At 16:26 30/12/2012, you wrote:
(EW) 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.
(KH) But that idea didn't need Krugman! Or anyone else for that matter. The Japanese had been importing resources ('cos they had none of their own) for decades before Krugman was even born. I believe those who say that Krugman got a Nobel for the same reason as Paul Samuelson (who only copied Marshall's ideas of Sale and Demand curves) -- that he was an economist very much in the public's eye.
(EW) 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.
(KH) And Henry Ford had known that decades before Krugman was born!
(EW) 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.
(KH) Yes, I should have said that I was thinking only of Europe and Asia where there were five extensive trading systems of sailing merchants. (North America, South America, Africa and Australia all had trading systems but they were land-borne and primitive compared with Eurasia.
(EW) 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.
(KH) Outside my original area. An d yes, you are right about Sao Paulo. The reason for its existence is relatively recent. It was Europe's rapidly increasing need for meat and wheat during the last decades of the 19th century that kick-started the city. The previous need for safe and extensive harbouring didn't matter so much in the days of the coal-fed and oil-fed steamers instead of sail.
(EW) 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.
(KH) I'm fascinated by its favellas and have always read your accounts of them with great interest.
(EW) 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.
Russia is another exception to my original account even though it certainly lies within Eurasia. For the most part of its existence it had no sea shore (worth speaking of) -- so no port at all! All its trade was land-locked. The best it had were extensive bogs in the north-west. Peter the Great turned all these into canals and shipping berths when he developed Petersburg.
(EW) 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.
(KH) I think the megacity will be the epitome of the industrial revolution. For reasons of efficiency, the larger the city the more efficient it is so, over the next 100 years, I foresee the decline and even death of most ordinary-sized cities and towns except for those with something exceptional about it. This could be having a high reputation university, or a major employer, or having tourist attractions, etc. But in an era which will become increasingly automated in which robots will not only be more versatile (perhaps making more than one consumer item simultaneously) but also profitable with short production runs (including custom-made single products at no extra cost) then I see production units gradually dispersing to the countryside (when, by then, the world population may be down to a fraction of today's).
Keith
Ed ----- Original Message ----- From: <mailto:[email protected]>Keith HudsonTo: <mailto:[email protected]>RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATIONSent: Sunday, December 30, 2012 9:54 AMSubject: [Futurework] Nobel Prize -- was Re: [Ottawadissenters] Hey, you gotta watch dem machines...At 03:27 30/12/2012, AC wrote:Krugmans Nobel was in a very conventional aspect of economic theory. He made certain breakthroughs. Dont 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>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? KeithKrugman'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 WeickSent: Saturday, December 29, 2012 2:57 PM To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATIONSubject: 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: <mailto:[email protected]>Arthur CordellTo: <mailto:[email protected]>'RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION'Sent: Saturday, December 29, 2012 2:33 PMSubject: 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.ArthurFrom: <mailto:[email protected]>[email protected] [ mailto:[email protected]] On Behalf Of michael gursteinSent: 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 questionsMFrom: <mailto:[email protected]>[email protected] [ mailto:[email protected]] On Behalf Of Arthur CordellSent: Saturday, December 29, 2012 10:44 AMTo: 'RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION'; <mailto:[email protected]>[email protected] Subject: Re: [Futurework] [Ottawadissenters] Hey, you gotta watch dem machines...Lets put Krugman out to pasture. He is becoming repetitive and boring.From: <mailto:[email protected]>[email protected] [ mailto:[email protected]] On Behalf Of Sally LernerSent: Friday, December 28, 2012 3:13 PMTo: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION; <mailto:[email protected]>[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: <mailto:[email protected]>[email protected] [[email protected]] on behalf of Arthur Cordell [[email protected]]Sent: Friday, December 28, 2012 12:11 PMTo: <mailto:[email protected]>[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 Keiths 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.ArthurFrom: <mailto:[email protected]>[email protected] [ mailto:[email protected]] On Behalf Of Ed WeickSent: Friday, December 28, 2012 7:05 AMTo: 'RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION'; <mailto:[email protected]>[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>http://www.nytimes.com/2012/12/28/opinion/krugman-is-growth-over.html?hp&_r=0Ed __._,_.___ Your email settings: Individual Email|Traditional<http://groups.yahoo.com/group/Ottawadissenters/join;_ylc=X3oDMTJnaDA3ZnM3BF9TAzk3NDc2NTkwBGdycElkAzE1MjA5MDU5BGdycHNwSWQDMTcwNTA4MzUxMgRzZWMDZnRyBHNsawNzdG5ncwRzdGltZQMxMzU2Njk2MzMx>Change settings via the Web (Yahoo! ID required) Change settings via email: <mailto:[email protected]?subject=Email%20Delivery:%20Digest>Switch delivery to Daily Digest | <mailto:[email protected]?subject=Change%20Delivery%20Format:%20Fully%20Featured>Switch to Fully Featured <http://groups.yahoo.com/group/Ottawadissenters;_ylc=X3oDMTJlZTl1Z3M4BF9TAzk3NDc2NTkwBGdycElkAzE1MjA5MDU5BGdycHNwSWQDMTcwNTA4MzUxMgRzZWMDZnRyBHNsawNocGYEc3RpbWUDMTM1NjY5NjMzMQ-->Visit Your Group | <http://docs.yahoo.com/info/terms/>Yahoo! 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