Perhaps in a future post I would be curious to hear more why you believe better economic efficiency is worth the price of negative impact on a segment of the community. Also, do you think in such instances the government should fund local groups to support those communities negatively impacted?
What is on my mind is the China shock, but also anytime communities have lost access to their economic engine. I think we experienced something similar when factories moved out of city centers (ie. depression of the community and increase in substance abuse). I am not saying we shouldn't have opened trade with China, as it seems overall human flourishing has increased, but I wonder if the cost of proactively helping the community negatively impacted through the transition would have been less costly than trying to clean up the mess after.
I also wonder if less regulations had less negative impacts when we there was a true relationship and trust between the producer and consumer and community effects kept the producers in check instead of regulations.
Thanks again for continuing to share your experience and perspective.
Ryan, thank you for these thoughtful comments and for the questions you pose. They're far too complex to respond to fully here; I'll consider whether I can take on some of them in future posts.
My openness to issue of policies that allow for broad-based efficiency but that have negative impacts on a subset of the community is rooted in what I've seen about economic transition over the years. Usually, when we try to protect a group (let's say an industry facing a tidal wave of cheaper imports) we simply subsidize inefficiency, and this plays out very poorly. The protected industry continues to deteriorate; its leadership becomes skilled in maintaining political protection but doesn't invest in the business itself - and why would they? Over time the people who work in that industry are worse off than if the adjustment had been made when needed. When you defer hard economic decisions, the pain you will eventually incur compounds over time.
What about gutted communities? Tough one - I've driven through many small towns in our state of South Carolina that were centered on a single large textile mill in our state. The mill closed and they've been mired in poverty since. But this just shows the problem with having an undiversified economy. And often, those mills were located because of an elephant-hunting economic development mindset; yet another reason why political considerations make for bad economic outcomes
China is something different. They're increasingly revealing themselves to be an enemy. We've kept hoping they would become friends if we were friendly, but we need to take their threat seriously. There are times when national security has to override short-term economic benefit, certainly.
Anyway - a few quick thoughts. Much more food for thought in your comments -
Thanks Jack, that is way more of a reply than I was expecting here in the comments.
Agreed on the negative impacts on protecting industries and now you have me pondering if decisions made due to national security could have similar negative impacts on nations.
My main focus was on the communities around those industries having been raised in both Appalachia and SC and feeling something could have been done to speed them through the transition vs letting them fester for 40 years.
Anyways, I hope you and your family have a wonderful 4th.
Thank you Jack for this eye opening message. I'd like a ride on Mr. Buffett's coattails some time hugs
Written so well!!!
Perhaps in a future post I would be curious to hear more why you believe better economic efficiency is worth the price of negative impact on a segment of the community. Also, do you think in such instances the government should fund local groups to support those communities negatively impacted?
What is on my mind is the China shock, but also anytime communities have lost access to their economic engine. I think we experienced something similar when factories moved out of city centers (ie. depression of the community and increase in substance abuse). I am not saying we shouldn't have opened trade with China, as it seems overall human flourishing has increased, but I wonder if the cost of proactively helping the community negatively impacted through the transition would have been less costly than trying to clean up the mess after.
I also wonder if less regulations had less negative impacts when we there was a true relationship and trust between the producer and consumer and community effects kept the producers in check instead of regulations.
Thanks again for continuing to share your experience and perspective.
Ryan, thank you for these thoughtful comments and for the questions you pose. They're far too complex to respond to fully here; I'll consider whether I can take on some of them in future posts.
My openness to issue of policies that allow for broad-based efficiency but that have negative impacts on a subset of the community is rooted in what I've seen about economic transition over the years. Usually, when we try to protect a group (let's say an industry facing a tidal wave of cheaper imports) we simply subsidize inefficiency, and this plays out very poorly. The protected industry continues to deteriorate; its leadership becomes skilled in maintaining political protection but doesn't invest in the business itself - and why would they? Over time the people who work in that industry are worse off than if the adjustment had been made when needed. When you defer hard economic decisions, the pain you will eventually incur compounds over time.
What about gutted communities? Tough one - I've driven through many small towns in our state of South Carolina that were centered on a single large textile mill in our state. The mill closed and they've been mired in poverty since. But this just shows the problem with having an undiversified economy. And often, those mills were located because of an elephant-hunting economic development mindset; yet another reason why political considerations make for bad economic outcomes
China is something different. They're increasingly revealing themselves to be an enemy. We've kept hoping they would become friends if we were friendly, but we need to take their threat seriously. There are times when national security has to override short-term economic benefit, certainly.
Anyway - a few quick thoughts. Much more food for thought in your comments -
Thanks Jack, that is way more of a reply than I was expecting here in the comments.
Agreed on the negative impacts on protecting industries and now you have me pondering if decisions made due to national security could have similar negative impacts on nations.
My main focus was on the communities around those industries having been raised in both Appalachia and SC and feeling something could have been done to speed them through the transition vs letting them fester for 40 years.
Anyways, I hope you and your family have a wonderful 4th.
Thanks Ryan - you too. We're grateful to have you as a reader.
Keep up the good work. I do recommend and share your alls substack often.