Corbynomics: A Dystopia

GreatApe

economic wrote: »

probably part of the problem is immigration making the supply of low cost labour high nd bringing down wages at the lower end.

another part of the problem is the benefits system incentiving people not to work.

and another problem is the lower economic growth (and therefore lower real incomes) we have seen since WW2. it now takes 2 incomes to raise a family, mortgage etc. in the 50s it only took 1 income so the wife stayed at home to look after the kids and do house chores.

now of course birth rates are falling and people having kids later in life. people also dont move out of family homes now until they are in their 30s. its not out of choice. its simple economics. all this contributed by the lack of growth, real wages etc.

so i do feel things are improving in some ways (efficiency, technology, medical advances, freedom etc) however there are problems too of course as mentioned above.

Lower skill Migrants don't push the locals down they push them up. (And the opposite is also true if we imported millions of high skill migrants they would push the locals down)

We have close to zero u employment (unemployed for 6+ months is only about 1%)
So if we have full employment and migrants are doing the less desirable lower paid jobs then its simple to deduce the locals must have been pushed up the pay and job scales.

It takes 2 incomes now to support a family because a lot of the money earnt from those 2 incomes goes to supporting the grandparents indirectly via taxes paid for pension and old age healthcare. We also consume a lot more now than we did fifty years ago so are not comparing like with like.

The measures of growth are also somewhat inadequate in the digital world. We now have access to almost limitless information and entertainment at almost zero cost. This is something that Is not AFAIK taken into account.
In the old days if you took half a dozen photos that added £5 to GDP as you had them processed and printed out at the chemists. Now you can take a hundred dozen photos a day at Much higher resolution and information yet it adds nothing to GDP. In the olden days people paid £5 to go to the cinema adding to GDP now they download for free HD films off the net. There is a lot of 'value added' activity going on with no value attached to it.

economic

GreatApe wrote: »

Lower skill Migrants don't push the locals down they push them up. (And the opposite is also true if we imported millions of high skill migrants they would push the locals down)

We have close to zero u employment (unemployed for 6+ months is only about 1%)
So if we have full employment and migrants are doing the less desirable lower paid jobs then its simple to deduce the locals must have been pushed up the pay and job scales.

It takes 2 incomes now to support a family because a lot of the money earnt from those 2 incomes goes to supporting the grandparents indirectly via taxes paid for pension and old age healthcare. We also consume a lot more now than we did fifty years ago so are not comparing like with like.

The measures of growth are also somewhat inadequate in the digital world. We now have access to almost limitless information and entertainment at almost zero cost. This is something that Is not AFAIK taken into account.
In the old days if you took half a dozen photos that added £5 to GDP as you had them processed and printed out at the chemists. Now you can take a hundred dozen photos a day at Much higher resolution and information yet it adds nothing to GDP. In the olden days people paid £5 to go to the cinema adding to GDP now they download for free HD films off the net. There is a lot of 'value added' activity going on with no value attached to it.

completely agree. do you see rates staying low for a very long time?

GreatApe

economic wrote: »

completely agree. do you see rates staying low for a very long time?

Real rates are below zero at the moment. I don't see them surpassing 0% for long in my lifetime.

I'm not sure the stock market will do a lot better. There are plenty of companies that could be screwed by the advance of tech. Everything from banking to commodities could suffer.

If we get general AI in 15-20 years time then nothing is clear beyond that. Soon after we either become gods or extinction. Or AI doesn't arrive.

economic

GreatApe wrote: »

Real rates are below zero at the moment. I don't see them surpassing 0% for long in my lifetime.

I'm not sure the stock market will do a lot better. There are plenty of companies that could be screwed by the advance of tech. Everything from banking to commodities could suffer.

If we get general AI in 15-20 years time then nothing is clear beyond that. Soon after we either become gods or extinction. Or AI doesn't arrive.

tech stocks should do well though. certain commodities will do well those in demand. banking i agree will eventually be replaced as well and its scary to think how fast things are moving. literally every servcie offered by banks can be replaced by fintech and thats no exaggeration.

Thrugelmir

economic wrote: »

tech stocks should do well though.

Tech stocks need constant product innovation. Ultimately they'll become like utilities. Once the technology becomes cheaper and more accessible.

economic

Thrugelmir wrote: »

Tech stocks need constant product innovation. Ultimately they'll become like utilities. Once the technology becomes cheaper and more accessible.

they need it sure. which makes them great long term holds as growth stocks for now. technological potential is huge IMO.

Thrugelmir

economic wrote: »

they need it sure. which makes them great long term holds as growth stocks for now. technological potential is huge IMO.

Huge product profit margins. Plenty of room to be undercut. Every dog has it's day.

GreatApe

economic wrote: »

they need it sure. which makes them great long term holds as growth stocks for now. technological potential is huge IMO.

The problem is its mostly a winner takes all system and its difficult to tell who the winners will be beforehand

For instance I think self drive cars will be huge wealth generator but right now its not clear which of the two dozen large companies working on it will win out or if it will be a new company that doesn't even exist yet

I have some shares in Tesla Apple and Google just for self drive tech. Whichever company comes up with the first workable version will have a captive market of 50+ million new cars a year. The car companies will pay dearly for it maybe in the region of $5k just for the software. That means it could be worth $250 billion a year and since its software it can be in excess of 50% margin. Of course those prices can not be sustained competitors will bring out software solutions for less than $500 at some stage but the first company will grab a large chunk of the transport as a service model. Basically uber without the driver x 100 for the size of the fleet.

GreatApe

Thrugelmir wrote: »

Huge product profit margins. Plenty of room to be undercut. Every dog has it's day.

Yes that is certainly possible

However a lot of tech companies have a natural monopoly. For instance there are a hundred uber clones and none of them are uber not because uber has the best software but because uber was first at getting enough users and drivers on their platform so now uber has the most drivers and fastest response times so virtually all new taxi cab app users ho for uber

However there is certainly the ability to be leapfrogged by other tech companies. In uber case if google or Tesla or another company get self drive cars first then uber is dead. Said company would not have the uphill struggle of recruiting drivers they can just deploy 500,000 Tesla/google/apple taxis and undercut human ubers. Do it with zero margins for a couple of years and become the new uber but fifty times the size and market cap.

economic

GreatApe wrote: »

Yes that is certainly possible

However a lot of tech companies have a natural monopoly. For instance there are a hundred uber clones and none of them are uber not because uber has the best software but because uber was first at getting enough users and drivers on their platform so now uber has the most drivers and fastest response times so virtually all new taxi cab app users ho for uber

However there is certainly the ability to be leapfrogged by other tech companies. In uber case if google or Tesla or another company get self drive cars first then uber is dead. Said company would not have the uphill struggle of recruiting drivers they can just deploy 500,000 Tesla/google/apple taxis and undercut human ubers. Do it with zero margins for a couple of years and become the new uber but fifty times the size and market cap.

sometimes i wish i went into tech rather then finance.