The world isn't as flat as Friedman thinks.

[CapTVK]

Forget it Vet, some people simply refuse to get the beam out of their eye. A simple visit to the site (which also hosts the excellent tool "Gapminder") would have cleared that up.

http://www.gapminder.org/

As for the graph, at the end of the day, a lot of people have been lifting themselves out of poverty, mostly without (or despite) our "help".

So, three cheers for world growth, globalisation and capitalism. Hip hip hip hooray!

[lord of the mark]

Originally posted by Oerdin


Singapore? Likely Taiwan as well.. What about the Netherlands or Switerland?

CG will quibble about "free" in regard to Singapore and Taiwan. Neither Singapore or Taiwan is completely laissez faire - both have, IIUC, Japanese style, economic planning, and Taiwan had a major land reform in the 1950s.

However as you imply, both relied overwhelmingly on trade and were open economies. One way of avoiding that fact is to use the strawman of "laissez faire"

[lord of the mark]

[QUOTE] Originally posted by GePap


"It would be nice to see these small countries use whatever little capital they have to develop internally, but instead what little capital they have invariably gets sucked elsewhere since it will be more productive for its owners in other areas, leaving those who won capital in a great situation, and everyone else in those countries screwed. "


If there are investment opportunities locally, capital will stay there, as well as see foreign capital drawn in. That doesnt mean there wont be short term capital flight crises, like 1998. Countries where capital flees long term are likely ones that have few investment oppurtunities, for one reason or another.


Countries may of course place limits on short capital movements, as Malaysia has, to avoid 1998 type crises. This has advantages and disadvantages, but is still not inconsistent with an export led model of growth.

"So they become a single item state, with its sole s
source of foreign capital being a single thing in which they have a temporary advantage...leaving those in control of that one thing more powerful than ever, and everyone else, well..tough. Yeah, great outcome. Makes for a far more stable situation...."

Im not sure what youre saying here. If they are large enough to export multiple items they can - it depends on scale. And they will likely continue to produce less transportable items (and services) locally. If they lack capital, as most poor countries do, they will of course depend on foreign capital. The only alternative is not to grow. "those in control of that one thing" - if there export is, say, a mineral, with high economies of scale, thats likely to mean a lot of power to whoever owns it. If theyre coffee farmers, or cotton farmers, or their advantage is in say, garment manufacture, ownership is not likely to be concentrated.

If they are subsistence farmers, of course they are not very likly to have to restructure their lives. Theyre also likely to live in abject poverty, however.

And amorphous or not, everyone whos
buying or selling something on the market is exposed to fluctuations in price - the only question is how much the local market is influenced by the world market.

"Maybe someone's ability to live should not be based on what a "market" decides they are worth. "

Someones ability to live shouldnt be dependent on the weather, either, or on the fickleness of germs. But those cant be abolished. You CAN abolish the market, but do you make it more likely that people will live when you do that? The global market doesnt decide what people are "worth" . It only decides what the products they produce are worth. Unless A. The world decides to give them stuff for free or B. They can produce all they need themselves (the closed economy model) then what is available for them to consume (with its implications for their ability to live) will depend on the market. While I see some good things starting to happen in the rich countries - debt relief for the poorest countries, and a goal of ending ag subsidies - there doesnt seem to be any movement to increase foreign aid to enable poor countries to import stuff without exporting. So the only alternative is the closed economy model, but years of experience has shown that for any economy is that isnt both continental in scoper and blessed with a favourable labor-resourece ratio, thats a formula for continued poverty.



"It gives people a chance to even the playing field. "


Only for those who actually migrate, who, upon receiving citizenship in a rich country, not only have access to the labor market, but the same social services, politcal input, etc. For those left behind, all it does is tighten the labor market and raise wages, which is the same thing trade does.

So unless you expect everyone to migrate, you still wouldnt have a completely "flat" world.

Maybe Friedman should have said a "flatter world" but I bet his publisher wouldnt have thought that a good idea.

[BlackCat]

Originally posted by Az


I specifically stated that the one of the main reasons wages are so low is 'supply and demand', i.e. what you meant by "the actual level".

It's not only a supply/demand question - it's the prize level too, and that is what I mean with "the actual level".

again, untrue. Even with equalization of regulations, and even with higher wage costs, wage difference will remain and will easily cover expenses such as the relocation and setup of operations in other countries - and more. But for now, the companies are telling themselves - why settle for this if the "market" is allowing us to have so much more?

It's actually pretty complicated to move production to cheaper countries and often it's not worth it.

Not with most of the industries we're talking about. consumer goods, "prerequisite" goods. The only really problematic area is things like chemical and petrochemical industry - but even that can be faced.

Most of the industries that easily could be moved did that years ago. Danish companies are actually taking back production. The reasons are several - long transport, different culture, communication, government regulations - the list is long.

Besides that, it's not always possible to move production to the cheapest place. Sometimes logistics prevents it, sometimes the country simply isn't ready to handle it.

And in those cases, there is no point on settling for lower wages, etc., for example is shipping time from X is ridiculous, right?
Lastly, it isn't like moving production to TWC's is reinventing the early days of industrialisation - there are lots of knowledge about handling dangerous stuff (though, I must admit that the Indian government have something to catch up) etc.

This is so garbled that you need to get it straight before I can be bothered to answer

[chequita guevara]

As LotM correctly pointed out, I will indeed "quibble" that neither Singapore nor Taiwan were free traders (laissez faire). It's true that both countries exported their way to prosperity, but both had significant government interference in the market, not just limited to tarrifs, but also guaranteeing loans etc. And, of course, bother was dictatorships, the KMT of Taiwan being particularly brutal.

Free trade favors the powerful, not the little guy.

It's also important to note that unless the government strictly controls foreign investment, it can be disaster for the country. Latin America has been plundered to the tune of nearly 1 trillion dollars in the last twenty-five years. You want to know why they're still a basket case, look no further.

[Az]

It's not only a supply/demand question - it's the prize level too, and that is what I mean with "the actual level".

what the hell is "the prize level"?

Most of the industries that easily could be moved did that years ago. Danish companies are actually taking back production. The reasons are several - long transport, different culture, communication, government regulations - the list is long.

Then the whole topic wouldn't be an issue, would it? in any case, we can alternatively discuss enacting these measures now.

This is so garbled that you need to get it straight before I can be bothered to answer

sorry about that, a part of a quoted text got into my reply - what I was saying was that if logistics makes a certain place unbearable in terms of manufacturing - it's pointless to discuss wages there.

[Kuciwalker]

what the hell is "the prize level"?

Probably the same thing as the price level.

[Kuciwalker]

But misspelled.

[Urban Ranger]

Originally posted by chegitz guevara
Free trade favors the powerful, not the little guy.

Quite. That's why many IMF/WB loans to Third World countries messed them up big time.

Watch out for them strings.