Comment by plutomeetsyou
5 hours ago
Countries and institutions should always produce things where they are excellent at producing, in forms of specialization and compete in terms of comparative advantages.
5 hours ago
Countries and institutions should always produce things where they are excellent at producing, in forms of specialization and compete in terms of comparative advantages.
We surely cant be this naive after the recent history of:
- China weaponizing the world's dependence on rare earth
- The US weaponizing the world's dependence on SWIFT
- Russia weaponizing Europe's dependence on natural gas
- Iran weaponizing the the world's dependence of oil supply through strait of Hormuz
While I agree in passing. I think saying you'll export all your work to places with worse labor laws is short-term thinking. Chinese companies are successful yes but they also don't necessarily compete fairly. We still can export large portfolios of goods to China. So to just say they are best because they have a government protected market, plus subsidies so we should abandon local is a bad optimization in the long term
This is true until you add a layer of geopolitics to your analysis.
Supply chain advantages make the country that produces most of the stuff progressively better at doing everything.
Only if you have the people to do it. China has some of the worst birth rate in the world. In ~20 years that manufacturing capacity either goes to robots or goes away. Then what?
One of the (many) areas in which China is doing great is industrial robotics. Not the fancy dancing dogs, but robots that replace workers in factories.
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how is that different from the rest of the world?
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Those thing are not static! Changing them can be a political decision. It was a political decision in China to become excellent at manufacturing.
That depends on if everybody gets along and is willing to trade
This attitude, if followed without qualifications, is dangerously naive and shortsighted, as the last few years of geopolitical events have shown.
Yes, and no. Yes because you are vulnerable to supply chain disruption by illwilled countries. But illwilled countries that disrupt supply chains greatly incentivise others to diversify supply away from them.
China could have the monopoly of rare earth production and refinery for all of eternity. But because of their reaction towards all the us allies when the us increased tariffs, I don't expect them to be relevant enough to disrupt markets with rare earths sanctions in 10-20 years.
> But illwilled countries that disrupt supply chains greatly incentivise others to diversify supply away from them.
... Except when they can't in any meaningful span of time.
Families should always eat at the restaurants that produce the most excellent cuisine. /s