
An economist explains what is happening to the global economy - prostoalex
http://qz.com/298405/an-economist-explains-what-the-heck-is-happening-to-the-global-economy/
======
clairity
the article ends with a trite dogmatic assertion that individualism will save
the world. no, ayn rand, it will not. individualism and collectivism need to
maintain a creative tension for economies to thrive. it's irreconcilable that
the same troubles cited by the author (income inequality, militaristic
aggression, religious extremism, etc.) have roots in stroking the individual's
ego.

there are some interesting tidbits like technological change creating (short-
term) economic upheaval and credit cannot fuel economic growth. but the
conclusion drawn is a curious amalgamation of progressive individualism that
simply doesn't follow from the observations that come before it.

~~~
tomaskazemekas
Now it is a good time to read 'The Road to Serfdom' by F. Hayek one more time.
Rising expectations of some part of the society that the government can give
them a shield from change and solve their problems are common during a crisis.
On the other hand, governments everywhere, the West included, are eager to
take more and more control over individual life. The book is in the public
domain and is available here [https://mises.org/library/road-
serfdom-0](https://mises.org/library/road-serfdom-0)

~~~
clairity
i haven't read it (and maybe i should) but it sounds like that book might be
ideologically dogmatic. i get disappointed by such things because they never
model sociopolitical life accurately enough for the conclusions to be useful.

governments are not special in requiring vigilance to keep them in check.
religions, corporations and other large political bodies (in the larger sense
of the word) also require vigilance. the answer isn't simply individualism.
these political bodies form because they provide social and economic
efficiencies that we want. such groups form instinctively and immediately, and
as such, we won't stop the formation of political bodies. the question then is
how to we structure the collection of political bodies so that they keep each
other in check, since no one individual can effectively orchestrate such a
balance?

democratic capitalism is interesting in that it's an (imperfect) iteration of
such a system.

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danjayh
No facts, no cold hard hard data, no references, all emotional hand-waving.

~~~
zenogais
Totally agree, overall a presumptuous piece of conjecture and a weak
justification of the present state of suffering experienced by millions
(excluding the author I presume).

It also struck me as originating from a highly US-centric view of the events
in Latin America/Europe/Middle East. Low in nuance and meshing poorly with how
the leadership of these countries understand and characterize their own
economic/political dilemmas and decisions. It essentially assumes a "one right
path for the world" and considers confused or invalid any deviation in
discourse or policy. Also seems to perpetuate the old Colonialist chestnut -
civilize the world (often directly against its will) at any price.

~~~
x0x0
Ukraine too. Russia was subject to an enormous amount of provocation from the
US, very little of which is reported. For an alternate view, the Russian
President's office publishes his speeches in english; this [1] is worth
reading.

But whatever you think of Ukraine, just remember how we reacted when Russian
put nukes on our doorstep. Yet the US government is happy to meddle in
Ukraine, on Russia's doorstep, and is shocked, shocked! when Russian reacts
very negatively.

[1]
[http://eng.kremlin.ru/transcripts/23137](http://eng.kremlin.ru/transcripts/23137)

~~~
retrogradeorbit
Another day, another hack, another story ignored by the main stream media:

[http://www.zerohedge.com/news/2014-11-25/hacked-us-
documents...](http://www.zerohedge.com/news/2014-11-25/hacked-us-documents-
said-reveal-extent-undisclosed-us-lethal-aid-ukraine-army)

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Htsthbjig
This is utter nonsense. An article full of dogmatic assertions with no backing
data.

If you want to understand the world, look at the numbers, like this:

[http://en.wikipedia.org/wiki/File:USDebt.png](http://en.wikipedia.org/wiki/File:USDebt.png)

A non backed assertion example: "Technological revolutions result in negative
turns in the distribution of income, as income flows towards those who take
early advantage of the new technologies."

Today the number One distribution machine is the computer of the central banks
that let them print billions of currency a day(dollars, euros or yenes) backed
by nothing real in the material world.

This people print on a single day the wealth that takes a year to generate in
the real world. Look at how much shadow money there is in securities and
derivatives compared with the real economy. As Warren Buffet says, it is a
weapon of mass destruction.

Even something technological like Facebook earned most of their money from an
artificially pumped stock market, not from the real world selling products and
services.

I have profited enormously from the stock market because I understand this, it
is not so hard. It is way harder to create valuable products out there in an
economy that is taken for ransom by the banks, big companies and governments
that are robbing them blindly.

Another powerful assertion: "Russia’s annexation of parts of Georgia and
Ukraine brought back another monster that we thought had disappeared between
the 1930s and the 1940s—the territorially acquisitive authoritarian Great
Power."

Russia should have supported a violent coup d'etat in Ukraine that replaced
their pro Russian democratically elected gobertment. They also should have
given them Sevastopol, and also let the US putting "defense" missiles there
pointing to Moscow.By the way they should also let the US to destroy Russia-EU
commercial relationship, and why not let foreign companies control their bast
natural resources(as the biggest country in the world).

Russia, like the US or China, has her own interest, like any other country.

Thinking a modern country is going to behave like Iraq when you invade their
country to take their resources is probably not a good idea.

~~~
emp_zealoth
I'm sorry, as a person that lives in Poland i have to disagree with rampant BS
about Russian involvement

Ukrainian government was an oligarchy, bought by Russia (The president
miraculously changed his mind right before it was time to sign the treaty -
having before, repeatedly, said how important to growth and stabilisation of
Ukraine affiliating with EU was)

Then, when it all blew up, he run off to his masters in Russia.

Russia is actively fueling the fighting in Ukraine, providing weapons,
specialists, training, money etc. A passenger liner was shot out of the sky
using modern Russian AA battery that had to be provided by Russian state.
Poor, poor victimised Russia...

About the missile batteries - Russians freaked out when they learned that US
shops carry ASAT/Anti ballistic missiles, not because it is a direct threat,
but because it stops them from doing something stupid with their nukes.

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breakyerself
The way I see it, unrestrained capitalism creating boom and bust cycles and
wealth inequality were what lead to the upheavals of the previous century. We
supposedly learned our lesson after the great depression, but then in the
1980's had a change of heart and decided that government meddling in
capitalism was the real problem and started going back to the old ways.
Slashing taxes and regulations Which has lead us into a new period of boom and
bust cycles and wealth inequality. I know that's an oversimplification and not
particularly technical, but the same can be said of this article.

~~~
raintrees
Aren't the boom and bust cycles more due to central banks, rather than
capitalism, itself? I have read it successfully argued that the United States
hasn't yet practised true capitalism, but rather forms of mercantilism.

~~~
gizmo686
I suspect that boom and bust is more fundamental than that. The essential
problem seems to be that when there is an opportunity for profit, capitalism
very efficiently drives us to exploit said opportunity. In almost all cases,
this causes a usage of said opportunity beyond sustainable levels leading to
an inevitable bust.

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danielschonfeld
I'd be interested to know if some people do not feel (entirely gut feeling is
what i'm referring to, no hard data required) that the world is headed towards
another world war? If you do not feel that way, please elaborate on how you
feel the events around the world transpire into your view of reality. (no
sarcasm intended in this message, please respond seriously if you do)

~~~
Joeri
The economic situation of today is not conducive to global war. Our whole
system is now based on international trade and skilled labor. When war breaks
out what happens is the skilled labor evaporates, destroying the local
economy, which then percolates into the global economy. Simply put, a world
war is now too expensive because governments wouldn't be able to
simultaneously fight and keep their population fed. Only if you had the right
mix of dogmatic leaders who were willing to throw their own people under the
bus and had the support of troops to do so (think taliban) could it happen,
but given the gradual decline of populous religious extremism in most regions
(except the middle east) i doubt we could get to that point any time soon.

Then again, world war 3 might break out next year. You can never tell such a
thing in advance.

~~~
gbhn
> a world war is now too expensive

That's what they said about WWI. Direct quote. My observation is that most
populations are pretty readily swayed to support a war. And the invisible hand
is no match for martial law in organizing resource commitment in a war
footing. It's been decades since this happened on a large scale, so I think
we've forgotten how truly terrifyingly effective a war footing can be for a
major power.

I mean, can you imagine the kind of utter devastation that would result if the
United States, as a society, really, and I mean _really_ , decided that
Islamic terrorism was an existential threat, and mobilized to fight it on the
fully integrated national level comparable to WWII?

If the country were all-in -- spending at the level of the European powers
during WWII -- this would mean an expenditure of perhaps $30 trillion per year
for three or four years focused on that goal, an intensity which is almost
beyond imagining. That's war mobilization in a modern economy. It's hard to
conceive because it is, frankly, inconceivable. How would that even work? But
possible? Oh, yes.

~~~
tomp
It's easy for the US to attack the middle east, because the US is almost self-
sufficient (they grow plenty of food and have a lot of oil), and they get
almost nothing from the region. It would be way harder for most other
countries to attack/be attacked, because most countries simply _need_ the
exports/imports to survive.

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chrisdevereux
I think Latin America is doing quite a lot better for "petty tyrants" this
century than it did for most of the last. The main difference is that the US
hasn't been as successful at replacing the uncooperative ones with its own.

~~~
ommunist
You can read Perkins "Confessions of an Economic Hit Man" \- very enlightening
on what the US was really doing in Latin America and Indo-China during the
last half of the last century. I bet you twenty, it did not stopped doing that
now.

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nickgrosvenor
Very interesting read.

Although while reading this article, I couldn't help but think that this
entire article is a theory and it's just one author's opinion. Because of the
arbitrary 100 year timeline, it seems a lot of thinkers are drawing parallels
to the early 1900's and perhaps the start of WW1 in 1914.

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arca_vorago
The real problem is that the oligarchy are in extraction mode and the
proletariat don't realize it yet. Resource wars loom on the horizon and two of
the three-city-oligarchy's have just about completed their revenge for the
deceleration of independence in the form of the dismantling of the American
System. It was the American System that gave us the industrial age.

"British free trade, industrial monopoly, and human slavery, travel together,
and the the man who undertakes the work of reconstruction, without having
first satisfied himself that such is certainly the fact, will find that he has
been building on shifting sands, and must fail to produce and edifice that
will be permanent. Look where you may, you will find prosperity to exist in
the inverse ratio of the connection with Britain." -Henry C. Carey (Lincoln's
Economic Advisor)

~~~
ommunist
The ultimate question is - do we need a permanent monetary system. (We do not
have one at the moment nowhere in the American System.) UPD: downvoted ;-) I
expected that. This research shows that political emotions always hinder the
human computational power -- [http://www.alternet.org/media/most-depressing-
discovery-abou...](http://www.alternet.org/media/most-depressing-discovery-
about-brain-ever) . I cannot be upset, biology always overcoming maths.

~~~
arca_vorago
I actually think our money system is fine, but that control should be put back
to congress as designated in the constitution and not to a non-governmental
body such as the fed. The problem is that before that would be viable,
congress needs to be purged of corruption first, which is much harder as long
as the monetary system is controlled by the international banksters.

------
jmnicolas
A lot of fancy words, I stopped after reading "Russia expanding its territory
just like the aggressive powers of yesteryear".

Mr "economist" if you don't understand that Russia's actions were a direct
reaction to the US led coup in Ukraine, then I don't need your explanations
about what the heck is happening in the world : you're clueless.

My take on this, is that the USA are collapsing and they intend to take the
rest of the world with them. Don't think I'm anti-American, I can make the
difference between decent ordinary Americans and their crazy government.

~~~
Elrac
This is the first I hear of a "US led coup in Ukraine." Can you share some
information on that topic?

~~~
tempestn
My understanding of "coup" is that it refers to the military overthrowing the
government. In this case the US is giving aid to the Ukrainian military in
their _support_ of the government against separatist rebels, no?

~~~
toyg
"Coup" refers to the way the previous, legitimately-elected government was
overthrown, before the "rebellion" had even started. It's still unclear who
really managed to escalate the situation using snipers (who were never found,
afaik), and how bands of "revolutionaries" were armed and organised. We know
the US were pushing hard for regime change, thanks to the Nuland intercept,
and the personalities reported as US-connected in that intercept were the ones
actually taking power.

History will usually call "revolutions" the overthrown of unpopular
governments doing outrageous things, and "coup" the overthrown of legitimacy-
elected governments doing things that only a minority considered
objectionable. You can see how this could lead people to judge the Ukrainian
series of events in different ways.

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tn13
I am unable to see any explanation in that article but merely unsubstantiated
claims (basically rhetoric). People are disillusioned with democracy and
capitalism ? Really ? 1/6th of world's population (India) just had one of the
most peaceful election voting in a "minimum government" capitalism oriented
leader with unprecedented voter turnout and thumping majority.

Any ways, I will not take even a Noble winning economist seriously if he says
he can "explain" global economy. These systems are far too complex. A Computer
Scientist with exceptional knowledge about Compilers might be as clueless
about machine learning as the next guy. No one can really explain these
things. The closest explanations about such things in my opinion is given by
either Milton Friedman or Nissim Taleb, and their explantions seem to be that
there is no explanation.

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motters
There are all sorts of problems with this narrative. It entirely misses large
components of the contemporary economic situation, and seems to be written
from a rather imperialistic standpoint.

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davidw
I think economics is fascinating, but sadly, too close to politics to not
generate flame wars on sites like this, so, reluctantly, I flag most broader
articles about economics.

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ommunist
Strangely enough this explanation does not involve any economical arguments,
figures or analysis. The main topic is demonising Russia.

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danieltillett
The job of economics is to justify why the rich should remain rich. The really
good economists can even come up with a plausible story that this is just.
Economist would have been B Ark Golgafrinchans.

~~~
ommunist
This is a good one. The recent research (I mean real research) gives a clue on
how riches do it --
[http://link.springer.com/article/10.1007/s12110-014-9219-y/f...](http://link.springer.com/article/10.1007/s12110-014-9219-y/fulltext.html)
. By passing wealth to direct kin and fiercely protecting it.

~~~
danieltillett
Yes economists are one of the phalanxes of mercenaries hired to enable this to
happen. I am still amazed that the rich have managed to pull this off, but
they do get the best advisers money can buy.

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retrogradeorbit
The fact that this explanation doesn't even have a single mention of the
unfolding currency wars, makes me think this economist really doesn't
understand the times that they live in.

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dgdsgdsg
this reads like some brain wash text from an worker of _the_ establishment.
not one word about why there is terrorism just saying it is linked to the fear
of change which is just a bad joke. look what the western countries have done
in the last 40 year and you know why. and then the statement about russia
expanding its area of influence but not one word about the NATO doing the same
and in a much more aggressive way.

this text is biased to the bone!

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joaonunesk
Capitalism, monopolizes. Technology, innovates. What you know today, it is
deprecated tomorrow. In today's world you can't feel accommodated.

------
wyclif
This piece needs a real editorial once-over for grammar and spelling. I'm not
impressed with the QC the current editors bring to Quartz stories.

------
volume
very Alvin Toffler Future shock like. At least from what I recall. Not really
"utter nonsense" but I think, raw ideas that need to be fleshed out into a
meatier narrative/argument.

