[FoRK] The World Is Not Flat

Stephen Williams sdw at lig.net
Tue Jan 19 16:57:21 PST 2010

David Kammeyer wrote:
> This is an interesting way to look at things.  The systems are definitely statically unstable, and maybe oscliatory over long periods of time.  For example, the auto manufacturing supply chain grew up in Michigan, Indiana, and Ohio.  When railroads grew up, the southern states realized that they could attract auto manufacturers with right to work laws and financial incentives.  Now that auto manufacturing has largely left Michigan, Michigan is falling all over itself to offer incentives for companies to relocate there.  Maybe the incentives have to get higher every round though.
Ken Ganshirt wrote:
> Well, no. Not really. It's generally coming out of tax dollars or artificially reduced wages and other individual and/or collective benefits. 
> It has little, if anything to do with transportation costs; only its availability, e.g. in your example, transportation has to be available or there's no deal to be made. But it doesn't much matter what it costs. It's cost can and will be offset, if necessary, by the other giveaways^h^h^h^h^h^h^h^h^h incentives such as reduced or forgiven taxes, licenses and other fees, free infrastructure, regulations that restrict labour's power to negotiate wages and benefits or absolutely reduce the wages and benefits, and regulations that reduce or remove penalties for transgressions against the commons.
>        ...ken...

Why the sudden fascination with incentives to lure business?  What's 
wrong with that?  To the extent that they clean out the cobwebs of 
over-taxation / regulation that were more to the benefit of large 
companies than startups, it is probably good. 

> This tendency is strongly encouraged by the corrupt collusion of 
> governments and national or multi-national corporate entities to 
> create (and strongly guard / enforce, through the coercive might of 
> government and captive law) such "beneficial" trade agreements, 
> contracts, and flows of money, value, and material.  It tends to 
> support incumbents, encourage monopolies, block innovation, and create 
> general systemic fragility / non-resiliency while aggregating 
> created-value "in the middle" of the economic landscape.  All value 
> flows towards the middle of the network...  and all the while the 
> dynamic equilibria of the network is increasingly undermined, 
> requiring higher and higher (potentially unsustainable) "input energy" 
> (i.e., economic resources and non-economic forces applied) to maintain 
> any appearance of stability. 

In the cases where the incentives and back room deals "corrupt" reality, 
i.e. lead to far less efficiency, this is very bad.  When they are 
removing regulation or taxation or when they are recognizing indirect 
benefit (training a workforce for future opportunities for instance), 
they may be very good overall.  Doesn't the last sentence there 
undermine the premise?  If it takes an increasing amount of energy to 
"maintain ... stability", isn't this good?  When stability is 
inefficient, don't we want instability?  Sounds like a self-correcting 

Within the US, transportation isn't terribly different than the past in 
a lot of ways, although it is more efficient and scalable down to a 
single person now.  Internationally with containerization, it has been a 
huge impact.  The cost of shipping around the world is similar or less 
than the cost of shipping across the country.  That makes China / Japan 
/ et al closer than Michigan in some cases.  Any discussion lamenting 
the "inefficiency" of buying from China rather than Michigan has to take 
that into account.

The US needs to get far more efficient in certain industries if we are 
to compete.  Obviously auto manufacture is one of them.  In making a 
list of those areas where there was a lot of inefficiency, auto 
manufacturing is interesting because the solution is probably to break 
the auto company as "the middle of the network".  Traditional auto 
companies, at least in the US, have had all of the pricing, profit 
skimming, product decision, and similar control over the entire supply 
chain.  This even though there is a long, distributed supply chain that 
is full of innovation and cost savings.  Already, we have widespread 
third party parts, repair, augmentation, etc.  Why not build a car 
company that operates that way more explicitly?  Or a whole market?

> All of this has happened largely due to cheaper transportation.  In surface transportation, we have had numerous improvements to railroads.  Internationally, we have had containerization, specialized bulk carriers, and much larger ships.  In information, we have had digitization, packetization, and fiber optics.  What's on the horizon that would be comparable to one of these?
> -Dave

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