Archive for November, 2006

Things That Prevent Productivity

I guess I must have been in a cynical mood because after reading Danika’s blog posting on productivity all I could think of were the things that prevent countries from being productive. There are many good ideas that would improve developing nations but there are still road blocks in the way. I am also not an expert in economics or have I taken a class in it (besides this one I suppose) so I apologize for any logical fallacies but constructive criticism is always helpful.

It is true that every country has a comparative advantage in something but can other countries impose regulations and tariffs that take away from this advantage? Or maybe they make the comparative advantage not as profitable as it could be. For my expert study I have been looking at the effects of agriculture subsidies in America and their effect on developing countries, mainly Africa. In Africa their main trade is agriculture products and because they are a developing nation much of the farming is done by hand and there is a lot of manual labor involved. Compare that to the huge farms that are run by advanced technology and filled with pesticides and fertilizers that make sure the crop potential is at maximum. More importantly add to this the massive amounts of agriculture subsidies (usually paid to big farms who produce crops like corn, cotton, and rice) that drive down produce prices. These low prices that we usually think of as a good thing makes it unprofitable for many African farmers and makes it really hard to compete in trade. In fact the prices are so low it is a lot cheaper to actually import food rather than get it domestically. As stated in the ‘NPR:Africa’s Lagging Development’, “…cheap, subsidized powdered milk from Europe has flooded West African markets. If you go through the countryside in Senegal or Mali, you won’t be able to find local milk… because the powdered milk has destroyed the whole dairy sector in West Africa.”

In addition, despite internal improvement in some African countries such as Mozambique the NPR series stated, “Cotton exporters say this part of northern Mozambique should be able to sell cotton at competitive prices. It has plentiful rainfall. Labor, at about $1 a day, is cheap. The main roads have been rebuilt after a lengthy civil war and are in excellent shape, by African standards. There’s a functioning railway linking the area with a port on the Indian Ocean. But growers complain that they’re barely making a living from their crops, and in recent years, several large cotton companies have gone out of business.”

So how can hard working and highly productive (for what they have) compete in a global market and defeat the cycle of poverty if even their comparative advantage is doing them no good? How do they break the cycle when they’re forced to be dependent on imports from other countries in order to survive?

Not only are there economic factors that prevent developing countries from becoming more stable. If you haven’t read the article “The World is J-Curved” by Ian Bremmer (it is tagged under bookmarks) I highly recommend it. To quickly summarize the idea, “Imagine a graph that charts a country’s stability on the vertical axis and its openness (both within the country and to the world) on the horizontal one. If each nation appears as a point on the graph, the resulting pattern looks very much like the letter J. Nations higher on the graph are more stable; those lower are less stable. Nations to the right of the dip in the J are more open; those to the left are less open. This simple J curve captures many of the dilemmas inherent in global politics today.” The article goes in greater detail but if this J-curve is real then the shift from being a closed and stable state to an open and stable state includes going through a period of instability. Many countries still struggle with that shift and some never quite make it so with the possibility of failure many countries are unwilling to open up.

Not to say that many of these things can’t be overcome but right now these are some of the things that I believe prevent developing countries from become productive countries. Isn’t pessimism great?

Warning:Possible Pointless Rambling Ahead

Rather than really analyzing anything in this post I’ve decided to just talk about a few things that have been on my mind. I don’t keep a journal (too paranoid someone would find it and read it) and as long as this is on the internet I think I might post something relatively sane. If you are unable to follow my stream of thoughts its not your fault. I don’t think coherently and sometimes my writing reflects that. I also do not promise that this post has a point to it, but if you care to read it any comments, questions, suggestions (on where I can find the closest psych ward?) would be nice.

While I was thinking today (as I often do to avoid real work for my classes) I have decided there is too much information available. Does anyone else get that overwhelming feeling of drowning in a sea of information? I’ll read an article online and then find a counter argument in another article that is just as sensible. Then I’ll read on another topic, then another topic, and another topic. By the end of the day I have been swamped with so much information from my classes, newspapers, tv and general online surfing its no wonder my brain won’t shut up. Even as I write this post I have changed my mind about 5 times on what to write about. Now I know its not my responsibility to read every article or opinion anyone has ever had but still I find myself persuing information and asking more questions. No one has ever really looked down on intellectual curiousity but I have reached the point where I get into that “what is the meaning of life?, what does it all matter?” mode and its starting to drain my brain.

The world never stops and I’m pretty sure the older you get the faster it accelerates. I don’t watch the news for one day and I’m 10 steps behind. For example I totally missed the whole Kerry told a bad joke issue (some of you still might not have heard) and even though it was a recent event (like Monday recent) I somehow feel 10 steps behind. Not only are people discussing the bad joke but it proliferates and spins off into other conversations. But as I step back and look at the news that comes and goes I wonder, is there just too much information? Would I be worse off I had never been informed Kerry can’t tell a good joke? Somehow I don’t think so and I’m sure in the coming weeks and months I’ll probably forget about the stupid joke. The more I think about this the more questions I have. I also grow more concerned about the media in general but that is a whole other topic unto itself.

Maybe a broad question that would fit my feelings and ponderings would be what will the average citizen be expected to know in the future? What should a college educated person be expected to know about the world they live in?(I’m trying at this point to ignore all those little nagging questions that come with those I have just asked) With so much information so easily tapped into will there be a new standard? Education in schools has changed since my mother was in school because of changing technologies. Before there was the hand held calculator math at a high school level didn’t go much beyond addition, subtraction, etc. With globalization and technology accelerating and flattening the world what will my children be learning in school?

I probably could go on and on with the questions but that wouldn’t get me very far because many of these questions cannot be answered. I suppose the best you can do is try to predict the future based on the the present. As I come to the end of this post I somehow feel I am asking age old questions, but with a present day twist. Does it really matter what time period I am living it? Isn’t it just human nature to want to know the meaning of life? Does man just naturally hope that what they are doing has some actual meaning so that by the time they get to the end of their life they can look back and not feel regret? I’m probably getting into philosophical ideas and ideas that require volumes of books just to begin answer.

If you could actually comprehend my thinking I thank you for reading my rambling. I guess at this point I am supposed to feel better after getting all this stuff out but I think I am actually left with more questions and confusion but who says that can’t be a good thing?

WSJ – Untouchables

Response to Assignment 5:

So what makes these business’ untouchables?

In the case of orthopedics and prosthetics it is the high demand within the U.S. for these products. “A big reason is that the U.S., with its population of fast-aging baby boomers, injury-prone weekend athletes and overweight people, is by far the world’s biggest market for artificial hips and knees. The U.S. represents an estimated $14 billion of the annual spending in a global market of $22.9 billion”. In addition often doctors work closely with the companies developing the orthopedics or replacement parts so it is easier to communicate if you are only a few miles away rather than a half a world away.

The Viking Range Corp. has an exclusive appeal and their products catered to people who want the real thing made in America. “Viking is one of those rare U.S. brands that have evolved into a cult object. Like Harley-Davidson motorcycles and Martin guitars, these brands have an aura of exclusivity that entitles their producers to charge premium prices — which helps keep their relatively high-cost U.S. manufacturing base viable.” These kind of products usually cater to upper class and professionals who have a need and want gas ranges that aren’t just ordinary Kenmore stoves.

The Schantz Organ Company has the advantage of needing very specialized workers to manufacture the Organ pipes. It takes the workers there about 5 years to become completely proficient in their skills. This type of highly specialized skill cannot be easily outsourced because most labor outside of the U.S. is unskilled labor.

All these companies have aspects that make them untouchables but some of them are still effected by outsourcing even if it is just a little bit. These jobs are for the most part untouchables because of their demand nationally, exclusivity in nature, and highly specialized training required to do them.

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