Race to the Bottom - the future of western manufacturing
Good Habit
Raymond Speer schrieb:
> If every capitalist system open to trade is doomed to deindustrialize,
> that is serious predestination.
It's not doomed to deindustralize under all circumstances - it depends
on it's position in the pecking order of nations at the time when a
*race to the bottom* seriously starts. As higher they are up - as deeper
they fall...[simplified general rule]
OTL, at the end of WW II, the US was very dominant economically and
politically [significant political/military opposition only *outside*
the western economic sphere /USSR].
Re-industialization after the depression had happened following
keynesian economic principles, and was widely helped by the war effort.
During the Cold War, political priorities dictated that Western Europe
and Japan shouldn't be pushed *to low*, else they would likely fall to
communism. So they were allowed to reconstruct building welfare states
and keeping a large part of their economy in their own hands.
Although W.E. and Japan recovered fast and regained an important
position in the global economy, the competition didn't hurt US industry
to much, because as welfare states, they didn't undercut US prices *that
much*.
Latin America - and some other places - weren't treated that nice, and
were forced by organizations like the IMF to shut down many public
services, and all direct control of many resources by big corporations.
So they were forced to produce MUCH cheaper, but up to the 1980's they
didn't become much more than niche players, and so there wasn't really a
race to the bottom.
This all changed dramatically in the 1990's, with Eastern Europe and the
former USSR changing to market economies, China getting a serious
foothold as workplace, and India, and others, starting to seek a role in
the game as well...
Now, within a short period, the countries offering CHEAP labor and low
social and environmental standards had expanded by several magnitudes.
Therefore, large parts of production moved, and leading politicians
pushed for a 'more active competition' - read - a fast race to the
bottom - only those with the worst social standards, the least care for
the environment, the lowest wages would be able to compete in
_globalized_ markets.
>
> Oh, I so want to believe that there are never mistakes that _MUST_ be
> made by our leaders. I desire to learn that alternate courses will brig
> a divergence, and that the consequences of the change can be an
> improvement on our record.
>
> I fear your theory because I worry that you may be right.
>
There was a very short window of opportunity early this year - the
global financial crisis did send a shockwave trough the world, and some
did even talk about necessary change. But, unfortunately, Obama seems
more to care about appearance then content, and so the chance wasn't
taken up, and almost all political leaders follow the call (of big
business) to get back to business as usual, that is:
more riches to the rich, more poverty to the poor.
So what are likely developments?
In the very near future (2010/2011) the race to the bottom will
accelerate even more - their will be growth in the "emerging markets" -
but only very little in the old industrial centers - probably not even
reaching 2007 levels. With consumption dropping due to very high
unemployment and falling benefits, the deficits will look bigger, right
wing loons will call for radical austerity [stimulus has failed] - and
will likely get their way.
And then?
The most (horrible) promising way to get back to Keynesian economics and
thus sustained growth would be a HUGE WAR - on the same order of
magnitude as WW II - or bigger - lasting many years, consuming enormous
resources, and allowing to rise the top tax bracket again to close to
90%. [A huge increase of the public sector and more equality required to
assure national survival]
Of course, the same effect could be achieved as well with a "War against
global warming". This would be much more useful, and therefore I can't
see a way that the necessary political support can be found [Survival of
the planet sounds important, but to frighten *enough* people in to
believing that it's really at stake - no way.
Alternatives: A short war - or several more medium sized wars - a la
Afghanistan / Iraq will not do the trick - they might be used to demand
more sacrifices from the poor, but build not enough pressure to really
take something from the rich, because the nations survival doesn't seem
at stake.
So, without a *huge effort*, the most likely outcome will be that a few
years down the road, the global balance skips - in the case of the US,
this would most likely be marked by the point were most other nations
stop to accept US$ as payment.
Then, there will either be some populist revival - it could take on a
socialist-populist direction (a la Hugo Chavez, may be) - a bit unlikely
in the US, I assume - or a racist-populist direction, leading to more
ghettos or more medium sized wars, thus making things worse. (more
likely, I would expect).
OR, the state could just retrench - "sorry, we don't have any money" -
most services are closed down, and in short order, the situation reaches
*failed state* levels. [The higher they rise, the deeper they fall...].
Unfortunately, survival chances in urban failed state areas are much
smaller than in the countryside...
eatfastnoodle
I think you generalized a bit too much from what happened during WWII.
The US economy got a boost during the war because the US mainland was
not involved in the battle while all other major participants on the
allies side had their industrial heartland either under occupation or
very closer to actual battle. US was the world workshop, the enormous
boost in demand that only the US could fulfill essentially created an
artificial monopoly for the US, which is unlikely to be recreated in
today's world.
As nuclear deterrent among major powers are well-established
institutitonally and well-understood by both the ruling class and the
not-the-brightest-bulbs. It's obvious that populist hacks could become
trendy, and they're already quite popular if you watch some of the
more nutty ones on Fox News. But for a bunch of populist hacks to stir
up the pot to the point that people would be fooled into a war against
another major powers, all of them are nuclear armed, with 60 years of
knowledge and education about the consequences of nuclear exchange
firmly built into the public conscience, it'd require such a
convergence of variables that I'd consider it extremely unlikely, if
not impossible. It's once thing to blabber about Obama being a closet
Muslim and have people believe it, it's another thing to trick people
into supporting a military endeavor that everybody knows will lead to
them being nuked. Without full-scale war against major power and with
the US mainland, like everywhere else, within the range of
conventional or nuclear tipped ICBMs, which all major powers possess,
it's unlikely that war would produce the kind of boom US witnessed
during WWII. Smaller scale wars against smaller countries, like what
happened in Iraq and Afghanistan, no matter how much money were thrown
in (take it together, the direct cost of both wars ran up to at least
2-3 trillion dollars, yet its economic stimulative impact is almost
negligible) will only have negative effect by draining the treasury
and hugely distorting domestic allocation of resources. In sum, war is
not the solution any more because of the nukes and because of ICBMs.
And as dumb as the general public is, it'd take a hell-ova populist
hack to make them suicidal.