by
Ryan Avent
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[...] As the information-processing capacity of firms has grown in importance--as culture has come to matter more--those working in successful firms have come to enjoy a critical advantage over those working elsewhere.
I find it baffling that he attributes it to "culture". I mean, it's not necessarily wrong (depending on how vaguely you define "culture") but it does feel very misleading. Is IP law "culture"? Is having access to cheap and pliable labour to do the shit work your high-skilled employees don't want to do "culture"?
[...] A firm's cultural capital lives in all its employees; if one quits, it is not threatened; if most do, it is. When labour is organised, it can appropriate the returns of this cultural capital (as it deserves to do). When it isn't, the returns are most easily appropriated by top executives.
ok he does recognise this too
Social capital is not quite as intuitive a concept as plain old capital. Physical capital--buildings and computers et al--shapes the way people behave at work. Social capital--behavioural patterns that live in our heads--do too.
on p122 he defines it as "individual knowledge that only has value in particular social contexts" which makes it an interesting concept, but it is quite different from more recognisable definitions (e.g., Bourdieu's)
Hopefully, thinking about society in this way allows us to better understand differences in economic performance. Social capital evolves over long periods of time, lives in the heads of those operating within society (but is often embodied in institutions, such as governments or firms), and influences economic behaviour. Some forms of social capital are growth compatible, others are not. In rich countries, norms and institutions encourage the clever application of new ideas to profitable ends, and innovators can take comfort in the belief that their efforts will be fairly judged in the market, and that any returns they earn will not be unjustly seized by others or the state.
[...] social capital can't easily be exported. [...] Social-capital-rich countries can merely try to create conditions that encourage the accumulation of healthy social capital in poorer countries. The European Union is a grand effort to do something very much along those lines: to create the incentives in peripheral European states with weaker social capital to invest in and deepen the sorts of social capital that are conducive to openness, the rule of law and free markets. International trade agreements and institutions such as the World Trade Organization are another way in which states actively seek to nurture social-capital deepening in poorer countries. Countries constantly use the geopolitical leverage available to them to try to improve the behaviour of troublesome neighbours, and these efforts occasionally bear fruit. Yet we should also acknowledge that countries are not, on the whole, very good at encouraging social-capital accumulation in others.
this is the most naive BS i've ever seen. defining social capital in this fairly standard and positive way and assuming THAT accounts for differences in economic performance is just ... unbelievable
the use of "fairly judged" is just wow, there's a lot to unpack here
plus this view of institutions like the EU and the WTO as benign (or even good) is so childlike
he then goes on to suggest migration as a solution which is obviously problematic (wtf happens to everybody else???)
[...] Big, skilled places are good at making workers more productive. Workers in places like Silicon Valley earn a hefty wage premium over similar workers in other cities, but new arrivals don't get the premium all at once. Instead it builds over time: evidence that the city is contributing to the knowledge and employability of the workers within it.
I mean it's true if you have a very value-neutral definition of the word "productive"? you could also just view it as rent ... or sucking more labour hours out of each worker
[...] social capital is the indispensable factor. Successful countries have good institutions, such as strong and stable governments committed to protecting personal property rights. Social capital supports the evolution and development of growth-boosting institutions, which in turns support the continued accumulation of social capital.
[...] healthy democracies and market economies cannot be imposed on sociteies that lack the underlying supportive social capital; they are emergent phenomena in countries with the right sort of social capital.
And so, historically, rich countries tend to stay rich while poor countries tend to stay poor. [...]
[...] development of the right sort of social capital is hard. Sadly, social scientists lack a satisfying explanation for how it occurs.
he poses the question on p165 but notwhere on any of these pages does he mention colonialism or its modern-day equivalent ...? or differing access to natural resources? i can't even
also is it an accident that he parroted the Tory motto here lmao
[...] we once devoted most of our household budgets to physical things: food and drink, clothing and furniture. Now we spend vast amounts on things like education and healthcare, or on housing [...]
funny he mentions those three because they have all been provided (to varying degrees) by the govt in various parts of the world at different points in time ... he's talking about a household budget, not govt, so maybe he means American consumer here? but then that's an isolated case where tons of money is being siphoned off in the system by (say) overpaid administrators / HMOs and pharmaceutical companies / predatory landlords and letting agencies. ofc he doesn't address that aspect
[...] warehouses are potentially a source of vast amounts of employment for less-skilled Indians (of which there are hundreds of millions). Yet the falling cost of simple robotics and the increasing power of computing means that many of those jobs may never be created. Instead a very small number of highly skilled Indian programmers may earn a good living writing code to control the robots who travel the great aisles within these warehouses, moving around goods shipments that might otherwise have been handled by human workers.
he recognises this but doesn't go into the positive implications of this (assuming we can sort out the distributional problems)
[...] Advanced economies cannot turn poor countries into rich ones, and we lack a foolproof recipe for poor countries seeking to make themselves rich. What can be achieved and has reliably been achieved, is the process of helping residents of poor countries to become rich by welcoming them into places with strong social capital.
Mass immigration has always been the obvious, pie-in-the-sky solution to wide gaps in incomes across countries. [...]
the lack of consideration of power dynamics / unfair distribution of goods & resources is ASTOUNDING, like actually shocking
- if immigration is a solution, it's a reactionary and clearly unsustainable one, and yet he somehow seems to endorse it
Secular stagnation slowly undermines support for the existing economic order, and while it is possible that governments will eventually settle on benign solutions to the problem, it is more likely that prolonged secular stagnation will lead to a broad backlash against global economic integration, and a costly turn inward.
he is right, but never does he stop to think that maybe the existing economic order needs to be overturned