
How the World Works (1993) - phreeza
http://www.theatlantic.com/magazine/archive/1993/12/how-the-world-works/305854/?single_page=true
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jsnk
Protectionism in East Asia did help very capital intensive industries
(automotive, chip fabrication, ship building etc) to grow during its infancy.
But I doubt that if this is fundamentally the right way to look at why
economic miracle happened in East Asia.

There has never been shortage of protectionist economies. In fact this was the
norm for centuries all around the world and certainly in East Asia. What was
it about post WWII that was so special that actually had impact on the
economy?

[Edit] And let's not forget about North Korea. North Korea surely had the most
protectionist economy in the world. It has shielded its own corporations from
the hardships of global competition, and yet we never saw companies like
Hyundai, Daewoo or Kia in North Korea.

~~~
manmal
If you mean "what was so special about post WWII that the US succeeded by
being laissez-faire" \- then I'd argue that WWII was what happened. With
Germany and Japan destroyed, the US had an advantage. Call it unfair or not.
Germany looks very healthy now, with their focus on industry.

~~~
danielam
The funny thing about Germany now is that it's actually in a bit of a bind
because its prosperity is perilously linked to export. The reason Merkel is so
aggressive about maintaining the integrity of the EU is largely because
Germany needs the free trade zone, common currency, etc to keep its export-
driven market running (not to mention favorable access to cheap labor to its
east). The author emphasizes the dangers of over-dependence on import, but the
opposite is likewise true. Interestingly, when the 2008 recession hit, Poland
was the only country in the EU left with positive growth and this is largely
attributed to the strong domestic market that made it more resistant to
failure in foreign markets.

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dctoedt
The author is James Fallows [0], a long-form journalist on public policy
subjects; computer user going back to Electric Pencil in the pre-IBM-PC days
[1]; multi-lingual international traveler; private pilot; beer connoisseur;
Rhodes Scholar; former chief White House speech writer; and family man. For
many years I've been reading pretty much everything he writes.

[0]
[https://en.wikipedia.org/wiki/James_Fallows](https://en.wikipedia.org/wiki/James_Fallows)
\-- see also [http://www.theatlantic.com/author/james-
fallows/](http://www.theatlantic.com/author/james-fallows/)

[1] For (several) laughs, see
[http://www.theatlantic.com/magazine/archive/1982/07/living-w...](http://www.theatlantic.com/magazine/archive/1982/07/living-
with-a-computer/306063/)

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B1FF_PSUVM
Well worth the reading time, if nothing else to point out where an almost
unheard of (but much practiced) alternative to the dominant free-trade
discourse is based.

It also helps to know that thirty years ago the fear of Japan's economic
growth had the US press shitting bricks, and probably not just because that
was good for circulation ...

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danielam
Let's not forget the broader geopolitical context and the relations among
nations that can result (this basically expands and refines the author's main
point). For example, South Korea's material prosperity is also the result of
American geopolitics. If you had told someone not 75 years ago that a nation
of rice farmers would become an advanced industrialized country in the time
that it did, you would have been laughed out of the room. The US needed South
Korea to be what it is and the country benefited from it economically. In
other words, it was in the broader American political and economic interest to
encourage South Korean growth.

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fanzhang
This article was written in 1993, a year where Japanese GDP per capita was
25%+ more than the US's. This was the peak of American fear against Japan
taking over the world, economically.

With the empirical foregone conclusion that Japan was better than the USA,
many people including this author seemed keen to find reasons. Many people
ultimately traced it back to the fundamental values of the US.

Yet looking 23 years forward in the future, the US GDP per capita is now about
50% greater than Japan's. In fact, Japan has barely moved in these 23 years,
and it's interesting to note everything the author citing above as Japan's
philosophical advantage being recast by more recent commentators as
weaknesses. To wit, here are the following praised ideas, and the most recent
critique of them in light of some developments in the last 23 years:

\- "Nation/group above the individual" \-- Japanese stagnation has been
strongly blamed on a culture where companies have less ability to hire young
but very talented employees because that would upset the age-competence
hierarchy, and other such rigid structure.

\- "Deliberate development needed for growth" \-- Witness the Chinese high-
speed rails to nowhere, the failure of the US federal forway into being a
solor company VC.

\- Close association of banks/conglomerates -- Theories abound of Japanese
zombie banks and companies with negative value being propped up by bad loans.

And sorry for bashing on Japan -- I have nothing against them personally. They
just happen to be a stand in for a star of the alternate non-Anglo economic
theory in the essay above.

(These cycles of being anti-US-value when another system is dominate has been
surprisingly common. Communism was championed most strongly within the US
itself exactly at times when the US was in a recession but the USSR was doing
well. For example the early 1930s or early 1980s.)

~~~
damptowel
Japan's decline might have been a political phenomenon.

[https://vimeo.com/110710752](https://vimeo.com/110710752)

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grillvogel
i do find east asian style capitalism preferable to the "fuck everyone over as
much as possible to maximize everything" style that we have here

~~~
readams
China is even deeper into the fuck everyone over as much as possible mindset.

~~~
grillvogel
[https://en.wikipedia.org/wiki/East_Asian_model_of_capitalism](https://en.wikipedia.org/wiki/East_Asian_model_of_capitalism)

nothing to do with China

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frsandstone
It's time to make America great again.

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mathattack
tl;dr

Can someone summarize? Is he just saying that free trade isn't the only way to
maximize national wealth? That perhaps Beggar Thy Neighbor can help ones own
country if others don't follow suit? It was too drawn out for me to read the
whole thing and rebut.

~~~
nostromo
The author is arguing that Mercantilism and Protectionism make countries
richer than does unbridled Free Trade.

I imagine OP posted this because it's at the core of the current US
presidential debate. Interestingly, it's a debate happening within the
parties, not just between them.

~~~
scribu
That may be the overall conclusion, but I find the many distinctions the
article draws between Anglo-American economics and others quite interesting in
themselves.

For example, I thought the point about inequality was very well articulated:

"In the real world happiness depends on more than how much money you take
home. If the people around you are also comfortable (though, ideally, not as
comfortable as you), you are happier and safer than if they are desperate."

Edit: phrasing.

