Hope you had a great break; we are now back to our regular editions of Top 10 links from around the Internet at 10:00 am today.
Mondays is me, Wednesdays its Bernard, and Fridays its a guest.
As always, we welcome your additions in the comments below or via email to david.chaston@interest.co.nz.
See all previous Top 10s here.
1. From [baby] boom to bust
Japan and Germany may not be outliers in the world's demography - they may become the norm.
The Economist reckons that one of the world's great transitions may in fact be happening right now - and if you are on a certain age (like me) you will find this truly amazing.
A whole bunch of us grew up with the notion that the world's expanding population was on a track to ruin. Books were written, philosophies established, 'rules' were made.
But we may not have read our tea leaves correctly; it looks like Asia is self correcting its population.
This will have huge implications.
Not mentioned by the Economist is that the one area that looks like it will have 'positive demographics' for most of this new century is North America. And New Zealand?
Over the past half-century the most profound influence upon the great majority of humankind has been the vast and gentle decline in the size of families. In 2014 (or thereabouts—such things are approximate) this huge change will reach a milestone. In the world’s most populous continent, Asia, the total fertility rate will fall to 2.1. The rate is the number of children a woman can expect to bear during her lifetime and 2.1 is a magic number because, if sustained, it produces long-term equilibrium in the population (it is known as the replacement rate). In 1960 Asia’s average fertility was 5.8.
The exact point at which fertility reaches replacement cannot be known for sure. The United Nations Population Division thinks it will happen at some point during 2015-20. But Chinese demographers think the UN is significantly overestimating China’s fertility rate, so 2014 is a reasonable guess.
2. 97 million and growing
New Zealand has been fortunate to get an early FTA with China. Others, including Australia, are scrambling. It has transformed our trade with them, including tourism. But we are a pimple to China. Although they may have reached it maximum population, it is still huge. As it ages and get more wealthy it is transforming into a 'normal' large country. And its people want to travel.
Their outbound travel industry is just getting started, and its already huge as the China Daily report shows.
Lets hope we go for tourism from there at the upper end of the market. Selective would be good. Swamping volumes - which they can supply - will do us no good at all, and probably not what the people who come want either.
China had the highest number of outbound tourists and amount of overseas spending in the world last year, according to a report released on Wednesday.
Ninety-seven million Chinese traveled abroad in 2013, beating the 2012 mark by roughly 14 million, according to the China National Tourism Administration. The number is expected to surpass 100 million this year.
The report released on Wednesday by the Tourist Research Center of the Chinese Academy of Social Sciences said that China's tourists have had the world's strongest purchasing power since 2012. They overtook German and US tourists as the world's biggest-spending travelers in 2012, spending US$102 billion overseas, a 40-percent increase from 2011.
Most Chinese tourists traveled to Asian and European countries, the report said, accounting for 75 percent of overseas tourists in those countries.
3. Is mobility the real issue?
'Everyone' is talking about inequality and the 1%. Indeed books have been written about it, movies made, and it has turned authors into politicians. Some are attracted because it supports their political views, others because they are genuinely worried about the trend. There is no doubt it is a troubling international trend, even here in New Zealand.
But now some are suggesting the problem is not really inequality, but mobility. They may have a point.
Using new US data, Brad Wilcox has identified three key factors that can help - or hurt - those on low incomes from improving themselves.
Obama is only the most prominent public figure to declare inequality Public Enemy #1 and the greatest threat to reducing poverty in America. CAP’s new Washington Center for Equitable Growth, Princeton economist Alan Krueger, and economist Miles Corak (with his famous Great Gatsby Curve) have all argued that it’s harder for the poor to climb the economic ladder today because the rungs in that ladder have grown farther apart. In Krueger’s words, countries like the United States with high inequality tend to have less upward mobility “for children from low-income families.”
But for all the new attention devoted to the 1 percent, a new dataset from the Equality of Opportunity Project at Harvard and Berkeley suggests that, if we care about upward mobility overall, we’re vastly exaggerating the dangers of the rich-poor gap. Inequality itself is not a particularly potent predictor of economic mobility, as sociologist Scott Winship noted in a recent article with his colleague Donald Schneider based on their analysis of this data.
So what factors, at the community level, do predict if poor children will move up the economic ladder as adults?
Based on my OLS regression analyses of the data, of the factors that Chetty has highlighted, the following three seem to be most predictive of rags-to-riches mobility in a given community:
- Per-capita income growth
- Prevalence of single mothers (where correlation is strong, but negative)
- Per-capita local government spendingIn other words, communities with high levels of per-capita income growth, high percentages of two-parent families, and high local government spending - which may be a proxy for good schools - are the most likely to help poor children relive the Horatio Alger story.
4. Putting bank margins in perspective
Here's something to consider. Bank margins by our retail banks are not rising, well not at least on a per unit basis. They may not be at their lowest level currently, but they are lower than over most of the period the RBNZ has been collecting this data - since 1996, almost 18 years ago.
Over the same period, mortgage lending has trebled, and other lending has doubled. Deposits have grown 240%. So the base on which these declining margins have been earned has grown fairly substantially - at a compound rate of loan growth of 7.3% per year, and way faster than our economy.
5. The US$9 trillion sale
The editors of the Economist magazine are recommending that Governments should launch a new wave of privatisations, this time centred on property.
There goal is to unlock "huge value" that is being wasted or ignored.
I will let you decide whether they make a good argument, but it seems New Zealand is leading this trend - again.
Imagine you were heavily in debt, owned a large portfolio of equities and under-used property and were having trouble cutting your spending—much like most Western governments. Wouldn’t you think of offloading some of your assets?
Politicians push privatisation at different times for different reasons. In Britain in the 1980s, Margaret Thatcher used it to curb the power of the unions. Eastern European countries employed it later to dismantle command economies. Today, with public indebtedness at its highest peacetime level in advanced economies, the main rationale is to raise cash.
Taxpayers might think that the best family silver has already been sold, but plenty is still in the cupboard (see article). State-owned enterprises in OECD countries are worth around $2 trillion. Then there are minority stakes in companies, plus $2 trillion or so in utilities and other assets held by local governments. But the real treasures are “non-financial” assets—buildings, land, subsoil resources—which the IMF believes are worth three-quarters of GDP on average in rich economies: $35 trillion across the OECD.
Some of these assets could not or should not be sold. What price the Louvre, the Parthenon or Yellowstone National Park? Murky government accounting makes it impossible to know what portion of the total such treasures make up. But it is clear that the overall list includes thousands of marketable holdings with little or no heritage value.
6. 'Expect 1 3-4% total return for bonds in 2014'
"There's 50 ways to leave your lover and maybe more than that to lose your money," says Bill Gross at PIMCO in his latest column.
Gross knows that firsthand. His flagship fund suffered losses last year along with the rest of the bond market as interest rates rose. Investors pulled more money out of his fund than any other bond fund last year, according to Morningstar.
Anyway, here he is doing his best to convince his readers that 2014 will be a good one for PIMCO bond clients who have more than US$2 trillion invested.
But riding the bond market seesaw doesn’t always mean negative returns, especially when it comes to other “carry” components inherent in fixed income securities. As I pointed out in my August 2013 Investment Outlook titled “Bond Wars,” maturity extension is just one of the ways to produce carry and total return in a fixed income portfolio. In addition there are 1) credit spreads, 2) volatility sales, 3) curve and 4) currency-related characteristics that when combined with maturity can produce returns over and above those microscopic Treasury bill rates, and still keep you from “breaking the buck” under a majority of scenarios.
On the “down” side of an interest rate teeter totter these carry components can help a portfolio benchmarked to a 5-year duration bond market index float above water and even enjoy swimming! Likewise, they become major components of low duration and “unconstrained bond portfolios” that do more than dog-paddle in a marketplace where bonds, stocks and alternative assets are competing for total returns. So in 2014, look for PIMCO to stress credit, curve, volatility and a tiny bit of currency while deemphasizing 10- and 30-year maturities that are Taper affected.
Still, a seesaw rider should not get carried away by this metaphor that seems to guarantee that what goes up must come down. Bond prices as shown in Chart 1 have already come down a lot since April of 2013 or July of 2012 – whenever you want to label the peak. And bond prices – especially those at the front end of yield curves – say 1-5 years, are critically dependent on the future level of Fed Funds, not the glidepath of the almost preordained Fed Taper which should end in 2014.
7. How does the exchange rate affect the real economy?
The NZ Treasury has published a whole series of working papers in the week before the Christmas shutdown. (H/T Peter E.) The 39 page one that looks at the exchange rate's affect on our economy is interesting - if only because it appears the whole issue has the experts stumped. They find that our commodity exports are quite insensitive to the FX rate, but our manufactured exports are.
I suppose that makes sense. Manufacturers making me-too products probably can't expect not to be affected. But if we have commodities (milk, meat, wood) that others need, the buyer will pay what they have to to get them.
There is no simple answer to how exchange rate movements affect the real economy. Exchange rates respond to many different types of shocks. These shocks may be fundamental shocks which have a persistent effect on the equilibrium exchange rate or non-fundamental disturbances which push the exchange rate away from its equilibrium level. Misalignments may be persistent or extremely transitory. In order to understand the relationship between the exchange rate and the real economy it is necessary to understand what types of shocks are affecting the exchange rate.
However, despite this detailed theoretical literature and extensive empirical testing, there are few definitive conclusions or clear guidance for policymakers. This is particularly true for advanced economies such as New Zealand, as most empirical work has focused on emerging market economies. Most other advanced economies are relatively closed or have large domestic markets, so the impact of shocks on the real economy through the exchange rate is not a significant focus. In addition, it is difficult for policymakers to identify accurately the nature of the shocks affecting the economy. The economy may also be affected by multiple shocks at the same time.
Determining the contribution of each shock can be difficult, especially in real time. So conclusions that can be drawn from the literature are:
- While the New Zealand dollar exchange rate may be above its equilibrium value, fundamental shocks, such as higher export commodity prices, may also have played a role in its recent appreciation. This suggests that the equilibrium value of the exchange rate may also have risen.
- Tradable sector output growth has declined since the mid-2000s, but within the tradable sector, activity in resource-based industries has risen strongly, while manufacturing output and exports of services has declined. This is consistent with ‘Dutch disease’ effects, as higher commodity prices crowd out non-commodity exports.
- Sensitivity to exchange rate movements varies across New Zealand’s economic sectors and industries. The agricultural sector is relatively insensitive to exchange rate movements, while the manufacturing and service sectors are more vulnerable.
8. 'Higher pay for everyone'
Shinzo Abe is the Prime Minister of Japan, and he has written a defense of his adventurous economic policies at Project Syndicate.
Basically, he is saying that his new direction in 2013 saw the Japanese economy turn the corner on two decades of stagnation. And the future will be bright he says, because of 'an emerging consensus that long-term recovery cannot be achieved without a concerted effort to increase workers' wages and bonuses'.
The wage surprise draws its inspiration from the Netherlands, where a consensus emerged in the early 1980’s that in order to sustain employment, the burden of taming rampant inflation should be shared by employers and the employed. That consensus was enshrined in the 1982 “Wassenaar Agreement,” named after The Hague suburb where it was forged.
Japan is now witnessing the emergence of a similar national consensus, or, rather, the Dutch consensus in reverse: a shared sense that the government, major industries, and organized labor should work together to increase wages and bonuses (while facilitating incentives that could enhance productivity).
Needless to say, wage levels ought to be determined solely by management and workers. But it is equally true that the emerging consensus among the government, business leaders, and trade unions already has led a growing number of companies to promise significantly higher wages and bonuses.
This is the essence of the wage surprise. It will be an entirely new phenomenon, one that, together with the massive ¥5 trillion fiscal stimulus, will more than offset the potential negative effect of a sales-tax increase. Most important, it will continue to put Japan’s economy on a sustainable growth trajectory. Of this I am certain.
9. A lot of rethinking to do
Last week I asked how we could address the issues confronting society from the fact that machines can now do much of the labour people are currently employed to do. There were few suggestions; it has many people stumped. The issue is causing growing inequality and poor mobility.
Tom Friedman at the NY Times reviewed a very new book by two American professors called The Second Machine Age. Friedman highlights some of their 'solutions'.
Put all these advances together, say the authors, and you can see that our generation will have more power to improve (or destroy) the world than any before, relying on fewer people and more technology. But it also means that we need to rethink deeply our social contracts, because labor is so important to a person’s identity and dignity and to societal stability.
They suggest that we consider lowering taxes on human labor to make it cheaper relative to digital labor, that we reinvent education so more people can “race with machines” not against them, that we do much more to foster the entrepreneurship that invents new industries and jobs, and even consider guaranteeing every American a basic income. We’ve got a lot of rethinking to do, they argue, because we’re not only in a recession-induced employment slump. We’re in technological hurricane reshaping the workplace - and it just keeps doubling.
10. Today's quote
"Business is the art of extracting money from another man’s pocket without resorting to violence." - Max Amsterdam
45 Comments
4. Considering Bank Margins
I read your chart as showing a bank mark up on lending retail funds of about 34% up to 2008. A blip down to 16% for a short while and a current mark up of 52% on the cost of funds. Am I reading it wrongly because I can't see how to conclude that margins are not rising?
Percentages of percentages (of percentages) always confuses.
These figues are taken from the RBNZ G5 series, the gap between Interest income to interest-earning assets, and Interest expense to interest-bearing liabilities.
1. Yawn. This was being written about a decade ago in conservative circles (Mark Steyn terms himself a 'demographic bore' on this subject). Good to see the MSM catching up. The phrase 'old before they're rich', applied to China, for example, in this 2007 academic study. Many of the citations here date back to the '90's. It's not hard to figure out future population trends, as one wag has it: just look in the childcare centres, kindergartens etc and start counting.
3. 'Inequality' is largely determined by family. So runs George Will's piece. And family (and culture generally) is notoriously resistant to external influence..... rule#1 in business is that significant cultural change is a 5-8 year project, and rule#2 is that often, it's people that need to be changed/swapped out.....
US jobs 'growth' - the earlier briefing at 9 refers. Roger Simon, over at Pajamas Media, has a rather different view: low unemployment (current measure) = high lack-of-participation rate. There's a telling graph in the head of the article, using an older measure....
No-one mentioned culling, no-one mentioned sterilization, why are you lying
The key to birth control is education of women, birth rates inevitably drop when women are educated and have freedom of choice
Anyway regardless human over population of the world is screwing it up
Falling birth rates are a side effect, not the principal purpose, of educating women, removing barriers to their participation in the workplace and providing them with access to contraception. Those would be good and right things to do even if you did not have an objective of reducing population.
And they are all already in place in New Zealand, so presumably you're not advocating any further action here?
definition:- wholesale
adjective:- done on a large scale; extensive. "the wholesale destruction of these animals by poachers"
synonyms:- extensive, widespread, large-scale, wide-ranging, far-reaching, comprehensive, all-inclusive, total, outright, thorough, sweeping, blanket, broad, mass
Preventing immigration into New Zealand will slow down the growth in, and may eventually reduce, the population of New Zealand. It will have absolutely no impact on the global population level, which you claim is your main concern.
In fact allowing immigration from less developed countries might even help to slow down global population growth, if it means that women get access to education, employment opportunities and contraceptives when they would not have done if they had stayed where they were.
There are arguments to be made against allowing indiscriminate and large-scale immigration, which is why New Zealand doesn't actually allow it. But concern about the environmental and ecological impact of global population levels is no argument at all for restricting immigration.
I am pretty keen on New Zealand having a higher population and more immigrants. Obviously this could be done in a bad way, but done properly I think it would benefit us all, I believe.
Among the very real benefits would be enriching our cultural diversity. We are not bad on this basis now - I love the changing makeup - but more diversity would be even better.
And, immigrants bring energy and enthusiasm, counteracting the lethargy and negativism that grows in mono cultural groups. We need the push; a little competition locally helps everyone lift their game. Sure, there would be whiners, but so what?
A bigger population would lower unit costs for governments, businesses and community groups. That would benefit everyone. Kiwis are well aware they 'pay too much' for some things on an international scale. A higher population would help mitigate those costs.
A bigger population would justify completing some bigger social projects - transport, community amenities, etc.
A bigger population would allow us to specialise more in the work we do, making some jobs that you can only currently do overseas, viable here, and bringing the benefits of those special skills to NZ.
A bigger population and job market would provide a wider range of job opportunities - for anyone with the drive to get them. (It might even allow some young people to get their expanded experience by not going overseas.)
A bigger population and economy would help us play a more meaningful role in the world, sharing our resources, capabilities, and capacity. Being too small means we are all talk, no meaningful action when our help is needed.
There are probably others. There are actually some very nice, vibrant, and exciting communities internationally that have similar land areas to NZ and populations about 10 million. I don't see why anyone think the current state here is ideal. Some people can make a case for a smaller population. That would mean the inverse of the benefits I list above. But there is nothing magic about 5 mln. I think it is too small. I would like to see a larger NZ inside a smaller world.
On the whole, I suspect the benefits would greatly outweigh the 'costs' - although I do agree some people would not like the change and would see it with a jaundiced eye. But they would likely be folks who don't like any change. To see benefits you need an optimistic outlook on life to start with.
There may be many other benefits. Feel free to add to the list.
The average working week in Korera is 60 hours.
http://www.forbes.com/2008/05/21/labor-market-workforce-lead-citizen-cx_po_0521countries.html
The reality is that we are letting people in and getting no corresponding increase in production, all we are doing is dividing our aealth by more and more people.
The increase in debt has held our GDP up.
Wiki
The New Zealand economy has recently been perceived as successful. However, the generally positive outlook includes some challenges. New Zealand income levels, which used to be above much of Western Europe prior to the deep crisis of the 1970s, have never recovered in relative terms. For instance, the New Zealand nominal GDP per capita is about 80% that of the United States. Income inequality has increased greatly, implying that significant portions of the population have quite modest incomes. Further, New Zealand has a very large current account deficit of 8–9% of GDP. Despite this, its public debt stands at 33.7% (2011 est.)[24] of the total GDP, which is small compared to many developed nations. However, between 1984 and 2006, net foreign debt increased 11-fold, to NZ$182 billion, NZ$45,000 for each person.[12]
The combination of a modest public debt and a large net foreign debt reflects that most of the net foreign debt is held by the private sector. At 31 June 2012, gross foreign debt was NZ$256.4 billion, or 125.3% of GDP.[25] At 31 March 2012, net foreign debt was NZ$141.65 billion or 104.4% of GDP.[26]
New Zealand's persistent current-account deficits have two main causes. The first is that earnings from agricultural exports and tourism have failed to cover the imports of advanced manufactured goods and other imports (such as imported fuels) required to sustain the New Zealand economy. Secondly, there has been an investment income imbalance or net outflow for debt-servicing of external loans. The proportion of the current account deficit that is attributable to the investment income imbalance (a net outflow to the Australian-owned banking sector) grew from one third in 1997 to roughly 70% in 2008.[27]
I am not advocating making NZ into Korea (North or South), only pointing out with an example that wealth comes from people's energy. Yes, Sth Korea has parleyed high energy into fast rising living standards. But I doubt many other countries, including NZ, could do that as quickly as they have done.
'Our' wealth (NZ) is not 'your' production. It just does not follow that more migrants take from your farm. Migrants come with special energy to succeed. (I was one, once.) The additions they make - and there are many countries that make the case (Australia, Brazil, Canada, USA) - vastly outweigh the costs they may bring, and quickly. Migrants 'pay' for themselves in short order, which is not something you can always say about the incumbents. Incumbents not pulling their weight will always feel threatened. Nothing you can do about that - except to say, if you accept them as the standard, your country is going to atrophy.
(Having said that, countries can make big mistakes with migration too - the UK is an example perhaps. It just takes longer to see the benefits. But they do come in spite of the policy mistakes.)
David Chaston: OK. That's the positive case. That's good. That's your view
As a media man you know you "have" to also put up the "negative" case at the same time to give a balanced view
From what I can see, you are providing a carrot at the end of a stick in front of a donkey .. it never reaches the carrot .. it's been happening for more than 10 years now .. where are the benefits that have arisen, itemise them, and then itemise any disadvantages that you have observed.
Then visitors can respond
There are some serious new zealand issues that are being exacerbated by continuing immigration while the problems are not being addressed
For some time, here on interest.co.nz, my personal view has been that the immigration spiggot should be turned off until all the infrastructure shortcomings are fixed, including housing, health, education, jobs, and then re-open the spiggot
Are you advocating increased immigration as a "fix" for the current shortcomings
Sorry David. I see your benefits as just assumptions. Mine are assumptions too of course. And they are different to yours.
In the 'good old days' we had half the population. And a much lower GDP. And a person on an average wage could afford a house on a decent bit of land. Could go the beach (beachfront actually) for a few weeks. And families largely got by on one income.
Not happening now, with an inflated GDP and population pressure.
My pick for an ideal sort of population level - based of course on a bunch of my own assumptions - is about one million for New Zealand. Or maybe a bit lower. The place would be vastly improved from the present.
I have great optimism about how good that would be, and suggest positive thinking would enable it to happen.
I am more than happy for other countries to follow New Zealand's example in terms of educating women and providing them with access to the workforce and to labour markets. That would be good for many reasons, political, economic and social as well as ecological.
However, if every country in the world were to follow the example of New Zealand in preventing immigration, how would that make a difference to global population growth and the ecological problems it creates?
Nature will do it for us (as in species, not specifically NZers), since we have chosen not to ourselves.
Also I think its more like < 2billion.
NZers, well some socio-economic groups are still having >2 children....the Q is how will they feed themselves.
Sit and watch......
regards
Education and family planning affect the overall rate of change over time, they don't set a cap. If you can't see this, take a spreadsheet and treat the first colum as population, and the second column as the generational rate of change. In the first row put 8 and 1.1 in the two columns. In the first column of the second row (cell A2 for example) write a calculation multiplying the two numbers above together to give this generations population (=A1 * B1) and get an answer of 8.8. In the second column put 1.1 again. Fill the calculation down 20 or so rows and watch the population increase. Now we introduce education by repeating the same calculation in column 1 but changing the second column to 0.95. Repeat this down another 20 rows and watch the numbers coming back down.
Now it is more complicated in the real world (because education is not evenly distributed between countries we would need a whole lot of columns), but that is the core idea that shows, in answer to your question, how the population can decrease.
We won't need a cull to get to 3 billion, the destruction of our environment in the name of growth will ensure it. Everyone knows the population "problem" will solve itself with projections for some time showing the world population to level off at a totally unsustainable 10-11 Billion.
It will be interesting to see if we ever make the 10 billion mark I suspect the problem will fix it self long before then.
Us Malthusians will be right in the long run it's just a matter of timing.
Oil will peak this decade (if not 2006), Ngas this or next decade. Just where will the fossil fuels for agri-transport / mechanisation and fertilizer be got from to continue excess food? Or look at the increase in extreme weather events brought about by burning fossil fuels, devistating crops...the last 20 years co2 dumping has locked in the next 20 increases in such events...(give or take a bit)
I think its going to get very rough and within 10 years myself.
regards
No, oil has probably peaked. The crude oil peak was 2006 but its possible in the next 4 or so years to briefly peak, ie before 2018~2020.
I talk about peak oil and not peak gas and also globally. Even then the most optimistic figures on shale gas in the USA talk about 2016 or so...
Solar isnt a transport fuel
SOE's should be retained as they are resiliance...a strategic asset we need.
regards
#t The exchange rate
I look at it this way
Say the NZ government introduced a new currency (the NZ pound) and it ran, for a while, along side our current NZ $
Say this NZ pound is introduced at an exchange rate of 1NZ pound = $10NZ
Now if the NZ$ is 80cents US then the NZ pound will trade at $8US
Would we be worried that our NZ pound is so high it is worth $8US. All that has happened is the pound is more valuable than the NZ dollar.
The exporter gets less NZ pounds but the pounds buy more and so on.
#9 Rethinking labour
As the majority of the people get poorer they accept it. As long as you give them a meal they will not riot. Some have been saying, for a while now, that the people will ultimately riot - they wont.
The road ahead is very clear to me. We will continue to get poorer and the 1% will continue to get richer. Eventually we will end up like, say Pakistan. They have very poor people and very rich people and have no riots.
Ultimately though, we will end up looking like the 1800's. The 1% will have their big estates and have hundres of servents to look after their gardens, cars, boats, helicopters, jets, look after their wardrobes, hairdressers, nannys, cheffs and kitchen hands and many more.
No one will complain for fear of loosing their job and getting kicked off the eastate.
Thanks David. The stats you reference show net interest margin as a percentage of net interest expense has risen from about 50% to 70% between Sep 2009 and Nov 2013. So no confusion in my mind that banks are now enjoying better margins between the cost of money in and money out.
@3, some misdirection here from those who would publish. higher income individuals and families moving into an area of lower socio-economics will improve the stats for the boundary but not the outcomes for either group across any of the criteria.
@9, this is too simple, having pressed populations like olives for workforce participation and productivity when it was pertinent, mankind now finds many will need to be left fallow due to technology. Proliferation of Non-producing informational and service workers can be tolerated for the illusion of jobs to a point, but the future may be full support of some who will never be employed or structural change to share it around. Largely remuneration for effort has failed as those doing least have accumulated most and vica versa. Greater minds than mine should already have a plan for this but I do not see them stepping forward. Leadership needs to be divorced from finance before Oligarchy becomes the only form of government.
As for education, many have reached a saturation point part way through high school, jawboning a "knowledge economy" is just a political sound bite.
Regards nine. In fact it seems there are two problems - to increase (the value off) outputs, and to distribute the outputs in a way that is satisfying (to whomever exercises power). In the last hundred years or so of Western history, we have treated those problems as intrinsically coupled, with a person's share of wealth directly linked to their contribution to the increase of that wealth. A common theme among proposed solutions to this problem is to break the link.
At the time this coupling worked very well, as demand for labour outstripped supply, and it was easy to profitably make use of a labour power. The link incentivised more people to contribute effectively to the increase of wealth. Now, (because we are still in a recession? Or is it more systemic, due to automation, technology, etc) it's much harder to put a labour power to use profitably, and the link incentivises a reduction in the number of people in work - and, due to the coupling, therefore causing poverty.
Of such solutions I've seen proposed so far, I have a slight preference for guaranteed basic income schemes, as these uniquely preserve the profit motive. They still incentivise people to work hard in order to get ahead while allowing reasonable distribution in conditions where demand for labour is weak.
Re 9 It seems to me the taxation of wages at low wage levels is a great disincentive to employing people and becoming employed all for a small return to the state. We should be incentivising the outcome we desire, people in work, This also has beneficial side effects such as increased self esteem, less crime and lower welfare costs.
#9. Sadly it's all about "the economic experts" being too well educated and not understanding what's going on.
Creating value and wealth vs employment, wasting time, and stealing market share.
eg The process to make farmers put in ponds, has created a new industry. Making them do it all at once has created a bubble, new skills and gear NOW...5 years of business for contractors, buying equipment, skilling up...then all are done. Leaving 10yr chunk of debt for farmer. Only winners are banks.
If that kind of think was staggered over 100 years (ie life of the pond), then you get 1/20th number of contractors. They're all well employed, can pay off and upgrade equipment, skills developed are still valuable 10-20 years later in workers earning lifetime. That's a industry created, and the pond & equip will be operating after it's costs are meet - that's wealth. That's actually creating an industry. (ie _creating_the_economy_)
However do have to be careful, the jump to transistors technology for radios & tv's, that just took all the marketshare of valve technology, not create a new industry. Fortunately it's a better industry in almost all cases, with further scope.
Much of what is done by the instant gratification crowd, is pushing up numbers (eg effect of price rises from GST increase appearing as inflation) or steal market share in one segment at the cost of leaving a viable market orphaned (and often still with debt). And often they do so creating a bubble chase, where it's a mouse wheel of trying to keep up and justify their position/committee's existance
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