Back to basic production

In the recent article, "The collapse of manufacturing" by The Economist 21 Feb 2009 Pg. 13, industrial production has fallen all over the world, this is especially so in countries that are dependent on manufacturing exports to the developed countries. This has only enlarged the economic problems for export-oriented countries as they can no longer export their countries out from poverty.

These export-oriented countries have huge labour supply and vast land mass with the exception of the city-nation Singapore. China, Japan, South Korea, and other Asia Pacific nations should consider a return to agricultural production if they have the comparative advantage in doing so at this point in time, without the assistance of government subsidy of course.

Yes, manufacturing demand is elastic and there is a lack of demand at this point in time. Consumers are worried over their jobs that they are spending less, demanding less manufacturing goods like computers, mobiles, et cetera. However, there is one aspect of production that consumers will demand. Such demand is inelastic. It is the demand for food.

Export-oriented nations should take this opportunity to encourage industries in farming, food production using labour and not technology. This may seem to be inefficient. But in export-oriented nations, if the cost of labour is less than the cost of technology, this would be productive. Not only would this create temporary employment for the unemployed masses, it would also increase the food supply of the world.

Although the sudden increase in food supply would cause food prices to fall, individuals' purchasing power would increase for other goods as they would be spending less on food. In turn, this could stimulate the demand of manufacturing goods and spur the cycle of economic growth.

Time to stop the spread of negativism

It has been a while since the last update was done. I stopped blogging, not due to the lack of time or the lack of interest. It is quite the opposite. I stopped to prevent the spread of negative news which was being reported each day. I stopped to prevent a vicious cycle of pessimism and negativism from occurring which would negate the positive effects of any stimulus package that were being done by the governments of the world.

"Can Talk of a Depression Lead to One?", by Robert J. Shiller, The New York Times, 21 Feb 2009 sums it best with and I quote, "EARLY in the Great Depression, people were concerned that, as one observer put it in 1931, we may “pass through a long period of mediocre business activity like that of the 1890s.”"

I definately would not want the Great Depression from happening ever again. It was painful for those living through that period. It was also painful on how the world came out from it, through a World War. ("Who’ll Stop the Pain?", by Paul Krugman, The New York Times, 19 Feb 2009)

The world needs positive news, now more than ever before. Hence, before anyone goes further with the constant bombardment of negative news, think of its effects. Of course, there is still a need for factual reporting of Gross Domestic Product (GDP), Purchasing Managers Index (PMI), retail sales revenue, companies' profits/loss announcements, et cetera. But once negative news is out, just let it pass. Do not keep spreading it. Do not let negativism feed negativism.