Assuming there is a straightforward way of figuring out the number of
humans needed to perform the same work at comparable quality and
speed,
taxing your way out of this is an obvious solution.
I was slightly amused to see that an example in a mid-XX paper on
linear programming (might even have been one of Dantzig's) had an
industrialist on one side and a government minister on the other,
attempting to calculate the factors/prices involved to determine
where their negotiation should end up. Now that we have several more
decades of experience, and at least million-fold cheaper
computation*, one might think this process would be even simpler. On
the other hand, GIGO, and maybe people have mostly used the interim
to learn to better fudge the factors...
Might work for large
developed economies, but developing economies like India would find it
difficult to counter more advanced high quality products from
developed
nations.
Strikes me that this scenario has played out in India before, when
woven fabric went from something (with modest capital investment in a
loom) that could be a substantial factor in household production, and
one signalled one's social capital by being able to wrap a non-
rectangular human body in different ways with large rectangles of
highly valuable cloth, to woven fabric as something flooding the
market from british factories (requiring much-more-than-modest
investment), after which one had to signal one's pecuniary capital by
chopping up and throwing away large amounts of cheap cloth, then
paying a tailor or seamstress wages to re-sew the pieces back
together in order to fit. Did we learn anything from that last
experience that might well be applied should we encounter similar
scenarios in the future?
-Dave
* oddly enough, the soviets, who should have been really into pushing
computer technology to aid in central planning, seem to have been
drastically behind ARPA in this department. Predictions are
difficult, especially about the future.
