FrankishKnight
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User ID: 645
Household consumption being 40% of GDP means households receive 40% of national income to spend. The rest goes to the state and corporate sectors, funding the investment-heavy model. Even if every yuan buys more calories than we thought, that doesn't change the share going to households versus the share going to industrial buildout.
Not so fast, different systems of national accounting and different relative prices complicate matters.
Chinese housing area/person roughly equals Germany's and energy consumption is nearly there, yet constitutes 25% of Geman PPP GDP per capita, with about 12.5k rent/utilities. Would both use similar systems, China's would be about 10k PPP, while lised PPP GDP/capita is... about 25k. Yet Chinese don't spend 40% on housing and energy, indeed housing's only a few percent of Chinese GDP (this is the imputed rent issue I harp on about). Remember, this is all PPP - supposedly adjusted...
Where US retail sales are 7.3T and Chinese 6.6T, US HFCE is 20T or 2.8x retail sales, while Chinese's is about 6.8T or 1x retail sales? (Then consider changing exchange rates when making the dollar numbers.) How can you compare US and Chinese numbers when the US' includes education, healthcare, travel, imputed rent and China's is just retail sales? @sarker
How is China getting the 70+% of its oil imports in this future?
Oil demand is decreasing if still slowly. Gasoline use is down. Last year, heavy vehicle use made up half of Chinese LNG consumption, which would look like substitution - but LNG demand is decreasing faster and faster. Huge solar and nuclear build outs are taking over (coal consumption is also dropping due to rapid construction of more efficient plants) and today, 22% of new heavy trucks there are electric. China is also building out synthetic natural gas plants enabled by cheap solar creating an effective price ceiling at $80 BOE.
FrankishKnight
6hr ago
in purely thermodynamic terms, if literally everything is cheaper in China, you can ignore standard macroecon, largely eschew exports, subsidize domestic demand and make Qianlong's boast a reality.
Capital begets capital. Increased capital concentration decreases costs of production and labor requirements. Left to expand forever, no one should ever catch up - but everywhere but China (so far) the greatest capital accumulations eventually succumbed to suicidal regulation and extracting value to subsidize non-productive sectors.
FrankishKnight
6hr ago
Won't the US enjoy a quantitative and qualitative superiority in AI though, based on the compute advantage, through to at least the 2030s?
What does that gain you when China can move matter?
FrankishKnight
2d ago
Argument?
FrankishKnight
3d ago
4, 10
Yes.
20, 30
Probably. What's even the difference between fake and wrong?
It's really hard to measure things or make conclusions from them. E.g. if this recent paper is true, modern neoclassical economics and DSGE models etc. are wrong (because tariffs have the opposite impact). I don't think we can really know. But we've had unmeasured endogenous money creation for a long time. Asset prices and credit cycles seem to drive the economy lately, but IDK how to incorporate those into some metric doing what inflation measurements should do.
No, you just wildly misunderstood[1] my point and think I (or rather my company) am too lazy to understand basic metrics. I am saying that OER is bad and not correlated to actual housing costs. Neither mortgage and insurance payments nor differences in total purchasing vs. rental costs are captured (depending on the geography, renting can be twice or half as much as buying). BLS lags and assumes price increases are gradual such that the sampled month only shows 1/6 of the change but rental prices do not go up a few dollars per month but have big, occasional changes based on new tenants etc. (Yes, this should be smoothed and averaged out but... I am arguing that's not what's done here.) To be clear, I don't think housing is currently a big inflation driver e.g. the New Tenant index showed a much faster decline.
[1] fair, not like I effort post or think about word choice. I e.g. don't know why I focused on CPI vs. the others which I also have problems with. CPE's the only one with fed targets...
Of course! I've lazy posted about this for years. Obviously, the basket of goods a person uses has gone up wildly more than the official numbers suggest - just compare the prices of food now and in your childhood. When you normalize different categories or baskets with wage increases, hours worked and labor productivity, it gets especially bad. We have also had wildly inflationary policy for decades now, which must increase to service debt while we're in a commodity supercycle where molecules matter again.
FrankishKnight
3d ago
Big topic, little time:
- cost increases are the main driver; there are less goods and things being done in America, they're just expensive
- at work we remove whole categories like government spending, legal, advertising and medicine (this is debatable, but important to normalize things later) which has long precedent in different systems of national accounting and, both from Socialist countries and libertarian analysts like Gavekal
You could have a society with lower GDP but higher real-world prosperity
We have plenty such examples today!
Our homeland, Europe has been invaded.
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