wealth inequalities.

Structurally, the EU will always face internal differences in language, cultures, politics, laws etc. So it won't become a single market in many respects, which means deeply embedded inequality will remain.

In comparison, China has implemented a single national language and is much more homogeneous.

The vast majority of people in the poorer Chinese interior lives along one of the major riverine watersheds, which helps to keep the cost of bulk transport low, although it won't be as low as for coastal port. Then if you've got higher value goods, railways and airports would be the preferred means of transport anyway.

 

[Anlsvrthng]

No, the original point was that the EU is better placed than China to grow and to address structutal wealth inequalities.

Structurally, the EU will always face internal differences in language, cultures, politics, laws etc. So it won't become a single market in many respects, which means deeply embedded inequality will remain.

In comparison, China has implemented a single national language and is much more homogeneous.

The vast majority of people in the poorer Chinese interior lives along one of the major riverine watersheds, which helps to keep the cost of bulk transport low, although it won't be as low as for coastal port. Then if you've got higher value goods, railways and airports would be the preferred means of transport anyway.

Again, the European countries has been wealthy before the EU, so we can say that at the moment (due to the lack of central taxes and treasury) the situation is worst than if they are independent.

And there is no relationship between country size and wealthiness ,by your logic the small countries are poor, the big are wealthy.


Maybe because the success is how effectively a group of people using the available natural/human resources, and compared to that the cost of transactions is minor.

 

[AndrewS]

Again, the European countries has been wealthy before the EU, so we can say that at the moment (due to the lack of central taxes and treasury) the situation is worst than if they are independent.

And there is no relationship between country size and wealthiness ,by your logic the small countries are poor, the big are wealthy.


Maybe because the success is how effectively a group of people using the available natural/human resources, and compared to that the cost of transactions is minor.

I'm not saying that poorer countries don't benefit from joining the EU.
But the EU is not a true single market when you compare it against the USA or China for example.

There are structural issues such as language that will stop it becoming a truly integrated single market.

So there are lots of places in the EU which can't use their available natural/human resources, because they are trapped in their own market.

Look at the horrendous youth unemployment rates and low wages in Southern/Eastern Europe, which have driven mass migration towards Northern Europe. And that migration has already contributed to a huge increase in electoral anti-foreigner sentiment.

Yet so many more people are still trapped in Southern/Eastern Europe, because they can't speak any other languages.

Labour mobility is one of the key elements of a functioning single market.

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And in terms of freight, where are the trans-european railway services or logistics networks?
And what about re-imposition of border controls between countries inside the Schenghen Zone?

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Like I said before, countries joining the EU is generally a good thing.
But it labours under structural issues that will stop integration.

English is the defacto language of EU politics and business, yet only 15% of the population have English as a native language.
Can you imagine the European Union imposing English on all the member states?
Can you imagine France, Germany, Italy, Spain etc etc, all agreeing that their existing languages are useless?
And that all schools, businesses, government offices, TVs, road signs, etc etc must be replaced with English?

But a single national language is required in order to forge a single political consensus with a strong central government that has budgetary power.

And a single national language would eventually mean a single market for labour, but this would be a project for generations to come.

 

[Anlsvrthng]

I'm not saying that poorer countries don't benefit from joining the EU.
But the EU is not a true single market when you compare it against the USA or China for example.
....
But a single national language is required in order to forge a single political consensus with a strong central government that has budgetary power.

And a single national language would eventually mean a single market for labour, but this would be a project for generations to come.

Again.
1. The big single market decrease the transaction cost, but it doesn't mean higher economical activity, and it is not even pre-requisite for the wealth. Fragmented Europe has been wealthier than practically all big market country.
2. The low transaction cost doesn't helps to facilitate high internal demand, and that is the driver of the wealth.

Summary: you can not cost cut your way into prosperity. The low transaction cost decrease the corporate cost, but decrease the market as well.

 

[Anlsvrthng]

However this bought up quite interesting result.

The difference between the US/Polish salaries is around 1:2 .

Now, the difference between the USA mainland salaries (without capital) is 1:1.5.

In China it is 1:1.5 ( if we remove the capital , Shanghai and Tibet(how can be Tibet this high?))

So, yes, the cultural homogeneity is visible in China, and it is on the same level like in the USA.

soruce :

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And surprisingly , the effect of cultural in-homogeneity can be quantified.

 

[AndrewS]

Again.
1. The big single market decrease the transaction cost, but it doesn't mean higher economical activity, and it is not even pre-requisite for the wealth. Fragmented Europe has been wealthier than practically all big market country.
2. The low transaction cost doesn't helps to facilitate high internal demand, and that is the driver of the wealth.

Summary: you can not cost cut your way into prosperity. The low transaction cost decrease the corporate cost, but decrease the market as well.

A bigger market is more efficient and has lower costs for products because it uses less inputs. Those lower costs do result in an overall increase in economic activity and eventually higher wages, as per the studies.

If you look at Europe, wages in Western Europe (approximately half the population) are high But in the rest of Europe (Eastern and Southern), average wages are more comparable with middle-income countries elsewhere in the world.

Lower transaction costs improve productivity. And GDP growth per person perfectly tracks productivity growth in the long run.

Where on earth are you getting your economic theories from?

 

[AndrewS]

However this bought up quite interesting result.

The difference between the US/Polish salaries is around 1:2 .

Now, the difference between the USA mainland salaries (without capital) is 1:1.5.

In China it is 1:1.5 ( if we remove the capital , Shanghai and Tibet(how can be Tibet this high?))

So, yes, the cultural homogeneity is visible in China, and it is on the same level like in the USA.

soruce :

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And surprisingly , the effect of cultural in-homogeneity can be quantified.

This is a really pointless comparison.

Neither China, USA, Poland have primate cities, so why bother taking them out of the calculation.

Perhaps you could take this to University of Warsaw or to Jagiellonski

 

[AndrewS]

China economic growth - driven by consumption

First 6months of 2018. Total growth of 6.8%

Final consumption contributed 78.4% of headline growth (5.3% out of 6.8% total)
Capital formation contributed 31.4%
Net exports turned out to be a drag, detracting 0.7% from headline growth in H1.

Source

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[Anlsvrthng]

This is a really pointless comparison.

Neither China, USA, Poland have primate cities, so why bother taking them out of the calculation.

Perhaps you could take this to University of Warsaw or to Jagiellonski

Interesting.

I took the effort to try to proof/falsify your theory , delivering same data that actually support your claim, and now you say that the comparison is pointless?

Usually in this kind of discussion I say that "this is however not prove the differences between countries" , and you "but yes, it is a proof for that", but now you somehow managed to jump to the other side of the table : )

 

[Anlsvrthng]

A bigger market is more efficient and has lower costs for products because it uses less inputs. Those lower costs do result in an overall increase in economic activity and eventually higher wages, as per the studies.

If you look at Europe, wages in Western Europe (approximately half the population) are high But in the rest of Europe (Eastern and Southern), average wages are more comparable with middle-income countries elsewhere in the world.

Lower transaction costs improve productivity. And GDP growth per person perfectly tracks productivity growth in the long run.

Where on earth are you getting your economic theories from?

Exactly, the most important from the standpoint of prosperity is the efficient / productive usage of the most important resource : the humans.

So, now .
By the data the influx of cheap workers NOT increase the productivity, but decrease it.
It doesn't push the businesses to found ways to use less labour, but to use workers to compensate for every issue.

Now, proof is the UK vs Poland productivity.

Big part of workforce went to UK , and pushed down the salaries.

The lack of workforce in Poland increased the productivity, the surplus in UK decreased it.

So, the size of the country, homogeneity and so on makes difference about the starting point of growth , but the tangent of growth depending on the productivity growth ,and that depending on the healthy, cut throat competition for workforce.