There are signs that some of the doom forecast for the world's biggest economies is not going to occur. The Americans seem to be reducing their trade deficits. UK credit card debt is falling. A combination of prudent policy and the laws of economics seem to be reducing the announcements of very bad things.
One thing has occurred to me through all this. Savings rates are low, according to all the macroeconomists. But I haven't seen anyone questioning whether the definition of savings ought not to change. After all, many people are no longer keeping money in traditional financial channels. This is mainly because the returns on some of these have been abysmal. So they are taking matters into their own hands, and putting money into property, or they are managing it themselves in brokerage accounts. It's not clear to me that money with online brokers, especially offshore ones, necessarily makes it into the savings statistics.
This is good old-fashioned disintermediation. Statistics target one thing, but the markets move so fast, that the broad concept that they are trying to measure, savings, includes much more than the various narrow financial products that the statistics track. Given the asset price explosion of recent years, it might make sense to include some property purchases as savings, when measuring individual behaviour. Perhaps we are not such spendthrifts as the economists would have us believe.
Where the world is going
There seems to be a clear tendency for China to become the world's manufacturer. Falls in transport costs, and the low wages there, mean that it can produce cheaper than almost any other manufacturer. Of course, the law of comparative advantage means that even if other companies are more expensive than China, if their relative price of certain manufactures is less, then they may still be able to compete.
This probably applies mainly to services, especially retail services, like selling and demonstrating goods, and restaurants, and entertainment. These either can't be exported from China, or it's relatively cheaper to produce them at home. All of these waves of industrial change tend to leave the people in the richer countries richer, as it drives down the price of basic goods, freeing up their disposable income for other things. The First World has been panicking about its economic future since the spinning jenny replaced workers in cotton mills, and since Indian cotton drove the Lancashire mills out of business. Yes, there are adjustment costs, but by and large, people in these areas are able to consume more and more as time goes by.
Even if robots take over the jobs of the Chinese workers, which they must do eventually, this will just mean more goods for them to consume, and their work will be available to redeploy to other uses.
Still playing with the format
I want to talk about Russia, financial markets, and telecoms, and although there is some overlap between these subjects, I imagine that the audiences for these subjects are somewhat distinct. So I may have to make several distinct blogs, and link them from here. Or link them to each other. I guess the smart thing to do would be to make this one the general blog, talking about larger predictions, and create some sub-blogs to deal with the more specialist subjects. Seems a lot of work to do given that I have an audience of precisely zero at the moment, but we live in hope.
Why Ten Thousand Feet?
Feels obvious to me, really, and I shan't be surprised if I have to change the name because someone else has already thought of it. Actually, the title I wanted to use was "Pomposity" but for some reason the software wouldn't let me use it.
The aim of this blog is to record my opinion on larger scale movements, and avoid detail unless absolutely necessary. Answer questions like: "How many communications devices will we have in the future?" "Is Russia doomed to be ruled by an authoritarian bureaucracy?", "What sort of financial services will people buy in the future?", "Is there such a thing as the cost of capital?" and "Does macroeconomics make sense?" I'll create sections for each of these questions, and give you the benefit of my opinions on all of them. Hopefully, you, in turn, will point out my errors, and my opinions will become better formed.
