All Asian markets down sharply, some more than 10%.
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In a back handed way thatâs good news. If shows that Elon and Tesla are not the problem. The world at large is!
Why the fuss about trade imbalance? The Law of Comparative Advantage, developed by David Ricardo (1772 - 1823), is an economyâs ability to produce a particular good or service at a lower opportunity cost than its trading partners. Comparative advantage is used to explain why companies, countries, or individuals can benefit from trade.
Back in 1823 there was no Internet, no optic fiber, no microchips, no jet planes, no gene sequencing. This is one of the reasons that economic laws are not as long lived as physics laws. Back in 1823 there was no, or hardly any, Increasing Returns industries. Fast forward two centuries and The Law of Comparative DisAdvantage kicks in. Decreasing Returns industries use a lot of cheap labor while Increasing Returns industries use much less but much more expensive labor. This DisAdvantage increases the wealth disparity this century is experiencing. This DisAdvantage guts labor intensive industries in HighTech countries. Capital flows to where it can best reproduce.
Now that we know the cause, does anyone have the solution? I wish I had.
The Captain
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Clicking on the original image gives lots of feedback. Can you provide the link? Much appreciated!
The Captain
Theoretically, minimum global standards for labor - counteracting the incentives to move labor offshore.
In practice, TIGâs tariffs are designed to get labor for US-distributed products back into the US. Welcome to $400 sneakers, as someone said on TV.
Then again, the developed world might engage in a race to the bottom when it comes to labor standards to compensate - how is that child labor-enabling legislation in Florida coming along?
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Here it is World Map
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19th century solutions wonât work in the 21st century. We need something better. Will AI and Humanoid robots do the trick? Humanoid robots promise low cost labor. When most are out of jobs, how do we pay them? Elon Musk suggested UBI but I donât like that idea. UBI is a socialist idea. What might be a capitalist idea. The Chicago Boys suggested a good idea for Chile which was ruined by the folks running the show. The bureaucrat class is a problem. Banks and others nickel and dime their customers to death when they donât outright bankrupt them, exceptions proving the rule.
Financial ignorance is a big part of the problem. Now kids donât even learn to read, rite, and rithmetic properly.
The Captain
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After the Nasdaq, S&P has joined the Trump bear market, 21% down or so. Dow hanging on by its fingernails.
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Agreed. And some of these kids are in their 60s and 70s as weâve seen in the past several months.
Pete
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âI think thatâs a false narrative,â [Bessent] told moderator Kristen Welker. âAmericans who want to retire right now, the Americans who put away for years in their savings accounts, I think they donât look at the day-to-day fluctuations. âIn fact, most Americans donât have everything in the market,â he added.