Start an economics discussion in eng tips 10

[2dye4]

I begin to find economics very interesting these days. Not the highly extrapolated academic stuff but the more broad issues that may be attacked with common sense analysis.

I have read frequently more thoughtful analysis on this site than can be attained anywhere else. No we are not economists and don't pretend to be. We certainly don't want economists designing bridges and engines. But there are three reasons we could do moderately well at informing each other about economic idea.

1 We don't have a reputation or ax to grind. (its not our profession)

2 We do have a much above average ability to see dynamics and establish cause and effect of things.

3 We are located at the source of business although used as a service to this but we have a distance that allows us to see a little more than the stakeholders.

As a benefit to ourselves the more we understand the free market and its direction the better we can guide our careers .

 

[GregLocock]

Has a significant 1st world economy dropped back to (long term) 3rd world status since say 1600, due to economic collapse rather than war?

I'm guessing not, and think there is a very good reason for that. The market (globally) would see a cheap labour pool with first world infrastructure and would exploit it.

As a famous economist once nearly said - the problem with the world's poor is not that they are exploited, it is that they are not exploited enough.

Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[PSE]

Greg,

I think what potentially prevented first world economic collapse in the past was colonization. In essence having a "captive" market for exploitation maintained the ruling countries economy. Colonization essentially ended in the 20th century. It's a bit too early to tell I think the subsequent effects on the global marketplace. I appreciate your point though as I consider the former soviet union. It broke apart but was it primarily due to economics or politics.

First world infrastructure in some areas is significantly aging and in need of an overhaul. Which might someone consider more economical, overhaul an existing system or build from scratch in a country that might be considered a "clean slate"?

I am also curious as to other's opinions on what variables they would use to characterize the economic viability of a nation.

Regards,

 

[satchmo]

Read Thomas Sowell's "Basic Economics". It has a good discussion on what variables are important for a country to be a good investment; reliable rule of law, banking infrastructure (ease of obtaining capital), etc.

 

[Gymmeh]

"Reliable rule of law"...is that why we have so many lawyers?

 

[moltenmetal]

Hmm: if "rule of law" is so important to an economy, why exactly is China flourishing? Intellectual property theft there is absolutely rampant, and no foreigner would willingly choose to put themselves at the mercy of the Chinese legal system...In investment terms, these things merely represent risk, against which benefit/profit is weighed. With ethics removed entirely from the equation, it's a simple economic risk/reward analysis. In other words, the thieves are winning and being allowed to keep their winnings as long as they give the right people a cut. It sucks but it's unlikely to change any time soon.

 

[GregLocock]

You can walk through any part of Shanghai without getting mugged or robbed. I think that is rule of law.

Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[drawoh]

PSE,

My understanding is that very few European powers made a net profit on their colonies. The British did well in India. King Leopold II made a killing in the Belgian Congo. Individual business types did well elsewhere, but they were massively subsidized by taxpayers who paid mostly for the military forces who maintained order.

Empires are the product of brute force. Usually, they are feasible because the empire builder has the economic surplus to spend on their military. The only way the enterprise makes money is if they conquer somebody richer. The problem is that if the victim is richer, they have even more money to spend on their military.

JHG

 

[PSE]

drawoh,

I have no information one way or the other that tells me if colonial powers made a net profit. WW2 effectively brought an end to that era as it exhausted the wealth of europe and others making the retention of colonies unsustainable.

In my opinion, the "successful" former colonies such as India and (with the former spheres of influence), China, benefitted from greater creation by their former rulers of a basic infrastructure (transportation and energy) which they could leverage for growth bringing them on the way to "first world" status. Current "third world" countries were not subject to this infrastructure investment and will have to create it on their own. The advantage (if any) being that the infrastructure they create, will be modernized in comparison.

A large question that remains (in my mind) is the expanding draw on basic resources. The "mantra" of economics seems to be one of continuing growth. I don't see how this will be sustainable in the long term given a finite amount of natural resources. Cancer is a biological equivalent of continuous growth, at least up until the point that the host dies.

Regards,

 

[csd72]

PSE,

many of the third world countries (particularly in Africa) are the way they are because they were exploited by colonial powers.

Sometimes the existing stable political structure was forced aside by the brute force of colonial power.

Yes, there were some positive consequences, but just as many negative ones.

 

[moltenmetal]

Greg: why bother with muggings and petty thievery when there are better, richer pickings?

 

[PSE]

csd72

Agreed. Now that colonialism has effectively ended, what will be the net effect on the global marketplace. As new players enter the arena of resource competition, the "law" of supply and demand would state that the price goes up. Question (rhetorical) becomes how high before it has a de-stabilizing effect on a countries economy? What effect would that then have?

I have never had any "formal" classes or training in Economics so my statements are made at a novice level. I do reasonably well with the (family level) micro-economics. This thread appeals to me as a way to learn a bit more. It would seem to me that a self sufficient capabililty (ideally with the capability of generating a surplus) is potentially the greatest asset a country could have. Trade relationships based on dependence can put an economy at higher risk.

Regards,

 

[drawoh]

PSE,

http://www.gwynnedyer.net/articles/Gwynne Dyer article_ End of Cheap Food.txt

Gwynne Dyer is predicting the end of cheap food. We all know were cheap gasoline is going, and I understand we already are out of cheap Hanna Montana tickets.

JHG

 

[csd72]

PSE,

I did economics at high school and macroeconomics as an elective at university (it fit my timetable).

It is pretty much all common sense sort of stuff. The law of demand and supply effects both prices and the values of currencies as well as inflation, so as long as you understand that the rest stems from there.

csd

 

[rtmote]

I subscribe to the Dilbert principles. As engineers we think we know what it should be but we smack our heads against the wall to understand what actually happens.

It's all a mystery; economic topics in a engineering forum will always go historical,cultural and emotional. We're not qualified. There's nothing I could learn from this forum. If I am interested in economics, and I am, I read Asia Times on line,

http://www.atimes.com.

Robert Mote

http://www.motagg.com