Economic Winter

I’m looking out of my window at the trees lining the road, I hadn’t consciously noticed it, but the beautiful green display that used to sit atop the little mound of earth separating the house from the main road has slowly disappeared. Now all that is left is the bare trees looking almost dead. As it happens I like winter, it has beauty of its own, not as obvious as the summer, but it’s there none the less. The way the bare branches reach up into the slightly overcast sky with the sun struggling to peer through onto the almost frozen pavement on which people walk by all huddled into coats and scarves to keep themselves warm. I imagine that winter with all of its hidden beauty would be rather depressing if it weren’t certain that it will once again turn into summer. The cyclical nature of the seasons allows us to appreciate the good aspects of every season without worrying too much about the bad, as we know that soon the seasons will once again have turned.
     The economy is exactly the same; we have had a very nice summer recently, but now it’s time for the seasons to change. Gordon Brown has done his best to hold back the inevitable, even though his efforts will now make the coming economic winter worse than it might have otherwise been. We are undoubtedly heading into recession, some people will lose their jobs, there will be strikes and people will begin wondering what could have happened and looking for someone to blame. But the coming recession is no more someone’s fault than winter is, and it is no more permanent either. It is a necessary economic process as is the shedding of the leaves that happens outside my window every year.

Chinese textiles

I have mentioned the hurtful impact of trade restrictions before, but this article from the BBC demonstrates their negative impact perfectly. Workers in the Chinese countryside who have taken it upon themselves to use a skill of their own to lift themselves out of poverty are being stopped by the same people who pretend to want to help.
China is about to become the worlds 4th largest economy, for some reason people see this as a bad thing, they worry about the country becoming too large and powerful. In truth this image is very misleading; in a scale of per capita income China is about 110th. Recently Western politicians decided that too many textile products were coming out of China and so they reinstated trade restrictions. According to socialist economics this should be a good thing, china will be unable to flood our markets with textile goods and so we can manufacture some ourselves, so everyone benefits, right?
Well, in short, no. China is able to produce textile products at a cost much lower than we are able to, when I say cost I mean exactly that, in economic terms, not just dollars. The cost of a service or a product is what we have to use or give up in obtaining it. In the case of textiles the cost is a combination of all of the processes which make up producing the natural and man made threads added to the processes involved in making them into a finished product, including the manpower needed in the process which also includes the opportunity cost of what could have been done with the manpower, machines and natural resources. In the developed world, this cost is very high, as the general level of education is higher; the opportunity cost of using this manpower for unskilled labour is higher, as is the cost of the machinery etc, so China is able to produce cheaper textile goods. This is a good thing for us; it allows us to buy our clothes etc at a much lower price than we would if they were made here meaning that we can spend a higher percentage of our income on other things such as sky TV or a car etc. It also benefits the Chinese as they are able to obtain the real economic benefit of their efforts and so develop their economy. Trade barriers get in the way of this and simply raise prices artificially meaning that we have less income to spend on other things and the Chinese have a harder time building their economy and lifting themselves out of poverty.
In short the ladies in the Chinese countryside are being held in poverty by western governments for no other reason than their fear of a poverty free China. This is certainly not well intentioned despite what they may say.

walk a mile in their shoes

It hit me today that it is impossible to judge someone’s situation until you have lived through it yourself. It’s very easy to look at the guy on the street corner begging and assume that he is there because he’s drunk, high or just plain lazy. The truth is often not as simple as this; many people become homeless for many reasons, often not through their own actions. We should not , therefore, judge anyone without having first hand experience of their situation, otherwise we will often be wrong. This doesn’t change my views of course, but it certainly does make me see things in a slightly different way. While I still do not believe in a tax funded benefits system, I do not judge the people who use the system as it is. Until I am in a situation where I have to rely on benefits, I cannot judge someone who does. This also applies the other way too, a lot of people do not like Bill Gates purely because he is extremely wealthy, however, it is as wrong to judge Bill Gates for his wealth without having stood in his shoes as it is to judge the guy waiting in the queue for his benefits cheque. All of my arguments for what I believe in do not come from judgements of people, but rather ideals based on individual freedom. However, in everyday life it is necessary to remember that our life experience is extremely limited, and any judgements we make are heavily biased because of this, and therefore we must remember to keep an open mind at all times and to walk a mile in someone else’s shoes any time we get the chance.

Finally the Xbox 360 is here!!!

Finally, the Xbox 360 European launch has happened. I still have mine on pre-order, so I should get mine soon. Of course by soon I mean several weeks (If not months as some message boards would suggest). The shortages of the new system are slightly annoying I must admit, but the way some people are talking about it you would think that it was on purpose. The reason people are able to complain at shortages is simply that supply matches demand so often in our daily life, that not being able to get hold of any item from a shop is so bizarre to most people that they start believing conspiracy theories.
     Nobody my age has ever had to live through national shortages of food, water (excepting hosepipe bans, but that doesn’t count!) or clothing. Sure, most of us have had to do without something at some point due to a lack of funds, but huge supply shortages of vital goods are simply unheard of in our economy. When President Gorbachev was shown around an American convenience store on his visit to the country, he was convinced that the shelves had been specially stocked with good to impress him, the simple truth was that he could not comprehend how supply and demand could be matched to well, after all, how could anyone have enough information on what people want in a certain area at a certain time? This information in our economy is passed on through the price mechanism, which fluctuates with changes in supply and demand. This system works so well that we can get hold of pretty much anything we want (depending on cost of course), so when supply is constrained for external reasons, demand cannot be met and we are as shocked at the empty shelves as Gorbachev was at empty ones.
     Although I am waiting very eagerly for my xbox 360, my hunger is tempered by the knowledge that there is nothing I can do to improve the situation, and that factory workers are at this very moment working to redress the balance between supply and demand that will find a nice shiny box sitting on my desk top. After all, at least we’re not waiting in queues for hours simply to be one of the lucky ones to get a loaf of bread.