the end of men (2)

http://www.theatlantic.com/magazine/archive/2010/07/the-end-of-men/8135
Hanna Rosin ziet als een dolle mina de komende overheersing van vrouwen over mannen.
In het neiuwe normaal hebben mannen afgedaan. Ze zijn eigenlijk nergens meer voor nodig. Ze zijn werkloos met slechte opleiding of functioneren minder goed dan vrouwen. Hun communicatie is slecht en hun vechtzin contraproductief, zo krijg je steeds weer nieuwe crisissen.
Als een land echt ziek is dan kiest men een vrouw om uit de problemen te komen. Zo ging het in Rwanda en Liberia (ze hebben mijn zorg nodig zei Ellen Johnson Sirleaf) en in IJsland.

Like them, he explains, he grew up watching Bill Cosby living behind his metaphorical “white picket fence”—one man, one woman, and a bunch of happy kids. “Well, that check bounced a long time ago,” he says. “Let’s see,” he continues, reading from a worksheet. What are the four kinds of paternal authority? Moral, emotional, social, and physical. “But you ain’t none of those in that house. All you are is a paycheck, and now you ain’t even that. And if you try to exercise your authority, she’ll call 911. How does that make you feel? You’re supposed to be the authority, and she says, ‘Get out of the house, bitch.’ She’s calling you ‘bitch’!”


Hanna steekt de draak met de ontdekker van het procede hoe je bij kunstmatige inseminatie (kunstzinnig tikte ik eerst) de keuze van het geslacht bijna helemaal kunt bepalen (de heer Ericsson). Hij dacht dat dit zou leiden tot een grote voorkeur voor jongens. Maar wat blijkt? men kiest vaker voor meisjes dan voor jongens. Het zijn overigens de vrouwen die hierover beslissen. Dat gebeurt nu zelfs in landen waar vrouwen tot voor kort zwaar gediscrimineerd werden, zoals Korea. Men kiest 2 tegen 1 voor meisjes bij kunstmatige inseminatie. Mannen zijn eigenlijk alleen nog maar nodig om vrouwen te bekoren: mannen zijn de domme blondjes tegenwoordig.



Och, de eerste post over the end of men lokte veel goedwillend commentaar uit van vrouwen (maar niet op de post zelf,men wilde niet onder eigen naam reageren).
Misschien moeten er ook andere dingen worden recht gezet. De vrouw mocht eerder met pensioen. Dat is onzin, want ze leven langer en blijven ook langer gezond. Er moet dus wetgeving komen dat rvouwen minstens twee jaar langer moeten doorwerken dan manne. Ook de pensioenpremie van vrouwen moet omhoog om te corrigeren voor hun veel hogere levensverwachting. Daar kan dan een een lagere werkloosheidspremie tegenover staan, omdta vrouwen minder werkloos zullen zijn.
Alimentatie zal voortaan in principe door de vrouw moeten geschieden en niet de man. Dat is het nieuwe normaal.

India groeit 4% extra door demografie

GS maakte een uitgebreide studie over de demografie van India. De belangrijkste uitkomst is dat de komende 10 jaar de groei met 4% aangezwenegld wordt door de gunstige demografie. Het percentage mensen dat afhankelijk is neemt flinkaf, de beroepsbevolking groeit met 110 miljoen, de urbanisatie zet fors door (290 miljoen mensen trekken nar de steden), vrouwen gaan meer werken en de genoten opleiding verbetert sterk.
Die 4% kan nog stijgen als men de juiste politiek volgt (verminderen bureaucratie, beter onderwijs, veel investeringen in infrasructuur)
Bovendien gaat de productiviteit extra stijging door het snel stijgende ssntsl 30-50 jarigen.

ndia’s Rising Labour Force
 India will likely provide the largest increase to the global labour force over the next decade—we estimate an additional 110 million by 2020.
 Key demographic trends driving the labour force are urbanization, more women in the work-force, and a large increase in the 30-49 age group.
 Demographics alone may contribute about 4 percentage points of annual GDP growth over the next decade.
 Demographics will affect consumer spending patterns. Spending on services such as health and education may increase five-fold by 2020.
 The age structure of the population is favourable for flows into equities and bonds, and less favourable for bank deposits.
 India’s manufacturing sector has the potential to create the necessary jobs due to recent policy changes, low unit labour costs, infrastructure build-out, prospective lowering of effective tax rates, and rising productivity trends.
 For potential to meet reality, however, India would need to reform its archaic labour laws and invest heavily in education and skills training.


Three demographic forces will shape India’s labour force—two are well-known—more women in the work force and urbanisation. The third is less well-known—an increase in the population of Indians who are in their 30s and 40s (‘thorties’). Nearly half of the increase in the labour force over the next two decades will likely come from this age group, which tend to be peak years for earnings, savings, and productivity.

Dus meer vrouwen, urbanisatie en meer 30-40 jarigen.
Can India absorb such a large increase in its labour force? In particular, the biggest challenge is to employ the surplus labour coming out of agriculture into industry and services. According to our projections industry would need to create some 40 million jobs over the next 10 years to absorb this labour—which is about 40% of the total jobs created.
 Our analysis suggests that industry can potentially generate the required number of jobs due to low unit labour costs, infrastructure build-out, the reduction of effective tax rates on industry due to the forthcoming implementation of the Goods & Services Tax (GST), and recent trends indicating increased investment and productivity in the sector.
 For potential to meet reality, however, would require a massive overhaul of India’s archaic labour laws and heavy investment in education and skills training. Labour restrictions on hiring and firing increases costs, reduces incentives to invest in skill development, discourages economies of scale, and inhibits competitiveness. Unless India reforms its labour laws, the industrial growth that is needed to absorb labour will remain in the realm of potential.

Three demographic trends are driving the increase in labour force. First, nearly half of the increase in the labour force over the next two decades will likely come from the age group of people in their 30s and 40s, which tend to be peak years for earnings, savings, and productivity. Second, a large number of
women can potentially enter the workforce. Third, we estimate that an additional 290 million Indians may urbanise by 2030, and a staggering 640 million by 2050.
Our projections for India’s labour force suggest that it may rise by about 110 million over the next ten years alone. To put this in perspective, the International Labour Organization (ILO) projects China’s labour force to increase by 15 million, and Japan’s to decline by 3 million over the same period. Our projections take into account increases to the labour force participation rate, due to a favourable age structure. Thus, our labour force projections are higher than those of the ILO.

D.w.z. het zwaartepunt van de groei in de wereld gaat verschuiven van China naar India.

taal en denken

de post hieronder beschrijft de invloed van tal op ons denken. Ook hoe je het schrijft is belangrijk. Die moeilijke tekens in het Japans en Chinees of Arabisch zetten je op een achterstand. het typt ingewikkeld in iedere geval.
Ik moest denken aan het verhaal dat eskino's 50 woorden heben voor de soorten sneeuw. Dat schijnt niet waar te zijn, maar iedereen vindt intuïtief dat dit wel waar moet zijn.
Arabische cijfers in plaats van Romeinse veranderde het rkenen: het werd ineens mogelijk zo beschreef Bernstein in against the (g)odds.

In veel beroepen hanteert men vakjargon. Dat beïnvloedt het denken. Je geberuikt te veel Engels, afkortingen. In hoeverre het je helpt is de vraag. Je kunt iets sneller zeggen en soms ook uitleggen. Maar verzin je hierdoor meer innovaties?
Misschien.

Does language influence culture?

Lost in Translation
http://online.wsj.com/article/SB10001424052748703467304575383131592767868.html?mod=WSJ_hp_us_mostpop_read
New cognitive research suggests that language profoundly influences the way people see the world; a different sense of blame in Japanese and Spanish
By LERA BORODITSKY
The Gallery Collection/Corbis
The Tower of Babel' by Pieter Brueghel the Elder, 1563.
Do the languages we speak shape the way we think? Do they merely express thoughts, or do the structures in languages (without our knowledge or consent) shape the very thoughts we wish to express?
Take "Humpty Dumpty sat on a..." Even this snippet of a nursery rhyme reveals how much languages can differ from one another. In English, we have to mark the verb for tense; in this case, we say "sat" rather than "sit." In Indonesian you need not (in fact, you can't) change the verb to mark tense.
In Russian, you would have to mark tense and also gender, changing the verb if Mrs. Dumpty did the sitting. You would also have to decide if the sitting event was completed or not. If our ovoid hero sat on the wall for the entire time he was meant to, it would be a different form of the verb than if, say, he had a great fall.
In Turkish, you would have to include in the verb how you acquired this information. For example, if you saw the chubby fellow on the wall with your own eyes, you'd use one form of the verb, but if you had simply read or heard about it, you'd use a different form.
Do English, Indonesian, Russian and Turkish speakers end up attending to, understanding, and remembering their experiences differently simply because they speak different languages?
These questions touch on all the major controversies in the study of mind, with important implications for politics, law and religion. Yet very little empirical work had been done on these questions until recently. The idea that language might shape thought was for a long time considered untestable at best and more often simply crazy and wrong. Now, a flurry of new cognitive science research is showing that in fact, language does profoundly influence how we see the world.
The question of whether languages shape the way we think goes back centuries; Charlemagne proclaimed that "to have a second language is to have a second soul." But the idea went out of favor with scientists when Noam Chomsky's theories of language gained popularity in the 1960s and '70s. Dr. Chomsky proposed that there is a universal grammar for all human languages—essentially, that languages don't really differ from one another in significant ways. And because languages didn't differ from one another, the theory went, it made no sense to ask whether linguistic differences led to differences in thinking.
Use Your Words
Some findings on how language can affect thinking.
Russian speakers, who have more words for light and dark blues, are better able to visually discriminate shades of blue.
Some indigenous tribes say north, south, east and west, rather than left and right, and as a consequence have great spatial orientation.
The Piraha, whose language eschews number words in favor of terms like few and many, are not able to keep track of exact quantities.
In one study, Spanish and Japanese speakers couldn't remember the agents of accidental events as adeptly as English speakers could. Why? In Spanish and Japanese, the agent of causality is dropped: "The vase broke itself," rather than "John broke the vase."
The search for linguistic universals yielded interesting data on languages, but after decades of work, not a single proposed universal has withstood scrutiny. Instead, as linguists probed deeper into the world's languages (7,000 or so, only a fraction of them analyzed), innumerable unpredictable differences emerged.
Of course, just because people talk differently doesn't necessarily mean they think differently. In the past decade, cognitive scientists have begun to measure not just how people talk, but also how they think, asking whether our understanding of even such fundamental domains of experience as space, time and causality could be constructed by language.
For example, in Pormpuraaw, a remote Aboriginal community in Australia, the indigenous languages don't use terms like "left" and "right." Instead, everything is talked about in terms of absolute cardinal directions (north, south, east, west), which means you say things like, "There's an ant on your southwest leg." To say hello in Pormpuraaw, one asks, "Where are you going?", and an appropriate response might be, "A long way to the south-southwest. How about you?" If you don't know which way is which, you literally can't get past hello.
About a third of the world's languages (spoken in all kinds of physical environments) rely on absolute directions for space. As a result of this constant linguistic training, speakers of such languages are remarkably good at staying oriented and keeping track of where they are, even in unfamiliar landscapes. They perform navigational feats scientists once thought were beyond human capabilities. This is a big difference, a fundamentally different way of conceptualizing space, trained by language.
Differences in how people think about space don't end there. People rely on their spatial knowledge to build many other more complex or abstract representations including time, number, musical pitch, kinship relations, morality and emotions. So if Pormpuraawans think differently about space, do they also think differently about other things, like time?
To find out, my colleague Alice Gaby and I traveled to Australia and gave Pormpuraawans sets of pictures that showed temporal progressions (for example, pictures of a man at different ages, or a crocodile growing, or a banana being eaten). Their job was to arrange the shuffled photos on the ground to show the correct temporal order. We tested each person in two separate sittings, each time facing in a different cardinal direction. When asked to do this, English speakers arrange time from left to right. Hebrew speakers do it from right to left (because Hebrew is written from right to left).
Pormpuraawans, we found, arranged time from east to west. That is, seated facing south, time went left to right. When facing north, right to left. When facing east, toward the body, and so on. Of course, we never told any of our participants which direction they faced. The Pormpuraawans not only knew that already, but they also spontaneously used this spatial orientation to construct their representations of time. And many other ways to organize time exist in the world's languages. In Mandarin, the future can be below and the past above. In Aymara, spoken in South America, the future is behind and the past in front.
In addition to space and time, languages also shape how we understand causality. For example, English likes to describe events in terms of agents doing things. English speakers tend to say things like "John broke the vase" even for accidents. Speakers of Spanish or Japanese would be more likely to say "the vase broke itself." Such differences between languages have profound consequences for how their speakers understand events, construct notions of causality and agency, what they remember as eyewitnesses and how much they blame and punish others.
In studies conducted by Caitlin Fausey at Stanford, speakers of English, Spanish and Japanese watched videos of two people popping balloons, breaking eggs and spilling drinks either intentionally or accidentally. Later everyone got a surprise memory test: For each event, can you remember who did it? She discovered a striking cross-linguistic difference in eyewitness memory. Spanish and Japanese speakers did not remember the agents of accidental events as well as did English speakers. Mind you, they remembered the agents of intentional events (for which their language would mention the agent) just fine. But for accidental events, when one wouldn't normally mention the agent in Spanish or Japanese, they didn't encode or remember the agent as well.
In another study, English speakers watched the video of Janet Jackson's infamous "wardrobe malfunction" (a wonderful nonagentive coinage introduced into the English language by Justin Timberlake), accompanied by one of two written reports. The reports were identical except in the last sentence where one used the agentive phrase "ripped the costume" while the other said "the costume ripped." Even though everyone watched the same video and witnessed the ripping with their own eyes, language mattered. Not only did people who read "ripped the costume" blame Justin Timberlake more, they also levied a whopping 53% more in fines.
Beyond space, time and causality, patterns in language have been shown to shape many other domains of thought. Russian speakers, who make an extra distinction between light and dark blues in their language, are better able to visually discriminate shades of blue. The Piraha, a tribe in the Amazon in Brazil, whose language eschews number words in favor of terms like few and many, are not able to keep track of exact quantities. And Shakespeare, it turns out, was wrong about roses: Roses by many other names (as told to blindfolded subjects) do not smell as sweet.
Patterns in language offer a window on a culture's dispositions and priorities. For example, English sentence structures focus on agents, and in our criminal-justice system, justice has been done when we've found the transgressor and punished him or her accordingly (rather than finding the victims and restituting appropriately, an alternative approach to justice). So does the language shape cultural values, or does the influence go the other way, or both?
Languages, of course, are human creations, tools we invent and hone to suit our needs. Simply showing that speakers of different languages think differently doesn't tell us whether it's language that shapes thought or the other way around. To demonstrate the causal role of language, what's needed are studies that directly manipulate language and look for effects in cognition.
Journal Community
discuss
“ That language embodies different ways of knowing the world seems intuitive, given the number of times we reach for a word or phrase in another language that communicates that certain je ne sais quoi we can't find on our own. ”
—Steve Kallaugher
One of the key advances in recent years has been the demonstration of precisely this causal link. It turns out that if you change how people talk, that changes how they think. If people learn another language, they inadvertently also learn a new way of looking at the world. When bilingual people switch from one language to another, they start thinking differently, too. And if you take away people's ability to use language in what should be a simple nonlinguistic task, their performance can change dramatically, sometimes making them look no smarter than rats or infants. (For example, in recent studies, MIT students were shown dots on a screen and asked to say how many there were. If they were allowed to count normally, they did great. If they simultaneously did a nonlinguistic task—like banging out rhythms—they still did great. But if they did a verbal task when shown the dots—like repeating the words spoken in a news report—their counting fell apart. In other words, they needed their language skills to count.)
All this new research shows us that the languages we speak not only reflect or express our thoughts, but also shape the very thoughts we wish to express. The structures that exist in our languages profoundly shape how we construct reality, and help make us as smart and sophisticated as we are.
Language is a uniquely human gift. When we study language, we are uncovering in part what makes us human, getting a peek at the very nature of human nature. As we uncover how languages and their speakers differ from one another, we discover that human natures too can differ dramatically, depending on the languages we speak. The next steps are to understand the mechanisms through which languages help us construct the incredibly complex knowledge systems we have. Understanding how knowledge is built will allow us to create ideas that go beyond the currently thinkable. This research cuts right to the fundamental questions we all ask about ourselves. How do we come to be the way we are? Why do we think the way we do? An important part of the answer, it turns out, is in the languages we speak.
—Lera Boroditsky

ecri is aandelenfundamentals

De ECRI loopt heel erg gelijk op met de S&P500 en de mortgage applications for purchase of a house. Het verband met de fundamnentals (17 i core cpi)* consensuswinst is zelfs nog sterker.

asset economy versus balansrecessie

Ons boek heeft een zeer ongeloofwaardige stelling: de asset economy verhoogt de economische groei structureel met ongeveer 0,5 tot 1%.
In het nieuwe normaal zorgt de asset economy juist voor een groeivertraging die op het ogenblik wel 2-4% lijkt.
De asset economy waarin de inflatie neerslaat in een hogere waarde van assets en nauwelijs in die van consumptieprijzen zorgt ervoor dat je steeds meer kunt lenen op je bezittingen. Mits die bezittingen maar inkomen genereren gaat dit niet snel fout.
Helaas, helaas, de kredietcrisi bracht de balansrecessie.
Alle sectoren proberen te dleveragen. dat kan alleen maar door (trendmatig) minder uit te geven dan je binnen krijgt.
Het begon bij de consument, vervolgens bij de banken en toen raakte dit de producent en toen de overheid.
Sinds 2008 lijkt het probleem verschoven te zijn van consument naar de overheid.
Toch is er vooruitgang: het bedrijfsleven kan weer releveragen. Daarbij moeten de banken weer gaan uitlenen (hun activiteiten concentreren op het bedrijfsleven).
De overheid moet investeren en dat te gelde maken, zodat de schuld niet oploopt. Beleggers moeten al die investeringen willen hebben vanwege het inkomen dat er uit komt.

Ik denk dat de asset economy per saldo toch inkomen genereert. De waarde van huizen en aandelen gaat structureel omhoog als het inkomen stijgt, zelfs in reële termen.
Als de schulden maar niet harder stijgen dan het verschil tussen inkomen en inflatie, dan kan er evenwicht zijn.
De waarde van bezittingen is na maart 2009 weer aan het stijgen. Zelfs de waarde van huizen stabiliseert in de VS. Als assets weer in reële termen in warde stijgen, dan leidt dit uiteindelijk of al heel snel tot extra groei.
Dit verhaal is voor de westerse landen moeilijk en speculatief, maar het staat als een huis voor de Emerging Markets. De geneugten van disinflatie zijn nog maar net ontdekt. Men moet echt veel beter gaan wonen, pensioenfondsen opbouwen etc. Het kan niet anders of daar zorgt de aset economy in ieder geval wel voor meer groei, vermoedelijk zelfs meer dan 1%.
Kortom, laten we zeggen dat voorlopig de westerse economieën 0,5% extra groei krijgen door de asset economy en Emerging Markets 1%.

Andere voorwaarden:
De schulden moeten voor een gunstige asset economy evenwichtig verdeeld zijn, zodat er geen geforceerde afbouw nodig is.
Ook het risico moet niet stijgen, anders gaat het fout met de waarderingen en ook met de schulden die dan hun afgrondniveau met te grote kans bereiken.
De snelheid van de kapitaalmarkten moet evenwichtig groeien (ook iets als verschil inkomen en inflatie). Door groeiende illiquiditeit gebeurde het omgekeerde in de kredietcrisis. Het risico moet dus transparant zijn (arrow?) en verzekerbaar tegen een redelijke prijs (nu blogje Montier).

Verder:
productiviteitsstijging is van meer invloed op de groei dan de asset economy. De asset economy kan van +0,5% naar -0,5% gaan, productiviteitsstijging van 3,5% naar 1% in de VS.
Door de ICT Revolutie zit het goed met de productiviteitsstijging (derde fase zeer gunstig).
Dat duurt tot recessiescenario. Dan krijgt asset economy het ook moeilijk.
Demografie is nu gunstig, vooral in Emerging Markets. In het wesetn is hij gunstig zo lang d pensioenleeftijd fors naar later wordt geschoven. De demografie van China gaat zijn tol eisen na 2015-2020.

BCA: Chao: de balansrecessie van nu is toch wel anders dan die van Japan. Daar moest het bedrijfsleven deleveragen, nu de consument en wellicht de overheid.
Japan is erger dan VS nu. Als de spaarquote van de consument stabiliseert en het bedrijfsleven is rendabel, dan groei je weer met trend of zelfs beter. Als het bedrijfsleven deleveraget dan gaat het fout met de winst en daardoor ook met de werkgelegenheid. Alles duurt enorm lang. Consumptie houdt groei wel boven nul.
In Amerika zag je dat alles razendsnel ging: banken gingen hun rommel niet na 10 jaar maar na 10 maanden op marktprijs waarderen, het bedrijfsleven ontsloeg mensen bij bossen en hield zo de winstmarge en de productivteitsstijging heel hoog. Voor de toekomst betekent dit groei van winsten en werkgelegenheid. En dus ook geen 20 jaar dalende beurzen, maar 2 jaar daling is genoeg.

het wensenlijstje om tot goede groei te komen

Groei moet komen uit groei werkgelegenheid, productiviteit en uitgaven die het inkomen bijhouden, liefst overtreffen (geledielijke opbouw levearge in de asset economy).
Uitgaven groeien minder hard dan inkomen, zelfs bij berdrijven, dat laatste moet anders.

1. investeringen omhoog, vooral die van de overheid in infrastructuur en onderwijs
2. invesetringen omhoog in bedrijfsleven, vooral de productieve (gebeurt redelijk van zelf omdat er veel innovaties moeten worden geïmplementeerd en er al voldoende is gebouwd aan huizen, kantoren en fabrieken)
3. securitisatie moet weer op gang komen, anders geen groei kredietverlening in VS
4. De asset economy moet bijdragen aan de groei (via securitisering, inkoop eigen aandelen, steeds mooiere woningen, etc.)
5. kwantitatieve verruiming om investeringen te financieren.
6. productiviteitsstijging ambtenarenapparaat, ongeveer als in bedrijfsleven
7. marktwerking in gezondheidszorg mits de zorg daardoor verbetert; rem op stijging gezondheidszorgkosten nodig, o.a. via preventie. (consumptie/BNP parallel gezondheidszorg/BNP)
8. Groene Revolutie rendabel (over drie jaar Chinese zonneenergie rendabel)
9. aardgasproductie uitbreiden.
10. peace dividend van Clintonjaren moet terugkeren

wat moet de westerse politiek doen om voorspoed te krijgen

Voor de niet westerse politiek is het eenvoudiger. Men hoeft geen schulden weg te werken, men heeft zich niet uit de markt geprijsd qua arbeid, men sluit aan bij de nieuwe mogelijkheden sinds de wereld plat is. De buitenlandse investeringen stromen binnen. Er is een enorme behoefte aan infrastructuur en de achterstand hoeft men alleen maar in te lopen. India is nu de infrastructuurknop aan het indrukken en dat moet een versnelling aan het groeitempo geven. De huidige 8% vindt men wat te weinig, dat moet toch minstens 10% worden. Begrotingstekorten mogen torenhoog worden, want als de nominale groei zo'n 10-15% per jaar is dan kun je het haast niet voor elkaar krijgen dat overheidsschuld/BNP flink oploopt. Overal in Emerging Markets ziet men nu voorbeelden hoe je hoge groei kunt krijgen en dat leidt to navolging. Door de ICT Revolutie wordt corruptie een stuk moeilijker en zo wordt het makkelijker het volkomen corruptieloze model van Singapore na te volgen.

In de westerse landen ligt het wat moeilijker. Schulden zijn wel een probleem en men kan de infrastructuurknop niet zo hard indrukken.
De VS hebben wat dit betreft nog een behoorlijk voordeel: infrastructuur kunen ze van 3 naar 6% van het BNP brengen.

Wat moet de VS doen?
De VS heeft te maken met een enorme vraag naar hun staatsleningen, omdat dit het meeste lijkt op de risicorije belegging. Daarmee krijgen ze gemakkelijk en zeer voordelig hun tekort op de lopende rekening gefinancierd.
Ook de vergrijzing is minder problematisch, de bevolkingsgroei is nog heel behoorlijk.
Daardoor zitten ze minder klem dan in Europa. Ze hoeven hun begrotingstekort minder hard naar beneden te brengen als ze maar behoorlijke groei van het nominale BNP ,laten zien (want dan loopt schiuld/bNP niet snel uit de hand). Om dat voor elkaar te krijgen moeten ze:
productief fiscaal stimuleren, d.w.z. veel infrastructuurinvesteringen doen, investeringen bedrijfsleven aanjagen, zorgen voor werkgelegenheidgroei (=midden en kleinbedrijf financieren). Extra vervroegde afschrijvingen tot een bepaald maximum bedrag tijdelijk invoeren.
Daarnaast moet de val van de huizenmarkt stoppen. Daartoe moet het makkelijke worden om hypotheken te verstrekken. Dat gebeurt nu moeizaam omdat de securitiseringsmarkt (mortgage backed securiteis) is stilgevallen. Bijna alle nieuwe hypotheken gaan nu via Fannie Mae en Fredy Mac. Ongeveer als in Nederland moet er een soort gegarandeerde hypotheekmarkt komen, waarbij de garantie betaald wordt door het bankwezen. Daar vallen dan de niet jumbo hypotheken onder die niet verder gaan dan 75-80% van de executiewaarde.
Het doel moet zijn dat het bedrijfsleven meer gaat uitgeven dan hun cashflow. Het bedrijfsleven moet stoppen met delevarging, maar juist gaan releveragen.
Het begrotingstekort loopt van zelf al redelijk terug. Als men overheids- en bedrijfsfinancieirngen aanjaagt gaat het vanzelf al goed. De Bush belastingevrlagingen voor de rijken bovem $250.000 terugdraaien is dan al bijna voldoende. De groei van de economie zal dan flink meevallen. De extra belastinginkomsten die hierdoor ontstaan moeten dan wel bijna volledig ingezet worden voor tekortreductie en niet voor cadeautjes ter herverkieizing van Obama.
Hierbij hoort dan vooral het terugdringen van de kosten van de gezondheidszorg.(denk aan het sterke verband tussen gezondheidszorgkosten als % BNP en consumptie als % BNP).

Europa heeft het moeilijker. De demografie is slechter en de tekorten van de overheid zijn niet evenwichtig verdeeld. Het Duitse model van je eruit exporteren lijkt te zegevieren.
Dan is nodig:
een lage euro via ruim beleid ECB, zich uitend in het vol stoppen van kapitaal bij gammele banken en overheden
meer sparen via langer doorwerken ouderen
gezondheidszorg betaalbaar houden
in de landen met te hoge schulden zijn dan extra bezuinigingen nodig. In Landen met grote overschotten op de lopende rekening zoals Duitsland en Nederland is dat minder nodig, mits men maar behoorlijk wat infrastructuurinvesteringen doet. Dat is op korte termijn hard nodig om de bouw niet kapot te laten gaan. Als de economie weer aantrekt moeten deze infrastructuurinvesteringen weer wat gematigd worden tenzij de Groene Revolutie rendabele mogelijkheden biedt (dan moet men zelfs versterkt hiermee doorgaan).

Wat moet de politiek doen om voorspoed te krijgen?

Op het ogenblik wordt kommer en kwel uitgestort doorde westerse media over hoe teleurtstellend het economisch herstel is.
Afgezien van het vermoeden dat dit vooral berust op te weinig geduld is het vooral een teken dat men niet in de getaen heeft hoe de wereld er voor staat. Men kijkt door een Amerikacentrische bril met in de zijspiegel de beslommeringen in Europa en Japan.
Ondertussen groeit de wereldeconomie in 2010 naar schatting met bijna 5%. Een groei van boven de 4% komt zelden voor, alleen in de epriode 2003-2007 zag men zulke hoge cifers en in nog enkele jaren in de periode 1950-1965. Ook in 2011 zal de groei boven de 4% zijn. Wereldwijd is er dus helemaal geen uitzonderlijk slecht herstel van de kredietcrisis. Men is echter blind voor iets anders: Amerika, Japan en Europa hebben hun recht om als toonzetter voor wat gebeurt in de wereld verloren. Hoe het gaat in de wereld wordt bepaald door China, India en in mindere mate Brazilië, Rusland, Turkije en Indonesië. Zij hebben de voortrekkersrol, niet de VS.

Na 9/11 is de macht van Amerika met sprongen achteruit gegaan (Europa is al helemaal onbeduidend geworden, het kon niet eens orde op zaken zetten in Joegoslavië). Het jarenlange spaartekort ging zich plotseling wreken toen de innovatiekracht, nog zo enorm sterk in de jaren 90 (90% van de belangrijke innovaties werden toen in de VS gedaan) flink verminderde na 2000 en men voor de tweede keer achter elkaar grote misinvesteringen deed (eerst in de ICT waarin elk bedrijf investeerde alsof ze marktleider konden worden; voor de tweede keer in het Mac Mansion). Een specifieke ramp voor de VS, de onjuiste wardebepaling van de hypotheken, waarvan de kredietverstrekking in de VS voor meer dan 50% van afhing, werd catastrofaal toen de republikeinse minister van financiën het tijd vond moral hazard te gaan bestrijden via het faillissement van Lehman Brothers.
Al die zaken bij elkaar hebben de macht van de VS nog sneller geërodeerd dan die van Groot Brittannië na 1890-1913. Na de Eerste Wereldoorlog werd de VS de hegemon. Nu is het de beurt aan China met India als belangrijke sidekick. We zitten in de overgangsperiode, net als 1890-1913. Die vorige overgangsperiode was overigens een periode met veel voorspoed. Het VK legde het niet alleen militair af tegen de VS na 1913, maar men legde het vooral ook af qua mogelijkhden om vooruit te komen: in het begin van de Idustriële Revolutie was het VK toonaangevend, rond 1915 was het de massaproductie door Ford, de grote olieproductie in de VS en vooral ook de veel meer op verandering gerichte cultuur van het immigratieland VS dan het conservatieve VK. Het VK dutte wat in onder haar rijkdom en sloeg flink aan het mopperen, net als nu gebeurt in de VS.
Net als het VK na 1913 onder ogen moest zien dat de VS belangrijker was geworden in de wereld, moet nu de VS aanzien dat China nu meer lakens gaat uitdelen. Het is nog niet zo ver dat China al meer lakens heeft, maar men krijgt elk jaar veel meer lakens bij dan de VS. Waar in de jaren 90 in dollars gemeten meer dan 90% van de wereldgroei naar zich toetrok, wordt nu meer dan 50% door China bepaald.
Men vindt het nog steeds raar dat de gang van zaken in China die van de hele wereld bepaalt. Men maakt zich liever druk over problemen in de VS en nu in Europa.
Het grote koersherstel in 2009 werd voorafgegaan door beursherstel in China en de correctie van 2010 ook.

The end of men

Een lang artikel http://www.theatlantic.com/magazine/archive/2010/07/the-end-of-men/8135 beschrijft de teloorgang van de man. Hij wordt aan alle kanten voorbij gestreefd door de vrouw.
Dit riep in de New York Times een tegenreactie op van columnist Kristof http://www.nytimes.com/2010/07/22/opinion/22kristof.html?_r=1&hp waarbij hij het in mijn ogen nog erger maakte (onze redding is dat vrouwen mededogen met mannen zullen hebben).
Sommmige gebeurtenissen veranderen voor altijd hoe je over zaken denkt, zoals 9/11. Of de Axiëcrisis in 1998 die Emerging Markets volwassen maakte.
In de Great Recession gebeurde dit weer. Machtsverhoudingen werden totaal door elkaar geschud. De opleving van de macht van de overheid lijkt slechts kort. De overheid is weer het probleem zoals Reagan al riep. Individuen zijn ook even minder machtig en moeten vaak zelfs meer loon inleveren dan de gewone arbeider. Dat zal ook tijdelijk blijken: als de beurzen en huizenprijzen stabiliseren keert hun macht terug, omdat er een explosie aan ideeën is geweest na de opkomst van internet. Al die komende innovaties moeten vooral door individuen worden aangezwengeld.

De grootste verandering is vermoedelijk de opkomst van de vrouw (en daarmee samenhangend de neergang van de man, deze zijn niet langer van Mars maar van Pluto dat niet langer als planeet erkend wordt.
Door de Grote Recessie werken er voor het eerst meer vrouwen dan mannen in de VS. In de Grote recessie werden netto 8 miljoen mannen ontslagen en slechts 2 miljoen vrouwen. Het ziet er naar uit dat vrouwen makkelijker een baan blijven vinden dan mannen omdat ze dominant zijn in 13 van de 15 snelst groeiende beroepsgroepen.

Voor het ICT tijdperk en het huidige tijdperk (dat heeft nog geen naam, suggesties?) waren mannen in het voordeel. Kracht, agressiviteit, opleiding en intelligentie waren de belangrijkste winnende eigenschappen. Mannen zijn en waren niet (of nauwelijks) dommer dan vrouwen. Dus agressiviteit en kracht en de betere opleiding waren doorslaggevend om mannen het belangrijkst te maken.
Er is uitgerekend dat mannen in hun leven tot de huidige tijd gemideld $ 431.000 meer verdienden in hun werkzame tijd.

Momenteel zijn kracht en agressiviteit (?) minder belangrijk. In plaats hiervan zijn communicatie, flexibiliteit en zorgzaamheid belangrijker geworden. Op die gebeiden hebben vrouwen een voordeel.
Qua opleiding zijn vrowuen de laatste paar decennia een steeds grotere voorsprong aan het opbouwen. Vrouwen maken hun opleiding vaker af dan mannen. Daarom studeren er nu tegen elke twee mannen nu drie vrouwen af.
Hoge welvaart wordt alleen nog maar bereikt in landen waar veel vrouwen werken, vooral ook in de betere groepen. Landen die dit niet lukt gaan de welvaartboot missen.

Mannen passen dus niet meer zo goed in de huidige tijd. Ze zijn gedoemd om en masse werkloos te worden bij de minst of geringste recessie. Ze komen die recessie uit zonder baan of een veel slechter betalende baan en moeten dan de hand op gaan houden bij hun vrouw.
Volgens het Bureau of Labor Statistics hadden in 1980 26% van de vrouwen een leidinggevende functie of waren professional. In 2009 was dit 52%.

How to Tame Your Nightmares

herapies Teach Sleepers to Change the Ending of Their Dreams—or Even Take Flight
In the new movie, "Inception," a master thief is able to infiltrate peoples' dreams and steal their subconscious secrets—even plant a dream idea they'll think is their own.
As fantastical as that seems, an evolving area of sleep research holds that it is possible for people to direct their own dreams, in a limited way.

WSJ's Melinda Beck gives a recap on how dreams have played a role in entertainment, including its latest part in the film, "Inception."
For example, people who suffer from recurring nightmares can learn to substitute happier endings. Practitioners of lucid dreaming—who train themselves to be aware that they are dreaming—say they can try out fantasies like flying.
Ordering up a dream about a nagging personal problem is difficult, but possible, says Robert Stickgold, an associate professor of psychiatry at Harvard Medical School. "As you go to bed tonight, really think about some of those emotional issues that you haven't wanted to deal with. You've got about a 10% to 20% shot."
That fits with the current understanding of what dreams are and why we have them. Once thought to represent repressed sexual urges, or simply neurons firing randomly, dreams are now believed to be mash-ups created by the unconscious mind as it processes, sorts and stores emotions from the day.
When Your Day Invades Your Dreams
Solving the Puzzle
As the rebus above illustrates, dreams can contain cryptic messages. But these techniques, with practice, can help calm troubled sleep:
Rewrite an Ending: While you are awake, imagine a happy conclusion to a recurring scary dream. Practice visualizing it several times a day and just before bedtime.
Become Lucid: Ask yourself often during the day if you are dreaming; then do it at night. If you can become aware of dreaming while you are doing it, you may be able to dream whatever you want.
Plan a Dream: Focus on an image, question or problem before you go to sleep. Look for a solution in your dreams—but it's likely to be a metaphor.

Interpret Meanings: Record every dream you remember in a diary before you get out of bed. Look for recurring themes. Gaining insight in your waking life may quiet a message in your dreams.
"We take our problems to sleep and we work through them during the night," says Rosalind Cartwright, an emeritus professor of neuroscience at Rush University Medical Center in Chicago, who has spent nearly 50 years studying sleep and dreams.
Her new book, "The Twenty-Four Hour Mind," explains that the mind latches onto some thread of unfinished emotional business from the day. Then, in REM sleep (the rapid eye movement period when most dreaming occurs), it calls up bits of older memories that are somehow related, and melds them together. "That's why dreams look so peculiar. You have old memories and new memories Scotch-plaided into each other," she says. "They are emotional connections rather than logical ones."
Usually, people work through the most negative emotions first, and their dreams become more positive as the night goes on. (How do researchers know that? "The old-fashioned way. We wake them up and ask them," Dr. Cartwright says.)
But nightmares interrupt that process; people usually wake up before the frightening emotion is resolved, so the dream keeps repeating.
"Your brain seems to think that it's helping you to prepare, but you don't allow yourself to finish it so it becomes a broken record," says Shelby Freedman Harris, director of the Behavioral Sleep Medicine Program at Montefiore Medical Center in Bronx, N.Y.
Image Rehearsal Therapy
Dr. Harris's program is one of a small number around the country that helps nightmare sufferers and people with post-traumatic stress disorder learn to rewrite the script of their recurring dreams using a technique called Image Rehearsal Therapy.
After recalling the nightmare in detail, the dreamer writes out the new script and envisions it several times a day. Dr. Harris says one of her patients had recurring nightmares of being surrounded by sharks. She imagined they were dolphins instead and rehearsed the scene during five sessions, and the nightmares vanished. A young patient having nightmares of being chased turned the pursuer into chocolate and ate him.
"It gives the patient control over the nightmare," says Dr. Harris. Studies have found that after several sessions practicing with a therapist, some patients dream the new ending just as they envision it, some dream another version of it, and some stop having the nightmare altogether.

Lucid Dreaming
or some people, the ability to recognize that they're dreaming while they are in a dream comes naturally—others are able to learn it. Once they master lucid dreaming, practitioners say they can change the scene, the action, the characters and the outcome at will.
"We recommend that most people start with flying. Have fun with it. The laws of gravity don't apply," says Stephen LaBerge, a psychophysiologist who popularized lucid dreaming while teaching at Stanford University for 25 years.

llustration by John S. Dykes
Tibetan Buddhists have practiced a form of lucid dreaming for centuries, but it wasn't taken seriously by scientists until 1978, when Dr. LaBerge, then a graduate student, came up with a way for lucid dreamers to signal that they were aware of dreaming using prearranged eye movements during REM sleep. Since then, dozens of studies at other universities have replicated the experiments, and enthusiasts have logged hundreds of lucid dreams at seminars held by Dr. LaBerge's Lucidity Institute.
How do you learn it? The next time you wake up from a dream, try to return to it immediately, he says. It will help your mind recognize that you are dreaming the next time. "Let your brain have that one little obsessive thought—'I want to remember that I'm dreaming'—and sleep with that intention," he adds.
How can you tell you're dreaming? If there's no give-away, like a dragon chasing you, Dr. LaBerge suggests trying to find a printed word. In a dream, words almost always change if you look away and look back.
In nightmares, while you can theoretically outrun or outfly any dangers you encounter, Dr. LaBerge recommends facing your fears instead. "Once you realize you are not in any real danger, you can turn and befriend that ogre," and the insight you gain may carry over into your waking life, he says.
Videogame players are often very adept at lucid dreaming, according to research by psychologist Jayne Gackenbach at Grant MacEwan University in Edmonton, Alberta, Canada. Not only do gamers have highly developed visual-spatial skills, she says, "they've also practiced fighting back, so that when Freddy Krueger pops up in their dreams, they're energized and think it's fun."
Dream Incubation
Can you order up a dream on a specific topic, or can somebody else influence your dreams? Numerous experiments with so-called dream incubation have tried, with mixed results.
"I can control people's dreams. I can get them to dream about videogames by having them play intensely," says Dr. Stickgold. His studies at Harvard found that when volunteers played the game Tetris for hours a day, 60% reported dreaming about it at least once as they were falling asleep.
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In a follow-up study with the virtual-skiing game Alpine Racer, 14 of 16 students reported seeing skiing images at sleep onset (as did three people who were merely observing the experiment.)
It's unclear how far into the night's dreams those images persisted. Dr. Stickgold and colleagues are now repeating the study having subjects play "Dance, Dance Revolution" and waking them later in the night to ask about their dreams.
Harvard psychologist Deirdre Barrett had students incubate dreams in the 1990s. She asked 76 students to try to solve a problem of their own choosing every night for a week. About half recalled a dream they thought was related to the problem, and 70% of those felt the dream gave them a solution.
Many scientists, artists, writers and other creative people have found the solutions to problems and other inspirations in their dreams, as Dr. Barrett recounts in her 2001 book, "The Committee of Sleep." The chemist Friedrich Kekulé discovered the ring-shaped structure of benzene after dreaming of a serpent devouring its tale, for example. Paul McCartney woke up with the tune for "Yesterday," in his head one night in 1965.
Still, it's by no means easy to order up inspiration on demand.
"It's not like the dream-construction portion of your brain is an intern and you can say, 'Go look this up,' You can't do that," says Dr. Stickgold. But reviewing emotional issues and memories of the day when you go to bed may lay down a trail for dreams to follow, he says.
Experts say the first step toward working with your dreams is recalling them in the first place. Most people dream for two to six hours each night, but at most they recall only about a half-hour's worth, usually the last one in the morning.
Keep a journal by your bed and write down anything you remember before you do anything else. If possible, wait until you don't have to set an alarm and can work through your last dream slowly. "That's when you are most likely to catch a dream," says Dr. Cartwright. Sketch out visual images you remember. Give each dream a name, like "The Ghost in the Closet or My Date With Robert Redford," she notes.
When you have collected several, look back to see if emotional themes are emerging. And be aware that they are highly metaphorical.
That common dream of being unprepared for an exam may be a stand-in for not meeting a goal or trying to juggle too many responsibilities. The naked-on-a-stage dream may be a reflection of being exposed and vulnerable in your waking life.
"Do the interpretive work first," says Dr. Barrett. "Just trying to suppress your dreams without exploring what they are about is doing them a disservice."
—Email healthjournal@wsj.com.

When Your Day Invades Your Dreams
By Rachel Emma Silverman

Ever since I saw the movie Inception last Friday (thanks “Baby Day” at my local movie theater!), I’ve been thinking about dreams. In the movie, Leonardo DiCaprio heads a team of corporate spies, of a sort, who can invade people’s dreams and extract secrets.
Dreams are based on snippets and snatches of our daily lives– the thoughts, memories and anxieties that we carry with us, even though we may not always be aware of them. During stressful work times, many of us have weird dreams about the office, while parents often have anxiety dreams about their children.
Sometimes dreams themselves are so stressful that people seek out therapies to actually redirect their dreams, as my colleague Melinda Beck reports in today’s Journal. Specialized sleep clinics are teaching people bothered by recurring nightmares how to “rewrite the script” and come up with different endings.

Why the battle is joined over tightening

By Martin Wolf

Published: July 18 2010 19:13 | Last updated: July 18 2010 19:13

To tighten or not to tighten – that is the question. It is one to which policymakers have started changing their answers. Are they right to do so? That is the issue addressed in the Financial Times this week, echoing the fierce debates of the 1930s. If arguments for tightening are correct, failure to do so would bring fiscal and financial shocks in some of the world’s most important countries. If arguments for tightening are false, decisions to do so threaten recovery and might trigger further financial shocks.

Where are the policymakers? The declaration after the Toronto summit of the Group of 20 leading nations, stated: “There is a risk that synchronised fiscal adjustment across several major economies could adversely impact the recovery. There is also a risk that the failure to implement consolidation where necessary would undermine confidence and hamper growth. Reflecting this balance, advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilise or reduce government debt-to-gross domestic product ratios by 2016.”

This language is notably more cautious than that of the Pittsburgh summit of September 2009. That stated boldly: “We pledge today to sustain our strong policy response until a durable recovery is secured. We will act to ensure that when growth returns, jobs do too. We will avoid any premature withdrawal of stimulus. At the same time, we will prepare our exit strategies and, when the time is right, withdraw our extraordinary policy support in a co-operative and co-ordinated way, maintaining our commitment to fiscal responsibility.”

So what has changed?

The first answer is that the world economy is recovering more strongly than expected. In April 2009, at the time of the London G20 summit, the consensus of forecasts for global economic growth this year was 1.9 per cent. By last September it had reached 2.6 per cent. By June 2010, it was 3.5 per cent. In the US, the consensus forecasts for 2010 were 1.8 per cent in April 2009, 2.4 per cent last September and 3.3 per cent in June 2010. Even for the eurozone, the consensus of forecasts has moved a little, from 0.3 per cent in April 2009, to 1 per cent last September and 1.1 per cent in June 2010.

The second answer lies with the fiscal crises in Greece and other peripheral members of the eurozone, reinforced by the election of the coalition government in the UK. The flight from risk was dramatic: in May, the yield on Greek 10-year bonds peaked at more than 12 per cent. This led to a rescue package by the International Monetary Fund and other eurozone governments, and the creation of a new €750bn joint IMF and eurozone stabilisation facility.

The extent of the tightening must also not be exaggerated. In its May Economic Outlook, the Organisation for Economic Co-operation and Development forecast a decline in cyclically adjusted fiscal deficits for the grouping as a whole from 6.4 per cent in 2010 to 5.8 per cent in 2011. Corresponding figures were 9 per cent and 7.9 per cent for the US, and 4.1 per cent and 3.6 per cent for the eurozone. But further tightening is now planned, particularly in the UK. Moreover, many think planned fiscal tightening does not go far enough.

What, then, are the arguments?

At the anti-deficit extreme are those who argue fiscal deficits have no impact on activity since they lead to offsetting behaviour by private people. Thus
governments run deficits, private people save, since they understand that their taxes will ultimately rise. Another, very different, extreme position comes from those who believe a deep slump would purge past excesses, and so lead to healthier economies and societies. While people who think in these radical ways influence the broader politics, they have limited direct influence on policymakers. So what is the latter debate about?

The “cutters” argue that such huge fiscal deficits – never seen in peacetime in big developed countries, notably the US – threaten long-term fiscal credibility and depress private confidence and spending. While piling fiscal stimulus on top of the built-in stabilisers made sense in the panic of 2008 and early 2009, the time has come for swift consolidation. Otherwise, a spike in borrowing costs looms, with dire results. The permanent loss of output and revenue left behind by the crisis, along with ageing populations, make action inescapable and urgent.

Finally, should economies weaken after a fiscal tightening, monetary loosening would be highly effective. The latter can work by encouraging investment and weakening exchange rates, so also encouraging exports. Many cutters also argue that the best response would be to reduce spending. That is the lesson, they say, from past fiscal retrenchment.

The “postponers” agree there must be decisive slowing of the growth of long-term spending. But they emphasise the fragility of recovery and, in particular, the huge private sector financial surpluses. This private frugality has caused the fiscal deficits, they insist, not the other way round. The sequence of events makes that evident.

Moreover, add postponers, we have seen a strong flight to safety: for the panickers, there is no alternative to bonds of highly rated governments, particularly the US, issuer of the world’s safe-haven currency. Since the eurozone crisis, that role has become more entrenched. Moreover, the long-term interest rates of leading countries are falling, not rising: in the US, 10-year Treasury bond rates are 3 per cent. Where, then, is the threat to confidence?

Moreover, postponers would add, with interest rates close to zero, monetary policy is ineffective, except to the extent that it supports fiscal loosening. Fortunately, countries with their own central banks can finance fiscal deficits directly. This is untrue for members of the eurozone, which are, in effect, operating with a foreign currency. So long as excess capacity remains so large and normal bank lending so weak, such reliance on the central bank “printing press” creates no inflationary danger. On the contrary, the danger is rather that premature fiscal tightening would trigger a sharp economic slowdown, as in Japan in the 1990s, so pitching important economies into deflation.

The interaction of high indebtedness with deflation could, they argue, create a downward spiral. A Japanese-style “lost decade” threatens the developed world. That is particularly likely if everybody tightens together. If anything, further loosening is needed: in the first quarter of 2010, the GDP of every member of the Group of Seven leading countries was still below its pre-crisis peak.

Readers must make up their own minds on the merits of the arguments this week. My own strong sympathies are with the postponers. But on one thing everybody agrees: this debate matters. We cannot be sure who is right. But we can be sure that, if policymakers get it wrong, the results may well be dire. Physicians must prepare to respond swiftly to adverse reactions to their favoured course of treatment.

martin.wolf@ft.com

De Hollandgekte in Duitsland

Een van de dreamings die Ter Veer schreef (maar niet in ons boek staat) is over een korte periode van Hollandgekte in de VS. Nederland was een krote periode in alles een voorbeeld, geweldig.

Nu zien we zo iets in Duitsland. Men vindt ons accent zo grappig en sympatheik. Men vindt de Nederlandse presentatoren zoals Sylvie van der Vaart beter dan de inheemse saaie boel. Sinds Rudi Carell speelt dit al (eigenlijk sinds Johan Heesters).
Loouis van Gaal wordt als geweldig gezien en net zo leuk als der Rudi.
De Duitse tv-cultuur is nu losser.

Sweet Spot for China's Blue-Collar Revolution

By Andy Xie 06.23.2010 17:14
http://english.caing.com/2010-06-23/100154848.html

Sweet Spot for China's Blue-Collar Revolution
Manufacturers are strong enough to pay higher wages, but will other players adjust to China's new labor environment?
Export manufacturers based in China have long been terrified of big buyers from the West. China has a lot more factories than the West has buyers for its products, so exporters have generally assumed that their powerful clients would never accept higher prices.

But business costs have been rising in China, manufacturers are well-connected to markets and infrastructure, and buyers are realizing that their supply options are not unlimited. As a result, western buyers these days should be a lot more terrified than their Chinese suppliers.

A recent spate of worker strikes at factories in China partly reflects a search for a new balance at the labor end of the manufacturing landscape, especially among young, blue-collar workers. On top of that, export manufacturers have been talking about labor shortages for the past year or two. But "labor shortage" is an oxymoron: Any product in shortage is simply not priced right.

These conditions point to a need for adjusting the price of labor in China. Western buyers should take note. Although individual factories may lack pricing power, China has national pricing power. Every factory in a given sector has a uniform wage level. And China is the factory of the world.

Exporters recently affected by strikes and labor shortages shouldn't worry too much. They have room to increase wages, and yet wage pressures are not unlimited. I think annual wages need to rise between 15 and 20 percent every year to re-establish an equilibrium. Improved productivity can pay for more than half of these wage increases, while the other half can be passed in the form of higher customer prices. And as wages rise, it will make sense for factories to retrain and hire middle-aged workers idled in recent years as manufacturers focused on hiring low-cost young people.

Some may argue that production can shift to other countries from China to appease buyers. Yes, some factories should and will move to other countries. This is how globalization works. When costs in one country rise significantly, production should shift to countries with lower wages. In this way, prosperity spreads all around. It would be wrong for China to pursue policies that prevent this process.

On the other hand, don't look for a massive shift in production away from China anytime soon. No other country has the production scale, cost advantages and infrastructure to replace China.

Shifting a portion of a company's production base to Bangladesh, Indonesia or Vietnam would raise costs and erode price advantages. Infrastructure could be built up in these countries to prevent bottlenecks and boost competitiveness. But infrastructure building takes a long time. Moreover, since factories should be close to suppliers and buyers, moving to another country could increase a company's logistics costs substantially.

Besides, western buyers should be able to pass on higher costs of Chinese labor and production to their retail customers. Only about 10 percent of the cost of each Chinese factory is attributable to labor. A retail price in the West is three to four times China's export price. Hence, China's labor cost is about 8 to 9 percent of a retail price in a western store. If China's labor costs double, retail prices need rise only 8 to 9 percent. And if this increase is phased in over three years, prices would climb 3 percent, which is an acceptable inflation rate.

I think China now has a sweet spot for increasing wages without losing significant market share in global trade. The window is probably 10 years. During this period, China's exports will rise mainly on higher prices and perhaps volume. China's annual exports could climb 7 to 10 percent, and more than double in a decade, to more than US$ 3 trillion.

Tipping Point

When a labor pool surplus vanishes and a shortage emerges, labor becomes a limited resource. A business that wants to hire more workers must lure them from other opportunities by, for example, offering higher wages.

In development economics, the tipping point from early to late stage equilibrium is called the "Lewis turning point." And what's been billed as a recent labor shortage in China suggests the nation's economy has reached this point. But it is not black and white.

College graduates still find it hard to get a job, and when they do they have to wrestle with low starting wages. This seems to suggest that the supply in the college graduate labor market is still unlimited. Indeed, at this point, the wage premium for college graduates is too small to justify the cost of a college education. In the jargon of economics, college education in China has negative value added.

Neither is the blue-collar market uniform. Employment opportunities for middle-aged workers are poor, and a significant share has been idle a long time. A re-entry for these workers could significantly shift the supply-demand balance.

The Lewis turning point is a process. One part of China's labor market – the young, blue-collar sector – has been exhausted. Export factories whose business model relies on this sector are now suffering acute labor shortages. Yet young workers are valuable: Their maintenance costs are low in terms of healthcare needs, willingness to relocate and limited expectations for housing.

Re-pricing something that is in shortage means the price of the total, not just marginal, supply goes up. Businesses resist increasing wages to attract new workers because they have to pay more to existing workers as well. As an alternative, they willingly operate below capacity; keeping some capacity idle makes good sense.

A labor shortage also reflects instability. Workers have an incentive to speed up re-pricing by, for example, resigning en masse and taking new jobs for higher wages. The whole labor force cannot coordinate such moves, so strikes emerge as uncoordinated expressions of this power. But as labor and management negotiate wages at each factory, the entire labor market gradually shifts to a new equilibrium.

If the government suppresses strikes, a labor shortage becomes more acute and wages remain stagnant. At some point, the pressure is too great for the government, leading perhaps to social trouble. That's why the government shouldn't politicize current labor-management conflicts. Politicization would only worsen the problem.

The shift to labor price increases in the export sector is playing a critical role in China's transition to a consumption-oriented economy. In the future, more labor will be oriented toward the service sector. Export volumes won't grow as in the past, but export price increases will generate enough revenue to pay for higher import levels, which is also part of the transition.

Beyond Labor

In addition to the labor market, the capital market needs to change substantially while adjusting to the new equilibrium. Higher interest rates would reflect this reality, but a switch from today's low rates to high levels could be stressful for the Chinese government and key special interests.

In the early 1990s, inflation rose in China because production capacity was insufficient to meet investment demand. Investment rose due to rapid credit expansion. So an inflation tax subsidized capacity formation.

After several years of rapid investment, production capacity was no longer a bottleneck. Deflation tied to a labor surplus became a dominant force in the economy. China then joined the World Trade Organization, which made the deflationary force a magnet for multinationals looking to relocate. China's low-cost labor was a big attraction.

China experienced double-digit GDP growth and low inflation as manufacturing soared. This ideal equilibrium – combining high growth and low inflation – was first broken when prices for commodities, especially oil, started to rise. China's demand growth eventually tipped the supply-demand balance in the oil market and triggered price increases from an average US$ 20 per barrel to about US$ 80 today. Prices rose across the board to accommodate higher oil prices, since interest rates were kept low in most major economies.

I have little doubt that the latest changes for China's labor market are even more inflationary. Over the past decade, the share of China's labor income in the economy has fallen dramatically. Today, it's probably below 40 percent. But over the next 10 years, I think labor's income share will rise significantly, probably up to 60 percent. Odds are that this normalization for labor income will lead to annual inflation of 5 percent or more.

But the current interest rate structure is not right for an inflationary environment; it was only appropriate for a deflationary environment. Now, a transition to higher interest rates is necessary to prevent a crisis.

Maintaining the current interest rate structure will accelerate inflation as real interest rates turn negative. This process can feed on itself and trigger a crisis. So the sooner China raises interest rates, the better. I think an interest rate that's right for the future could be 5 percentage points higher than today's level.

Nevertheless, the government has been reluctant to raise interest rates. This hesitancy reflects transition difficulties. High on the list of hurdles are local governments and state-owned enterprises – the most powerful interest groups in China. Both could oppose higher interest rates, delaying the transition.

In the low interest rate environment, the nation's money supply grew rapidly, inflating prices for assets such as property, which local governments rely upon for revenues. Low interest rates also caused state-owned enterprises to increase leverage. If interest rates normalize today, the property market could decline 50 percent, hurting the fiscal position of local governments. And enterprises, whose average leverage ratio is probably around 100 percent, could see their profits wiped out if interest rates rise 5 percentage points.

Because interest rates will only be allowed to rise slowly, and reluctantly, economic forces will push China's inflation rates higher than they could be if rates were allowed to rise rapidly. It's hard to guess how high prices could climb, since tough-to-forecast oil prices play an important role. Yet oil prices are likely heading higher in coming years. China's inflation rate could spike in double-digit territory.

One possible scenario is that inflation rises above 10 percent in 2012, leading to social tension that overwhelms resistance to higher interest rates. And as interest rates climb in chunks, as they did in the early 1990s, property prices would fall dramatically, probably by more than 50 percent.

The banking system would suffer significant losses. But since the central government has a strong balance sheet and can issue bonds to recapitalize the banking system, high interest rates and a collapsing property market would not derail the economy.

A major economic transition rarely passes without a crisis of some kind. Resistance to transition makes a crisis more likely. But crisis can be averted in China if interest rates are allowed to rise as soon as possible and at a measured pace. If rates climb 1.5 percentage points this year, 2 percentage points next year, and again in 2012, a soft landing for the economy would be possible, even if the property market experiences a hard landing.

China's current transition is also tied to an inevitable consequence of the human cogs that run the world's factory: The labor market has become inflationary. Now, at the macroeconomic level, China must raise interest rates to prevent an inflation overshoot. Meanwhile at the microeconomic level, the government should tolerate legitimate labor demands for higher wages, even strikes.

Anything of unlimited supply has an economic value of zero: Its price is equal to the production cost. Labor is something like that at an early stage of a nation's industrialization. When a rural labor force is larger than an industrial workforce, the labor surplus prevents workers from demanding higher wages.

Such was the situation a few years ago in China. But times have changed. A new equilibrium is emerging as part of economic transition. Ways of doing business are changing for manufacturers and western buyers, as well as local governments and state-owned enterprises. Western shoppers will be paying more. And China's blue-collar workforce will benefit.