Linked by David Adams on Wed 17th Dec 2008 17:15 UTC, submitted by Michael
In the News In a muckraking article, suppliers to well-known computer manufacturers are accused of mistreating workers and violating Chinese labor law: "According to a Hong-Kong based human rights organization, working hours total up to 370 hours per month, workers aren't receiving the legal minimum wage and in the run-up to Christmas, days off are cut out entirely." One of the reasons that high tech hardware has become so widespread and useful is because it's so inexpensive. As this article demonstrates, this affordability can come at a price.
Thread beginning with comment 340717
To view parent comment, click here.
To read all comments associated with this story, please click here.
RE[7]: shit happens
by wannabe geek on Thu 18th Dec 2008 13:52 UTC in reply to "RE[6]: shit happens"
wannabe geek
Member since:

As many other followers of the Austrian school of economics, he correctly and accurately predicted the current crisis, as well as the housing bubble and the dot com bubble.

So did other, non-"Austrian" economists, such as Michael Hudson. Also search for Max Keiser, lots of fun now and then to see him commenting on a.o. Al Jazeera English.


That may be the case, but my point is that mainstream economists, following Keynesian reasonings and terminology, massively failed to predict it. This is the most interesting aspect of "Peter Schiff was right" videos.

" They don't blame the lack of regulation of the markets, but exactly the opposite, the interventionist, Keynesian policies of credit expansion by the US Federal Reserve.

1) There is nothing "Keynesian" about what the Fed has been doing in the past decades;


I disagree. From the Wikipedia definition of Keynesianism:

"According to Keynesian economics the state should stimulate economic growth and improve stability in the private sector - through, for example, interest rates, taxation and public projects."

All this talk about "stimulating the economy", "avoiding deflation" and lowering the interest rates as a medicine for the economic crisis, the belief that a little bit of inflation is good for the economy, are all Keynesian tenets. They are not facts all economists agree about.

2) The reason the crisis is so bad this time is partly because of Clinton having killed the Glass-Steagall regulations.

Well, there's much truth to that, and many Austrians agree, but then it's no surprise that some particular piece of "deregulation" can be harmful in a massively regulated and intervened market, where this particular regulation at best mitigated the abuse of some privileges that should have never been conceded in the first place:

"The Financial Services Modernization Act of 1999 would make perfect sense in a world regulated by a gold standard, 100% reserve banking, and no FDIC deposit insurance; but in the world as it is, this "deregulation" amounts to corporate welfare for financial institutions and a moral hazard that will make taxpayers pay dearly."

"Similar causes, say the Austrians, lie behind the 1929 crack

No, that was because of a very similar credit bubble on the stock market. There was very little regulation at the time.

"a very similar credit bubble on the stock market", exactly. Your explanation coincides with mine and the Austrians' in everything, except, maybe, on who is to blame for the credit bubble (central banks, that is, the government).

There was quite a bit of regulation back then, but most importantly, central banking is all the regulation that's needed for this kind of disaster. Panicked interventionism did the rest and led to the Great Depression.

" and virtually all boom-bust economic cycles ever since, which are NOT a natural behavior of a real free market economy.

"Boom-bust" cycles are caused not by regulation or deregulation, but by the monetary system (fractional reserve banking and compound interest).

Yes, as you say, fractional reserve banking lies behind the boom-bust cycles, but what makes them huge and nation-wide is central banking. Otherwise there would be a bank run here and there, but most banks would act responsibly for their own sake, as an excess of credit expansion would lead to a quick depletion of the bank's reserves, and most people would diversify their choice of banks for their savings.

While Peter Schiff is completely right about the debt and the balance of payments deficit, and about America's overconsumption and huge indebtedness, he pays little attention to America's free ride as explained by America's top financial economist, Michael Hudson, in Global Fracture and Superimperialism.

I'll take a look at that. But Schiff talks quite a lot about America's "free ride", even if it's from a slightly different angle.


Reply Parent Score: 2

RE[8]: shit happens
by h3rman on Thu 18th Dec 2008 15:06 in reply to "RE[7]: shit happens"
h3rman Member since:

You have good points, and FTR (I hope I already said that) I think Peter Schiff knows what he's talking about, it's quite embarrassing to see those videos with the pundits laughing at him for his predictions, which anybody with a clear mind could see were correct.

Here's another video with Ron Paul and Peter Schiff stuff in it, nice compilation.

About the Keynesianism, you're both right and wrong. The US has a central bank and the government spends money and has a deficit. But that in itself doesn't make it "Keynesian". Before Keynes, there were central banks, and governments used to borrow and spend lots of money (usually on wars and empire building, sounds familiar? :-) ) and raise taxes to pay the interest.
And what the US government is doing now has nothing to do with "Keynesianism" whatsoever, it's pure kleptocracy. Obama is not going to do anything about it either. It's a total mess, and the country is run by crooks. The US is a real estate economy, it's not a labor economy, which is what Keynesianism is all about. In Keynesianism, one taxes property more than labour. Under Reagan-Clinton-Bushonomics, (speculative) property basically isn't taxed at all.

Reply Parent Score: 3

RE[9]: shit happens
by jimbofluffy on Fri 19th Dec 2008 03:22 in reply to "RE[8]: shit happens"
jimbofluffy Member since:

The US is a real estate economy, it's not a labor economy, which is what Keynesianism is all about. In Keynesianism, one taxes property more than labour. Under Reagan-Clinton-Bushonomics, (speculative) property basically isn't taxed at all.

I have never heard the US be called a "real estate" economy before. Maybe you mean a service economy?

Keynesianism or at least Neo-Keynesianism can be summed up in two words: nominal rigidities. Money can have real effects (as opposed to Classical theory) which leaves room for monetary policy. In regards to funding for fiscal policy, whom one taxes is a minor point.

Reply Parent Score: 1