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el freako
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Bristol, European Union
Oct 1999
time: 05:22
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quote:
Originally posted by TheStinger
I thought purchasing power parity resulted in countries such as India having larger economies than Germany.
I may be wrong though. |
That is correct - remember that there are over 12 Indians for every German so even if they are poor then numbers make up for it.
PPPs are a far better way of comparing incomes across countries than exchange rates.
Think about it if the pound goes up against the dollar by 10% are we really 10% richer?
Only if we spend all our money in the USA.
And I'm sure you notice how cheap things seem to be if you go to greece or turkey.
The ranking of the top 10 world economies using the World Bank's estimates of PPP's are:
1. United States: $9.91trn
2. China: $5.69trn
3. Japan: $3.44trn
4. India: $2.55trn
5. Germany: $2.11trn
6. France: $1.48trn
7. Britian: $1.46trn
8. Italy: $1.41trn
9. Brazil: $1.34trn
10. Russia: $1.30trn
(the EU-15 combined is $9.23trn)
Last edited by el freako on 17-09-2002 at 18:45
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el freako
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Bristol, European Union
Oct 1999
time: 05:22
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Of course it makes sense,
How about an example:
Say a large company makes ball bearings - they employ 5,000 workers and each one of them makes £1,000 profit a year for the firm.
Compare that to a small Software company that has only 50 people, however they each make £20,000 in profit a year for their firm.
Which firm is the most modern and high-tech? the software firm.
But the ball-bearing firm still makes 10 times the profits of the software firm - if they were both Plc's the ball bearing firm would probably be worth 3-7 times as much as the software firm (it would be unlikely to be worth 10 times as much because of the better growth prospects for the software firm).
To see how useless exchange rates are just look at a series of GDP converted using exchange rates over time.
In 1995 (when the US dollar was low and european currencies high) the Euro Zone had 96% of the US's GDP when converted using PPP's - but by 2000 that had collapsed to 62%.
Now that would imply that during 1995-2000 the Eurozone's economy shrank by an enourmous 22% - however it actually grew by 13%, that huge 45% difference shows just how unreliable exchange rates are.
Using PPP's the decline was much more realistic (from 80% of the US in 1995 to 76% in 2000)
Last edited by el freako on 17-09-2002 at 19:43
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el freako
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Bristol, European Union
Oct 1999
time: 05:22
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quote:
Originally posted by TheStinger
Its a while since i did economics(about 10 years) but i can see htrough a daft example when i see one. Your example would also apply for GDP.
My example, Germany could borrow (at great cost no doubt) 10% of its PPP measure of worth tomorrow. India could not. |
Your reasoning is rather confused here.
Your claim seems to be that because a country cannot borrow as much as another then it's output has to be lower.
These are two different indicators that are only loosely linked - however much people's 'gut feeling' that they should be.
All GDP measues is total output - you seem to believe that it should also show how strong a countries financial system is and how productive the workforce is - that's like looking at your car's speedometer and complaining that it can't be correct becuase it does'nt tell you what the time is.
You seem to think that 1bn Indians couldn't possibly produce the output of 80m Germans - all the average indian need do is produce a tenth of the average german.
Please explain to me then why the US economy is so much larger relative to Europe even though the gap in our incomes is at the lowest since the 1850's (hint: they have added a lot more people producing relatively lower value goods).
Last edited by el freako on 17-09-2002 at 20:11
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Lemmy
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Bubblewrap
Dec 2000
time: 06:22
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quote:
Originally posted by johncmcleod
I actually thought it was more really of an argument, because some Euros were saying that they laughed when people said it. |
I was actually laughing because of your arguments, i mean you come with things like industrial might and military power and diplomatic influence, and you're right, the US is unsurpassed when it comes to those things. But how do those things directly make your life better?
I live in the Netherlands, our military sucks, and i doubt anyone would seriously listen to what we have to say internationally. But still, i doubt that my life has been any worse then yours because of that.
This isn't Civ, this is real life, and power and influence aren't the only things that matter. If you really want to say that you live in the best country in the world, then show some examples of how your life in the US is better then life in the EU for example.
Do you have more freedom? Can you do so much more things then other people in other countries can?
Or perhaps you have a better future ahaed of you then your EU equivelants? Why then?
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Lemmy
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Bubblewrap
Dec 2000
time: 06:22
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quote:
1) military might makes it possible to project your nation's power and protect your interests. This becomes important, especially as you start to get more creature comforts (see below). |
Military brings also higher costs, potentionally weakening your economy, when you project your power to often, it has a chance to backfire, and create enemies, which in turn may force you to project more power on other countries.
quote:
2) industrial might enables your country to either a) make creature comforts to make your life better or b) sell/trade the stuff made in order to acquire creature comforts to make your life better. More industrial might = more creature comforts, so yes....there IS a direct coralation there. |
So the industrial might of the Soviet Union made the soviet population live in wealth? It all depends on the government and the market model being used. More industrial might also means more working hours, the US has a 6-day workweek, at least so i have been told. In the Netherlands we have a 5 day workweek, leaving more free time for other things.
Yes, it enables you to make more creature comforts, doesn't mean they are actually made.
quote:
3) without military and/or diplomatic weight, you exist at the mercy of those with more guns than butter. you therefore, exist in a perilous state. It is fortunate that the Netherlands are surrounded by democratically minded states who have no interest in gross territorial acquisition. How long do you suppose the Netherlands would exist as an independent nation if, say, it were tucked between Iran and Iraq? You would quickly either arm yourselves, seek a close alliance with someone much bigger than either of these two (sorta like Kuwait did with the US), or you would be an appendage to one or the other of them. Those would be your possible futures. |
Would that be the Iraq and Iran that formed due to US actions, or an Iran and Iraq that would have formed without any actions  .
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Velociryx
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of Candle'Bre
Apr 1999
time: 05:22
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Military might, Lem, should be viewed as Insurance. If you never need it, that's great! If you need it tho, and don't have it....kiss your country g'bye.
True, like insurance, you should never carry more than you need, but make the mistake of not having enough, all it takes is one crisis to crumble everything you've worked so hard for.
As to industrial might....of course my example was oversimplified....merely to point out to you tho, that yes, there IS a coralation between industrial might and creature comforts. Your initial post made it seem as tho the two have nothing to do with each other. I don't think that's what you meant, which is why I resorted to the simple example.
Iraq/Iran....either...neither. Pick two bullies bigger than the Netherlands. If your nation was stuck between them, those would be your choices. Sad but true, my friend....we hunting apes that call ourselves homo sapiens are not so advanced that the barrel of a gun does not dictate peace. More often than not, it certainly does.
-=Vel=-
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Adalbertus
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Cologne, Germany
Feb 2001
time: 06:22
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quote:
As to industrial might....of course my example was oversimplified....merely to point out to you tho, that yes, there IS a coralation between industrial might and creature comforts. Your initial post made it seem as tho the two have nothing to do with each other. I don't think that's what you meant, which is why I resorted to the simple example. |
There are two things about industrial might: One is the "gross" thing, which you need when you have an economic fight against another nation. The other is about creating comfort for the population, which relates roughly to GNP per capita. And here, the EU and the USA are approximately on par, and the Netherlands probably better than the USA.
quote:
Iraq/Iran....either...neither. Pick two bullies bigger than the Netherlands. If your nation was stuck between them, those would be your choices. Sad but true, my friend....we hunting apes that call ourselves homo sapiens are not so advanced that the barrel of a gun does not dictate peace. More often than not, it certainly does. |
I can name you these bullies: Germany and France. And the most interesting thing: The Netherlands became independent from Germany only in 1648 (mainly due to the influence of France after Germany was laid in ruins by a joint effort of France and Sweden), at the height of their economic might. After that, the Netherlands declined more than increased in power, and for their size they are still quite powerful. They had Germany and France running over them, and still survived. It's not because of their big army, but because they managed to use one side for their purposes. Good diplomacy.
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Lemmy
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Bubblewrap
Dec 2000
time: 06:22
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quote:
Military might, Lem, should be viewed as Insurance. If you never need it, that's great! |
but you also shouldn't go around creating the need for such an insurance by projecting your power on people who don't want it.
quote:
True, like insurance, you should never carry more than you need |
quote:
Your initial post made it seem as tho the two have nothing to do with each other. |
my bad.
quote:
Iraq/Iran....either...neither. Pick two bullies bigger than the Netherlands. If your nation was stuck between them, those would be your choices. Sad but true, my friend....we hunting apes that call ourselves homo sapiens are not so advanced that the barrel of a gun does not dictate peace. More often than not, it certainly does. |
Yes, fortunately, like the US, we aren't next to any bully....but this was about how a large military improves living conditions or something. I think in the case of the US, a large military, and more or less using it, created the need for a larger military, without a noticable improvement of life.
(with large i mean larger then needed to defend your territory)
quote:
After that, the Netherlands declined more than increased in power, and for their size they are still quite powerful. |
You sure the Netherlands didn't reach the height of their power in the 18th century? You know, with all that trade and colonies and stuff...ah, those were the days.. 
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Dauphin
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Caught in a tuna net
Jan 1970
time: 05:22
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quote:
Originally posted by Velociryx
Lemmy....just some observations:
1) military might makes it possible to project your nation's power and protect your interests. This becomes important, especially as you start to get more creature comforts (see below).
2) industrial might enables your country to either a) make creature comforts to make your life better or b) sell/trade the stuff made in order to acquire creature comforts to make your life better. More industrial might = more creature comforts, so yes....there IS a direct coralation there.
3) without military and/or diplomatic weight, you exist at the mercy of those with more guns than butter. you therefore, exist in a perilous state. It is fortunate that the Netherlands are surrounded by democratically minded states who have no interest in gross territorial acquisition. How long do you suppose the Netherlands would exist as an independent nation if, say, it were tucked between Iran and Iraq? You would quickly either arm yourselves, seek a close alliance with someone much bigger than either of these two (sorta like Kuwait did with the US), or you would be an appendage to one or the other of them. Those would be your possible futures.
-=Vel=- |
Military might is only developed when it needs to be. What need of a military does the EU have?
Industry is not the be-all-end-all. 1 million rich people is better than a billion poor people. Improving industry is good, but if the wealth is spread thinly, then you are not increasing creature comforts for the masses.
Re diplomacy, the Swiss have been doing very well without a military, an industrial base or allies for centuries. Their peoples are some of the richest in the world.
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Velociryx
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of Candle'Bre
Apr 1999
time: 05:22
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Alb....inside the span of 200 years, the USofA went from nil to the hands down, bar none biggest economy the world has ever seen. That's huge, and cannot be understated.
Part of it was the American knack for innovation....taking roughed up ideas of others and building on them. Part of it was natural resources. Part was sheer luck.
I guarantee you that if we had the landmass, resources, and population of russia + china + india, we'd have a gdp on par with that 8x population, and probably in the same timeframe. Love the USA or hate the USA, even our most bitter detractors have to admit that when it comes to using and growing capital, we do it like nobody's business.
Dolphin....I see where you're going, but still disagree. Right now, you are vulnerable. Today. You are vulnerable on a variety of fronts, and those fronts need military preparedness.
What are they?
1) Oil dependency. ME controls a healthy chunk of oil, with Russia coming on line as a big producer soon too (and not a moment too soon for them and their crumbling economy). You want to continue to enjoy the EU lifestyle, then protecting the life blood of all modern economies (oil) has GOT to be priority numero uno (with priority #2 being the quest for viable alternatives to fossil fuels). Right now, the EU has it easy in that regard, cos the US, with a larger economy, is even MORE vulnerable to this than you are, and so, has stepped up to the plate. If the oil stops flowing, the west stops entirely.
2) Two-bit thugs and wannabes. These guys seem to crawl out of the woodwork. Some are of our (generic "our" here....Western world in general) creation, and some just seem to sprout up like weeds on their own. These guys indescriminately kill, maim, gas, torment, and terrorize. Since Euros like to travel as much as we do, that's a concern. Travel in the wrong hood, and your people get kidnapped, blown up, stabbed, shot at, etc. If you can't respond, the two-bit thug sees you as weak, and like any schoolyard bully, if you're weak, you're the target of further attacks.
3) Biochemical and Nuclear proliferation. Crazy dictators don't care about MAD, they care about power. Suitcase nukes, using jets as missiles on civilian targets....all that's fair game. Now, it's true that a conventional military has to think on its feet to fight a force organized to make use of those kinds of attacks, what other alternatives do we have. It's either make our own terrorist organizations to fight fire with fire, leave it in the hands of law enforcement divisions, or use the military.
That the EU has been able to ignore or curtail military spending to the extent that it has is a testiment to the strength of the US military. Of course no one would attack Europe.....the US would kick their arses! Note tho, that the EU15 nations have very nearly the GDP of the USA. As you solidify your economic position, I would expect that some agreement would be reached between the EU and US regarding military expenditures, with yours rising, and ours falling.
-=Vel=-
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Velociryx
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of Candle'Bre
Apr 1999
time: 05:22
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Oh trust me....the need is out there....at the moment, it's been suppressed by the fact that the US (willingly) does the bulk of the heavy lifting, BUT....
Your own economy will soon be roaring along right on par with ours, and as we scale back our expenditures, we'll need our friends across the pond to help take up the slack. This will be good for both of us, as it puts us on an equal footing in every way.
And in the meantime, the current #2 contender for the Economic Heavyweight Champion (#3, counting EU as a solidified whole) is China. Her economy is growing faster than ours (makes sense, it started so much lower!), and it won't be long till she's the big dog on the block. Very definately it'll happen in our lifetime, and prolly sooner than we think. When that happens, it will FORCE a greater spirit of cooperation between us, cos don't think for a minute that China won't want to flex those newfound muscles, and it will take every bit of our American ingenuity and European pragmatism to deal with that threat.
Count on it.
-=Vel=-
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Lemmy
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Bubblewrap
Dec 2000
time: 06:22
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quote:
And in the meantime, the current #2 contender for the Economic Heavyweight Champion (#3, counting EU as a solidified whole) is China. Her economy is growing faster than ours (makes sense, it started so much lower!), and it won't be long till she's the big dog on the block. Very definately it'll happen in our lifetime, and prolly sooner than we think. When that happens, it will FORCE a greater spirit of cooperation between us, cos don't think for a minute that China won't want to flex those newfound muscles, and it will take every bit of our American ingenuity and European pragmatism to deal with that threat.
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i don't see why China has to be an enemy forever, they aren't a heavyweight yet and thus no threat to us now, so there is still a chance China get's a better government before that happens, and i think we should do everthing we can to encourage that, and not just brand China as our enemy.
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17-09-2002 18:40
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