Wasn't familiar with Krugman's "babysitting co-op parable". Interesting.
I'm not convinced that depression is strictly an issue of overproduction -- it's more a vapor-lock in which the currency pump between production and consumption seizes up. The Friedman approach is to encourage production, the Keynesian approach is to stimulate demand. Calling insufficient demand the same thing as overproduction doesn't quite seem right to me.
I've got to reflect on your cheap vs. expensive labor comments as well. The immediate problem I see is that expensive labor, in a world in which either capital or labor is free to migrate, results in either in-migration of cheap labor, or capital flight to less expensive markets. Which suggests possibly putting some controls on both, or addressing the labor costs part.
I suspect we're agreeing in at least part on the idea that you've got to have currency flows on both sides of the production/consumption cycle.
I'd also argue that right now both capital (in the form of interest rates) and labor (in the form of wages) are relatively inexpensive in the US. The dual problems are of stimulating demand, and on generating a real return on investment (equity or debt).
Overproduction is an issue insofar as (mostly) consumer goods are how we manage to generate fiscal flows. People buy goods for money. However if they either don't buy goods, or prices are too low to generate sufficient flows, you end up in a cycle where you're cranking out crap goods which people don't particularly need to consume but are strongly encouraged (by advertising, moral suasion, societal pressure) to do so: the "consumer economy".
We worked our way out of this the last time (Great Depression) with WWII.
I suspect we're agreeing in at least part on the idea that you've got to have currency flows on both sides of the production/consumption cycle.
Definitely. I can say that at least right now, one of the major problems is that labor is "penned in" by national borders, but capital isn't. The labor side of things has gotten too weakened because capital can arbitrage itself to seek optimum pricing, and labor can't.
So yes, to a certain degree I'm in favor of capital and/or trade controls simply because I think a real one-world open-borders policy cannot possibly work right now, and free trade/capital flow without free movement of labor is just an arbitrage opportunity waiting for eager capitalists.
I'm not convinced that depression is strictly an issue of overproduction -- it's more a vapor-lock in which the currency pump between production and consumption seizes up.
True enough. A "real depression" also seems to have another major component: a weight of private debt that the nonfinancial economy cannot reasonably carry. This prevents price and currency adjustments from correcting the other imbalances naturally.
Wasn't familiar with Krugman's "babysitting co-op parable". Interesting.
I'm not convinced that depression is strictly an issue of overproduction -- it's more a vapor-lock in which the currency pump between production and consumption seizes up. The Friedman approach is to encourage production, the Keynesian approach is to stimulate demand. Calling insufficient demand the same thing as overproduction doesn't quite seem right to me.
I've got to reflect on your cheap vs. expensive labor comments as well. The immediate problem I see is that expensive labor, in a world in which either capital or labor is free to migrate, results in either in-migration of cheap labor, or capital flight to less expensive markets. Which suggests possibly putting some controls on both, or addressing the labor costs part.
I suspect we're agreeing in at least part on the idea that you've got to have currency flows on both sides of the production/consumption cycle.
I'd also argue that right now both capital (in the form of interest rates) and labor (in the form of wages) are relatively inexpensive in the US. The dual problems are of stimulating demand, and on generating a real return on investment (equity or debt).
Overproduction is an issue insofar as (mostly) consumer goods are how we manage to generate fiscal flows. People buy goods for money. However if they either don't buy goods, or prices are too low to generate sufficient flows, you end up in a cycle where you're cranking out crap goods which people don't particularly need to consume but are strongly encouraged (by advertising, moral suasion, societal pressure) to do so: the "consumer economy".
We worked our way out of this the last time (Great Depression) with WWII.