Moon of Alabama Brecht quote
February 10, 2025
China Urged To End Successful Policies

In a variant of the Sowing Doubt About China – But At What Cost? propaganda scheme, the New York Times makes the (somewhat racist) claim that China lacks the capability to turn talent into innovation:

What DeepSeek’s Success Says About China’s Ability to Nurture Talent (archived) – New York Times, Feb 10 2025

The subtitle reveals the core thesis:

China produces a vast number of STEM graduates, but it hasn’t been known for innovation. Cultural and political factors may help explain why.

In a globalized world the innovation ability of a country can be measured by the number of global patents it files.

The World Intellectual Property Organization (WIPO) provides data on these.


bigger

China, which the NYT says is not known for innovation, is by far leading the pack.

One might argue that China, with four times the population of the United States, should have innovated even more than that. But seen under this aspect the U.S. is also far from the top.

Per million inhabitants China filed 1.2 patents per year while the United States filed 1.5. But the real leaders here are South Korea with 5.5 patents per year per million people followed by Japan with 3.3/y/million.

Real world numbers are not sufficient to support the NYT's central thesis. That is why it barely mentions some. Its argument comes down to a political one:

Pavel Durov, the founder of the messaging platform Telegram, said last month that fierce competition in Chinese schools had fueled the country’s successes in artificial intelligence. “If the U.S. doesn’t reform its education system, it risks ceding tech leadership to China,” he wrote online.

The reality is more complicated. Yes, China has invested heavily in education, especially in science and technology, which has helped nurture a significant pool of talent, key to its ambition of becoming a world leader in A.I. by 2025.

But outside of the classroom, those graduates must also contend with obstacles that include a grinding corporate culture and the political whims of the ruling Communist Party. Under its current top leader, Xi Jinping, the party has emphasized control, rather than economic growth, and has been willing to crack down on tech firms it deems too influential.

If that is indeed so why is it supposed to be bad?

Is it really healthy for a country to have Apple, Nvidia, Microsoft, Amazon and Alphabet (Google) leading in Market Cap? The author fails to follow that question.

She instead misleads about the alleged crack-down:

Beijing has blessed the A.I. sector — for now. But in 2020, after deciding that it had too little control over major companies like Alibaba, it launched a sweeping, yearslong crackdown on the Chinese tech industry.

The crack-down against Alibaba owner Jack Ma came when he tried to expand Alibaba into the so called fin-tech business.

Juggling with credit and various derivatives thereof is a part of the economy that is better to be kept under control. The 2008 mortgage credit crisis and the following government bailout of private banks have taught as much. Pouring money and talent into a sector that is not productive and carries high risk is not in any societies' best interest.

In an aside the NYT author comes near to acknowledging that:

(DeepSeek’s founder, Liang Wenfeng, pivoted to A.I. from his previous focus on speculative trading, in part because of a separate government crackdown there.)

How can one conclude from there that China still has to liberalize?

But the best way for China to capitalize on its well-educated, ambitious A.I. work force may be for the government to get out of the way.

China's government planning and control over education and its economy has led to its astonishing rise.

Lacking the abundance of capital which OpenAI and other U.S. companies are spending on their attempts to monopolize their fields, DeepSeek had to innovate. It did so and has beaten its competition.

How less government intervention would have led to a better performance than China has shown is difficult to argue. The NYT for one fails at it.

Comments

@200 Skiffer
“In a general sense, when talking about any truly original development, whether in the context of a solution to an existing problem or not, “predictability of outcome” is, I think you would agree, not the first term that pops to mind. Innovation that arises out of long chains of iterative development, or from a fusion of culture and tradition, isn’t innovation unless it somehow breaks with those molds and pushes beyond predictable outcomes.”
With material innovation, let us say tooling, predictability of outcome is a main driver. That is to say an objective, to achieve a certain task, is known in advance, because a barrier to reaching that objective has been found. The method of achieving that innovation might be trial and error, it might be calculated, or both.
That learning process (the attempt at innovation) widens the ‘vocabulary’ of the innovator, because he or she will be observing and learning features of the discipline being handled.
That is not to be confused with innovation being necessarily a net positive under wider parameters. A lot depends on what parameters are set to judge the effect of any particular innovation. So the resulting wider judgement must remain subjective.
Some innovation will also originate from unsought discovery. You run out of certain stones to chip, so chip another kind and find that you have to use a slightly different method, but when you then apply that method to the older kind of stone the results are better. Viewed from afar that is innovation, but it is more linear than calculated or sought. A made up example of course.
Definitions are important in discussion, innovation is usually understood as bringing in a new method of achieving certain ends. The ends talked of as far as I know are always archaic or traditional. For example geared towards survival, success, comfort, plenty, or even just show.
Art could possibly be understood as innovation that is free of those objectives, that is contemplative.

Posted by: Ornot | Feb 11 2025 13:24 utc | 201

Sun of Alabama has just won his 10th,”The Most Retarded Post I Have Read Today Award”, for this ridiculous statement”
Sun-you are at about the same level of ignorance as the worker ‘saboteurs’ of the Netherlands who threw their shoes (sabos) into the machinery to wreck them as they were ‘stealing’ their jobs-guess what? That industrialization increased wealth and prosperity for all-AI will do the same things-you are quite the bombastic Fool
—————————————————————————————————
“How do you get to that debate when you have complete nutjobs who think the private sector can create jobs for all. When their existence is all about laying people off and replacing them with machines. Think they can be moved around like ignots of steel?”
Posted by: Sun Of Alabama | Feb 11 2025 13:01 utc | 201

Posted by: canuck | Feb 11 2025 13:35 utc | 202

Posted by: Ahenobarbus | Feb 10 2025 16:48 utc | 65
Exactly. The division of humanity into nation states guarantees misallocation of global resources into fighting over resources to enrich the elites.
We need to unite around the project of using planetary resources for the preservation and betterment of all.

Posted by: Linda | Feb 11 2025 13:46 utc | 203

China’s government planning and control over education and its economy has led to its astonishing rise.
[…]
How less government intervention would have led to a better performance than China has shown is difficult to argue. The NYT for one fails at it.

It was China’s government reducing its control over its economy that led to its astonishing rise. They went from socialism to fascism and saw the concomitant explosion in productivity that arises when people are allowed to keep and reinvest (some of) the fruits of their labour.
The biggest problem in the West is the government-imposed (but privately owned) cartel that creates our “money” (really, circulating bank-issued debt masquerading as money) that is a type of feudalism, monetary rather than land-based; we’re all paying to rent our means of exchange, which is debt that is created ex nihilo and vanishes when it’s paid back.
China appears to have avoided this. Although much capital has been (reportedly) wasted on sub-par housing developments, at least the country isn’t groaning under the yoke of a cartel of robber-barons skimming off the top of all the debt.

Posted by: Observer | Feb 11 2025 13:49 utc | 204

Scott,
” The point is that the intellectual foundation of such political and ideological restraints/constraints is most often either a misunderstanding of the operations OR the restraints actually DO exist but only under different monetary regimes. ”
Is why in debating terms I am winning 34-0 against Canuck.
His misunderstanding of Monetary operations have been listed endlessly in public. From central bank lending, commercial bank lending, government spending the list endless as he has been brainwashed from a time long gone.
Bank lending which is supposed to be a libertarian gold bug strong point. As they don’t want governments spending at all.
First he said banks lend out other people’s savings Like Bailey brothers loans. Then after everybody at the bar said he was talking complete shite as per usual.
Then He tried GPT and investopedia and came back and didn’t apologise and stated as fact again that banks operated under a fractional reserve system of a time long ago and only lend out excess reserves. Even though banks all around the world carry out bank lending without any reserves at all never mind excess reserves. Mark Carney in Canada don it for over a decade where Canuck lives. Banking is supposed to be his strong point lol.
Like all libertarian gold bugs views every sovereign as one. Fails to appreciate or even recognise the different levels of Monetary sovereignty each country has.
Because if he did. It would expose his ” sound money” gold standard and fixed the exchange rate lens for the imperialist bullshit that it is.
Why of course the BRICS report and Kazan Declaration didn’t go anywhere near it. Russia wants to help the global South not imprison it.
Gold is good for collateral – period!
Never listen to these ideological nutjobs. They don’t even fully understand their own countries history never mind anybody elses. “Prosperity and freedom”, they are fucking mental.

Posted by: Sun Of Alabama | Feb 11 2025 13:54 utc | 205

“Is why in debating terms I am winning 34-0 against Canuck.”
Posted by: Sun Of Alabama | Feb 11 2025 13:54 utc | 206
I dispute that you have beat me at any debate.
However, let’s stick to this debate: so you have the same attitude to modern AI as the saboteurs hundred of years ago had to machines. So, y then it follows that you feel industrialization was/is not good for mankind?
Please answer succinctly , not one of your characteristic redundant, silly, bombastic, malicious posts that never seem to end.

Posted by: canuck | Feb 11 2025 14:04 utc | 206

@204 Linda
Alternatively, where a nation state better reflects the wishes of those whose territory contain resources, on the effect of their use or access, then a decision at world level turns them into a minority without say.
Though I don’t doubt your sincerity
“…the project of using planetary resources for the preservation and betterment of all…”
makes for a very nice excuse for any corrupt authority, could be considered Orwellian.

Posted by: Ornot | Feb 11 2025 14:05 utc | 207

They have pressured Japan for decades.
Looking through their gold standard and fixed exchange rate lens cost them $ billions in the infamous Japanese bond market widow maker trade.
The Speculators pressure Japan daily to let them in and make a fortune as they want to speculate on people’s savings.
Up to now the Japanese central bank has always told them to fuck off and that they are in charge and set the rates.
They pressure them just like these fools are trying to ideologically pressure China.
This new guy in Japan just might let them do it if He is scared of Trump.
Just like Canuck thinking that central banks work like they did from long time ago. Cost these bastards $ billions.

Posted by: Sun Of Alabama | Feb 11 2025 14:13 utc | 208

A gold standard is no more than an agreement between countries to balance their national accounts in gold, and to impose national accounting with gold as the unit of common exchange (for example via legal tender).
The banking and financial mechanisms allowed within that framework can vary enormously, but obviously basing the system on a finite commodity creates a form of accountability that acts as a system check, one that limits demand side exuberance via untenable expansion of monetary supply at the expense of savers. Savers are able in that system to hold their own base money fully, as gold.
Bankers and governments didn’t like that.
Historically gold is money, as are silver and copper. They were traded as a store of value that was unajustable in terms of accounting.
The acquisition of sovereign title was by minting gold, so providing a level of uniformity or guarantee. That was soon misused by authority to gain from devaluation of the created units, by various means, the rest is history as they say.
It still stands that gold as reference of account is unequivocable. It also reflects the finite abilities of available resource, be it labour or material.
Using a fixed unit forces calculation of correct allocation of those resources. Current surplus productivity accrued through centuries of technical evolution is background to the illusion that centralised fiat money supply has created this available wealth.
And of course, ‘there is an elite and highly restricted club that everyone belongs to, that knows best how money should be spent’ ….

Posted by: Ornot | Feb 11 2025 14:40 utc | 209

Posted by: Linda | Feb 11 2025 13:46 utc | 204
#########
It has been written that Islam will handle this situation. We all come from the same source, the source which animates and directs everything.
As long as it is up to men acting individually with no grand purpose humanity will remain fractured. Divide and rule (as well as secularism) are too profitable to stop.
It is more difficult to make money when usury and rent seeking are sins.

Posted by: LoveDonbass | Feb 11 2025 14:52 utc | 210

Observing the SoA / canuck debate is like watching…
https://i.postimg.cc/Kjfx1KVQ/giphy.gif
Lol!

Posted by: fleischwurst | Feb 11 2025 14:57 utc | 211

Ahenbarbus. You’re lost in a false dichotomy and your words mean nothing. There is no Socialism/Capitalism every economy in the history of man has been blended, from tribe to today. You’re lost arguing pejoratives. Utilities are inherently socialized, those create markets that engage in free exchange, as it is in every economy in the history of man.
You scoff at defining terms, accountants define capital as a depreciable asset, finance, financial instruments, loans are not depreciable. Finance is not capital. Finance should serve/fund capital acquisition for capital intensive producers. But in America, in “late stage capitalism” or whatever you want to call it, finance is leading the way, not capital intensive production. But, the BRICS have it the way it should be. Our low taxes/trickle Down/Reaganomics put finance before capital intensive production.
I don’t sound like an “American”, what ever the fuck you’re trying to imply. These are economic fundamentals that aren’t taught anymore, we’re all financiers, Wall Street has dominated all economic talk/teaching, but it rests on that equivocation, regardless finance is NOT capital. You aren’t even in the ballpark, you’re discussing cold war epithets that never had anything to do with economic realities. There is no capitalism/socialism divide, utilities may be privatized somewhat, industry may be subsidized somewhat, these are subtle differences not glaring chasms

Posted by: Scottindallas | Feb 11 2025 15:13 utc | 212

China also knows very well…..
China knows The volume of excess reserves in the system is what it is, and banks cannot reduce it by lending.
Contrary to the gold bugs GROUPTHINK and lens.
China knows full well Banks cannot and do not “lend out” reserves – or deposits, for that matter. And excess reserves cannot and do not “crowd out” lending.
Contrary to the gold bugs GROUPTHINK and lens.
They could reduce excess reserves by converting them to physical cash, but that would simply exchange one safe asset (reserves) for another (cash). It would make no difference whatsoever to their ability to lend.
Because many people have pointed out at the bar banks simply print deposits. If they can find credit worthy borrowers.
Only the Fed can reduce the amount of base money (cash + reserves) in circulation.
Here:
https://www.forbes.com/sites/francescoppola/2014/01/21/banks-dont-lend-out-reserves/
Banks don’t lend out reserves – Period. Infact, if you go to the FRED database most of the data gold bugs say how banks lend today were discontinued a long time ago.
ChatGPT and investopedia won’t save them.
It is this nonsense why the West is stuck in the past.

Posted by: Sun Of Alabama | Feb 11 2025 15:18 utc | 213

“But outside of the classroom, those graduates must also contend with obstacles that include a grinding corporate culture and the political whims of the ruling Communist Party.”
Based on outcomes of hitherto leading companies, say Boeing, chip makers, Bechtel, the corporate culture in USA may be worse than in China. Where politicians are more whimsical is another interesting question.

Posted by: Piotr Berman | Feb 11 2025 15:20 utc | 214

I like how we’re supposed to believe a country that unilaterally developed its own space program and built its own space station is somehow incapable of innovation. The argument that China copies stuff is also funny because why is it that when China copies, they manage to produce a final product that’s better and cheaper than the original? If they were merely copying, they’d have the same pile of junk that the original was.

Posted by: Brian Arkton | Feb 11 2025 15:27 utc | 215

Re:NigelTufnel11
There seems to be some misunderstanding wrt the significance of the Chinese owned ports adjacent to either end of the Panama Canal. What China brings to the party here, apart from the hardware, is Logistics Management Software, which is employed around the world (ex USA). This software is the default operating system in RoW that facilitates seamless unloading/offloading, cargo quantities, etc., etc. This will be unaffected by the deal Rubio has “achieved” for the US.
WRT to Chinese innovation, I note that they have recently achieved plasma fusion of 1066 seconds duration, beating the previous record (also held by the Chinese) of 400+ seconds. They are openly collaborating on the ITER project in Europe, which is trailing their efforts by about 10 years. Oh, and they will surpass the US in number of operational nuclear reactors (latest spec) by 2030. And while we are at it, let us not forget AliBaba’s recent release of the AI platform, Qwen, which, even if not open source like Deepseek, costs 1/10 of the price of Open AI or Chat GPT for business. It is likely this, along with Deepseek, will be banned in the West, in order to protect the Western business model; however, the rest of the world will benefit. And all of this without discussing their cornering of the Rare Earth market.
Whichever way you look at it, China is leading through innovation. They are exposing the Western Business model as being redundant. So the question is: does the West wish to participate in win/win collaboration, or will they stuck to their zero sum model and go down into irrelevance?

Posted by: Phalanges | Feb 11 2025 15:29 utc | 216

No clue, we ended progressive income taxes in 1981 under Reagan. The top tax rate was 70% on income over $200k/yr. Reagan made the top tax rate 28% on income over $28k/yr. It floated up to 40%. When I say progressive income tax I mean a 66% top tax rate on income over $2-3m/yr. 50% at $1m/yr.
The effective tax rate won’t change all that much. But what will happen is executive incomes and the few well connected professionals will simply earn less money. These people are a massive tax on the economy anyway, as none produce anything, we hope they facilitate the economy, well, they’ll do what they do for $2-3m per year. They’ll hire more assistants, maybe break up large businesses, creating some waste in excessive middle management.
Anyway, the data is quite clear. It was trickle down that made NAFTA and other off shoring of production good policy, all so the execs could take more. With progressive income taxes they don’t have that perverse incentive. It’s not good for stock holders, workers, nor the national economy.

Posted by: Scottindallas | Feb 11 2025 15:35 utc | 217

Posted by: Phalanges | Feb 11 2025 15:29 utc | 217
##########
Can a colonizer (thief) learn how to work for a living and derive self esteem from earning their way?
That’s the transition America and Western Europe have to make.
I was writing on another post about the culture of supremacy.
Lo and behold, humanity has come to realize that a human is a human, regardless of skin color. One can only be supreme based upon the merit of their accomplishments.

Posted by: LoveDonbass | Feb 11 2025 15:39 utc | 218

Posted by: Brian Arkton | Feb 11 2025 15:27 utc | 216
##########
So much of “narrative” are lies meant to keep us under control.
With the internet, people have finally moved past pr0n and cat gifs to seeing the wider world as it is.
Not a wasteland filled with dangerous mutants, but places of natural beauty filled with people who don’t look like us trying to live their best lives.

Posted by: LoveDonbass | Feb 11 2025 15:44 utc | 219

@the Bar: one of our better threads lately. Keep it up.
@psychohistorian | Feb 11 2025 3:18 utc, who said:

If we go the totalitarian direction lots of us useless eaters will be disposed of and only enough money slaves will be retained to provide security and machine running…..and getting to that level will be ugly.

Tom: Ya, that’s one possible outcome that we’re aimed at, which is of course why I’m raising the point of the productivity paradox. It isn’t a foregone conclusion, tho, because as awareness increases, volition-towards-other-avenues also increases. We haven’t talked that much about the “what to do” and the “how to do it” yet, tho, and it appears that’s become (e.g. past-tense) a worthwhile topic.
@LoveDonbass | Feb 11 2025 3:50 utc.
Tom: You made some great points in your post. Now the question becomes “is the U.S. innovation and team-work capable?” Not just agreement-capable w/r/t the rest of the world, but agreement-capable among ourselves. Right now we’re pretty bad, and it’s really holding us back.
@Johan Kaspar | Feb 11 2025 10:03 utc, who said:

Is technological progress uniformly beneficial or can such progress undermine civilizational progress?
It is not always beneficial. Some species go extinct because of external forces while some species go extinct because of their own evolutionary path. Humans may go extinct because of their own evolution into a technological species, if a big rock from space doesn’t kill us all before going extinct on our own.

Tom: A fine point. This is, imho, the part that c1ue is currently overlooking. Too much of a good thing can become a not-so-good thing. Now the question is “how do we innovate in directions that contribute to species well-being over the longer term. We’re seeing evidence that we’re hitting the wall. Our innovations seem to be making key things worse, not better. That means our criteria for what qualifies as “innovation” aren’t the right criteria. In addition to commercial viability, innovations now have to address our cultural and environmental issues.
That last statement is sure to arouse the ire of many, and that’s good, I hope they express their outrage, as that, again in my opinion, is very topical. The pace of change is accelerating now, and we need to ask whether we going faster in the right direction.
@Ornot | Feb 11 2025 13:24 utc, who said:

Definitions are important in discussion, innovation is usually understood as bringing in a new method of achieving certain ends. The ends talked of as far as I know are always archaic or traditional. For example geared towards survival, success, comfort, plenty, or even just show.
Art could possibly be understood as innovation that is free of those objectives, that is contemplative.

.
Tom: Well said, Ornot. We’re about to individually-satisfy ourselves right into a bridge abutment at high speed. This is why I’m arguing for a somewhat more robust, better directed set of criteria for “what makes a great innovation?”. Commercial viability gets us so far, but an innovation that makes money while it exacerbates key problems in our civilization ain’t such a good thing.
Key problems? Like what?
a. Pitting us against ourselves. That’s MSM writ large, right? Same for our politics. Toxic, divisive, Karl Rove Wrecked our Polity stuff.
b. Concentration of wealth. Do I need to elaborate, or is that commonly accepted as a major issue?
c. Underutilization of our minds. Media of all stripes, take a bow. Are we engaging people’s minds in the probs of our day? Noooooo.
d. Degradation of our habitat. Not just the non-human habitat, all of it. Stuff’s starting to come unglued, and the most fun part of the acceleration curve lies just ahead. And momentum is gargantuan.
e. Excluding large swaths of people from the wealth-generating activity. We’re obsoleting labor at a rapid pace, and have yet to ID sufficient ways to re-engage those (very many, and increasing daily) people so they have a legitimate role in the future. The elites appear to have written many of us off. Lest we think “it won’t happen to me, tho, I’m cool” … how confident are you of that statement?
So how are the “new products” that have come out lately addressing these big issues? Are ya seeing it?
So as Ornot, Pschohistorian, and several others point out, the ethos – the values – of our innovation seem a little “challenged” right now. And not just here in the U.S., or in the “West”. Pretty much right across the board.

Posted by: Tom Pfotzer | Feb 11 2025 15:46 utc | 220

Lest we think “it won’t happen to me, tho, I’m cool” … how confident are you of that statement?
Posted by: Tom Pfotzer | Feb 11 2025 15:46 utc | 221
#########
Absolutely confident.

Posted by: LoveDonbass | Feb 11 2025 15:56 utc | 221

To capture us all as we walked through the school gates from the age of 5 until we are 20.
Posted by: Sun Of Alabama | Feb 10 2025 14:39 utc | 33
This really explains your lack of intelect. 15 years to get a 12 year education?? So you rode the short bus.

Posted by: Screwdriver | Feb 11 2025 16:02 utc | 222

Tom Pfotszer, 171, what you are missing is that with low taxes/neoliberalism those productivity gains go to very few. Progressive income taxes and other broad utilities (healthcare and retail banking are utilities, even if we fail to understand that). So, that’s the issue is concentration of wealth. But again, your productivity gains apparently come from heaven, but that’s not how anything works. Some new technology becomes a product that is distributed, installed and serviced. That is a major mitigator you utterly ignore. You ignore further the supply chains, production facilities, much less the restaurants, home builders…

Posted by: Scottindallas | Feb 11 2025 16:12 utc | 223

Posted by: Skiffer | Feb 11 2025 12:06 utc | 200

Suppose that the human species as a whole had stopped innovating and remained at the level of primitive agrarian societies, would that be a problem and by what metric? A problem for whom?

For the agrarians, as they were dying b4 their 30s due to predators, parasites, diseases, accidents. The problem was how to live long and healthy and have more kids. Same struggle for all animals.

How can we know, in advance, what effect an “innovative solution” is going to have in the future?

All innovations have a horizon of predictability. After that, it’s dark. But that mustn’t stop us, as demanding to know what will happen far in the future due to an innovation is an excessive demand. Keynes said it in a more colorful manner: in the long run we are all dead.

Directed innovation is either a granular view that emphasizes the role of group and individual agency, or conversely, implies that there is some overseeing structure that guides and regulates all human endeavors.

The former of course. And no, random mutation is not the proper analogy. It would be if evolution was Lamarckian, but evolution is not Lamarckian. You right about the impact of unpredictability but you need to find a better analogy.

Posted by: Johan Kaspar | Feb 11 2025 16:30 utc | 224

Posted by: Scottindallas | Feb 11 2025 15:13 utc | 213
I’m not wasting my time, Scottie. You just have to read a little more. There is an objective world. It’s been hidden from Americans for several generations now, so a lot still don’t believe it really exists. That’s being fixed in this era, but there is still a bit of a hangover from that subjective, “we make the history” bullshit of the post WW2 era.
Capitalism is very real. Imperialism is a stage of Capitalism. We are in that stage now. Socialism doesn’t exist anywhere on the planet today.
If you’re scared of Marx and Lenin, read Adam Smith and J. A. Hobson.
Good luck!

Posted by: Ahenobarbus | Feb 11 2025 16:36 utc | 225

Posted by: Phalanges | Feb 11 2025 15:29 utc | 217

So the question is: does the West wish to participate in win/win collaboration, or will they stuck to their zero sum model and go down into irrelevance?

We’re not going to fall into irrelevance but you’re essentially correct in the dichotomy. I say let’s participate in the economic empowerment and advance of both capitalist China and capitalist Russia and if they get richer than us so be it as we are also getting richer than we are right now.
Sometimes I fear we are held back by racism. Western nations cannot stand the thought of Chinese and Slavs richer than us.

Posted by: Johan Kaspar | Feb 11 2025 16:41 utc | 226

F??k the system before the system F??ks you!
In the lush countryside of England, where the canals wound like sinewy veins through the landscape, lived a man named Oliver Bray. Oliver was a grizzled soul with a mane of unruly hair and a beard that had grown wild with his years spent living off-grid on a narrowboat named Pattey. He had traded a life of conformity for the rhythmic lull of water and the embrace of rustic living, allowing his heart to sync with the ebb and flow of nature.
Pattey was no ordinary boat; she was his sanctuary. With its burnt-orange chimney puffing smoke into the sky, it stood as a testament to his ingenuity and determination. Amidst the wallpaper of wildflowers and reeds, Oliver had carved out a life that most could only dream of, one where the wild gave him fuel, food, and a freedom too precious to quantify.
Every day began with a ritual: a walk along the towpath with his loyal four-legged companion, a scruffy but endearing mutt named Dumbo. Named not for any lack of grace but rather for his massive ears and loyalty, Dumbo was all the family Oliver needed. They combed through the woods, foraging for mushrooms, berries, and wild greens. In the spring and summer, Oliver relied heavily on nature’s bounty, while in the colder months, he supplemented his diet with carefully stored preserves and pickles.
Fuel was gathered from the surrounding forests, where fallen branches became logs, chopped and stacked with care. Meanwhile, a slight breeze would carry the aroma of seasoned wood through their tiny floating home, turning the simple act of cooking into an art form.
However, what made Oliver’s life truly remarkable was his secret operation—an underground distillery nestled in the narrowboat’s cramped quarters. With a mix of scrap metal and a penchant for tinkering, Oliver had fashioned a makeshift spirit still fashioned from discarded materials he had gathered on his evening jaunts through local junkyards. It gleamed with a rustic charm, an alchemical tool that transformed raw grain and foraged fruits into potent moonshine.
What had begun as a hobby became a necessity. When Oliver calculated just how much he was spending on essentials, he realized he needed a little extra income. One fateful evening, while sharing a drink with fellow boaters, an idea sparked. Why not trade his homemade spirits for goods, services, or even cash? Thus began his Moonshine Chronicles, where he became a friend to the local boating community—the shadowy supplier of the best-kept secret: homemade gin, fruity schnapps, and wheaty vodka, each bottle hand-labeled with a whimsical drawing of Dumbo.
Word spread like wildfire along the canals. Oliver’s moonshine became the toast of the towpath, exchanged in hushed tones between boaters in secluded coves or lively gatherings on sunny afternoons. It turned out he had a knack not just for distilling but for brewing enduring friendships and trust. He developed a network of loyal customers who would keep his secret, allowing him to earn a handsome surplus of GB pounds—hard currency for someone living a life so far removed from it.
With his earnings, he indulged in the pleasures of life, often treating Dumbo to gourmet kibble or a new bed. Calves of cheeses, fresh seeds for their little garden, and special snacks for both himself and Dumbo filled the narrowboat. And on especially good trading days, he would host barbecues for fellow boaters, where homemade spirits flowed freely amidst laughter and stories shared under the glow of fairy lights.
As weeks turned into months, Oliver developed a rhythm, an existence that danced between nature’s offering and the pleasures of camaraderie. He became something of a local legend, his narrowboat a beacon of self-sufficiency and rebellion against the constraints of modern consumerism.
But perhaps the greatest joy for Oliver was the simple companionship of Dumbo, who would sit attentively by his side, eyes sparkling with the joy of being alive. Together they explored the banks of the canal, chased rabbits, and basked in the sun.
As time went on, Oliver became a firm believer that the true wealth didn’t lie in how much money he made or how many moonshine bottles he sold, but in the freedom he tasted, the friends he made, and the profound connection he fostered with Dumbo and the wilderness surrounding them.
Thus, he found a fulfilling life, one brewed in the light of the moon and carried on the back of a shaggy dog, nestled sweetly among the wildflowers—forever content drifting on the waterways, living a life just beyond the reach of the system.
https://i.postimg.cc/G2fWBFhc/7338448d-caaa-426d-9d4d-7bdcda80eb56.png

Posted by: fleischwurst | Feb 11 2025 16:41 utc | 227

China absolutely limits their defense spending due to budgetary constraints. Where “overbuilding” homes and infrastructure remains an asset, every bomb a liability. So there are limits, as I said, no need to lecture me. But YOU leap to extremes, “China doesn’t do that”. Indeed they do. So your extremism and ideology is blinding and eclipsing your reasoning. Aristotle taught that wisdom and virtue lie in moderation, not extremes.

Posted by: Scottindallas | Feb 11 2025 16:48 utc | 228

And no, Income taxes DO NOT take anything away from firms, they encourage the firm to reinvest or pay taxes. Property and sales taxes are only avoided by fraud or not investing, spending. So, those taxes operate VERY differently for anyone filing an itemized tax return.
A Sales tax of 8.25% as we have in Texas is a 82.5% income tax equivalent for a firm that makes a 10% net profit. Where the lawyer and accountant are not sales taxed. Sales taxes tax real producers, don’t tax paper pushers and in fact increase cost/taxes for real production. Income taxes have the opposite effect. So, which tax matters immensely. Again. If you’d ever filed an itemized tax return…

Posted by: Scottindallas | Feb 11 2025 16:54 utc | 229

Good grief Tom, we have a labor shortages in the US. When is all this innovation going to create massive layoffs? You’re so deep in theory you’ve lost the scene. Oh, a tree died and fell down. We’re a tree short, at this rate there will be no trees left. Will no one care for the buggy whip workers? Damn. There’s a whole ecosystem here, your narrow perspective misses the whole history. When are we gonna make obsolete? When the robots makes the robots? Well, that hasn’t done it either.

Posted by: Scottindallas | Feb 11 2025 17:08 utc | 230

Ahenbarbus, no, I don’t need to read critiques from the birth of industrialism. You need to learn about the progressive era, the era that created the largest middle class in history. China has followed our post depression/progressive era example and built an even bigger industrial base and middle class, Industrial base is capital, capital intensive production. The Chi-coms are capitalists, the US exported it’s capitalist base. You’re conflating colonialism, and colonial aims, which was always the goal of the cold war, not economics. The Soviets were racing to secure raw materials, just like “Red China” as were the Brits, Germans, French…you confuse team color with economic policy. It was always bullshit, but you’re too old to see. I’m Gen X, born in 69, I remember pre Reagan era and after.

Posted by: Scottindallas | Feb 11 2025 17:16 utc | 231

Posted by: jinn | Feb 11 2025 1:35 utc | 160 A good comment is worth repeating:

The reason progressive income taxation was implemented is that it is an economic stabilizer for capitalist economies which are inherently unstable. The reality of progressive income tax is that when incomes go up the tax on those incomes goes up at a faster rate and when incomes go down the rate of taxation goes down at a faster rate. This is known as the “automatic stabilizer”, often attributed to Keynes.
For example, the so-called “fiscal stimulus” following the 2008 meltdown of western capitalism was due to the reduction in taxes from upper income earners reduction in income. The actual laws passed (like TARP) that were promoted as fiscal stimulus actually made profits for the US Treasury which means they were not a stimulus but a drag on the economy. The only actual fiscal stimulus that made any big difference was due to the progressive income tax. One can only speculate how much larger that automatic stimulus would have been if the progressive income tax had not been weakened repeatedly over the previous 45 years.
As for whether progressive income tax encourages investment -> any income tax encourages investment if the tax system is structured to exempt investment in one way or another. It encourages owners of capital to invest profits rather than take as income and pay tax.

In my defense, my comment was decrying how that person was insinuating there was one justification for progressive income taxes, which isn’t true. That was doubly deceitful because the usual argument about increasing investment was more commonly made against progressive taxation. The (il)logic was that it broke up the capital concentration needed for productive investment. Basically, that was the properly derided trickle down theory. That person’s so-called argument by the way implied that reductions in tax rates should increase productive investment, even while outraged over declining investment. Touting a fact that contradicts the argument made is no problem for a liar.
I should add that there are two other arguments for progressive taxation. One is that if a government needs money, usually for war, it should follow the bank robbers’ maxim, go where the money is. It seems to me that rich people are very sensitive to the fact that they are paying a lot more in total than the scum. They do not think the widow’s mite was worth more than the rich man’s offering! There were high rates in WWII (which somehow didn’t prevent productive investment, although much of that was government work) yet another refutation of that person. The more general one is to help automatically stabilize society by breaking up monopoly power. I think that has been established not to work. (As I recall Walter Scheidel’s The Great Leveller contains a useful global historical review.)
I also want to add that from my perspective the key issue is how it is the prospect of profits that largely determine actual productive investment. If financial instruments pay better, that’s what gets invested in. The last I looked, economics doesn’t even have a widely accepted theory of how profit rates are determined, not so-called neoclassical, not DGSE, not Keynesian, not Minskyan, not MMT…Austrian? I’ve lost track, they seem to be too weird to bother with. I have a vague impression they’re still at buy cheap, sell dear?

Posted by: steven t johnson | Feb 11 2025 17:21 utc | 232

Posted by: LoveDonbass | Feb 11 2025 3:31 utc | 177 As I understand the facts, the Taliban cracked down on poppy farming. This was believed to be one of the unacknowledged reasons for US hostility. The shift to fentanyl appears to have proceeded along with the decline in Afghan heroin due to Taliban interference in the countryside, long before their final re-victory. It seems like the way opium production in the so-called Golden Triangle rose and fell with the CIA’s paramilitary activities. The old movie Air America might be worth seeing?

Posted by: steven t johnson | Feb 11 2025 17:29 utc | 233

@Scottindallas | Feb 11 2025 17:08 utc, who said:

Good grief Tom, we have a labor shortages in the US. When is all this innovation going to create massive layoffs? You’re so deep in theory you’ve lost the scene.

Scott: Easy to see why you might have this perspective. You’re in Texas, right? Get out of TX into most flyover states – not the coasts, nor the metro centers. Take a look there.
Next point: If there’s a labor shortage, how come wages have been static for the past few decades? Square that circle. There is a shortage of some labor categories (hi-skill, lot of value-add), but there’s a whole lotta Walmart-pay, low-skill stuff that is supposed to be a viable job, and isn’t.
Why is household debt so high?
Why do Americans have so little in savings?
Take a closer look, Scott. Labor participation numbers are still headed down, even with “full employment”. How come?
So when you say I’m out of touch, and I can back up my assertions with authoritative data sources.
Explain away the numbers I’ve presented, please. Those are not theoretical numbers, are they? Pretty actual, so far as I can tell.
====
And to LoveDonbass: Love your confidence. I am also confident in myself, but not confident that I’ll be insulated from the effects those forces have on others. The knock-on effects.

Posted by: Tom Pfotzer | Feb 11 2025 17:35 utc | 234

Posted by: DunGroanin | Feb 11 2025 10:59 utc | 198
DeBeers is in quite the quandary. Lab grown diamond production is rapidly growing. Soon, it is estimated a LG diamond of 0ne carat can be made in India for $20.
There is no way to tell the difference between a natural diamond and a lab grown diamond. About 1/2 of all gem diamonds sold are lab grown.

Posted by: Oswald | Feb 11 2025 17:35 utc | 235

https://www.eurasiareview.com/26012025-technology-innovation-gives-china-a-heads-up-in-the-space-race-oped/
I recall reading an article by NASA officials warning that China wasn’t simply copying the US is space but rather innovating.
As for the need for workers in the US, there are road signs looking for prison guards, local police, state police. There are shortages of doctors of various types. Also, auto mechanics and skilled factory workers.

Posted by: Eighthman | Feb 11 2025 17:39 utc | 236

Posted by: Zet | Feb 11 2025 2:33 utc | 168 Seems to me this is more apologetics for Trump, trying to pretend there’s method in the madness. Contrast this Pollyanna view with @169:

“We conclude that when applied to a large, resource-rich, technically proficient economy, after a period of shock and adjustments, sanctions are isomorphic to a strict policy of trade protection, industrial policy, and capital controls. These are policies that the Russian government could not plausibly have implemented, even in 2022, on its own initiative.”

There is no prospect of capital controls with Trump. His announced determination to preserve the dollar as the global reserve currency says the opposite. There is no industrial policy, which isn’t just tariffs but also targeted subsidies and state investment and regulation. Trump is for deregulation and blanket or across-the-board tax cuts on higher brackets. Your own quote refutes you, except for being right that was what Biden tried to do. (My belief is that President Band-Aid’s policies were too little, too late, as typical. The full Build Back Better was closer to actually making a difference—something which Biden appeared to be temperamentally and politically opposed to!—but even that inadequate.)

Posted by: steven t johnson | Feb 11 2025 17:57 utc | 237

Posted by: Scottindallas | Feb 11 2025 16:54 utc | 230

A Sales tax of 8.25% as we have in Texas is a 82.5% income tax equivalent for a firm that makes a 10% net profit.

Trying to parse this sentence, I get subject=sales tax and linking verb=is and description=income tax equivalent. This doesn’t seem to make sense. Not sure filling out an itemized tax return reveals all the secrets of political economy.

Posted by: steven t johnson | Feb 11 2025 18:07 utc | 238

“There is no way to tell the difference between a natural diamond and a lab grown diamond. About 1/2 of all gem diamonds sold are lab grown.+
Posted by: Oswald | Feb 11 2025 17:35 utc | 236
Balderdash!! (1) (2) Experts, or rather professional buyers (they of course have the most risk) of diamonds can tell the difernce and the price of fake diamonds are much higher:
“1. Other ways to test a diamond:
Use a magnifying glass to look for imperfections.
Shine a UV flashlight on the diamond. Natural diamonds glow blue under UV light, while lab-grown diamonds may glow a different color.
Use the dot test. Place a diamond on a dot drawn on white paper, and look through the pointed end of the diamond. If you see a circular reflection, the diamond is fake.
2. “A 1 carat natural diamond can cost between $1,300 and $10,000, while a 1 carat lab-grown diamond can cost around $1,000. The price of a diamond depends on its quality, cut, shape, and whether it’s natural or lab-grown. ”

Posted by: canuck | Feb 11 2025 18:18 utc | 239

What with inflation and all that since he initially had one made to go to 11.
The rest of us will stick to 10 maximum.
Being fuddy duddy old stick in the muds hat most of us barflies are.
Posted by: DunGroanin | Feb 11 2025 4:33 utc | 180
Dun, maybe this — Spinal Tap moment — will help
https://youtu.be/hW008FcKr3Q

Posted by: Sakineh Bagoom | Feb 11 2025 18:21 utc | 240

Other ways to test a diamond
Posted by: canuck | Feb 11 2025 18:18 utc | 240

The quality of a diamond is determined by the defect rate of the circuits built upon it.
https://www.df.com/diamond-wafer

Posted by: too scents | Feb 11 2025 18:24 utc | 241

“To capture us all as we walked through the school gates from the age of 5 until we are 20.”
Posted by: Sun Of Alabama | Feb 10 2025 14:39 utc | 33
“This really explains your lack of intellect. 15 years to get a 12 year education?? So you rode the short bus.”
Posted by: Screwdriver | Feb 11 2025 16:02 utc | 223
S of A. was captured long ago by his own intellect; he is a self described -‘Intellectual Luddite’ (TM)(1)
1.”The Luddites were a group of English textile workers in the early 19th century who broke machines to protest against new technology. ”
S of A is now campaigning against AI (2)
2. S of A ‘s ideas can really be a boon: as a contrarian indicator-whatever he said ‘gold is going down” when in a previous iteration he was Lavrov’s Dog about a $1,000 dollars below the gold price now pushed me in to buying a bit more bullion-thanks S. of A

Posted by: canuck | Feb 11 2025 19:08 utc | 242

Posted by: steven t johnson | Feb 11 2025 17:21 utc | 233
The arugement for progressive income taxes is empirical based upon the concept of disposable income. When the wealthy have excess disposable income, they dont take their money and invest in a new production facility to create jobs. The reality is that they use the money to buy a new Picasso or Estate adding nothng to the economy. In contrast, when a poor person receives income, they will purchase a car, washing machine or spend it on daycare services. All net positives to the economy. Flat taxes end up being extremely regressive because their is no disposable income at the lower levels. The flat tax arguements are libertarian junk economics being pushed down from the upper classes.
Incidentally, I spoke with a Chief Economist at the IRS and asked him if they spend their time trying cracking down on the elite since that is where all the money is. He responded that its impossible to get money out of that level becuase they will hire a legal team from a major law firm to protect themselves. So, they spend their time cracking down on the middle class, who are generally defenceless and where the easy money can be found.

Posted by: Deniz 152 | Feb 11 2025 19:46 utc | 243

@jinn #143
So explain why Nixon was forced to take the US off the gold standard.
Was it because Nixon suddenly turned around the trade surplus?

Posted by: c1ue | Feb 11 2025 21:05 utc | 244

@steven t johnson #150
WTF are you talking about.
Was it France that broke Bretton Woods? No.
Was it France that was running out of gold? No. In fact, France was one of the major reasons why the US was running out of gold. De Gaulle LOVED redeeming excess US dollars for gold at $35/oz.
You are so full of shit, it is not even funny.

Posted by: c1ue | Feb 11 2025 21:08 utc | 245

@jinn #160
Right, it was the reduction in taxes wot did it. The increase of the Treasury balance sheet by $8 trillion had nothing to do with. /sarc

Posted by: c1ue | Feb 11 2025 21:09 utc | 246

@Tom Pfotzer #171
You have the pieces, you are just not putting the together correctly.

True until about yr 2000. In the last 50 years productivity has increased faster than the U.S. population’s ability to _pay_ for consumption.

Why? Why has the US population’s ability to pay for consumption fallen vs productivity?
Hint: redirection of the rewards of productivity from a more even ownership/labor split to owners. Which is what I said.
And note I am not saying this as a flaming liberal. I say this as an outcome of economic analysis as a fiscal conservative.
And why 2000? Hint: post Y2K monetary policy.

How come that productive capacity isn’t running flat out?

You are conflating productive capacity with productivity. That is not the same thing at all, although these are not entirely unrelated.
A factory that has a capacity to make 1M widgets, but that makes only 900K widgets, is 90% capacity factor.
However, if the factory increases its capability, all other things being equal, to be able to make 1.1M widgets – then its productivity has increased 10%.
Regardless: your argument is false because China has built a truly enormous basic capacity for manufacturing. Regardless of “productivity” increases, this growth in manufacturing in China would inevitably lead to decreases of capacity in US/Western production (i.e. the capacity utilization you reference) without regard to productivity enhancements.
But of course, US/Western “productivity” enhancements for the last 30 years primarily consist of software shit even as Chinese factories actually increase their productivity of atom-based products.

Posted by: c1ue | Feb 11 2025 21:18 utc | 247

@Tom Pfotzer #221
Name me 10 things commonly used by normal Americans for which the US has TOO MUCH capacity hence is causing reductions in capacity utilization.
You are clearly in love with your theory, but it has zero basis in reality.

Posted by: c1ue | Feb 11 2025 21:21 utc | 248

Posted by: Deniz 152 | Feb 11 2025 19:46 utc | 244 Yes, that is theory asserted back @132 to be the only argument for progressive income taxes, except actually explained. That commenter who categorically denied this is the one you should be arguing with, I think. Coming from a would-be Marxist perspective, I would say whether or not progressive income taxes help investment depends on the prospect of higher profit rates from productive investment…and as I forgot before, also on whether the government spending is on infrastructure and services that ultimately contribute such as basic research and even direct investment. But even then I think it’s the effect on lowering costs, thus raising profits, that serves as the mechanism.
The point about flat taxes is correct. But not everyone agrees that taxes from an insufficient income to meet the prevailing standard is a bad thing. They seem to think per capita taxes paid in gross is what matters. By that standard a millionaire paying $10 000 in income taxes is one hundred times as oppressed as a low wage worker paying $100.
Posted by: c1ue | Feb 11 2025 21:08 utc | 246 And that gold is why France overtook Germany as the industrial engine of Europe? And it was why France could ignore the dollar after Nixon ditched gold? And why France’s gold hoarding contributed so much to stable world world trade? If you’re smelling something unpleasant, look to yourself. I’m on line, it’s only pixels. For onlookers, gold hoards are not productive investment, and increased hoarding is a symptom of a decline in the profitability of other investment. Archaeologists and treasure hunters and random sharp-eyed people have found over the years many buried hoards of gold and other valuables. Why were they there? Because having a hoard didn’t save the people who buried them, they died before they could dig them up.
The point about IRS is correct enough, though I am not sure the rich aren’t so convinced. Paying lawyers is like paying taxes? They seemed very pleased to cut the IRS budget!

Posted by: steven t johnson | Feb 11 2025 22:00 utc | 249

Steven, there is a difference between “capital intensive production” or real production and finance. And, progressive income taxes are the best tool to reward high cost sectors and tax the ever living shit out of paper pushers who punch the cheat code. Their activities are a tax on the economy as sure as sales tax or tolls, or payroll taxes. It’s baked into everything. Progressive income taxes limit their takings. Entrepreneurs, people with real ideas never earn much income. They’re doubling down on their ideas. Progressive income taxes may not tax these folks near as much as the pigs at the trough. It’s a distinction all that arcane Marx stuff couldn’t understand nor did they anticipate it.

Posted by: Scottindallas | Feb 12 2025 0:52 utc | 250

@jinn #160
Right, it was the reduction in taxes wot did it. The increase of the Treasury balance sheet by $8 trillion had nothing to do with.
Posted by: c1ue | Feb 11 2025 21:09 utc | 247
The reduction in taxes was the only Fiscal Stimulus as can be seen on this graph
Looking at this graph one can see the Federal govt receipts dropped dramatically while expenditures continued on trend. That means the private sector was paid more by the govt while the govt was paid less. That was almost entirely due to progressive income tax. Progressive income tax is a system where there is not a one-to-one relationship between tax and income. When incomes increase taxes go up faster. When incomes fall taxes go down faster. This has the effect of boosting the economy on down cycles and slowing the economy on up cycles.
I don’t know what you mean by “increase of the Treasury balance sheet by $8 trillion”. I suspect you are talking about the balance sheet of the Federal Reserve. You should spend some time figuring out the difference between the Fed and The Treasury and the meaning of fiscal stimulus versus the meaning of monetary stimulus.

Posted by: jinn | Feb 12 2025 0:53 utc | 251

The arugement for progressive income taxes is empirical based upon the concept of disposable income. When the wealthy have excess disposable income, they dont take their money and invest in a new production facility to create jobs. The reality is that they use the money to buy a new Picasso or Estate adding nothng to the economy. In contrast, when a poor person receives income, they will purchase a car, washing machine or spend it on daycare services.
Posted by: Deniz 152 | Feb 11 2025 19:46 utc | 244
but if you’re lucky, the dumb fuck wants, not a picasso, but a human colony in mars (or ring of factories in orbit) and the needy’s next McDonald’s will only make him fatter.
who knows?
If you’re talking about a purely keynesian approach, you might be right, or not, a moon-shot personal project can do as fine as a hoover dam.
who knows?
remember the last western drive starts with a “spare” princeling in the SWern’s most corner of europe, in a tiny peripheral country. And within half a century portugal owned half the world and was rolling on spice, gold, slaves , silk, china’s silver and anything you can imagine, not half bad for a population (lots of children and women included) just shy of 1.75 million (only possible because knowing their size they only worked with local alliances).
BTW, now it’s not time for western europe, but if america be constantinople, maybe it’s theirs until things reboot here.
Slightly OT, china WILL have a moonbase soon and a colony within our lifespan (even for MOA oldtimers) but if the us/musk get a mars colony I’ll be glad. We should leave this risky bottleneck and worst teluric gravity well ASAP, humanity must flourish, diversify and prosper from, but beyond, our home planet. My 2 cents

Posted by: Newbie | Feb 12 2025 2:18 utc | 252

Newbie | Feb 12 2025 2:18 utc | 253–
“China’s space station to welcome more commercial spaceflights in 2025 including cargo crafts and launch vehicles” China’s space program and goals are impressive. Add Russia to the mix, and Moon Colonization becomes very probable in the timespan you cited–by 2033. One of the Young Scientist Award winners was a woman who creates anti-radiation polymers and other materials whose chat with Putin was very cool.

Posted by: karlof1 | Feb 12 2025 3:00 utc | 253

Just a little reminder that progressive tax rates are meaningless without (a) a drastic and fundamental simplification of the tax code (i.e. few if any loopholes) and (b) criminalization of all compensation not paid in US dollars (i.e. no crypto, no stock options). For starters.

Posted by: malenkov | Feb 12 2025 3:04 utc | 254

@c1ue: good debate. replies in-line below.
c1ue: Why has the US population’s ability to pay for consumption fallen vs productivity?
Hint: redirection of the rewards of productivity from a more even ownership/labor split to owners. Which is what I said.
Tom: wealth concentration is an issue, we agree. It’s also that wage growth has lagged prices (inflation) hence curtailed buying power. Part of reason for low wage growth is (drum roll) automation, reduces labor’s leverage, as does is off-shoring. If there was a domestic labor shortage (like there was after Covid episode) you’d see more wage growth domestically. Pre- and Post-Covid spike, not happening.
c1ue: You are conflating productive capacity with productivity. That is not the same thing at all, although these are not entirely unrelated.
Tom: no, I’m not, and haven’t conflated productivity with prod capacity. ID the place where I conflated. Quote me.
c1ue: if the factory increases its capability, all other things being equal, to be able to make 1.1M widgets – then its productivity has increased 10%.
Tom: no, only the factory’s capacity increased (in your example). Its productivity would _only_ increase if fewer inputs were required to produce same outputs. Who’s conflating now? (I know you know the diff btw the two, but your quote above doesn’t do you justice.)
c1ue: your argument is false because China has built a truly enormous basic capacity for manufacturing. Regardless of “productivity” increases, this growth in manufacturing in China would inevitably lead to decreases of capacity in US/Western production (i.e. the capacity utilization you reference) without regard to productivity enhancements.
Tom: I agree that capacity increase in China would tend to reduce capacity utilization elsewhere. However, read up-thread where I point out to ScottInDallas re: low U.S. savings rate, increased HH debt, static wages … result in curtailed demand. Job growth hasn’t been in the good-paying jobs, c1ue. Buying is constrained, and that also is a factor in production utilization.
My core assertion is that automation is proceeding faster than alt-uses for the displaced labor are sopping up the excess labor, and that trend is likely to continue and accelerate. Show me some numbers about new job formation with high-pay that are taking up the displaced labor, please. That’ll convince me. Haven’t seen it yet.
c1ue: name me 10 things commonly used by normal Americans for which the US has TOO MUCH capacity hence is causing reductions in capacity utilization.
Tom: You have it backwards. Too much capacity is caused by _insufficient demand_. The utilization numbers are just the result of too much capacity relative to demand. Insufficient demand is caused by insufficient buying power.
Here, take a look at wage growth (all workers) over last 20 years. About 2 or 3% growth per year, same as inflation rate (if you believe the official numbers; I find them to err on the low-side).
So wages barely keeping up with inflation.
Aggregate buying power has been demonstrated to be flat-to-falling for years now, c1ue. Even after we shipped all that prod cpy to China and Mexico and the Asian Tigers, we still can’t keep the factories we still have producing at or near max. Can you imagine what the cpy-utilization numbers would be if those factories had stayed here (in the U.S.)?
c1ue: You are clearly in love with your theory, but it has zero basis in reality.
Tom: I like the theory because no one’s been able to de-bunk it. You did not accomplish that feat in your riposte.

Posted by: Tom Pfotzer | Feb 12 2025 3:12 utc | 255

Posted by: karlof1 | Feb 12 2025 3:00 utc | 254
#########
The ability to design new materials will separate the industrial powers over the next few decades.
Russia seems to do well in that field.
Oreshnik was an amazing feat, and Putin has suggested many similar level technological leaps are in progress.

Posted by: LoveDonbass | Feb 12 2025 3:36 utc | 256

“Just a little reminder that progressive tax rates are meaningless without (a) a drastic and fundamental simplification of the tax code (i.e. few if any loopholes) and (b) criminalization of all compensation not paid in US dollars (i.e. no crypto, no stock options). For starters.”
Posted by: malenkov | Feb 12 2025 3:04 utc | 255
Trying to outlaw stock options is a silly, myopic idea.
Stock options incentivize managers to grow their business and the concurrent stock price and it is of no cost to the shareholder/investor because unless the stock rises the stock options are worthless.

Posted by: canuck | Feb 12 2025 4:06 utc | 257

The Chinese are winning the AI race – by not racing. AI accomplishes very little outside the physical sciences. China doesn’t seem deeply interested in showing off word salads and is thus able to tackle all kinds of real economy challenges.

Posted by: simplejohn | Feb 12 2025 5:01 utc | 258

The tax code is simple for simple matters, complicated for complex matters. A lot of very smart people developed it over the years to capture every type of economic transaction imaginable. The loopholes are in Estate Taxation. The business side is pretty solid. Most countries outside of the U.S. don’t take tax seriously, it is just a game to be played to see who can cheat the most. The problem with U.S. taxation is enforcement at the upper incrome levels and regressive Self-Employmentband payroll taxes.
Stock options are a good idea, but in practice they have been disastrous in many areas. One reason the U.S. healthcare system is broken because IP attorneys start ups to monopolize technologies that provide a tiny incremental benefit to the patients, but can be exploited once it gets into the health care supply chain. The whole financialization of U.S. industry into China began with CEOs chasing profit increases for stock options benefits in the 80s. The stock option killed American Manufacturing because there was this new incentive to cut costs. The GE guys who wrecked so much havoc are all stock option chasers.

Posted by: Deniz 152 | Feb 12 2025 5:56 utc | 259

Chinese GPUs outdo Nvidia chips nearly tenfold in supercomputer simulation: study
Innovative parallel computing design using domestic hardware underscores Beijing’s broader strategy to blunt ‘chokepoint’ risks in critical tech

Computer researchers in China using domestically made graphics processors have achieved a near-tenfold boost in performance over powerful US supercomputers that rely on Nvidia’s cutting-edge hardware, according to a peer-reviewed study.
The accomplishment points to possible unintended consequences of Washington’s escalating tech sanctions while challenging the dominance of American-made chips, long considered vital for advanced scientific research.
The researchers said that innovative software optimisation techniques enabled them to improve efficiency gains in computers powered by Chinese-designed graphics processing units (GPUs) to outperform US supercomputers in certain scientific computations.
https://www.scmp.com/news/china/science/article/3298226/chinese-gpus-outdo-nvidia-chips-nearly-tenfold-supercomputer-simulation-study?

The bottleneck isn’t doing the calculations, it is accessing the memory.
https://www.google.com/search?q=china+ddr5

Posted by: too scents | Feb 12 2025 7:06 utc | 260

In response to Ornot@202,
“With material innovation, let us say tooling, predictability of outcome is a main driver. That is to say an objective, to achieve a certain task, is known in advance, because a barrier to reaching that objective has been found.”
Yes, but to me, that is the “granular view” — as in, we are looking at innovation from the perspective of a hypothetical piece of technology and its development. The article in the OP doesn’t do that, as it adopts a perspective at the level of nation-states in competition for being the most innovative, i.e the objective we know about is the objective to innovate, whatever that actually means, and already I would argue that “predictability of outcome” of such a broad view does not correlate with any specific tooling improvement or technological solution, but arguably a philosophical framework. The state that thinks of itself as a global leader in innovation is currently focused on holding back the development of others as its strategy for remaining on top, while we are offered a framework of thought where it is in the interest of other nations to change the international perception of how innovative they are, so those are the tasks or problems offered up as the context for how we’re meant to think about innovation — to me, the “predictability of outcome” in this context, as well as whether there’s a worthy task being achieved or a problem being solved, are open questions.
For that reason, I introduced a slight perspective adjustment where innovation is a global and historical phenomenon, an aspect of human development both past and projected into a hypothetical future, because my first instinct is that the role of innovation is being misunderstood in the framework that is being presented.
In response to Johan Kaspar@225,
“For the agrarians, as they were dying b4 their 30s due to predators, parasites, diseases, accidents. The problem was how to live long and healthy and have more kids. Same struggle for all animals.”
This is a so-called open ended question, since the dynamics of mortality and reproductive capability don’t have a ceiling. A hypothetical immortal entity that seeds the entire universe with its offspring by thinking still hasn’t actually moved the needle on resolving this conundrum, only changed the dynamics, and if we frame it as a problem that we want to solve, then the ultimate solution is an end to the process itself. This is not to imply that I’m somehow arguing against innovation, as your reply seems to suggest — my focus is on the semantics of it being defined as a problem-solving mechanism, since that instead strains the meaning of the terms problem and solution. In comparing modern society to that of our prehistoric ancestors, do we observe deficiencies that they themselves struggled with or merely project our own perspectives onto what their experience should have been like based on how we would respond were it suddenly thrust on us? In my view, the human species never faces any problems, but adapts to and shapes their environment, normalizing experience, while a problem is the product of an outside perspective, the conjuring of a “what if” scenario, and taken together with innovation the two terms become synonymous — the problem finding its origin in its own solution, hypothetically or practically. Or, in simpler terms, a problem doesn’t exist until an improvement to a process is implicit in its redefinition, and so to hinge innovation onto problem-solving creates a logical loop rather than give the term meaning.
The introduction of time-travel, for example, would unarguably be an innovation, I’m sure we would both agree. Is the problem then that we are otherwise confined to a certain rigid temporality, that we don’t have the tools for manipulating events in our own past retroactively or ignore causal relationships by drawing from future events, or other opportunities that the addition of time-travel introduces? Are these actually problems if time-travel turns out to be fundamentally impossible, or simply fails to materialize, or are these restrictions actually benefits in how they force us to approach choices more mindfully and safeguards against temporal manipulation, while the hypothetical introduction of time-travel would be a problem?
As for evolution as a parallel, the framework of the environment and the mechanics of the system to which the evolving entity adheres force a specific structure on the course of possible events. Mutation can’t be totally random, but has to adhere to what is physically possible in order to manifest materially, and the success of traits, whether guided or arbitrary, is guided by their potential to survive and thrive within their environment, causing reinforcement mechanisms to emerge. The same is true for human innovation when viewed from the perspective of human development as a whole, as human agency and ingenuity do not exist in a vacuum, or arguably do not exist at all in this context, but are subject to what is physically possible and the impact of their product modulated by the environment in which it is introduced. If you believe I’m right about the unpredictability of innovation in the broader perspective, then human innovative development can be conceptualized as a pseudo-randomly evolving organism without contradiction. In this view, the relevance of individual agency is debatable at best, since we’re talking about a non-deterministic system with a non-deterministic outcome. You yourself left it up to chance whether humanity would die a “natural death” or kill itself off, without offering a third alternative, and so if we also have to account for human agency as a determining agent in the system, this implies that, in your view, humans individually want to see one of these two outcomes come to pass and are actively pursuing it in all that they do, which I sincerely doubt is the case.

Posted by: Skiffer | Feb 12 2025 8:58 utc | 261

Male kov, not really you over state.b the real problem is our tax code doesn’t work with low rates. Again, the higher the nominal rate the greater the incentive to reinvest. There are loopholes and the like, but most of that is in there for good reason. Again, paper pushers don’t understand, financiers don’t understand, they’re still not depreciating capital (which is fairly meaningless under our low tax rates). The financiers have no idea about the complexity of running a business, they’re hype machines, truth is dangerous to their gambits, manufacturing wants the truth

Posted by: Scottindallas | Feb 12 2025 13:47 utc | 262

Tom, in fact incomes have grown massively. Obama saw many minimum wage increases that doubled or more the minimum wage. I don’t think you hire people, cause income has risen, and faster than inflation of late. Middle class wage inflation is good, but low taxes have seen the execs take most all the gains. Progressive income taxes directly fix that. Incomes matched production increases under progressive income taxes, it was ending of progressive income taxes that saw that stop. You really have no clue what you’re arguing here.

Posted by: Scottindallas | Feb 12 2025 13:52 utc | 263

Scottindallas, I’m sympathetic to your general argument, but this —
“Obama saw many minimum wage increases that doubled or more the minimum wage”
— is so misleading as to be false. Any minimum wage increases that occurred during the Obama Administration took place at the state level, and said Administration did nothing to increase the nationwide minimum wage beside uttering the occasional pretty word.

Posted by: malenkov | Feb 12 2025 14:08 utc | 264

How is it misleading? The fact is incomes grew at their fastest rate as inflation rose generally. It doesn’t matter whether it was federal policy. I’m not defending these low tax rates, I’m not saying productivity gains are a net negative. Capital intensive production is a win-win, it grows the economic pie. Finance and paper pushers are zero sum activities. Progressive income taxes favor capital intensive production, low taxes favor paper pushers. Or narrow distribution of economic gains, where capital intensive production gains are more broadly shared.
You can’t point to robotics reducing assembly line workers and ignore robot production, programming, and maintenance. Nor can you ignore the novel enterprises those robots get used for. Pyrex made windows for space travel, and many other purposes.

Posted by: Scottindallas | Feb 12 2025 16:04 utc | 265

A canuck who at convenient time poses as an enemy of the PMC and hails his God Trump for smiting the wicked PMC, defends stock options. Stock options are how the M part of PMC (insofar as there really is such a thing) make their money. When push comes to shove, you find out whose side they’re really on.

Posted by: steven t johnson | Feb 12 2025 16:40 utc | 266

“How is it misleading? The fact is incomes grew at their fastest rate as inflation rose generally. It doesn’t matter whether it was federal policy.”
So delighted to see that you’re making my point for me!

Posted by: malenkov | Feb 12 2025 16:44 utc | 267

>>>>>>>>
Posted by: wagelaborer | Feb 10 2025 17:50 utc | 81
…Abraham Lincoln said: “As long as one workingman is unemployed, the hours of labor are too long.”
Is any brainwashed 21st century human capable of understanding the mindset of that 19th century man, straight off the farm, where many hands make light work, if everyone shares in that work?
It doesn’t seem so. Hence, the endless arguments about which form of capitalism can lead to the desired ever-increasing growth, the US kind where the corporations control the government, or the Chinese kind where the government reins in the corporations. And all of them dependent on ever-increasing productivity, which leads to the need for fewer people, combined with a bizarre belief that the population must also increase, needed or not, or you somehow lose the demographic war.
Whether ever-increasing growth is a good thing at all never enters the minds of the brainwashed.
<<<<<<<<< Exactly the way I'm thinking, and very well put. Thanks!

Posted by: jonboinAR | Feb 13 2025 2:15 utc | 268

@B:
If you want to read more articles written by Micheal Pettis and his views then you can find him at the “Carnegie Endowment for International Peace”.
https://carnegieendowment.org/?lang=en
and search with the words “Micheal Pettis”.
E.g.
https://carnegieendowment.org/podcasts/the-world-unpacked/michael-pettis-on-us-china-trade-relations?lang=en
https://carnegieendowment.org/posts/2025/02/the-relationship-between-chinese-debt-and-chinas-trade-surplus?lang=en
https://www.foreignaffairs.com/united-states/how-tariffs-can-help-america
https://carnegieendowment.org/podcasts/the-world-unpacked/michael-pettis-on-us-china-trade-relations?lang=en
The words “Endowment” and “for Peace” makes my skin crawl. It reminds me too much of what the NED (National Endowment for Democracy) is all about. It could – repeat – COULD be one of those shady thinktanks.

Posted by: WMG | Feb 13 2025 7:49 utc | 269

Great thread barflies – it appears we are getting there through the scientific method of ‘guessing’ but hey ho it’s getting us there… let’s keep buggering on. Final post for this thread I guess.
Posted by: Deniz 152 | Feb 11 2025 19:46 utc | 244
Also @ Posted by: steven t johnson | Feb 11 2025 22:00 utc | 250 (I agree with you about that at least- lawyers as tax!)
Deniz you should encourage that chief ‘religionist’ to spend even more time and effort on pursuing these rich!
Because – isn’t it obvious? If the aim is to dispossess the super rich of their undisposable incomes and in the process of avoiding that they make lawyers richer – then you can tax the lawyers more! And sooner or later the super rich will have been ‘robbed’ by the lawyers.
As we all know! Lawyering is in effect a taxman that collects for himself…ha!
There are ways of skinning them ‘cats’ including taking the whole goddamned lot when they die.
It’s as the old kings used to do with their barons they made for a lifetime. How else could they pass on the baronetcies to the ones they chose to reward in their reign?
I’ve met top tax experts and even Treasury wonks working at the top levels of Revenue and Excise who have never heard of the ‘Consolidated Fund’ at the Bank of England that starts every morning with a balance of zero. From which all that days public departments spending is ‘magically’ made. And into which all government ‘receipts’ are put in. At the end of that day whatever the balance is – ‘magically’ vanished!
And the new day starts with the balance at zero!
That is the Magic Money Tree in daily operation. It hides in plain sight and has done so for centuries. There are even fairy tales about it.
These top wonkers still after being shown that still believe taxes pay for public spending!! They ignore the reality of that account because they have never been told about its vital role – that’s reserved for the really senior civil Sir Humphreys and Ministers who have to daily repeat the lie of Public Sprnring and Revenues.
Most taxes by most people are not direct but by VAT, Duties and Excise – they require no tax returns. It keeps the low paid poor because they can’t avoid it. They make themselves even poorer by buying litter tickets with impossible odds – that’s the ‘Idiot Tax’ btw.
————————
And finally-
@ Posted by: Newbie | Feb 12 2025 2:18 utc | 253
It’s about right Newbie – but there are plenty of asteroids to mine between here and Mars! Life on that planet would be not great without fresh air to breath… rivers that run … birds and animals and green growth… a magnetic field that provides sufficient protection… if and when it is occupied it will be under ‘shelter’ for earth biological life forms and above ground for robotic ones. Most of all the actual adventurers and settlers of the inner solar system won’t be our current Yankee doodles or Anglo Europeans or even Russian! They’ll be some Chinese, some Indian and mostly AFRICAN.

Posted by: DunGroanin | Feb 13 2025 10:51 utc | 270

It was China’s government reducing its control over its economy that led to its astonishing rise. They went from socialism to fascism and saw the concomitant explosion in productivity that arises when people are allowed to keep and reinvest (some of) the fruits of their labour.
Posted by: Observer | Feb 11 2025 13:49 utc | 205

Interesting, a barfly who calls China fascist? I’ve encountered Trots like Ahenobarbus and Tichy who insist that China is not socialist but capitalist, but it is exceedingly rare to see the usual anti-China folks call China fascist.
Equating China’s system with fascism appears to be a recent trend on social media. This might be the work of a certain oligarch who loves fascism, loves a certain salute and also loves promoting AfD. That oligarch erroneously described Nazis as socialists and erroneously described himself as a socialist because he happened to like the ideology of Nazis who deceptively labeled themselves as national socialists.
On X a few days back, someone was praising China for its willingness to keep capitalists in line.
https://x.com/extradeadjcb/status/1889446293509988795

I like the Chinese approach where you can be a corporate executive & have a free hand to innovate & make money but there’s an invisible line circumscribing the National Interest & if you step over it they just execute you
@extradeadjcb

Replies to the post quickly equated China’s system as being fascism.
https://x.com/DiggingInTheDi1/status/1889516155058241845

That’s literally just textbook Fascism.
It works.
@DiggingInTheDi1

https://x.com/Tysenberg/status/1889450503521566970

People assume any positive sentiment toward fascism means desiring a genocide, I just want a bit of Gleichschaltung as a treat
@Tysenberg

https://x.com/CyberdyneC/status/1889560212844978177

we have a word for that economic system
(fascism, it’s fascism)
@CyberdyneC

This is an old thread that no one frequents, but I believe it’s important to take note of the start of a trend, regardless of whether that trend is artificial or organic in its origins.

Posted by: All Under Heaven | Feb 13 2025 20:50 utc | 271

Posted by: DunGroanin | Feb 13 2025 10:51 utc | 271
What are these wars that we spend our time on here at MOA other than poker games for the stupid money class?

Posted by: Deniz 152 | Feb 13 2025 23:18 utc | 272

Posted by: All Under Heaven | Feb 13 2025 20:50 utc | 272
##########
One of the most beautiful things in the world is that the Global South, including Russia and China, has its own information spaces that don’t rely on Reuters or the BBC.
Pols in those countries are more concerned about domestic media than virtue signaling to the global neoliberal class.
Russia and China could care less if they are called racist or fascist.
They will keep to their agendas of building their civilizations’ future.
Meanwhile, the Western powers are so mired in groupthink and thought control, that they fall further and further behind.
All is as it should be.
No offense to my friend Ahenobarbus, but his social theories presume a Western perspective and don’t tend to translate well to the Global South. Any theory that has truth value should be accurate in multiple circumstances and with different cohorts.
If the theory applies only to white Westerners in the pre-digital age, it is not very useful as an analytical tool today.

Posted by: LoveDonbass | Feb 14 2025 0:44 utc | 273