Saturday, January 05, 2008

Cut-throat capitalism for companies, but kumbaya communism for countries

In a recent post on rising economic nationalism within the US, Parapundit's Randall Parker excerpts from economist Robert Samuelson, among others, who writes:
Even as countries become more economically interdependent, they're also growing more nationalistic. They're adopting policies intended to advance their own economic and political interests at other countries' expense.
Is that not exactly what corporations do, if you just replace the word "countries'" with "corporations'" in each of the sentences, and perhaps change "nationalistic" to "competitive" or something that means essentially the same thing? Funny that these globalists favor laissez faire capitalism at the corporate level, but advocate communalism at the national level.

Why are nations, as independent entities, not allowed to compete with one another as corporations do? Should Samuelson not also be arguing for Toyota and GM to put down their price warring and just merge together? Why not the same thing in the banking industry, and let Microsoft and Google share the same employees, and why not produce Airbus planes in Seattle? In fact, why not have one uber international conglomerate just buy up everything, so that we wouldn't have these price wars, and bidding contests, and wasted effort proactively recruiting those who are already employed?

9 comments:

Anonymous said...

The slippery-slope smear-job artists will cry fascism and beggar-thy-neighbor, and imply that competition between nations can't stop short of total war. To some scholars and others it is painfully, enduringly irksome that the fat selfish bourgeoisie of America has not long since been ground down to third world standards. These are the people who have been trying for technology transfer, and cheering on Chinese spies, so that Americans don't get the benefit of what is invented and developed here with lots of help from the net taxpayers of this country. Behind all this is power-greed: successful ordinary people are harder to rule than others. No principles are involved either, even though it is made to sound as if they were. The proof of this is the kaleidoscopic double-standards that you are catching on to. JSBolton

Anonymous said...

Here's another odd thought:
Olympics build peace through national competitions? Would it follow that we can build peace and understanding through an olympics of competitive devaluations?JSB

Audacious Epigone said...

John,

What of the corporatist 'liberal-right' types (WSJ, David Brooks, etc)? Do you explain it in the same way, as a power-grab? Seems to me that the nation as an entity competes with, alongside, and in collusion with the corporation, a countless number of times over and throughout the world. Yet the nation and the corporation are, for the liberal right and the internationalist left, treated drastically differently, whereas on the paleo-right (and I'm generalizing widely) they are both looked upon with some level of respect and on the 'populist-left' both are looked at with suspicion.

Fat Knowledge said...

I got to admit, I don't really understand what you are getting at here.

What do you mean by competing at the national level? What does 'winning' at the national level mean? Corporations try to maximize profits, what do you believe countries should try to maximize?

Typically what Samuelson rails against are protectionist policies that increase the price of imports and therefore makes them more expensive and therefore reduces them. This will help out some workers in that country at the expense of consumers.

I would argue that in most cases, a country as a whole is better of with free trade (I define winning as increasing standard of living), as the ability to purchase goods for a lower price and have a greater variety of goods is of greater value than the jobs in certain industries that will be lost.

I don't see how allowing companies to freely compete in any country would be considered communalism. I see it as the exact opposite. You are allowing companies to compete everywhere rather than having a central government decide the rules of what can and can't be sold and at what price. Allowing for free trade increases price wars in my view, so I don't understand how you come to the opposite conclusion.

Audacious Epigone said...

FK,

Having a means of wealth creation is more important to the long-term viability of a country than is obtaining wealth. We can argue about the specifics, but that's not the point of my post. I fail to see how a trade deficit amounts to 'trading paper for products' anymore than running up credit card debt is advantageous because you're just swiping your card through a reader for a second in return for lots of great stuff.

But my point is that when nations, and the people/politicians who comprise them, do things that they believe will benefit the nation, these economists cry foul. When companies do the exact same thing, it is competition to be encouraged.

"I don't see how allowing companies to freely compete in any country would be considered communalism."

The communalism was with regard to the role of nations--companies are encouraged to ruthlessly compete, while nations are encouraged to practice communalism, striving for the greatest good of all instead of just for themselves, as corporations do.

nzconservative said...

The liberal-right seems to be particularly naive in regard to defence and trade.

It's a slippery slope to allow Chinese firms to manufacture parts for a company like Boeing, but free traders don't seem to care less.

Another, perhaps more topical issue is biofuels.

Biofuel development is coping alot of flack from free traders because it is being subsidised by the government and may push up food prices in the third world.

However, why should food production automatically get priority over biofuels? Why is feeding other countries necessarily more important than greater energy self-sufficiency.

The biofuel bashers are also overlooking the fact that higher food prices are benefiting third world farmers as well as western ones.

Sure biofuels aren't the whole answer, some biofuels will probably be a commercial flop, but that doesn't mean they shouldn't be given a fair trial.

Peak oil's probably only a decade away, do we still have time to wait for the private sector to come up with solutions on its own, or risk putting all our research eggs in one basket?

Indebted western countries need to start thinking about their own problems first.

Audacious Epigone said...

NZ,

Well said. I hadn't really thought about it from that angle.

undergroundman said...

I think you're missing the point, as FK said. Economists think that by minimizing trade barriers you do maximize the "profit" of a country, and . The problem is that politicians don't realize that they're crippling a country's "profits" when they impose trade barriers. These trade barriers go both ways: the US imposes a tariff on another country's products and that country will impose a tariff on US's products.

Your analogy doesn't really work. Perhaps you should review the comparative advantage concept.

In order to really understand it, you also have to understand the concept of opportunity cost. We impose a tariff on another country's products so that our citizens will purchase homegrown products -- but then that hits our people's pocketbooks, and hard. It also reduces the overall efficiency of the system -- less products created, and thus higher products.

Imagine if you could only buy American cars. Consumers would just have to suck up shoddy manufacturing and higher costs because the pressure of superior foreign cars wouldn't exist.

Audacious Epigone said...

UM,

"Economists think that by minimizing trade barriers you do maximize the "profit" of a country..."

How can running in the red for nearly two decades straight be a formula for maximizing profit? It may be the way to maximize the buying power of the nation's "employees" over the short-term, but would these same economists cheer a corporation that let all of its employees make buying decisions with complete license, even as the stock of the company takes a pounding (the US $ is essentially the nation's 'stock price')? Certainly not. They do not view the nation as a legitimate entity.

"These trade barriers go both ways: the US imposes a tariff on another country's products and that country will impose a tariff on US's products."

Not from, say, the Chinese perspective. One party to the transaction is more than happy to let the other impose tariffs without responding in kind.

"It also reduces the overall efficiency of the system -- less products created, and thus higher products."

That's not necessarily the case. Virtually all technological advancement is made in countries with prohibitively high labor costs. Searching for perpetually cheaper labor does not encourage innovation--the essential element to continuous growth in the SOL over the long-term--it discourages it.

"Imagine if you could only buy American cars. Consumers would just have to suck up shoddy manufacturing and higher costs because the pressure of superior foreign cars wouldn't exist."

There are trade barriers to US autos in Japan, a market that is ~80% domestic if memory serves. And the love of free trade is part of the reason why there isn't even reciprocity. If a German car is exported to the US, Germany refunds the VAT paid on the vehicle. If a GM car goes to Germany, the VAT is slapped on. That in addition to income taxes owed at home, the majority of which Mercedes can avoid. To be fair, though, that's more a natural consequence of an income tax system competing against a consumption tax system. I favor the latter, and think more than any trade agreement, a national sales tax and an end to the corporate income tax would bolster US manufacturers.