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Is the Industrial Path to Economic Success for Poor Nations Dying?

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A worker cuts a steel rod inside a steel factory on the outskirts of Jammu January 12, 2015. REUTERS/Mukesh Gupta/Files
A worker cuts a steel rod inside a steel factory on the outskirts of Jammu January 12, 2015. REUTERS/Mukesh Gupta/Files

I strongly urge you to read this Raymond Zhong article on how the expected to path to national economic success–and the moral justification for supporters of race to the bottom globalization–of industrialization is rapidly closing for the world’s poor nations. There are several issues at play. First is automation. There just isn’t the need for as many workers if corporations can employ robots. Second is that the extreme nature of modern capital mobility means that nations increasingly can’t have long-term industrial expansion that builds a middle class and absorbs their growing population of workers. It’s too many nations fighting for scraps. Third is that so much of what does exist around labor-intensive industrialization is captured by China that with a combination of low wages, preexisting capital investment, and authoritarian government is appealing to rich world companies.

Deindustrialization is a well-known phenomena in the United States. But what you may not know that it is already happening in Latin American nations like Mexico, long before the promised creation of a middle-class through industrialization takes place.

If industrialization is not a path to wealth for poorer nations, what does that leave them? Not much. Some argue the service industry is a path to economic stability but that’s ridiculous given the low wages of the service industry. We can see the problems with the service economy in the United States, a nation that still has a sizable number of well-off people. If it doesn’t work here, how is it going to work in Bangladesh and Ethiopia and Nigeria? Of course who this situation benefits is corporations who can already play off countries against one another in the race to the bottom. If every country is desperate for the scraps of global capitalism, it’s grim for the world’s poor indeed.

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  • Lost Left Coaster

    What’s left is resource extraction. I’m thinking specifically of Bolivia and how the Evo Morales administration has built Bolivia’s economic future on making more money off of resource extraction by transnational corporations by renegotiating royalty rates to favor the state and calling it “nationalization.” The Bolivian economy is growing faster than ever, with more investment in poverty reduction and rural areas than before, but it is all dependent on natural gas prices, and at this point they are planning to drill for oil and gas in national parks, displacing indigenous peoples from their lands, and accelerating deforestation in the name of decolonization.

    • Well, there’s certainly a long history of leftist belief in modernization through natural resource exploitation, especially in Latin America. So this isn’t surprising. But even if this is the future (and I don’t know that it is broadly), it hardly helps nations with relatively few natural resources like Bangladesh or Cambodia.

      • J. Otto Pohl

        It doesn’t help countries with resources to extract either if that extraction doesn’t get reinvested into other sectors like happened in South Africa and the UAE. In some cases like Nigeria resource extraction has been extremely harmful. So much so that most Nigerians are poorer now than before the oil boom. There needs to be value added production for export. Textiles are one industry where this can start as in Bangladesh or Cambodia. Pharmaceuticals are another like in India. But, the reliance on only one or a couple of commodities is disasterous. There are always bust times more than making up for the booms. Zambia is currently suffering heavily due to its dependence on copper. Even the supposedly invincible trifecta of cocao, gold, and oil did not save the Ghanaian cedi from collapsing in 2014 and then again this year. There are industries where African countries can compete internationally in terms of quality. But, the existing governments do very little to encourage their development and more frequently than not have policies that actively sabotage domestic small and medium businessmen for the benefit of large foreign corporations. For instance it is almost impossible to send small amounts of money out of Ghana. So any payments abroad needed for an export business are extremely difficult. It is, however, very easy for large corporations like the South African dominated Anglo-Ashanti Gold to send billions out of the country.

    • Ransom Stoddard
      • Brett

        Sort of. Natural resource wealth tends to amplify tendencies within the governments that have it, so low-corruption countries like Norway do alright while already corrupt countries like Nigeria and the various Arab monarchies get even more corrupt.

        • Ransom Stoddard

          Yeah, that’s my own view as well, but I thought the concept was relevant to the original comment.

  • Scott P.

    So I guess we shouldn’t worry about outsourcing manufacturing to poor countries because those jobs will soon disappear in any event?

    We can the problems with the service economy in the United States, a nation that still has a sizable number of well-off people. If it doesn’t work here, how is it going to work in Bangladesh and Ethiopia and Nigeria?

    In any case this diagram shows that services make up the majority of every developed nation’s economy, so it certainly ‘does work’ in the first world.

    In fact services took up a majority of the US work force starting in the 1940s, so unless you really want to go back to the Gilded Age, a service-based economy is the only option.

    • Linnaeus

      In any case this diagram shows that services make up the majority of every developed nation’s economy, so it certainly ‘does work’ in the first world.

      “Services” encompasses quite a range of jobs, though. That diagram doesn’t tell us what those jobs are and what they’re paying.

    • Brett

      Being less vulnerable to geographic shifts definitely is one benefit of a services-dominated economy. Instead of clustering around cities and particular areas, most services instead tend to become more prolific depending on the population density – denser, bigger urban areas will have more services, and more diversified services.

      There are some exceptions where outsourcing the services is possible, and more may be possible once we get better telepresence and robotics. But for now that’s the case.

  • Dilan Esper

    It has to be the service sector, despite Loomis’ prejudices against it. Like it or not, it takes fewer workers to make things now than it did in the past. That’s a reality. And that trend will continue due to automation. Also a reality.

    So Loomis may not like the service sector, but it’s the service sector or nothing for these countries. (And, I might add, just because service jobs don’t pay well now doesn’t mean there aren’t ways to raise service sector wages in the future. *ahem* card check *ahem*, for instance.)

    Also, there’s a big inconsistency between complaining about third world deindustrialization and advocating that American manufacturing corporations must not ship manufacturing jobs overseas. Disallowing that sort of outsourcing would likely speed deindustrialization.

    • You are misunderstanding me. I’m not saying you are going to see a large service sector. I am saying that it won’t lead anywhere because they are bad jobs that pay very little and don’t really generate additional wealth.

      • twbb

        Yes, the wealth generation part is the big issue. Serving a hamburger or giving a massage doesn’t create something in the sense that building a tractor or growing wheat or mining copper does.

        • Dilan Esper

          Why is labor only valuable if it creates something? A hotel receptionist is part of an operation that can provide someone with a joyous vacation; however, he or she does not create anything like a copper miner does. But both are important.

          • J. Otto Pohl

            Tourism is a nonstarter without infrastructure. For instance the fact that for the last two years most of the greater Accra region has only had 12 hours of electricity out of every 36 is a huge problem for service industries. The strategy of going the way of Nigeria and having every building outfitted with its own diesel or petrol generator makes providing lights and ac in hotels and refrigeration in restraunts and bars much more expensive here than in Asia or other places with reliable electricity.

          • twbb

            At a small scale, for the individuals involved, sure, but in terms of entire economies you can’t have them be primarily service-based; you need someone to actually create the goods sold, the food served, and the infrastructure used. Economies are at their core creating and distributing commodities that keep us alive and reproducing; that’s the base of the pyramid, and all the art, literature, and restaurants on top of that are great but they don’t serve that purpose.

            • Dilan Esper

              In a Maslow’s hierarchy sense that is true, but that’s also silly– the whole point of automation and industrialization is we can do that stuff on a mass scale with fewer workers and thus make a lot more stuff while providing people with more free time.

              So there’s nothing special about manufacturing jobs. Sure, the world as a whole needs to have a certain number of them to make the stuff that is needed. But if you want to get to full employment and prosperity, you need service jobs because only so much stuff needs to be manufactured and less human workers are needed to manufacture said stuff.

            • Pseudonym

              This is why most of the world’s advanced economies are made up of primarily agricultural workers: gotta keep the people alive and reproducing.

              You could argue that we need iPhones so we can run Tinder and keep reproducing, but then you could argue that we need restaurants for a similar reason.

            • Brett

              Look at agriculture, though. It more than satisfies us in terms of food and agricultural commodity production (literally over-satisfies us, considering we have all kinds of government programs designed to soak up agricultural overproduction rather than reducing the land under cultivation these days), while only representing a very small part of employment and GDP.

              Manufacturing could very well go down that road, and already sort of is when you consider that even in the Workshop of the World (China), manufacturing employment is down heavily from twenty years ago.

              But it’s hard to see how the Services Sector could ever be completely satiated in terms of demand for it. The types of services possible are literally unimaginable in terms of how vast the possibilities are – the only real limiter is income and amount of time during the day to partake of them.

              • twbb

                I think you’re
                Basically what I’m trying to say is you can’t have an economy that is an extended version of: I’m your waiter on Monday, then you’re my waiter on Tuesday, and he’s both our waiters on Wednesday, etc. On the surface that may seem to create “value,” it’s kind of a fictitious value. Me bringing you your hamburger doesn’t really add value to the economy as a whole.

                Sure, a small group of people manufacturing and growing food can support a lot of service workers, but there’s a limit to how service-heavy your economy can be, especially since when ownership of the farms and factories gets concentrated in a small group of people the people able to buy the services gets smaller and smaller. There’s a limited number of waiters, dentists, and musicians one billionaire actually needs.

                In practical terms talking about large-scale movement of manufacturing to service jobs doesn’t work if you don’t either increase the number of farmers and factory workers OR make the proceeds from those farms and factories shared more equitably.

                The issue here seems to be that people are suggesting that you can move large amounts of people in the developing world to the service sector without doing either of these things, and I don’t think it’s possible.

        • Brett

          It creates value either way, even if the service somehow seems less “tangible” because it’s not producing physical goods.

      • Brett

        They’re bad jobs right now, but a lot of low-skilled manufacturing jobs were pretty terrible as well in terms of pay before unionization.

        I think there’s a lot more room for productivity in the overall Services Sector, but until there’s some serious upward wage pressure by a stronger economy and stronger unions, it won’t happen. And if rich countries go down that route, then poorer countries have a potential pathway to follow.

    • J. Otto Pohl

      Exactly which services do you suggest Ghana develop in order to achieve a first world standard of living?

      • Hogan

        I hear lawyers are in great demand and command very high salaries.

        • J. Otto Pohl

          Well a number of my best undergraduate students did have me write them recommendations to go to law school either at UG or GIMPA down the road. Two of them were even foreigners. One was British and the other from Botswana so I suppose that providing them with a history undergraduate degree and then post-graduate law degree is a type of export. But, I am not sure that manufacturing lawyers is the way out of national poverty.

          • Linnaeus

            Far be it for me to speak for Hogan, but I don’t think that he thinks that manufacturing lawyers is the way out, either.

      • AR

        I do not claim to speak for Professor Loomis, but the implication of his writing, is that it is questionable if such a situation will allow most people in the developed world achieve the assumed first world standard of living (there is a reason it is called a race to the bottom). I am fairly sure his answer would look more like “abolish capitalism” than some kind of theory of of neoliberal political economy.

        • LeeEsq

          That’s very nice but many people do not want to abolish capitalism even if they aren’t actually capitalists themselves. They might want it reformed or restrained in someway but they don’t want it to be abolish. Its not like the tried alternatives to capitalism have such a great track record and interest in the untried alternatives is low.

          • Hogan

            That’s very nice but many people do not want to abolish capitalism even if they aren’t actually capitalists themselves.

            Many people didn’t want to abolish feudalism even though they weren’t lords. Yet here we are.

            • J. Otto Pohl

              How will we manage to manufacture and export large amounts of lawyers under socialism? Generally the more socialist an economy the fewer lawyers they have compared to the US. The USSR exported lots of oil, lots of weapons, some vodka, and some cavier. But, they were not producing lawyers for export. More importantly who is going to import them if they are socialist? The Soviets were not importing US ambulance chasers.

            • LeeEsq

              The two things aren’t comparable. The alternatives to feudalism were untried when it occurred but it ended up working. There have been several attempts to find alternatives to capitalism and most of them have been failures. “X can’t fail, it can only be failed” applies to all ideological systems. We tried alternatives to capitalism, they did not work. The system that works the best seems to be some sort of capitalism with a system for ensuring a fair or at least fairish distribution of wealth.

              You don’t even need to go to the extremes of Communism to demonstrate the need for capitalist activity. The United Kingdom’s welfare state did great when it came to healthcare, pensions, transportation, education after some trial and error, and to an extent housing. It sucked when it tried to manufacture cars under the aegis of government owned corporation.

              • Hogan

                The alternatives to feudalism were untried when it occurred but it ended up working.

                Plenty of non-feudal systems of production were up and running, on relatively small scales, and many more were tried and failed (or succeeded but were crushed by local political/economic elites). As organizing an entire economy around an elaborate system of land tenures stopped working, those alternatives began to mutate and network and eventually we arrived at this thing we call “capitalism.”

                You’re an end-of-history guy as far as political economy goes; you think we’ve basically solved the problem and now we’re just tinkering around the edges. I think capitalism is going to stop working the way feudalism did, and it’s not a bad idea to talk about what kind of values we want the next thing to embody.

                (For many of us socialism isn’t a detailed blueprint for organizing a political economy, and it has fuck-all to do with centralized top-down command and control. It’s just organizing a political economy based on, e.g., democracy rather than oligarchy and egalitarianism rather than hierarchy.)

                • LeeEsq

                  I’m not necessarily an end of history guy and I don’t necessary see the big debate as being between capitalism and socialism when it comes to economics. I think the actual debate is between people who view economics as being akin into physical forces, something that can’t be messed with without causing irreparable harm, and people who see the economy as an entirely human creation and could be suited towards human needs. You can find capitalist and socialists in both camps.

                  My problem with the “abolish capitalism” arguments is that many of it’s proponents seem to be advocating the leftist equivalent of “conservatism can’t fail, it can only be failed” or are advocating for something that hasn’t been tried but isn’t really going to be that popular because it is wildly utopian, the leftist equivalent of anarcho-capitalism.

                  I’d also like to point out that having a political economy based on democracy rather than oligarchy and egalitarianism rather than hierarchy will not necessarily get you the vote you want. The electorate needs to favor egalitarianism over oligarchy and must have enough consensus against capitalism. It is perfectly possible for people to democratically choose a political economy like ours.

                • Pseudonym

                  If socialism can in theory be bottom-up and adaptive, why couldn’t capitalism in theory be democratic and egalitarian? Comparing the theory of one system against the historical practice of another is unrealistic. (For what it’s worth, I think some sort of hybrid will work the best, but I’m not tied to that belief.)

                • LeeEsq

                  Capitalism can be democratic and egalitarian in theory, you can have capitalism as a system of employee owned firms run on a democratic basis competing with each other on a free market. Something like Tito attempted with market socialism in Yugoslavia but with bad decisions having the negative consequences of bad business decisions in classical capitalist system.

                • Hogan

                  It is perfectly possible for people to democratically choose a political economy like ours.

                  Except that this isn’t how these changes happen. We don’t all get together [somewhere] and discuss [something] and then take a vote on the General Will, which we then embody in a Social Contract. That’s sure as hell not how we got capitalism. It took peasant revolts and civil wars and land enclosures and religious wars and revolutions and counterrevolutions and all kinds of shit. I would like to think the next transition will be less appalling than that, but it’s not going to be the kind of town meeting setting you keep invoking.

                  Which is what I mean by “end of history.” Something like Lord Kelvin’s end of physics: “We’ve arrived at a mostly stable resolution of all important questions; now we’re just working out a couple of details.” I don’t think so.

                • Hogan

                  why couldn’t capitalism in theory be democratic and egalitarian?

                  Capitalism, like anything else, can in theory be anything. But the owner/managers run the company and the employees don’t. How do you split that difference?

                  Top-down hierarchical socialism is not what I and a lot of other people mean by socialism. I know it’s an essentially contested concept. I’m just trying to put out a definition that doesn’t seem to get a lot of attention from the “OMG Stalin Mao” wing of commenters here. It’s a thing.

                • Pseudonym

                  Capitalism, like anything else, can in theory be anything. But the owner/managers run the company and the employees don’t. How do you split that difference?

                  With the prevalence of 401(k)s you already have a lot of people acting as both employees and owners. Of course in practice the unequal distribution of wealth (much greater even than that of income) means that most people aren’t able to exercise much power in their capacity as owners, but wealth can be and is redistributed by government policy (both upwards and downwards to varying degrees).

                  There’s also the possibility of capitalism with strong worker protections, including legally guaranteed collective bargaining rights (or even mandates) for workers. Are unions inherently anti-capitalist, or do they just level the playing field between the concentration of capital and the relative dispersion of labor?

                  I’m not sure whether LeeEsq’s suggestion of a system of employee-owned firms qualifies as capitalism or not. Do you think that sort of “market socialism” would have the same problems as capitalism?

                • Hogan

                  With the prevalence of 401(k)s you already have a lot of people acting as both employees and owners.

                  Acting? No. Holders of stock through 401(k)s are in no way acting as owners. Which is why I specified “owner/managers.” See Berle and Means, et al.

                  Are unions inherently anti-capitalist

                  Ask the capitalists. They seem to have strong opinions.

                • Pseudonym

                  Well, shareholders being owners but not controllers sounds more accurate. I’m familiar with the gap between ownership and management but don’t see that as necessarily smaller under socialism than capitalism.

                  As for asking the capitalists to define capitalism, corporations hate unfettered competition. The so-called capitalists would probably find themselves more enriched under corporate fascism than capitalism per se, but that doesn’t make fascism the purest form of capitalism.

                  I think that reasoning relies on semantic confusion of the word “capitalist” referring to a provider of capital versus a supporter of the system of capitalism. That’s not a very robust philosophical foundation.

                • Pseudonym

                  I guess what I mean is that I don’t really consider it an important question whether private investment/ownership/management combined with strong worker protections and collective bargaining qualifies as “true” capitalism or not. Do you think it might work? Would it qualify as a valid variety of the kind of socialism you’re trying to achieve?

                • Pseudonym

                  I’m familiar with the gap between ownership and management…

                  As well as all other internet traditions, I should add.

    • LeeEsq

      Dilan, this is a good time to bring up something I’ve been wondering about. On Scott’s threads on voting, you keep bringing up the point that leftists are not just more aggressive liberals but want something different than what liberals want. You also identify explicitly as a leftist rather than a liberal. Yet, on threads dealing with economic and other material issues you take a rather Neo-Liberal and anti-leftist line when it comes to your policy choices. You have been against rent control, in favor of unregulated airlines because it lowers ticket cost, and for globalization and the service economy.

      I agree with you on material issues more than Erik but Erik takes a more classic leftist stand on these issues. There seems to be an inconsistency between your self-description and your beliefs on economic and material issues.

      • J. Otto Pohl

        Hey if China and Vietnam can still be ruled by parties calling themselves Communist then Dilan can call himself a Leftist.

      • Dilan Esper

        It’s a good question.

        I identify as liberal, not leftist. I respect leftists (including Erik), but they DEFINITELY have different priors than I do.

        I do think that on matters of foreign policy, the anti-war, anti-interventionist left have been consistently the wisest group of people. And that one of the most screwed up things about American politics is that the way that this group of people, who get most foreign policy questions right, is seen as unserious whereas bloodthirsty hawks like McCain and Hillary Clinton are seen as “serious”. And so if you want to call me “left” rather than “liberal” on foreign policy, that’s fine.

        My defense of the left on voting and the like is precisely that they have different priors than I do and therefore do not expect them to behave as just super-liberal liberals or something. Some do, but some really have ideologies that are quite foreign to Scott’s center-leftism and which explain their behavior a lot better than Scott’s alternate “they are stupid” or “they want to hurt people” explanations do. They aren’t stupid– they want different things than Scott does, and have different priorities.

        I’m voting for Hillary in 2016. In some sense I do apply Scott’s “lesser of evils” approach in my voting. I reserve the right to have dealbreakers, but Hillary hasn’t approached any of them.

        But on the other hand, I can totally see how Hillary crosses some other people’s dealbreakers. And I really have a big problem with, for instance, liberal internationalists telling pacifists they have to vote for candidates who are big-time hawks. We aren’t one big happy family– pacifists have big problems with liberal internationalists (indeed, just like Scott has bigger problems with Nader voters who he thinks hand elections to Republicans than he does with conservative voters who vote for right wingers, pacifists sometimes have bigger problems with centrist liberals who force the Democratic Party to the right on military matters than they do with conservatives who vote Republican; this problem has existed since at least the time of the Vietnam War).

        • Dilan Esper

          One other piece of food for thought. The Democratic base is basically left, not liberal, in my taxonomy– anti-war, anti-corporation, anti-bank, anti-mercantilism, etc.

          And we are now in an era with a polarized electorate and basically no swing voters. Which, by the way, is what Scott wants. He wants everyone who is on some sense on the left side of the political fence to vote for the more left-wing of the two parties, the Democrats.

          But where you don’t have any swing voters, I see no reason whatsoever why candidates for national office shouldn’t basically reflect whatever the base’s views are on every important issue.

          We’ve seen this happen on some issues. It used to be, for instance, that you could get away with some fudging on abortion as a Democrat. Joe Biden wasn’t ever pro-life, but he wasn’t exactly a strong pro-choice politician either; he supported lots of restrictions on abortion, including funding, early on. He has flipped to the pro-choice position. The party base requires it.

          But again, without swing voters, there’s just no reason to do Clinton-style triangulation at all. In other words, the base is anti-free trade (which I disagree with, but they are the base of the party), and that view should be reflected. There should be no room for Hillary Clinton or Obama or anyone else to negotiate trade deals. It’s a polarized electorate– you don’t gain any extra votes selling out the base.

          Similarly, if the Democratic base demands prosecution of bank officials and a prohibition on large banks, that should be the position of the nominee. Securing huge donations from bankers is not important when the electorate is this polarized and there is no swing voters.

          And if the base demands an anti-war candidate, Hillary should be forced to repudiate her hawkishness and become a dove. Because, again, there’s no benefit to deviating from the base either to get the campaign dollars from the military industrial complex or to get hawkish swing voters. There aren’t any.

          In other words, we should be seeing candidates who pass the litmus tests of the base. Republican candidates do. But Democrats are still allowing all sorts of Clinton-style deviations, when those deviations don’t gain any additional votes.

          We’re stuck right now because of the historical and branding strengths of a Hillary Clinton candidacy. But if present trends continue, there’s no reason that the 2024 candidate should not be someone who reflects the base’s position on every major issue. And if that can happen, a lot of these issues with left wing voters deserting would be mitigated.

          • J. Otto Pohl

            So the base of the Democratic party wants Bob Avakian to be the presidential candidate? I think the Democratic Party base is a lot more centre right than you think.

            • Dilan Esper

              I mentioned four issues where overwhelming majorities of Democrats support a position:

              Abortion
              Free trade
              Breaking up big banks
              Fewer military interventions

              On the first one, the party has moved to the position of the base, even though there’s a big mushy middle in polling on the issue. It hasn’t hurt them at all.

              On the other three, the position of the professional politicians is at odds with the base.

              I could mention a fifth issue, gay marriage, where we have seen the same thing happen as with abortion– you can no longer be a national Democrat and oppose gay marriage.

              I didn’t mention other issues where the base might be split. On all the issues I mentioned, the polling is clear about what Democratic base voters support, and on three of them, the leadership is out of step.

          • LeeEsq

            My definition of the Democratic base or Republican base are people that are actual members of the party and who participate in internal party politics. This includes showing up and meetings and voting in primaries. This means that a lot of liberals are part of the Democratic base.

            • Dilan Esper

              The internal party actors are not the base. The base are the reliable voters who vote every election for the party.

              For instance, the base of the Republican Party is more socially conservative than internal party actors. And the base gets its way in terms of the positions of candidates.

        • LeeEsq

          The anti-interventionist side might be the wisest but that is by accident rather than wisdom. They get just as starry-eyed as the interventionists and have the same tendency to see what they want rather than what exists. To use a non-present example, they were able to point out the flaws of the United States intervention in Vietnam but got to ga-ga over Ho Chih Min. Rinse, wash, and repeat for a lot of other people. A wiser choice would be to say that we shouldn’t intervene because it will not work and because of self-determination but not getting too starry-eyed about the leadership.

          • Dilan Esper

            That’s not really fair.

            Ho Chi Minh was better for Vietnam than any realistic alternative, and led a popular nationalist movement.

            Yes, some people on the left lionize and romanticize people they shouldn’t. Like Stalin (who, by the way, American liberals also romanticized during World War II). But that’s not the issue– the issue is getting the POLICY right.

            It really doesn’t matter whether a Vietnam War opponent was a cold-eyed realist or thought Ho was an incarnation of God. They got the policy right.

            And more generally, the reality is that many of America’s problems are caused by a belief that we need to be the military ruler of the world, constantly bombing or invading anyone who crosses us. As long as that is true, the anti-war left is going to be generally right about foreign policy because it will be very rare when we actually should be intervening or intervening in the way we do. So propping up a leader that they shouldn’t prop up as a hero seems a second order concern to me.

            • Like Stalin (who, by the way, American liberals also romanticized during World War II)

              This is slightly unfair since it was basically encouraged by the government.

              • Dilan Esper

                True, but it was a government full of liberals. :)

                My general point is that you can’t read much into the rhetoric of people about foreign leaders. There was, after all, a reason we pumped up Stalin, and there may have been all sorts of reasons for the anti-war left to portray Ho in glowing terms when opposing the war.

            • LeeEsq

              For Ho Chih Min, I agree that I might have not been fair but using a Cold War example was the least contentious think I could say. I honestly think that Ho Chih Min’s biggest problem was that he openly called himself a Communist. With different wording, he could have gotten the American support he wanted. He wouldn’t even need to change his policies.

              • I honestly think that Ho Chih Min’s biggest problem was that he openly called himself a Communist. With different wording, he could have gotten the American support he wanted. He wouldn’t even need to change his policies.

                That pretty much ignores the fact that basically any anti-colonial leader was seen as a sketchy pinko in the Cold War context. Jacobo Arbenz was overthrown by the CIA without calling himself a communist.

                • ThrottleJockey

                  Yep, even MLS was labe led a communist.

                • Dilan Esper

                  MLK.

                  Although the MLS, with its single enterprise ownership structure and comparatively close to level salaries, could be communist too. :)

            • LeeEsq

              Like you noted, we all have our deal breakers. For tribal reasons, mine is Jew-hatred. A lot of the people wrongly lionized and romanticized by the Left, not Ho Chi Min, have had varying levels of Jew hatred or at least a strong antipathy towards we Jews, and not simply because of anti-Zionism, as part of their worldview. This is simply something I can’t support or get behind.

              • Of course for you, “criticizing Israeli apartheid” = “Jew hating.”

                • LeeEsq

                  And for you Jewish self-determination is racism while for other self-identified people, it is a natural right.

                  Will you actually learn something about the real Israel rather than the one you have in your head. Without Israel, hundreds of thousands of Eastern European Jews would have joined Soviet Jews in experiencing the joys of Communist persecution. Nobody on the Left would have cared or protested one bit because Cold War. Without Israel, the Jews of MENA would have been forced into the same devil’s bargain that other minorities in the Middle East have been. Either the support a horrible dictator in exchange for protection or they get persecuted by the majority that decides for Islamist government. Nobody on the Left would care because anti-Colonialism.

                  Your very good at criticizing Zionism but you have absolutely no realistic alternatives.

                • Sure I do. Return to pre-1967 boundaries and treat people as equals

                  You are the one who needs to stop applying double standards. If you aren’t cool with Jews being forced into lives like those who live in the Gaza Strip, then you are a racist for saying it’s OK for Israel to do that to the Palestinians.

                • LeeEsq

                  And I’ll further add, that I can’t recall any instance of the Far Left actively or even passively helping the Jews.

                  I grew up during the Late Cold War when it was rather clear that the Soviet Union and the Eastern European Communist states were morally bankrupt but still happily persecuting the remaining Jews, especially in the USSR. The campaign to free Soviet Jewry was a big part of my childhood. I can’t recall any instance of say the people opposed to South African Apartheid showing up to offer support for the Jews of the Soviet Union. The great and the good were so pre-occupied with opposing Reagan and Thatcher that even that would be too much for them.

                • You aren’t answering the question. Unless you are cool with Christian self-determination putting Jews into ghettos, supporting the Israeli placing of Palestinians into the Gaza Strip is racist.

                • John Revolta

                  Times have changed. Comparing post-War Zionism to what we have today is like comparing Nelson Rockefeller to Ted Cruz.

                • Pseudonym

                  Unless you are cool with Christian self-determination putting Jews into ghettos, supporting the Israeli placing of Palestinians into the Gaza Strip is racist.

                  This sort of formalism isn’t what I’d expect from someone concerned with power discrepancies. Jews within Israel may have a similar level of control as Christians within the U.S. and Europe, but regionally or globally it’s a very different picture. (That’s not to say that I endorse Israel’s actions.)

                  Would Native Americans keeping whites off their reservations be considered racist?

                • That’s a completely different power dynamic.

                • Pseudonym

                  And the power dynamic between Christians and Jews in Europe is not the same as that between Jews and Muslims (and Christians) in the Middle East.

                • LeeEsq

                  Erik, the Evangelical Christians who support Israel are at least honest with the reason why they support Israel.

                  The anti-Zionists claim not to be anti-Semites but they have a long and will documented history of using some the most extraordinarily classic anti-Semitic imagery possible. They also have an equally long history of ignoring the blatant Jew-hatred that exits in the wider Arab and Muslim worlds. There is simply no evidence that the Arab nationalist movement, Palestinian or otherwise, intended to include Jews in their nationalist project in anyway at anytime.

                • I fail to see how any of this justifies placing Palestinians in ghettos.

          • J. Otto Pohl

            There has also been a strong isolationist right. Murray Rothbard wasn’t a leftist or fan of Ho Chi Minh. He was an opponent of US intervention in Vietnam.

            • Dilan Esper

              There is also an anti-free trade right (Pat Buchanan), and while I don’t give too much credence to the idea that tea party types hated the big banks, there is at least a bit of that sentiment on the right too.

              There are also right wingers who are pro-choice (e.g., Megan McCardle), right wingers who favor gay marriage (David Brooks), etc. That really doesn’t change the point that the bases of the parties are overwhelmingly polarized on these issues.

              • Brett

                McArdle is only theoretically pro-choice. She’s not openly in favor of banning abortion, but she’s stated on multiple occasions that she’s basically okay with restrictions designed to make it difficult to access. I get the vibe that it makes her uncomfortable, but her libertarianism also means she doesn’t think it should be banned.

        • I identify as liberal, not leftist. I respect leftists (including Erik), but they DEFINITELY have different priors than I do.

          I’m not going to deal with most of the silliness, but for the love of clarity, could you just clarify what you mean by “priors” here? When you introduced this lunacy, it was that there was different historical antecedents. Now that is silly, because the antecedents don’t matter if you evolved to the same place.

          But now, you just seem to mean “Different policy choices”.

          Or maybe you mean “priors” as in “prior probabilities”? I have no idea.

          Of course, none of these versions help your argument a whit, but it would be nice to know *which* you meant.

          • Pseudonym

            Normally I’d assume he was referring to Bayesian priors, but this makes little enough sense that I’m not sure he’s not just pulling the word out of his posterior.

            ETA: or is he just using it as an ill-considered abbreviation for “priorities”?

            • Who know? When he first started using it he definitely and explicitly meant “historical origins”. Now it just seems to be a word he uses to make it sound like he’s saying something meaningful.

          • Dilan Esper

            Philosophical priors.

            Liberalism arises out of first principles of individual rights, democracy, tolerance, equality behind the veil of ignorance, due process, free enterprise, etc.

            Leftism arises out of first principles of equality of outcome, punishment for malefactors, the ultimate vindication of the oppressed, public ownership of the means of production, speaking truth to power, etc.

            Think Enlightenment vs. Marxist.

            Now I do not deny that there is significant overlap. But a leftist really does come at political issues from a very different intellectual framework than a liberal does.

            And if you don’t understand this, you will never really understand the conflict between Nader voters and Gore voters. That’s fundamental to it. A lot of centrists and liberals think that leftists are just super-liberals, when in fact a lot of leftists reject key principles of liberalism.

            If you don’t understand this, Bijan, you really should follow Bob Dylan’s injunction about criticizing things you don’t understand.

            • LeeEsq

              I understand the Enlightenment vs. Marxist framework but Nader was nowhere close to being a Marxist. He is pretty much a New Deal/Great Society Liberal and operating from an Enlightenment framework like Gore was. Anybody who thinks that voting for Nader would have gotten us a Marxist president is dim.

            • Pseudonym

              I’ve never heard the word “priors” used unadorned with that meaning before. “First principles” makes a lot more sense. Maybe it’s a common usage in philosophical argot, but when a Google search for “philosophical priors” brings up results about Arthur Prior and Bayesian epistemology I doubt it.

              • Pseudonym

                Maybe I’m just getting confused. Is voting for Nader and throwing the election to Bush instead of Gore supposed to advance “individual rights, democracy, tolerance, equality behind the veil of ignorance, due process, free enterprise, etc.” or “equality of outcome, punishment for malefactors, the ultimate vindication of the oppressed, public ownership of the means of production, speaking truth to power, etc.”?

                • Hogan

                  Rem acu tetigisti, as Jeeves would say.

                • Welcome to the Dilan zone where actually paying attention to what you’ve said and the implications thereof is not merely optional, but forbidden.

                • Malaclypse

                  Only in the same, stupid “heighten the contradictions” sense help by economically privileged pseudo-Marxists that think reading Lenin will make them a working-class hero.

              • Maybe it’s a common usage in philosophical argot

                Absolutely not. It’s part of his confusion and obscurantism.

            • Philosophical priors.

              Ok, a slight evolution.

              But again, the theoretical foundation doesn’t matter if there is convergence on policy and strategy in a particular circumstance. I have no idea why you persistently refuse to understand this.

              Now I do not deny that there is significant overlap. But a leftist really does come at political issues from a very different intellectual framework than a liberal does.

              Again, so what? It only matters if there are different implications in the current situation. And there isn’t in the current circumstances. Your assertion that

              1) DIFFERENT PRIOS
              2)
              3) THUS DIFFERENT CHOICES

              is broken because you don’t even give a hand wave in the middle. It’s not enough to go “Wow! Look at how different the theoretical framework is. It wouldn’t be surprising if there were differences in consequences!” This is true and banal and no one disputes it.

              That this ever leads to a Marxist and a Liberal preferring a modern day Republican regime on *policy* grounds is obviously risible. If it is on tactical or strategic grounds, then at least it’s not risible that some people would have different tactical or strategic beliefs, but then it really just is heighten the contradictions. Which we know, regardless of our policy preferences, is stupid.

              If someone wants to argue for a clean hands theory of voting, they are free too, but 1) morally, that’s a tough row, 2) that’s not what most people actually think, and 3) strategically and tactically it’s stupid. So if you care about consequences at all, you are in trouble.

              And if you don’t understand this, you will never really understand the conflict between Nader voters and Gore voters.

              I was a Nader supporter. I definitely understand it. You, however, do not.

              If you don’t understand this, Bijan, you really should follow Bob Dylan’s injunction about criticizing things you don’t understand.

              Ok. I guess you are going to continue to compound your embarrassing behaviour by being condescending where you are exhibiting extreme ignorance.

              This stuff wouldn’t get you a D in an undergrad class…you do understand that right? And it’s not because we’re silly or DOTN UNDERSTAND you, it’s because what you write is just obviously bonkers.

              Consider Alison Jagger’s classic “Feminist politics and human nature” wherein she analyses four forms of feminism (marxist, socialist, liberal, and radical) in term of their underlying theory of human nature. She argues that many differences in the four are derivable from difference in that underlying theory.

              However, that doesn’t mean that they don’t coverage on lots of things in lots of cases. Indeed, that they are all feminisms implies at least some important commonality. So, not only are we all well aware of the difference in theoretical background of various liberalisms and leftisms, we were well aware before you raised this “killer” point. But it’s not a killer point, it’s just wrong. Pretending that the rest of us don’t understand it and that’s why we disagree is sad. And a sort of projection.

              The fact that in all your repetitions of this hilarious theory you *never discharge the key step* is a strong indicator that you got nothing. Using silly made up jargon isn’t going to make your nothing look like something.

  • saraeanderson

    I keep hearing that the hubbub over automation is oversold, since a workforce of humans is a lot more flexible than a warehouse of very expensive robots that can only make one product. That makes perfect sense to me, but I haven’t really looked into it. What do you think?

    • BiloSagdiyev

      Thomas Friedman will exhort the robots to become flexible and dynamic. Once they do…

      • ThrottleJockey

        Thomas Friedman will exhort the robots to become flexible and dynamic cab drivers.

        FIFY.

    • Joshua

      AI is a thing. The robots are getting smarter and their functionality is becoming more generalized. Yes, a lot of automation to date has been very expensive single-purpose arms and such, but going forward those robots are designed with more flexible arms, better mobility, and are able to be reprogrammed.

      Plus automation can be a lot of things. McDonald’s replacing its cashiers with Windows terminals is automation.

      • Linnaeus

        McDonald’s replacing its cashiers with Windows terminals is automation.

        Ah yes, the McDonaldization of society.

      • NonyNony

        McDonald’s replacing its cashiers with Windows terminals is automation.

        Sure. And yet despite the threats they make – and despite the fact that the technology available to do this has been available for more than a decade – they continue to not do this. Because McDonald’s probably recognizes that doing this is a non-starter for most of their franchisees unless McDonald’s foots the bill both for the initial capital outlay to buy the self-service terminals and for IT staff that can show up at the drop of a hat when the terminals stop working during lunchtime. Plus you still have to have counter people to answer customer questions, fetch refills of drinks, deal with customer complaints, etc. So your savings had better be a LOT more than the labor costs to make it worthwhile.

        • Linnaeus

          Good point. Plus, a lot, if not most, of McDonald’s revenue comes from drive-through windows. The self-serve terminals can only be used indoors.

          • NonyNony

            I was going to mention the drive thru windows, where the technology needed to replace a single human being involves a whole lot of expensive tech, but it was taking me off on a tangent. But there’s a whole lot of expensive tech involved in taking an order via a microphone, translating that into an order for a cook to fill, assembling that order in the staging area, and then moving that order safely out the window to the customer in the car.

            Heck even at the register they’re only talking about replacing the person taking the order with a self-serve touchscreen – they aren’t talking about replacing the people working there with a conveyor belt or a robot to deliver the food. (Or bring it to a table when it might be a short wait to finish preparing it).

            Every time the threat of replacing cashiers with touchscreens comes up, I wonder exactly how much money it would save McD’s to do that. Even if the cashiers were making $20/hour – how many could you really fire and still have a staffed counter that could provide service during the busy times?

            • Brett

              Probably not more than 2-3 of them, total. You’ll still need people in the back and for cleanup, the manager, at least one person monitoring the self-check out stations, and so forth.

              They might be able to squeeze some more people out of working in the back kitchen if they drastically shrank the menu, but that doesn’t seem to happen. In-N-Out burger pays relatively good wages and has a small menu, but they seem to use that to just hire more people and produce far larger amounts of their basic menu items.

        • Joshua

          Well, maybe not McDonald’s. But virtually every store or pharmacy these days has self checkout kiosks. I personally don’t like them but people use them. Some restaurants do have order terminals. I was using one at QuikChek almost 10 years ago. Panera is doing it now.

          My point is simply that automation is not necessarily a giant robot arm bolted into the ground helping to build widgets.

          • Linnaeus

            My point is simply that automation is not necessarily a giant robot arm bolted into the ground helping to build widgets.

            Or, if it’s not “classic” automation, it’s a kind of semi-automation that shifts labor from a paid worker to an unpaid customer. I made the quip upthread about the McDonaldization of society, which I took from the book of the same name. One of the things the author notes about McDonald’s (and businesses that function on a similar model) is that it prioritizes efficiency, standardization and social control, and hence is often one of the first places you see trends like this.

    • SIS1

      If humans were actually more economical than automatons, why would any industry have automated, ever?

      Having machines that produce the one thing you produce more effectively and efficiently is exactly what you do if you can. If you are in the business of making widgets, why care that your great widget making machine can’t make sporks? You aren’t in the spork business.

      We humans like to tell ourselves that we are indispensable – the facts just keep getting in the way.

      • Linnaeus

        I remember reading somewhere – on the Internet, natch – that the ideal number of employees for any business is one.

        • SIS1

          The ideal number from the prospective of the owners is none – that way, all your costs count as investments into your already existing capital.

          • Linnaeus

            Point taken, although I think the idea was that the one employee would be the owner of the firm.

            • NobodySpecial

              Well, fire that guy, he hasn’t done enough work to enhance the revenue stream!

              • CP

                Deindustrialization is a well-known phenomena in the United States. But what you may not know that it is already happening in Latin American nations like Mexico, long before the promised creation of a middle-class through industrialization takes place.

                One of Krugman’s main arguments in “Conscience of a Liberal” was that the middle class society the U.S. had in the mid-20th century was not the natural result of industrialization, but had to be created through deliberate policy choices and sustained effort on the part of the government and population (i.e. the New Deal state).

                This seems like yet another argument in favor of that position.

                • Yes, I generally agree with that assessment.

                  There is nothing natural about the economy. It is all a creation of human choice.

      • NonyNony

        No that isn’t the point that saraeanderson is making. Or at least it isn’t the point that people who say that automation is being “oversold” are making.

        When people say that what they mean is that automation is very, very good at replacing people for highly repetitive, highly precise tasks. Replacing someone who is painting the eyes on thousands of doll heads with a painting robot is a no-brainer if you can afford the upfront cost of the painting robot.

        Where robots fall down is that when you want to switch that person from painting baby doll eyes to fashion model doll eyes, that’s easy enough to do with a human being. With a robot it can be an expensive retooling process. And while its just as easy to switch that person to painting anything else – or even possibly have that person move from painting to sewing or move them to packing boxes in times when you need box packers more than painters – with a robot if you’ve bought a painting robot you’re locked into having it paint and you just shut it off and it sits there when not in use.

        There’s a lot of research going on in the AI field to have robots that are highly trainable to be able to move them from one task to another without the expense of retooling. But so far these robots have been a lot of hype without much in the way of payoff. AI suffers a lot from the “last 10% problem” – getting an AI to do 90% of what you want turns out to be fairly easy. It’s that last 10% that has you beating your head against the brick wall.

        • SIS1

          The vast majority of jobs in manufacturing are repetitive or precise tasks, which is why automation has been so successful already, and continues to advance. Same is true for Agriculture, which has been vastly automated in those places rich enough to afford the capital investments to automate that sector.

          People who claim “automation” is being oversold assume that work is more variable and complex than it generally actually is.

          The list of job titles being made obsolete is a lot longer than that of new job titles. You make shipping cheap enough and it makes no economic sense to make things in a place like Cambodia if you can have a factory in China with three times the labor costs but with a lower actual per item cost make it and then have it shipped.

        • Lee Rudolph

          It’s that last 10% that has you beating your head against the brick wall.

          I have an ingenious plan to develop a robot that beats its head against brick walls, so that you don’t have to!

      • Machines are great.

        Only one problem with them – they don’t buy anything.

        • Walter Reuther

          Hey, that’s what I said to Henry Ford II.

        • SIS1

          I concur, which is why I think people counted out Karl Marx way too early…

        • Brett

          Their owners do.

          • Marginal propensity to consume…..

            They don’t buy enough stuff to keep the economy running.

        • Pseudonym
        • UserGoogol

          Fully automated economy with a basic income guarantee, hoorah~

          Or from a more down to Earth perspective, if jobs are automated, money is still made, the difference is that it goes to capital instead of labor. The problem is that capital is quite a bit less equally distributed than labor is, which aside from basic issues of human welfare also does introduce aggregate demand problems. But concentration of wealth isn’t a new problem, it’s something we’ve been having to deal with the whole time we’ve been doing this whole capitalism thing. (Or before then, really.) And we have lots of potential solutions on the table, even if “abolish the need for labor and have everyone live off the dole” isn’t a practical policy platform at the moment.

          • The problem is that none of these potential solutions are going to come to pass without working class power forcing capitalists to give in on them.

            The actual solution is likely going to be extreme wealth disparity.

          • Great idea. Never happen in a million years, but great idea.

            Seriously, have you listened to our political rhetoric since forever?

            “Pull yourself up by your bootstraps!”
            “If you don’t work you don’t eat!”

            • Pseudonym

              Well, you get enough people who can’t eat and you’re likely to see some sort of change.

      • Brett

        If you are in the business of making widgets, why care that your great widget making machine can’t make sporks? You aren’t in the spork business.

        If your widgets are exactly the same for every customer, then that’s okay. But if there’s customization involved, or better yet customization and diversity of products combined with change in production over relatively short time frames, then it’s much more difficult to automate.

        Just look at textiles. Textile production is very labor-intensive, and has consistently been very labor-intensive even despite the fact that it’s been the subject of mechanization since the mid-18th century at least. It’s so labor-intensive that it was one of the first industries to be outsourced in search of cheaper labor costs, and there would be serious profits for anyone who could figure out how to automate production of textiles to the point where it didn’t drive outsourcing anymore.

        But it hasn’t happened yet, because textiles often require the production of a highly diversified set of clothing, and major change-ups in the patterns and types of clothing being produced on short order.

  • Ransom Stoddard

    There are some fallacies and misconceptions in this post that I might engage with later, but for now I’ll sidestep that and suggest one way that a lot of development can happen in a short period of time: immigration. Workers with observably identical skills can instantly multiply their incomes by crossing a border and using those skills in a different country (http://www.cgdev.org/publication/place-premium-wage-differences-identical-workers-across-us-border-working-paper-148). (As an aside, that should be a Graves Registration notice for theories about “culture” and race underlying inter-national income disparities). Why this is so is an interesting question (I’d lean toward some sort of Acemoglu/Robinson explanation about institutions, with some consideration of geography in creating divergences between them), but not really relevant: as long as people would make more stuff and consequently earn higher wages by moving from one area to another, it makes sense to let them.

    Of course, actual open borders is a political impossibility under current conditions. But it’s a normative question worth thinking about, at least. And it’s one that hasn’t received enough attention: a lot of “free market” UChicago bigwigs were either totally indifferent to or actively opposed to liberalizing international labor mobility.

    • ThrottleJockey

      Open borders as you suggest would decimate American wages. Neither Big Labor nor GOP xenophobes would support it. Only the open borders segment on the Left and the Chamber of Commerce would support it.

      • Ransom Stoddard

        Closed borders as you suggest are decimating third world wages. But it’s not an either/or thing; if the compositional effects of immigration are inequality increasing for the people already within the borders of the host nation, the much better solution is to tax the rich and give the proceeds to the workers who lose out from immigration. And it’s really not even clear that immigration hurts wages (http://davidcard.berkeley.edu/papers/mariel-impact.pdf).

        • Joshua

          the much better solution is to tax the rich and give the proceeds to the workers who lose out from immigration

          Yea, that’s gonna happen, just like it happened after NAFTA.

          • If there’s one thing we can say for sure, it’s that the promises of free trade supporters are always fulfilled….

            • Pseudonym

              Though a cynic might say the same about socialist revolutionaries.

          • xq

            Repealing NAFTA also didn’t happen after NAFTA. So the “tax the rich” solution is no worse on that front.

        • xq

          People cite this paper a lot, but note that Card (as well as others) has a few more recent papers that did find negative effects.

          http://www.nber.org/papers/w5927

          I think it’s pretty unlikely that there are no negative wage and employment effects of immigration on low-skill native workers.

          • Ransom Stoddard

            Agree regarding wages, but it seems empirically well substantiated that it doesn’t have any negative impact on employment. I think the better questions than “does immigration lower wages?” are “how many people’s wages are lowered?” and “by how much are they lowered?” (plus, “is there a better way to offset that than limiting immigration?”).

            • xq

              Did you read the abstract at the link? The guy you cited to support your position changed his mind based on a more sophisticated analysis. Is there a reason you think he was right in 1990 and wrong in 1997?

              I think the better questions than “does immigration lower wages?” are “how many people’s wages are lowered?” and “by how much are they lowered?” (plus, “is there a better way to offset that than limiting immigration?”).

              Agreed. I think pretending that there are no negative effects is a bad strategy for advocates of more open immigration.

              • Ransom Stoddard

                Did you read the abstract at the link?

                I actually did not, though I should have. I’d now really like to read that paper, but apparently NBER servers aren’t working.

          • twbb

            Particularly since you can find plenty of low-skill native workers who can literally point at the very jobs they’ve lost (“yeah, Bob over there used to hire me for roofing projects, but now he hires undocumented workers for half the hourly cost”).

    • SIS1

      Actually, its isn’t a question worth thinking about anymore, since we already thought about it extensively and have come to the conclusion you noted, that it is politically impossible.

    • DrDick

      Do visit the planet earth someday. I think you will find it quite astonishing. Where are all of these workers going to get the resources to go where the jobs are and how is the sudden surge in the workforce supposed to improve anyone’s income (other than that of the capitalists)?

      • Ransom Stoddard

        With significantly higher transportation and communication costs, illiterate peasants in the 19th century managed quite well to “get the resources to go where the jobs are” during open borders. Today on the third rock from the sun, workers from Mexico manage to pay coyote fees massively inflated by immigration restrictions that are often 2-3 years worth of their home country wages.

        The workforce of the world wouldn’t surge; the number of people doing jobs would be the same. The composition of the workforce would change, with those people doing jobs in countries where they’re more productive.

        • SIS1

          Those “borders where open” because the existing inhabitants lacked the means to enforce their borders, and states like the US wanted the increased manpower. So, the political situation was fundamentally different. You acknowledge that your idea is politically impossible as things are NOW.

      • Brett

        The evidence is mixed on that second question, but for the former look at migrants from places like Mexico. These are poor workers, but many of them manage to scrape up the thousands to pay for a coyote to get them across the border. And of course migrants in the Gilded Age were often just as poor, or poorer – yet they managed to make the trip.

        • Pseudonym

          In theory migrants from Mexico to the U.S. might make both countries poorer on average and yet any particular individual the same or better off. In practice I’m not sure whether it’s true or not.

  • max

    Third is that so much of what does exist around labor-intensive industrialization is captured by China that with a combination of low wages, preexisting capital investment, and authoritarian government is appealing to rich world companies.

    That’s the pact. Communist China calls itself capitalist and effectively is allowed a high trade barrier economy and thus controls all the manufacturing, and the capitalist countries ‘own’ the a large chunk of the output and the rights to the output in the rich world. Which they can use to tax the 1st world consumers. The capitalists up their profits and the communists get to play United States circa 1900.

    The capitalists are counting on the Communists failing to keep the show running and getting de-powered somehow, allowing the 1st Worlders to move in and buy the country (property rights!) and the Communists laugh and keep on playing their game of modified Marxism, believing that the 1st world will piss away its advantages and then China will be the hegemonic world power.

    The rest of the poor world gets turn into resource extractors for the Chinese industrial base.

    If every country is desperate for the scraps of global capitalism, it’s grim for the world’s poor indeed.

    Well, that’s the plan, Stan. Eventually the underclass income in the developed countries is sunk to the level of the third worlders, the third worlders’ income rises to the level to the 1st world underclass, and the global elite live in Versailles.

    Maybe then they finally turn the UN into a world government – that represents the interests of the elite of course. And polices any uprisings on the part of the peasants.

    Of course, whether the global elite are dominated by China or the US or Europe is an interesting historical question, albeit one of no interest to 95-99% of the world population (since nothing will change for them).

    max
    [‘I wonder what the modern equivalent of pyramids would be?’]

    • Lee Rudolph

      ‘I wonder what the modern equivalent of pyramids would be?’

      Combination grain-and-ICBM silos.

      • burnspbesq

        Underwear and baseball cap factories. When wages in, say, Laos are sufficiently below rising Chinese wages to justify moving the equipment, the equipment gets loaded on trucks. The shell of the factory remains.

  • ThrottleJockey

    I think this post is unnecessarily pessimistic. Take automation. It reduces costs on one hand while increasing wealth on the other. Its true that in the short term this displaces labor, but in the longer run this reduces costs for consumers while–because of the increase in wealth–increasing the demand for other goods and services.

    Your link to the Latin American deindustrialization article cited high energy costs as the chief factor. That’s interesting because Modi’s objection to scaling back carbon output is that it would effectively neuter India’s economic growth meaning that India and other developing countries could never enjoy the wealth that 1st world countries now enjoy. In light of global warming I’d bet that resolving this is a much bigger issue than deindustrialization. I don’t really think poor countries are going to forego real economic growth in the name of global warming, but rich countries may have to pay poor countries if we want a livable planet.

    • Hogan

      Its true that in the short term this displaces labor, but in the longer run this reduces costs for consumers while–because of the increase in wealth–increasing the demand for other goods and services.

      Depends on where the wealth goes, don’t it?

      • ThrottleJockey

        I don’t have a good reason to believe that global wealth would voluntarily choose to sequester demand at home. An increase in demand is an increase in world demand.

        • Malaclypse

          There’s a very good reason to believe this – as wealth increases, the velocity of money decreases, as does the marginal propensity to consume.

          • ThrottleJockey

            I’ve occasionally heard that asserted but I’ve never seen a cite for that do you have one?

            Also as wealth increases investment increases and those investment increases will find their way overseas.

            • Malaclypse

              Starting here is good.

              • ThrottleJockey

                I’m familiar with Keynes. There’s no proof, however, that marginal demand decreases with increases in individual wealth.

                • At least in current conditions it clearly does (near zero inflation/near zero interest rates). One big problem is that even at effectively negative interest rates no one is investing (not banks, nor companies, nor individuals).

              • Pseudonym

                It’s been forever since I studied any of it, but wasn’t Keynes concerned mostly about the short term (hence the famous quote) when it comes to the paradox of thrift? There are certain accounting identities in play here too, e.g. that global production must equal consumption plus investment (correct me if I’m wrong), because any money moving around has to come from/go to somewhere.

    • SIS1

      That more wealth is being created isn’t in question – its the distribution of said wealth that matters.

      • Right–and I think promoters of globalization who think some semblance of economic equality will result at home are deluding themselves because they understand neither American history nor power relations. The only institutions in the United States ever to force a fair share of wealth going to the working class are unions. Globalization has decimated unions and decimated working class voices in politics. We already see the impact of this in American politics and growing income inequality.

        The question that believers that we can solve these problems through the current system is one of power–who is going to make the wealthy share the wealth? Why would they do so voluntarily?

        • SIS1

          Its clear that some people are unwilling to accept the essential interconnection of economic and political systems, as if the balance of resources and wealth were not a fundamental aspect of how power is distributed.

        • ThrottleJockey

          To be fair I didn’t say that it would result in more equitable distribution of wealth here at home. I was answering the original post which was about increasing the development of third world countries.

          Is true that domestically it’s a far different proposition.

          • I don’t think it will lead to more equitable distribution of wealth overseas either, especially if unions can’t organize and demand a fair share without the organizers being killed or the work moving somewhere else.

      • Philip

        And unfortunately, it’s about as left-skewed a distribution as they come.

  • ThrottleJockey

    The other thing that’s unnecessarily negative is the assessment of China. Because of China’s one child policy China will be ‘old before it is rich’. That is to say their ratio of workers to retirees will be sharply negative.

    Today, the worker to elderly dependent ratio in China is 16:100; by 2050 it will be 64:100. Beijing already has 1.7 million elderly 65 and older; Shanghai 2.3 million.

    Within about 10 years actually India will supplant them on labor costs. Now given that India’s energy base and industrial infrastructure is poor, even with low labor costs they won’t be able to handle all the business China loses. That will be a big boon to developing countries.

    • SIS1

      China just dropped its one child policy, and China, like the US and Western Europe, will have the benefit of its invested wealth to use to automate its industry or move up the supply chain, leaving those third world countries who never got the change to build up a pool of investments and savings at the mercy of those who do have the money.

      • ThrottleJockey

        Sure they just dropped their one child policy but it’s unlikely to change things radically. Once you discourage women from being baby factories its hard to make them go back to being baby factories. In that link I posted I believe one of the professor says that it’s unlikely to boost the birth rate by more than a couple of million.

        Even if China tries to replicate the US or the UK are the EU and move up to value chain it’s unlikely to succeed. Wide by a high price baby stroller from China when you can buy a high price baby stroller from the US? It’s not as if China competes on quality it competes on cost.

      • Brett

        China’s already doing that, too. There are millions fewer Chinese manufacturing workers today than there were 20 years ago, and they’re investing quite heavily in industrial robotics.

        That said, if there are off-shorable manufacturing jobs (even less than historically), Chinese corporations will probably follow the same pattern as Korean and Japanese corporations in outsourcing to poorer countries in Asia and abroad (in China’s case, Africa as well).

    • UserGoogol

      ratio of workers to retirees will be sharply negative.

      Nitpick: Ratios don’t work that way. I see what you mean, but you mean less than 1, not negative. The ratio of two positive numbers is positive, no matter how much bigger one is than the other.

      • ThrottleJockey

        Yes, of course you’re right. I was actually referring to the change in the ratio when I said negative. At least that’s what I meant. I see “change” was left out.

      • Pseudonym

        Nitpick: Ratios don’t work that way.

        Nitpick: blockquotes don’t work that way. -_-

        • UserGoogol

          Fair enough.

  • Timurid

    Read the Zhong article and… THOSE COMMENTS. Mother of God…

    • SIS1

      Its the Wall Street Journal – the commentators are ideologically no different from what you would see in a Breitbart thread, though supposedly with more advanced vocabularies.

      • Pseudonym

        Has the article made it to Hacker News yet?

    • No mangoes are worth that.

  • xq

    The article gives lots of data on manufacturing, but not on what we should really care about: economic growth and the distribution of the gains of that growth. India, at least, still seems to be growing quite rapidly even if manufacturing is a smaller component.

    I think the declining value of low-skilled work due to automation is something to worry about in the future, but is probably overstated as a problem in the present.

  • Some argue the service industry is a path to economic stability but that’s ridiculous given the low wages of the service industry.

    Er. How are the people making this argument defining service industry?

    • My sense at least is that a sizable portion of it is building tourist economies, in addition to the sorts of service industry jobs other nations have. I do need to explore this part of the question more.

      • OK, because my first thought was that after various corporations have reduced a country to toxic gloop and left all but a tiny population destitute (and very ill), who is going to need their car fixed or want to stay in hotels?

        My second thought was it means countries would train citizens to perform various tasks and ship them around to the lowest bidders, but that’s probably too cynical.

        Probably.

        • J. Otto Pohl

          Evidently the LGM plan for the Ghanaian economy is to train lawyers for export.

          • ThrottleJockey

            You don’t need to export them all you need to do is do what India is doing and set up call centers/work centers in Ghana where you field with them.

        • Ronan

          This article (and the book it’s connected to) gives a good enough comparative take on the political economies of developed countries service economies

          http://www.renewal.org.uk/articles/the-political-economy-of-the-service-transition/

  • Pseudonym

    First is automation. There just isn’t the need for as many workers if corporations can employ robots.

    Well, somebody has to design and build the robots that those corporations employ. The robots aren’t free, so somebody is still getting paid. If the robots are making production cheaper or better then there’s a real benefit to using them, and the relevant question is (as I’m sure you know) how that benefit is distributed. A lot goes to consumers; cars these days are generally much better and higher quality (and safer and more environmentally friendly) than cars were in the days of mass employment in the American auto industry. You’re not going to get humans to replace machines in most electronics manufacturing either because it’s not physically possible, and I don’t think you’re arguing that we should go back to the days of artisanal vacuum tubes in order to ensure full employment for electronics repairmen. Part of why the service industry tends to grow so large in developed countries is that things just become comparatively cheap.

    The big issue with automation seems to be (and correct me if I’m wrong here) that it doesn’t leave room for much in the way of unskilled or semi-skilled or even skilled but uneducated or non-information-oriented workers. Automation shifts income from factory workers to engineers and capitalists. You complain that automated checkout systems are displacing cashiers; do you have the same complaints about UPC codes and scanners speeding up the checkout and inventory processes so fewer workers are needed? Would you have been complaining about the opening of self-service grocery stores a hundred years ago displacing armies of clerks? Or tractors displacing farm workers? I think in both cases automation eliminated huge numbers of jobs, but (notwithstanding the massive problems with industrialized agriculture) it also made food much cheaper and produced a surplus of income and workers that could go into jobs like auto manufacturing in the first place.

    These shifts in production due to automation have historically occurred mostly under capitalism, but how would things hypothetically have happened differently under a socialist economy? Is that a fair question to ask? Or is my take on industrial history just off-base?

    • J. Otto Pohl

      There was automation in the USSR and East Germany. But, these states suffered labor shortages not labor surplusses so it did not effect their employment rates negatively. The USSR imported guest laborers from North Korea and Vietnam. East Germany imported workers from Vietnam and Mozambique.

    • jimpharo

      Think you’re onto the start of something important: we seem to be having a failure of imagination when it comes to what we could do with ourselves if we had robots to do a lot of the heavy lifting. Of course, we’ll still need to build and maintain (and research for the future of) robots.

      But it seems to me that there are a lot of useful things that we could do that don’t involve making washing machines.

      We seem terrified of the notion that if people aren’t made to work, we will all die. I think this whole idea is simply a relic of what will soon be seen as the bygone era of scarcity, which I suspect has been over for a century, any way.

      It’s likely that a minimum level of compulsory labor will always be necessary, both for practical reasons (building robots) as well as moral/social reasons, like ensuring a perception of fairness. But the evidence that anyone is better off if we make millions sit in cubicles for 40 hours a week pushing paper is pretty thin.

      Folks with an unfair share of resources are understandably deeply committed to preserving the ideas that got them their wealth and let’s them keep it. That doesn’t mean everyone else can’t move on with our lives. Which, a la Naomi Klein’s latest, is already happening.

      Our future will be a post-capitalist one. And it may be that what we now see as developing countries locked out of industrialization will be our savior by imagining a renewable world and leading us out of this stupid darkness.

  • Brett

    No one’s done the “Service Sector Rise to First World” industrialization before, but I think it’s certainly possible. You just need to figure out how to boost the productivity of low-skilled service sector workers and economic sectors in general, and one big incentive for that would be if they become more capable at unionizing in rich countries and start demanding higher wages and compensation.

    Automation actually might help them in this regard, although it will produce concerns about de-skilling. Imagine a job that used to require a heavily trained doctor becoming something that someone with an associates degree could do as a specialized task – it sucks big time for the doctor, but it could be very good for the new worker.

    And services, at least for now, are much more resilient to outsourcing. Most of them actually have to be done on site or nearby, and urban areas in a country usually require the same set of services (with more populous, denser urban areas having the potential for more and more diversified services). Unless a town itself dies, you’re not going to have situations in a services-dominated economy where the employer is going to just up and move somewhere else, ripping out the economic heart of the town in the process as with manufacturing.

    • J. Otto Pohl

      A lot of services can be outsourced. Almost anything that consists of sitting in front of a computer and typing up a report can be outsourced. Even face to face consultations can be done by Skype now. Sure fast food delivery can’t be sent overseas but, anything that just involves sending data and that includes money now can easily be done in a foreign country by foreign workers.

      • Brett

        That’s why I qualified it. All that said, there’s been pretty strong predictions of “we will all telecommute, etc” for years now, and it doesn’t happen. It turns out face-to-face contact is still really valuable for business purposes.

        • J. Otto Pohl

          It depends what business. Writing and editing have never required much face to face time. I mean I just finished a couple of things for publications based in Kansas and Amsterdam respectively.

      • Aircraft maintenance.

        • Pseudonym

          …can or can’t be outsourced? Depends on the range of the aircraft, doesn’t it? And moving maintenance to contractors in right-to-work[…] states is its own form of outsourcing. Thankfully the FAA has actual standards.

        • BigHank53

          Increasingly done in China, Mexico, and Central America.

          No, really.

  • j_kay

    Reality says the article’s wrong, Robots haven’t slowed global famous worldwide OUTSOURCING to industries anywhere, have they, though they’ve been around decades? Latin Anerica will be back when their economy returns. Remember, WSJ’s the fine perfect Murdoch-engine.

    Why wouldn’t the whole world use cheaper robots?. And, mostly, it has lower labor costs than we do.

    Service jobs also include Bill Gates and all of well-paid Microsoft, Though far more are in the Walmalts and McD’s of the world.

    In conservativeland, only we can use robotics atall. Japan, ahead of us in robots, doesn’t exist.

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