andygoo
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7 years ago
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on: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers
Fair as long as demand is as elastic as it used to be. Like if everyone has a phone now it will be harder to sell new phones. And good for pointing out a critical assumption behind the article - that CA surplus will actually fall as a result of tariffs, as you showed there is a fifth solution - sell to other countries, EU for example, US is not the whole world
andygoo
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7 years ago
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on: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers
Why government spending is neccesarily wasteful? I would say consumption of financial services part of GDP which is massive in us is less relevant to layman that vital services government provides
andygoo
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7 years ago
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on: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers
Did you mean that China can just decrease domestic price and sell the goods to domestic consumers?
andygoo
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7 years ago
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on: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers
If they are more elastic it means that demand is more responsive to price hikes. This is opposite to your conclusion
andygoo
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7 years ago
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on: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers
Studying economics for some time, I think economists often ask wrong questions. So let's say trade war occurs, and china will lose some of its exports. The main question is not whether savings would decrease or investment rise, the main question is how all the spare capacity left will be utilised. Yeah, if it won't be utilised then there will be unemployment, well pointed by the author. If domestic consumer will consume what was produced for exports, then consumption would increase and savings would fall. If Chinese will find a way to use spare capacity to produce something else what is in higher demand (high tech let's say) then investment would rise. And let me assure you that strong Chinese government will find a way to use all the freed up labour/capital resources, so any downfalls would be temporary. On the other side are democracies like US which don't have that much control over production side and whose economies are not that robust to shocks that China may face now.
