I was reading the papers and I spotted two interesting articles (from le Monde, in French):

The Belgians seem afraid to go through the 1585 blockade of Antwerp all over again as the Dutch are taking too long to flood a polder giving access to the harbour (some say in order to benefit the port of Rotterdam which would suffer from its neighbour’s competition).

An while China is inventing new way to bring modernity to its countryside, Russia has to deal with the heritage of 70 years of communist rule (did I ever stress how important EH was for our every day life?). The Russian government has decided to pull the plug on nearly 300 mono-cities, these towns built in the hinterland around a single industry and often a single factory (such as Togliatti, near the Volga, home-base of the the car manufacturer Avtovaz and its 100,000 workers). It a perfect illustration of the evils of government-led allocation of resources. I feel for the millions of people that will be left behind (specially because many of them had been forced to move to these places by Stalin, not mentioning that some of them are former gulags camps), but you cannot avoid rationality too long and geography is certainly one of the most stubborned things around.

6 Responses to Webography

  1. klhoughton says:

    “The Russian government has decided to pull the plug on nearly 300 mono-cities, these towns built in the hinterland around a single industry and often a single factory…It [is] a perfect illustration of the evils of government-led allocation of resources.”

    As opposed, of course, to the factory towns in the U.S. that were closed down because their work was outsourced or eliminated.

    “In socialism, man oppresses man. In capitalism, it is the opposite.”

    • Ben says:

      What is happening in the US (but also in W. Europe) is in no way as dramatic. First of all because, the closures are not due to a dependence upon oil which totally screws industries in a very short time (Detroit, Lorraine and Manchester took decades to fall, in Russia it is happening in a few years). Second because however important these closures in the West they represented but a limited share of the GDP and employment whereas in Russia we’re talking about 40% of GDP of 10 years ago. Then there is another matter of scale, if things go wrong in Liverpool, people can move to say London or York or whatever other place, in Russia, when you are lost in the middle of nowhere, … well you are lost in the middle of nowhere. Finally, there is the fact that it is a decision taken by the state and as such significantly more brutal than the process which could have conducted 300 major factories to the ground.

      Besides, I am not sure that the US industry is the best example of a sector driven solely by the hand of the market. Au contraire.

  2. “It is a perfect illustration of the evils of government-led allocation of resources…” Suggestion: Maybe you would discover or realize certain things that could escape you by considering it, first of all, as a bad, really bad, decision or idea? Simply? Consider that we’re realizing today, in the Western world, that much of the “evils of government-led allocation of resources” are, or have been, made under the pressions (some call it “corruption”) of private lobbies. Are extravagant bonusses, for instance, or relocating production resouces oversea, “good allocation of resources?” It’s true that decisions are taken within a System or another – but we can see that bad decisions can be taken under any System. What is the strongest: the System itself, that invisible entity which seems to yield sometimes so much power, or those who “grouillent” within it and should, maybe, try to become more conscious and try to shake up the kind of deep hypnosis they seem to under. Interesting post. It inspired me that :)

  3. Emil says:

    I doubt the author knows what she is talking about … “Au lieu de restaurer la croissance industrielle, le gouvernement a préféré se reposer sur les revenus du pétrole et du gaz ” … afaik, the share of oil and gas in Russian economy was about 4% at the top of the resources boom, and in Moscow they used to complain about labor scarcity.

    Those 300 major factories took 17 years to be run into the ground. Now is just the wake up call, and it will free labor for other major factories some place else. The big cities across the Urals and on the Pacific will get a bit boost. It will be unpleasant for the people displaced, but not all will be displaced since minerals will still be in some demand, and those that will stay put might enjoy a better life, like one family living in a 80m2 home instead of three families living in a 80m2 home. In a couple of years the demand for minerals will pick up, and China will spend their cache of USD making some Siberian miners quite prosperous.

    “En revanche, la production industrielle est à son plus bas niveau depuis dix ans.” … yes, Russia is selling a lot less weapons that it used to, but the share of services in the GDP structure is about the same as in Western Europe.

    • Ben says:

      Interesting… except of course that the share of services in Russian GDP is nowhere near what you can observe in Western Europe (in the mid 50% for Russia, in the high 60% for Germany, close to 80% for the Netherlands, we’re talking 25 percentage points here).

  4. Emil says:

    “close to 80% for the Netherlands” … so, not much industry in Netherland ?

    Russia had 61% services, 27% industry about 2004 …

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