[HN Gopher] How do poor countries get rich?
___________________________________________________________________
How do poor countries get rich?
Author : barry-cotter
Score : 139 points
Date : 2022-06-26 12:20 UTC (10 hours ago)
(HTM) web link (thegoodblog.substack.com)
(TXT) w3m dump (thegoodblog.substack.com)
| lcall wrote:
| A sufficient fraction of the population who practices honesty and
| the Golden Rule, which go a long way. One thing that helps with
| that is to really believe that we are and will be accountable to
| God, i.e., so that even when no one is watching, doing the honest
| and kind thing matters to oneself and one's own self-respect.
| Without this sufficient fraction of the population, it will be
| very hard to maintain the rule of law anywhere, I think.
|
| Also very important, I think, are literacy and education in
| general, which is more available than ever before (see for
| example other discussion around WGU and BYU Pathway Worldwide,
| like at https://news.ycombinator.com/item?id=31180816 or in
| wikipedia). They are accredited, online, and tuition at least for
| BYU Pathway Worldwide is vastly lower for students in poor
| countries, with support system etc etc, even if one doesn't yet
| know English.
|
| There are just so many opportunities, if we are willing to strive
| to be consistently honest and decent toward each other (...and of
| course, work and plan, as others point out in various ways...).
|
| edit: more at my web site (in profile, simple, skimmable, &
| nothing for sale).
|
| Thoughtful comments appreciated with any downvotes.
| qikInNdOutReply wrote:
| By being at the borders of colliding empire vasall-states, were
| both sides prop up the front-states and use soft-power as much as
| possible. Follow the iron-curtain lines of the blocks in the cold
| war to find countries that got rich that way.
| rob_c wrote:
| Just buy more money
| jleyank wrote:
| Get defeated in war by the us and have them rebuild your country
| for you. Humorously, the mouse than roared. Seriously, Japan and
| the Marshall plan.
|
| The also didn't seem to include "dig something valuable out of
| the ground and sell it" as an option.
| cjmb wrote:
| I hate to plug my own writing here, but if you'd like a much
| deeper exploration of the topic, you'll probably enjoy reading
| The Full Stack of Society: Can You Make A Whole Society
| Wealthier?
|
| https://www.conradbastable.com/essays/the-full-stack-of-soci...
|
| A lot of folks on HN have liked and shared it before so I feel
| like it's okay to share again.
|
| My core thesis is that there's a stack of wealth-building
| strategies:
|
| - Feudalism, aka "take & tax other people's productivity" (this
| is zero-sum)
|
| - Mercantilism, aka "sell someone else's productive outputs into
| someone else's consumption"
|
| - Industrialism, aka "Mercantilism but with production brought
| in-house"
|
| - Globalism, aka "export Industrialism to make your customers
| richer so they can buy more of your products"
|
| - Financialism, aka "centralize and allocate flows of capital
| across time to accelerate any of the other layers in the stack"
|
| In reality, most successful countries combine a couple of these,
| but one tends to be dominant at a time. Most large countries
| today have passed through this stack and are currently in one of
| the final 3 layers.
|
| A handful of small, well-positioned countries are able to run
| unique strategies based around supporting neighbours. I chose not
| to focus on these because they tend to be very specific (e.g.
| Singapore can only be Singapore because it's located in
| Singapore, Ireland needs to be in the EU for its tax arbitrage to
| work, etc.).
|
| I would also +1 to epistasis's suggestion in the top comment --
| How Asia Works is a great book. If you read it, also read Miti
| and the Japanese Miracle. My chapter on Industrialism links to
| those and other related sources.
| simne wrote:
| Not bad. But about financial repression is wrong.
|
| Best example is Russia.
|
| They few decades tried to make all things at home, naming it
| import-substitution ("importozameshchenie").
|
| Really they need this because they want to conquer world, and
| manufacture independence need to withstand sanctions.
|
| And in reality they got extremely criminalized economy, and
| economy slowdown, because it is much easier to falsify documents,
| to claim mostly Chinese produced goods, than to really make own
| production. Same thing practice Ukraine and most other ex-USSR
| countries, with same result.
|
| Second is that regulations vectored to limit access of imported
| goods, inhibit economy, because they limit access of business to
| really need things.
|
| For example, Ukraine have high import taxes for automobiles, to
| support internal auto producers, but in reality, because of this
| limitations, we have prices for same machines, few times higher
| than in neighbor countries, and small business cannot buy
| automobile and lot of business are not opened at all.
|
| These import barriers are so powerful brakes, that even last
| years chain of open market agreements with many countries, does
| not help to grow gdp much, we have grow of potential markets for
| 1000% in 10 years, but gdp grow less than measurement error.
|
| Korea was poor country before economic liberalization, and before
| them jailed president :)
|
| To be strict, none of mentioned methods alone could be driver for
| grow more than for few percents, and to grow faster, need to make
| them ALL good enough, comparable to developed countries of old
| democracies.
| VictorPath wrote:
| In the case of China, the answer would be - fight off the
| Japanese, then fight the US backed KMT, launching speak
| bitterness rallies against large landlords along the way, pour
| troops into North Korea in the 1950s, start a great leap forward
| campaign and then a Cultural Revolution. Then Mao and Zhou Enlai
| make some peace with the US and we carry on until Xi Jinping
| where you have the largest gdp-ppp in the world and the second
| largest nominal gdp in the world. Not in this prescription, and
| of course Deng Xiaoping aligned the economy to the changing world
| situation, but it was a different road, and other countries
| industrialized on this road as well.
| rr808 wrote:
| I like how the internet gives everyone an opportunity to voice
| their opinion. Unfortunately it means every random person can
| write something that sound authoritative even though there is no
| accuracy.
|
| The title is something lots of people are interested in, but then
| the author has lists sources, no evidence and doesn't even write
| a profile about who they are.
| necovek wrote:
| You make it sound as if there's something wrong with that?
|
| As you point out, it's obvious none of the claims are supported
| by evidence, and there is no appeal to authority ("this is who
| I am"), which qualifies this as an opinion, and should be taken
| as such.
|
| Which means that any reasonable person should, before they make
| their own opinion, look for evidence for or contradictions to
| the posted opinion, and use that to make a more informed
| opinion.
|
| Now, the fact that a majority of internet readers are not
| reasonable is where we should be worried, not about someone
| sharing their opinion in a modern day bar.
|
| (Interestingly, the fact that those same people never thought
| to critically look at "official" news on TV/newspapers is a
| symptom of the same problem before the internet.)
| photochemsyn wrote:
| The definition of 'getting rich' in this article seems rather
| vague. Are we talking about the average standard of living of the
| entire population, or the accumulation of wealth by a handful of
| privileged elites? A gross measure like GDP doesn't distinguish
| between the two situations, does it?
|
| The general trend in poor countries with exportable raw materials
| over the 20th century has been this: wealthy and powerful
| countries make deals with small groups of elites to extract those
| resources and ship them to the wealthy countries industrial
| production sectors at relatively low prices, while propping up
| the local tinpot dictators with weapons and cash so they can keep
| control of their populations. Saudi Arabia is one example
| (America being the wealthy patron), Niger is one example
| (France's supply of uranium ore), and that's how the Soviet Union
| operated in the various 'stans of Central Asia as well. The poor
| countries may have 'become rich' but in general, their average
| standard of living remains extremely low relative to the
| industial wealthy powers.
|
| The only way for such countries to raise their overall standard
| of living is to add value to their raw materials domestically by
| building up their manufacturing potential. For example, if they
| have lithium deposits, they should be building factories to
| convert the lithium into batteries, and then sell the batteries
| on the global market. Now they have an industrial center, which
| brings in revenue, and they have begin to have a well-paid
| professional sector, medical and legal experts, a higher standard
| of living and so on.
|
| At least until their brilliant financial gurus realize they can
| increase their personal wealth 50-fold by shipping the entire
| industrial sector to some Third World hellhole and wrecking the
| whole system, like Wall Street did to the Rust Belt in the United
| States.
| aetherson wrote:
| In practice, when GDP rises significantly, average standard of
| living rises as well. Saudi Arabia's GDP per capita is $20k.
| Niger's GDP per capita is $565. I think that Niger and Saudi
| Arabia's living standards are about on par with other countries
| for those per-capita GDPs.
| hunglee2 wrote:
| East Asia is the only region which was certainly 'poor' but now
| can be described as somewhat 'rich', and they are all more or
| less followed the same pattern:
|
| - low wage, high volume, light industry for export - lower wage,
| high volume, heavy industry - multi-decade protectionism to raise
| global competitive domestic champions - no democracy, if you can
| help it to ensure political stability to execute multi-decade
| strategy
|
| Idiosyncratic caveats:
|
| - Japan got its boost particularly by becoming the arms
| manufacturer for the US in the Korean War
|
| - Singapore / Hong Kong also had financial liberalisation /
| international money laundering for the Brits
|
| - Korea / Taiwan / Hong Kong also had shipping
|
| China has followed clearly the same trend (note the irrelevance
| of the political system, main thing is to avoid democratic
| instability), simply becoming more massive than any before
| because it is inherently massive, and has therefore even greater
| economies of scale to leverage.
| machinekob wrote:
| East/Central Europe (post commie)?
| mc32 wrote:
| Germany has helped push development there (as has the US to a
| lesser degree) by investing in manufacturing and taking
| advantage of their labor force(s). Modernizing existing
| factories helped.
| machinekob wrote:
| Im more about "East Asia is the only region which was
| certainly 'poor' but now can be described as somewhat
| 'rich',"
| mc32 wrote:
| Romania and other parts of south Eastern Europe were
| quite poor.
| machinekob wrote:
| Yes thats why im showing post commie east europe as
| example of countires that was poor and are "rich" today
| hunglee2 wrote:
| I believe there was a long period (decade) of economic
| depression, entry into the EU then opened up a huge new
| market for former Warsaw Pact countries. It is worth noting
| that East / Central Europe economic development remains very
| uneven - Romania, Bulgaria both pretty much economic basket
| cases
| machinekob wrote:
| You are wrong for example Poland GDP per capita growth 6x
| Czech 3x Hungary 2x before they join EU and after commie
| ended (90-93) etc etc. https://data.worldbank.org/indicator
| /NY.GDP.PCAP.CD?location...
| hunglee2 wrote:
| happy to be corrected, that's for doing so
| wrzuteczka wrote:
| Exactly, that's one of the most overlooked parts of the
| Earth, but if you consider the GDP growth rate over the last
| 30 years, Poland is second only to China.
| beaconstudios wrote:
| It's called a developmental state:
|
| https://en.m.wikipedia.org/wiki/Developmental_state
| mc32 wrote:
| Brazil tried local protected manufacturing --Mexico tried to be
| the lower cost manufacturer for NorthAm and SouthAm and they
| had some success but ultimately were beaten by Chinese labor.
| China had the advantage of both being a MFG base and also a
| market opportunity. Their labor force in their EEZs were also
| better educated.
| hunglee2 wrote:
| I have read that Brazil's main problem is geography - major
| population centres are the coast, and separated from each
| other by difficult-to-pass terrain. Part of what Bolsonaro is
| trying to do is solve this, through sacrificing the Amazon
| marcosdumay wrote:
| Well, you shoul get better sources.
|
| Brazil does have logistical problems, but your
| characterization of them is completelly off. And, by the
| way, the Amazon isn't logistically "on the way" for
| anything. The parts that aren't in reach from some quite
| large ports do not host many people or economical activity.
| hunglee2 wrote:
| indeed I should, I was commenting off-the-cuff, thank you
| for the admonishment!
| sophiabraxas wrote:
| This doesn't make any sense, sorry. The Amazon is very,
| very far away from the Brazilian coast.
| hunglee2 wrote:
| I accept my ignorance
| darthrupert wrote:
| Finland was pretty poor before and after the war, and was
| burdened by war reparations.
| hunglee2 wrote:
| I would be very interested to know of Finland's economic
| progress. I suspect the end of the Cold War was a delta,
| though this is just my intuition. Would love to be educated
| on this!
| jltsiren wrote:
| Finland was part of Sweden until Napoleonic wars. At that
| time, the Enlightenment was a fashionable topic among
| European monarchs. Instead of annexing Finland, Alexander I
| of Russia set it up as an autonomous grand duchy, as a test
| case for more modern forms of government. Finland gained a
| political identity and kept Swedish institutions instead of
| adopting Russian ones.
|
| Economic growth started in the mid 19th century.
| Industrialization began, the old guild system was
| abolished, and there were fancy new things such as public
| education, own currency, and railroads. When Finland gained
| independence during WW1, it was largely a formality. There
| was still a bloody civil war, and Finns didn't really start
| working together until WW2.
|
| When WW2 ended, Finland was still largely rural. There were
| war reparations to be paid and refugees from lost
| territories to resettle. While Finland had leaned towards
| Germany until then, it was no longer possible, and Sweden
| became the new role model. Finland focused on heavy
| industry and technology. People started moving to cities
| (and to Sweden). Because Finland was a special case as the
| favorite capitalist country of the Soviet block, trade with
| the USSR became lucrative. The economy was mostly free but
| not fully open, and the occasional devaluation of the
| currency was a key financial tool. By the 1980s, Finland
| had become a wealthy country.
|
| The end of the Cold War was a catastrophe. Trade with the
| USSR/Russia collapsed. Business leaders didn't know how to
| operate in an open market. The government didn't know how
| to deal with that. The result was probably the worst
| depression in Finnish history. Other political choices of
| the time (such as joining the EU) were better. The next
| center-left/center-right coalition made some good choices,
| as did Nokia. After 2000, Finland started regularly
| appearing near the top of various "top countries by [a good
| thing]" lists.
| pjscott wrote:
| That was fascinating. Does anyone have recommendations
| for something that goes into more detail? Finland seems
| to have had different enough circumstances that it can be
| a useful test case for grand theories of economic
| development based on looking at e.g. Asia.
| MomoXenosaga wrote:
| All the rich countries in Europe were once poor.
|
| As an answer to the question: stable, somewhat competent and
| non corrupt government.
|
| Good luck with that.
| xvilka wrote:
| Well, state of the public infrastructure and transportation is
| top notch in China nowadays. Traveling from big cities in China
| to big cities in US is like going to the third world country.
| Thus, the "developed" country is a mirage, it only applicable
| to certain aspects of life or economy, while as a whole doesn't
| hold.
| refurb wrote:
| Some huge number of Chinese (50%?) are still in the
| countryside scraping by as farmers on a few hundred dollars a
| month.
| andi999 wrote:
| Malaysia and Thailand are also not poor anymore.
| slothtrop wrote:
| Not nearly on the level of the 4 Asian Tigers however
| andi999 wrote:
| Yes, but this was not asked for, isnt it. (especially since
| china was mentioned)
| wyclif wrote:
| Maybe not "poor" in the literal sense of the word, and
| certainly much less than they used to be, but also not really
| fully developed countries comparable to the Western nations.
| andi999 wrote:
| Define western nations. Looking at the hdi (and
| experience), I think both countries qualify (of course they
| dont top it) .
| https://en.m.wikipedia.org/wiki/Human_Development_Index
| fulafel wrote:
| Click saver: on https://en.m.wikipedia.org/wiki/List_of_c
| ountries_by_Human_D... has Thailand on 79th place between
| Peru and Armenia. Malaysia is on place 62 between Costa
| Rica and Kuwait. The list is 189 entries long so both of
| these countries are still in the upper half, but there
| aren't western countries nearby, unless east european
| countries like Albania and Bulgaria count.
| macco wrote:
| China is not a rich country by G7 standards.
| https://en.wikipedia.org/wiki/G20
|
| Their growth is mainly triggered by rolling back the horrendous
| policies of the Great Leap Forward.
| hunglee2 wrote:
| quite right, China continues to consider itself a developing
| nation, so this is my categorisation. Trajectory is there
| though
| thematrixturtle wrote:
| I've worked and traveled in many developing countries, and the
| key seems to be to get to the point where you have a self-
| perpetuating middle class: there have to be enough people with
| disposable income that they can start a virtuous cycle where
| _their_ spending pulls other people out of poverty. And this is
| most easily (if that 's the word) done by creating factory jobs
| that both pay better than farming and reward the entrepreneurial.
| This happened in China, in Singapore, in Korea, in Japan, in
| Thailand, and thanks to the BPO industry it's starting to happen
| in the Philippines and India as well. Alas, it's manifestly
| failing to happen in Africa.
|
| As it happens, I'm typing this in a mid-tier Vietnamese city of
| some fame as a beach resort. Coming out the War of American
| Aggression (as they call it here), Vietnam had a hardline
| Communist government and sub-Saharan Africa levels of poverty,
| with most people earning a dollar a day or less, but in the 1980s
| they finally started experimenting with capitalism. When I first
| visited this city in the early 2000s, there were a few hotels,
| but they catered almost exclusively to adventurous foreigners.
|
| In 2022, the equation has been flipped completely on its head:
| the beach is packed side to side with highrises that could easily
| be in Miami or the Gold Coast, and 99% of the visitors here are
| now locals. This applies even at the top-end places like the
| Western chain hotel I'm staying at, which is completely booked
| out, and the expensive seafood restaurants: the one I ate at
| tonight was doing a roaring trade in imported Alaskan king crabs
| selling for hundreds of US dollars each. And for every hi-so
| there's 10 or 100 regular folks on company-sponsored getaways and
| the like, and behind every domestic tourist there's the local
| low-cost airline with its air crew and ground staff, the Grab
| (Uber) driver, the tour guide, the IT guy sorting out the hotel's
| networking, etc etc.
| t43562 wrote:
| I'm from sub-Saharan Africa and FWIW I agree. The middle class
| represents a threat to power of the elite which continually
| tries to disempower it with the help of the jealousy of the
| "not middle class".
|
| So in countries where the middle class is under constant attack
| via corrupt use of their taxes, such as my home, economic
| development cannot really happen. Everyone is living hand to
| mouth and not able to take risks or invest.
| menshiki wrote:
| I am not sure how accurate is the first paragraph. There is a
| strong notion in Confucianist countries that promotes saving
| majority of your income. People in China, Taiwan, and Singapore
| often tend to send save 70% of their income. The same can be
| said about migrants from those nations that moved to the
| western countries. At the same time, in the US and Western
| Europe is one decides to save 50% of their income it is
| considered exceptionally high.
| thematrixturtle wrote:
| The actual savings rate in Singapore is around 40%, and
| Confucianist countries also have a strong notion of "face",
| including conspicuous consumption to keep up appearances. But
| feel free to visit any Singaporean shopping mall or
| restaurant: it's locals who are doing the vast majority of
| the spending.
| menshiki wrote:
| I've spent years in Taipei and I have definitely observed
| the phenomenon you're describing. However, from my
| experience, it's mostly the ultra rich/upper class people
| that occupy the department stores on weekends.
| hapiri wrote:
| The saving habits was mainly of the post-WW2 generations that
| have to follow a prudent life style to survive. Highly doubt
| that Confucius has anything to do with this.
| pessimizer wrote:
| > There is a strong notion in Confucianist countries that
| promotes saving majority of your income.
|
| Rather than ancient Chinese philosophy, this mindset was
| probably more driven by
| https://en.wikipedia.org/wiki/1997_Asian_financial_crisis
| bannedbybros wrote:
| [deleted]
| m00dy wrote:
| This article is interesting but it really needs proof-reading.
| There are some missing parts, poorly structured parts that are
| hard to understand. Would be great to read the corrected version
| epistasis wrote:
| For people interests in this topic, I really recommend the book
| How Asia Works by Joe Studwell. It focuses mostly on a subset of
| Asia that has great economic success in the 20th century, and
| only looks at a few contrasting countries to show perhaps why
| they didn't work as well.
|
| The book's theory is that success starts by first focusing on
| productivity of agricultural land, to maximize output, not
| profit. To accomplish that, you need lots of farmers who are
| motivated to maximize output, which means land distribution so
| that farmers are working for themselves, rather than as laborers
| where the landowner takes all. Once there is a broad base of
| farmers, and the country has food sovereignty, limited import
| funds can't be drained away just to make sure everyone is fed.
| And once there's a broad farming base, that is accumulating
| savings, that means that 1) banks can start making loans for the
| beginning of industry, and 2) there's a strong farmer consumer
| base that can be customers of this early industry.
|
| Countries like Japan, Taiwan, and South Korea that practiced land
| reform to wrench land away from idle landlords and distribute it
| widely, have had this success. And countries that feigned it,
| like the Philippines, have struggled in comparison.
|
| Land really is different from capital, there's a finite amount of
| it, whereas more capital can always be made. Redistributing
| hoarded land should be a primary function of government, or at
| least a government that wants to grow the economy, rather than
| grow wealth inequality.
| zenon wrote:
| A in-depth review/summary of the book:
| https://astralcodexten.substack.com/p/book-review-how-asia-w...
| Apocryphon wrote:
| Here's a good account of how land reform was undertaken in
| Taiwan:
|
| Taiwan and the "Land to the Tiller" Program by John C. Medaille
|
| https://cooperative-individualism.org/medaille-john_taiwan-a...
| ismail wrote:
| > Countries like Japan, Taiwan, and South Korea that practiced
| land reform to wrench land away from idle landlords and
| distribute it widely, have had this success.
|
| This is an interesting view. how did they avoid being punished
| for this?
|
| Zimbabwe tried redistributing farms but it turned out horribly
| for them.
|
| Would be interested In understanding how Zimbabwe attempt was
| different to these countries.
|
| Here in South Africa land reforms is a politically charged
| issue. Due to apartheid we have a deeply unequal society, where
| productive farm land is concentrated in primarily in a few
| hands. Split along racial lines.
|
| I recall meeting some labourers on a farm here in the western
| cape. They worked on a farm that had been "claimed" by
| colonisers who arrived in the 1800's, and then handed down in
| families.
|
| Where as this labourer ancestors has been in that area for
| generations before the colonisers got there.
| imtringued wrote:
| >Zimbabwe tried redistributing farms but it turned out
| horribly for them.
|
| It actually didn't. It tries to buy out land but then noticed
| that it ran out of money. After that they hired thugs to get
| white farmers off their farms. They didn't give the new black
| farmers any method of financing their business which led to
| failed farms. Finally they gave the land to political allies
| who don't farm at all.
|
| A simple land value tax would have prevented this nonsense.
| mgh2 wrote:
| [1] Japan https://news.ycombinator.com/item?id=31881381
|
| [2] Korea https://news.ycombinator.com/item?id=31881497
| slothtrop wrote:
| I also recommend this book review -
| https://astralcodexten.substack.com/p/book-review-how-asia-w...
|
| Brings up the point that some countries with similar land
| reforms (e.g. Mexico) didn't achieve the same result, but
| generally casts a favorable view of the book.
| [deleted]
| Animats wrote:
| _I really recommend the book How Asia Works by Joe Studwell._
|
| Yes. That's a good book.
|
| It's not "land reform", though. It's agricultural
| modernization. Farming needed to be mechanized to free up labor
| for manufacturing. The "Asian tigers" had far too many people
| tied up inefficiently growing rice. Then they could start
| exporting.
|
| Most poor countries are past that point now, though. Today's
| poor countries have too many people in cities. And everybody
| can't be a net exporter.
| lern_too_spel wrote:
| The biggest impediment to growth is idle wealth. Wealth tied up
| in art is not doing anything and should be taxed arbitrarily
| high at inheritance. The same with slumlords' properties. Taxes
| on productive income can then be reduced by the same amount to
| encourage growth.
| car_analogy wrote:
| > Wealth tied up in art is not doing anything
|
| Wealth* that is not doing anything has no effect on the
| economy. Suppose I had $100 trillion in cash (or art, or
| other useless commodity) in a vault somewhere, and never
| spend a dime of it. How is it impeding the economy? If I
| didn't tell you about it, you wouldn't even know it existed.
|
| It's only when I start _spending_ it, to redirect labor per
| my wishes, that I start affecting the economy. If I spend it
| all on yachts, that will cause a lot of labor and materials
| to go to yachts that won 't contribute anything to the
| economy once built, instead of going to something more
| productive.
|
| *Using "wealth" to mean fiat money, or art, or anything that
| has no productive use. E.g. if the wealth was instead in the
| form of idle farmland, that would be used to grow food if
| owned by someone else, then yes, that would be impeding the
| economy. So one must distinguish between wealth with inherent
| value, and wealth that only has value because people are
| willing to pay for it.
| imtringued wrote:
| >If I spend it all on yachts, that will cause a lot of
| labor and materials to go to yachts that won't contribute
| anything to the economy once built, instead of going to
| something more productivity
|
| Actually that would result in a manufacturing industry. The
| problem is that if you wanted to buy a Yacht in say south
| Africa you wouldn't manufacture it in South Africa despite
| the mass unemployment problem.
| hansel_der wrote:
| > If I didn't tell you about it, you wouldn't even know it
| existed
|
| but it does exist and is "missing" from the economy (i.e.
| other peoples pockets)
| car_analogy wrote:
| If you add a zero to the end of every bill in
| circulation, there will be 10x more money, but people
| won't be any better off.
| makomk wrote:
| Not really. There is not some fixed amount of money in
| existence and certainly not some fixed amount of wealth.
| Governments and banks create money as necessary to
| facilitate the actual economy in producing actual stuff,
| and as for wealth, well... When the price that some
| artist's works trade at goes up, such that the value of
| the ones sitting in some billionaire's vault is now
| higher, that extra wealth clearly doesn't come from
| anywhere at all. It simply springs into existence from
| nowhere, and will spring out of existence just as easily
| if private ownership of art becomes effectively
| impossible. What is a limiting factor in the real
| economy's ability to make people better off is its
| capacity to produce actual goods and services for them to
| buy, and that capacity is not used in any way by wealth
| sitting around doing nothing.
| imtringued wrote:
| >There is not some fixed amount of money in existence
|
| No, but people constantly shout "money printing" when the
| money supply goes up even though it could be as a result
| of people producing more physical capital.
|
| Imagine producing more physical capital and being told
| you don't deserve liquidity in proportion to the
| capital/value you produced. That is the problem with a
| fixed supply currency system like the gold standard.
|
| Why is it a problem to keep the money supply fixed?
| Imagine a theoretical economy where 100% of the money is
| in the hand of a single person. Even though the rest of
| the economy is able to produce and barter, it would be
| far more efficient to use liquidity i.e money to
| facilitate the division of labor. That one guy with all
| the money is effectively blocking the public
| infrastructure we call money. Transactions that ought to
| happen don't happen. Money doesn't fulfill its function
| as a medium of exchange. Therefore it is only appropriate
| to tax people in proportion to the damage they cause to
| the economy by excessive patience and holding excessive
| amounts of liquidity. It like an illegal parking fee
| intended to keep the streets free.
| zozbot234 wrote:
| There's a fallacy here. The bottom-line economic effect of
| having a lot of "wealth tied up in art" is incenting the
| preservation and/or creation of highly valued art. You can't
| even meaningfully take that wealth away in the aggregate,
| because it's pure paper wealth; it's a side effect of how
| much we happen to value some objects.
|
| Slumlord properties have the same theoretical problem as
| land, in that concentrated ownership can act as an incentive
| towards bad management; there's not much economy of scale
| when it comes to managing rental properties, so policy should
| incent dispersed ownership instead.
| vkou wrote:
| Not when the price of art never reaches it's creator, and
| only goes stratospheric through speculation and back-and-
| forth trades long after his death.
|
| You can't be incentivised to create art when you will never
| realize that incentive. And unlike music record labels,
| it's not like you are giving someone else your earnings in
| exchange for editing and technical help and marketing.
|
| Art was a bad example, though, since it's mostly just used
| as a tax dodge. The real problem is rent seeking.
| epistasis wrote:
| I'm not sure I agree with this. There's two key parts to
| wealth: producing enough stuff to make life easy for people,
| and distributing that to many many people tether than
| hoarding it for a few.
|
| The amount of production is not impacted much by how how many
| bushels of wheat, or days of labor of the average worker, we
| value the Mona Lisa. Art can be wealth, but not all wealth is
| a factor of production. Labor, land, capital are all factors
| of production that influence how much stuff is made.
|
| Making sure that everybody has enough to survive, enough to
| thrive, and enough to be creative and innovate or achieve
| what they want should be the goal. Distribution not only of
| wealth, but perhaps as importantly, distribution of
| responsibility and authority so that people can make the best
| possible decisions for themselves. Redistributing away from
| the accumulation of power/wealth into too few hands is very
| important for that.
| missedthecue wrote:
| I really need you to explain to me what "tied up" means. If I
| buy a $100 million dollar piece of art, that $100m doesn't
| disappear into the ether, it goes to the person who sold me
| the piece, who can then spend that on whatever they want.
| wronglyprepaid wrote:
| Can you cite anything to back your claim here? Why is idle
| wealth more of an impediment than policies that discourage
| investment? What does idle wealth even mean, how do you
| measure it? Why would anyone with wealth want it to sit idle?
| bombcar wrote:
| An no matter how many times you sell the Mona Lisa to pay
| the Mona Lisa tax, it still wouldn't drop in value. So all
| art would have to be owned by the government or non-
| profits, which can easily be abused by the rich to hold
| "their" art tax-free.
| [deleted]
| car_analogy wrote:
| > Countries like Japan, Taiwan, and South Korea that practiced
| land reform to wrench land away from idle landlords and
| distribute it widely, have had this success.
|
| Land reform was one element. The other, despite the article's
| unqualified praise of "open up your economy to foreign
| investment and trade", is trade restrictions and various forms
| of state meddling to support local industries. I don't need to
| point out how difficult China makes it for foreign firms to
| operate in their local market. Per James Galbraith:
|
| " ... none of the world's most successful trading regions,
| including Japan, Korea, Taiwan, and now mainland China, reached
| their current status by adopting neoliberal trading rules." -
| https://en.wikipedia.org/wiki/Comparative_advantage#Criticis...
| ETH_start wrote:
| >>The other, despite the article's unqualified praise of
| "open up your economy to foreign investment and trade", is
| trade restrictions and various forms of state meddling to
| support local industries
|
| A couple counter-arguments to that:
|
| According to Milton Friedman, after Japan was forced by
| Western powers to remove trade restrictions and drastically
| lower tariffs in the late 1800s, it prospered, contrary to
| what the mercantilist theories of the time predicted:
|
| https://youtu.be/CWgNe8v6KFc?t=322
|
| Also, there is much evidence dispelling the mythologized
| account of MITI's role in the expansion of the Japanese
| economy specifically:
|
| https://www.econlib.org/library/Enc1/JapanandtheMythofMITI.h.
| ..
|
| The article notes much more foundational properties of the
| 50s/60s Japanese economy, like a smaller portion of private
| sector output being taxed to support the public sector, as
| more likely causes of its growth:
|
| >>"The fact that the tax burden is unusually low by the
| standards of other developed countries may alone be a
| significant factor in the explanation of the high rate of
| private saving and investment in Japan." From 1951 to 1970,
| while Japan's real GNP was growing at an average of 9 percent
| per year, total national and local taxes (excluding social
| security) fell from 22.4 percent of national income to 18.9
| percent. This left more money for people to save and invest.
| Compare Japan's situation with the United States, where the
| proportion rose from 28.5 percent to 31.3 percent.
| Interestingly, Japan's two decades of greatest postwar growth
| were also its decades of lowest taxes. During the seventies,
| as Japan's taxes rose to 22.8 percent of national income in
| 1980, real GNP growth declined to only 4.8 percent. Higher
| taxes weren't the only reason for this deteriorating
| performance, of course; oil price increases also contributed.
|
| This graph demonstrates how much lower social welfare
| spending used to be in Japan:
|
| https://ourworldindata.org/grapher/social-spending-oecd-
| long...
| simonh wrote:
| I see it differently. They didn't go all-in on neoliberal
| trading rules from day one, and that was probably largely
| sensible, but the end objective should be and basically still
| is transitioning to neoliberal trading systems.
|
| I'm no absolutist, each country has to balance a whole host
| of local conditions and needs. They also need to build a
| consensus. However the fact is they liberalised trade and
| investment, and that's what brought success. There were
| preconditions to being able to do that, but it's still a
| fact.
| car_analogy wrote:
| I would argue that they only liberalized international
| trade and investment _after_ they attained success, i.e.
| their local industries became mature enough to compete
| internationally.
|
| But I suspect we agree - different trade policies are
| needed for different stages of development. Fledgling
| industries need protection, while mature industries want to
| expand into foreign markets.
|
| Where conflict arises is when mature industries want to
| expand into developing markets, crushing any local
| competition. Sometimes this is mutually beneficial (not
| every country can have leading edge semiconductor fabs),
| other times it is not (nobody needs McDonald's to feed
| their country), but those industries will still lobby for
| trade deals for market access, and use neoliberal trade
| theory to justify it as mutually beneficial.
| simonh wrote:
| I don't think that's true, because industrialising takes
| capital, a lot of it. If all these countries tried
| developing using indigenous rural sources of capital it
| would take generations. But foreigners aren't going to
| invest capital if they don't get rights and guarantees,
| and that means at least some level of liberalisation.
| Ekaros wrote:
| I'm not sure McDonald's is worst possible option. As long
| as it is allowed to operate with local franchises and
| production. Maybe some part of supply chain can be
| imported, but mostly it should be locally produced. Thus
| allow some rent seeking, but also build up local economy.
| MomoXenosaga wrote:
| The smart idea is to adopt neo-liberal free trade AFTER you
| have made sure your local business people can stand the
| competition.
| frostwarrior wrote:
| And how can that be done?
|
| Sometimes you simply can't compete with another country
| with really devalued currency and very low wages
| epistasis wrote:
| The book I recommend at the top gets into that in parts
| two and three. For example, "export discipline"
| Psyladine wrote:
| The same way oil-scarce regions don't compete against
| oil-rich ones. Geography is destiny, and nations
| specialize in industry for a reason, beyond the
| universals (food, education, justice and social welfare).
| zozbot234 wrote:
| The well-known problem with "state meddling to support local
| industries" is that, as a rule, that kind of policy tends to
| support the most parasitic and least socially beneficial
| industry sectors (because they don't have much of an
| alternative to lobbying for more government meddling), not
| those with the best potential for success.
| ohgodplsno wrote:
| Saying this while China has adopted a posture of letting
| the state control which industries to grow before opening
| it up to competition, soon becoming the wealthiest country
| in the world kind of reveals your bias for known-to-not-
| work solutions.
| epistasis wrote:
| Exactly, the successful Asian nations had very clever
| techniques for this. One, was to provide subsidy/tax
| breaks/trade protections only to those firms that could
| compete on the global market. This means that firms have to
| find success through actual productivity and output, rather
| than through rent seeking.
|
| So it isn't so much "as a rule" as "as a rule when the
| government has been refulatorily captured."
|
| In fact I think you will find that most industries that are
| built only happen through lots of government
| "interference." Silicon Valley is an excellent example of
| this, as the early customers were all defense industry
| largesse. And without those extremely rich customers with
| very extreme technological needs, development of Silicon
| Valley would have stalled, or perhaps not happened at all.
| zozbot234 wrote:
| The government is always "captured" by _some_ interests.
| The meaningful question is what could incent governments
| to pick the most widely beneficial policies. Trade policy
| is one of those sectors where it seems especially easy to
| make socially bad choices, so being extra careful can
| make sense.
| car_analogy wrote:
| I'm not sure I buy your logic (why would a less beneficial
| industry be better at lobbying?), but even so, is it a
| worse problem than economic colonialism, where no local
| owned firms can flourish, because the market is saturated
| by foreign goods by more advanced firms, and the only
| economic opportunities are working _for_ those firms?
|
| The examples of those successful Asian countries implies
| that the tradeoff is well worth it.
| zozbot234 wrote:
| > The examples of those successful Asian countries
| implies that the tradeoff is well worth it.
|
| And the examples of many, many countries which used
| "industrial policy" to implement awful ideas like import
| substitution (i.e. "developing" towards autarchy, not
| increased trade openness and market discipline) can imply
| the opposite.
| car_analogy wrote:
| Of course the state meddling can be done wrong. But
| unrestricted free trade advocates claim that is _cannot_
| be done right - that simply opening up markets is always
| preferable. That there are _zero_ examples of poor
| countries that became successful economies following this
| path, and numerous examples of various forms of
| protectionism resulting in prosperity, should be a clue
| to which strategy is better.
| zozbot234 wrote:
| > But unrestricted free trade advocates claim that is
| cannot be done right
|
| I'm not sure that this is correct, the theoretical
| argument for supporting infant industries is quite old
| and well known by now. The main remaining question is an
| empirical one, of whether you think that industrial
| policy as it's actually practiced in the real world is
| generally worthwhile. Those who advocate against
| government meddling argue that it mostly isn't.
| imtringued wrote:
| What people who are against immigration, especially
| "economic" migration don't understand that the companies
| that provide goods in the migrants origin country are in
| the destination country. If you are in El Salvador and
| you are buying American trucks, those trucks are
| manufactured in the US,if you have nothing to export in
| El Salvador, you have to go where the employer is and
| that means migration. It is especially absurd in Germany
| because exporting and never importing means a constant
| outflow of funds out of e.g. Greece which also means a
| constant flow of immigrants to Germany.
| legolas2412 wrote:
| I don't understand. Do you mean Americans are immigrating
| to China, given the trade imbalance?
|
| Why does exporting come with the expectation of providing
| employment to countries who could not build competent
| industries. I am not anti-immigration, I am an immigrant
| myself, just trying to understand your argument.
|
| I think economic immigration has nothing to do with trade
| imbalance, and all to do with quality of life. As an
| example, India may be exporting more to Greece, but there
| are many Indians who would rather live in Greece, and
| none in the other direction.
| onlyrealcuzzo wrote:
| This is a really interesting take.
|
| Although more capital, in theory, can just easily be made - if
| the incentives are not in place - it appears to have the same
| problems as getting past the agricultural stage.
|
| So it seems like a parallel to me why advanced economies might
| stagnate.
| epistasis wrote:
| This is addressed in later parts of the book, and I really
| only focused on the first part in my comment.
|
| How to keep capital 1) maximally productive, rather than rent
| seeking, and 2) keep capital from fleeing, are all about what
| incentive structures the government sets up. And for every
| single industrial country, government policy has been key to
| growing infant industries into functional, independent, adult
| economies.
|
| At every stage of economic development, the rules seem to
| change for of which policies enable or maximize economic
| growth. (I fear the US is starting to flub it now, but they
| may still save themselves!!)
| tynpeddler wrote:
| Really excellent point. Transitioning to a capitalist system is
| extremely difficult because other economic and political
| systems almost always have much more extreme imbalances in the
| distribution of money and power (especially if the situation is
| bad enough to warrant a large change) and introducing a
| capitalist system lets those folks simply perpetuate uneven
| wealth/power distributions and in many cases make things worse.
| The US got around this problem by having huge amounts of land
| to give away in the west (after conquering it from the Indians
| of course), and I think Britain kind of got around this problem
| by creating a system that let their productive merchant class
| amass large amounts of wealth and partially displace the
| inefficient aristocracy. France had a rough go of it and had to
| have multiple revolutions to clear out their nobles and Germany
| had to lose a few world wars to level things out a bit.
| tsss wrote:
| The wealth inequality in the US is now higher than at the
| time of the French revolution, so I find this assertion to be
| highly questionable.
| missedthecue wrote:
| India has a lot of farmers running their own plot of land, but
| they aren't very high on the list of agriculturally efficient
| farming. The average farmer is only doing 1.2 hectares where in
| the USA the average farm size is hundreds of times greater and
| far more efficient.
|
| I think it would be economically better, though politically
| impossible, if India experienced a great deal of farmland
| consolidation. How is a guy that only farms 1.2 hectares
| supposed to increase his income? Buy a farm truck or tractor?
| Increase efficiency? He's stuck doing everything by hand and
| making $1000 a year.
| epistasis wrote:
| High farm output from land distribution is only the start,
| and only works for the first decade or so of development. The
| books later parts describe what works for industrial
| development, and to some degree what does not. I think India
| fits in very well with the ideas portrayed in How Asia Works.
| fractalb wrote:
| > The average farmer is only doing 1.2 hectares where in the
| USA the average farm size is hundreds of times greater and
| far more efficient.
|
| Sure, there might be some truth to the statement that an
| average US farmer is more efficient than an Indian farmer.
| But, the reason that an average India farmer is only doing
| 1.2 hectares compared to the US farmers is not that Indian
| farmers are inefficient at farming, it's just that there are
| at least two orders of magnitude more farmers in India (and
| that's their livelihood) compared to the US.
|
| edit:formatting
| missedthecue wrote:
| There used to be a lot more american farmers too before
| farmland consolidation.
| sudosysgen wrote:
| Sure, but that only happened because the US had enough
| capital to put to work all the farmers gainfully.
| fellellor wrote:
| One of the reasons for small land holdings in India are
| succession laws in Independent India. The entire holding
| doesn't go to the eldest male/child, rather it's often
| divided among siblings. The division leads to all kinds of
| violence and shrinking holdings over generations.
|
| Also the most profitable farms aren't the largest ones,
| which are often dedicated to growing common grain like
| wheat and rice, and sugarcane. These crops would be bought
| by the government at prefixed prices. And the assured
| income again leads to a lot of fighting and influence
| mongering, and ironically much smaller takes for the
| average competing farmer.
|
| Quite unexpectedly, the highest profits are made by farmers
| who manage to get smart financing and grow niche crops like
| fruits, some vegetables, flowers, organic, cash crops etc.
| The highes profits in India are always made by people who
| carefully avoid government and activist attention,
| assistance, benevolence, interference.
| zozbot234 wrote:
| _How Asia Works_ was reviewed on SSC as part of an ongoing
| review contest: https://astralcodexten.substack.com/p/book-
| review-how-asia-w...
| SenHeng wrote:
| Another reason for China, Japan and Korea has got to be the
| intense focus on education, and the belief that education has
| (financial) value.
|
| Singapore showcases this very well. The ethnic Chinese and the
| Indians are very much focused on pursuing education for their
| children, even back in the early colonial days and that has led
| to great success for that portion of the population. The Malays
| however, have a more idyllic bent in their cultural preferences
| and that has led to a more impoverished life overall in their
| population.
|
| Maybe it's because the early Chinese and Indians were imported
| by the British and brought with them the stereotypical
| immigrant work ethic while the Malays were indigenous and
| didn't have the same kind of drive.
| curiousgal wrote:
| Well Tunisia has been focused on education as well and that
| hasn't led them anywhere.
|
| Without a solid economy you just end up with like 30%
| unemployment rate where a large percentage of those
| unemployed hold higher degrees (masters and PhDs).
| devonkim wrote:
| Tunisia's natural resources and trade position on the
| global stage is not very clear and also matters because
| countries that also focus upon education that have whatever
| natural resources also include Iceland where many people
| emigrate from and it's a big local issue there. I'm
| certainly ignorant to Tunisia' problems nor strengths and
| am interested in understanding how to best tap into
| educated persons wherever they are in the world given
| they're such a valuable resource regardless of country of
| origin. Countries like Korea and Japan have partly
| benefited from the West's fears of communism with extra
| resources and diplomatic attention to serve as a set of
| buffer countries against the USSR while it didn't do as
| well in former Soviet countries for reasons I have zero
| understanding of. To deny that the US and NATO countries
| have tried to manipulate these buffer countries is pretty
| much a denial of reality BTW and something worth analyzing
| compared to other countries with similar socioeconomic
| conditions during the Cold War period.
| csomar wrote:
| In my opinion, Tunisia's problem is cultural. I see the
| recent mass-immigration of sub-Saharan as potentially
| significant to let Tunisia lose its culture and identity;
| and finally break from it toward a liberalized economy
| and order.
| csomar wrote:
| Huh, I disagree. As someone from Tunisia, the early focus
| on education has led a considerable number of people to
| become wealthy (me included). I still remember the days
| (early childhood) where I was helping my father farming and
| selling food on the street. That life is quite different
| from where I am today. I attribute this to the solid
| education I had early on and the particular culture where I
| grew up (mid-coast).
|
| I don't think education alone is enough for the path to
| richness in a nation. Tunisia is still stuck with an
| inability to re-innovate and free its economy, and resolve
| its corruption issues. I don't think centralized government
| is the answer either (neither is industry as some comments
| suggested; Tunisia could have jumped directly from an
| agricultural to an information economy, but so many things
| went wrong).
|
| Maybe it's the Mediterranean? There is hardly any
| Mediterranean country that had economic success in that
| same time-frame.
| throwaway2056 wrote:
| Language, network effects and political affiliations allow
| for slightly easier visa access beneficial for Asians to
| work across Middle East, EU, USA.
| csomar wrote:
| Language: Tunisians speak fluent French.
|
| Network effects: Tunisia is quite close to Europe.
|
| Visa Access: It's limited but still
| https://en.wikipedia.org/wiki/Tunisian_diaspora vs
| https://en.wikipedia.org/wiki/Overseas_Chinese. Relative
| to population size, Tunisians moved more overseas.
| 3a2d29 wrote:
| Really interesting perspective here, wanted to add. I am an
| engineer now, but studied developmental economics very briefly
| and there are lot of really interesting theories out there.
|
| This "land distribution" point reminds me of a paper they
| claimed Spain fell behind other colonial powers like England
| and France because the resource they exploited was precious
| metals that allowed a few to get rich, but didn't allow a
| middle class to grow.
|
| Make me think of whether big tech does the same thing (if they
| can find a way to automate enough they can hire few people and
| few engineers)
| dasil003 wrote:
| I've thought a lot about this as big tech has grown over the
| past twenty years. I don't think it's quite as bad as
| precious metals because tech does have utility. But the low
| marginal costs and rapid global distribution trend towards
| winner-take-all results.
| edgyquant wrote:
| But it's also creating a large population of upper middle
| class/upper class individuals who will then invest their
| capital. So I still don't see it being as bad as a gold
| rush.
| chrischen wrote:
| But the inverse of that is a bit ridiculous: don't automate
| the things so you can create busy work for more people. It
| sounds even more ridiculous if you phrase it as make and keep
| people alive just to do busy (fake) work.
| epistasis wrote:
| Right, p -> q does not imply q -> p, and does not imply !p
| -> !q,yet too often when it comes to economics, that sort
| of fallacy underlies key arguments on selling policy to the
| populace.
| tnzk wrote:
| The point was, at such a developmental stage, large portion
| of population wouldn't be capable of automating stuff, so
| keeping people busy and alive would be better than starve
| them with nothing to do.
| chrischen wrote:
| That's exactly how and why progress is halted. People
| yell "think of the jobs" and prevent new advances in
| automation or technology that would actually save lives
| or better lives, just for the sake of protecting the
| incumbent industries.
| quacked wrote:
| I couldn't agree with you more. I don't think this principle
| ceases to be true once a country gets rich, either--the more
| fundamental goods the people produce themselves with a focus on
| maximizing output (food, weapons, textiles, fuel, medicines)
| the better off the country will be, especially if the people
| own the land they work on.
|
| In many western countries each of these industries has
| undergone massive monopolization, which in my opinion has
| driven not only wealth inequality but _knowledge_ inequality--
| there are now many millions of people who couldn 't actually
| set "the system" up if the oversight vanished because they
| don't have any real ownership of its components.
| frostwarrior wrote:
| We should ask also how do countries get rich amd also stay
| democratic and free. Saudi Arabia may be rich but that doesn't
| mean it's a great place to live
| thematrixturtle wrote:
| It's questionable whether Saudi Arabia can really be described
| as "rich". The country has a great deal of income equality
| (there are beggars on the streets of Riyadh), foreign workers
| who are paid a pittance do virtually all of the work, and the
| economy including a huge chunk government make-work for locals
| is mostly a mirage propped up by oil prices.
| frostwarrior wrote:
| That's the problem, people usually talk about a rich country
| as synonymous to a good quality of life for the average man.
| And often it isn't
|
| A rich country is a country with money and capital. It
| doesn't mean that the country is a good place to live
| sidibe wrote:
| > there are beggars on the streets of Riyadh
|
| I have no idea how rich Saudi Arabia actually is but where
| are there no beggars?
| imtringued wrote:
| Begging is illegal in Singapore.
| arminiusreturns wrote:
| When the economic hitmen come to the country with IMF
| conditionalities they accept them then trickle down all the money
| thats leftover. If you really want a nation rich they should
| nationalize their products but thats usually when its time for
| "democracy" and you get coup'ed, so for the greater good, just do
| what the economic hitman says. Unfortunately only the corrupt
| elite get rich. Maybe they industrialize and create a middle
| class despite the corruption, which does the most to increase a
| nations wealth.
| thriftwy wrote:
| IMF is not a develoment fund. It may help you get your balance
| meet if you already have runaway debt problem. If you don't, it
| will not come knocking.
| standardUser wrote:
| Is this propaganda? Most developing nations that have reached
| "first world" status, or close to it, did so via aggressive
| industrial policy, the thing that the already-wealthy Western
| world deterred developing nations from embracing for many decades
| (when they could) in favor of the "free trade" model the Bretton
| Woods institutions were designed to force on developing nations.
| This article doesn't even seem to acknowledge industrial policy,
| and instead harps exclusively on Western perspectives.
| sillystuff wrote:
| Yes, the US for instance was protectionist, once it had a
| domestic industry. And, earlier in its industrial development,
| it also stole IP from England[1]. It seems to be the way things
| are done. The only thing moderating US protectionism, in those
| early years, was the large agricultural exporting economy of
| the South.
|
| The other bit is that over a quarter of the worlds population
| are currently under US sanctions. With much of the world acting
| in lockstep so as to stay in the good graces of the US[2].
|
| Looking at what Cuba has accomplished just in its biotech
| industry while under crippling sanctions (for 60 years) makes
| me think they could really flourish without the sanctions[3].
|
| My argument is that it is necessary to end sanctions for a
| county to flourish, but it is not sufficient. For instance,
| ending sanctions and returning seized funds will not make a
| country like Afghanistan into a rich country (it may prevent an
| estimated 1M children from dying of starvation due to US
| sanctions, though[4]).
|
| [1] https://news.sky.com/story/cyber-is-changing-war-but-its-
| pea...
|
| [2] https://en.wikipedia.org/wiki/United_States_sanctions
|
| [3] https://www.ineteconomics.org/perspectives/blog/how-cuba-
| bec...
|
| [4]
| https://www.ft.com/content/b038dec2-a49d-46d5-b187-3dd7216a2...
| macco wrote:
| Why should it be propaganda?
|
| Your claim that all countries got rich via aggressive
| industrial policy doesn't make sense to me.
|
| What was this policy in the US? What was this policy in Western
| Germany after WW II?
|
| Their main strategy was to allow creative destruction, through
| strong institutions. The most important probably the rule of
| law.
| cma wrote:
| Sounds like the US used the loose IP protection model we
| complain about with China:
|
| https://www.wikipedia.org/wiki/Samuel_Slater
|
| > Samuel Slater (June 9, 1768 - April 21, 1835) was an early
| English-American industrialist known as the "Father of the
| American Industrial Revolution" (a phrase coined by Andrew
| Jackson) and the "Father of the American Factory System". In
| the UK, he was called "Slater the Traitor"[2] and "Sam the
| Slate" because he brought British textile technology to the
| United States, modifying it for American use. He stole the
| textile factory machinery designs as an apprentice to a
| pioneer in the British industry before migrating to the
| United States at the age of 21.
| sudosysgen wrote:
| The US in the early 19th century was already a rich country.
| In fact, the US was a rich country from before it was even a
| country.
|
| West Germany after WW2 did have strong industrial policy, and
| up to now it's one of the European states with the strongest
| industrial policies.
| vinceguidry wrote:
| The article backs its theories up with historical examples.
| You're attacking it for seemingly not being interested in your
| pet theory.
| ohgodplsno wrote:
| Propaganda doesn't mean lies. I can make propaganda saying
| that the only way to get rich is to have an industry based on
| the export of wheat, and I can find historical examples of
| that. Just because you can provide examples doesn't mean your
| theory is right, and the whole article basically reeks of
| "woo western good stupid asians not letting their whole
| economy commit suicide" while ignoring the thousands of
| factors that go into it. One of the markers for economical
| success is often lack of involvement of the US. See the
| Philippines where the US backed Marcos as a dictator, with
| this sack of shit Reagan granting him asylum after being
| kicked out of the country.
| vkou wrote:
| There's no shortage of historical examples to support his
| position, and it's not a weird fringe theory.
| thematrixturtle wrote:
| The article talks about that at the end:
|
| _The East Asian development model adds to export oriented
| manufacturing financial repression and land reform. Financial
| repression in this context is the state controlling people's
| savings and through a combination of law and incentives,
| increasing the amount that's invested in domestic manufacturing
| firms. Key tools of this are capital controls, which prevent
| capital from leaving the country to get higher returns
| internationally, political influence over bank lending, and
| currency devaluation which in addition providing advantages to
| exports reduces consumption and increases savings._
| anovikov wrote:
| What i never understood about it is where the "higher returns
| internationally" would come from. How can returns in a
| country where the capital is sorely lacking - and many
| businesses can be opened and operate in a virtually
| competition-free environment, are not created for not having
| money to start up - be lower than in developed nations that
| already have everything imaginable?
| acover wrote:
| There are benefits to colocation. The inputs to your
| business may already exist and are cheaper in a rich city
| than in a poor city.
|
| You'll see this where everyday shelf stable goods are more
| expensive in developing nations than in the usa.
| calvinmorrison wrote:
| higher growth potential. You can double gdp by having
| people make $2 a day more
| FredPret wrote:
| You are right about the lack of competition in the third
| world. But there are sometimes structural and legal factors
| that make it harder to make money there; lawsuits,
| arguments, edge cases, and general agreement on how things
| should work that the West figured out long ago. You can't
| invest lots of money with confidence until these things
| have stabilized.
|
| The other thing is that the economy is like an ecosystem -
| the richer it gets, the more nooks and crannies open up
| that can host thriving systems. That's how a complex, rich
| economy can keep growing exponentially. Human needs are not
| limited - there's always a way to improve life for someone.
| imtringued wrote:
| You have to adjust returns by risk. The risk adjusted
| return of dollars and euros is much higher than the risk
| adjusted return in pretty much every African country. It
| only takes repossession, nationalisation policy or civil
| unrest and your investment is gone.
| marcosdumay wrote:
| "Strong industrial policy" comes in many forms. The onw that
| conflicts with free trade tend to create low added value, high
| capital intensive "also run" companies that benefit no one.
|
| High tech industry requires both a policy that allows them and
| access to the international market, for both buying and
| selling.
| epistasis wrote:
| If you read further, other potential models are mentioned.
|
| I would agree that the "liberalization" theory has been fairly
| well disproven, and is nearly laughable. But the post is not
| propaganda, as it mentions competing ideas that IMHO are much
| better.
| lambdasquirrel wrote:
| Either propaganda or inability to get outside of one's own
| bubble?
|
| I don't think it was a coincidence that all of the Asian
| countries had strong central governments with commitments to
| long-term planning, at the times of their ascension. Even
| today, they send hordes of students to American engineering
| universities, as if the aggressive industrial policy never
| ended. At CMU, there were roughly as many Singaporean, Thai,
| Taiwanese, and Korean students (i.e. each of them) as there
| were students from the Midwest, in the engineering program I
| was in. And they were much much better prepared for the
| material than 9 out of 10 of the American students. From them,
| I gathered a picture of societies that had strong policies
| designed to build out the kind of economy that poor countries
| would love to have. Liberal, it was not.
| mouzogu wrote:
| Geography also plays a large part. Hard to progress when you're
| dependent on bordering countries for access to resources.
|
| A coastline, access to ports and, regular and reliable rainfall,
| moderate climate with little danger of natural disasters all
| helps.
| lizardactivist wrote:
| Unfortunately, it first depends on whether the IMF, really the
| U.S. and to some extent the EU, are willing to allow it.
| yunohn wrote:
| This is the only correct answer. Everything else is textbook
| speculation.
|
| As long as we have modern colonialism and unbalanced currency
| valuations, the poor will stay poor.
|
| Eg - The irony of mentioning poverty traps, when all Western
| countries still have massive poor classes that experience them
| is lost on the author and audience.
| dirtyid wrote:
| TLDR is start with strong authoritarian state capacity and
| violently bring order to social fabric and build
| industrial/extractive base while ingratiating powerful hegemons /
| neighbours, or certainly not piss them off. Ultimately, those
| with wealth and power get to pick winners and losers. Nascent
| democracies tend to be developmental death sentences - can't
| coordinate. It will likely involve extreme state violence.
|
| Less viable Asian Tiger export driven route:
|
| -Be authoritarian.
|
| -Establish domestic serenity via state violence.
|
| -Have maritime access.
|
| -Be geopolitically strategic to US interests at heigh of
| hegemony.
|
| -Align as satraps and be subsidized by US.
|
| -Create export driven industrial policy to climb up value chain.
|
| -Educate population
|
| Still viable extractive state route.
|
| -Be authoritarian.
|
| -Establish domestic serenity via state violence.
|
| -Have maritime access.
|
| -Have resources.
|
| -Don't be sanctioned by US.
|
| To get to upper income fast:
|
| -Helps to have small population.
|
| -Have access to cheap migrant labour.
|
| Historically, start with:
|
| -Be authoritarian.
|
| -Establish domestic serenity via state violence.
|
| -Have access to cheap slave labour.
| refurb wrote:
| Rather than "be authoritarian", you could just say "provide
| stable political environment", which would include
| authoritarian.
| Eddy_Viscosity2 wrote:
| Has there ever been an example of a country becoming rich that
| didn't involve some sort of systemic oppression and exploitation
| of some group of people (whether within their own country or in
| another)?
| pjscott wrote:
| Can you think of any country, rich or poor, that doesn't have
| something like that in its history?
| febeling wrote:
| To me, this question has been answered long ago by the book The
| mystery of Capital (2000) by Hernando de Soto.
|
| The conclusion is, that the administrative and judicial system
| needs to work for the poor, too; and there needs to be a process
| that is somewhat practical to go from black/ gray economy to
| fully legal status.
|
| He and team did historical research how that process was very
| similar in all countries now rich; and showed by experiment that
| same process is a rich privilege, or extremely costly and
| inefficient for everyone else (often due to hesitation to
| overturn nominal property rights in conflict with factual
| reality). The experimental study was done in a number of
| countries in the so called developing world, Egypt, Peru,
| Malaysia among them iirc, covering quite distinct cultural
| backgrounds, and consisted in following real life cases (over
| many years).
| lazyjones wrote:
| Capital always flows to regions where it's not subjected to high
| taxation and where it's reasonably safe from political turmoil.
| And without plenty of capital, the only way developing nations
| can get rich is by exploiting resources or using forced labour.
| hbarka wrote:
| A poor to rich country should be measured by how quickly they can
| build high-speed rail networks and their capacity to turn raw
| input into finished goods. In addition, rich to poor decline
| should be measured in how quickly the opposite is occurring in
| terms of decline or inability to improve public works, education,
| and manufacturing.
| throwaway4220 wrote:
| As feedback - lots of incomplete sentences. I had to stop reading
| it was driving me nuts
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