China Economy Megathread

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Helsing posted:

Britain did use protectionism to shield the growth of its industry and it practiced "land reform" of a sort via enclosures of common land, but I don't think the British government consciously stimulated industry in the 18th century in the same way that the USA, Japan, South Korea, or China did in the 19th and 20th centuries. I'd have to check some historical sources before saying anything more than that.

The British did subsidize and protect their industry under the Henry VII and Henry VIII in the 16th century and I know that in the 18th century guys like Daniel Defoe called for that sort of plan to be repeated but my general impression is that the British industrial revolution mostly happened without any direct stimulation from the government (other than protectionism and the opening up of colonial markets of course), which is not the case in the other countries we're discussing. I admit I might be off here if anyone has evidence to the contrary.

What probably helped in this matter was that there wasn't an industrial state nearby willing to intervene in British affairs in order to ensure their own market positions stayed good. I recall vaguely reading that one of the major motivators for a lot of Asian industrialization wasn't so much "we want to inherit the great bounty of dark Satanic mills with 14 hour work-shifts" as "we'd prefer not to be a colonial fiefdom." It was certainly the primary motivator for Japan.

# ¿ Mar 18, 2014 19:41

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# ¿ Apr 28, 2024 03:15

Nessus: Dec 22, 2003; After a Speaker vote, you may be entitled to a valuable coupon or voucher!

asdf32 posted:

Why?

Subsidies of all forms are basically just run of the mill investments - you take money from one place in the economy and invest it in another. At best the government's advantage is it's borrowing rate or size, but like any other investment there are costs and no guarantee of success.

What you're asking for here, choosing high growth industries, is exactly the thing private capital is trying to do at the same time. And after accumulating a certain amount of capital it should be in a position to do exactly that.

Government of course has an incredibly important role doing all the things government is uniquely well suited for - education, infrastructure, regulatory framework etc, but picking and choosing winning industries isn't really among them.

Though I'll note that I think it's obvious from historical examples that government involvement in industry often isn't harmful, especially when the path to develop (get/deploy basic capital) is fairly clearcut. But that remains somewhat far removed from being evidence that it's necessary.

The best argument here I think one of stability - government investment can be more stable than private which is relevant for certain industries. But I see that as a more limited argument applicable to specific industries rather than a general necessity for growth across the board.

The government has a time horizon beyond 'the next quarter' so there's that at least.

# ¿ Mar 22, 2014 05:26

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