China's Emergence as a Superpower (till 2014)

[Dayuhan]

I tell you that the vast majority of those workers will often end up unemployed or employed in such poor jobs that keeping them in their old job means a vastly higher productivity even before taking subsidies into account.

Vast majority? I doubt that. Based on what empitical evidence?

[Fuchs]

Vast majority? I doubt that. Based on what empitical evidence?

It's such a non-controversial thing usually that I merely had to do a quick google search to come up with an examples study:
http://www.ncbi.nlm.nih.gov/pubmed/2732771

You are talking about subsidies, right? Subsidies produce deadweight loss.

I had to look it up initially (languages...) and so far found it to be similar to "Wohlstandsverlust" (at least deadweight loss marks the areas on diagrams which we would mark as "Wohlstandsverlust".

Subsidies are transfers, and I do not remember a theoretical basis for claiming that a transfer itself means a Wohlstandsverlust. There are transaction costs, of course - administration, enforcing of revenue, distortions caused by tax dodging etc.


Even if there was a deadweight loss; I pointed at the output loss by closing the factory and sending a fraction of the workers to marginal jobs, a small fraction to decent jobs and a large fraction into unemployment.



Finally, there's a macro level to the problem: Contrary to antiquated free trade theory, it's simply stupid to believe that everything should be produced by the fittest ones. This would inevitably leave some unfit ones without the exportable output to afford a decent material standard of life.
Mali et al have no choice, but countries with industries (for technically export-capable products, that is; at the very least suitable as substitutes to imports) should not give them up easily and de-industrialise, for they would move to join Mali.


Relatively inefficient industries can very well be good industries and vital to a countries' material standard of life.

[Dayuhan]

It's such a non-controversial thing usually that I merely had to do a quick google search to come up with an examples study:
http://www.ncbi.nlm.nih.gov/pubmed/2732771

Nothing there indicating a "vast majority". If "This excess of disabilities then stayed relatively constant at approximately 17 per 100 persons from 5 to 10 years after the shut-down", wouldn't subsidizing that excess of 17 per 100 through retirement be cheaper than subsidizing the entire factory ad infinitum?

Companies which fall behind in productivity/competitiveness are much more likely to do so because of a lack of capital investment or because of management errors.

Labor cost and regulatory burden don't enter into it at all? Do you really think any level of capital investment and management expertise could have kept, say, the US textile industry competitive?

Subsidies in developed also have a negative global impact, posing a serious obstacle to countries that are trying to develop viable industries

This thread needs to get back to China...

[Fuchs]

Nothing there indicating a "vast majority".

Actually,

After the factory closure, the annual employment rate of the study group showed a steady rise to a maximum level of 44% within 6 years, but even after 10 years never matched the employment rate of the controls.

AND I didn't only refer to unemployed, but rather wrote

...the vast majority of those workers will often end up unemployed or employed in such poor jobs that keeping them in their old job means a vastly higher productivity even before taking subsidies into account.

Now look at my emphasis, please.


I don't believe that you think about the same as I do. I think of the economy as something that creates goods & services, sustains itself and distributes the goods and services (and there are some trade effects).

To close a factory in a distressed sector usually means to reduce the goods produced in the country, for the workers don't simply move to another factory.

It's a strange idea of efficiency to favour substantially less output and substantially less consumption only because a company failed on the market.
This makes sense when there's a lot of flexibility, when workers get a new job of at least equivalent productivity and when capital is simply allocated to a better use.

The reality in Germany is that the former doesn't happen and the latter takes the shape of capital export that helps nobody but a handful of big ticket capital owners.
The reality in the U.S. and UK is more about the former, while the latter cannot be said as long as the macro picture includes a substantial net capital import.


Keep in mind that the economic theory that says 'bad' companies shall be liquidated to free up resources for better uses is a very primitive one (early 20th century) and so very basic that it doesn't include the substantial limits on those "better uses".
Moreover, economic theory is not nationalistic-egoistic, but rather totally fixated on efficiency. Studying macro and micro basically means a three to five year indoctrination of aversion against waste of resources.
A nation has different priorities than to optimise the global economy.


Some developing countries have used subsidies to horrible effect (example low oil prices in Iran) while others have become the foundation of the countries' new prosperity (example electronics and shipyard industries in South Korea).
Subsidies aren't only good for attack (gaining market shares), but also for defence (keeping market shares).

Western countries can use subsidies (and other privileges, as subsidies are IIRC a problem under the WTO regime) to help the development of all-new sectors (biochemical technology etc) and to sustain old sectors in order to avoid the after-effects of losing them.

[Ray]

“The new American ‘pivot towards Asia’ is a brilliant illustration of the place of this region which is now key to the balance of today’s world and in defining our security interests. This area is indeed a strategic stake for France which is and will remain a power in the Pacific and Indian Ocean. I came here to affirm that France firmly intends to remain committed to fostering security in the Asia Pacific area.”--------- French Defence Minister Jean-Yves Le Drian, Address at Shangri-La Dialogue Singapore June 03 2012.

http://www.southasiaanalysis.org/pap...paper5081.html

[Bob's World]

France appears to be working aggressively to reestablish influence in many of their old haunts.

When nations wearied of French control and colonialism, many turned to the US for hope. Now it appears it is France that is offering itself as a less controlling option. Ironic.

[davidbfpo]

Bob,

What evidence supports your argument? Leaving aside Libya.

France appears to be working aggressively to reestablish influence in many of their old haunts.

In the Pacific France has retained most of colonies; in Asia I think France is glad to be gone (Cambodia did see some activity when peace was achieved); in Africa she has retreated, in the Ivory Coast she had to "share" peacekeeping with the UN (which failed) and in the Middle East selling weapons in the Gulf and being noisy on Syria hardly fits.

The UK of course has a new, stronger relationship with France and President Hollande has taken a little step to show this:http://www.bbc.co.uk/news/uk-england...shire-18548327