Sunday, April 12, 2020

Abandon all hope

According to Brad DeLong, your country should [a]bandon all hope of running a successful developmental-state industrial policy if:

  1. You have landlords (or some other parasitic class interpenetrated with those from whose ranks your bureaucrats are drawn): then you are doomed, because the more effective your government’s ability to use levers of state power, the more the distribution of income and wealth will be frozen into a form pleasing to your anti-developmental current upper class. You need to start with a remarkably equal and definitely not inherited-inequality distribution of income and wealth. If you do not start there, abandon all hope.
  2. You do not have an ideology of economic development shared by your elite: if your elite judge each other by, say, how rich they get and do not judge each other by whether they have contributed to society’s growth mission, abandon all hope.
  3. You do not have an effective educational system for training and an effective examination system for selecting your bureaucrats. If your bureaucrats cannot outsmart the private sector and foreign managers whom they are attempting to regulate, outproduce, midwife, or garden, abandon all hope.
  4. You do not have an ideology in which government service is a high prestige occupation. If your best and your brightest do not regard government service as a good thing to do, abandon all hope.
  5. You do not have a firm and reality-based conception of what industrial structure you want your country to develop into. If you cannot point to another country, and say: we want to become like them, and here are the first stage investments and capabilities we need to develop to do so — if you cannot do that, abandon all hope.
  6. You do not have the factor-mobilization prerequisites—the power to mobilize savings for investment, to massively upgrade the technical education level of your population, to move people out of low productivity into high productivity occupations, to build the infrastructure and the links to global value chains. If you do not have the factor mobilization prerequisites to make a success of industrial policy, abandon all hope.
  7. You do not have access to the markets that will buy at a price that will cover your costs the goods you produce if your industrial policy is successful. If world markets are not open to you and you have to rely on domestic demand from a poor population, abandon all hope.
  8. You do not have the power to judge which private businesses are successful and need to be fertilized, and which are unsuccessful and need to be pruned back. The best way to do this is to lower the value of your currency and then watch which of your firms are successful exporters—to use foreign countries markets’ as devices for telling you who is making high-quality goods at a reasonable price. But you have to do this somehow. If you cannot measure where you are succeeding, abandon all hope.

[It should be noted that the United States fails not just one or two but most of these tests, especially the first. We have access to international markets, but not much else.]

No comments:

Post a Comment

Please pick a handle or moniker for your comment. It's much easier to address someone by a name or pseudonym than simply "hey you". I have the option of requiring a "hard" identity, but I don't want to turn that on... yet.

With few exceptions, I will not respond or reply to anonymous comments, and I may delete them. I keep a copy of all comments; if you want the text of your comment to repost with something vaguely resembling an identity, email me.

No spam, pr0n, commercial advertising, insanity, lies, repetition or off-topic comments. Creationists, Global Warming deniers, anti-vaxers, Randians, and Libertarians are automatically presumed to be idiots; Christians and Muslims might get the benefit of the doubt, if I'm in a good mood.

See the Debate Flowchart for some basic rules.

Sourced factual corrections are always published and acknowledged.

I will respond or not respond to comments as the mood takes me. See my latest comment policy for details. I am not a pseudonomous-American: my real name is Larry.

Comments may be moderated from time to time. When I do moderate comments, anonymous comments are far more likely to be rejected.

I've already answered some typical comments.

I have jqMath enabled for the blog. If you have a dollar sign (\$) in your comment, put a \\ in front of it: \\\$, unless you want to include a formula in your comment.

Note: Only a member of this blog may post a comment.