"What's good for General Motors, is good for America!"

[lehighguy]

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The more one studies these things, the more it becomes obvious that it is analytically useless to talk in blanket terms about the effects of "government intervention." But if you look at these cases, it is also obvious that certain forms of government intervention were absolutely critical to their success. There is nobody who is a serious student of Japanese or Korean developmental history who really disputes this.

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Are they critical, especially today? Certainly export oriented growth was helpful in the starting phase, but it remains a long term drag on the economic situation. As you own economy grows it becomes impossible to piggyback growth on someone else. At some point you need to build domestic demand. Entrenched political forces used to protection for so many decades make this diffucult.

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The state-owned enterprises are probably disasters, but that is only one (extreme) form of government intervention. Others, especially those that have secured political stability as a byproduct, may have been absolutely critical. Your statement that "the more government the worse it works" is basically unsupportable. Political economy is far more complex than you think, and blanket propositions like thse are almost always wrong.

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Political stability may be an important part of China's developement, but this is far from an arguement for superior economic policy. Farm subsidies in the industrialized world no doubt bring about political stability, but they are far from optimal (or even good) economic policy.

There seems to be an idea that if it works at all then it must be optimal policy. France works, but I would hardly call thier high unemployment and slow GDP growth optimal. Similairly, people have argued that China's one party dictatorship is why it has developed faster then its nieghboring democracy of India. That doesn't mean that dictatorship is better then democracy.

When you think about the theory and look at it in practice you have to wonder why support for idiotic policies like price controls, tariffs, min wages, and subsidies continues despite the fact they are obviously bad policy.

[lehighguy]

Unions are not designed to fight capital and business owners, they are designed to fight workers not yet employed. A majority of union policies and advocacy is aimed against teh poorest and most destitute.

[InchoateHand]

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A majority of union policies and advocacy is aimed against teh poorest and most destitute.

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Whatever the sorry state of tradeunions in the USA today, this comment is laughable. Care to support it in any way that doesn't illustrate a gaping chasm where a basic history of labor (and economics) should be?

[lehighguy]

Most of what unions do is keep other workers out. This limits the supply of labor and drives up wages. Consider the entire concept of liscensing and union only employment policies. Why does a hairdresser need certification?

In the past the victims were mostly poor black people that were forced out of jobs because they didn't belong to the union and couldn't afford to join/get certified.

My entire family has been in unions. My granfather was a union leader and traveled the country negotiating. He was a card carrying communist until he was older and relized it was a pile of bullcrap. My dad is a teamster and my mom was a union shop steward before she quit. She said her employees' demands were so outrageous she couldn't ask for them with a straight face anymore. So I have some personal perspective on this in addition to simply looking at history.

[sam h]

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Are they critical, especially today? Certainly export oriented growth was helpful in the starting phase, but it remains a long term drag on the economic situation.
As you own economy grows it becomes impossible to piggyback growth on someone else. At some point you need to build domestic demand. Entrenched political forces used to protection for so many decades make this diffucult.

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There seem to be a couple issues here. First is the issue of interventionism. I do think that many of the interventionist policies that characterized the huge growth stages of these economies - especially the way financial systems were run - are probably no longer sound. Whether the better solution today is purely a marketized model, however, seems very unclear. Probably there is no "best" policy package, just best fits for different contexts.

Second is the issue of export-orientation. I don't see why export-oriented policies should not be sustainable in the long run. Domestic demand should develop as the economy grows, which is precisely what did happen in Japan, Korea, Taiwan, and now China. I can see why the policy coalitions that form around intervention might prove obstacles for changing those interventionist policies, but I don't see why they would hinder the growth of domestic demand.

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Political stability may be an important part of China's developement, but this is far from an arguement for superior economic policy. Farm subsidies in the industrialized world no doubt bring about political stability, but they are far from optimal (or even good) economic policy.

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Well, obviously not all policies that support political stability will be good. But since economic growth without political stability is pretty difficult, then a degree of interventionism to ensure this has historically proven necessary for most developing countries.

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There seems to be an idea that if it works at all then it must be optimal policy. France works, but I would hardly call thier high unemployment and slow GDP growth optimal.

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I agree. Of course, one could say the same thing about examples of more laissez-faire economies as well. Just because the US model has worked pretty well in the last 20 years doesn't mean its optimal or that it would be a good fit for many other countries.

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Similairly, people have argued that China's one party dictatorship is why it has developed faster then its nieghboring democracy of India. That doesn't mean that dictatorship is better then democracy.

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I think that would be a silly argument, as China is much different than idea in a variety of ways. Of course it also would not constitute a good argument for dictatorship in the abstract.

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When you think about the theory and look at it in practice you have to wonder why support for idiotic policies like price controls, tariffs, min wages, and subsidies continues despite the fact they are obviously bad policy.

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Personally, I think this is where you are wrong and where you might augment your background and obvious interest in economics by delving a bit into economic history and political economy. The theory, meaning mainstream economic theory, will often be skeptical of these policy instruments. But its still just theory, derived from simplified models of human and social interaction. The practice simply gives a more complex picture, especially when we look at instruments such as minimum wages and subsidies. Minimum wages have historically been absolutely key concessions to working class constituencies for maintaining political stability in developing countries. Subsidies have historically been beneficial for a variety of reasons in some contexts, while obviously harmful in others.

[lehighguy]

No doubt government policies help someone. Tariffs on car imports obviously help car manufactureres (in the short term). The purpose of economic theory is the examine the totallity of a policy. Often, it allows us to consider those without a voice (usually the consumer).

Consider your bit about export oriented economies. The net result of all that protectionism is rediculous prices (traveled in Japan lately) as well as other inefficiencies.

One can point to positive effects while ignoring less visible negative effects in order to make intervention look good, that is why we have the theory.

Often when presented with logic one has no rebuttal too it is common to fall back on the "doesn't work in real life" defense. As if for some reason price cieling theory is stops making logical sense all of a sudden. I find this lacking, especially because I'm often left wanting when they try to provide examples that can still be disputed by the theory. The fact that Japan was successful and has large farm subsidies doesn't justify thier use. It's like a fish that chases a gutshot and hits and thinks it was +EV.

Is there a case to be made for sacrificing economic wellbeing for political stability, yes. But that is different from argueing that it is better economic policy, rather you saying people are too selfish to play by fair rules.

[hetron]

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Spare me the economics lesson. I understand the principles behind free market economics. The problem is not with theoretical free market economics. The problem is with how the model is being implemented in the world right now, and who it benefits.

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Wow. What a meaningless, banal statement. What, specifically, is the problem with how free trade is being implemented? You don't just state "there's a problem" and then not explain what the problem is.

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If you don't think interventionist policies didn't economically benefit many of the 3rd world countries whose economies boomed inthe 70's, you are nuts.

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Please, enlighten me. What interventionist policies worked, and what were the logical reasons why?

Will

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In response to point no. 1, a bunch of things. For one, the US is still protecting certain industries (farming, steel) while encouraging other (poorer) countries to drop tariffs against US goods. Furthermore, environmental concerns may not be of significant importance in an economic model, but they do come into play in the real world. Multinationals don't have a problem going into some poor country and polluting it.

As to point B, many of the 3rd world nations who developed strong economies did so by applying high tarriffs to foreign goods, heavily subsidizing industries that produced viable exports, and engaging in import substitution. Though import substitution has kind of gone by the wayside, a lot of the east asian economies still heavily subsidize their export-making industries and levy a big fat tax on foreign goods.

[sam h]

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Consider your bit about export oriented economies. The net result of all that protectionism is rediculous prices (traveled in Japan lately) as well as other inefficiencies.

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Export orientation does not necessarily entail protectionism. In fact, many of these East Asian countries had relatively (for the time period) open trading regimes during their big development spurt.

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One can point to positive effects while ignoring less visible negative effects in order to make intervention look good, that is why we have the theory.

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Obviously you have to weigh them both.

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Often when presented with logic one has no rebuttal too it is common to fall back on the "doesn't work in real life" defense. As if for some reason price cieling theory is stops making logical sense all of a sudden.

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Errh. I don't think you really understand the fundamentals of social scientific inquiry. No matter how "logical" a theory, it still needs to be put to the test empirically. You call that the "doesn't work in real life defense." Most academics call that basic research practice. Intellectual history is nothing but a long litany of theories that seemed "logical" at the time but were later discarded because they were not supported enough by evidence from the real world. That's how we make some kind of progress.

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Is there a case to be made for sacrificing economic wellbeing for political stability, yes. But that is different from argueing that it is better economic policy, rather you saying people are too selfish to play by fair rules.

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I don't really understand the latter part of your statement. But I think you are missing the point with the former part. Political instability in developing countries has historically been very hard to ensure, and this has been a major impediment to growth. Therefore, safeguarding political stability may not be a "sacrifice" of economic well being at all.

[Cyrus]

Unions can be an overall good thing or an overall bad thing, depending upon personalities and circumstances. Generalizing is not very helpful. I happen to know, for example, cases of people who were saved by the union, as far as their livelihood was concerned. Sometimes, even their lives (union-imposed safety regulations lowering accident stats). I also happen to know, very intimately, destructive tactics by ideologically blinded unions, which cut off the tree branch on which they were sitting, i.e. the plant closes and goes belly up because of totally unrealistic demands.

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In the past the victims were mostly poor black people that were forced out of jobs because they didn't belong to the union and couldn't afford to join/get certified.

[/ QUOTE ] I have no idea what you could be talking about. Joining the union means paying a li'l ol' something outta your paycheck. Why would you say that blacks suffered in the past from unionizing? The American labor movement history, on the contrary, shows that blacks benefited enormously from the effects of unionization. (Although unionization meant initially broken heads, mass firings by the employers and police action against "agitators". So unionizing ain't easy, so what?)

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My dad is a teamster and my mom was a union shop steward before she quit. She said her employees' demands were so outrageous she couldn't ask for them with a straight face anymore.

[/ QUOTE ]And this means that unions are generally bad? no more than if I gave you a story with the opposite effect. No, it's the cumulative and historical effect of unionization that we gotta examine. If we do, we'd see that unionization has eventually (after all the head breaking, etc) raised the benefits of workers in America, secured workplace safety regulations, actually contributed to improved quality in production, etc.

Of course, when things are tilted too heavily one way (as, for example, in the United Kingdom, in the 1970s), unions might get unrealistic, over-ambitious or simply confused. This is usually disastrous for the cause of that union, if not the whole labor movement.

Nowadays, with globalisation rendering protectionism almost non-existent, with frontiers getting practically obsolete, and with capital setting workers in competition to one another all over the globe, the old-style labor movement might be breathing its last. New ideas for action are required. Perhaps new men, as well.

[MMMMMM]

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Nowadays, with globalisation rendering protectionism almost non-existent, with frontiers getting practically obsolete, and with capital setting workers in competition to one another all over the globe, the old-style labor movement might be breathing its last. New ideas for action are required. Perhaps new men, as well.


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"Required" my foot. If it wants to die, perhaps it should be granted the respect of a peaceful passing.