dagblog - Comments for "Mr. Sachs, Mr Keynes. Oh, you've met already"

I've always assumed that

Flavius — Sat, 20 Aug 2011 11:49:26 +0000

In reply to To tell you the truth I am

I've always assumed that Eliot wasn't describing the world , just causing you to envisage one very genteel part of it with lobelias and tennis flannels and decent godless people..

Thanks for Buddy Holly..Did he ever sing Rosalie's Good Eats Cafe ?

Malaysia during the 1990's

PeraclesPlease — Sat, 20 Aug 2011 04:42:16 +0000

In reply to While Oxy Mora's reference

Malaysia during the 1990's East Asia meltdown ignored the World Bank's advice (order) and put up walls to protect its currency. They managed to weather the crash much better.

However there are tons of examples where protectionism left inefficient systems stand without pressure to change.

I'd like to know how how opening our borders to cheap Brazilian ethanol would have changed our corn industry, energy industry and solutions for alternate fuels. Instead we put a 63 cent a gallon tariff on it.

The other issue is that frequently when we talking about protectionism, we're jackknifing between helping US workers and helping "the world".

It's arguable that US trade with China has been a help for everyone - we get very cheap stuff across the board with low margins (as do other Chinese clients), it's dramatically helped Chinese poor, and China has done more to develop Africa in the last decade than we have.

Oops, but it's also left our workers and many elsewhere competing with long hour, dorm-living worker bees in China - Foxconn's work with Apple being the best known.

But that probably isn't the real problem - Chinese protectionism keeps their currency artificially high, and keeps US-funded goods made in China from being sold in China. Plus the Chinese government through all sorts of military and other government-owned companies, subsidizes the bejeezus out of products to compete overseas. Otherwise trade and labor conditions would balance over the long run.

So countries buying Huawei products are really getting them dirt-cheap, financed by China, making it impossible for western companies to compete.

Another issue is that while every American has to pay taxes on earnings anywhere in the world, companies - despite being "people too" - are exempt from this. And of course don't pay Social Security either. So through our government, we provide all sorts of support for US commercial activities around the world, but then our clients stiff us and only report taxable income abroad.

So it's not really globalization that's hurting the most - it's that we're not able to bring down the biggest foreign protectionist racket, and that we're not making our own corporations pay their share.

[of course protectionism in this case does help China - short term. Long term they've got serious problems getting to certain stages of quality, and rely too much on intellectual property theft - like burying those technology-stolen bullet trains rather than someone actually finding out why they crashed and what was in the design they'd used. And note that China still can't do well in the auto market.]

I took it as Oxy Mora saying

Flavius — Sat, 20 Aug 2011 02:16:29 +0000

In reply to How can a story about an

I took it as Oxy Mora saying that the conventional wisdom can be dead wrong.

how do you know that your

Flavius — Sat, 20 Aug 2011 02:09:50 +0000

In reply to While Oxy Mora's reference

how do you know that your belief that protectionism will do the trick is not similar to ancient islanders thinking making more wood totems would do the trick?

I was mildly interested that Keynes in his break from his life time support of Free Trade stated

The virtue of Protectionism is that it does the trick

As to my confidence in that truism , it hardly matters but I'll do a stand alone blog on the subject and duck..

I'm all for generalizations,

PeraclesPlease — Fri, 19 Aug 2011 20:16:47 +0000

In reply to In Skidelsky's biog of Keynes

I'm all for generalizations, they just have to be tested.

Re: 1914, I think the borders had already started closing a bit before then, and protectionism was on the rise.

Of course that wave of globalization was also fed by colonialist passions of the top European countries, so suffers the same general faults as the particular English occupation of Ireland.

http://www.history.ox.ac.uk/currentunder/honours/history/general/12resources/1856_1914.pdf

Your use of the word

artappraiser — Fri, 19 Aug 2011 20:01:13 +0000

In reply to Martin Wolfe of Financial

Your use of the word chauvinism in this context somehow triggered me to think of how one very famous axiom (that ironically comes from the WWI era even though popularized more recently) sort of summarizes Diamond's book:

The original phrase "Think Global, Act Local" has been attributed to Scots town planner and social activist Patrick Geddes.^[1] Although the exact phrase does not appear in Geddes' 1915 book "Cities in Evolution," ^[2] the idea (as applied to city planning) is clearly evident: " 'Local character' is thus no mere accidental old-world quaintness, as its mimics think and say. It is attained only in course of adequate grasp and treatment of the whole environment, and in active sympathy with the essential and characteristic life of the place concerned."

In Skidelsky's biog of Keynes

Flavius — Fri, 19 Aug 2011 19:57:37 +0000

In reply to Martin Wolfe of Financial

In Skidelsky's biog of Keynes he prefaces one chapter by a passage by someone -maybe Keynes-describing how interconnected Europe was in June 1914.

One of the several examples ( I don't have the book here):you could wake up and without getting out of bed in London phone your order for tonight's desert to a Parisian Patisserie.

An influential 1910 essay (by Norman something or other) argued that there wouldn't be any more wars because of the close links among the business people across state lines.

Maybe the only safe generalization is that no generalization is safe.

Martin Wolfe of Financial

PeraclesPlease — Fri, 19 Aug 2011 19:32:34 +0000

In reply to While Oxy Mora's reference

Martin Wolfe of Financial Times notes that in the late 1800's there was probably much more in the way of globalization and open borders than today.

The chauvinism that ushered in WWI also brought all that unity to a screeching halt.

While Oxy Mora's reference

artappraiser — Fri, 19 Aug 2011 19:24:35 +0000

In reply to It was Oxy Mora's post but

While Oxy Mora's reference was apropos in introducing related thought provocation, I'm not so sure that Jared Diamond's main points would go along with your argument. If you take a look the wikipedia entry on the book (which I cited above,) one point the book stressed was this

most important lesson is that societies most able to avoid collapse are the ones that are most agile; they are able to adopt practices favorable to their own survival and avoid unfavorable ones

and

Diamond identifies five factors that contribute to collapse: climate change, hostile neighbors, collapse of essential trading partners, environmental problems, and failure to adapt to environmental issues.....Diamond also states that "it would be absurd to claim that environmental damage must be a major factor in all collapses: the collapse of the Soviet Union is a modern counter-example, and the destruction of Carthage by Rome in 146 BC is an ancient one. It's obviously true that military or economic factors alone may suffice"

Globalization is still a fact going on whether we participate in it or not, and Jeffrey Sachs is someone who tends to look at the whole global situation; in your cite he mentions Asia, the global rich, etc.. Now it may be a wise decision to counter all this somehow, but I doubt very much Jared Diamond would argue that it should be on the basis of axioms like your let all goods be homespun. Diamond's main point would lead to the conclusion that sometimes it would be good to let all goods be homespun and other times it would be really stupid to do so, not that there are such truisms that one should always follow.

Indeed, his book's main point may be that societies should avoid relying on such "truisms." I.E., how do you know that your belief that protectionism will do the trick is not similar to ancient islanders thinking making more wood totems would do the trick?

Jared Diamond's Collapse:

artappraiser — Fri, 19 Aug 2011 18:46:27 +0000

In reply to Can't seem to recall the name

Jared Diamond's

Collapse: How Societies Choose to Fail or Succeed.