Web Assignment 9: Successes of State-Led Development

Back at the start of the twentieth century, social scientists like Max Weber dismissed East Asia as doomed to relative poverty for centuries: the Confucian-bureaucratic-literati culture, they said, was completely incompatible with the technocratic rationality required for modern market capitalism to function. Yet the past half century has seen astonishing growth and moderate progress toward democracy in East Asia, in spite of the region's breaking many of the rules of the role and limits and government that seem to hold in much of the rest of the world.

Surf over to http://delong.typepad.com/pe101/virtual_discussions/ and then to http://delong.typepad.com/pe101/2007/08/web-assignmen-9.html. Write a comment of at least 200 words on whether you think James Fallows adequately accounts for East Asia's special and successful path. Contribute to the discussion that is ongoing at http://delong.typepad.com/pe101/2007/08/web-assignmen-9.html--that is, react and respond to not just Fallows but, to the extent it is appropriate, the earlier posters and commenters on the webpage.

Due by 5 PM on October 30.

Since we don't have the Fallows book, we are declaring a web assignment holiday for this week: everybody gets two points...

Comments

[Kieran M. Duffy]

He adequately addresses Japan's successful path of medernization, and economic success. He first points to how Japan does so as a result of encroachment by western powers as he says "In Japan economics has in effect been considered a branch of geopolitics-that has been the key to the nations strength or vulnerablility in dealing with other powers." And futher when he points to how through tarriffs, just like the Dutch, Great Britain, and the United States "cheated" to achieve internal success. Specifically using protective tarriffs for rice farmers which are still in tact today.

This claim is illustrated well with his example of US protective tarriffs for over 150 years until 1945, coincidentally when Wall St. dethroaned London as the financial center of the world and they dropped from thirty percent to nine percent.

He does not adequately address any rise of Malaysia, South Asia, Hong Kong, South Korea, Taiwan,etc. known to many as the "Asian Tigers." He touches briefly on Korea but that is it.

Overall, I loved the article. I think it is an awesome article about government intervention/protectionist policies filled with colorful examples such as the Abe Linclon quote on tarriffs, the first time the US "primed the pump with the 10,000 muslet order to Eli Whitney, the "pyramid" of global financial power, and most importantly how throughout history in order to achieve financial success all that have sat on top of that pyramid "cheated."

Alice Amsden says it best "Every country that has caught up with others has had to do so by rigging it rules: extracting extra money from its people and streering the money into industrialists' hands"

I never would have called this an article on South Asian economic success.

[Noah Castro]

This article is a fundamental critique of the so called commercial "rules" established by "Anglo-American" hypocrisy. These “rules” have been established by economic superpowers that self-servingly omit the protectionist conditions or “cheating” that allowed them to rise to power in the first place. These "rules" are part of a game that has been rigged in favor of powerful economies under the false pretense that the "rules" are in everyone’s best interest and that the only way to win is by adhering to them. I believe that Fallows main point, which to a lesser extent refutes Weber's prediction and to a greater extent reiterates more accurately the prompt in question, is that East Asia did not develop successfully in spite of breaking free-market “rules”, it developed successfully because it broke the “rules”.

Fallow’s main idea seems to address the dynamisms of various industrial/trade development models and how they are perceived according to the different policy makers that utilize them. “The gods of trade help those who help themselves. If a nation decides to help itself - by protecting its own industries, by discriminating against foreign products - then that is a decision not a sin.” While I don’t think that Fallows does an adequate job of explicitly articulating East Asia’s path to success, he does expound on many of the fundamental components of the East Asian model that empowered the region to define success on its own terms. East Asia’s refusal to submit to a false pretense coupled with its inquisitive strategy and hybridization of traditional values with innovative industrial organization ultimately led to its increase in international significance and subsequent challenge of the "Anglo-American model".

[Glory Liu]

I think the ongoing discussion about breaking and bending the “established rules of trade” is fascinating, especially within the last few decades or so with the rise of emerging economies in East Asia and in reaction, Anglo-American paranoia.

I enjoyed Fallow’s article very much. But I had to read with a very critical mind. To me, his argument seemed rather polarized. He has the Anglo-American theories on one end with the German/East Asian theories on the other. Fallows makes them sound like complete opposites: the Anglo-Americans only concerned with market success, while the Germans and East Asians respond to market failures; Anglo-American theory seeking equality of opportunity, whereas the German/East Asian theories more concerned with equality of outcome. Anglo-Americans view big business and global trade as a win-win situation, while the German/East Asian model sees win-lose situations. In the end, however, Fallows basically says that despite the differences, the East Asian countries are able to catch up, which worries the Anglo-Americans: how can you achieve the same ends with such dissimilar means? Is the Anglo-American paradigm being threatened?

I agree with Fallows and the previous posts that it is an extraordinary situation that the East Asian countries have gone through and are still going through. But I don’t agree with the structure of his argument, which seemed too much as if the West were being threatened by the East. Fallows never says this, but a few of his points illustrate how historical Anglo-American dominance established a de facto set of “rules” that were always subject to Anglo-American circumstances. For example, during the 18th and 19th centuries, Great Britain and America ran mercantilist and extremely protectionist economic policies in order to achieve very high growth rates. However, today, the World Bank rejects protectionist policies of developing countries and instead advocates the opening of third world markets to first world goods (but never vice versa). With the East Asian Tigers coming onto the playing field, of course the West would feel a threat that their “rules” might change with additional players.

The East Asian model isn’t an overthrow of the Western model, but rather a modification. For example, China now has a virtually free market economy, but without a democratic civil society (which the West would expect). Huge private tech industries are booming in Japan and Korea, but the government plays a substantial role in steering their productivity and thus “steers” the economy. Parts of the Western model still exist in East Asia, but others do not. The West, however, doesn’t have to see the new East as an opponent, but rather as a teammate. That sounds extremely corny, but ignoring or being afraid of an opponent isn’t going to make them go away.

[Eric Silverman]

I am glad someone finally acknowledges the process by which modern nations become modern. The only reason why the United States and Britain CAN be an industrial power is because they acted like mercantilists using protectionist means. While free may give poorer nations access to a wealth of resources, it gives them little incentives, or even discourages, the independent reproduction of those resources. If information technology can be produced cheaply and more efficiently in China and India, the market in Ghana has no chance for development. This gap in productive and innovative power is acceptable as part of the rules of the game according to the liberal creed.

I do believe, however, that is it appropriate that the state develops some kind of protectionary relationship with their private sector during a country’s initial development. Japan is the perfect example: a country that was destroyed by WWII and had to develop a completely different polity. Its protectionist policies allowed small business to grow to maturity before they interacted on an international scale. While this “cheating” is morally justified. There is no reason that less developed nations should be forced to compete with those that have been playing the game for centuries.

[thomas wheat]

If List was right, the US economy would be in a not so healthy state (and would get worse in the future) because our country was no longer producing goods like it use to in the past....wait a minute....

[Chun Chung Chan]

i am agreeing with eric. japan is a good example. the miti boosted the major industrial sector, and it also helped the small infant industry. even nowadays, protectionist measure still exists, eg: european cars have high import tax to go into japan market.