"First World Macroeconomics in less than 2,500 words, part 2"

Jim:

I know that you get tired of hearing economic arguments that seem to come from outer space. You are doing a great service to the industry by writing about economics in layman's terms.

I don't understand why we have paper companies such as P&G, Kodak and Nokia always undergoing reformation, creating new and improved products and otherwise embracing innovation by following the Germanic model of econ while the companies that follow the Anglo model are stuck producing the same old stuff, shutting down machines, and turning off the lights. Nokia made communication paper, decided that they really made communication media, decided that the cell phone was just a modern version of paper and changed everything. Mead was a pretty innovative company within this framework until a bunch of Ivy league kids from McKenzie directed the company back to the Anglo model. Mead was gone two years later.

Point is, this is a global economy and US universities are smugly sitting behind their tax free trust funds, with econ deans actively preventing the teaching of non-Anglo economic models. The Anglo model depends on population growth in order to work. All the while their own sociology departments teach the idea of limiting population and stopping growth. Don't the department heads talk with each other? The Japanese, Germans, Austrians, Swiss and Finns seem to do well using the alternative system of capital allocation which includes longer production processes including innovation as an input. We are in trouble in our industry because we stopped funding new product research a decade ago and spent money on M&As instead under the assumption that the rate of growth of the consumer would not level off.

Mike Ryan
Process Laboratories
Chillicothe, Ohio
USA

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Grandpa,

I think your change of status has made you a little easy on your weekly riddle.

If it was I, I would take out a slip, put it in my pocket, pull out and open up the remaining slip in front of the boss, pat my pocket, smile, and walk away.

Mike Higgins
Higgins Consulting
St. Petersburg, Florida
USA

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Hi Jim

Always enjoy reading your articles. Wanted to mention, however, that aging populations are not limited to France, Germany and Japan. In fact, virtually all of the Northern Hemisphere is moving in this direction as birth rates (per woman) are at just about 2.0 to 2.1 children. That is, the average age of the population (including the US) is increasing. Any exceptions will be due to immigration. But the question for our industry is "what paper and paper products are required or needed by an aging population?"

All the best,

Gary Baum
PaperFuture Technologies
Appleton, Wisconsin
USA

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Gary,

The answer is obviously paperboard caskets, which, of course, would fall into the "Innovation" category. If one wanted to make these "green" one would obviously make them from recycled paperboard, thus one last time saving a few trees as they exit stage left.

Jim

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Dear Jim,

By and large I am in agreement with your analysis… however I think the problem may reside in the use of 'economic' [or macro economic] in place of 'socio-economic' or dare I suggest 'socio- enviro-economic' [SEE = eyes wide open]. Whilst I don't purport to understand the psychology of markets [socio] ...which may even reside in the subconscious... many people have deluded themselves their property was worth a lot and that they could access this 'paper' profit equity to re-invest in further paper money / shares ... the banks were happy to play along with this as discussed by many others... we need only look to Japan in the 90s and the property bubble their for a lesson not learnt ... we don't know what we know...but we live with it everyday [keep your eyes open]...and as always 'if it sounds too good to be true', or 'too easy', then think/look twice

Anyway, with regard to "My view of entertainment is everything, and I mean everything, that is not basic food, shelter, and clothing." ...I'd say that makes up a large portion of the economy [for now]...hoola hoops, pokemon, coke cola, the wiggles, the beatles, etc etc ...these things fall under the banner of 'culture' which actually dictates what we eat, how we build our houses, where we build em and what we do etc etc…and perhaps makes surviving worth living [we all like to be challenged and/or distracted]...I think the USA [and Australia] needs to look to its culture and what it values as a mechanism to improving life [and so improve the world economy]

In the meantime I suspect we're all gonna be tested ...the 21C is actually dawning on us now and we need to adapt and aspire to greatness whilst being humble ... I doubt we can continue business as usual ...innovating your business model keeps you ahead...clearly our bushfires here in Victoria have shown that our current practices come into question with a really big fast fire ...perhaps remind the forest workers in the US to tend to their trees and do some scenario planning

Cheers,

Dr Richard Helmer
CSIRO
Victoria Australia

PS: the experiment I remember most from high school was one where we grew yeast cells in a test tube ...in the end pretty much all of them died from their excrement...we need to be mindful of this as our globe is a bit of a fixed volume/isolated cell… I agree we should think to what kind of world can support 10 times the current population [bearing in mind that having achieved it in advance we will need to re visit the problem]

PPS: in the mid term, food is gonna get more expensive

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Thanks, Richard. After watching a "scientific" show on television the other day, I think the earth is probably doomed by a short gamma ray burst exposure caused by collapsing binary neutron stars. Apparently we took a hit from one of these some 45 million years ago and are sitting ducks for another. Something we can't begin to control. So, in the meantime, like your yeast, we sit in our own excrement. Pleasant. See paperboard caskets above.

Jim

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