Friday, September 30, 2005

The Panglossian view of Deindustrialization

Read an article in the Economist about the decline in manufacturing both as a proportion of the economy and as a share of the labour force. The argrument is that efficiencies in manufacturing and the increased importance of services makes the decline metal bashing no big deal. That is true all things being equals. A society that finds it is cheaper to build cars will spend more money on consumption than durables.

The reverse is also true. Societies/economies that find it to be increasing expensive to provide for durable goods, like austerity in wartime will spend less on consumption to provide human and material resources to feed factories. In Island in the Sea of Time, a small town is marooned in the Bronze Age. They find they don't have all the human, material and technological resources to maintain late 20th technology. One engineer calculates that entire population could spend five years building a hydroelectric dam to power an aluminium refinery. Of course they would all starve before dam is finsihed.

The problem with American deindustrialization is not that they have discovered they can produce the same material goods using few technological and human resources. The problem is that they have decided not to run their own factories better but increasingly to buy from Chinese ones instead. Blame Walmart the traitors, although, many people don't want to, like Slate, CIO Magazine, Robert Reich, and many other apologists, paid shills and the usual suspects.

For more information on the Philosopher Pangloss go his wikipedia page.

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