Tuesday, January 30, 2007

The wisdom of Ponzi

I bring you the wisdom of Ponzi Q. Globalization, lifted from the comments on DeLong's blog.

Beloved corporations like Microsoft and Intel have already learned that they can get good technology R&D cheaply by outsourcing to places like China and India. These are American companies benefiting from innovation abroad. Why is it such a benefit to America to have the R&D and innovation done by Americans in America?

Isn't Summers an economist? If so, then why is he not for free trade? We need not innovate in any science here in America in order to prosper. Given our high living standards, it's a waste of money.

Economic orthodoxy states that it's an absolute good for all nations to focus on what they have a comparative advantage in. The U.S. is not exempt from this. Let the Chinese and the rest of the world do the scientific dirty work. We in America will do the work that suits us. And, as Alan Blinder has pointed out, the work that suits America is personal services, not innovation in biotechnology. Subsidies for innovation or R&D or whatever are a form of protectionism and must be shunned.


...We Americans do not have a monopoly on brains. American multinationals can fund biotech innovation abroad and get more for their money. The innovation will be done, just not by Americans in America. American businesses will still get the rewards from the innovations. What's so bad about that?

...What's wrong with having America business funding R&D in biotech or whatever the next big thing is overseas? Giving the differences in living standards and labor regulations, they can get a bigger bang for their buck. What's not to like?

If Americans get screwed out of doing this type of work, so be it. They can go into the one line of work where Americans seem to have a comparative advantage, personal services, and I'm sure everyone will be better off. It's not a zero sum game, you know.

All this sounds like industrial policy to me. And being a good believer in those most perfect of human intellectual inventions, free markets and free trade, I am appalled at its promotion on this board.

...Economists are needed to provide an ideological framework that justifies the screwing of the weak for the benefit of the powerful. They are thus more important to those who matter than any scientist.

The economists most listened to already are established and thus can even promote policies that screw their own kind without fear. The economists who are not established must follow the orthodoxy. Apart from the pressure to conform, economic theory is very complicated and, thus, it is too difficult for a novice to deviate from the orthodoxy.

However, most economists are not masochists. When enough economists suffer sufficiently from extensions of the policies they promote today, then the economic theory will adjust to so that its implementation will ease their suffering.

...There is no market failure here. Given the high costs to do anything here in the good old U.S. of A., it is better if innovation and product development are done abroad if possible. And with each passing day, because of technology and the neo-liberal globalizationized regulatory regime, it becomes more possible.

Americans should stick to the types of work in which they have a comparative advantage. Here I agree with Alan Blinder that America should focus on personal services.

So to heck with biotechnology and science/technology research in general. Let them go the same way we let go of making televisions and other stuff. There's one big global labor pool now. Let us take advantage of it! Or should I say, let corporate 'America' take advantage of it! Because what's good for corporate 'America' is good for America. And we will all share in the prosperity that trickles down from the executive suites and brokerage firms someday.

This is Economics 101 people.


Unknown said...

That guy with his talk of "capital vs. labor" and multinationals vs. unions is missing the point. The TV-making industry is different from biotech because the biotech industry will create technological advances (which results in an increase in productivity, to use econo-speak). If the TV industry held the promise of vastly longer life, health and youth, eradication of disease etc, then it would make more sense to pay money to keep it around. (Which is not to deny that there can be other benefits to keeping an otherwise uncompetitive industry going).

Anonymous said...

We have with technology this capitalist fact at play in the market; as with agriculture, the financiers, marketers and distributors gain more than the producers. dude deal with it! I've said services that can not be gotten away from are one way. Health care gets bigger worldwide everyday, even the capitalist want it removed from business costs, it will be removed from business and handed to government. And like food stamps to supermarkets it will shifts the payment directly into providers hands, hospitals and doctors and other medical service providers. Services can be developed into one more payment vehicle to advanced business development. The part not fully seen in globalization is an exponential expansion of ability worldwide, mostly Asian now that will outrun the ability of local markets to absorb the knowledge workers and skilled workers being created from once empty market places worldwide. It is the application of this creative capitalist formula that will fills markets worldwide. And millions will reach out from Asia to other developing markets. Do they require an H1B visa to start a business in the Rebublic of Ghana.

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