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Factories disappearing ?

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softwareNerd
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Bloomberg reports on an Italian businessman who gave his workers three weeks off. he then secretly packed up all his factory equipment and shipped it to Poland. He let a handful of his workers in on his secret and they moved to Poland with him. The case has stirred up controversy in Italy.

 

I found the story interesting because (other than the rough Atlas analogy), I recently heard a similar story on NPR. A Chicago businessman wanted to shut his factory there and move equipment to two other plants, in Colorado and Pennsylvania. His workers occupied the plant.

 

Classical economists like Smith and Say argued that freedom of individual choice (aka "property rights" in the material sphere) increases wealth. Generations of subsequent economists, from Keynes to Friedman, have shifted the focus to fiscal and monetary policy, while the really important focus ought to be on structural policy. Instead of debating how much the government should spend or how the Fed should fix interest rates, the real focus ought to be on structural issues that are holding back wealth-creation. Example: labor laws, wage-rates, Keystone pipeline, allowing Boeing to move where they wish, etc.

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A problem that I have always had with economic freedom indexes is that they fail to evaluate the variance of importance of factors between different economies. I have a hard time believing that inefficient regulatory burdens are actually enforced in places like Namibia or Laos. The number one, most important factor of economic freedom anywhere in the world is the enforcement of property rights. In countries where property rights are basically secure (most of the Western world), we can then start looking at fiscal and monetary policies as sources of economic inefficiencies. However, there are exceptions to this rule where fiscal and monetary policies are so terrible that property rights become irrelevant, ie. Zimbabwe's hyperinflation.

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In countries where property rights are basically secure (most of the Western world), we can then start looking at fiscal and monetary policies as sources of economic inefficiencies. ... ...

For property rights to be secure, the owner must have the right to dispose of his property as he sees fit, and this this should hold against private thugs as well as against democratically-elected governments. The latter has been eroded enough in the West to make a significant difference to the process of wealth-creation.

To take a small example, Any rational person can see that the Keystone pipeline ought to be built, but the government has so far stopped this cheaper gas. The same applies to union-laws, wage-rate regulations, and examples like stopping Boeing from moving their plant. Each is a violation of property rights. Further, there are many businesses that simply do not move in a particular direction because they know the government will not allow it.

Healthcare is another good example. It is a huge sector, and one in which the most significant problems are all government-caused structural ones. The Federal reserve and the banking system are predicated on the violation of rights.

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  • 2 months later...

One problem I have with these factories and pipelines is they're skipping out on a lot of safety measures. 

 

There's been tragedy after tragedy in Bangladesh, including that 8 story building collapse that killed over 1100. 

 

And with the pipelines, someone's paying a lot of money to keep the hundreds (over 750 in N. Dakota alone), of oil spills quiet. 

 

Meanwhile, just this friday, oil that was supposed to be on the Keystone, derails on a 90 car train.

Edited by Ben Archer
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One problem I have with these factories and pipelines is they're skipping out on a lot of safety measures.

No, skipping out safety measures is not routine in the U.S. Poorer countries, like Bangladesh, are like the West from 200 years ago where western levels of safety are not seen as being worth the cost.

I had a car that had an oil spill every day, on my garage floor. A bit facetious, but the point is that the danger is in the dose. Your article is from RT, not exactly a reliable source, but even they admit that most spills are under 2 cubic meters. The one story they tell of a "major" spill speaks of trucks hauling away the oily sand. These are not real dangers. To think of them as such is to drop context and to drop the vital notion of dose. Even a true disaster like Chernobyl isn't as bad as the media would have you believe. I'm not saying that those types of big disasters are just fine, and that we should ignore them. However, the fears run way ahead of the reality. According to the CDC, a good flu season sees about 3,000 people die in the U.S. but a bad flu season can see about 40,000 deaths. yet, there's much more panic about Fukushima than about flu deaths. And, compared to these, small oil spills that get cleaned up are really not worth worrying about.

Added:If the American voter can stop worrying about small non-fatal accidents that are handled as part of a regular process, that will do more for wealth creation than any government-backed promissory notes, or government-funded "innovation".

Edited by softwareNerd
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Well I originally read about the article in the Bloomberg Business week magazine, I just quickly googled and linked the first thing I could find.There's a similar article on their website, but the one in the magazine was more detailed. 

 

I think it's simplifying things to suggest that 200 years ago, the conditions in the textile factories in Bangladesh were observable here. Not only is the negligence towards safety much more extreme, but the situation with child labor. They even tried firing a large amount of kids but most of them ended up in prostitution or gangs. One solution could be to build a new, safer factory that was to such a scale that it could monopolize the industry and shut the other derelict ones down. 

 

I'm guessing the last bit about "innovation" was a jab at my other post, but I really don't see the relationship between the worrying of american voters and the global economic crisis I was addressing =P 

 

Regardless, I agree these types of accidents are going to happen. If you read the bloomberg article though, a lot of oil has spilled in N. Dakota, and I just expected a lot more media attention.  I only mentioned the train–wreck because it might not have happened if they'd just let the Keystone pipe carry on, heh. 

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I think it's simplifying things to suggest that 200 years ago, the conditions in the textile factories in Bangladesh were observable here. Not only is the negligence towards safety much more extreme, but the situation with child labor.

In the U.S., the famous case was the fire in the New York "Triangle Shirtwaist" factory; but, that was just 100 years ago. Wind back to earlier industrialization: Charles Dickens and Oliver Twist. There's really nothing wrong with child-labor in contexts where people are trying to survive and put the next meal in their stomachs. No country should be in that situation today, but many are... Bangladesh included.

 

They even tried firing a large amount of kids but most of them ended up in prostitution or gangs. One solution could be to build a new, safer factory that was to such a scale that it could monopolize the industry and shut the other derelict ones down.

Sure, but the real solution has been in the grasp of these folks for decades. Bangladesh was part of British India, and the whole Bengal area was not the most backward. Post Independence, in 1947, India and Pakistan (Bangladesh was "East Pakistan") generally adopted statist policies. All three countries did very poorly, and are still poor. Why did India at least get on the programming/outsourcing band-wagon, while Pakistan and Bangladesh did not? It's all a question of government policy.

People are so poor in Bangladesh because government policy keeps them so. Also, Bangladesh has a history of some form of muddling democracy, without even the occasional Pakistan-style army takeover. In other words, a lot of Bangladesh voters are voting to continue their system. In this sense, their poverty is their own doing: a result of their ignorance. One can give them aid, or one can set up a better factory -- essentially eating some of the cost -- and one might even be able to sell consumers on the idea of paying more for garments that come from better factories. Perhaps things like this will be steps toward more rational ideas on economics, but finally that is what they need: less government intervention in their economy.

 

I'm guessing the last bit about "innovation" was a jab at my other post, but I really don't see the relationship between the worrying of american voters and the global economic crisis I was addressing...

Sorry, I did not mean a jab. My point was that a big part of innovation is about using knowledge, technology and automation to lower costs. Things like the Keystone pipeline are squarely aimed at lowering costs, and any fear that is overblown is a set-back to such innovation.

There are now three threads that are a bit inter-twined, so I think I'll stop here.

Added :) : If you go back to the opening post, I made a point that I'll reiterate here. The most important laws and policies that aid wealth creation are the structural issues and rights issues raised by folk like Adam Smith. Fiscal and monetary policy are typically much less important to the process of wealth-creation. Countries that have remained poor -- Bangladesh included -- have followed fairly Keynesian fiscal policies, but really skipped over Adam Smith too soon.

Edited by softwareNerd
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One problem I have with these factories and pipelines is they're skipping out on a lot of safety measures. 

 

There's been tragedy after tragedy in Bangladesh, including that 8 story building collapse that killed over 1100. 

 

And with the pipelines, someone's paying a lot of money to keep the hundreds (over 750 in N. Dakota alone), of oil spills quiet. 

 

Meanwhile, just this friday, oil that was supposed to be on the Keystone, derails on a 90 car train.

Do you honestly believe that saying "there are hundreds of oil spills" is an intelligent way to quantify the cost of oil pipelines to surrounding property and human health?

Same with Bangladesh, btw. "tragedy after tragedy" is not a very useful attempt to measure something. It is an attempt to measure it, just a very poor one (the repetition of a word was a primitive attempt to illustrate quantity, back before numbers were invented - that's what you were doing there, attempting to quantify without bothering with numbers).

 

Now that we have numbers, you could do better, if you were interested in doing a good job. You could measure the risk industrial accidents pose to property or life (both in Bangladesh and the US). You could compare those risks to other risks, as well as to the cost of thwarting industrial activity in an attempt to prevent them.

Why don't you? Why settle for vague and ineffective attempts to measure things you're concerned about enough to make long posts about them?

Edited by Nicky
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Do you honestly believe that saying "there are hundreds of oil spills" is an intelligent way to quantify the cost of oil pipelines to surrounding property and human health?

Same with Bangladesh, btw. "tragedy after tragedy" is not a very useful attempt to measure something. It is an attempt to measure it, just a very poor one (the repetition of a word was a primitive attempt to illustrate quantity, back before numbers were invented - that's what you were doing there, attempting to quantify without bothering with numbers).

 

Now that we have numbers, you could do better, if you were interested in doing a good job. You could measure the risk industrial accidents pose to property or life (both in Bangladesh and the US). You could compare those risks to other risks, as well as to the cost of thwarting industrial activity in an attempt to prevent them.

Why don't you? Why settle for vague and ineffective attempts to measure things you're concerned about enough to make long posts about them?

I  didn't realize my intent was on quantifying the " the cost of oil pipelines to surrounding property and human health"

 

Same with Bangladesh btw, "tragedy after tragedy" is not an attempt to quantify something...it's acknowledging that they happened, and its a problem.  (example, example)

 

I'd love to see an example of how you'd "compare those risks to other risks, as well as to the cost of thwarting industrial activity in an attempt to prevent them."  (I suggested boosting productivity in the existing larger, and better run factories to drive out the smaller, dodgier ones)  

 

Lovely condescending tone (I see it in a lot of your posts), picking apart a simple segway into further discussion. Relax. 

Edited by Ben Archer
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I  didn't realize my intent was on quantifying the " the cost of oil pipelines to surrounding property and human health"

 

Same with Bangladesh btw, "tragedy after tragedy" is not an attempt to quantify something...it's acknowledging that they happened, and its a problem.  

It is an attempt to quantify. Just mentioning that there is a problem is an attempt to quantify. You are quantifying it as more than nothing. That of course is an even less accurate way to quantify than your previous attempt.

 

It makes your views on these issues superficial to the point of superfluous. I see this a lot in your posts. You should try to focus more, you're way too relaxed. Or, if you wanna be relaxed, go watch TV. Don't try to discuss issues that require a focused mind.

Lovely condescending tone (I see it in a lot of your posts), picking a part a simple segway into a more detailed discussion. Relax.

The main difference between being critical and being condescending is the level of the criticism. I'd love to be able to present criticism that rises above condescension. But, for that, you'd have to actually try to make some intelligent points, instead of being vague and superficial on purpose. Edited by Nicky
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I don't watch TV, but thanks. Here's an example of something you could've said, which in fact, helped educated me on the subject He brought up some good points and history I hadn't considered  (it's Softwarenerd's reply). Maybe you should criticise him for not  reducing the discussion to the essentials, which in your mind is "failing to quantify."

 

You seem to be interpreting the intent of my posts as the beginnings of a treatise  By mentioning the 750+ oil spills, I was  noting the lack of media attention, and the irony that the Keystone pipeline might have averted the train wreck. 

 

Again, a real charmer, thanks for reducing the conversation (one I was done with) to your trivial misinterpretations. 

Edited by Ben Archer
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