August 5, 2002
10:22 AM Subscribe
Another of our industries,one that actually produces something, has started what appears to be a death spiral. This industry survey was used as supporting evidence as they presented their case to the ITC in May, ahead of a report to be submitted to the House Ways and Means Committee this fall. Some of the business owners comments are here. Who benefits? Near as I can tell, This Guy. (Best if read aloud)
The "here" link is the most interesting. This could be seen as a case study for a fascinating, if probably overwrought, Harper's article this June, Unmade in America, on the transfer of manufacturing chains and overseas, even if final assembly were done in the US: what's called a "global supply line". It's somewhat echoed by BW's When Everything is Made in China. Lynn's thesis is that instability could threaten those supply lines and seriously disrupt American industry. For example, a heated dispute between China and Taiwan is frequently cited as inevitable; and estimates of our dependency on chip manufacture based there go as high as 80%. Even attempts by producers to diversify sources often route back to the very same plant. (This is similar to how businesses who buy backup internet services fail to realize that both primary and backup are on the same fiber optic line in the same trench.) Lynn doesn't seem wholly convincing regarding the strategic concerns -- they seem tacked on to his basic argument of protectionism. Certainly the industry itself uses such arguments and the defense community has been concerned for several years; the whole dumping business is only viable politically because of this attitude.
My personal rebuttals are based on two or three items, though I certainly can't take on Lynn point for point. First, resources tend to flow regardless of conflict -- one example being the African diamond trade. True, the higher the level of sophistication involved in the supply line, the less portable and resistant to conflict, but in general the value of the export is heightened by the conflict, and the incentive for even a ragtag guerrilla group to somehow leverage the supply is consequently greater. Second, conflict rarely arises so quickly that trade is perfunctorily disrupted. The existence of a threatening political situation alone tends to draw investment to other areas; and any increased costs due to boycotts or trade wars, which generally precede violent conflict, will make the cost structure of alternatives that much more attractive. Vendors can shift to other suppliers, other nations, and even other materials. Third, the economic incentive of controlling a resource is itself a bulwark against instability, as there will be a business class opposed to significant changes in policy that could impoverish them. In short, that the very flexibility of globalization argues against the points Lynn is trying to make.
posted by dhartung at 12:01 PM on August 5, 2002
My personal rebuttals are based on two or three items, though I certainly can't take on Lynn point for point. First, resources tend to flow regardless of conflict -- one example being the African diamond trade. True, the higher the level of sophistication involved in the supply line, the less portable and resistant to conflict, but in general the value of the export is heightened by the conflict, and the incentive for even a ragtag guerrilla group to somehow leverage the supply is consequently greater. Second, conflict rarely arises so quickly that trade is perfunctorily disrupted. The existence of a threatening political situation alone tends to draw investment to other areas; and any increased costs due to boycotts or trade wars, which generally precede violent conflict, will make the cost structure of alternatives that much more attractive. Vendors can shift to other suppliers, other nations, and even other materials. Third, the economic incentive of controlling a resource is itself a bulwark against instability, as there will be a business class opposed to significant changes in policy that could impoverish them. In short, that the very flexibility of globalization argues against the points Lynn is trying to make.
posted by dhartung at 12:01 PM on August 5, 2002
Thanks, dhartung. Pretty interesting first post, too, mss. So are you in Akron? :)
posted by mediareport at 3:54 PM on August 5, 2002
posted by mediareport at 3:54 PM on August 5, 2002
This thread has been archived and is closed to new comments
posted by Faze at 11:44 AM on August 5, 2002