User:Webisteme/Cynicus Economicus

Cynicus Economicus is an anonymous British economics blogger, who lives and works in China. As well as writing for his eponymous blog, he is a contributing author at financial news and commentary site Seeking Alpha, and the Trade and Forfaiting Review.

The thesis of Cynicus Economicus (CE) is that that an economic crisis created the financial crisis represented by the fall of Lehman Brothers. CE's account starts with the opening of markets in China and India. He observes that this opening saw a huge addition to the global labour force, whereby the labour was connected with capital, and access to world markets. He contends that, whilst there was a growth in the supply of some commodities, the infrastructure heavy growth in places like China meant that commodity supply growth was insufficient for globalisation to raise the living standards of all i.e. CE argues that the increasing demand for commodities created a zero sum game. With regards to the financial crisis, he argues that:

"The reality is that the financial crisis is not the cause of the crisis but is a symptom. In particular, the emergence of China has seen huge swathes of manufacturing moving to China at the cost of the West. The result of this should have been seen in the lowering of wages in Western manufacturing in order to meet this emerging competition. Instead, what happened was that there was a shift into the ‘service economy’, in which services employment replaced manufacturing. The root of this shift was not an economic miracle, but the foolhardy lending of wealth into the Western economies by the Eastern economies and the rising wealth of the petro-economies (increasing demand for oil, and increased profits). This lending created a wall of money entering into the Western financial systems, and yet there were limited productive investments in the Western world."

Although the views of CE were once novel, it appears that elements of his thesis are now adopted by mainstream economics. Also, CE argued that the developed economies such as the US and UK were poorer than they thought in 2008, and the years following this discussion may be seen as confirming this view.

Influences
Cynicus has stated that he is "sceptical" of economic theories, and "picks and mix[es]" from different schools, "according to whether they seem to correspond to reality."[1] He has cited the Wealth of Nations as a key influence:

"I am re-reading The Wealth of Nations again, and for those of you who find economics a puzzle, I can not recommend this book enough. It is clearly written, free of jargon, and just makes excellent sense."[2]

Wealth of Nations - Adam Smith

Identity
References

[1] http://seekingalpha.com/author/cynicus-economicus [2] http://cynicuseconomicus.blogspot.com/2009/03/uk-and-silent-bank-run.html