Do you have a source for this? In the past when I've been told this, the statistics referenced where based on whether a company was classified as being in in the manufacturing sector, not based on which jobs were classified as manufacturing. This included companies that were classified that way due to historical inertia, or based on their global industry but actually had little to no manufacturing in the US. Based on that I have a hard time knowing what to believe, and would love to be pointed to more accurate information.
Average productivity per manufacturing worker in the US grew on average by 3% per year in the 1950–1980s and 4% per year in 1990s (https://www.bls.gov/opub/mlr/2002/06/art4full.pdf), i.e. its current output is comparable with that of ~50m people working in 1969, so a 30% decrease in total manufacturing employment was probably well compensated for (putting aside the social welfare point of view).
There's a vibrant high-tech contract manufacturing segment of the economy, led by behemoths like Foxconn and several other Asian players who specialize in consumer electronics & computing gear (Compal, Pegatron, Quanta, etc). That doesn't mean manufacturing doesn't exist in the US, though, and there are still very large EMS firms with significant presence domestically, like Jabil, Flex, Celestica, Sanmina, and plenty of others. The difference between now and 25 years ago is that it hasn't been cost effective to manufacture high volume, low complexity electronics in the US for a full generation. But, the majoarity of high complexity, low volume (NPI, very large PCBs, PCBs with many complex layers) stuff is still made in the west, and there will always be meaningful demand for high tech manufacturing in regulated industries (defense, medical), too. For example, CGMs are made in Alabama & Ireland, avionics for Apache helicopters are made in Alabama, data center server racks for Meta are assembled in Finland, Germany & San Jose. Same for Netflix CDN racks.
It goes on and on. The majority of what has been outsourced to China (and Taiwan and Singapore and India and Vietnam) is the "face" of high tech electronics, and the majority of electronic piece parts components, but not final assembly and not much of the tricky stuff. I don't think we'll see a quick ramp of high-vol/low-mix mfg coming back anytime soon because too much of the supply chain is in Asia, but it could if there were sufficient demand.
How does this square with 5G radios being almost entirely made in Asia? As in the entire chain from antenna design to finished chip happens >90% in Asia by dollar value.
None of the things you mentioned come even close in terms of complexity, on a per cubic volume basis at least.
There are reams of economic literature trying to estimate whether government intervention in the market was a good idea. Most of the time it doesn't turn out great. So the parent's suggestion "probably won't be a win for economic output" is a pretty safe bet.
Often governments will use "security" as an argument to keep steel, shipbuilding, etc, in the country. That argument is not really possible to evaluate on economic grounds.
> That the favoured industry (or company) is doing well isn't necessarily a sign that the policy is overall good for the country's economy.
You are answering specifics with generalities.
If Taiwan didn't support and nurture TSMC so that today it's a national champion that prints money, what development path do you think they could have taken that would've brought at least the same economic success? Please be specific.
There's plenty of other companies in Taiwan already today, and that's without the counterfactual of leaving more money in people's hands.
I can't predict specifically what other things would have happened. If people could do these kinds of predictions well, maybe central planning would actually work?
You are saying planning never works without even the ability to point to any specific cases. Why do you swallow your own ideology so uncritically?
Does Soviet-style central planning work? It didn't seem to work well in the few societies that really tried it.
Dos all planning fail? Seems unlikely, given the amount of fairly centralized planning that went on (and still goes on today) in East Asian countries, countries that are the rare "success stories" of developmental economics.
In fact the original East Asian success story was Meiji-era Japan, basically the only society outside of the West that managed to industrialize itself during the 19th century. And if one sits down to read a history book one quickly realizes that what the Meiji government did was highly top-down and planned with the explicit goal to catch up to the European colonial powers. It did not resemble classical laissez-faire economics.
Huh? Where did I say that planning _never_ works? Please read more carefully, lest you argue against strawmen.
I said that planning and forecasting is _hard_, and that _I_ can't tell you on the spot what counterfactually would have replaced TSMC. Many different options are possible. Or perhaps TSMC would have still happened, but in a different way.
> In fact the original East Asian success story was Meiji-era Japan, basically the only society outside of the West that managed to industrialize itself during the 19th century. And if one sits down to read a history book one quickly realizes that what the Meiji government did was highly top-down and planned with the explicit goal to catch up to the European colonial powers. It did not resemble classical laissez-faire economics.
If I have an ailment and go to a chiropractor to fix that ailment, and later my ailment goes away, that doesn't necessarily mean that the chiropractor helped. In fact, those guys are dangerous and more likely to make things worse.
For another Japanese example, see how eg Sony had to fight and dodge the much vaunted MITI more often than not, especially in the beginning. (Sorry, I'm not up to date on all the Meiji-era stuff. It's a fascinating period of history, though!)
---
Just to be clear, central planning can 'work' up to a point; it doesn't necessarily lead to famine. Eg seen on its own East Germany was the most successful socialist economy ever. Out of the ashes of war torn quarter-country they rebuilt a reasonably high standard of living---the highest among all socialist countries, and pretty decent by global standards---all while paying enormous war reparations to the Soviet Union. (I was born in East Germany.)
Their system had many aspect of Soviet-style central planning. But over most of its life the regime wasn't nearly as totalitarian as Stalin's Soviet Union.
It's just that East Germany pales compared to more market oriented West Germany. (And West Germany pales compared to even more market oriented Switzerland.)
> The government support are a combination of low interest loans, import controls and financial subsidies.
There is a very well-understood formula on how to go for from an agrarian society to an industrial one, which has been used going back to the late 1800s:
https://www.amazon.com/Just-Get-Out-Way-Government/dp/193086... is an alternative view at development economics. The title is a bit provocative, (even the author wasn't really happy with it, when I had a chat with him about it). The main thesis of the book is that honest and competent civil servants are the most rare and precious resource a country has, especially a poor one, so policies should economies on their labour.
So eg you should privatise a state-owned company by auctioning it off in one piece to the highest cash-bidder open to all comers from anywhere, no questions asked. Instead of having your civil servants set up a complex system or worse trying to evaluate proposed business plans. Complexity breeds corruption in the worst case, and in the best case still takes up civil servants' limited time.
> On a trip to Turkey in 2018, I read How Asia Works, by Joe Studwell. Despite the fact that it didn’t get everything right, it’s probably the best nonfiction book I’ve ever read.
> As any longtime reader of mine will know, my favorite book about economic development is Joe Studwell’s How Asia Works. If you haven’t read this book, you should definitely remedy that. In the meantime, you can start with Scott Alexander’s excellent summary.
The book goes over what actually happened: it's not theory, it's history. What worked in each country (often the same/similar things), the variations, and where things were tried but went badly (often with analysis on why).
> The book goes over what actually happened: it's not theory, it's history. What worked in each country (often the same/similar things), the variations, and where things were tried but went badly (often with analysis on why).
Alas, in the absence of randomised controlled experiments, it's very hard to infer causality purely from observations. You need a theory to guide you. But observations are still extremely useful, of course.
Just because countries did X and Y happened later, doesn't necessarily tell you X causes Y. In addition to the usual causation vs correlation dilemma, in economics you can even have what looks like reverse causation that goes back in time, because intelligent actors anticipate the future.
(Silly example, if there's a clear sky, and you see many people carrying raincoats and umbrellas, it's likely to rain later. But that doesn't mean that umbrellas cause rain.)
Many of the successful countries in 'How Asia Works' share some ethnic similarities. (Eg many have at least sizeable Chinese minorities or have outright Chinese majorities.) Many of the success stories also have some land reform in their past. The author decided that the latter 'worked' (ie was a causal factor), and ignores the former as perhaps a mere coincidence. Similarly, the author decided that the bouts of industrial policy and protectionism are praiseworthy causal factors.
He almost arbitrarily excludes Singapore as purely a financial centre, even though we have a pretty diversified economy these days, and in the past during the fast catch up growth, we weren't a global financial hub yet. That early development owes much more to the typical 'sweatshop' model that we see in many successful industrialisers, ie (light) manufacturing for export.
> 'How Asia Works' is not exactly economic orthodoxy, to put it lightly.
And yet it describes the historical record of several countries (in the case of Japan, how they did it twice: post-Meiji Restoration and post-WW2).
It goes over countries deemed 'successful' (Japan, Korea, etc), and others (Philippines).
What (particular?) "economic orthodoxy" would you suggest countries follow? What are countries (if any) have followed them, and what are the results? Are there book(s) that you would recommend on how to implement this/these orthodoxies, with case studies or historical examples of implementations?
'How Asia works' describes the historical record of some examples, yes.
There are some correlations between various factors and 'success'. Alas, it's hard to tease out which of the correlations, if any, are causal factors, and which are just coincidences, or worse. [0]
The book guesses at some of these causal factors, and makes policy recommendations.
I am mostly not really convinced by the full list of causal factors the book presents. On the one hand, the book observes protectionism and argues that it's a causal factor in promoting prosperity. That's just the old and tired 'Infant Industry Argument', so we should require quite some evidence to take it serious. On the other hand, the book ignores the possible impact of having lots of ethnically Chinese people in your country. (I don't know for sure whether that's a causal factor, but it sure looks noteworthy and deserves at least as much consideration and discussion any of the other factors.)
I also think the book is too quick to dismiss Hong Kong and especially Singapore. Singapore did not start out as a financial centre, and especially early on manufacturing was much more important here.
> What (particular?) "economic orthodoxy" would you suggest countries follow?
Much of what the successful countries examined in the book have been doing is worth following.
In any case, if you want an orthodox policy recommendation: the Washington Consensus was pretty decent. Lots of examples there.
Well, to be precise: Washington Consensus with the crucial addition that your central bank (if you have one) should be doing something like nominal GDP level targeting.
What that means is that the total nominal spending in your economy needs to be on a stable path. Don't let it grow too much, or you get inflation and overheat the economy. Don't let it collapse, or you get a recession.
See Scott Sumner's or George Selgin's writing for why that's really important and how that can work. (And why it's more sensible than targeting inflation.)
As a cautionary tale, look at Argentina. They were doing fairly well during their neoliberal / Washington consensus phase, but their currency arrangements led to a collapse of aggregate nominal spending in the economy. Alas, the subsequent recession was blamed on neoliberalism.
For examples with stable total spending, have a look at Israel or Australia. (At least until a few years ago, I haven't checked recently.) Both countries' nominal stability let them avoid recessions. Australia is especially noteworthy, because as a resource exporter you'd expect their economic fortunes to be as volatile as commodity prices. See https://marketmonetarist.com/2012/11/19/the-export-price-nor... for an investigation.
https://www.amazon.com/Just-Get-Out-Way-Government/dp/193086... is an alternative view at development economics. The title is a bit provocative, (even the author wasn't really happy with it, when I had a chat with him about it). The main thesis of the book is that honest and competent civil servants are the most rare and precious resource a country has, especially a poor one, so policies should economies on their labour.
So eg you should privatise a state-owned company by auctioning it off in one piece to the highest cash-bidder open to all comers from anywhere, no questions asked. Instead of having your civil servants set up a complex system or worse trying to evaluate proposed business plans. Complexity breeds corruption in the worst case, and in the best case still takes up civil servants' limited time.
[0] When I say 'worse', I have in mind an example like: empirically we can observe a strong correlation between personal wealth and owning a fancy car. Alas, that doesn't mean getting yourself a fancy car will make you rich. Just the opposite, in fact.
Does “government intervention” include subsidies and R&D, in your account? I can think of more than a few industry segments (aerospace, biotech, etc.) that likely wouldn’t exist or be nearly as lucrative as they currently are without the extensive government intervention that helped build them.
> I can think of more than a few industry segments (aerospace, biotech, etc.) that likely wouldn’t exist or be nearly as lucrative as they currently are without the extensive government intervention that helped build them.
And continues to make. The NHS, for example, is a major source of funding for research into new drugs and treatments. mRNA vaccines came from decades of NHS funded research that the manufacturers are just now picking up and running with.
It should also be pointed out that economic goodness is not and should not be the be-all end-all reason for government spending. Governments building parks, for example, is a social good with little economic value (or at very least hard to quantify benefits).
In the case of things like medicine, government spending there has a social good of limiting communicable disease which is more important than how much money a drug company can make off a drug.
For something like TSMC putting plants in the US, even if it's somewhat economically disadvantageous we are still talking about bringing onshore more jobs and training for US citizens which will generally increase our capabilities here and the satisfaction of those employees.
Trying to get onshore development of electronics, the government basically has 2 levers to pull, either subsidizing building new manufacturing or applying tariffs to incoming tech goods. One of those levers has the negative consequence of raising prices on tech goods for everyone while we wait for manufacturing to build out.
That’s simplistic and assumes a baseline where the relationship with the government starts at zero.
The company pays taxes. There can be negotiations over the tax rate, which is not a subsidy so much as a ‘tax you less’ type arrangement. This can happen at multiple levels for a company like Apple, even beyond the state/federal thing. The repatriation of billions of dollars of earnings is also in play.
TSMC doesn't pay taxes to the US government (at least, not significant taxes until recently). And that's what we are trying to onshore, the fabrication capabilities.
We could try and incentivize a company like Apple to fabricate in the US, but the simple fact is that (until recently with the new TSMC fabs) we did not have the fabrication capabilities in the US needed to make apple silicon. Apple does not have the capabilities to make these fabs either.
You can cut taxes to 0 for US fabrication plants, but there are simple overhead costs that are hard to get away from. That's why an actual subsidy is needed.
I mean, you could exempt fabrication plants from employment and environmental laws to allow them to operate cheaper... but that's sort of monstrous.
The main reason for TSMC to build plants in the US is as a hedge against a Chinese invasion of Taiwan.
That outweighs anything like jobs or economic efficiency (given no such war) by a couple of orders of magnitude.
And this really applies whether or not the US would join the war on Taiwan's side. TSMC production would be likely to be shut down for 5-10 years, regardless.
> For something like TSMC putting plants in the US, even if it's somewhat economically disadvantageous we are still talking about bringing onshore more jobs and training for US citizens which will generally increase our capabilities here and the satisfaction of those employees.
Out of the examples, aerospace engineering was helped by many government interventions such as war-time buying and development of titanium working.
On the other hand, it's also hindered by government regulations making all new development much more expensive than what it could be.
I'd think all the industry segments would exist as the do provide clear benefits to everyone but the development paths taken could be different from what they're now.
> I can think of more than a few industry segments (aerospace, biotech, etc.) that likely wouldn’t exist or be nearly as lucrative as they currently are without the extensive government intervention that helped build them.
Likely, yes, but even if they are, it’s impossible to say whether that’s a net win for society. Possibly, if the government hadn’t subsidized them, but instead had had lower taxation, other industry segments would have blossomed, and gotten better benefits for society.
As an example, US government support for the Internet may have led to larger automation, making labor relatively more expensive, and because of that decreasing the size of the middle class. Opinions will differ on whether that’s a net positive.
I think there’s too many layers of counterfactuals here: much of the government’s economic intervention stems from a (perceived) need that transcends ordinary economic concerns. Think wars, epidemics, famines, etc.
In other words, I think we’d need to presume the absence of those concerns to intelligibly consider the absence of taxation-funded interventions. And that’s more of a minarchst fever dream than a thing that could actually happen.
Sure. Maybe the market will provide food security in 98% of years on its own, but we need more 9's. And we obviously need our government to be coercive enough to protect us from outside, less benevolent, forms of coercion.
At the same time, this isn't a "yes/no" question. This is thousands of sliders that we adjust for each industry.
You always have to consider the opportunity cost. Sure, perhaps we've ended greater security and have also ended up with vibrant industry A at the end of it; but we maybe had to pay by hurting industries B, C, and D. It might be worth it; but it doesn't mean it makes sense to do it for industry Z where there is a smaller security benefit.
A lot of people would prefer to pay no taxes, but that’s presumably not your point. Per-dollar, I think the average American taxpayer is probably very happy with the government’s investment in, for example, the Heavy Press Program (= modern airplane airframes) and resilient packet switched networking (= the Internet).
Or more directly: it’s hard to even imagine a contemporary national or international industry without the economic interventions that produced those things.
I know, imagining things is hard. But that's not much evidence either way.
Yes, there might be some government programs that look like a good deal in retrospect. Just like some lottery tickets are winners.
The heavy press program even turned a profit, if I remember right. Though private enterprise is usually pretty good at funding these kinds of projects, even with long lead times. (See eg how Amazon or Tesla or even Microsoft took ages to return capital to investors, but still had enthusiastic shareholders.)
I don't know specifically about packet switching, but you hear similar arguments about the invention of the computer.
In our reality, programmable electronic computers owe a lot to government and specifically military funding. But as a thought exercise, perhaps you can imagine an alternative history without WW2: IBM already made computing devices for business long before the war, and it's relatively easy to see how they would have eventually come up with a programmable electronic computer.
Compare also Konrad Zuse's work in Germany:
> After graduation, Zuse worked for the Ford Motor Company, using his artistic skills in the design of advertisements.[14] He started work as a design engineer at the Henschel aircraft factory in Schönefeld near Berlin. This required the performance of many routine calculations by hand, leading him to theorize and plan a way of doing them by machine.[21]
> Beginning in 1935, he experimented in the construction of computers in his parents' flat on Wrangelstraße 38, moving with them into their new flat on Methfesselstraße 10, the street leading up the Kreuzberg, Berlin.[22]: 418 Working in his parents' apartment in 1936, he produced his first attempt, the Z1, a floating-point binary mechanical calculator with limited programmability, reading instructions from a perforated 35 mm film.[14]
Zuse Z1 replica in the German Museum of Technology in Berlin
> In 1937, Zuse submitted two patents that anticipated a von Neumann architecture. In 1938, he finished the Z1 which contained some 30,000 metal parts and never worked well due to insufficient mechanical precision. On 30 January 1944, the Z1 and its original blueprints were destroyed with his parents' flat and many neighbouring buildings by a British air raid in World War II.[22]: 426
> Zuse completed his work entirely independently of other leading computer scientists and mathematicians of his day. Between 1936 and 1945, he was in near-total intellectual isolation.[23]
In our real history, the US and UK armed forces came first, but a world with more resources in the hands of the private sector (and also with less war) would have surely accelerated some of these private computing experiments (IBM or Konrad Zuse or someone else), and we would have seen computers at roughly the same time as in ours, or perhaps even sooner.
Similarly, the real history of packet switching is heavily intertwined with some US government projects. But even just browsing Wikipedia https://en.wikipedia.org/wiki/Packet_switching tells you about other attempts and projects going on around the same time. So the government's investment probably did not speed up things by that much, even before you consider that in our counter-factual the private sector would have more resources.
> I know, imagining things is hard. But that's not much evidence either way.
Imagining is easy; "hard to imagine" is an English idiom for "that seems implausible" :-)
You're providing examples that counter the impact of government innovation, but it's unclear to me whether these are true counterexamples. The history for IBM, for example, is almost entirely intertwined with IBM's role as a defense contractor. Zuse's second computer (the Z2) was funded directly by the German government, presumably because it aligned with Nazi military interests.
(As a whole, these things are impossible to extricate: it's clear that the government doesn't create every possible idea, and there are an infinite number of innovations that can't be assigned back to government sponsorship. But I think there's general academic consensus that computing, aerospace, and biotech all progressed at rates beyond their equivalent private sector capacity due to government investment, and that the resulting progress was "worth it" in terms of returned economic and social value.)
Yes, that's why I talked about Zuse's earlier work. And IBM also had plenty of private business (and would have had more).
> But I think there's general academic consensus that computing, aerospace, and biotech all progressed at rates beyond their equivalent private sector capacity due to government investment, and that the resulting progress was "worth it" in terms of returned economic and social value.
It depends on your counterfactual. If government had taxed the same funds, but spent it on something else, yes, we would have had less progress in these specific sectors.
If they had taxed and intervened less, perhaps we would have had more?
And, of course, we picked these sectors out after the fact. There's plenty more examples of failed government investments.
I don't know why people say this. The reason China beat us out in manufacturing of many goods is BECAUSE of government interference. They have a much more top-down leadership style that allows these gains in efficiency. They've streamlined.
But even looking at the US' history this hasn't been the case. The only reason we got out of the Great Depression was because of the most radical government-backed economic policy ever: The New Deal. Even today HUGE sectors of our economy, like defense, are paid for on government money. Those are jobs, companies, entire industries.
There really, truly, isn't. Classical economists can't handle being wrong, but given an alternative reality did not happen, it was a success.
We can speculate and play armchair economist all day. But the hard reality is that the New Deal revitalized the economy and created countless jobs to pull the US out of the Depression. Maybe a "do nothing" approach would've worked too, eventually. When I unlock the secrets to interdimensional travel, I'll let you know.
Armchair economists set up an argumentative scenario where they cannot be wrong. You see, if they're wrong about a situation then secretly they're right, because if you did what they suggested instead it would've worked too (and better!). But if they happen to be right then of course they're right, and countering suggestions are obviously wrong and would've caught the economy on fire.
> There are reams of economic literature trying to estimate whether government intervention in the market was a good idea. Most of the time it doesn't turn out great.
These sentences are just propaganda. There’s no factual basis for them.
There are no markets without government intervention. Statements like this are more like religious incantations than appeals to “research” of some kind.
Yes they do. Consider weed. It was well established before being legalized. Legalization brought higher taxes and interference. The black market continues as an alternative to the free one.
For obvious reasons a market for a product that is banned by the government is a poor example of a market that exists "without government intervention"
Functional markets require a strong mechanism for protection of property rights. The fact that we have some historical systems where that has taken a different form than a conventional government doesn't negate that the only practical mechanism that we have to protect property rights and support markets is a government.
Ancap fantasies aside, of course.
And then, there's lots of situations where externalities exist. If I poop in the river and you're downstream, it costs me nothing; I have no reason to stop.
> Functional markets require a strong mechanism for protection of property rights. The fact that we have some historical systems where that has taken a different form than a conventional government doesn't negate that the only practical mechanism that we have to protect property rights and support markets is a government.
Even if we grant that argument, that's at most an argument in favour of a minimalist nightwatchmen state. Not the full blown Leviathan.
> And then, there's lots of situations where externalities exist. If I poop in the river and you're downstream, it costs me nothing; I have no reason to stop.
It means that markets rely on the rule of law. From monopoly regulation to the prohibition on outright theft, markets literally cannot exist without governance.
> In economics, a public good (also referred to as a social good or collective good) is a good that is both non-excludable and non-rivalrous.
If you ever sat in a traffic jam, you will have experienced that road use is rivalrous. And toll roads show that it's rather easy to exclude people from using roads.
Building roads with general taxpayer money and making them available without payment by the users might or might not be good policy. I don't know. But roads ain't a public good.
Most roads are difficult to exclude. Most spend most of their time with excess capacity and are not rivalrous. They're clearly not a typical private good.
And they're usually a natural monopoly, too. Not to mention that the acquisition of land to make a road is often problematic.
Basically, there's a lot of reasons to expect market failure in a market for roads. That's not to say the only solution is for the government to provide them, but that laissez-faire, completely hands off solutions are probably not going to turn out great.
Nowadays it's fairly easy to exclude people from roads: just put up a sign that says you can only use them if you paid. (You can also use a camera and some machine learning to catch offenders; or otherwise cheap overseans workers who manually review footage.)
> Most [roads] spend most of their time with excess capacity and are not rivalrous.
Most cars sit around idle most of the time. I'm not sure what your argument shows?
> And they're usually a natural monopoly, too. Not to mention that the acquisition of land to make a road is often problematic.
That's a different discussion. Though I'm more optimistic.
They are a massive transfer to public land to whoever occupies the road, and the person occupying the road might not even be in their steel box for days on end.
Well, it depends on how the roads are financed. You are right that roads financed out of general taxation and free to use can be seen as direct or indirect subsidies to the car industry.
But the same physical road, but financed out of user-fees (or by voluntary contributions from nearby shops to attract shoppers etc) by a profit-driven private company, are not subsidies to the car industry.
Or take the hypothetical from the last paragraph, and add massive taxes on top, and all of a sudden it's the opposite of a subsidy. But the physical road stays the same.
How is stopping trucks on the road to check their papers, and holding up the delivery for some period of time, on a semi-random basis, not ‘intervention’ of some kind?
I would argue it 100% is. You can make MUCH more money if you steal or perhaps keep slaves. We're just so used to these preventative measures that we don't really consider them, but this is, in essence, a huge "tax" on the private sector.
Playing by the rules is very expensive as compared to not.
Even if you buy that argument (and I'm skeptical), that's at most an argument for a minimal nightwatchmen state; not for further government intervention.
If you're skeptical about whether governance is required for markets to function, launch your next startup on the darkweb or in a failed state. I fail to see how one could imagine any kind of healthy market operating without basic governance, reliable infrastructure etc. It's a religious idea (anarchocaptialism or something similar) at that point.
Past that, actually engaging with business (as a customer or employee) should be a rapid reminder of how much we have regulation to thank for. From not being poisoned (immediately or over the course of a lifetime) by our food, burned alive by non-fire retardant furniture (and the absence of a fire service), to having weekends off, our wages reliably paid, to being free from physical and the more obvious forms of psychological abuse. It's right there - you engage with the rights and privileges afforded by legislation daily.
Just astonishing to me that this kind of market fundamentalism is still actively engaged in. People can disagree on the extent and fundamental structure of government, but to deny it's role in the basic functioning of business in a society as complex as ours seems outright absurd.
As people get richer they demand better quality stuff and can afford it.
That includes taking weekends off.
It's perfectly legal where I live to work on the weekend. There's also no minimum wage here. Yet, most people get weekends off and get paid more than zero.
It's also entirely legal here to offer jobs without reliable pay (as long as the contract doesn't promise reliable pay).
There's plenty of long term poisonous food available in all countries: you can mainline eg pure sugar to your heart's content. Most people in most countries opt for tastier and healthier fare, because they can afford it. There's also plenty of immediately poisonous substances available, like strong alcohol.
People also regularly opt for more than the legal minimum in terms of furniture safety. Eg Ikea sells you kits to bolt your cabinet to the wall, so it doesn't fall on your child trying to climb up on it. So the legal minimum's don't seem particularly binding: people voluntarily exceed them.
> Just astonishing to me that this kind of market fundamentalism is still actively engaged in. People can disagree on the extent and fundamental structure of government, but to deny it's role in the basic functioning of business in a society as complex as ours seems outright absurd.
Governments do stick their hands into many pies, but that doesn't mean that them doing that is required by some physical or natural law.
> If you're skeptical about whether governance is required for markets to function, launch your next startup on the darkweb or in a failed state.
Yes, governments control some of the best real estate on earth. That doesn't mean they necessarily contributed much to that happy state of affairs; often just the opposite.
Btw, many companies are trying to escape even basic functions provided by government, and are going for private arbitration instead, because it's more efficient.
Well I do think the security argument does stand, you don't want to outsource navy carrier construction to China for example. Just don't expect a thriving economy to be built around it.
Yet the most successful nations on the planet go against this economic wisdom and do subsidize industries they deem important and/or protect them with tariffs. The US did this until the 1960s. China does this now.
Sorry, I should have picked a clearer term. There is broad agreement among economists that _regulating_ markets is needed to have an optimal outcome for society. I was referring to government subsidies specifically, in that case the distortion is rarely beneficial. Especially when taking into account that the money could have been applied elsewhere with bigger gains to society.
There’s a lot of navel gazing around these sorts of analyses. Consider that the entirety of the tech industry exists in its current form due to federal spending.
The Silicon Valley story is well known; the SAGE project really created the classic IBM.
One of the greatest examples is the DARPA VLSI project of the late 70's and 80's. The ROI of that program is crazy.
If you are interested in this time, I 100% recommend the book The Dream Machine which is centered on J.C.R. Licklider but covers most of the people and projects that lead to personal computers. Stripe Press has a beautiful hardcover version of the book, but the font is tiny. I had to switch to an ereader version in order to read it.
