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Some of the confidence of this article (which one could describe as a remarkably, um, self-confident explanation of basic accounting identities in international

by kapitza 10y ago

Some of the confidence of this article (which one could describe as a remarkably, um, self-confident explanation of basic accounting identities in international trade) seems a little misplaced 20 years later. Especially if you've spent much time in the burned-out areas of America. As an economic doctrine, running a country as if it were a company (in economic terms) has a name. It's called "mercantilism." Adam Smith coined this term to describe, essentially, normal economic policy before Adam Smith. You don't need a time machine to investigate the effects of mercantilist economics, since the entire modern Far East is run on basically mercantilist principles. Just visit Harvard, ride the Amtrak to DC (looking out the windows), then fly to Shanghai. Cost, about $2K. This should give you a good gut feeling for whose econ professors are on the money. On the other hand, Adam Smith sure could turn out a sentence. And so can this guy. Not clear that this is the best way to judge economics professors, however. For a classic text in mercantilist economics, try Friedrich List, _National System of Political Economy_ (1844): https://books.google.com/books?id=4uuc7tdk0Z8C https://books.google.com/books?id=4uuc7tdk0Z8C

arcanus 10y ago
I think you could more directly make your point. > Just visit Harvard, ride the Amtrak to DC (looking out the windows), then fly to Shanghai. Cost, about $2K. This should give you a good gut feeling for whose econ professors are on the money. Are you suggesting the USA has more poverty than China?
umanwizard 10y ago
I've ridden the Amtrak from Boston to NYC and NYC to Philly, and I've been to the Far East three times (including Shanghai). I still have no idea what point you're making. Regardless of what side you're supporting, keep in mind that only a small minority of Chinese people live in Shanghai, and only a small minority of Americans live in the Acela corridor, so we probably can't draw broad conclusions from either.
zhemao 10y ago
Your argument is that mercantilism works better because East Asian nations have better public transportation and railway networks than the US? Last time I checked, GDP per capita and labor productivity in the US greatly exceeds that of China, Taiwan, Japan, SK, or Singapore. The mercantilism vs. capitalism debate Adam Smith was entering into wasn't really about internal economic organization anyway, it was about international trade and economic competition. The old mercantilist idea was that economic competition was a zero sum game, and that above all else the government should try to maintain a favorable balance of trade (export more than you import). Adam Smith's basic argument was that both sides benefit from trade. By following their comparative advantage and then conducting trade with each other, two parties could consume more than they could produce alone. Reading about Friedrich List, some of his ideas do have merit. Protectionism to foster nascent industries has worked well as a development tool. The US used it in the 19th and early 20th centuries and the East Asian nations (except Singapore) used it in the later 20th century. But for that to work, there had to be certain conditions: a weaker currency and lower standard of living. So it works well for countries that have not yet developed, but not so well for countries which have already developed. It also doesn't explain countries like Singapore, which did not develop based on low-grade manufacturing, but instead by embracing its important position on key trade routes and developing its service sector (esp. financial services).
- edblarney 10y ago
  "The mercantilism vs. capitalism debate Adam Smith was entering into wasn't really about internal economic organization anyway, it was about international trade and economic competition. The old mercantilist idea was that economic competition was a zero sum game, and that above all else the government should try to maintain a favorable balance of trade (export more than you import). Adam Smith's basic argument was that both sides benefit from trade." +1 to this, this is a better description of 'Mercantilism'.

by kapitza 10y ago

arcanus 10y ago

I think you could more directly make your point. > Just visit Harvard, ride the Amtrak to DC (looking out the windows), then fly to Shanghai. Cost, about $2K. This should give you a good gut feeling for whose econ professors are on the money. Are you suggesting the USA has more poverty than China?

umanwizard 10y ago

I've ridden the Amtrak from Boston to NYC and NYC to Philly, and I've been to the Far East three times (including Shanghai). I still have no idea what point you're making. Regardless of what side you're supporting, keep in mind that only a small minority of Chinese people live in Shanghai, and only a small minority of Americans live in the Acela corridor, so we probably can't draw broad conclusions from either.

zhemao 10y ago

Your argument is that mercantilism works better because East Asian nations have better public transportation and railway networks than the US? Last time I checked, GDP per capita and labor productivity in the US greatly exceeds that of China, Taiwan, Japan, SK, or Singapore. The mercantilism vs. capitalism debate Adam Smith was entering into wasn't really about internal economic organization anyway, it was about international trade and economic competition. The old mercantilist idea was that economic competition was a zero sum game, and that above all else the government should try to maintain a favorable balance of trade (export more than you import). Adam Smith's basic argument was that both sides benefit from trade. By following their comparative advantage and then conducting trade with each other, two parties could consume more than they could produce alone. Reading about Friedrich List, some of his ideas do have merit. Protectionism to foster nascent industries has worked well as a development tool. The US used it in the 19th and early 20th centuries and the East Asian nations (except Singapore) used it in the later 20th century. But for that to work, there had to be certain conditions: a weaker currency and lower standard of living. So it works well for countries that have not yet developed, but not so well for countries which have already developed. It also doesn't explain countries like Singapore, which did not develop based on low-grade manufacturing, but instead by embracing its important position on key trade routes and developing its service sector (esp. financial services).

edblarney 10y ago
"The mercantilism vs. capitalism debate Adam Smith was entering into wasn't really about internal economic organization anyway, it was about international trade and economic competition. The old mercantilist idea was that economic competition was a zero sum game, and that above all else the government should try to maintain a favorable balance of trade (export more than you import). Adam Smith's basic argument was that both sides benefit from trade." +1 to this, this is a better description of 'Mercantilism'.