8 ms·

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

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.

thematrixturtle 4y ago
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 4y ago
  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?
  - calvinmorrison 4y ago
    higher growth potential. You can double gdp by having people make $2 a day more
  - FredPret 4y ago
    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.
  - acover 4y ago
    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.
  - imtringued 4y ago
    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.
  - barry-cotter 4y ago
    Poor institutions. Low trust. Absence of rule of law. Corruption. Enormous cultural mismatches. Atrocious or nonexistent infrastructure. Insane difficulties hiring competent staff. Investing in poor countries is really hard.
lambdasquirrel 4y ago
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.
vinceguidry 4y ago
The article backs its theories up with historical examples. You're attacking it for seemingly not being interested in your pet theory.
- vkou 4y ago
  There's no shortage of historical examples to support his position, and it's not a weird fringe theory.
- ohgodplsno 4y ago
  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.
marcosdumay 4y ago
"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.
macco 4y ago
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 4y ago
  Sounds like the US used the loose IP protection model we complain about with China: https://www.wikipedia.org/wiki/Samuel_Slater 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 4y ago
  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.
- rayiner 4y ago
  > What was this policy in the US? See: https://en.wikipedia.org/wiki/American_System_(economic_plan) https://en.wikipedia.org/wiki/American_System_(economic_plan...
epistasis 4y ago
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.
sillystuff 4y ago
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-peace-we-should-worry-about-11615783 https://news.sky.com/story/cyber-is-changing-war-but-its-pea... [2] https://en.wikipedia.org/wiki/United_States_sanctions https://en.wikipedia.org/wiki/United_States_sanctions [3] https://www.ineteconomics.org/perspectives/blog/how-cuba-became-a-biopharma-juggernaut https://www.ineteconomics.org/perspectives/blog/how-cuba-bec... [4] https://www.ft.com/content/b038dec2-a49d-46d5-b187-3dd7216a2931 https://www.ft.com/content/b038dec2-a49d-46d5-b187-3dd7216a2...

thematrixturtle 4y ago

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 4y ago
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?
- calvinmorrison 4y ago
  higher growth potential. You can double gdp by having people make $2 a day more
- FredPret 4y ago
  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.
- acover 4y ago
  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.
- imtringued 4y ago
  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.
- barry-cotter 4y ago
  Poor institutions. Low trust. Absence of rule of law. Corruption. Enormous cultural mismatches. Atrocious or nonexistent infrastructure. Insane difficulties hiring competent staff. Investing in poor countries is really hard.

lambdasquirrel 4y ago

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.

vinceguidry 4y ago

The article backs its theories up with historical examples. You're attacking it for seemingly not being interested in your pet theory.

vkou 4y ago
There's no shortage of historical examples to support his position, and it's not a weird fringe theory.
ohgodplsno 4y ago
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.

marcosdumay 4y ago

"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.

macco 4y ago

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 4y ago
Sounds like the US used the loose IP protection model we complain about with China: https://www.wikipedia.org/wiki/Samuel_Slater 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 4y ago
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.
rayiner 4y ago
> What was this policy in the US? See: https://en.wikipedia.org/wiki/American_System_(economic_plan) https://en.wikipedia.org/wiki/American_System_(economic_plan...

epistasis 4y ago

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.

sillystuff 4y ago

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-peace-we-should-worry-about-11615783 https://news.sky.com/story/cyber-is-changing-war-but-its-pea... [2] https://en.wikipedia.org/wiki/United_States_sanctions https://en.wikipedia.org/wiki/United_States_sanctions [3] https://www.ineteconomics.org/perspectives/blog/how-cuba-became-a-biopharma-juggernaut https://www.ineteconomics.org/perspectives/blog/how-cuba-bec... [4] https://www.ft.com/content/b038dec2-a49d-46d5-b187-3dd7216a2931 https://www.ft.com/content/b038dec2-a49d-46d5-b187-3dd7216a2...