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Old 11-15-2013, 10:27 AM
 
28,906 posts, read 45,202,743 times
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Quote:
Originally Posted by lycos679 View Post
China isn't a welfare state though. As their labor pool declines they will see wages rise to compensate.
Yet.

Also, you have to realize that your theory means a first-class conundrum for Chinese economic planners. The reason the Chinese have had such spectacular success has been because they had the commodity of inexpensive labor. That's it. So as wages continue rising due to the law of supply and demand, that puts the Chinese at a decided economic disadvantage.
Even now, roughly 95% of all Chinese high tech manufacturing is assembly only. By that, I mean that a shipload of parts comes into the country, is put together in some massive warehouse, and is shipped back out.

I personally know of three different manufacturing operations that have or are in the process of moving their factories to places such as Indonesia or Vietnam, chiefly because wages are rising at a 15-25% a year clip.

What's more, that's not the only bomb that's going to hit. The Chinese real estate market is overbuilt so much that it makes the American real estate crunch look mild by comparison. While the American market had roughly 9-10 months of excess inventory, the excess in many of China's largest cities is estimated to be 9-12 years. That is a terrifying number, especially when you realize that construction constitutes roughly 25% of the Chinese GDP. The central planners in China have created such contradictions in their economy that they can't stop building. Yet they don't have buyers for what they're building. It is history's greatest instance of malinvestment by far, eclipsing the infamous Japanese real estate bust.

Essentially, take anything that has happened to the Japanese over the past two decades and multiply it by two-three-even ten times. That's how bad it's going to get. It also explains why roughly 8% of the Chinese GDP leaves the country every years in the form of foreign investment. If China were such a long-term bet, why wouldn't the money be staying at home?
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Old 11-15-2013, 10:54 AM
 
11,780 posts, read 8,209,779 times
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Quote:
Originally Posted by cpg35223 View Post
Yet.

Also, you have to realize that your theory means a first-class conundrum for Chinese economic planners. The reason the Chinese have had such spectacular success has been because they had the commodity of inexpensive labor. That's it. So as wages continue rising due to the law of supply and demand, that puts the Chinese at a decided economic disadvantage.
Even now, roughly 95% of all Chinese high tech manufacturing is assembly only. By that, I mean that a shipload of parts comes into the country, is put together in some massive warehouse, and is shipped back out.

I personally know of three different manufacturing operations that have or are in the process of moving their factories to places such as Indonesia or Vietnam, chiefly because wages are rising at a 15-25% a year clip.

What's more, that's not the only bomb that's going to hit. The Chinese real estate market is overbuilt so much that it makes the American real estate crunch look mild by comparison. While the American market had roughly 9-10 months of excess inventory, the excess in many of China's largest cities is estimated to be 9-12 years. That is a terrifying number, especially when you realize that construction constitutes roughly 25% of the Chinese GDP. The central planners in China have created such contradictions in their economy that they can't stop building. Yet they don't have buyers for what they're building. It is history's greatest instance of malinvestment by far, eclipsing the infamous Japanese real estate bust.

Essentially, take anything that has happened to the Japanese over the past two decades and multiply it by two-three-even ten times. That's how bad it's going to get. It also explains why roughly 8% of the Chinese GDP leaves the country every years in the form of foreign investment. If China were such a long-term bet, why wouldn't the money be staying at home?
I'm not sure that is relevant to the OP's topic. China does have some glaring demographic problems, but those same demographic problems aren't much of an issue over the long term for the individual people. China never promised expensive social programs to their seniors though.
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Old 11-15-2013, 11:49 AM
 
Location: Central Texas
13,720 posts, read 24,613,257 times
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Quote:
Originally Posted by lycos679 View Post
A declining global population isn't a problem because wages would rise to compensate for the lack of labor. However, a declining national population is a problem for the welfare states because you need a certain amount of workers to pay for the old people.
A lack of labor IS a problem, regardless of wages.

Most established countries have a huge infrastructure to maintain. Even if the population is declining and they don't need to build more homes they still repair roads, plant crops, etc.

Japan has a labor shortage. And they are fulfilling it by bringing labor from other Asian countries, especially Korea.
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Old 11-15-2013, 12:02 PM
 
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Quote:
Originally Posted by hoffdano View Post
A lack of labor IS a problem, regardless of wages.

Most established countries have a huge infrastructure to maintain. Even if the population is declining and they don't need to build more homes they still repair roads, plant crops, etc.

Japan has a labor shortage. And they are fulfilling it by bringing labor from other Asian countries, especially Korea.
I already clarified that a declining population is a problem for the welfare states. A declining population is a problem for Sweden, but not so much for Bangladesh or the Congo.
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Old 11-15-2013, 12:53 PM
 
28,906 posts, read 45,202,743 times
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Quote:
Originally Posted by lycos679 View Post
I'm not sure that is relevant to the OP's topic. China does have some glaring demographic problems, but those same demographic problems aren't much of an issue over the long term for the individual people. China never promised expensive social programs to their seniors though.
I just have to disagree. China will be losing approximately 200,000,000 workers in the next forty years, and experience a tripling of the percentage of its elderly at the same time. Despite 70 years of Communism, the Confucian influences still run strong there, one of the strongest impulses of which are honoring and taking care of the elderly. For example, the Chinese recently passed laws requiring children to visit their parents on a periodic basis. However, even that will fall short for it means that a worker will be supporting two parents along with his own household.

When that fails, the state will inevitably have to step in, lest they experience large numbers of indigent and homeless elderly -- something that just is completely against the grain in that society.
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Old 11-15-2013, 01:59 PM
 
5,458 posts, read 6,124,370 times
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Capitalism ,as practiced in the 21st Century, depends on growth. If we don't grow, we have a serious problem.

(Hence, the Fed's desperate attempt to generate some inflation, which thus far has failed).

From a more social perspective, there is nothing wrong with a no growth population. It takes away a lot of the artificial pressures which we place on ourselves as human beings trying to be something more, individually, and collectively, than what we are.

Simpler, kinder, and more focused on people as opposed to things. Not necessarily bad.
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Old 11-15-2013, 02:17 PM
 
Location: Los Angeles (Native)
24,163 posts, read 13,675,815 times
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I am one that believes you can have a declining population and still thrive.

A pretty good example is Pittsburgh. Their population has declined, but they have been ranked a great place to live on many levels.

I always thought the fascination with growth was a bit insane
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Old 11-15-2013, 02:37 PM
 
Location: West Coast, US
77 posts, read 81,073 times
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Quote:
Originally Posted by jm1982 View Post

I always thought the fascination with growth was a bit insane

Me too! I'm no economist, but even I get you simply cannot have infinite growth that draws from finite resources.

I've been looking for work for nearly a year now. It'd be great to have to only compete against fifty or so people for every single job opening, as opposed to 300+. And do NOT get me started on rush-hour traffic!
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Old 11-15-2013, 06:36 PM
 
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The problem is proportions of age groups. The USA has too many elderly and that segment is growing. Cut that number significantly, and the overall demographics work better. New Zealand only has between 3 and 4 million people but they have a great country with a great quality of life and it is somewhat socialist. Big deal. Same with Australia. It is the older demographic groups that are the economic killers. Perhaps former CO governor Lamb was right, old people have a duty to die. We are a nation abandoning our youth in favor of the old who become non productive and are that way for many, many years. Far longer than social security ever anticipated. China, Japan, France, Germany and many other first world nations have huge problems with aged populations. It is going to be very ugly indeed. Population reduction is desirable provided you reduce the right segments.
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Old 11-15-2013, 08:04 PM
 
Location: Pennsylvania
1,698 posts, read 1,824,573 times
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Improvise, adapt, overcome. Things will balance out with a declining population if people are responsible, plan intelligently and make prudent decisions. The ones I worry about are those who expect growth of any kind to persist forever without a collapse.
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