tag:blogger.com,1999:blog-3239599.post110544949342104793..comments2024-03-08T05:28:34.766-05:00Comments on Through the Looking Glass: Unknownnoreply@blogger.comBlogger9125tag:blogger.com,1999:blog-3239599.post-78397653388801331192008-04-24T20:52:00.000-04:002008-04-24T20:52:00.000-04:00a good article that strikes directly at the heart ...a good article that strikes directly at the heart of everything that's wrong with the washington consensus. trade barriers are an absolute pre-requisite for industrialization, period, end of story. <BR/><BR/>and the economists who preach the opposite are not stupid, they know exactly what they're doing. the goal is not to help poor countries industrialize, it is to *prevent* them from industrializing and make sure that they continue to specialize in the extractive industries - including oil drilling - that are necessary top fuel the existing industrialized economies.<BR/><BR/>it's sharecropping, on a global scale, and the IMF is the new company store. simple as that.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3239599.post-1171071160116864522007-02-09T20:32:00.000-05:002007-02-09T20:32:00.000-05:00"Of course this doesn't mean Nebraska has remained..."Of course this doesn't mean Nebraska has remained dirt poor. Through education and and investment in farm capital Nebraska farmers have grown to become amoung the most productive in the world and while Nebraskans aren't the richest people in America they are certainly rich by world standards."<BR/><BR/>While Nebraska didn't industrialize, highly productive agriculture was important for the industrialization of the country as a whole. This is an essential point that economists tend to miss. Subsistance farming means most of the manpower is tied up in producing its own food, and so little is left over for other productive endeavors. One reason Africa has remained so poor is that there has not been a revolution in agriculure such as occured in England in the 17th and 18th centuries, and Asia with the Green Revolution. This is partly because the crops are different and foreign aid and government policies have mistakenly emphasized big industrial projects. <BR/><BR/>In addition, African agriculture has been crippled by agricultural trade barriers in the developed countries.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3239599.post-1141360714239485952006-03-02T23:38:00.000-05:002006-03-02T23:38:00.000-05:00It's not that the point of comparative advantage i...It's not that the point of comparative advantage is to keep wages low. Comparative advantage just describes what will happen under certain conditions. There are cases in which it will actually keep wages high --- as in America in the '50s, when it probably was the case that the country's comparative advantage was in high wage industries, and so opening trade pushed low-wage jobs overseas. But those were unusual conditions; my point here is that in other cases, which may be more common in other parts of the world right now, the exact same theory may predict very different effects.charleshttps://www.blogger.com/profile/10359125688523895375noreply@blogger.comtag:blogger.com,1999:blog-3239599.post-1141258738018915062006-03-01T19:18:00.000-05:002006-03-01T19:18:00.000-05:00I am very interested in a user-friendly version of...I am very interested in a user-friendly version of your comment that the _point_ of these comparative advantage theories was to keep wages low.<BR/><BR/>Manufacturing and Agriculture certainly do something different to the mentality than extraction. <BR/><BR/>A lot of the extractors (e.g. Haroldson Lafayette Hunt) have become very religious people. What other force can one (simpleminded) person possibly attribute to their good fortune? Why did they strike oil, and not another? God intended this. This is the way. Bow, now.JoshSNhttps://www.blogger.com/profile/08034864979736555692noreply@blogger.comtag:blogger.com,1999:blog-3239599.post-1140535578027453392006-02-21T10:26:00.000-05:002006-02-21T10:26:00.000-05:00"If a country's comparative advantage is in dirt f..."If a country's comparative advantage is in dirt farming, how can it still industrialize under unrestricted free trade?"<BR/><BR/>This is a good question. Now unfortunately it's very hard to answer as there have never been any countries that have operated under unrestricted free trade. However we are fortunate in having the example of Nebraska which can serve as a proxy for such a country as it appears to have a comparitive advantage in dirt farming and has had free trade with other American states since its creation. <BR/><BR/>Nebraska appears to show that countries with an advantage in dirt farming don't industrialize. Sure there is some industry but it is mostly light and revolves around agricultural machinery and food processing. Compared to many other U.S. states Nebraska has very little industry. <BR/><BR/>Of course this doesn't mean Nebraska has remained dirt poor. Through education and and investment in farm capital Nebraska farmers have grown to become amoung the most productive in the world and while Nebraskans aren't the richest people in America they are certainly rich by world standards.Ronald Brakhttps://www.blogger.com/profile/06303527805739321316noreply@blogger.comtag:blogger.com,1999:blog-3239599.post-1131513338749594232005-11-09T00:15:00.000-05:002005-11-09T00:15:00.000-05:00Comparative advantage, while real, must be conside...Comparative advantage, while real, must be considered (a) over the long term and (b) in historical perspective. <BR/><BR/>It must be recognized that every modern industrialized nation had, at some point in it's development, stiff trade barriers. Often these were the result of favored groups pressing for protection against imported good, but just as often served to shelter flegling domestic industries. Industry in the US benefitted greatly from the trade barriers erected as a result of the War of 1812. Sans that, it is questionable how rapidly the industrial revolution would have reached our shores.<BR/><BR/>The first point is a tad tricky, but I think more important. The micro-example of "comparative advantage" involves a lawyer and his secretary. The lawyer is a faster typist, but makes more money speaking to clients, etc... It is to both their advantages to to work in their respective specialties. Up to a point. For the secretary to increase his salary beyond a certain point he needs to improve his marketable skills beyond typing, an act which requires a debt-financed investment in training. The same holds true for countries.<BR/><BR/>Most non-industrial nations can see the comparative advantage trap for what it is, a few try to act accordingly. The problem with oil is that it is (a) so proffitable and (b) so crucial to far more powerful neighbors that it exerts a poli-social-econ pressure of it's own. It takes a great deal of vision, and even more guts, to move beyond that and act against so powerful a short-term interest.<BR/><BR/>The the House of Saud for example. The tacit agreement between them and their subjects is essentially buying governance: we use the oil money to pay for everything and you don't ask too many questions. This little farce is being played out to greater or lesser degrees of success in most of the oil-exporting countries. Many of these countries are in a trap, and their leaders respond accordingly by packing away billions overseas in case they have to airdale it out like the Shah. In these cases corruption (a correlate of normal industrialization) is an effect of the economic conditions, not the cause.<BR/><BR/>Any 18th century mercantilist could have spelled it out: a colony is a state which exports raw materials and imports finished goods. The history of these exchanges is instructive.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3239599.post-1128202059188334712005-10-01T17:27:00.000-04:002005-10-01T17:27:00.000-04:00This comment has been removed by a blog administrator.Mikehttps://www.blogger.com/profile/12127313333390937533noreply@blogger.comtag:blogger.com,1999:blog-3239599.post-1124992378223048142005-08-25T13:52:00.000-04:002005-08-25T13:52:00.000-04:00There's a corollary available, regarding the conse...There's a corollary available, regarding the consensus Washington advice on accepting foreign investment. Massive foreign investment is recommended as a way to further industrialization. The consequence, when the investment has to be repaid in a recession, is an equally massive currency crisis, a la Argentina. East Asian countries, like Japan, industrialized on the back of very high domestic savings rates and highly restricted foreign investment.Bruce Wilderhttps://www.blogger.com/profile/09631065564839959376noreply@blogger.comtag:blogger.com,1999:blog-3239599.post-1118471122337535052005-06-11T02:25:00.000-04:002005-06-11T02:25:00.000-04:00The puzzle with oil is not that it drives out othe...The puzzle with oil is not that it drives out other traded goods (as you say, a standard application of comparative advantage) but that it seems to make countries worse off, probably because of corruption.Anonymousnoreply@blogger.com