3 ms·
Amen to that. In general, I think successful economies should strive to be pretty balanced sector-wise, for two reasons: 1. Like with outsourcing, if you have
by js8 11y ago
Amen to that. In general, I think successful economies should strive to be pretty balanced sector-wise, for two reasons:
1. Like with outsourcing, if you have enough people to be experts in a given thing, it will probably cost you more to outsource than to keep local expertise, due to additional transaction cost (transport, culture barrier, outsourcer profits, corruption..). And nations typically have more than enough people to be experts in some basic economic production infrastructure.
IMHO, it only pays off to outsource high-end stuff, like microprocessors, to other nations. It is also good for a nation to be expert/leader in some area like that. Switzerland is a good example of this.
2. There are network effects when you have mixed economy. How can you produce any good, say, agricultural machinery without agriculture? You may be the best machinist in the world, but without trying it out you don't know what problems you're solving. IMHO, this adds up very quickly. Similar with computing - you cannot solve manufacturing problems without having manufacturing industry in the same place you have the people who know computers.
It may seem that in today's connected world it wouldn't matter, but I doubt it. You need to get people from different fields to know each other, to talk over lunch or beer about problems they have. I think (in the U.S. at least) there is also social stratification issue, which is partly resulting at people poking at startups (sometimes rightfully so) for stupidly catering to middle classes instead of solving real problems.
- clarkmoody 11y ago> successful economies should strive to be pretty balanced The economy is not a thing that can "strive" for anything. Rather, the economy is simply the collection of actions taken by people in the market. Let's ask, why are those economies successful in the first place? > stupidly catering to middle classes instead of solving real problems That's a bit condescending, don't you think?
- js8 11y ago> The economy is not a thing that can "strive" for anything. Of course it can, it's a component of human society, and societies can "strive". > Rather, the economy is simply the collection of actions taken by people in the market. Just like actions of individual humans is "simply" result of actions taken by individual neurons. > Let's ask, why are those economies successful in the first place? Sure - Ha-Joon Chang was already mentioned, and I wholeheartedly recommend his books. From his perspective, "free trade" is just one possible economic strategy, that is useful on a certain level of economic development. > That's a bit condescending, don't you think? Sometimes deservedly so. If I believed in the rationality of the free market, I would be confused by huge valuations of advertising IT companies. Anyway, I am not really judging those people, I was just making remark that they are criticized. In fact, I am (almost) one of them, I work for large SW company that does IT support software for big corporations like banks. I would probably prefer to improve software for manufacturing, but the truth is, it just doesn't pay that well as this.