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Okay, it seems that what I'm trying to explain is difficult for you to understand. Let me change this a bit. Imagine you are made president of a 3rd world coun

Okay, it seems that what I'm trying to explain is difficult for you to understand. Let me change this a bit. Imagine you are made president of a 3rd world country which has not yet industrialized. You are now tasked with making this country actually rich. Where would you put the government money in? If you say you would equally create service and manufacturing industries, then your country would collapse quickly. The correct thing to do is to create goods that can be exported, or that have some use within the country itself. The other industries always develop themselves, because they are a sort of grease for the core industries. Allocation of time and money is not done by bankers. It's done by managers and owners, the bankers just approve or disapprove loans.

deleted 18y ago
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tptacek 18y ago
A free-market economy without banks will have an awfully hard time starting new enterprises; pooling savings and investing in businesses is the purpose of a bank. Managers and owners can't allocate time and money without capital.
Tichy 18y ago
I think bankers have to decide if a loan is promising or not. If you want a loan to start a business that is doomed, they should say no. Without money, the managers can't do anything. I don't want to defend all bankers, but I think it could be a service like other services. Your 3rd world example also falls short. I wouldn't create a "planned" economy, but go for demand. Actually a lot of 3rd world countries fare reasonably well with tourism, which is maybe more service than production? India also exports services - it is possible, so I think the generalization "products over services" fails. Both are necessary.
light3 18y ago
If you discard the important finance decisions to do with not only the allocation of resources, but also protecting your country from outside financial 'wars' then you could be creating so much value but not able to retain that value, just look what happened during the Asian financial crisis.

deleted 18y ago

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tptacek 18y ago

A free-market economy without banks will have an awfully hard time starting new enterprises; pooling savings and investing in businesses is the purpose of a bank. Managers and owners can't allocate time and money without capital.

Tichy 18y ago

I think bankers have to decide if a loan is promising or not. If you want a loan to start a business that is doomed, they should say no. Without money, the managers can't do anything. I don't want to defend all bankers, but I think it could be a service like other services. Your 3rd world example also falls short. I wouldn't create a "planned" economy, but go for demand. Actually a lot of 3rd world countries fare reasonably well with tourism, which is maybe more service than production? India also exports services - it is possible, so I think the generalization "products over services" fails. Both are necessary.

light3 18y ago

If you discard the important finance decisions to do with not only the allocation of resources, but also protecting your country from outside financial 'wars' then you could be creating so much value but not able to retain that value, just look what happened during the Asian financial crisis.