As an exercise, I put the following scenario to everyone.
Take any random country and have it export nothing. It'll continue to have service industries, it'll continue to grow some food and so on for local consumption, but all exports cease.
What do you expect to happen to that country economically?
My answer:
On day 1 I expect nothing much to happen apart from some limited loss of employment in exporting industries that'll likely be replaced by employment in services.
Slowly but surely however I expect them to become impoverished. Because they'll still be importing all manner of things, since they can't possibly produce everything themselves, but they're not exporting anything. That being so, they'll have a one way flow of money out of the country.
The longer it continues, the further they'll slide. Everyone has a job, services are happening, but there's a constant drain of wealth out of the country to pay for imports and nothing coming back in. As the currency starts to lose value, interest rates must be raised to keep inflation in check and slow the slide. Everyone feels poorer, but nobody's too sure exactly why given there's plenty of activity, people have jobs and so on.
Can anyone debunk my thinking here?
Won't it show up sooner though?It's not until the creditors (source of imports) stop exporting to this unproductive country, that it's impoverishment will be ultimately realised.
I think we're (more or less) on the same page here, i.e. the realisation of impoverishment is correlated to a decline/cessation of imports into the country.Won't it show up sooner though?
Eg fuel is priced in USD so as the currency declines fuel gets expensive for locals.
Or someone who wants to take an overseas holiday finds that it's now cost prohibitive to do so. They still have similar funds available in local currency, but that doesn't buy so much anymore.
Cars are imported so they get expensive. People still have cars, but the fleet slowly but surely gets older and runs down.
Or things like music festivals are cancelled because no overseas act is willing to perform for a price expressed in local currency and converted to USD or GBP it's cost prohibitive to pay them,
And so on. All seems reasonably OK but one by one things just become unaffordable to ordinary people or where scale is required just fall over completely.
This scenario brings to mind countries with closed borders such as Haiti (perhaps not closed borders, but impoverished though), North Korea, Albania just to name three.Won't it show up sooner though?
Eg fuel is priced in USD so as the currency declines fuel gets expensive for locals.
Or someone who wants to take an overseas holiday finds that it's now cost prohibitive to do so. They still have similar funds available in local currency, but that doesn't buy so much anymore.
Cars are imported so they get expensive. People still have cars, but the fleet slowly but surely gets older and runs down.
Or things like music festivals are cancelled because no overseas act is willing to perform for a price expressed in local currency and converted to USD or GBP it's cost prohibitive to pay them,
And so on. All seems reasonably OK but one by one things just become unaffordable to ordinary people or where scale is required just fall over completely.
The relevance I had in mind to the previous discussion is that mining, agriculture, manufacturing etc all export or provide an alternative to importing that product whereas administration, low value services etc don't do that.This scenario brings to mind countries with closed borders such as Haiti (perhaps not closed borders, but impoverished though), North Korea, Albania just to name three.
Every import is most often compensated by printing more and more local currency which ultimately become worthless and you have crazy inflation within the country,. Zimbabwe was that scenario.pretty soon, employment becomes rare.look Haiti now.I think we're (more or less) on the same page here, i.e. the realisation of impoverishment is correlated to a decline/cessation of imports into the country.
And your mentality, is exactly the same as our politicians, because they also have an absolute belief in their own opinions, over common sense.I don’t think battery manufacturing is an obvious one, although I do understand it’s one you are obsessed with.
I don’t so much have a believe in my own opinion about battery factories as much as I believe in the markets ability to work out where it deploys capital. (Indonesia is lower cost production that WA nickel, even if we built a battery factory here it would struggle against lower cost materials)And your mentality, is exactly the same as our politicians, because they also have an absolute belief in their own opinions, over common sense.
Indonesia has absolutelty screwed Australia over nickel, by demanding China build the infratructure to refine their crap nickel in Indonesia and not in China.
Is WA's once-booming nickel industry dead or just a sleeping giant?
WA's nickel industry has collapsed this year but multi-billion-dollar projects are still being developed with an eye on a future recovery.www.abc.net.au
They are now trying to encourage Tesla to build a battery manufacturing plant in Indonesia, that's the difference between a fat ar$ed lazy Govt and a sevond World Govt thatcis progressive, like we were in the 1960's. Lol
Anyway completely off topic, just an angry old bloke who has worked his ar$e off and now have to listen to well off young blokes that have lived through the "Wonder years". Lol
A shock is coming.
I don’t anyone here is saying we should stop exporting, I think we should be big exporters, of anything we have a competitive advantage in.As an exercise, I put the following scenario to everyone.
Take any random country and have it export nothing. It'll continue to have service industries, it'll continue to grow some food and so on for local consumption, but all exports cease.
What do you expect to happen to that country economically?
My answer:
On day 1 I expect nothing much to happen apart from some limited loss of employment in exporting industries that'll likely be replaced by employment in services.
Slowly but surely however I expect them to become impoverished. Because they'll still be importing all manner of things, since they can't possibly produce everything themselves, but they're not exporting anything. That being so, they'll have a one way flow of money out of the country.
The longer it continues, the further they'll slide. Everyone has a job, services are happening, but there's a constant drain of wealth out of the country to pay for imports and nothing coming back in. As the currency starts to lose value, interest rates must be raised to keep inflation in check and slow the slide. Everyone feels poorer, but nobody's too sure exactly why given there's plenty of activity, people have jobs and so on.
Can anyone debunk my thinking here?
there is the ignore button if my opinions keep you up at night,Anyway completely off topic, just an angry old bloke who has worked his ar$e off and now have to listen to well off young blokes that have lived through the "Wonder years". Lol
A shock is coming.
which ones ( wonder years ) were they ?Anyway completely off topic, just an angry old bloke who has worked his ar$e off and now have to listen to well off young blokes that have lived through the "Wonder years". Lol
A shock is coming.
Why would I ignore you, the only way issues are fully explored are by robust debate.there is the ignore button if my opinions keep you up at night,.
I think I have made my way by working hard and having a high savings rate, and then making wise long term investments, by backing my opinions. If you haven’t done as well maybe it’s your investment opinions that need adjustment, not mine.
yes , indeed , and if those batteries/tech are competitive , you can always license the tech/IP to international clients and stay internationally competitive that wayI don't think we should manufacture grid batteries here, on the basis they will be cheaper, I think they should be built here because they are strategicaly critical and we actually may also be cost competitive enough to pursue the option.
So if the batteries aren’t cheaper, how are you going to get people to buy them?I don't think we should manufacture grid batteries here, on the basis they will be cheaper, I think they should be built here because they are strategicaly critical and we actually may also be cost competitive enough to pursue the option.
But if that’s possible it should happen anyway. With perhaps only minor incentives.yes , indeed , and if those batteries/tech are competitive , you can always license the tech/IP to international clients and stay internationally competitive that way
The issue is that a lot of what’s being discussed essentially is exporting versus not exporting.I don’t anyone here is saying we should stop exporting, I think we should be big exporters, of anything we have a competitive advantage in.
The notion that everything has to come from the cheapest supplier, is a very one dimensional view, that in a lot of cases ends up with poor outcomes.
That’s not what I got from it, was more about importing vs making stuff ourselves.The issue is that a lot of what’s being discussed essentially is exporting versus not exporting.
No, to me it’s about maximising the goods and services we have available with our limited capital and labour we have available.To the capitalist purists it's all about maximum profits on paper, they disregard hidden subsidies that all countries give their own industries, and also disregard the fact that other countries have a degree of self reliance that we don't.
It will come back to bite us one day.
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