Posts Tagged ‘commerce’
“The only thing that will redeem mankind is cooperation”*…
Industrial policy is on the rise around the world, as nations (and sometimes regions) create laws and policies that prioritize domestic competitiveness and economic benefit over free trade, using tools like investment, regulation, and tariffs. Increasingly these policies are being animated not only by economic, but also security concerns. (See, e.g., here and here.)
The traditional worry about policies like these is that they create barriers (thus tensions) between countries… which, at a time when the world desperately needs collaborative responses to global challenges like climate change, could be deeply problematic. But Nathan Gardels argues that industrial policy might be precisely what we need to set the stage for meaningful cooperation…
The remarkable story future historians will tell about the late 20th and early 21st century is how inviting a Communist Party-state to enter a global economy built on the capitalist principles of free trade and markets ended up transforming the neoliberal West into a bastion of protectionism and state-directed industrial policy of the same kind now condemned as unfairly advantaging China’s rise.
They will also note the further irony that the logic of opening to China in the 1970s — and of China’s opening to the West — had a national security premise of checkmating the Soviet Union. Half a century on, the Middle Kingdom is more closely aligned with Russia than in the later stages of the Cold War, primarily as a way to do the opposite: checkmate America’s continuing dominance of the very world order that enabled its rapid ascent.
Adding more complexity to this reversal of history are the related global challenges that have arisen in both East and West: decarbonization of fossil-fuel dependency to mitigate climate change while coping with the disruptions of the digital revolution and the advent of artificial intelligence.
These threads of deglobalization, climate and technological revolution have all converged in the competitive assertion of “industrial strategies” in which nation-building is integrally bound up with international security concerns. China is driven by the fear of not catching up, the United States by alarm at losing the upper hand and Europe by the angst of falling behind both and losing its strategic autonomy.
China’s industrial strategy is called “dual circulation,” essentially a policy of self-reliance and resilience in the face of newfound Western hostility. It is aimed at bolstering domestic consumption and production, including conquering the latest AI technologies with its own resources, while off-loading manufacturing overproduction abroad and expanding trading ties in the global South.
The U.S. strategy, as crafted by President Joe Biden, encompasses a broad array of protective tariffs and subsidies. The CHIPs Act and related policies seek to foster homegrown microchip production while denying frontier technologies to China and restructuring supply chains to friendly nations. The Inflation Reduction Act promotes extensive new investment in the green energy transition. Incongruously, at the same time, a tariff of 100% has been imposed on the import of Chinese electric vehicles. Further tariffs on component inputs, such as batteries sourced in China, are already on track.
Following the U.S, the European Union is also set to raise its own stiff tariff hikes on Chinese EVs as it pursues a European Green Deal to transition to renewables on its own terms. Europe also seeks to blunt the impact of the “buy American” restrictions of the IRA so that fleeing capital looking to exploit the subsidized U.S. market does not hollow out its own green industries before they can be firmly established.
Earlier this month, the former European central banker and one-time Italian prime minister, Mario Draghi, has gone the next step and plotted out a detailed, long-term “industrial strategy” to close the gap with the U.S. and China, which he calls “an existential challenge” to the European way of life.
“If Europe cannot become more productive,” Draghi writes in his report, “we will be forced to choose. We will not be able to become, at once, a leader in new technologies, a beacon of climate responsibility and an independent player on the world stage. We will not be able to finance our social model. We will have to scale back some, if not all, of our ambitions.”…
[Gardels unpacks both European and Australian industrial policy..]
… For all these divergent industrial strategies to succeed in the end depends largely on whether sustained nation-building investment outstrips the duration of protective measures that ought to be only a temporary respite from asymmetrical conditions while they are rebalanced.
To the extent these decoupled initiatives do succeed, they will, paradoxically, come to be regarded not as the antithesis of global cooperation, but as the precondition for it. Only when the power centers of China, the U.S. and Europe are assuredly in control of their own destiny will they be secure enough to open up and cooperate on the global issues that impact them all equally…
The case that divergent “industrial strategies” in the U.S., China, and Europe can create the security to open up: “The Precondition for Global Cooperation,” from @NoemaMag.
* Bertrand Russell
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As we reconfigure, we might spare a thought for a man who provided an important part the foundation on which opponents of industrial policy base their arguments: Pierre Le Pesant, sieur de Boisguilbert (or as he is more commonly known, simply Boisguilbert); he died on this date in 1714. A French Enlightenment law-maker and economist, he was the first of the great continental liberals– a proponent of laissez-faire and minimalist government and an early opponent of mercantilist “Colbertisme.” He is considered one of the fathers of the notion of an economic market.
“Americans are getting stronger. Twenty years ago, it took two people to carry ten dollars’ worth of groceries. Today, a five-year-old can do it.”*…
Scheduling note: the press of travel and obligation will make it impossible for your correspondent to post for the next few days; regular service should resume on or about Friday the 11th…
Rising prices prompted many consumers to shift to lower-cost goods from premium brands. However, as Ana Elena Azpúrua reports, an analysis of millions of products by Alberto Cavallo shows how inflation hit budget products harder in many countries, a phenomenon called “cheapflation”…
Surging inflation drove many consumers to cheaper brands or lower-quality products, but new data suggests that switching might not have saved them as much as they might have expected.
During the most recent period of high inflation, prices of the least expensive products increased more than those of the costliest, according to an analysis of microdata from large retailers by Harvard Business School Professor Alberto Cavallo. In a forthcoming article in the Journal of Monetary Economics, Cavallo and coauthor Oleksiy Kryvtsov, senior research officer at the Bank of Canada, refer to this phenomenon as “cheapflation.”
In the United States, the prices of the cheapest food products climbed 30 percent between January 2020 and May 2024, outpacing the 22 percent increase of the fanciest foods.
Kryvtsov and Cavallo, the Thomas S. Murphy Professor of Business Administration, analyzed millions of products from more than 90 big retailers in 10 countries, including detailed price data for products within the same categories, something that’s been difficult to study. After creating indexes tied to pre-pandemic prices, the researchers concluded that “cheapflation” isn’t unique to the US…
… The price gap between cheap and expensive goods widened most as inflation was peaking, but the spread remained even as prices stabilized, eating away consumers’ potential savings.
“Prices for cheaper brands grew between 1.3 and 1.9 times faster than the prices of more expensive brands, and only when inflation surged, not before or after,” the researchers write.
Why? Cavallo and Kryvtsov find evidence of an increase in the relative demand for cheaper products, as consumers shifted their spending from high to low-priced varieties in an attempt to lower their grocery bills. They also point out other reasons, including targeted fiscal stimulus, which likely increased the demand for cheaper varieties, and the possibility that cheaper products tend to depend more on global supply chains, like the ones disrupted by COVID-19. At the same time, the profit margins of cheaper goods could be tighter than those of makers of high-priced goods from the same category, adding pressure to raise prices as supply costs increased.
But when inflation decreased, “the relative prices of cheaper options remained permanently higher, even though the inflation inequality abated. This may help explain why some consumers may think that prices are ‘too high’: not just relative to the past, but also relative to more expensive varieties,” the authors write…
One reason we’re feeling the pinch: “Charting ‘Cheapflation’: How Budget Brands Got So Pricey,” @anaeazpurua on @albertocavallo in @HBSWK.
* Henny Youngman
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As we scrimp, we might send developed birthday greetings to Jakaya Kikwete; he was born on this date in 1950. And economist and politician, he served as finance minister then President of Tanzania. Kikwete was instrumental in the political and economic reforms that have led to Tanzania being called “a success story” and served as chairperson of the African Union (in 2008–2009) and the chairman of the Southern African Development Community Troika on Peace, Defence and Security (in 2012–2013).
Since stepping down as President in 1915, Kikwete served as the African Union High Representative in Libya and as a member of the UN’s Lead Group of the Scaling Up Nutrition Movement. Since 2022, he has been a co-chairing the Commission for Universal Health convened by Chatham House, alongside Helen Clark.
“With new technologies promising endless conveniences also come new vulnerabilities”*…
Many of us assume that most global communication is accomplished via satellite; in fact over 95 percent of international data and voice transfers are currently routed through the many fiber optic lines that crisscross the world’s seafloors. Earlier this year, (R)D took a look at the folks who lay, maintain, and repair these crucial cables. As noted there…
If, hypothetically, all these cables were to simultaneously break, modern civilization would cease to function. The financial system would immediately freeze. Currency trading would stop; stock exchanges would close. Banks and governments would be unable to move funds between countries because the Swift and US interbank systems both rely on submarine cables to settle over $10 trillion in transactions each day. In large swaths of the world, people would discover their credit cards no longer worked and ATMs would dispense no cash. As US Federal Reserve staff director Steve Malphrus said at a 2009 cable security conference, “When communications networks go down, the financial services sector does not grind to a halt. It snaps to a halt.”
Corporations would lose the ability to coordinate overseas manufacturing and logistics. Seemingly local institutions would be paralyzed as outsourced accounting, personnel, and customer service departments went dark. Governments, which rely on the same cables as everyone else for the vast majority of their communications, would be largely cut off from their overseas outposts and each other. Satellites would not be able to pick up even half a percent of the traffic. Contemplating the prospect of a mass cable cut to the UK, then-MP Rishi Sunak concluded, “Short of nuclear or biological warfare, it is difficult to think of a threat that could be more justifiably described as existential.”
Now, from TeleGeography, the interactive Submarine Cable Map, a free and regularly updated resource that allows one to locate any of the over 600 cable systems connecting the world. [Submarine Cable FAQ; even more here].
It’s fascinating to browse. Note, for example, the confluence of cables at the Northern Marianas and Guam…
Charting the web that connects the world: “Submarine Cable Map” from @TeleGeography.
Apposite: an argument that networks of connectivity are the battleground of the future: “From Mass to Distributed Weapons of Destruction.”
* Clara Shih
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As we contemplate connectivity, we might note that John Mullaly was born on this date in 1835. Mullaly immigrated from Belfast to New York City, where he became a journalist. In 1854, he followed a story to Newfoundland, where he covered the laying of the first Transatlantic Telegraph Cable, in a series of articles, then in a book. Indeed, Mullaly became a booster of undersea cables, lecturing on them.
At the outbreak of the Civil War, Mullaly fell afoul of federal authorities by advocating against the draft. After the war, he left journalism for politics, joining the famously-corrupt Tweed Ring and Tammany Hall, where he became involved in the annexation of property in the Bronx (which had been unincorporated parts of Westchester County). Interestingly, Mullaly worked to create public parks in the Bronx, and founded the New York Park Association in 1881. His efforts culminated in the 1884 New Parks Act and the city’s 1888-90 purchase of lands (on many of which Mullaly and his Tammany cronies are believed to have profited) for Van Cortlandt, Claremont, Crotona, Bronx, St. Mary’s, and Pelham Bay Parks and the Mosholu, Pelham, and Crotona Parkways.
Mullaly Park in the south Bronx was named after him. But in 2021, after criticism and protests against Mullaly’s racist rhetoric during the murderous New York City draft riots (which Mullaly helped incite), the NYC Parks Department announced they would remove Mullaly’s name, instead honoring Reverend Wendell T Foster, the first Black elected in the Bronx (who as a long-standing New York City Council Member was a champion of the park and the neighborhood).
“The metric system did not really catch on in the States, unless you count the increasing popularity of the nine-millimeter bullet”*…
Nearly everywhere in the world, folks use the metric system to measure things; here in the U.S. we use the Imperial system. (Note that Britain should really be a dark shade of green– i.e. a little yellow, mixed with a lot of blue. Brits may regularly use inches, ounces, miles, and pounds in everyday life, but have officially been Metric since 1965.)
Mike Sowden (amusingly and informatively) recounts the history of the metric system, then muses on why Imperial measures– the mile, the inch, the cubit, the ell– have staying power…
… Yes, all of these lack precision, so they’re useless for modern science, and would be incredibly dangerous if used for engineering purposes. But they also tell a story of people’s relationship with the space they moved through.
A lexis of movement – perhaps in a similar fashion to the language of landscape that writer Robert MacFarlane has done so much to retrieve.
This is why I’m on the fence about Imperial now. There’s no question that Metric is necessary as a standardised, exact form used to make cars that don’t shake themselves to bits, planes that don’t fall out the sky and spacecraft that can launch themselves to interplanetary targets with mind-blowing accuracy.
But the versions of Imperial still being used by people in everyday life deserve their place in the world too.
Anyone brought up thinking and feeling temperature in Fahrenheit can tell us Celsius-reared folk something different about how we can experience the world. Anyone cooking in pounds will be thinking about food a little differently (“well, it’s just 2 cups, isn’t it?”). All these things are tiny windows into new ways of seeing what we think we already know…
In defense of an old way of measuring: “Why Go Imperial in a World Gone Metric?” from @Mikeachim.
See also: “The real reasons the US refuses to go metric,” and explainer from Verge Science on the last big attempt to turn the US towards Metric, why it failed, and the ways scientists and manufacturers have snuck it in anyway.
* Dave Barry
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As we muse on measurement, we might pause, on Pi Day, for a piece of pi(e)…
… in celebration of Albert Einstein’s birthday; he was born on this date in 1879.
“Everything should be made as simple as possible, but not simpler.”
“We used to build civilizations. Now we build shopping malls.”*
Through the second half of the 20th century, the mall became more than a fixture of American life; it became a hub. And, as Matthew Christopher explains, while malls remain, the bloom has come off of the “rows”…
I’ve visited hundreds of abandoned places in my life—factories to asylums, schools to churches—but suburban malls might be the most surreal and striking. They captivate the imagination in a way few other types of environments can: with an almost imperceptible layer of fog that forms between the first and second floors of an atrium, endless reflections of vacant storefronts, or a chance encounter with a groundhog in the remains of a food court. Stripped of signage and wares, they are nearly perfectly liminal spaces. Malls have become a part of the modern collective unconscious, through both the haze of half-buried memories of any American over the age of 20 and their ubiquity in popular media. They reflect the American consumer’s identity, and to see a suburban mall in ruins warps nostalgia into something nightmarish and forlorn in a way that abandoned factories, hospitals, or even churches don’t quite do.
We are all, to some extent, intimately familiar with the mall experience. Many of us in America had an indoor shopping center that was “our mall” at some point in our lives. Those memories are shared, because even though we weren’t all going to the same mall, we were: franchise stores—Auntie Anne’s, Sbarro, The Gap—share the same layout and inoffensive color palette and logo lettering across the country. To know one of these malls is to know them all. It’s a powerful magic I’m not sure I can fully explain, even after wandering the deserted storefronts of many vacant shopping hubs.
Much has been written on the phenomenon of the collapse of the American mall and the reasons for it. The most obvious—the rise of online retail—is undeniably a significant factor, but it also masks a rot that had been spreading before Amazon gutted brick-and-mortar. It’s hard to think of any comparable social institution that cost so much and covered so much physical space and then imploded so quickly. As always, the story is far more complex than any tidy summary can encompass…
The indoor suburban shopping center is a special kind of abandoned place; read on for more of the story and more photos: “The Life and Death of the American Mall,” @AbandonedAmerica@mastodon.social in @atlasobscura.
* Bill Bryson
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As we fool around in the food court, we might note that today is Teddy Day, a celebration of Teddy Bears…
The Teddy Bear appeared in a shop window in Brooklyn, New York, on February 15, 1903, but the story of the cuddly toy began a few months before that.
It really started when President Theodore Roosevelt took up an invitation to go bear hunting, in Mississippi with the Governor of the state, Andrew Longino, in November 1902. I can tell you two things about President Teddy Roosevelt – 1. He hated being called Teddy, and 2. he was an avid hunter – he had trophies and hunted for both meat and sport. That first day of his hunting trip, he was really disappointed because he and the governor didn’t find any Bears, but the governor DID NOT want to disappoint the President, so he had the hunting guide go out and find a bear, which he did. He found an old bear and tied it to a tree; they brought the president, but he didn’t want to hunt a trapped bear – it was unsportsmanlike.
Whenever any President does anything, it’s kind of newsworthy, and Clifford Berryman, a cartoonist heard the story, made the old bear a cub, and made a cartoon of Teddy freeing a Bear Cub from a tree. The cartoon made the rounds and inspired Morris Michtom and his wife Rose, to make a little toy bear cub, just to decorate the window of their hand-made toy shop. Most toys were handmade still in the early 1900s. A bunch of people offered to buy it, but he didn’t sell it right away. He actually sent it to the President and asked permission to sell what he called The Teddy Bear. Teddy Roosevelt approved, with no strings attached, so the Mitchums started making them, and put them on sale.
The Teddy Bear really represented the start of more than just the first stuffed non-human toy with arms and legs, it changed the whole toy industry. The earliest toys were usually something with wheels, a ball, a human baby doll, or sports-oriented. In 1892, there was a cat toy, basically the outline of a cat with stuffing, called Ithaca Cat (US patent 483727A). It was more like a shaped pillow, they still make reproductions today. That caused a mini-craze for other stuffed pillow toys like bunnies, kittens, puppies, and the Teddy Bear came out at just about the right time.
The stuffed Bear was the biggest toy of the last century. Change a few things, and give the bear a personality, and the toy becomes Winnie The Pooh, or Paddington Bear, Teddy Ruxpin, The Care Bears, or Corduroy. Teddy Bears introduced the whole idea of anthropomorphic toys- animals having human features and personalities.
The Mitchums went on to found the IDEAL Toy Company, which up until Barbie & GI Joe, was the largest Toy Company in the World. IDEAL is also the company that gave us The Rubik’s Cube in the 1980s. If the Miitchums didn’t start by giving us the Teddy Bear, we’d probably still be rolling hoops (hooping) with a stick like people did for most of the past 2000 years…
“The Teddy Bear“
We might further note that a recent incarnation of the Teddy was an avatar of late Mall culture: Build-a-Bear Workshop… which, from its founding in 1997) grew to over 500 (largely mall-based) locations around the U.S… but that has now moved aggressively on-line.
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