By Hunter Wallace
This excerpt also comes from the Ha-Joon Chang book and is particularly interesting in light of the fate of Birmingham:
“Korea also provides another dramatic example of a successful public enterprise in the form of the (now privatized) steel maker, POSCO (Pohang Iron and Steel Company). The Korean government made an application to the World Bank in the late 1960s for a loan to build its first modern steel mill. The bank rejected it on the grounds that the project was not viable. Not an unreasonable decision. The country’s biggest export items at the time were fish, cheap apparel, wigs and plywood. Korea didn’t possess deposits of either of the two key raw materials – iron ore and coking coal. Furthermore, the Cold War meant it could not import them from nearby communist China. They had to be brought all the way from Australia. And to cap it all, the Korean government proposed to run the venture as a SOE. What more perfect recipe for disaster? Yet within ten years of starting production in 1973, (the project was financed by Japanese banks), the company became one of the most efficient steel-producers on the planet and is now the world’s third largest.”
Listen to this:
http://www.encyclopediaofalabama.org/article/h-1597
“Birmingham owes its 1871 founding to the geological uniqueness of the Jones Valley, the only place on Earth where large deposits of the three raw materials needed to make iron—coal (for conversion into coke), iron ore, and limestone—existed close together. Named for the industrial heart of Great Britain, the city prospered and grew as the iron, coal, and steel industry expanded. But labor issues, economic constraints imposed by northern owners, and eventual overseas competition hampered development, and Birmingham never evolved into the world-class steel-making center that its founders envisioned.”
Birmingham is a good lesson in the dangers of unregulated foreign investment:
“In 1907, New York investment banker J. P. Morgan, who had recently created the world’s largest company, United States Steel Corporation, acquired control of TCI. Local supporters of the purchase initially believed that this development would guarantee Birmingham’s future greatness, but their expectations were wrong. U.S. Steel officials did not want TCI to compete with Pittsburgh and other steelmaking centers and imposed a discriminatory pricing formula, known as “Pittsburgh Plus,” that was essentially a fee placed on rail shipments from Alabama. This fee eliminated any price advantage that TCI might have had outside its immediate region. New management, including CEO George Gordon Crawford, also defied southern views of labor and social welfare by dramatically improving housing, education, and medical care for TCI’s largely black work force.”
FINIS.
http://www.al.com/business/index.ssf/2015/08/us_steel_closing_blast_furnace.html
This state run project may have ended well enough, but that’s the exception to the rule. It’s a lot easier for me to point out failed subsidies than shining examples like this one.
Right now in my home county there are solar farms going up everywhere. These projects are guaranteed to fail and–well I was going to say “become”–remain eyesores long after the subsidy is over and the project fails.
Even in the case of roads, railways, pipelines, and canals, if they are viable economically, I’d prefer the gov just step in for purposes of imminent domain and let the private sector pay for and carry out the construction. Only exception I can think of is where national defense is a factor, such as our interstate system, in which case the gov may subsidize. Otherwise, business is generally better left to businessmen.
Germany is a big fan of solar power:
https://en.m.wikipedia.org/wiki/Solar_power_in_Germany
Alabama is a big energy producer. We produce a lot of nuclear and hydroelectric power:
http://www.eia.gov/state/?sid=AL
South Carolina is the third largest nuclear energy producer in the US. Over half the electricity in SC comes from nuclear power:
http://www.eia.gov/nuclear/state/
South Carolina, North Carolina, Texas, and Alabama are big producers of nuclear power.
http://www.encyclopediaofalabama.org/article/h-1638#sthash.vFK3YHKu.dpuf
“In the decades after the Civil War, Alabama became one of the nation’s leading iron and steel producers. Although Gadsden and the Florence Sheffield District along the Tennessee River contributed to this rise, the Birmingham District became the largest iron and steel producer in the southern United States. Unique geological conditions provided the district with closely associated and abundant deposits of iron ore, coal, limestone, and dolomite. These were the raw materials essential for making iron and steel, and at some locations within the district, deposits were only a few miles apart. This lucky geological arrangement resulted in the lowest raw-material assembly costs in the United States and allowed the district to grow as rapidly, in the last two decades of the nineteenth century, as Pittsburgh and Chicago.”
Geologically speaking, Birmingham, AL is one of the most fortuitous sites in the world to make steel, but no longer has a steel industry. In contrast, South Korea which has no geological rationale for a steel industry had to import coal and iron ore all the way from Australia for use in its state launched steel industry which is now the third largest producer of steel in the world.
Birmingham, however, is now one of the world’s leading producers of civil rights and the title pawn and payday lending industries. It still has a statue of Vulcan which towers over a black ghetto.
Pohang University is one of the best science and technology universities in Asia:
https://en.m.wikipedia.org/wiki/Pohang_University_of_Science_and_Technology
If I had to identify the essential trait of Southern man, both as I observe him and as you, I think, understand him, Mr. W. it would be a lack of urbanity. In fact, it would be something more than that, not merely an indifference to or lack of love for city life but a sort of anti-urbanity, hostility to city life.
Maybe it’s possible to build a great civilization without urbanity, but it seems a contradiction in terms: civilization is city life. It is the urban. All the gentility with which the South, in its undying self-infatuation, has always credited itself is not urbanity, whatever might be its worth.
That, at bottom, is why I am little moved by your latest tear, about Hamiltonianism versus Jeffersonianism, about J. De Bow, etc. It’s just a variation of the old evasion. As you now see it, the problem wasn’t the Northern tariff or whatever, it wasn’t a Yankee lack of respect for states’ rights or whatever. No, now it was the Southern leadership’s unfortunate lack of respect for central planning. In the damned Union, the South, led by partisans of laissez-faire, was fated to a lack of industry.
The problem, in other words, is still, in your mind, “the damned Union.” That is what you are unwilling to face. You ask how the South became “the other” in America. The South made itself an “other.” It prided itself on being “other,” boasted of being “other,” thought it would prevail as something “other” than the North. Maybe it yet will; but if the region that is now called the South will one day be a great civilization, it will not really be “the South”—because it will be urbane.
Years ago, when I first began posting here with some frequency, your follower who ID’d himself as Stonelifter dismissed one of my comments as the mouthing of a “city fag.” That was your great Southern gentility, your great Southern virtue: He didn’t even have the good manners to address me. He spoke to you and other Southerners here. That was his great martial virtue: opportunistic seizing on my having identified my locale. Above all, that was his Scythian ignorance, according to which the person who has mastered, who is comfortable with, who loves city life is an inferior of the rustic.
In the end, it was much easier for Japan to create modern Hiroshima out of the ashes of World War II than it was for the South to recover from the Civil War. The task of the Japanese was simply to rebuild. Having seen an unfortunate end to the militarism and imperialism they’d imbibed with the rest of Europeanness, they simply abandoned those things, and once again began building the urban culture they’d been building since their encounter with the West in the Nineteenth Century. The South, on the other hand, had before it a psychological challenge—one it has yet to meet—the challenge of abandoning its curious status as a sort of hypertrophic Caribbean colony, whose gentry had somehow been self-imagined as self-sufficient, without any need of a connection to an urban home country.
That is why, as I’ve suggested in recent comments here, at Occidental Dissent, you Southerners are not really English. To my mind, marked as it is by only very-limited historical knowledge, the South’s last Englishman was Robert Maynard, who sailed, like the good, great Royal Navy officer he was, to finish off Blackbeard. The death of the Caribbean marauder Blackbeard off the coast of North Carolina seems to me, the last manifestation of Britishness in the South. After that, you were on your own. When you lost on your own, you blamed it on everyone else.
Re:John
1.) Most Southerners do live in urban areas.
2.) As we shall see in an upcoming book review, many secessionists who bitterly opposed tariffs and internal improvements in the old Union were not ideological free-traders. They simply objecting to taxing the South’s export-based economy to finance internal improvement projects in the North.
3.) Japan was still an independent country after WW2. That wasn’t true of the Confederacy. The US also forced a constitution on Japan that demilitarized the country.
This sounds great!!! I don’t understand why the government doesn’t own all industries.
The USS Fairfield Works in Alabama had some of the most modern pipe mills in the USA. So modern that steel production, the input, couldn’t keep up with the output of the USS Fairfield pipe mills.
From what I understand, and I could be wrong about this, USS has shutdown basic steel production in Alabama, and will rely on both foreign and domestic produced steel to feed their pipe mills. I understand that USS is, or may be building an electric furnace to feed their pipe mills?
The pipe business is in a slump right now, so it could be awhile before anything happens in Alabama.
Re: Fairfield
This Mario Baggi(sp) dude who is the Chairman and CEO of USS is a relatively new hire from Alcoa. He’s a Brazilian!? LOL. Really.
My friend, who was the General Superintendent of the Fairfield Works, a really sharp technical guy, has as far as I know, retired.
The union has had their problems at Fairfield. Basically, and this happens other places too, you had some of the local union leadership that was making special deals for themselves, and not for the rank & file. These kind of leaders always get caught, sooner or later, and they put the union in a bad light & position.
The steel industry is an area where Alabama should have a clear advantage over the likes of Japan and South Korea, but the laissez-faire, free-market, free-trade doctrine and the utter lack of vision on the part of the US government and industrialists proved to be fatal to it:
http://m.koreatimes.co.kr/phone/news/view.jsp?req_newsidx=69759
1 — “Most Southerners do live in urban areas.”
I don’t doubt that. In fact, I was expecting you to respond with some such statistic. While I was downstairs, getting a sandwich, after I posted my remark above, I thought, “Mr. W. will respond by informing me that the per capita square footage of skyscraper office space in the South is actually greater than that in the North.” That has nothing to do with urbanity, and by replying with such a statement you simply confirm your own lack of urbanity.
2 — “As we shall see in an upcoming book review, many secessionists who bitterly opposed tariffs and internal improvements in the old Union were not ideological free-traders. They simply objecting to taxing the South’s export-based economy to finance internal improvement projects in the North.”
Whatever you say. I’m losing track of your arguments, which, as I’ve said, are evasions. That, actually, is the South’s greatest and most-enduring tradition: evasion–self-evasion.
3 — “Japan was still an independent country after WW2. That wasn’t true of the Confederacy. The US also forced a constitution on Japan that demilitarized the country.”
See 2.
Hunter,
“The steel industry is an area where Alabama should have a clear advantage over the likes of Japan and South Korea, but the laissez-faire, free-market, free-trade doctrine and the utter lack of vision on the part of the US government and industrialists proved to be fatal to it:”
So I wonder what the difference in minimum wage is in Japan and Korea?
I wonder if they have all the antidiscrimination laws we have?
Just because you can point out a couple successful examples of state industries does not mean that’s the best strategy overall. There are other factors, like regulations and hbd. That does not mean the gov should not promote economic autonomy. I’m just saying that we don’t have a very good track record for gov owned industries.
The difference is that Japan, South Korea, and most recently China each set out to build a steel industry – regarding it as an essential element of national power and prosperity – as part of their national economic development strategies.
Japan and South Korea also set out to build automobile industries to compete with American auto producers. From what I have read, something like 80 to 90 percent of the iron ore used to make steel there is imported into Japan and South Korea. As we saw the other day, China is now trying to build an aerospace industry.
Neither country would have a steel industry or an automobile industry were it not for government intervention in the economy. They wouldn’t have either industry were it not also for the triumph of the laissez-faire, free-trade, free-market model in postwar America.
A photo of the Fairfield Works: https://www.ussteel.com/uss/wcm/connect/7009ae5c-de21-4497-a247-4a657afc3d4d/1/FWAER007.jpg?MOD=AJPERES&CACHEID=7009ae5c-de21-4497-a247-4a657afc3d4d/1
Hunter,
“Germany is a big fan of solar power”
They are also a big fan of Islamic immigration. Does that make it a good idea?
Solar power makes a lot more sense in the US than Germany.
That’s why the government MUST nationalize all industries. As noted by Hunter, the government is far superior to the private sector at allocating resources (labor, land, and materials) and has proven that it is far superior at deciding which industries to invest in. The government has created everything, invented everything, and has made everything in life possible. The only thing the private sector has ever succeeded in is screwing everything up and screwing everyone out of their job. I see no reason why a private sector should even exist. None whatsoever. It exist only to make our lives miserable. The government is highly competent and is not subject to greed or corruption as is often the case with the private sector. The government is driven by altruism and the objective to make all of our lives better. There is no case that can be made that a government that’s competent enough to run, direct, and plan industry isn’t capable of owning industries. So can we please start solving all of our problems by nationalizing all industries.
Jeff,
That’s a libertarian straw man. Whereas libertarians hate government and communists hate the market, there is clearly a third way which is practiced by lots of countries around the world. That’s what we are exploring here because it seems to he what works best in practice.
South Korea, for example, isn’t North Korea by any stretch of the imagination. Yet South Korea isn’t a free-market paradise either. Instead, the government cooperates with the private sector to promote national economic development through targeting key industries – steel, automobiles, consumer electronics, semiconductors, etc. – and by mastering new technologies.
If you can kill race and gender quotas or nondiscrimination laws, (which is probably not an issue in SK or Japan) then your gov run industries are a lot more likely to succeed.
I still say the best place for gov planning is to make sure the items produced are diverse enough for us to survive sanctions or outright embargoes. If we need steel, then let us make steel; if we need oil or gas, then let us frack; if we need food, then let us grow it. I think tariffs are an excellent tool for this kind of autonomy, subsidies make me a little nervous, gov owned and run monopoly–Hell no.
Tariffs are unusually fail safe when you consider:
Tariff too high:
gov doesn’t collect much money, because everything produced at home yielding economic autonomy. Consumer has to pay significantly more.
Tariff too low:
gov makes money from taking only a small slice from high volume import. Prices stay low and no harm done, except that we are still dependent on imports.
Therefore there is no super delicate balance with tariffs where it is inclined to backfire on us. It is a tradeoff, so you can’t go too wrong. Also, unless the tariff is zero or so high that importation drops to zero, then they are guaranteed to make money for the gov, with zero chance of investment loss.
In either of these extremes, the tariff is superior to sales tax which discourages domestic and intl commerce indiscriminately. At least with the tariff you are encouraging a desired behavioral change.
Tariffs can be easily changed by decree on a moment’s notice without too much damage done, so that makes it way better than a gov run company, since private sector is more nimble.
My synopsis is that:
–all the economy planning that the gov needs to do can be done w tariffs.
–tariffs are the most failure proof method for the gov to plan economy.
–tariffs (imho, but a survey wouldn’t hurt) are the most palatable plan to the masses. Even if other ideas are superior, you still lose if you can’t convince the mainstream. State owned industries are alien to us and are nonstarters even if for that reason alone. Very few Tea party types would object to tariffs bc they want to see those “Made in USA” labels.
From what I have read, state owned enterprises are/were a common development tool in South Korea, Taiwan, Singapore, China, Brazil, France, Finland, Norway and Italy.
I guess I better clarify a bit more on tariffs:
You’ll see countless arguments that tariffs penalize the consumer, or that the harm done to the economy is greater than the benefit of the tariff.
True, and true. But those two statements are true of any tax. If you assume that we must have some kind of tax to fund the gov and military, then the next thing to ask yourself is which taxes are the least harmful or accomplish some other good, like a change in behavior.
Compare the tariff to sales tax. Both penalize the consumer, but the tariff has the advantage of encouraging economic autonomy by only taxing the foreign goods where the sales tax taxes indiscriminately. So unless sales taxes have some virtue over tariffs, then we can say conclusively that tariffs are superior to sales taxes.
What about income taxes? They punish people for earning money. Well if that isn’t bad for the economy, I don’t know what is! Punishing for earning essentially boils down to punishing the consumer since earning and spending are intrinsically connected. So unless income taxes have some virtue over tariffs, then we can say that tariffs are superior to income taxes.
The point is that most any tax is a drain on the economy because, duh, you are siphoning off money to the government. The best we can do is shoot for taxes that are low friction (efficient to implement and collect) and encourage positive behavioral changes, like buying domestic, or smoking or drinking less. Sumptuary taxes (sin taxes) and excise taxes (gas tax or highway toll) fall in this category. I would also consider poll taxes in this category since it discourages low information and selfish voting more than it does informed and careful, altruistic voting.
In my ideal economy, tax policy would include:
–tariffs
–sin taxes
–excise taxes (earmarked for the cause relevant to item being taxed)
–prison labor (not traditionally thought of as a tax, but you’re taxing by extracting labor rather than a cash fee. I guess you could count prison labor as a sin tax since it penalizes undesirable behavior.)
As long as the sin taxes are reasonable, the average person could go a lifetime without paying a significant sin tax or doing prison time. If sin taxes were to include sucrose and high fructose corn syrup, then a lot of us will be paying them, even if we don’t smoke or drink, but if it cuts down on the rate of diabetes and obesity it will be a good thing.
I’m pretty dead set against income and sales taxes, since they penalize the kind of behavior we want to encourage more of.
Sir,
I do not agree with sin taxes – because I would not want to get into telling people what they can do to themselves. As a Tarheel, I am utterly tired of people trying to slip sucrose and hydrogenated oils into my tummy, while they rail on about cigarette smoke.
That said, I very much like the rest of your proposal.
By the way, I like Senator Cruz’s fiscal policies – including the 10% flat tax, after the first 36K untaxet muinimum.
Back in the mid 80s we basically set up camp for military exercises in Pohang. What I remember of the steel works was the non stop or so it seemed ambulance traffic coming and going out of it. And the workers all rode bikes to and from work.
Any way SK is an amazing country for what they have done, the old salts I had served with always told me how poor SK was back in their day and when I arrived there they were well on their way to hosting the Olympics and arriving at developed country status.
You couldn’t be more wrong on the solar issue. Technology of solar cells and especially solar storage are still in their infancy. We just don’t have the technology right now to capture sunlight at a good high efficiency/low cost ratio. And we really don’t yet have the technology to store it properly.
The somewhat affordable 10′ x 10′ panel and storage system that will completely power an average home is probably less than a decade away. I’m being a bit overly optimistic with this assumption, but certainly not unrealistic. We just need more companies willing to put up the money and advance the technology.
Junius,
I sympathize with you on the sin tax. I used to feel the same way, and in a small way I still do.
The change came when I realized:
–We have to have some kind of taxation to run things.
–sin taxes make a lot more sense than virtue taxes, which is what we have now, with income, sales, gift, inheritance, and property taxes.
–sin taxes, as long as they are reasonable, are taxes that I don’t really have to pay, at least not much, unless I choose to maintain a vice.
If it were up to me, I’d tax sucrose and high fructose corn syrup by the traincar load at the candy and softdrink factories. In exchange, I’d lower some other kind of tax, like income tax, sales tax, or property tax.
Celestial,
I do not doubt that solar technology will continue to advance. But I don’t believe gov subsidies are the way to go. These projects that I speak of will likely fail as soon as the mandates/subsidies end. The local people resent them for being ugly and taking up farmland, and of course not being cost effective where taxpayers and electricity consumers get to foot the bill.
Should the solar revolution come, I suspect that will come about from the private sector and without subsidy, unless we’re talking about subsidized research that leads to the breakthrough.
I really do wish the private sector would invest more into the technology. But it’s so expensive right now, the infrastructure so anemic, and the profit margins still so razor thin that the only way to jump start it all has been through subsidies. I’m positive that advances are around the corner that will drive down prices in the industry and, in turn, make everything a lot more affordable for the average homeowner—and less of an eyesore as well. That will eventually make the market an extremely profitable venture for the companies willing to make the sacrifices right now. But it’s probably still several years away before we get to that point.
Hunter,
Re:
“3.) I started an entire thread on South Korea’s steel industry which is just one specific example of a state owned enterprise and private sector-government cooperation which should have never succeeded according to libertarian economics. ”
my response:
I don’t think libertarian economics means that a state owned company cannot exist, or even that it cannot exist while producing a profit on the open market, rather that private sector is generally much more efficient than gov sector.
When you point out the success of the NK steel industry, that is like pointing out Ben Carson or Thomas Sowell and saying “Look how intelligent and well mannered negroes are! We need more negroes in our country!”
I think the role of gov economic planning is best limited to making sure we are autonomous enough to withstand whatever trade disruptions might occur, whether political origin or otherwise.
Quite simply, businessmen are better businessmen than congressmen are.
This is not a straw man argument. This is the same argument made 50 years ago in the US by proponents of socialism. Of note, there were markets in the old Soviet Union. The major difference between the S.U. and the U.S. is that Soviet government owned the means of production. Many socialist countries today have government ownership of major industries. This not a question of whether there should be markets. The question is which entity/entities should own/control the means of production? You have made a consistent argument that government can run industries better than private ownership. You have stated that the government has created and invented everything. You have advocated for government intrusively directing the business decisions for every corporation. With government having the level of control that you have argued for, they effectively own the mean the production. All that’s lacking is the official titles to the companies. If government can run a company, why shouldn’t it also own them? You have stated that there should be private/government partnerships without providing any details as to what this means and how is it suppose to work. May I ask, does the partnership between government that you advocate for include the cooperation on immigration policy? How about the partnership between government and the private sector on enforcing political correctness? But since you imply that there should be a private sector, what is it that they can do that the government can’t? According to you, the government can and does everything. Based on your arguments, I don’t understand why all industries should not be nationalized.
1.) Sure it is.
In the real world, there is a vast middle ground between the communist utopia, which is based on pure collectivism and state ownership, and the libertarian utopia, which is based on radical individualism and the free-market.
There aren’t many wealthy, developed countries in the world which correspond to either of those models. Virtually all developed countries make extensive use of both the state and the market.
2.) Among other things, I haven’t said that government has created everything, that government should run all industries, that all trade is bad, that there should be high tariffs on every consumer good, that government should micromanage every corporation, etc. Instead, I have just pointed out how the real world doesn’t correspond to libertarian economic theories and policy ideas.
3.) I started an entire thread on South Korea’s steel industry which is just one specific example of a state owned enterprise and private sector-government cooperation which should have never succeeded according to libertarian economics.
4.) I haven’t reviewed the book yet. That’s a few days away
5.) A great example of private sector-government cooperation would be the American aerospace industry where private firms like Boeing and Lockheed have always worked closely with the state or the American biotechnology industry which is similarly emeshed with the state. Over 50 percent of all R&D in the US is financed by the state.
6.) In the real world, the state and the private sector aren’t as antagonistic as libertarians make it out to be. This, of course, is on display in Germany, Sweden, Finland, France, Japan, South Korea, Taiwan, the US in all sorts of sectors of the economy.
So why do you keep talking about ” laissez-faire, free-trade, free-market model.” According to the above statement, it doesn’t exist.
How do you judge success? The only objective measure of success and failure is profit/loss. Can the state owned Korean steel company produce steel at a profit? If not, how do you define success? Here is a good example, a mayor of a city once declared its mass transit system a success. This mass transit system could not survive without subsidies via other local taxation. Therefore, it costs more to provide the service than the prices people are willing to pay. How can it be called a success. If General Motors had been owned by the government, it would been deemed a success. The US Postal Service loses over $1B/yr. Should it be deemed a success?
Boeing and Lockheed have been successful at inflating the defense budget. They are a part of the military-industrial complex. And have you ever heard of the broken window fallacy? Government funds these “partnerships” through taxation. If it weren’t for the taxation, capital (money) would be available for other uses. This gets to the heart of the question of which entity should determine the factors/means of production. If government is a better allocator of resources, then there cannot be a case to be made to have a private sector. If the private sector can allocate resources more efficiently, there is no need for any funding for the production of goods and services. For these government/private sector partnerships, what value judgements are used to determine the proper allocation of resources. The private sector uses the profit/loss model. Absent of profit/losses and prices, what means and metrics does the government use to determine if their investments are wise?
” If it weren’t for the taxation, capital (money) would be available for other uses.” – I hope those other uses include defense, because you either pay for security, or you pay for not having security.
The government can be a better allocator of resources, in such cases as the Manhattan project or the Apollo program for example. The private sector would not do either and for quite good reasons, and yet there was merit to both projects. This is the reason that government exists at all.
AnAnon,
These were both defense related programs, which is a special case. I allow that when it comes to defense, either military or economic autonomy (which should be part of a defense strategy) then it’s good for gov to plan. The free market just isn’t going to plan for that unless they can make sales, like military uniforms, guns, etc.
If the private sector had the authority to do the r&d and testing, then I cannot be sure that they would not have gotten the H-bomb by contract more efficiently than the gov did on it’s own. But some things were secret and couldn’t be shared I suppose. It doesn’t compare very well to something like the SK steel industry.
I’m also cool w gov planning infrastructure, especially when imminent domain is involved.
Celestial,
I’d say those investment dollars are going into fracking research these days, which is fine by me. I have no idealogical loyalty to any one energy source as long as it gets the job done without too much eco damage. I am fine with coal, oil, gas, nuclear, wind, waves, tides, hydro, whatever, but they have to pull their own weight economically rather than be funded by subsidy. Exception if it has to do w economic autonomy, like getting away from Arab oil dependence.
The Manhattan Project was used to produce nuclear weapons. The private sector doesn’t allocate resources to produce doomsday weapons. And how do you make a value judgement on the Apollo Project? Yeah, it was cool but by what standard do we use to determine it was a wise allocation of resources. If you wish to judge it by its value for national defense then the US government does have a valid role in this regard. However, it is still subject to waste and gross misallocation of resources (e.g. the $1T F35 boondoggle). But Hunters arguments are government/private sector partnerships not for defense but for the creation of non-defense/consumer goods and services.
Jeff,
Yeah, I agree. Defense oriented and just general industry are two different ball games and play by different rules. Defense interests (including economic autonomy, and contagious disease control, as well as military and CIA) are justifiable areas for the gov to intervene, subsidize or maybe even run things.
Outside of that, gov planned industry is going to fail 99% of the time. But our elected officials will claim it was a success if it was something they were involved in.
Birmingham, however, is now one of the world’s leading producers of civil rights and the title pawn and payday lending industries. It still has a statue of Vulcan which towers over a black ghetto.
LOL! As I said before, sarcasm is really the only way to discuss these topics as everything else seems to not sink in to our people. They are so brainwashed by this garbage.
I also love your poultry, peanuts and potato chips line as well. While our people are screaming for free market and more “liberty”, the rest of the world is passing us by – nations that were behind us just a half a century ago are now technological powerhouses why we sit here and head towards a banana style republic..
John Bonaccorsi,”…2 — “As we shall see in an upcoming book review, many secessionists who bitterly opposed tariffs and internal improvements in the old Union were not ideological free-traders. They simply objecting to taxing the South’s export-based economy to finance internal improvement projects in the North.”
Whatever you say. I’m losing track of your arguments, which, as I’ve said, are evasions. That, actually, is the South’s greatest and most-enduring tradition: evasion–self-evasion…”
Your arguments are nothing but sophistry. Hunter’s 2nd argument is to the point and accurate. You may not like it but it not evading anything. It’s describing things as they are. Your and many others in the North hatred for the South is a major problem for raising capital as much of it originates in the North. He’s given you direct evidence of this in the differential pricing for Southern based steel companies.
Jeff’s sarcasm about government helping industry takes no account of the type of capitalism the Japanese and Asians are playing. They are using “monopolistic capitalism”. Where the huge amount of investment need for a modern plant is difficult to come by unless helped by the government. At first a plant like this will lose money but eventually it will OWN the market. It’s efficiency is so high and the capital requirements so steep that your average free market capitalist will turn his nose up at any investments.
There are several examples of this. The TV industry, electronics, steel, shipbuilding… Remember when Clinton was in office a fire at a Japanese factory shut off ALL of a particular plastic used to encapsulate electronic chips.
I’ll give you another example. Elon Musk got in the rocket business because of his beliefs about the future. His capital requirements were well within Boeing and several other defense companies reach. You may say this is different. He’s an individual but the idea is the same. Some industries need to be based in the US for our security and development. Some subsidies for these industries are important.
Asians are willing to take a lower level of profit to capture the market. In turn they are helped by the government and protected. Over time they ARE the market. At the volumes they operate at they can charge a decent mark up and it’s difficult for any other company to catch up.
Standard economist have no input for this type behavior so they just ignore it. If they know so much why do we keep loosing trade in all the industries they target? Even when Japan has higher wages than the US.
The world does not conform to their charts and graphs so they just declare victory while the ship sinks.
Ulfric,
As I have read more about the Alabama peanut industry, I have come to realize that it, too, was nurtured by government subsidized R&D, agricultural tariffs, and decades of federal crop subsidies. In fact, Tuskegee University’s very own George Washington Carver – probably the most famous black scientist in the world – became famous for his congressional testimony in support of the 1922 tariff on imported peanuts.
Auburn University, which was started as one of the South’s many land grant colleges, does a lot of research in this area. American agriculture is heavily dependent on all the pesticides and crop varieties (which are immune or resistant to blights and pests) that are spin offs of government research done at state universities.
“Your arguments are nothing but sophistry. Hunter’s 2nd argument is to the point and accurate. You may not like it but it not evading anything.”
No, Sam, it is evasion, of the fact that the South had cut itself off from the rest of the Union, as well as from Britain and the rest of Europe. The South, as I’ve said, had made of itself “the other,” was insisting on being “the other”–and then it complained when it was treated and regarded as the other.
“Your and many others in the North hatred for the South is a major problem for raising capital as much of it originates in the North.”
I reject you view that I hate the South. What I’m objecting to is your unwillingness to acknowledge your own error. For a century-and-a-half you’ve been nothing but passive aggression, an amalgam of grousing, antipathy, and self-pity. Try acting like men. Hint: A man has better things to do than sing about how annoyed his woman was that he came home drunk again at three in the morning. When you begin acting like men, maybe you’ll find you won’t have to rely, like beggars, on others’ capital.
As an ideology, classical liberal and neo-liberal economics is the reigning orthodoxy, even though the doctrine itself has little correspondence to either economic history or actual practice in the world’s developed countries.
The UK didn’t become the world’s leading superpower and industrialized nation by practicing classical liberal economics. Instead, it only embraced that model AFTER it had reached the summit of the world’s nations in the 1840s.
Similarly, the United States rejected classical liberal economics all the way down to WW2. It was only after WW2 that the US, which took over the leadership of the “free world” from Britain, became the world’s great champion of the free-market and free-trade.
In the 19th and early 20th centuries, the US had markets and trade, but neither could be described as “free.” Likewise, Britain didn’t get to where it was in the 1840s as a result of free-trade or the free-market, even though it had both trade and markets.
By that standard, Toyota which didn’t become competitive in automobile manufacturing for 30 years was certainly a loser. The Japanese and South Koreans after them should have stuck to their comparative advantage in the export of seafood and bought superior American automobiles.
Instead, Japan and South Korea took a long term view. They decided that automobiles, steel, consumer electronics, and semiconductors were industries they wanted in Japan and South Korea because those industries would generate greater wealth and development in the long term that would lift their nations out of poverty.
The free-market system is biased towards short term profits and the consumer. The Japanese and South Koreans knew that and factored it into their economic policies.
As for POSCO, it was privatized in the 1990s, but the government still has a large stake in the company. This is typical of state owned enterprises which have been privatized in lots of countries like France.
Compare a large Southern city like Atlanta or Houston with the high speed bullet trains and mass transit in Japan or South Korea. Is America a success for being so much more dependent on automobiles? Most of the automobiles which are used to commute into and out of Houston or Atlanta were likely built by the Japanese.
The US Post Office was privatized. Shouldn’t it be more successful now? As for GM, the government rescued GM and it paid back its loans. Should it have been allowed to collapse instead? The French automobile company Renault was also a state owned enterprise.
Yes, and as others have already pointed out, much of the advances in science and technology over the past 50 years can be laid at the doorstep of defense spending. Nuclear power is just one example.
I’m familiar with the theory, but I highly doubt that if it been left up to the consumer and the free-market that there would have been advances in science and technology in the late 20th century as significant as, say, nuclear power, the computer, or commercial satellites.
Why can’t the government simply subsidize R&D, advances in sectors like aerospace and healthcare through government contracts, invest in infrastructure or education, or nurture entire industries like agriculture and advanced manufacturing? Isn’t that what we already do today?
Here’s one example: under the concept of “public health” the government has systematically eradicated scourges like polio, measles, and small pox, and the South is no longer plagued by the likes of malaria or yellow fever, as it was through most of the 19th century.
Was it profitable in the long term to invest in public health by eradicating malaria in the American South? Yes, but that wasn’t the only consideration. The profit/loss logic of the free-market has its limits. BTW, disease was one of the major factors that had traditonally held back the growth of large cities and commerce in the South. The Caribbean had an even worse problem.
More here on malaria eradication:
https://en.m.wikipedia.org/wiki/National_Malaria_Eradication_Program
“The Manhattan Project was used to produce nuclear weapons. The private sector doesn’t allocate resources to produce doomsday weapons.” – neither, so far, has the public sector, considering planet earth has been battered by thousands of nuclear weapons tests.
“And how do you make a value judgment on the Apollo Project?” – 1st place, single greatest human achievement, We beat that other guy, take your pick. The project itself was cancelled well before anything substantial could have been done in space, to pay for non-discretionary spending.
“However, it is still subject to waste and gross misallocation of resources (e.g. the $1T F35 boondoggle).” – the F35 is an attempt to estimate the total cost of the aircraft over its entire lifetime, no other plane has been subjected to that, so we really don’t have a basis for comparison as far as whether or not $1T is absurd. the actual obligations which will sink the USG are far, far worse than that.
“But Hunters arguments are government/private sector partnerships not for defense but for the creation of non-defense/consumer goods and services.” – Capital investment is very expensive these days, you aren’t going to challenge Asia incorporated out of your garage. even if you invent the most efficient process ever, you still have to recoup your investment which means you lose and the other guy that doesn’t wins. like it as not, the winners are going to have some degree of government assistance, even if that is merely tariff support.
‘solar’.. who cares about solar power? It is worse than every other widespread means of generating electricity.
Steel is something that _people actually need_.. things that people don’t have any use for, like solar power, should not exist, and should certainly not be subsidized. OTOH, things that people actually need might make sense to subsidize to avoid predation from outside.
Paul,
You’re a little harsher than I would be on solar. I just don’t think there is justifiable cause to subsidize, except maybe for university research–maybe.
I’m all for encouraging our basic necessities like food, steel, auto parts, clothing, etc. to be produced domestically, but not by gov run monopolies. Subsidies, maybe in some cases. Tariffs and deregulation, definitely.
Of course we’ll be importing our chocolate, coffee, and bananas.
I really hope American industry isn’t in the hands of people like Paul. We need lateral thinkers and men willing to take risks. Practically everything on our planet is a derivative of solar energy. Every piece of life and remnant of past life is linked to it.
ALL ENERGY SOURCES ARE DERIVATIVES OF THAT BIG BRIGHT SHINY THING IN THE SKY. It never stops throwing out energy. It’s an infinite source of energy that produces a TRILLION TRILLION times more energy than we could ever possibly use. The problem is that we are still in the Stone Age as far as understanding how to harness it efficiently and keep any kind of environmental impact to a bare minimum. The entity that figures out how to harness it efficiently and can find a way to protect their intellectual property will pretty much be able to rule the world.
What exactly is the average household going to use steel for? I understand how households need a constantly supply of cheap energy, but I can’t figure out what they are supposed to do with tons of cheap steel sitting in their backyard. My guess is that they would sell it to help pay for their monthly expenses, like the utility bill that never stops coming in and always seems to get a little larger every month.
“It’s an infinite source of energy that produces a TRILLION TRILLION times more energy than we could ever possibly use.”
Indeed. The earth is moving through a photon sea, and we’re still worrying about liberating photons trapped in fossils. Apart from race-ruination, this is the greatest of the left’s crimes. We don’t even need a breakthrough. We have all the technology we need to bring down solar power from space. We’d have the capital, too, if the left hadn’t begun siphoning off capital to the World Welfare State in the latter 1960s–at the same time that it began subverting our efforts to exploit outer space. Combustion is Stone Age technology. Had it not been for the 1960s counterculture, the Age of Combustion would have ended at some point between the first moon landing and the end of the Twentieth Century. Combustion would have been reduced to a toy, the way the horse was reduced between, say, 1920 and 1930. Carbon footprint? We’d be deliberately burning all the flammable waste in trash dumps simply to release carbon, which inexpensive space-based solar power would be extracting from the atmosphere to produce gasoline, limestone, etc. Carbon–one of the most valuable elements–and the left speaks of it as if it’s poison.
Wikipedia’s article on space-based solar power:
https://en.wikipedia.org/wiki/Space-based_solar_power
John,
A lunar power station is certainly interesting, but it is not economically feasible for the near future. We have over 100 years worth of coal, oil, and gas at the current rate of consumption. One hundred years is a long time for technology to advance far beyond where it is today. We also have other options that will likely compete w fossil fuels in the future also, like nuclear, geothermal, solar, wind. All it takes is a key breakthrough for any of these to out compete fossil fuels and they have my best wishes in doing so. But when it comes to today and the near future, fossil fuels are by far the most feasible for most applications.
IMHO anything that collects energy from outer space and beams it to earth would lead to global warming many times faster than burning fossil fuels, which I do not think pose a serious threat to the climate. Heat extends growing seasons and higher levels of CO2 help plants grow faster.
Fossil fuels won’t last us forever, but they will last us a loooong time before we have to worry too much about other alternatives. Unless things change course fossil fuels will probably outlast Western civilization.
PS The following, by a Texan space physicist named David Criswell, is the proposal I personally find most fascinating. It uses the moon as the primary solar-power collection platform, from which the energy is microwaved to Earth …
Lunar Solar Power System: Practical Means to Power Sustainable Prosperity
http://www.searchanddiscovery.com/pdfz/documents/2009/70070criswell/ndx_criswell.pdf.html
Here’s the Criswell bio at Wikipedia …
https://en.wikipedia.org/wiki/David_Criswell
“IMHO anything that collects energy from outer space and beams it to earth would lead to global warming … ”
If you’ll read Criswell’s paper, Jeff–or maybe one of his interviews, linked at the Wikipedia page–or somewhere–you’ll find his statement that the system he proposes does not affect the Earth’s temperature.
John,
“you’ll find his statement that the system he proposes does not affect the Earth’s temperature.”
Then he is full of shit.
“Then he is full of shit.”
I don’t know, Jeff. The man has a pretty significant scientific background.
Maybe two years ago, an electrical engineer to whom I mentioned this also had a quick objection: the microwave beam from the moon would be hazardous. No–Criswell has the data on that, too. If you were standing in the beam (as you would not be), you’d feel some warmth, but it wouldn’t be as if you were in a microwave oven. Take a look at the illustrations in that paper. The system is beautiful; and as I’ve said: no breakthrough required.
When it comes to energy policy, the major problem is how much we shell out every year on foreign oil imports. That’s money which is sucked out of our economy. Fracking has lately put a major dent in this, but Saudi Arabia is fighting back.
Hunter,
I pretty much agree, except I’m not going to rank the problems, but here are the top 3:
–we are dependent on our eternal adversaries to freely trade with us when they could embargo at any time. Not a good defense strategy.
–we are making Arab states richer, which of course they will use to turn around and fight us.
–it sucks money out of our economy as you said.
Fortunately fracking and horizontal drilling is changing all that. We need to have our own homegrown energy, or the next Arab war we get involved in we just take oil as payment like Trump says he’ll do.
I agree.
From what I understand, Saudi Arabia and other foreign oil producers are trying their best right now to strangle fracking in the US. I haven’t followed the issue as closely as I used to, but it remains to be seen if the cheap oil prices right now will have that long term effect.
Damn.
Can you repost the USPS comment? I accidentally deleted it while responding in the control panel.
John,
The claim that it would not heat up the Earth is in violation of the 1st law of thermodynamics, unless the energy is going into chemical bonds (like hydrocarbon bonds maybe) or into the creation of mass (basically doing nuclear fission backwards, which to my knowledge has never been accomplished by man.) I doubt either of those is the case, though it could go into the creation of H-C bonds, but that would be pointless since we have so many H-C bonds in the form of oil, gas, coal, and cellulose. There is no foreseen shortage of any of those things in the near future.
Even if it were true, it is still, for now, much, much cheaper to pump oil out of the ground and scoop coal from the KY mountains (leaving agricultural land where the land was previously untillable).
At current rate of consumption, we have over 100 years worth of fossil fuels left and plenty of competing energy sources on the way.
Why would I put a solar station on the moon to beam energy back to Earth when we have so much? That would be like going to the moon to mine for salt water to bring back and drink after desalinating it.
If mercantilism is as successful as you insist, why didn’t Great Britain readopt it after the failure of free market liberalism? And why don’t all countries adopt it today?
That’s a good question.
If you look at the British West Indies, which became an early experiment in the new faith of free-trade and abolition, the result was an unmitigated disaster. Yet Britain never admitted its error. It never restored slavery or protective tariffs. It never restored white supremacy and colonialism in Africa either after watching what happened to Nigeria, Ghana, Zimbabwe, Kenya, etc.
Such was the surprising strength and resilience of the ideology. British historians have pondered that question for decades. The best answer that I have to offer is that classical liberal economics was clothed in moral self righteousness.
“Why would I put a solar station on the moon to beam energy back to Earth when we have so much?”
You’re right, Jeff; all of that can be debated. I mentioned Criswell’s scheme mainly because there seems to be a drumbeat, out in mainstream America, of energy hopelessness, for lack of a better phrase. The ideas, the discoveries, the possibilities are so great that there’s nothing even to be concerned about. We can go in any direction we want, but you’d never guess that from what you hear in the mainstream media. Some persons, I suppose, would say that the media are being mischievous, that they’re trying to induce despair, but I wonder whether the reporters are simply clueless.
John,
So many kids have been indoctrinated into the Green Religion that it gained critical mass long ago. The mindless masses just follow the herd. Reporters, unfortunately mostly fall into the mindless masses camp. They are selling whatever the market is buying. They care nothing about the truth.