[SeaGypsy]

Sorry but that is a crap post. China (only) achieved 7.5% growth "Oooohh" a disaster (compared to 10%). This shitty little news item is one of a pile likewise for the entire time I have been on this site. It does nothing to undermine my argument, so what's with your silly addendum? "It ain't gonna happen like what?"

[Keith_McClary]

I'd like to see a more recent version of this.

[PrestonSturges]

There are many historical examples of countries where modest reforms or improvements lead to mass revolts. People get a little mobile, a little less hungry, and they wake up.

On the other hand, desperate poverty leads to an extremely conservative outlook (Afghanistan etc).

[SeaGypsy]

You are suggesting a mass revolt in China. There are continuous local revolts going on, they mostly don't make the news. There is nothing modest about China's reform over the last 2 decades; the opposite description is apt: outlandish.

Nothing has changed to contradict the thesis in this thread. Inflation is eating any wage rises up before they happen in the first world, even in Australia (where I live currently and the government boasts of 'weathering the GFC better than any other'). Whereas Chinese workers continue to achieve increased buying power.

I am not trying to argue that China is swapping places with the USA. Peak oil is gashing holes into all of the world's economies as we speak. My point is that in the interim, before some serious systemic breakdown occurs, the wage playing field is set to be levelled. Levelled then downwards from there.

[PrestonSturges]

Asia's rising social welfare states (The Economist)

http://www.readability.com/read?url=htt ... e/21562195

[Cloud9]

I think we will find diesel to ship food a lot longer than we will find it to ship trinkets. As complex systems collapse for lack of cheap oil, we will see the rise of local pricing again. This local pricing will be dictated by the ability to pay and the demand for the product. In really hard times, a wagon load of turnips will be worth a few rounds of silver.

[bochen280]

You are suggesting a mass revolt in China. There are continuous local revolts going on, they mostly don't make the news. There is nothing modest about China's reform over the last 2 decades; the opposite description is apt: outlandish.

Nothing has changed to contradict the thesis in this thread. Inflation is eating any wage rises up before they happen in the first world, even in Australia (where I live currently and the government boasts of 'weathering the GFC better than any other'). Whereas Chinese workers continue to achieve increased buying power.

I am not trying to argue that China is swapping places with the USA. Peak oil is gashing holes into all of the world's economies as we speak. My point is that in the interim, before some serious systemic breakdown occurs, the wage playing field is set to be levelled. Levelled then downwards from there.

Your thesis only makes sense in terms of real GDP PPP per capita. You assumed China and US population will equalize. When there is 6 Yo to every one Joe, how in the world will the gap ever be close to being closed?

Middle class is unsustainable bubble anyway, US will lose its middle class, China will never achieve it. This is, as they say, a mathematical certainty.

[SeaGypsy]

It's all relative and it may never actually close; I'm not trying to prove something absolute, just drawing an observation over time.

[EdwinSm]

In the west I see a gradual erosion of the value of wages - they may still go up, but by less than inflation leading to a small annual loss of purchasing power. Over time this will narrow the gap with China, but it would not be enough to close it in the near future. If there is a sever recession, then wages might drop, but in my mind the main figure for comparison would be household income, the average of this will drop significantly in a recession as more people become unemployed.

For China I see two main diverging pressures. The current hard landing of the their economy braking will mean pressure to keep wages down, in the face of rising unemployment. In the long term the demographic effect of the one-child policy will soon (within the decade if I remember correctly) mean that the working-aged population will start to decrease. This historically has put a pressure to raise wages [for example the Black Death in Europe lead to much higher wages for the workers who survived]. I am not sure how these diverging pressures will interact, or which will the the stronger.

[SeaGypsy]

Nope, China is heading for a massive RE crash; end result being lots of affordable housing and re-assertment of totalitarian regime over the corpses of failed banks. Some very 'interesting' things will go on with China in the emerging future. I believe it would be a mistake to believe the pattern will follow the US RE crash. The efficiency of the one party system over dumbocracy will assert itself in a crisis.

It's an intuition so far, I don't believe China is on the brink of actual war with anyone; but this is the beginning of the China era/ there are sabre's to be rattled though the spoils get slimmer the pirates get meaner, some even get fatter.

We are in an age of 'perpetually increasing novelty' under chaos theorem, a golden age. The beginning, middle and end of which is perhaps a matter of perception, personal, family, national/ cultural, but especially a matter of the age/ experience of the beholder of our current circumstance. "Increasingly interesting times", a thousands of years old Chinese concept which made some American scientist/ theorists rich, perhaps should have changed the world/ turns out to be an everyday newscast.

[vision-master]

Middle class is unsustainable bubble anyway, US will lose its middle class, China will never achieve it. This is, as they say, a mathematical certainty.

unsustainable until J6P crushes the 1%er's by force.

[dbruning]

"unsustainable until J6P crushes the 1%er's by force."

Don't the 1% own the politicians, military and civilian forces? In any case, with an armed populace, civil war would be one of the worst things that could happen, regardless of who "won", the loss of life and damage to infrastructure would be horrible.

[SeaGypsy]

J6P's guru is a cornucopian. There is no need to 'Crush the 1% by force'; simply to force them to release free energy secrets held in their vaults deep below their château.

[kublikhan]

Hanging onto this gap is too expensive. It is not going to happen.
Parity will be in this space.

I am going to guess that the meeting point will come before/ around 2020 and that it will be at around $200 a week in current $USD.

So you are predicting real US wages will fall by 75%? And real Chinese wages to double/triple? All in the span of 8 years? I think that is highly unlikely.

Check out estimates made by a team of economists on this subject:
List of countries by future GDP (based on ECI) estimates

They are predicting that by 2020 we will see a weekly income of around $1100 for the US and $115 for China, compared to $889/$72 US/China for today. Pretty far from parity. Yes the income gap narrows, but not as radically as you suggest. I think those numbers are closer to what we will see than $200/$200 US/China.

[SeaGypsy]

Knock the top 20% of earners off the stats then redo the maths; it's already happening. (PS having a quick scan of the chart provided; I rate it's worth as toilet paper. I very much doubt the oil plateau we are on is going to last out the decade. Such predictions are based usually on EIA & other mainstream major energy pundit forcasts; almost in consensus here at peakoil.com held to be cornucopian fantasy reliant on re-definition of 'all liquids' & highly optimistic outcomes of current speculated plays. Reality is we are going to be seeing the downslope starting sooner than later. The dynamics are massive. I doubt my prediction will apply across the board, or that it is worth more than 10 cents at present/ just a subject open to discussion)

[kublikhan]

Knock the top 20% of earners off the stats then redo the maths; it's already happening. (PS having a quick scan of the chart provided; I rate it's worth as toilet paper. I very much doubt the oil plateau we are on is going to last out the decade. Such predictions are based usually on EIA & other mainstream major energy pundit forcasts; almost in consensus here at peakoil.com held to be cornucopian fantasy reliant on re-definition of 'all liquids' & highly optimistic outcomes of current speculated plays. Reality is we are going to be seeing the downslope starting sooner than later. The dynamics are massive. I doubt my prediction will apply across the board, or that it is worth more than 10 cents at present/ just a subject open to discussion)

Fair point. But even just looking at median income, I find it highly unlikely it will fall to China's level. The worst recession in decades only knocked 7% off of median income. Your projections assume 10x that level of reduction. This source might be a bit more palatable to you:

From 2000 to 2010, median income in the U.S. declined 7% after adjusting for inflation, according to Census data. That marks the worst 10-year performance in records going back to 1967. On average, the economists expect inflation-adjusted incomes to rise over the next decade, but the 5% projected gain isn't enough to reach prerecession levels.

"Standards of living in the U.S. will continue to decline as we deleverage and emerging markets take over as the growth engine of the global economy," says Julia Coronado of BNP Paribas. Incomes are being held down by persistently high unemployment and tepid economic growth, and the situation isn't expected to improve much in the foreseeable future.

Bleak News for Americans' Income

And the the oil problems apply just as much to China as the US, if not more so. China's dependency on imported oil is growing while the US is shrinking. Already, China spends more of it's GDP on oil than the US does:

As much oil as the United States imports, the European Union imports more, although both spend the same portion of GDP, the EU GDP being slightly larger. And as high a portion of GDP as Europe and the US spend on oil, China, Japan and India spend higher, with India, the smallest GDP, spending the largest portion. China is already importing half as much oil as the US, with the figure represents 3.5 percent of GDP.

Europe Is Importing More Oil Than the US

China’s economic success is not unique and is part of the “Asian economic miracle.” China’s economic development model is still largely a replication of that adopted by other more advanced East Asian economies, in our view.

China is at a similar inflection point. According to the data compiled by Maddison, Japan and Korea reached the $7,000 level in the late 1960s and 1980s, respectively. Thus the Chinese economy is now at an inflection point similar to that in the Japanese economy 40 years ago (i.e., around 1969) and the Korean economy 20 years ago (i.e., around 1988). We find that beyond this inflection point, overall GDP growth tended to decelerate and inflation to accelerate in both Japan and Korea (exhibits 2 and 3).

Specifically, with regard to economic growth, while the 10-year average GDP growth rate for Japan during 1960-69 and Korea during 1979-88 was 10.4% and 10.0%, respectively, the rate in 1970-79 and 1989-1998 decelerated to 5.2% and 6.3%, respectively (exhibit 2).

Risks
Both Japanese and Korean economies were hit by serious crises in the decade after their economies crossed the inflection point. These experiences suggest that the future development for the Chinese economy over the coming decade will probably not be entirely “accident-free”.

The particular crisis experiences of Japan and Korea point to the vulnerability of the Chinese economy and the types of possible risks that could seriously destabilize the economy. There are two—an energy crisis or a financial crisis.

In view of China’s rising dependency on crude oil over the coming decade, a sharp increase in crude oil prices for a prolonged period of time could deal as large a negative impact on the Chinese economy as was the case for Japan duding the oil crisis in the mid-1970s. In fact, the oil crisis in the mid-1970s caused the Japanese economy to gear down on a permanent basis.

Chinese Economy through 2020