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The same is true of China, the US, and Germany. The idea that developing countries can get rich through free trade is a myth [1]. Developing countries that embr

by dnomad 8y ago

The same is true of China, the US, and Germany. The idea that developing countries can get rich through free trade is a myth [1]. Developing countries that embraced free trade (see Africa, South America) largely remain poor today while countries that embraced protectionism (see Asia) are much wealthier. The basic fact here is that industrial societies need to be bootstrapped by a strong, active government (who can defend native industries and provide financing in the form of fiat currency) and rampant copying by those native industries (who have no legacy investments and can jump straight to best-of-breed practices and the latest technologies). None of this is a new idea: it was all laid out by Friedrich List almost 200 years ago. Unfortunately the basic idea, despite the mountains of empirical evidence, fell to the onslaught of "free trade" propaganda. What's interesting is that the same basic dynamic likely applies to even highly developed economics. The tariffs are likely just the beginning. We will see even Western countries abandon "free trade" and strong, active states taking firm control of the economy in order to drive growth. The key words that will define the economic future will be "political economy." [1] https://www.nytimes.com/2018/02/07/magazine/the-rise-of-china-and-the-fall-of-the-free-trade-myth.html https://www.nytimes.com/2018/02/07/magazine/the-rise-of-chin...

whb07 8y ago
I’ve got no clue what this has to do here, but all that article shows is that The NY Times is doing a swell job in providing substance free material and a love for the almighty state. The author of that article is this fella [0]. While I do not doubt his writing abilities, I do doubt his expertise in economics and his political motivations. Simply put, I do not show up at X field and pretend to know things just because I think I’m smart, even if I don’t have anything to do with said field. It’s interesting how with economics everyone thinks they can do just as much. If you would like a basic intro to free markets checkout Milton Friedman’s Free To Choose series on YouTube. It’s from the 80s but well worth the time investment. It’s an easy to understand documentary series and at the end he talks to a group of people about the subject shown. [0] https://en.m.wikipedia.org/wiki/Pankaj_Mishra https://en.m.wikipedia.org/wiki/Pankaj_Mishra
Symmetry 8y ago
I don't think it's right to say that enforcing copyrights is an aspect of free trade. In practice many countries don't want free trade unless their copyrights get enforced and so copyright ends up getting rolled into free trade agreements but you could say the same with health and safety standards in products. I also think of government support for industry as orthogonal to free trade. Yes, countries have certainly sped up their development through the use of tariffs. By transferring money from consumers to people accumulating capital they increased the effective savings rate of the country and increase growth. But you can also literally just tax consumers and pass the money on to industrialists in the form of cheap loans like the Japanese did in their development. They didn't go off the gold standard until the Great Depression but I'm sure you could industrialize through fiat currency too though no cases come immediately to mind. I'm not entirely happy telling current poor countries "Suffer now so your grandchildren can be rich" even it that's what my ancestors did for me. And I'm certainly not going to advocate the sort of violent labor movement suppression that seems to have always gone hand in hand with rapid industrialization[1]. I suspect that a lot of truths about the world are going to change as AI develops over the next half century so I feel like I shouldn't be advocating sacrifices I'm not sure will pay off. [1]https://pseudoerasmus.com/2017/10/02/ijd/ https://pseudoerasmus.com/2017/10/02/ijd/
xadhominemx 8y ago
Your point about developing economies is true, but this: >What's interesting is that the same basic dynamic likely applies to even highly developed economics. is not
tormeh 8y ago
>Developing countries that embraced free trade (see Africa, South America) largely remain poor today while countries that embraced protectionism (see Asia) are much wealthier The assumption that South America and Africa are pro free trade is not true. Indeed, most of the countries with the highest tariffs are in Africa. https://www.tutor2u.net/economics/blog/which-countries-have-the-lowest-import-tariffs https://www.tutor2u.net/economics/blog/which-countries-have-...
profalseidol 8y ago
"political economy" Marx used this a lot 200 years ago.

by dnomad 8y ago

whb07 8y ago

I’ve got no clue what this has to do here, but all that article shows is that The NY Times is doing a swell job in providing substance free material and a love for the almighty state. The author of that article is this fella [0]. While I do not doubt his writing abilities, I do doubt his expertise in economics and his political motivations. Simply put, I do not show up at X field and pretend to know things just because I think I’m smart, even if I don’t have anything to do with said field. It’s interesting how with economics everyone thinks they can do just as much. If you would like a basic intro to free markets checkout Milton Friedman’s Free To Choose series on YouTube. It’s from the 80s but well worth the time investment. It’s an easy to understand documentary series and at the end he talks to a group of people about the subject shown. [0] https://en.m.wikipedia.org/wiki/Pankaj_Mishra https://en.m.wikipedia.org/wiki/Pankaj_Mishra

Symmetry 8y ago

I don't think it's right to say that enforcing copyrights is an aspect of free trade. In practice many countries don't want free trade unless their copyrights get enforced and so copyright ends up getting rolled into free trade agreements but you could say the same with health and safety standards in products. I also think of government support for industry as orthogonal to free trade. Yes, countries have certainly sped up their development through the use of tariffs. By transferring money from consumers to people accumulating capital they increased the effective savings rate of the country and increase growth. But you can also literally just tax consumers and pass the money on to industrialists in the form of cheap loans like the Japanese did in their development. They didn't go off the gold standard until the Great Depression but I'm sure you could industrialize through fiat currency too though no cases come immediately to mind. I'm not entirely happy telling current poor countries "Suffer now so your grandchildren can be rich" even it that's what my ancestors did for me. And I'm certainly not going to advocate the sort of violent labor movement suppression that seems to have always gone hand in hand with rapid industrialization[1]. I suspect that a lot of truths about the world are going to change as AI develops over the next half century so I feel like I shouldn't be advocating sacrifices I'm not sure will pay off. [1]https://pseudoerasmus.com/2017/10/02/ijd/ https://pseudoerasmus.com/2017/10/02/ijd/

xadhominemx 8y ago

Your point about developing economies is true, but this: >What's interesting is that the same basic dynamic likely applies to even highly developed economics. is not

tormeh 8y ago

>Developing countries that embraced free trade (see Africa, South America) largely remain poor today while countries that embraced protectionism (see Asia) are much wealthier The assumption that South America and Africa are pro free trade is not true. Indeed, most of the countries with the highest tariffs are in Africa. https://www.tutor2u.net/economics/blog/which-countries-have-the-lowest-import-tariffs https://www.tutor2u.net/economics/blog/which-countries-have-...

profalseidol 8y ago

"political economy" Marx used this a lot 200 years ago.