Not sure of where all of this is going. Prior to Krugman, the theory of
international trade was based on the Ricardian notion of comparative advantage.
Countries would produce those products in which in which they had an
advantage, given their resources, and then trade with each other. From what
little I know, Krugman brought in the idea that, given a certain level of
technological development, resource advantage didn't really matter very much.
Any advanced country could, and would, produce cars and, given consumer
willingness to buy, these cars would be shipped to markets all over the world.
As others have pointed out, economies of scale were very important in this.
The more cars that could be produced, the lower the unit costs; the more cars
that could be shipped, the lower the costs of shipment.
I'll leave Krugman at this point and wade into what Keith says about the growth
of urban centers. Keith appears to explain urban growth in locational terms.
Port and river cities along major trade routes grew because goods moved through
them. Perhaps this was true until relatively recent times. However, I've been
to a few cities whose growth took place for rather different reasons. Take Sao
Paulo for instance. It is not a port nor is it on a major river system.
Nevertheless it is one of the largest cities in the world, with a population of
some twenty million. I'm not sure of all of the factors that made it grow, but
one was the mechanization of plantations in the countryside and the consequent
displacement of African slaves who then moved to cities. Sao Paulo has a
modern urban core, but this is surrounded by enormous slums occupied by the
black descendants of Africans.
Or take Moscow, not as large as Sao Paulo, but not very far behind with a
population of about eleven million. It grew very rapidly during the twentieth
century because it was the capital of the Soviet Union and required huge hoards
of public servants to develop and operate the planned economy. Or take St.
Petersburg. It was founded because Peter the Great wanted a capital city that
would match the elegance of other major European capitals of the time. Very
few people lived there when construction began some 300 years ago, but it now
has a population of some five million.
All I'm saying is that while we like to think of cities in terms of ports and
trade routes, their foundation and growth occurred because of a variety of
factors. The industrial revolution had an enormous impact, draining the
countryside of people and moving them in to city slums. Major changes in
agriculture were also a factor. If you didn't need as many people out on the
land, they had to go somewhere -- why to the city of course -- which would
account for at least some of the growth of cities like Winnipeg and Regina on
the Canadian prairies.
Ed
----- Original Message -----
From: Keith Hudson
To: RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION
Sent: Sunday, December 30, 2012 9:54 AM
Subject: [Futurework] Nobel Prize -- was Re: [Ottawadissenters] Hey, you
gotta watch dem machines...
At 03:27 30/12/2012, AC wrote:
Krugman's Nobel was in a very conventional aspect of economic theory. He
made certain breakthroughs. Don't know whether that makes him qualified to
comment on this and that. The NY Times likes him. And that apparently is good
enough.
See below
http://www.nobelprize.org/nobel_prizes/economics/laureates/2008/press.html
Patterns of trade and location have always been key issues in the economic
debate. What are the effects of free trade and globalization? What are the
driving forces behind worldwide urbanization? Paul Krugman has formulated a new
theory to answer these questions. He has thereby integrated the previously
disparate research fields of international trade and economic geography.
(KH) As far as I can see (below) Krugman's approach supplies nothing new --
bog standard economic history. Everything he describes is after the event --
after the fact of urban centres. Why did they occur? Where did they occur?
When did they occur? He doesn't seem to answer those.
Well, I'll tell you. Almost all major conurbations lie at what were
previously major ports (even if they're not so busy today), The remainder are
on rivers. In times past they all had many manufacturing areas and developed
major warehousing (for stuff made in the interior of the country) and financial
sectors. (Clerks alone were many thousands strong in all large trading
port-cities. Until WW2 every Bill of Sale needed to be hand-written three times
[there was no other adequate copying method]. One copy went to the merchant's
own bank [wherever it was in the world], another copy went to the
counterparty's bank [wherever that was], and the last copy went to a merchant
bank in the City of London which acted as an honest broker between the two
parties (who might be on opposite sides of the earth and, if it's a first
contract between them, couldn't trust one another).
Take this cluster of major trading ports back to the late middle ages -- the
17th century, say. There was no globalized trading system. There were four
smaller ones. 1. The low European countries and the Mediterranean; 2. The
Mediterranean based on Venice-Florence-Genoa 3. The Arab based on the Red Sea;
4. The Indian based on the Indian Ocean; 5. The Chinese based on South-East
Asia and islands.
The merchant adventurers of the last three systems had lateen (steerable)
sails on their boats and could tack against the wind if necessary and cross
oceans. 3 and 4 were not ready culturally. Chinese merchants, already too rich
for the Emperor's liking, were forbidden to use their lateen sails. However,
when Vasco da Gama and Christopher Columbus decided to use lateen sails in
order to cross oceans, they opened the whole world and spelled the end of the
five previous systems.
The ports that these sailing ships chose had to be able to offer safe water
to, usually thousands of boats of all nationalities and sometimes for weeks if
storms raged. This further consolidated them as cosmopolitan cities where many
languages were spoken. Most of them in Europe became free cities or city-states
-- far more powerful, financially and militarily than the country around them.
The above, then, are the true beginnings of the globalized trade system we
have today. As we have more and more automation and as factories can become
smaller and smaller, the bulk of tomorrow's manufacturing will also take place
in the megacities.
Arthur, when are you going to nominate me for the Nobel Prize?
Keith
Krugman's approach is based on the premise that many goods and services can
be produced more cheaply in long series, a concept generally known as economies
of scale. Meanwhile, consumers demand a varied supply of goods. As a result,
small-scale production for a local market is replaced by large-scale production
for the world market, where firms with similar products compete with one
another.
Traditional trade theory assumes that countries are different and explains
why some countries export agricultural products whereas others export
industrial goods. The new theory clarifies why worldwide trade is in fact
dominated by countries which not only have similar conditions, but also trade
in similar products - for instance, a country such as Sweden that both exports
and imports cars. This kind of trade enables specialization and large-scale
production, which result in lower prices and a greater diversity of commodities.
Economies of scale combined with reduced transport costs also help to
explain why an increasingly larger share of the world population lives in
cities and why similar economic activities are concentrated in the same
locations. Lower transport costs can trigger a self-reinforcing process whereby
a growing metropolitan population gives rise to increased large-scale
production, higher real wages and a more diversified supply of goods. This, in
turn, stimulates further migration to cities. Krugman's theories have shown
that the outcome of these processes can well be that regions become divided
into a high-technology urbanized core and a less developed "periphery".
From: [email protected] [
mailto:[email protected]] On Behalf Of Ed Weick
Sent: Saturday, December 29, 2012 2:57 PM
To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION
Subject: Re: [Futurework] [Ottawadissenters] Hey, you gotta watch dem
machines...
What I've liked about the many columns and few books by Krugman that I've
read is that, like me, he doesn't like the growing income gap between the rich
and poor, the growing power of money, the hollowing out of the economy by the
application of technology and the export of jobs, and the growth and
disenfranchisement of the poor. While he is an economist, a Nobel laureate at
that, I see him more as a commentator who is pointing at growing problems that
need attention and consistent work even if they are very difficult to resolve.
Ed
----- Original Message -----
From: Arthur Cordell
To: 'RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION'
Sent: Saturday, December 29, 2012 2:33 PM
Subject: Re: [Futurework] [Ottawadissenters] Hey,you gotta watch dem
machines...
But through his incessant trumpeting of outdated solutions he blocks
innovative thinking, new ideas. Yes he asks some questions but seems to fear
going down the road to possible solutions.
Arthur
From: [email protected] [
mailto:[email protected]] On Behalf Of michael gurstein
Sent: Saturday, December 29, 2012 1:51 PM
To: 'RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION'
Subject: Re: [Futurework] [Ottawadissenters] Hey, you gotta watch dem
machines...
But then all we have is the neo-lib conventional wisdom Economics 101
echo chamber. At least he asks a few of the right questions.
M
From: [email protected] [
mailto:[email protected]] On Behalf Of Arthur Cordell
Sent: Saturday, December 29, 2012 10:44 AM
To: 'RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION';
[email protected]
Subject: Re: [Futurework] [Ottawadissenters] Hey, you gotta watch dem
machines...
Let's put Krugman out to pasture. He is becoming repetitive and boring.
From: [email protected] [
mailto:[email protected]] On Behalf Of Sally Lerner
Sent: Friday, December 28, 2012 3:13 PM
To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION;
[email protected]
Subject: Re: [Futurework] [Ottawadissenters] Hey, you gotta watch dem
machines...
Yes, the bit tax, and basic income as well. Let's put Krugman in the
loop. Sally
--------------------------------------------------------------------------
From: [email protected]
[[email protected]] on behalf of Arthur Cordell
[[email protected]]
Sent: Friday, December 28, 2012 12:11 PM
To: [email protected]; 'RE-DESIGNING WORK, INCOME
DISTRIBUTION, EDUCATION'
Subject: Re: [Futurework] [Ottawadissenters] Hey, you gotta watch dem
machines...
Seems like Krugman is finally beginning to move away from his learned
dogma. Perhaps he has been reading Keith's postings. In any event time to
think about policies for a digital economy and time to think again about the
bit tax as a way of distributing the productivity of a highly automated economy
so as to maintain effective demand.
Arthur
From: [email protected] [
mailto:[email protected]] On Behalf Of Ed Weick
Sent: Friday, December 28, 2012 7:05 AM
To: 'RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION';
[email protected]
Subject: [Ottawadissenters] Hey, you gotta watch dem machines...
Krugman's piece in this morning's NYTimes appears to take us well into
the realm of science fiction. But then maybe it isn't fiction any more?
http://www.nytimes.com/2012/12/28/opinion/krugman-is-growth-over.html?hp&_r=0
Ed
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