@scott i was. i miss the bay area terribly. but now i am something of an exile in Florida.
(we moved here to be near family who — long story — are no longer here. the basis for my fondness for the area, #NewCollege of Florida, is a source of great pain now as proximity is proximity to DeSantis and Chris Rufo urinating all over the place. we can’t afford to move back for now, unless some great gig makes that possible, so here we are. the people are nice but the sprawl is so sad.)
@admitsWrongIfProven@qoto.org indeed!
Trying to make my obsessions more sociable, me and my fam are gonna go to this Kamala-campaign debate watch party in Tampa (Ybor City) tomorrow night (Tues, Sept 10).
You can come too! https://mobilize.us/s/M0QH3m
@kentwillard when you put it that way, getting this explained well is a campaign in the service of world peace! let’s get to it!
i don’t know whether South Korea and Japan would be more open. they are accustomed to industrial policy, so that part’s an easier lift. but the industrial policy battle seems close to won in the US as well. SK & Japan tend towards “national champion” style policy, though, which is much closer to US-style rentierism than China’s radically competitive industrial policy.
@StillIRise1963 @inquiline@union.place 🙁
are there maybe cult leaders or gurus who sell holy shit?
@kentwillard but (my project these days is explaining this), that’s precisely China’s model, and it’s genius. when you say “take revenue”, you mean sell at any level above marginal cost, even if it doesn’t cover fixed (capital) costs. they’ve synthesized econ-101-style competition in high capital industries, by subsidizing cap investment that otherwise would never happen, because competition would forseeably reduce margins to below capital cost recovery levels at expected quantities sold.
@kentwillard to us, it’s “unfair” competition, but only because we rely on our producers gaining pricing power to recoup cap costs. which means we *cheer* capacity constraints as “rational”, “efficient” when in real terms, more capacity is always better than less. it’s our model, our expectations, that are dumb, inefficient, counter to competition and ultimately innovation. (that last claim would be heavily contested, but i’m glad to defend it.)
@kentwillard it’s one of those days!
[New Post] China has much to teach us. John Roberts does not. https://www.interfluidity.com/v2/10062.html
@kentwillard everything under a Trump administration strikes me as hard to predict. there’s the possibility he just cedes Taiwan in exchange for soy purchases and calls it a great deal for Real America (as China then completely owns the semiconductor industry). or he feels humiliated by a China blockade and orders something rashly escalatory. it’s a terribly uncertain, dangerous situation even without the wildcard of Trump.
@kentwillard it is. and the export sector will disappoint, because the world is full of strategic actors rather than passive accommodators of trade now.
household stimulus may not be the path — expanded strategic investment can get ex-construction workers hired — but one way or another, as the export sector fades, the state sector will step into the breach.
@kentwillard i think more decoupling than war. industrial countries (really blocs) are all going to protect strategic industries. is that a trade war? it’ll look like it in nonaligned, open consumer countries (to their great benefit). but it’s also a kind of trade peace. the question is how companies survive in an era of redundancy and global overcapacity. the answer is subsidy, whether overt as i propose, or covert as consolidation and pricing power (really bad imho).
@PRW excellent point.
cf Hamlet
@kentwillard i think Xi has played geopolitics terribly, but i am more sanguine than you are about China’s economic trajectory. China builds to overcapacity and then seeks foreign markets for its excess, but i think its industrial policy is no longer shaped by trying to win foreign markets, just making crap. China increasingly focuses on industries it considers important, either domestically or strategically, and uses foreign markets to help pay for that. 1/
@kentwillard so i don’t think China is focusing on exports in fact. Western economists always say so, but that’s because Western industries don’t like the combination of Chinese overcapacity and “free trade” market access. we accuse as their “strategy” the side effects that trouble us, but i think they are side effects, China will do much the same when their market access is cut off. (they’ll still export to the the less industrial, nonaligned world!) 2/
@kentwillard China is suffering now from a real-estate bust and sluggish domestic consumption. But China’s authoritarian opacity means it can selectively bail out or punish real estate investment funds without political blowback about corruption and moral hazard. It is already doing this. 3/
@kentwillard Western economists have been predicting Western style financial crises in China for years. They don’t happen. China “foams the runway” by recognizing investment losses only at the time of regulators’ choosing, when punishing them won’t be destabilizing, or by never recognizing losses after quiet bail outs. 4/
@kentwillard Domestic underconsumption is really only a problem for China if it comes with political discontent, if the public is unhappy with reduced consumption in ways that threaten “stability”. Xi is very resistant to stimulus or welfare state support of consumption, but he does have those options, deflation is the current concern, inflation not a binding constraint. If domestic underconsumption / citizen discontent becomes a problem, the state will (however reluctantly) support demand. /fin
the most depressing way to start your day is waking up.
@kentwillard yes. China needs to accept that its own economic model demands subsidy, and not expect outside markets to cover that cost. China is working hard on self-sufficiency in production terms. but they still depend upon the foreign sector to make their industries pencil financially, and they hope that foreign dependence on their manufactures will give them leverage geopolitically.
@kentwillard i think the cause of peace is better served by more “national self-sufficiency” between US and China than by mistrustful interdependence. so yeah, i definitely want industrial policy to support that. ( i can’t recommend Keynes’ talk on national self-sufficiency enough: https://jmaynardkeynes.ucc.ie/national-self-sufficiency.html )
@kentwillard thanks!
the proposal is not motivated by any desire to compete with China, but rather to learn from China.
in practice, though, the US adopting a more China-like economic approach will create tensions with China. China recoups much of what would otherwise become subsidy (opaquely embedded in underperforming loans) by international sales. our becoming a net overproducer reduces our role as customer and creates new competition for products in third markets.
some days it seems like everything new is old again.
@BenRossTransit oh yeah, consensus is what i’m apologizing for, to whoever the real author of the quip is (usually attributed to Twain, probably apocryphally). it’s my mischief.
the usual version of the quote is “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
