Food, inflation & social stbility

[Billy T]

...

... Are you agreeing that the US will adopt more of a state controlled economy in which food marketing companies like privately owned Cargill will be told they can not sell to the highest bidder (China)? I have several times agreed that the US mid west can produce more food than American needs, what is in doubt is to whom will it be sold - Americans or Chinese who can pay 50% more for it. I.e. current US capitalism / free market / must die to prevent poor Americans from doing so when China wants to pay 50% than they can.

No.

Then if Cargill etc. can sell to the highest bidder, will the poor Americans starve? Or will there be food riots, as I forecast long ago? What was the point of your post (98) noting that US can produce more food than it needs if it is sold to China who can pay more?

One in every seven Americans is already on food stamps - I don´t think the broke US treasury can pay for that program if it becomes 2 in every 7.

 

[Billy T]

Ford had a big, but little intended effect on food prices and social stability; however he clearly intended to reduce the cost of transport greatly:

Here (if it posts) is interesting car repair ad,sent out by penny post card,* in 1928 (When 8+ million model Ts were on the road but even the last made was a year old):

I bet the secretary had to type at least five to earn a penny.

*Note the penny post card still existed in the late 1950s - I had a bunch I earlier printed up myself in the high school print shop class as QSL cards to send to other amateur radio operators. After a few weeks of evening listening for someone transmitting in Morris code** from South Dakota, I finally got the last of 48 QSL cards (one from each of the then existing states) and got my WAS (worked all states) certificate.*** (I had only 50W input power to my transmitter, and much less radiated, so I had to use code to reach S. Dakoda. My contact was very glad to talk to me too as I was his first contact from West Virginia.)

** On a frequency I had a crystal for generating transmission near that frequency. I was very poor but had very cheaply bought many war surplus crystals that were with little demand as not in the amateur bands - I learned (taught myself) how to re-grind them to higher frequencies so I had many with different frequencies and listened to frequencies near to those my crystal set could produce.

*** I also had a 35 wpm (word per minutes) code certificate, but did not disserve more than 20wpm. I just got lucky during the 35 wpm part of the test and had one minute of error free random word copy. You can recognize mis-spelled words if you get nearly correct copy (and correct them with lucky guesses when several different real words exist when one false letter is replaced), as I did, before submitting your copy by mail.) By correcting errors in plain sentences, not random words, I could make error free text at 25 wpm. Really good code readers like Edison can copy code in their head much faster than they can talk - Edison, as a youth, worked as a telegraph operator. He copied several entire messages in his head, sometimes while making his coffee, before bothering to write them down!

 

[Billy T]

"... Corn is now about $8 a bushel—twice what it was priced at just a month ago. Soybeans are at an all-time record price nearing $17 a bushel, up from $13 just two months ago. These two important crops have hit all-time highs.

According to official figures, 78% of the corn crop this year is now in a drought-impacted condition, and 77% of the soybean crop is similarly impacted. But for those of us who buy our food on store shelves, it’s difficult to make the connection between the worst drought in 50 years and the impact it will have on the family budget.

So Here's the Impact on You: Food prices overall rise about 1% for every 50% increase in corn prices, partly because corn is used in so many products. But most city dwellers don’t realize that a good portion of the corn and soybean crop are used to feed livestock. There the impact will be more dramatic—but not as immediate.

Ranchers will bring more of their hogs and cattle to market now, as they realize it will be expensive to feed them over the winter—if they can find enough hay after the drought. So the first impact is a glut on the market, driving prices down. Then, with a few months lag, you’ll see prices of beef, pork, chicken, eggs, and dairy start to skyrocket—probably around Election Day.*

Forget food prices for a minute. About 25% of the corn crop is used for ethanol—as a gasoline additive. So not only will food prices be impacted, but the price of a gallon of gasoline will start moving higher in the days ahead. Then we will see the true folly of subsidizing an industry that diverts food to fuel. {A point I have been make for years - even started a thread on it.}

Since transportation is a key cost of many consumer goods, rising gasoline prices should push prices of many consumer goods higher. That’s exactly what the economy doesn’t need as it struggles to move ahead.

Higher food and transportation prices will be a drag on an already slowing economy—increasing the chances of recession as we approach the election. This drought adds the ingredient of stagflation—rising prices in a slowing economy. ..." Quote from: http://www.moneyshow.com/investing/article/11/Blog-28633/A-Real-Farm-to-Table-Crisis/

*It will last for a few years as breeding stock is also taken to market and in 2013 thru 2014 there will less pigs and cows coming to market even if the drought is over.

 

[quadraphonics]

One in every seven Americans is already on food stamps - I don´t think the broke US treasury can pay for that program if it becomes 2 in every 7.

I've already referred you to the reasons for the recent atypical growth, and the projections of how the program will proceed, the last time you brought that up. Your troll technique of ignoring that, and then cross-posting this same polemic to multiple threads, is just that.

 

[Billy T]

I've already referred you to the reasons for the recent atypical growth, and the projections of how the program will proceed, the last time you brought that up. Your troll technique of ignoring that, and then cross-posting this same polemic to multiple threads, is just that.

I am just stating facts and my expectations based on the trends shown in these facts.

I don´t need to accept your contrary projections or expectations or reasons why they are not extrapolatable into the future, so will continue to post the facts and their current trends until they change when I like and when they are on subject.

Few would dispute that doubling of corn prices in last month is mainly a drought effect, but food prices have been rising faster than inflation for some years before the drought began - mainly, I think, because the developing world is growing richer, more populous, and eating more meat. I see no reason to expect that to change.

With real salaries falling in the US and food prices rising faster than inflation, don´t you think more and more people will need help putting food on the table?

 

[quadraphonics]

I am just stating facts and my expectations based on the trends shown in these facts.

And I am just pointing out that you are doing a poor job delineating what is a simple "fact," and what is your own, unique prediction - and that your predictions vary dramatically from those of the professionals who predict such for a living, and that this happens because you keep excluding major, relevant factors from your prediction, despite having already been informed of them.

Which is to say that you are - characteristically - cherry-picking data you like, ignoring data you don't, and then trumpetting silly, false predictions as being more valid than they are. You are doing this even after being called on such.

And you're cross-posting that whole mess into multiple threads at once, which is a tell-tale troll tactic.

I don´t need to accept your contrary projections or expectations or reasons why they are not extrapolatable into the future,

They aren't "mine." They are from the CBO.

so will continue to post the facts and their current trends until they change when I like and when they are on subject.

And I will continue to point out the dishonesty of your approach, and its failure to come to grips with significant, known factors, and your underhanded tactic of cross-posting all of this in multiple thread simultaneously.

Few would dispute that doubling of corn prices in last month is mainly a drought effect, but food prices have been rising faster than inflation for some years before the drought began - mainly, I think, because the developing world is growing richer, more populous, and eating more meat. I see no reason to expect that to change.

The analyses I've seen attribute growing food prices to a combination of increased biofuel usage, growing global population, and growth in developing countries.

http://www.fao.org/docrep/014/i2330e/i2330e03.pdf

Moreover, food prices would have to increase a lot to get back to where they where in the middle of the 20th century. Just to put thing in perspective.

With real salaries falling in the US and food prices rising faster than inflation, don´t you think more and more people will need help putting food on the table?

US salaries have been flat in real terms, not declining.

Food assistance in the USA is more an issue of income inequality than affordability overall. The USA, as a whole, can easily afford as much food as it needs. The fact that we also need welfare programs to get that food to the poor segments of society means that we have an inequitable socioeconomic system, not that we have any trouble affording food as a country overall.

 

[Billy T]

"... Corn might not be the only crop to wither this year if we don’t catch a break in the weather. The US soybean crop has also been heavily impacted, while winter wheat, which farmers would normally begin planting next month, could also produce a smaller-than-average yield if it doesn’t get enough water during its germination period. If it isn’t wet enough for the wheat to begin sprouting before the first freeze, the crop is likely to fail. That’s extremely problematic because the winter wheat crop supplies most of the necessary input for bread flour. As such, grain prices are likely to remain elevated for much of the next year. And farmers aren’t likely to see relief any time soon..."

Note there are no "N" or "B" spots.

Graph Source: NOAA Climate Prediction Center. Text and graph from: http://www.investingdaily.com/15506/capitalize-on-crop-failures

 

[quadraphonics]

One thing this drought indicates how risky it is to couple fuel supplies (i.e., corn-based ethanol) into your food supply and agriculture. There is speculation out there that this summer will spell the end of corn-based ethanol mandates. We will see...

 

[Billy T]

One thing this drought indicates how risky it is to couple fuel supplies (i.e., corn-based ethanol) into your food supply and agriculture. There is speculation out there that this summer will spell the end of corn-based ethanol mandates. We will see...

Yes. Here are some of my comments on this, posted nearly seven years ago:

“…Few understand how much of their tax dollars go to support the inefficient sugar / alcohol industry in US:
The US should buy alcohol from Brazil (and other tropical producers who have cheap land, labor, 24 month growing season, good rains, etc.) If it did so, the balance of payments problem would be less than paying for oil imports. Frozen Iowa's corn based Alcohol is several times more expensive to produce. IT WOULD COST US TAX PAYERS LESS if US simply GAVE CAR FUEL AWAY FOR FREE!!!!! The amount given would need to be limited because if car fuel were free, the consumption would rise and this would no longer be true. Perhaps every US citizen could receive free (transferable for non car owners) coupons for 1000 liters of free alcohol annually and pay lower taxes.

The US voter is in the pocket of the Iowa corn lobby and too ignorant to know it. …”
From post at: http://www.sciforums.com/showthread...g-amp-Polution&p=915166&viewfull=1#post915166

Instead of taking my advice, the US put high input duties on Brazilian sugar cane based alcohol, which has an 8 fold energy gain, and granted a “blenders subsidy” in addition to the standard farm subsidy on corn, more than 25% of whose production is now diverted to making inefficient alcohol fuel. Iowa corn based alcohol has a 1.5 fold energy gain at best, and a negative gain according to a Cornell study and some other studies by universities, not in the "corn belt" show only break even.

Also Noble Prize winning biochemist pointed out that soil bacteria convert much of the nitrogen fertilizer used into NOx pollution. A lot of that fertilizer is needed in Iowa to speed growth to compensate for the shorter growing season. Some is used in some cane fields in Brazil, but not all. Sugar cane is grass and grows without any fertilizer in Brazil but small amount increases yields enough to make modest use profitable.

BrasChem now has two plastic plants each making 100,000 tons of plastic from sugar cane alcohol so now sugar cane alcohol fuel costs about the same per mile driven as gasoline. These plants do still reduce the consumption of irreplaceable petroleum that IMHO should only be used as chemical feed stock, not burnt for heat. (Use natural gas of alcohol for liquid fuel instead)

Yes perhaps now with the drought posters who opposed my ideas will see the error of their ways. I think you Quadraphonics were one, but have not troubled to did up your post doing that, so I may be wrong.

 

[quadraphonics]

Yes. Here are some of my comments on this, posted nearly seven years ago:

You should probably pay attention to what has happened since. The USA abolished the ethanol import tariffs and production subsidies last year.

But the upshot is that any kind of ethanol fuel, from any source, still results in coupling of the liquid fuel supply to the food supply and agricultural conditions.

 

[Billy T]

You should probably pay attention to what has happened since. ...

I have. I noted in post just made that now, even sugar cane based alcohol costs as much as gasoline - so no longer would importing it make a reduction in US balance of payments debts if it were imported from Brazil, and no longer does the Iowa corn lobby any have any need of the import duties to keep it out. And I also knew were abolished no more than a couple of years ago when importing it made no economic sense. -I.e. unlike your assumption about me, I have stayed very well informed on this subject.

I however, I also note that the IOWA lobby still gets the gets corn largest of all the farm subsidies, in part because Senator Glasser is head of the ways and means (I think that is the name) finance committee and that Iowa is the first of the primary states, so all candidates, Obama included, promise to keep the tax payer´s gravy train coming there when seeking their parties nomination. That has not changed. Thus, I repeat my 7 year old words which were included in bold in 7 year old post and are bold in my last post also:

The US voter is in the pocket of the Iowa corn lobby and too ignorant to know it.

To illustrate the continuing stupidity of tax payer support of corn based alcohol, perhaps you don´t know that that subsidy makes it cheaper for Brazil to import US tax payer supported corn based alcohol than grow it in Brazil, so it does! I even started a thread on this stupidity many years ago some what focused on the corn based alcohol called "How DUMB can US voters be?" but other examples of stupidity are included in it too.

 

[Billy T]

"... The most extreme forms of drought spread last week in the lower 48 states, and moderate or worse conditions are expected to persist in the Midwest through October, according to U.S. monitors.

Extreme and exceptional drought, the two worst categories on a four-step scale, increased to 22.3 percent of the region in the week ended July 31, up from 20.6 percent, and expanded to 18.6 percent of the U.S. as a whole, up from 17.2 percent in the previous period ...

In July, 0.79 of an inch of rain fell in Burlington, Iowa, 3.46 inches fewer than normal. In St. Louis, 0.72 of an inch fell, 3.39 inches below normal, according to the National Weather Service. ..." from: http://www.bloomberg.com/news/2012-08-02/intense-drought-spreads-midwest-to-dry-through-october.html

Billy T comment:If the winter wheat does not sprout before the frost because soil is too dry - that will be costly. More on this in post 107.

 

[quadraphonics]

I have. I noted in post just made that now, even sugar cane based alcohol costs as much as gasoline - so no longer would importing it make a reduction in US balance of payments debts if it were imported from Brazil,

Switching around which particular country you import from is never going to make a particular dent in the balance of payments in the first place.

Replacing imports with domestic production, however, does.

and no longer does the Iowa corn lobby any have any need of the import duties to keep it out. And I also knew were abolished no more than a couple of years ago when importing it made no economic sense. -I.e. unlike your assumption about me, I have stayed very well informed on this subject.

And yet, you still went ahead and posted a complaint that the USA had imposed ethanol import tariffs. Hence my observation that your knowledge did not seem to be current. If you're simply reposting outdated information without bothering to update it or otherwise indicate that it is no longer accurate, then your problem is with your own writing/editing skills and not any "assumptions" on my part. You presented your outdated comments as evidence that you had been right all along, so unless you specifically disclaim parts of them the reasonable interpretation is that you hold them to still be valid in their entirety. So why don't you try dialing down the arrogance, and spend more time making your output informative and accurate?

Also, your assertion about cane ethanol costing more than corn ethanol is also outdated. Brazil had a bad crop last year - that kind of dependence on weather being my whole point here, which you appear determined to avoid - which you have mistaken for a secular trend. Brazil is currently importing no ethanol from the USA, while the USA imports significant quantities from Brazil:

http://www.bloomberg.com/news/2012-...ethanol-to-brazil-in-may-as-imports-rise.html

The US voter is in the pocket of the Iowa corn lobby and too ignorant to know it.

The fact that you don't approve of the corn subsidies does not establish that US voters are ignorant of them, nor that they are "stupid" for supporting them. You have presented no evidence that US voters are ignorant of corn subsidies, nor have you seriously dealt with the quesiton of whether or not they make for good public policy. You have simply asserted the supremacy of your perspective, and then set about calling anyone who thinks differently "stupid" or "ignorant." I.e., you are engaged in an ugly tactic of arrogance and nationality-baiting. You should stop with that kind of offensive, inflammatory behavior, and instead display a bit of honor and seriousness by actually investigating what the sources of political support for the corn subsidies are and how they figure into the larger picture.

Which of course you will never do, since it would get in the way of your cheap "LOL AMERICANS ARE DUMB AMIRITE?" asshattery. It seems that you are not seriously interested in economics and public policy, but rather use those subjects as an outlet for some nationality complex. Which is to say that you do the opposite of science: instead of letting the data tell you what it means, you cast about for ways to make the data support your required interpretation (that Americans are stupid and doomed). Thus, your reliance on anecdote and outdated date, the various tactics you employ to dismiss or minimize contrary evidence, etc. It's difficult to take seriously as anything other than an expression of your own personal political animus. This interpretation is further buttressed by the way in which you rush to ally yourself with anyone who posts things supportive of your worldview, and likewise wage attack campaigns against anyone who challenges it (including stalking them from thread to thread with cross-posts of mendaciously edited quotes and other bully tactics).

To illustrate the continuing stupidity of tax payer support of corn based alcohol, perhaps you don´t know that that subsidy makes it cheaper for Brazil to import US tax payer supported corn based alcohol than grow it in Brazil, so it does!

The reason I "don't know" that is because it is not true. Which you would know if you actually kept yourself informed about this issue, instead of simply repeating talking points from years ago and insisting that reality conform to that.

I even started a thread on this stupidity many years ago some what focused on the corn based alcohol called "How DUMB can US voters be?" but other examples of stupidity are included in it too.

It's an embarassment that SciForums would tolerate a thread whose title is a bunch of shouting about how a particular nationality is "DUMB," and doubly so that they'd entrust the proponent of that kind of shithead rhetoric with moderation duties. It is furthermore blatant hypocrisy for that same offender to later complain about "personal attacks" when his various failings and dishonorable tactics are noted for what they are.

Meanwhile, you have once again made your entire response about chest-beating and personal attacks, stuffed full of errors of fact and mischaracterizations of other threads that you don't even bother to actually cite, while eliding the actual point: that using agriculture for fuel creates linkages between fuel prices, food prices, and climate events that can result in wild volatility. The absence of such coupling is one of the advantages that have entrenched fossil fuels: you just pull the stuff out of the ground (often in areas far from agricultural regions), without worrying much about what impact that has on food prices or if the weather this year will mess up your investments. Addressing the risks of such linkages is a major challenge for that proponents of agriculture-based fuels will need to solve.

 

[Trippy]

Addressing the risks of such linkages is a major challenge for that proponents of agriculture-based fuels will need to solve.

This just strikes me as common sense (addressing the risks you've mentioned, that is).

I've never been a fan of the idea of using foodstuffs for fuel, or for animal feed, for that matter. Personally I think the focus is in the wrong place, and that we need to focus on using what we already have more efficiently. In the context of this discussion, exploring ways to generate fuel and fuel blends from waste materials (thermal depolymerization, for example).

 

[quadraphonics]

This just strikes me as common sense (addressing the risks you've mentioned, that is).

It is, of course, but there's the usual human and political incentives to ignore the long-term systemic risks up until they rear up and bite.

I've never been a fan of the idea of using foodstuffs for fuel, or for animal feed, for that matter. Personally I think the focus is in the wrong place, and that we need to focus on using what we already have more efficiently. In the context of this discussion, exploring ways to generate fuel and fuel blends from waste materials (thermal depolymerization, for example).

Yeah, all of that, and also non-agricultural renewables like solar and wind.

 

[RedStar]

Capitalism is on the way out.

@ quadrophonics, I posted a visitor message on your wall in response to your "mechanization" scenario

 

[Billy T]

Capitalism is on the way out. ...

In some areas, probably true. I.e. China will be able to pay much more than Americans can for some of the grains produced in the mid west, even after the drought ends. Cargill is a privately owned company, (no traded stock) and would like to sell food to the highest bidder and could under a capitalistic system; but it will not be allowed to if that means Americans will go without food.

Also, but less certain, is the fact that the dollar will collapse and then Americans will need to produce goods and services for their imports, not pay for many with printed green paper as is currently done. With oil and some other critical materials in short supply, and Asian nation´s with the power to pay more and needing more their prices will rise faster than general inflation in the US, as food has been doing for about a decade. (Pre-drought, anyway) This too will contribute to the declining living standard in the US. (average American´s salary / purchasing power is down about 7% in last half decade already but with these factors a 20% decrease in the next half decade is certainly plausible.)

There very likely will be political ramifications to these unpleasant changes, especially if Chinese continue to enjoy double digit real increases in the purchasing power and that fact cannot be hidden from Americans. I.e. they may demand more central and rational direction of US´s long term capital investments - less funding for Banks and QEx for aid to Wall Street and more repair of bridges, etc. I.e. the Chinese hybrid economic system will become more attractive and switching to it will require more than just minor interference with the current infrastructure building and regulation system than just prohibiting Cargill from exporting food to the highest bidder.

China has show in past three decades that letting the relatively unregulated invisible hand of Adam Smith (capitalism) determine what is for sale in the market place with long range (decades) of intelligent infrastructure expenditures, like that shown below, produces a more rapidly growing society with more benefits for more people.


NS water transport system will remove nearly 36 billion cubic metres of water every year from the Yangtze River Basin and ship it to the arid North some 3,000-kilometres (1,900 miles) away!

Those pipes are 8.5 meters in ID – 18 wheeler trucks can easily drive thru while they are dry!

If scheduling and operations projections are accurate, in 2014 some 13 billion cubic metres (3.4 trillion gallons) of water per year will pour through the tunnels of the central line, under construction in Henan Province, and will be sent north to help curb water shortages in more than a dozen cities, including Beijing. The eastern line, a second transfer project, should already be operating by then, transporting 14.8 billion cubic metres of water annually from the lower Yangtze River to Tianjin.

 

[RedStar]

In some areas, probably true. I.e. China will be able to pay much more than Americans can for some of the grains produced in the mid west, even after the drought ends. Cargill is a privately owned company, (no traded stock) and would like to sell food to the highest bidder and could under a capitalistic system; but it will not be allowed to if that means Americans will go without food.

In all areas, eventually. Capitalism is unsustainable. Regarding food:

http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/

While food prices are volatile, there has been a steady trend of increase since 1990, and this will only get worse as more of the world develops. Furthermore, increased labor costs in outsourced countries will drive up production costs, thereby increasing the price of many goods and services and reducing the standard of living for many Americans. Inequality will grow. Class divisions will become more and more apparent.

And then, finally, there is the problem that mechanization and automation of production will render large segments of the population without income, and therefore without consumption power. Since they do not own means of production, they are both without income and without a means to produce. At this point, capitalism makes no sense, and must be replaced. As the productive forces are developed, socialism becomes more and more possible.

Also, but less certain, is the fact that the dollar will collapse and then Americans will need to produce goods and services for their imports, not pay for many with printed green paper as is currently done. With oil and some other critical materials in short supply, and Asian nation´s with the power to pay more and needing more their prices will rise faster than general inflation in the US, as food has been doing for about a decade. (Pre-drought, anyway) This too will contribute to the declining living standard in the US. (average American´s salary / purchasing power is down about 7% in last half decade already but with these factors a 20% decrease in the next half decade is certainly plausible.)

Agreed. Essentially what has happened is the financial establishment has stimulated growth for years on credit and debt, but now that house of cards is collapsing. It is the working class and "middle class" who will pay the taxes to pay off these debts (and bailouts! yay), and have to suffer austerity measures. So not only do the working and middle classes get screwed over, but they suffer austerity and become more desperate, more ready and willing than ever to be exploited.

There very likely will be political ramifications to these unpleasant changes, especially if Chinese continue to enjoy double digit real increases in the purchasing power and that fact cannot be hidden from Americans. I.e. they may demand more central and rational direction of US´s long term capital investments - less funding for Banks and QEx for aid to Wall Street and more repair of bridges, etc. I.e. the Chinese hybrid economic system will become more attractive and switching to it will require more than just minor interference with the current infrastructure building and regulation system than just prohibiting Cargill from exporting food to the highest bidder.

Ideally, the political ramifications will be class warfare and revolutionary socialism.

China has show in past three decades that letting the relatively unregulated invisible hand of Adam Smith (capitalism) determine what is for sale in the market place with long range (decades) of intelligent infrastructure expenditures, like that shown below, produces a more rapidly growing society with more benefits for more people.

As compared to what? All of what China is doing at the moment would not have been possible without Mao's Revolution, New Democracy, and the various programs he instituted. Deng Xiaoping built on Mao's legacy (although, arguably, in the opposite direction).

At any rate, as I said, capitalism will continue to develop China until the contradictions and antagonisms inherently present make it unsustainable and problematic. I don't think we will have capitalism by 2100.

 

[Aqueous Id]

In all areas, eventually. Capitalism is unsustainable.

Seems like it's the first self-sustaining system they've had since - the Mongols?

While food prices are volatile, there has been a steady trend of increase since 1990, and this will only get worse as more of the world develops.

High food prices aren't necessarily a bad thing, especially if there are still truck farms and backyard gardens. And when or if big agribusiness moves in, that just whittles the cost down. Or, if it produces stagflation, then the little truck farmer gets his competitive edge back. There seem to be a lot of scenarios that are so much better than the mass starvation they once endured.

Furthermore, increased labor costs in outsourced countries will drive up production costs, thereby increasing the price of many goods and services and reducing the standard of living for many Americans.

We haven't seen much inflation lately (in the US, that is). Yet there is a perception of endless inflation, which seems odd to me. It's more like a self-fulfilling despair that brings misery when really things aren't that bad. I can remember in times of high growth, when inflation didn't matter much, because wages and employment were relatively good. People would complain about it, but not because it was breaking their bank. It was more like a whiney negativity, something heard a lot today, despite vast improvements (like the ease of setting up shop on the web) that simply weren't available decades ago.

Inequality will grow. Class divisions will become more and more apparent.

The worst class divisions are squatters camped outside of mansions, armed and angry. While homelessness and poverty are still rampant global phenomena, you must admit that this is an era of relative peace and freedom in areas of the world that were once perennial hot spots for insurrection, massacres and rampant human rights violations. China has a long way to go but it has already crawled out from under a scourge. It seems like there is something worthy of celebrating in this.

And then, finally, there is the problem that mechanization and automation of production will render large segments of the population without income, and therefore without consumption power.

I believe they will move with technology better than Americans, who are still in many ways resting on their laurels. You are talking about some highly energetic people who walk fast, talk fast and get stuff done. I think they will rise to the occasion. I suspect they are raising the next generation of professionals and scholars.

Since they do not own means of production, they are both without income and without a means to produce. At this point, capitalism makes no sense, and must be replaced. As the productive forces are developed, socialism becomes more and more possible.

If you mean relying on the public dole, don't forget that this encompasses a loss of dignity. Some people will never opt for it out of pride. The ones that do are already beaten. This present wave of optimism in China serves as a model to the young generation that there is hope. That may be worth more than all of the practicalities of economic success put together. Anyone who makes it now will have a hard time backsliding.

Essentially what has happened is the financial establishment has stimulated growth for years on credit and debt, but now that house of cards is collapsing.

That's a fairly jaded view of finance. In desperate times of sluggish growth, the best medicine may be loans to supplement the low liquidity. Even with interest to worry about it can be better than the alternative - closing up shop. To everything - there is a season, etc. In general credit exists purely to stimulate growth. When there is a lot of debt, it generally is a sign of health - that risk is being taken because, odds are, it will pay off. Optimism is the best medicine for recession. Nothing demonstrates optimism better than risking collateral on a sure-fire idea or delivering a convincing proposal to venture capitalists about some whiz-bang venture.

It is the working class and "middle class" who will pay the taxes to pay off these debts (and bailouts! yay), and have to suffer austerity measures.

But in a system in which taxes for the poor are nil, and taxes for the middle class are less than some of the nonessential costs people squander their earnings on, there can be an egalitarian solution, one that shifts the burden to the most affluent people and corporations, to mitigate the need for austerity.

So not only do the working and middle classes get screwed over, but they suffer austerity and become more desperate, more ready and willing than ever to be exploited.

I think that's the classical model, which is being defied even today. Despite the crash of '08 and many cutbacks, it seems like austerity - like it meant under the world bank, and in countries where the US staged coups to shock the economies into discipline - is probably ancient history.

Ideally, the political ramifications will be class warfare and revolutionary socialism.

I wonder. The world is changing, too, people are adapting globally to a paradigm shift. Young students are today reading economics and political history with previously unknown academic freedom. Hope springs eternal where there is freedom, growth and opportunity. This is their time to shine, and in many ways they are rising and shining. This was what our position in the Cold War was all about - to set people free and let them flourish. And now it's finally come to pass. I can't find too much bad news in this scenario, considering the alternative.

All of what China is doing at the moment would not have been possible without Mao's Revolution, New Democracy, and the various programs he instituted. Deng Xiaoping built on Mao's legacy (although, arguably, in the opposite direction).

You mean, as a reaction to oppression they are now determined to rush forward and develop what ever they can as fast as they can before the hammer drops again?

At any rate, as I said, capitalism will continue to develop China until the contradictions and antagonisms inherently present make it unsustainable and problematic. I don't think we will have capitalism by 2100.

That's a long, long time from now. Anything can happen. But one thing that will remain a legacy for them is how oppression factored into the lives of their ancestors, a legacy that might parallel the black experience in the Jim Crow era, or the Great Depression and the Dust Bowl years, the way families in the US have carried the legacies of their grandparents and great grandparents & etc. forward even today.

If anything, the year 2100 will be marked by serious consequences of deep irreversible environmental damage and depletion of cheap mineral, water and land resources, and, hopefully, a global awareness and concern that is simply ignored today out of more pressing issues more directly impacting individuals and families. This chaotic problem, being unable to live in the world without tearing it up, may be an attribute that is relegated to us alone by the later generations, the way we blame generations past for decimating indigenous people, for carving up Africa and creating endless hostilities, or for all of the harm of the Industrial Age, and the Wars and genocide it provoked. Just think how much brighter the world can be, when those who live in it can look back at us and say: "Never again." I think what I am saying is that the best hope for the future is that we prove to be the worst generation that ever stomped the planet.

 

[Billy T]

... there is the problem that mechanization and automation of production will render large segments of the population without income, and therefore without consumption power. Since they do not own means of production, they are both without income and without a means to produce. At this point, capitalism makes no sense, and must be replaced. ...

Nonsense. Do you really think it took less of human labor to put food on the table in "the good old days" of say 1900? When more than 80% of American lived on farms worked long hours in all sorts of weather (instead of in air conditioned factories or offices) and only need to use less than 10% of the earning from their labors to put food on the table? (The remaining 90% being spent to make jobs for workers no longer needed on the farms.) The death of the family farm with massive industralized agriculture employing less than 5% of the population is the greatest blessing to come to American in the last 100 years.

Even China´s communistic leadership agrees: The CCP threw their communistic doctrine out the window a couple of years ago to follow the US´s example of large scale efficient food production. It must have been hard to do -to disown Mao´s beliefs, but they had no choice.

BTW, even if you don´t, China is recognizing that Mao, and his "cultural revolution" with professor sent to re-education center or used as street cleaners, etc. set progress back more than a decade. - As just one example of his damage done by opposing efficient large scale production (what you still do) he closed large steel production centers and told the people to build small blast furnaces in their back yards!!!! - insanity!!!

You seem to be really a Ludenite, more than a communist, and certainly not a modern socialist like found in Scandinavia, with efficient modern production.

True the government still owns the farm land, (the "means of production") but 150 million peasants were given the right to lease "their" inherited tiny inefficient plots to newly formed large agri-corporations. This not only greatly reduced the cost of food, which was growing unaffordable for many, but freed up workers to build the world´s fastest and largest rail system, a new power plant every 10 days, roads, water and sewerage systems (and every thing else a modern city needs) for 100 new cities to house 2/3 of the peasants leaving their former farms to enjoy a better life with land rent in their pockets to add to their salaries in the urban centers they moved to. Smartest move the CCP has made in years! (scrapping non-working communistic idology and encouraging corporate "exploiting landlords" with share holders.) This policy change is main reason why real salaries are growing by double digits in China with many rural areas seeing more than 20% annual salary increases!

The picture in US is still better on an absolute scale, but for many it is a declining standard of living, however, no one will starves with lack of income as you suggest, not so long as the world accepts printed paper for real goods and services (and FED´s printing press doesn´t break).

Few posting here appreciate how bad things have become for 46 million fellow Americans. (Basic cause of this problem is the locally funding of schools that cannot educate them for the modern world, but I will not say more on that now, again.) This quote may, however, open some eyes:

“…a record 46 million Americans are signed up to get food stamps... and 85,000 fresh names were added to the disability roster in June. … we can argue the government is subsidizing Wal-Mart:

At about 11:50 p.m., long, winding lines start to form at the three open checkout lanes. The manager takes to the storewide PA to summon all cashiers to their posts. As the clock strikes 12, the lines move slowly forward. Almost all the customers pay with swipe cards and linger over brimming carts to double-check foot-long receipts for errors.

It's a monthly event, and a sign of the times. On the last day of every month, at 24-hour Wal-Marts, food stamp recipients line up to make essential purchases just as their federal benefit cards recharge for the new month.{Italics is re-quoted from Reuters in link below}

While you and I sleep, countless Americans watch the clock. With each tick of the second hand, their monthly reprieve creeps closer. They live month to month... and often, that's not enough. …”

From: http://www.insideinvestingdaily.com/articles/inside-investing-080312.html