Ghana will no longer sell cocoa to Switzerland
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Not to pick on you, but I often hear this frasing in the 'first world' and surely you dont 'allow' or 'disallow' internal policies to an sovereign nation?
It sounds like a Freudianslip or something, the reality is that its easy to bully or bribe officials in developing nations.
'Allow' implies some degree of forgiveness or allowance of entity on the other side of the table.
In this case, Ghana may probably face trade sanction/scrutiny for their protectionism. It will have to play out in terms of other agreements.
Not exactly. Between forcing their hand on disadvantageous trade deals, lodging complaints and enforcing restrictions with the WTO, and outright installing dictators and funding militias - allowing or disallowing is all what the first world ever does.
The reason these countries were allowed to do it where others are not was because the US wanted strategically placed powerful allies in the region.
There probably wouldn't be a Japanese electronics/car industry, for instance, if the Soviets hadn't spooked the the US in the 40s.
Japan's industrial base was built before the 40s, with an extensive domestic supply of machine tools and industrial equipment, rail infrastructure, and finished manufactured goods. Or else who do you think was building the planes, ships, and submarines that the allies were fighting on the Pacific front? Their industries were temporarily damaged by the war but it's no surprise that they'd be back to building cars within a couple decades.
They, rather than the US, were the ones who built up much of the initial industrial base of Taiwan and Korea, as part of their own colonization efforts. Not out of so much benevolence, of course.
Their skill base was intact but their industry was razed by WW2.
Either way they needed raw materials and markets to develop their industrial base and that required favorable American trade policy, $$$ and military support.
Forget about the third-world, right now the USA is not-allowing Germany the right to build a pipeline with Russia!
First-world - check, sovereign - check, allies - check.
The USA is threatening trade sanctions if Germany builds the pipeline. I would not call that "not-allowing".
That seems to be OP's whole point. The US is responding as a sovereign nation to actions of other sovereign nations. Phraseology like "allow" and "disallow" are not accurate. If Germany does the cost-benefit analysis and decides to cancel the pipeline because they don't want trade sanctions, that was their decision as an independent nation. It is not as if we are threatening war.
The USA didn't just do it to voice their displeasure: they could have done that with an email.
They truly think its enough of a hammer to stop the pipeline.
Hence "won't allow"
When the US pulled out of the Iran nuclear deal, for example, it essentially ordered European companies not to trade with Iran. Even European companies that have no business in the US are afraid to do business with Iran, because American secondary sanctions will still hit them. No European bank will lend to a European company that does business with Iran, out of fear of American sanctions.
These sorts of actions will eventually provoke a reaction: either the establishment of alternate financial systems or retaliatory sanctions.
Are allowed to break the law? Are you not?
ding ding ding. Germany is allowed to build whatever pipelines they want, they just also might have to pay US trade sanctions. Without a threat of force, we are not forcing them to do anything.
If the US wants to impose a tariff to nations that do X, that does not mean that the US is forcing these nations to do anything. They can pay the tarrif, change their behavior, or sell their goods elsewhere. Or they can charge a counter-tarrif -- oops, not if they are an export-dependent economy they can't. That's the crux of the issue.
Germany needs to pay their own workers enough so the German economy is not dependent on exporting a 1/3 of their GDP each year just to maintain domestic employment.
Obviously when you create an economy that crashes the moment others stop letting you run massive trade surpluses, then you are effectively handing your sovereignty over to your trading partners.
Whining about that and blaming your trading partners for using the power Germany has given them seems a bit naive.
Germany will never be sovereign as long as it is an export-dependent economy.
That is, any developing country is presented with 2 options by the developed world: either accept 'free trade' (allow foreign investors to buy up the local industry, commit to IP laws, don't apply tariffs) or no one will be allowed to trade with you or send you aid.
In the meantime, powerful countries are taking numerous protectionist measures in their key industries, since that is the only way to actually be prosperous.
Do multi-national trade agreements (which I believe are the core mechanism for this) actually penalize signatories for trading with non-signatories? Or is it more that trade between signatories is so advantaged that no company within a signatory state would be competitive were it to trade with a counterpart in a non-signatory state?
Blackmail poor countries into selling all of their assets to foreign capital, just to gain access to foreign credit.
See what's happening in Cuba. See what Vietnam had to do after the war with the US, see Greece with Europe recently, see countless more.
The WTO, IMF and the World Bank are the colonizing arm of capitalism.
It's a relatively new form of supernational economic warfare that turned out to be very effective, especially when combined with embargoes and economic sanctions. It's the famous "offer one can't refuse".
Only at the conditions imposed by the IMF. Usually that means the state has to steer away from anything that could be profitable and focus only on what is not palatable to foreign capital.
It also means states can't apply import taxes, thus making their industries instantly obsolete. It's pretty much a huge transfer of wealth from inside to outside.
Im going to need a direct example please
Also see this video[1] about Vietnam, around halfway through it explains pretty well how it works.
Edit: I realize now you asked about the "forced privatization of industries" sentence. That's thoroughly stressed accross all IMF literature, and you can see it happen in pretty much every country that takes IMF "aid".
-[0]: https://www.imf.org/en/About/Factsheets/Sheets/2016/08/02/21...
Oh, it's much simpler than that. If an undeveloped (or developing) country doesn't place nice with the "Developed" rules, the IMF will just bankrupt their currency and send them back to the dark ages.
Why do you think Switzerland is the world's 3rd biggest exporter of Coffee [1], while not growing a single bean ? .. and Germany is number 5.
The IMF doesn't let coffee growing countries like Ethiopia or the Ivory Coast export processed beans, because they want the immense profits going to developed countries. Also the WTO plays a role and just doesn't tax unprocessed raw coffee beans coming out of those poor countries, but taxes processed coffee (and chocolate) goods at astronomical rates.
I think it's probably a much better plant to extract a good deal of wealth from the natural resource and invest it in other areas of higher value creation, even in the same vertical.
There's a good chance that Ghana's policies are needlessly constrained.
More obviously there are 100 things Ghana could do to improve living conditions in more obvious areas i.e. corruption etc..
Consider the immediate situation:
Ghana's exporters have just been banned from exporting. They are going to go out of business very soon.
Ghana doesn't have all of the layers of industry necessary to support development and export of products i.e. there are no market buyers at any reasonable price.
Result: collapse of the industry - unless somehow the Government of Ghana can artificially inflate prices and keep them alive for a very long time while domestic partners somehow magically are able to get off their feet.
This plan feels not very well conceived.
I'll bet something is lurking under the surface.
If the government supports the development of a chocolate production industry, including support for cocoa exporters, then it has every chance of success.
And with the Casio profits, they could make a reasonable run at unseating Swiss chocolate in another century or so.
Canada maybe not so much, but Saudi Arabia and the UAE? Yeah, and I think they understand that as well. If we have a fusion breakthrough next year, what will Saudi Arabia export besides Wahhabism?
https://www.theguardian.com/world/2020/apr/25/saudi-arabia-t...
However, plenty places still use corporal punishment, including Singapore:
Actually yes. The trend happening there is reminiscent of the spice trade. The UAE will stay afloat because of its massive externally invested wealth fund and Canada's liberal policy will keep the talent coming (although imo destroying the local population's affordability). But Saudi Arabia has a huge problem right now, since they squandered a lot of their oil wealth and are in no position to rely on immigrant growth - especially when native Saudis are not employable at all. I know for a fact that the UAE actually monitors intelligence in Saudi Arabia to make sure that a revolt or an insurgency doesn't happen there. OPEC annual meetings are literally a mercantilist exercise.
> Ghana doesn't have all of the layers of industry necessary to support development and export of products i.e. there are no market buyers at any reasonable price.
Per the article, they literally control half of the world's cocoa. This means they get to define what "a reasonable price" is, as long as the rest of the world wants to keep its chocolate plentiful.
I'm not a politician or economist - but to me, it seems obvious the plan here is to bootstrap domestic cocoa processing industries, get the current exporters to sell cocoa to domestic producers, and export processed products (like chocolate). They're not going to just stop cultivating cocoa - being in control of half of the supply of raw materials for a highly prized product is their one big leverage on the international market.
As to not having the necessary industry base to pull it off - the question is, how fast can they build one? I'd guess a couple of years, if no foreign powers try to make it hard for them.
The second question is: Is there any reason cocoa can't be grown elsewhere, or the second biggest producer can't increase production?
It may be possible to use artificial techniques to grow it elsewhere, but I'm assuming it's not economically viable or you get a product with worst quality in the end
Agricultural luxury goods are one area where it’s hard to continually push a monopoly advantage.
That said, I think that if Ghana can take the short term repercussions, then the country will come out ahead. It can become to chocolate, what France is to wine. But that would require heavy marketing in order to change people’s perception about what kind of chocolate is most delicious.
So European companies setup plantations?
But yes, Swiss chocolate manufacturers have some options: a) setup a processing plant in Ghana, b) increase production somewhere else, c) reduce usage..
Maybe more.
They only country that has been able to do what you're talking about successfully is Norway and maybe the US and Canada, which have much better institutions than anywhere in Africa and the Middle East.
I don't know the fine details of how chocolate is made, but a chocolate bar seems like a fairly straightforward industrial product. Why should it be made in somewhere as high-cost as Switzerland, if not just because of operational and brand-value momentum?
I do. It isn't, necessarily. Quality is becoming much more important now and makers of high quality chocolate are growing in market share. Like coffee, there is more demand for higher quality and less exploitative business models.
There is a significant demand for high quality cacao such that producers of chocolate are helping to develop the cacao industry in producing countries to move to a higher quality,less exploitative model.
I don't know for certain, but Ghana, and other African countries, may be staking their future on this model, which has been successful in Central and South America, rather than continuing to use egregiously exploitative labor to produce low quality of cacao to sell large quantities to companies like Nestle. More and more, the money is elsewhere.
This is just refusing to sell to Switzerland. High end chocolate companies are very interested in developing higher quality and more equitable cacao production in other countries, as there is a shortage of high quality cacao. I know the company I worked for has recently been buying cacao from Ghana, something that they did not previously do. Working with these kinds of producers is probably far more beneficial than continuing to work with companies mass producing chocolate.
This should have been obvious since the Opium Wars and the Opening of Japan (see Commodore Matthew Perry).
All developed countries are pro free trade for markets where they are strong and fiercely protectionist where they are not (or they consider those markets strategic priorities).
I'm from Romania. Romania joined the EU in 2007, so we had to liberalize everything. It has generally been good for us (higher wages, economic growth, overall development), but I know all the German, French, Belgian supermarket chains.
Do you know why I know them? Because there are 0 (zero!) local supermarket chains left. They've all been bought by foreign companies.
Similar story for banks, car companies, whatever.
During the 2008 economic crisis Erste, Austrian banking group, repatriated all the local profits (from BCR, former major Romanian bank) to Austria so that the local banks would not be impacted. Similar story for OMV, Austrian oil and gas group (from Petrom, former major Romanian oil and gas company).
It's a mixed bag, really. You need some foreign investment to kickstart things, but if you don't start blocking stuff off, you'll never go over the middle income barrier, at best. At worst you practically become someone else's colony, or in the olden days, you actually were their colony (and what happened in Bengal in 1941 and Ireland in the 1800s comes to mind).
I don’t
Yugoslavia 1) allowed its people to freely work in the West, and many people chose to go to West Germany, and 2) Yugoslavia built up extensive tourist infrastructure in Croatia and Montenegro that drew predominantly German-speaking holidaymakers (and not so many English-speaking ones -- UK holidaymakers went for e.g. Spain or Greece during this era). All this made German seem like the language for communicating with foreigners, though among younger generations it is already giving way to English.
Althought I did see enough Lidl and Aldi around.
There is quite a body of scholarship on the sociolinguistics of the Austro-Hungarian Empire, if you are curious.
You don't build a bond with some nation and culture over the course of one century it takes more than that. For example like you probably know Ottoman Empire was ruling and controlling south-east Europe for 500 years and impact of that is very much visible and present today.
Certainly German words in Croatian testify to contacts at some level of the population. Romanian, too, abounds in German words in some domains, for example, but this doesn’t mean the average Romanian would have been able to speak any German. But in Croatia knowledge of German varied greatly from the country’s northwest to its south. Again, the sociolinguistics of the Austro-Hungarian Empire are well-described.
The German connection is definitely there. There was even a transliterated word used for people working abroad: "gastarbajter," from German Gastarbeiter. And it was used for anyone working abroad, no matter where :-)
Edit: https://en.wiktionary.org/w/index.php?title=Category:Serbo-C... . I can't believe "boja" is borrowed.
Sadly, Romania’s competitiveness in building its own businesses in Europe is weakened by being left out of Schengen. Considering that Mark Rutte’s party just won reelection in the Dutch elections, sadly nothing is likely to change on that front for years – he is the biggest force vetoing Romanian accession to Schengen.
We should just start vetoing some of those important treaties or other big agreements. We need to start pressuring the other EU members into pressuring the Netherlands for us.
In practice, many large companies are owned by investors from all over the world looking for diversification.
When foreign owners extract profits to recover their investment or pay whomever, wealth is in fact leaving the country - because they still own the capital (stores) yet get money back.
It's not clear cut based on this. They could have invested beyond price, brought knowledge, improved efficiency ... It's also possible they are in effect extracting wealth colonialist style, which is something to beware of - at scale it can have severe consequences for local economies.
If the interesting work all stays in the home country, how do you call that?
We like to kid ourselves that multinational companies are truly multinational, companies of the world. What's the percentage of non-American top managers, for example, working for American based multinationals? It's probably in the low 1-digit percentages.
There is a definite advantage to bejng an early investor. For these companies the risk is comparatively small and the rewards they reap are huge and on very long time horizons.
It's not super clear cut that it's all nationalist BS.
As far as returning the earnings to workers and local economy via taxes - yes there are expenses, you can't take 100% of income as profits, but there is a lot of leeway to direct the funds pretty much wherever the company chooses. Corporate headquarters in tax friendly countries are popular for a reason.
When the company buys in Romania and lays of the local marketing, sales departments, etc to make things more efficient, uniform and streamlined that doesn't help the local economy. That makes things more efficient tho but as a Romanian you're left holding the bag.
Now everything is foreign owned and the streamlining and competition has played out in such a fashion that there's potentially less competition and consequently less benefits off competition. (see all the modern industries that have turned into duopolies, monopsonies or the like that can easily keep new competition from coming in but also don't compete enough to drive consumer prices down.
If push comes to shove, they will for sure prioritize French/German/Belgian interests.
Can't really blame them but strategically it's not a position you want to be in, looking at it from the other side.
In more general sense, all global companies have some originating country and most of them keep the HQ and most of the high-paying jobs there. They expand to other countries mostly as a cost-saving measure and they have zero loyalty to them, while they have a lot of loyalty to the mothership.
No, it makes perfect sense when you factor in that FIAT/FCA/Stellantis was and is the receiver of massive subsidies, in various guises, from the Italian state. Losing those would be more harmful to the business than losing any foreign factory (with the exception of US ones, which were also beneficiaries of massive state support). FCA stopped being a "national champion" ages ago, they are just a hardened global business now; they just know which side their bread is buttered.
> They expand to other countries mostly as a cost-saving measure and they have zero loyalty to them
Believe me, they have zero loyalty to "the motherland" too. Many of them have long relocated their HQ too, for fiscal reasons. FCA/Stellantis, for example, is now based in Amsterdam. The chance that they'll ever expand again their manufacturing bases in Italy or France is minimal.
Honestly, the issue is that national champions don't exist anymore. Greed-is-good is all that matters.
https://www.manager-magazin.de/unternehmen/handel/aldi-nord-...
So far, the standard of living in post-Soviet EU countries is still higher than in China, but that's because of the much better starting point and also because it's just hard to provide wealth for over a billion people in a modern, heavily automated economy. However, even with their gargantuan population size, I see China potentially overtaking Poland or Czech Republic in terms of quality of living in the next 50-100 years.
A WTO member can either comply with their treaty obligations (e.g. reducing barriers to trade) or have other members apply their own remedies (e.g. punitive tariffs.)
If the effect of compliance is worse than the punishment (e.g. underdeveloped industry eliminated by foreign competitors vs. continuing to operate despite high tariffs) they'll not comply.
If the punishment is worse (e.g. industry is basically competitive, but tariffs would make products hard to sell in foreign countries) they'll choose compliance.
At the bilateral level, there's not much difference to the pre-WTO situation, which might make you wonder whether it's all pointless. The advantage of the WTO is that it provides a shared target for compliance: if a country follows WTO rules, pretty much every other member will be happy with that. Which is a bigger incentive than having to please every trading partner individually.
China also messed up big time by enforcing their 1 child policy, and taking so long to open up and industrialize. They're far behind economically compared to where other countries were with their demographic. Now they're on the verge of the biggest wave of senior citizens reaching retirement the world has ever seen, with crumbling infrastructure and housing, relatively low GDP/capita and no clear path to manufacturing/export of truly high value goods and services. They're screwed.
China really wants to get out of low-value manufacturing, and in some ways they're encouraging pushing that out to south-east asia and africa. But at the same time they don't have the positive image and reputation needed to be a big exporter of high-value goods. Who is going to trust Chinese companies with things like 5G infrastructure and CPS, when they're all basically an extension of the CCP when it comes to security? Who wants to live and work in China now, when you have no real justice for foreign citizens and the CCP can arrest you at a whim? If anything even close to Shenzhen is replicated elsewhere in the world, I think companies and individuals will gladly develop their products elsewhere. Will a giant Chinese company ever gain the reputation of Samsung or Sony? DJI I guess? But that's a bit niche.
Poland is growing healthily last I checked. The proof is in immigration numbers in other European countries. It seems to be reversing. In Norway there's a clear downward trend in immigration from Poland.
ASML's machines aren't something you can just copy by buying one of them. (You'd do better by hiring ex-ASML engineers to teach you how to do it.) And ASML would've sold their EUV equipment (just as they continue to sell previous-generation machines) if their export license had been extended by the Dutch government, but the US applied pressure to make sure that didn't happen.
You say China took too long to open up and industrialize. Well, they are open to buy from ASML and industrialize with their help, but others are closing that door...
I think in 5G, some top level planners in the West have realized the error of their ways, and are investing heavily in basic research. I think it is too late.
Wait until Berkeley Stanford and MIT get better network security! [0][1][2]
[0] https://www.nytimes.com/2019/12/31/us/chinese-scientist-canc...
[1] https://www.latimes.com/california/story/2020-06-11/chinese-...
[2] https://www.cbc.ca/news/canada/manitoba/chinese-researcher-e...
To cite them here is firstly to lie, as they aren't relevant, but secondly to show some pretty xenophobic tendencies, equating any news story connected to anyone Chinese as being proof of some other anti-Chinese theory.
Pretty disgusting.
[0] https://blogs.cisco.com/news/huawei-and-ciscos-source-code-c...
[1] https://www.bloomberg.com/news/features/2020-07-01/did-china...
[2] https://globalnews.ca/news/7275588/inside-the-chinese-milita...
[3] https://www.justice.gov/opa/pr/former-raytheon-engineer-sent...
[4] https://www.nydailynews.com/news/national/snowden-chinese-ha...
[5] https://www.theverge.com/2019/7/10/20689468/tesla-autopilot-...
[6] https://www.thedetroitbureau.com/2019/03/tesla-sues-former-e...
> You say China took too long to open up and industrialize. Well, they are open to buy from ASML and industrialize with their help, but others are closing that door...
There's also the elephant in the room: China is controlled by the Communist party, which holds values that are antithetical to those of many of its trading partners (https://www.nytimes.com/2013/08/20/world/asia/chinas-new-lea...). Neither Taiwan nor South Korea have that kind of incompatibility. It was kind of naive and arrogant for Western trade policy to focus on stuff like IP theft and market access while ignoring that elephant.
https://www.nbcnews.com/think/opinion/cheap-drones-china-tur...
Because China can waggle a huge target market to tempt people into repeating well documented mistakes
Furthermore, Hong Kong has some international appeal and most people think of it as a nation separate from China. In reality, companies from China incorporate in HK to escape the aurora of being a Chinese compnay
I would expect this to continue. In fact, there are probably a few brands that are Chinese that you don’t realize are Chinese.
They're going to try to compete on price and quality. If customers think that the Xiaomi phone is good and cheap, the governments will have a hard time banning it. Customers don't really care about turning over huge amounts of information to Tiktok as well as to Facebook. That puts the western governments in a bind, to either ban wholesale or piecemeal, and it looks bad for them either way.
That's not a guaranteed win for China. It's hard to compete on both price and quality, and they're going to have to work hard to win a reputation for the latter. It's possible: both Japan and South Korea have done it. But they did so with a friendly US, not a hostile one.
They have the advantage of an enormous internal market, but it's not a wealthy one. They're going to look to Africa, which is also not wealthy, but there is money there, with less focus on privacy and more on price. Perhaps India and Latin America as well.
Weren’t South Korea, Taiwan, and even Japan once known for their rampant IP theft?
Yes they stole even IBM Mainframe OS's repeatedly....and sold it.
With that said, my next phone will be an iPhone. I am trying to de-china whenever I can when it comes to buying stuff.
I have bad news for you, friend.
Isn't Apple extremely well known for it's production lines being in China?
https://www.realclearmarkets.com/articles/2018/07/30/ip_thef...!
So Hollywood and the MPAA, who so aggressively pursue what they deem "IP infringement", have more than one skeleton in their closets.
Bear this in mind whenever someone tells you -- as often witnessed here on HN -- "but without copyright there will be no writers" or "art isn't possible without IP laws".
----
[1] https://en.wikipedia.org/wiki/Free_Culture_(book)
[2] https://en.wikipedia.org/wiki/Cinema_of_the_United_States#Ri...
Just recently had a bit of a good laugh about this. I decided to read Caesar's notes on Gallic wars, and downloaded some random .fb2
It turned out to be a preview fragment, which ended with a stern warning that it is illegal to break copyright laws and that this book can be legally purchased via provided link. I'm sure Gaius Julius is very happy with how these guys protect his interests.
Well, without copyright, writers would find it hard to live off their work, but contemporary copyright has outgrown its usefulness and it wasn't writers who pushed for extensions.
Let us get back to the original 14+14 model, but how, against a determined resistance of entrenched interests?
Let's say this research costs 1 million dollars, and the company bankrolls this via a loan. They build it and are successful, and begin paying it off.
Their competitor copies their idea, and exploits the fact that they have more capital and less debt to buy up more of the market, and end up the winner.
So, under a zero protection scheme it is optimal to wait until your competitor invests in research, and then just steal it. Which is what happens on a geopolitical level where there is no feasible enforcement possible.
Is it such a bad thing? The United States did it in order to industrialize and I would say that's a good thing.
The underlying issue with Pareto optimal scenarios like this is that we end up trapped in a local minima.
I think in a particular case it's important to look at the context. For this, it likely depends on the scale, so in small town Georgiaville it would prevent innovation, but across the world scope its better* for ideas to be free.
*given most mainstream progressive utility functions and non-zero-sum philosophies
Some inventions are pretty expensive, like mRNA vaccines. If there is no way to profit from them, no one will spend crazy money on the research.
(Notably, mRNA was originally researched by the academic sector, but it did not recognize the importance of the topic and Katalin Karikó had to move to the private sector to finish her work.)
You seem a bit misinformed. ASML CEO has repeatedly showed extreme desire to sell in china (it already comprises the fastest growing DUV market)[1]. It's the american pressure, indirectly or directly exerted which is causing issues. If it were upto ASML SMIC would already be establishing it's EUV fabs.
[1] https://www.caixinglobal.com/2020-10-16/dutch-tech-giant-asm...
That's because of geopolitics: These countries are small enough that they cannot be a threat to the US. In fact they are dependent on the US.
China, on the other hand, is a strategic adversary irrespective of their IP laws (and enforcement of those laws) or even of their political regime.
IP is artificial construct supported and ultimately enforced by governments when it suits their purpose. For developing countries this IP just locks them forever into servitude as they can not afford to pay for IP. Never mind that. Even if they invent something themselves they'd still be breaking some patent. Personally I completely support a position where until country reaches certain GDP per capita they should be free from any IPO enforcements.
By the way the largest IP holder on this planet is also the largest thief of IP. This is how they've started.
That said, it is possible that China will reverse this self-made problem by developing and mandating use of artificial wombs or something similar. Authoritarian societies do not have many ethical scruples when it comes to problem solving.
Other than my car and some furniture, pretty much everything I've bought that cost more than $100 in the past 10-20 years has been made in China.
> Will a giant Chinese company ever gain the reputation of Samsung or Sony?
Perhaps not, but they'll likely continue to manufacture most of the products sold by the Sonys and Apples of the world.
Pretty much none of the tactics would have worked for a small country that China played successfully. If you are small you can choose to be independent and protectionist - and remain very poor, or join the party, but be pushed into the corner, hoping that with time the playing field will level out somewhat.
From that point on they had a pretty clever long view policy but it would have been surprising if they hadn't. They spent the previous century getting fucked by foreign invaders, if they hadn't learned how to resist it by the 1970's then Chinese culture as we know it would have been doomed to collapse by the 90's.
And truth be told they almost did in 1989. If the CCP was a little less organized, if the military was a little less loyal and if the protesters had their shit together a bit more it could have turned into a full popular revolution.
It would have plunged China into a civil war again and there would be millions dead. China would be a worse position now by every metric.
Not true. I hope you are joking. Most countries that joined the EU in the 2000s and 2010s become pretty westernized within 5 years of joining. Have you ever spent significant time in these countries, pre-EU or post-EU? Also, the countries that benefit the most from being EU members are the new members.
> So far, the standard of living in post-Soviet EU countries is still higher than in China, but that's because of the much better starting point and also because it's just hard to provide wealth for over a billion people in a modern, heavily automated economy.
The standard of living is pretty high in a lot of those countries, and not all of them are post-Soviet. Look at Malta or the ex-Yugoslav countries (Slovenia, Croatia) for example. I do not understand why westerners (particularly Americans) like to talk trash about the EU. I hope the Americans doing this realize where they are going, as in the wrong way, or on the wrong trend line. Of course America can wake up from being on some trend line, but to win the battles they are up against, profound societal changes will need to occur.
U.S. life expectancy will soon be on par with Mexico’s and the Czech Republic’s: https://www.washingtonpost.com/news/to-your-health/wp/2017/0...
Also, according to that article, American women's life expectancy is soon to mirror Croatia. You know, that war-torn, ex-Yugoslav country that had a nasty war in the 90s and displaced a lot of people. Americans should be embarrassed.
What isn't fine is the worldwide trend toward morbid obesity and metabolic disease. Americans, as usual, are the trend setters, but we are following them. That is what reduces life expectancy and especially life quality in nations that can afford to gorge on 100 pounds of sugar per person and year.
I am a dual US| EU (Croatian) citizen, who is culturally American. I live in Croatia. So, I hope you understand where I am coming from, even though I was wrong.
I also have type 1 diabetes (autoimmune and insulin dependent) which is a “metabolic disease”. It is more appropriate to say “type 2 diabetes” or “diabetes type 2” or “insulin-resistance”, rather than a metabolic disease.
The issue with America is we have a lot of unnecessary death. It is not just obesity and type 2 diabetes, although that is a huge part of it. Our healthcare system is designed to create as much profit as possible, without having to improve the health of the people using it. We have no adequate public health infrastructure because of this huge profit seeking and we suffer because of a lack of regulation. This all causes unnecessary death.
That's already known factor though. The reason of the free movement of labour to make up for capital movements like these.
The best way seems to start with low level work and move up the chain.
It'll be interesting to see. Making good chocolate certainly isn't easy. Nor is compliance with food quality standards..
But if they control enough of the chocolate production, I guess foreign manufacturers may choose to setup a processing factory in Ghana.
Of course, it's not without risk. Foreign manufacturers could perhaps invest into farming equipment to make neighboring Ivory Coast more productive at farming cocoa..
But doing this certainly creates uncertainty and instability, which is rarely good.
If you are buying an $9 chocolate bar, in addition to quality, consumers are also looking to support fair business models. So improving the labor conditions, something many European companies seem to show little interest in, is as much a part of finding better partners as increasing quality. And more and more, these issues are just as important as quantity.
I'd be interested in the story, if you have time, but my only comment for everyone else reading this, these are technicalities, regarding the gist of my comment. They only change the timeline, but the main idea is the same.
It depends on your perspective really. When I lived in Oregon, there were Fred Meyers all over the place, but they're all owned by Kroger (HQ in Ohio) now. Are they 'foreign' because they're from another state inside the USA?
AFAIK, Kroger keeps the local brands, so IDK why none of the local Romanian brands were kept. If it's anything like China or USSR, probably not a lot of faith in the local brands I guess?
But this isn't a great analogy because the U.S. federal government keeps interstate trade much more homogeneous than the EU.
That's part of it, but there's actually also a set of interstate compacts (that still have to be "allowed" by Congress constitutionally) and also Uniform Codes (which don't). Particularly the uniform commercial code https://en.wikipedia.org/wiki/Uniform_Commercial_Code
Basically, a think tank from the 50's decided to convince all the states to pass laws which just all happened to look alike because they copied from the same source. No interstate agreement required, they just all did it, no congressional thumbs up required. I... don't think the EU is quite on that level of unity yet =)
To my mind the EU was our salvation not so much because of its economic nature, but because of its political one. The free market was the price we had to pay in order to be able to travel, work, study abroad, earn real wages that we could use to invest back into our own country etc. The EU also insured a decent degree of geo-political, strategic stability. Without the EU we may have ended up like our neighbors to the North/East.
Adjusting to a new trade regiment will always be painful in the short term.
But many factories have moved labor intensive parts of production to eastern europe. Which wouldn't have been possible without the EU.
In Romania it's actually quite hard to buy products and services that are not provided by some foreign company. Most banks, all big shopping chains (as GP noted), lots of the food and clothes, agri-business, almost all the telcoms are foreign. As a matter of fact, even though we have our own currency, a lot of products are pretty much directly priced in euros: cars, home appliances, electronics, apartments, land, rents, utility bills. All of these go up when the euro goes up (they don't go down when the euro goes down - and the euro never goes down).
It seems to me too early to predict a lot about Eastern Europe. < 20 years is not a long time. 2007 means that the first children born after Romania joined the EU are 8 years away from leaving university.
You could very well be correct, but I'd want to see some countries that tried this a lot longer ago.
Almost all the cases of countries going from underdeveloped/developing to developed did it through various forms of protectionism: Japan, Singapore, Taiwan, South Korea, China, Hong Kong.
I'm trying super hard to think of a country that did it by liberalizing fully. Eastern European countries might be the examples you're looking for, but it's too early to say.
If you think about any sport, or any activity in general, it makes sense. You never expose the hard parts, you only expose what you can easily defend or what can defend itself. Or if you're China, you fake exposing the soft parts and then you catch everyone in your tar pit :-))
US states, despite what Americans tell themselves, are culturally/socially/economically a lot more homogeneous than random countries around the world are to each other.
And US states are all protected by the same federal government. None of them can really be abused by outside forces with little/no repercussion.
They really can't be compared (US states vs countries around the world).
> They really can't be compared
Sure they can. They show that a diverse set of "countries" with no trade barriers results in mutual prosperity. It's one of the great ideas of the United States.
Plenty of nations around the world are bullied. The US and the banana republics (which sounds a lot like arrogant victim blaming from the Americans!), Eastern Europe and Russia/the Soviets, Afghanistan and everyone, etc.
US states don't have that problem. When was the last time Idaho had to defend itself from foreign interference, invasion, trade embargoes, etc?
Regarding US states, and though I absolutely abhor playing devil's advocate on this one, the Northern states did force the Southern ones to give up their economic model at gun point.
Free trade, right? :-)
Your thesis was free trade turns countries into colonies. It clearly doesn't. It's other things that turn countries into colonies.
https://www.euractiv.com/section/trade-society/opinion/eu-fr...
Similarly to how Vietnams economy is hampered if it gets exposed to more mature parts and electronics industries from let's say Germany leaving only it's mature low skill industries sustainable trough low wages I can see the same in the west
I live in a western country and i enjoy relatively free trade with the US but I don't expect my country or surrounding ones to produce a software giant because I expect them to be stomped in the ground by existing duopolies or simply bought out. I don't expect something to join the competition between intel amd anywhere in a free trading world and potentially drive consumer prices down more because they'll perpetuate their copyrights and IP with well timed adjustments till the sun goes dark, etc
A person even closer to me used to work for OMV immediately after they had purchased Petrom (our former State-run oil company). The stories I could hear back then could fill many pages, I still remember seeing the papers with hundreds of people's names on them, people who were supposed to be laid off the following days. And that was just from one company division. To say nothing of the fact that the Austrians had no oil drilling operations, no oil drilling specialists, nothing of the sorts, while Petrom had been in the oil drilling business for decades. Or how OMV had (I think it still has) as its major shareholder the Austrian State, so in fact we managed to sell our oil state company to basically another state.
It doesn't seem Romania is drilling much these days, more like refining imported crude oil before exporting the products. Judging from what was left of a different communist regime the last 30 years haven't been easy but most people seem to be much, much better off now than before the fall of the iron curtain probably also compared to the general QoL development in the world, I haven't looked up any statistics but it definitely seems like it. The quality standards now are much higher in every respect, the work in a factory is much safer for the workers. You are usually looking at many years of retirement even when you generally retire later where I hear stories about people from factories dying quite early probably because of the working conditions, many small injuries over the lifetime, fumes, dirt, smoking everywhere and all the time etc. If you get injured at work in Germany and haven't done anything against the protocols, it is a big problem for the company - you will be compensated usually very well for your trouble. Companies try to avoid injuries as well as they can in my experience on seeing the shop floors of a steel foundry, where safety really matters, else you are likely to get hurt fatally.
That said, no corporation is always doing the smart thing from the business or management perspective. There is usually internal politics, management strategies and more involved. There are also more and less competent people at every position. Maybe OMV should have kept some of the specialists and maybe educate them about the modern technology and methods. Generally the previous regimes were not very efficient with personnel and other resources so it is really hard to say what OMV should have really done.
But were the local owners forced to sell? And is there an actual issue with them selling to foreign companies?
Is it a bad thing? I was under impression that these were exactly the kinds of businesses that operate better at larger scale.
If the industry they work in can't compete their entire income is reduced to zero.
That can knock out related industries as well and ultimately leave the country exposed to currency collapse and hyperinflation as the exporting countries decide that this country has nothing it really wants any more while they still desperately need imports.
This happened to Venezuela (after local industrialists declared war on Chavez in 2002 he effectively set out to destroy them) and Zimbabwe (when Muagabe dispossessed farmers from their land, rendering it unproductive).
The US is also exposed to this risk. It's steadily but very slowly losing hi tech manufacturing capabilities - something that takes decades to get back once lost (due to the network effect and loss of skills).
But I thought we're talking about a time period before that industry even exists.
Like coffee, I believe the industries that are able to produce higher quality beans with more equitable and fair labor practices are doing better than the countries that continue producing cheap cacao. Something that I am under the impression is less supported by European chocolate producers.
My source is my time as a chocolate maker in the US.
ANY developing European country in history started with offering raw materials and very quickly invested into manufacturing and producing good quality products. There are no obstacles for Ghana to do the same. At the moment you can see some poor European countries with industry and skilled workforce and they all have poor results because of corruption. Something tells me, that it will be the same for Ghana.
And you really think that Ghana's cocoa superiority will be upended by some American startup? That's laughable, and certainly not enough of a credible threat to keep Ghana under the boot of economic imperialism.
Countries like Ghana used to be held over a barrel regarding price. They produce low quality cacao usng extremely exploited labor to provide mass quantities to multinationals making low quality chocolate,like Nestle, Dove, Ghiardelli, etc.
Lately there is a lack of high quality, "fair trade" cacao for the growing high quality chocolate industry, which has taken to helping growers develop to be able to provide what they need. Not good news for the low quality producers, which, broadly speaking, are in Europe, which has been resting on its laurels and reputation while the state of the art has rapidly been improved by small, but growing companies. I don't know for certain but this may be part of the reason Ghana is refusing to sell to Switzerland. I do know that the company I worked for recently began buying cacao from Ghana. And that is certainly partly due to the quality increasing significantly.
This sounds a bit paternalistic and condescending. I guess that first and foremost the "first world" should stop financing horrible dictatorships and wars in the ex-colonies. That would be a good, honest start.
When you do that and even take down the dictator (Gadafi), you end up with a worse government, or no government at all. We can all agree Saddam Hussein was a horrible dictator supported by the US, look at Iraq now, is it better off without Saddam?
There is no clear cut, and it seems like whatever the west is doing or abstaining from doing it's going to attract hate. We all hate that the Saudis are free to be horrible, but what is the alternative? A new Iraq?
What if you just let them be, you might say? Then you end up with 8 year long wars like Iran-Iraq. Or with genocide like in Yugoslavia in the 90s.
I think we can all agree China is a horrible dictatorship, how exactly can we stop financing it, since we rely so much on their factories?
That's a false dichotomy. I think that many people who oppose the war in Yemen would settle for an end to military support and arms sales to Saudi Arabia, and possibly other economic sanctions.
Whether that would lead to a positive outcome for Yemen, though, is another question, and highlights your point about the problems of abstaining.
Build a second set of factories in a different country.
It has a good deal of historical detail on what developed countries did themselves to become developed with respect to IP and protection.
Except that often they do. With lower safety/environmental standards, lower wages, and lower expectations many "developing" countries can undercut the labor markets of developed countries, operating advanced manufacturing at far reduced costs. Many would ague that is exactly how China has risen to power.
A reliance on export of raw resources is also no telltale of a country still "developing" its economy. Canada is heavily dependent on resource extraction and export. Canada is also a former colony. But would anyone here dare say Canada is a "developing" economy?
Well, no, thanks. I'd rather not be forced to enslave my people in order to compete with western capitalism.
There's a big chunk of that country that can pretty much only be used for resource extraction. It's hard/impossible to grow anything there and pretty harsh to live there.
That's extremely lazy reductionism. You're talking about countries of wildly different sizes (Taiwan is tiny, Japan is medium-sized, China is gargantuan), starting from wildly different levels of development (Japan was developed pre-WW2, India and China were in abject poverty), with wildly different levels of homogeneity and diversity (Japan is highly homogenous, China less so, India not at all), diplomatic alignments (Japan with the US, China with the Soviets, India in the third world), resources (Japan with zero, India with quite a fair bit), availability of capital (Japan, Taiwan and South Korea with quite a fair bit, India with very little, don't know about China), political systems (government-managed free market in Japan, autocracy transitioning to a democracy in Taiwan and S Korea, socialism in India, full communism until 1980s-1990s in China).
Maybe if you apply the tariffs very intelligently but most developing countries are not blessed with great non corrupt governments.
The
>pressured into free trade agreements (for example by making aid dependent on this)
is kind of telling. A lot of the long time free trading countries like HK and Singapore don't need aid. It's often the tarrifs that make places poor enough to need that.
Take cloning a 1970s car vs an electric one from 2021. While not trivial, I feel if you can make, stamp and weld steel you are half way there for the 1970s. For an electric car you need an enormous supply chain of batteries, microelectronics and all kinds of safety features, etc etc. It's so complicated that big car makers now basically just have one platform of car they base dozens of models off.
However, it's not all bad. China's one child policy is really going to start biting them over the next 10-20 years (and even though they've reduced it now it's hard to see the mindset ever changing) and there will be an enormous demand for cheap labour, which I expect Africa to provide.
Developing countries do not have hugely diverse domestic industries with top of the line offerings. How can one create a successful business if every niche or high quality product you have around costs a lot more for you than for your compettitiors in developed countries?
Basically what Friedrich List [1] wrote in 1841 [2], and being proven correct time and time again while we completely disregard it.
Now you can even go further and ask yourselves if what is happening in the West by moving all the factories and manufacturing to China and neighbouring countries isn't exactly like the Colonization of the Americas by the British.
It wasn't luck that made the USA Great. It was the best stock from Europe who come up with the American School [3], and we can now see the tragic consequences of abandoning it for "free" trade.
If a country imports manufactured goods and exports raw materials, it is a colony.
[1] https://en.wikipedia.org/wiki/Friedrich_List [2] https://archive.org/details/nationalsystemp00nichgoog [3] https://en.wikipedia.org/wiki/American_School_(economics)
Alexander Hamilton's influence goes way beyond inspiring a ridiculous musical for an attempt to capture that historical personality and distort his positions so nobody would read his writings.
There is a vast difference between not being possible, and the interlopers we call "the elites" not wanting to do it because they have other interests that don't overlap with the Nation's interests.
The US could also support massively extractive industries internally. Most countries can't do that.
What are the examples where protecting a country from exports for a few decades then opening it up to competition actually produced a world-class industry? Singapore is an example of a country that has been pro free-trade and has benefited as a result.
Freedom of movement to everyone, as inside the EU, would make even more sense. Every country is rather protective of that though.
I would suggest you to read Hernando De Soto - The Mystery Of Capital: Why Capitalism Triumphs In The West And Fails Everywhere Else
The book argues "it actually has everything to do with the legal structure of property and property rights. Every developed nation in the world at one time went through the transformation from predominantly informal, extralegal ownership to a formal, unified legal property system. In the West we've forgotten that creating this system is also what allowed people everywhere to leverage property into wealth." [1]
Book is in the public domain: [1] https://archive.org/details/Hernando_De_Soto_The_Mystery_Of_...
Once the China for instance embraced capitalism and changed their legal system to allow private property ownership and allow market economy they thrived. Plus allowing American companies to come and exploit cheap work force they acquired "know-how" by now widely known and familiar stealing of intellectual property and copying literally everything they put their hands on.
"forced" is probably not the right word. "baited" is better.
The developed world uses aid/loans to manipulate policy in the developed world, by targeting desperation. Make loans that the recipient cannot repay, then offer to restructure if they will comply with certain conditions.
This is why the IMF exists.
However that is selection bias, government and international development agencies tried literally everything, many things 10 times, often over years and years. Often wasting resources that then didn't go into their successful part of the economy.
Quite often governments also do lead following, they do something, something else is successful, then more money flows into that and then a few years later all the bureaucrats congratulate themselves on their success.
We actually have pretty good and very clear numbers on what actually works. Basically it boils down to 'don't be a shit government' and if you manage that you will have some amount pretty good amount of growth. Avoid a few idioitic policies, implement the basic of law and business (property rights), don't punish successful people, don't be ultra protectionist.
Any country that manages that usually manages to get a fair amount of growth. It might not be growth in Steel industry but better more efficient framing, mining, tourism, labor intensive industry and stuff like that are still very helpful base to build up the basic infrastructure and business environment.
The old Post-WW2 version of 'lets not import steel, invest many billions in building our own steel industry' kind of plans actually have a terrible history of success.
But this debate has been raging for 3000 years now, in modern history mercantilism vs free market debate, then the socialism vs capitalism debate (calculation debate), then Post-WW2 development of 'Development economics' that had all these debates again. Look at India, and its strange 'Indian Socialism' based on many British ideas.
> So much like we allow children time to learn in school before we expect them to compete in the job market
Mostly what we are actually doing for most jobs is kids basically showing that they can be good little workers and have basic social skills.
For a country this would basically be, show that you respect basic property rights, don't have polices that make creating a business impossible, be reasonable accessible to global market. If you can do that, welcome to being adult, you will likely be reasonably successful.
> we should allow developing countries to employ protectionistic policies like tariffs
Allow them sure, who are we to deny them. But that doesn't mean its a good idea most of the time.
This idea of raising tarrifs on imports and then using the money to protect domestic industries has been tried in Latin America in the 60s and 70s, in Africa, and in many places.
The results are mixed.
The problem with infant industry is that you get a group of local monopolies protected by the government who sell expensive low quality goods to the public, people get sick of it, they want the lower priced better foreign goods as it will increase their quality of life, and at some point there is sufficient political pressure to force a regime change.
Another way of saying this is that the infant industries often fail to grow up, they remain protected infants forever.
On the other hand, if you don't protect your infant industries, then you have no chance against mature foreign competitors, as you point out.
Then there is a third aspect to this, which is that foreign governments, especially East Asian governments (not only China, but China is the biggest offender) massively subsidize domestic industries and so you have to subsidize and protect your industries in return, or they will be destroyed by competitors who never need to turn a profit, or repay a loan, or meet any environmental regulations, or deal with unions, etc.
So it's a tough call. All these theories have valid points, but they all have fatal flaws. For the last few years, I've come around to the following mantra, which is my own development philosophy:
* every country should have a long run balance of payments. That means all trade should be balanced.
* countries should make investments in local productive capacity, but not subsidize industries per se
* countries should not allow foreign companies to set up factories or purchase capital or land. Each nation's assets should be owned by their own citizens only.
* With the above caveats, there should be free trade and no industry protection.
What this means, in practice, is banning foreign capital inflows. Have your own currency, borrow only in your own currency from your own people, and don't allow foreigners to purchase your bonds, stocks, land, private debt, or productive capital.
But trade all you want with them. As long as you do that, your currency will depreciate sufficiently to prevent any flood of cheap imports, and your domestic industries will have a chance.
This is why it is prudent to lock up certain assets (land / long lived assets) to citizens of the country.
This is where china succeeded. You go in, you give up IP and share %, and they get a piece of the action.
Free trade benefits everyone for pennies. However, the makers / artisans (shoemakers, etc) always lose out big. So free trade is a net winner but creates very unbalanced losers. Ultimately there is an argument for compassion against free trade, which fits squarely with your arguments.
And any attempts to adopt a more nationalistic trade policy that promotes sovereignty are met with pretty brutal suppression from our internationalized corporate sector and their various handmaidens in the press and progressive politics -- which now has no loyalty to America at all.
And this is happening all over the world, but most prominently in the US as well as Southern Europe. Domestic political forces that hate the native population are collaborating with the domestic corporate sector to sell every piece of capital that isn't bolted down to overseas investors with cheap printing presses and a longer time horizon.
This is a good point!
> Each nation's assets should be owned by their own citizens only.
Curious, why? Countries vary in size, so this seems like an arbitrary restriction.
Also: how is it undesirable to have a foreign company build a factory that hires workers?
Won't growth be slower without foreign investments?
It is not an arbitrary restriction at all, it is the only possible way to have balanced trade in a hostile environment. You have the balance of trade identity:
change in current_account + change in capital_account = 0
That means in order for nation A to be a net importer of goods, it must sell off its capital to the foreign sector.
So instead of thinking "Lazy Americans love cheap foreign goods, so they import too much and that makes them poorer so they have to sell off their capital to "borrow" from abroad"
Think like this: Nation B prints up money, uses it to buy bonds/factories/etc in nation A, which forces the currencies to adjust so that Nation A's products are more expensive to nation B and Nation B's products are cheaper to Nation A so that enough is imported to balance the current and capital account, and in this way Nation B's intervention makes Nation A poorer.
Then the question becomes, why should Nation A allow this type of intervention?
Indeed, the impoverishment of Ireland was due mostly to British landlords who owned a huge portion of Irish land, and British firms that owned a huge portion of Irish industry, making the Irish mere renters of their own country's capital.
> Also: how is it undesirable to have a foreign company build a factory that hires workers?
You do not need foreigners to do that. For a foreigner to build a factory in nation A, they have to first export some good to nation A, and instead of using the proceeds to importing an equivalent amount of goods, they use the proceeds to buy some land or a factory, etc. That land or factory could have been bought by someone in nation A if they would not have been deprived of the export income.
In other words, in a floating currency regime, it is impossible for the foreign sector to "bring money in" to another country and fund investment - trade is not funded with specie flows - it is only possible for the foreign sector to drain income from nation A's current account, and then re-invest the income that was drained via the capital account. Thus all foreign investments are merely efforts to recycle trade surpluses, and they are required for the trade surpluses to occur in the first place.
That is what is wrong with foreign capital inflows, and why all nations from South Korea to China that follow export-led growth plans always heavily restrict or outright ban foreign capital inflows, much to the consternation of economists who think foreign capital inflows help rather than hurt. Asia knows that these inflows hurt, and it's time we realized that, too.
I doubt that's the situation Iran is in.. it more like isolation. Because Iranian car manufacturers have no ability to import machines, or try to and export cars. I would imagine they aren't pushed to compete with foreign competitors.. and once sanctions disappear they will disappear with them.
If Iran wasn't sanctioned, could import machinery, and was allowed to export cars without cribbling tariffs, while it could forbid import of cars. Then maybe car manufacturers would get good enough to compete internally. Or at least that's the theory GP is arguing, as I understand it.
Maybe, it holds up, being able to do protectionism without retaliation might be beneficial. Or maybe it would just lead to a inefficiet car industry that never manages to export anything, and is only continues to exist due to protectionism..
I don't know -- but protectionism might not be the way to create efficient industries. Or maybe it can be?
It seems absurd to demand non-industrialized countries should develop all those things by themselves, while developed nations stand by. At the very least it would take decades, while people in the developing country remain poor.
Also, I take issue with the formulation "when developing countries are pressured into free trade agreements" - it is still simply a trade, "withholding aid" is not different from a sum of money offered in a trade. "pressured into it" is leftist propaganda.
This is why you should let foreign investors into your country. If Switzerland would build chocolate factories in Ghana everyone would be happy and in 30 years non Swiss chocolate industry would grow organically until the Swiss companies can no longer compete.
Let X be an industrialized country, and Y be the one exporting raw materials.
There are many tea plantations in Y. Companies from X own those plantations. They take the tea that is produced for some few cents, process it, put it in teabags, put the teabags in a well designed box, and then sell it across the world for a much higher value than whatever the cost of producing the plants was in Y. Most of the money goes to people in X.
Now what is we do what you say? then, companies from Y would be selling the boxed tea bags themselves. None of the money would go to X anymore. X exchanges its money for Y's tea.
In fact, X exchanges all of its money for other products from other countries as well. X now falls into a trade deficit.
The only competitive advantage Singapore had was rule of law and stability.
It’s interesting to me how much tasty and interesting stuff in Africa has not been marketed internationally and there’s lots of room for them to grow and develop.
For example, fonio [0], is a grain native to west Africa that I’ve never seen in the US but was eaten every day when I was there, as common as rice. It’s gluten-free and could be the next quinoa and a great opportunity to develop a new brand and export finished products rather than just commodities.
One of the big opportunities of all this digitization, I think, is that it’s now easier for remote locations to get more value out of their commodities than just exporting raw and having someone else add most of the value.
I’m surprised the Swiss aren’t trying to do more joint ventures to develop chocolate making capabilities in Ghana.
You are right, the oldest proven use and origin of pepper is from Mexico, exported from the portugese all over the world...but the chinese and india peppers are still a bit of a mystery.
See also potatoes, tomatoes in European cuisine.
https://foodtank.com/news/2018/08/ghanaian-chocolate-revolut...
But there is a finite number of farmlands available. For asian countries to up their cocoa production, they must take a portion of farmlands from other crops, or burn more rainforest to make more farmlands, neither of which is good in the long term.
Did this work out for Ghana? There are no newer posts since 2018 on this.
Give that cocoa is their number 3 export - and I suspect most of that is in raw form - I really hope this doesn’t backfire. They need foreign currency.
A wiser path might be to build up global chocolate brands in parallel to raw exporting, sort of like we’re seeing China move up the value chain from value-added manufacturing to consumer brands.
But I don't think ghana is going to be doing B2C stuff just yet. I'd assume that they are going to export cocoa products, as it would allow them to charge a much higher price, keeping more money in the country
[0] https://en.wikipedia.org/wiki/Five-Year_Plans_of_South_Korea
That seems like bigger news than the headline.
Surely the cocoa won't just be burned, someone will find a way to process it.
It seems reasonable to me. My understanding is that the ones adding the value, by turning the raw material into chocolate, are the ones making the majority of the profits.
why people do not think nowadays?
source: https://ec.europa.eu/eurostat/web/products-eurostat-news/-/E...
This must be done with caution. Crashing the internal chocolate price will hurt Ghanaian farmers in the short term even as the country attempts to negotiate the country to a better place.
"Governing a country is like frying a small fish" -- Tao te Ching 60
1) Ghana needs capital to build cacao processing plants
2) Foreign investors loans capital and plant is built with skilled foreign labor
3) Once running, plants are staffed by unskilled local labor
4) Ghana has an unrelated financial crisis and defaults on loans
5) Foreign investors take ownership of cacao processing plants through liens
6) Foreign investors threaten to close plants unless they get a free-trade zone
7) Cacao is now processed in Ghana with cheap labor and no export dutieshttps://www.divinechocolate.com/products
A much better model than the Fairtrade scam by which white-savior consultants jet off to poor countries to lecture locals whose backs their fat salaries are extracted off.
Please be aware that the market of cocoa is not an easy one and not very transparent. The Dutch TV maker Teun van der Keuken was devastated by what he saw in Ivory Coast with a lot of child slavery going on. He started his own slavefree brand Tony Chocolonely, but even they have to admit they can not guarantee it is slavefree made, they can only strive for that. By the way, the people from Nestle just shrugged over the issue of child slavery.
I am very happy to see good policy being applied in Africa, they need to do this more often and strongly. Europe and the US, governments and companies, have been pulling their strings far too long. I hope China can give them a sense of how they can fend better for themself.
Coco is sold on world markets as a commodity good. Suppliers can't know what country the beans originated. To get guaranteed slave-free chocolate you effectively have to create your own logistics for that specific purpose. Any chocolate producers that haven't done that will have some amount of slave-produced coco mixed into their supply chain.
China’s influence over Africa to secure it’s own cocoa production?
Article from 2017: https://mobile.reuters.com/article/amp/idUKL8N1K35R1
So looks like China paid up this year and got exclusives, and not Switzerland.
What’s the game, I must know. Ghana is Lord Baelish?
Let me be honest. I prefer European-style chocolate. Milk chocolate. White chocolate. They're much richer, and I hope there will continue to be a great supply of this type of chocolate. Maybe that Swiss brand recognition has more to do with the fact that it actually tastes really good versus what's being attributed to hand-wavy concepts about colonialism and power structures.
There's obviously a market for these sort of "non-European-style" chocolates, which, as you said, are marketed specifically as being associated with countries like Ghana. In NE Asia there's actually a chocolate bar just called Ghana (made in Japan..)! So why shouldn't Ghana try to capture more of the value of that market? I'm sure Swiss chocolate makers can source their cocoa elsewhere, and milk chocolate needs far less actual cocoa anyway.
And also much unhealthier. They contain copious amounts of added, refined sugar. Cocoa can be healthy given it's nutrient profile, but only outweighs the damage added sugar causes if the chocolate is >90% cacao.
Fun fact - there is stark difference between Lindt made in Switzerland and the ones made in EU (had ones from France and Germany, you have to look for fine print in the back since overall design is same). Swiss-made I found unsurprisingly only in Swiss supermarkets, with the price being 50-100% higher than the same in EU supermarkets, but the taste is much, much better. I guess higher quality coca beans are used but not sure here.
They are so good that I don't seek out local/foreign artisanal chocolate anymore, since every single one of them simply doesn't compare (apart from price which can be even significantly higher). Over the years, I've tried many. But this is obviously highly subjective and true only for variants of dark chocolate, I don't buy other types.
[1] https://www.chocolate.lindt.com/our-chocolate/our-brands/exc...
The dark one with sea salt is especially enticing, but I avoid it as well dark chocolate in general, because of the higher stimulant content. It makes me wonder how much of dark chocolate's growing popularity has to do with the stimulants it contains. As I tried to elude to by mentioning my prior experience at Whole Foods, I have broad exposure to different foods, i.e. I really do understand how satisfying a bag of bitter raw cocoa nibs can be. I j
I assure you, a bar of dark chocolate with "fancy" spices has never expired in my pantry. The Swiss stuff is ok, if your palate reached maturity at seven years old†.
† this is not my actual opinion. I'm ribbing you.
Someone else here mentioned Lindt. Their Lindor truffles are often on sale in CVS Pharmacy and similar locations in the US. These treats are very popular, and people really enjoy them because of the pseudo chocolate ganache in the center. Real chocolate ganache is made with butter, which isn't so common in Africa. Less availability of butter in Africa leads me to think that we won't see chocolate ganache-inspired products coming from Africa. The hotter weather of the continent makes me wonder if chocolate meant to melt in your mouth like ganache-inspired products will really take off there. Of course I would like to be surprised here, but I will just keep buying the Swiss stuff until then.
The main risk will be if their domestic chocolate producers aren't able to pay enough to Ghana's cocoa farmers, and instead of creating a chocolate industry they decimate their cocoa farming sector. Hopefully they have gotten their ducks at least somewhat in a row before they started this.
Also it prevents from having internal competition between exportation and internal refining, as exportation is easy "right now" money while refining will take time and investments.
I immediately looked up the first 2 most locally famous companies I could think of ( https://en.wikipedia.org/wiki/Chocolat_Frey + https://en.wikipedia.org/wiki/Cailler which in this case made me read https://cailler.ch/en/about#sustainability ) and in both cases they mention "UTZ Certified" ( https://en.wikipedia.org/wiki/UTZ_Certified ):
UTZ, formerly called UTZ Certified, is a program and a label for sustainable farming. The UTZ label is featured on more than 10,000 product packages in over 116 countries. In 2014, UTZ was reported to be the largest program for sustainable farming of coffee and cocoa in the world. The UTZ program addresses agricultural practices, social and living conditions, farm management, and the environment.
So, from the point of view of sustainability (quality of the product, quality of living of the producers, etc...) the swiss products should be ok, which should be a good thing, right?
Therefore, if general sustainability is OK, then the local companies (therefore, indirectly "the government") shouldn't have problems developing/evolving that kind of industry? Or maybe not?
I'm writing this because I don't understand why such a drastic measure ("stop selling to Switzerland!") is being adopted. I guess that if Ghana does that then Switzerland will just switch to other producers - it will take some time&effort to ensure the same standards (for the quality of both the product & farming) but it's doable => I miss seeing the advantage here for Ghana, as they won't be able anymore to sell their "higher-priced UTZ-certified product" to Switzerland (my assumption is that what they're selling is UTZ-certified).
Am I being naive? Am I overlooking something, maybe simplifying stuff too much?
Building up local industry sounds like a good approach for the long term (though, contra the article, inevitably at a short term cost); the simplistic free trade arguments discount the value of developing industry within the country. A ban is a very blunt instrument though; a tariff (perhaps gradually increasing over time) seems like a better approach that would help the country gradually transition while avoiding shocks.
Banning the export of a commodity is very hard. It works when the supply could be drastically reduced in the short term (1973 Arab oil embargo), or when the product has already failed in the market and they need government intervention to save face (recent Russian ban on raw timber export). In any other case, the goods will always find a way through the controls to meet the demand.
This response is a good thing. I hope they succeed, its as steep hill to climb making good chocolate from cocoa.
Wouldn’t be surprised if there’s a coup in Ghana soon, not least because a lot of rich exporters will be angry.
There is a parallel with tea. At one time, people thought in terms of "English tea" or "French tea". In recent decades, western people are much more acquainted with Japanese and Chinese tea directly. It is no coincidence that this stuff is fresher, more varied, more affordable...
I'm hearing about a surprising number of interesting, value-adding cryptocurrency projects based in Africa. In the meantime, the developed world is obsessed with economically useless trends like virtual sushis, pancakes and NFTs...
https://en.wikipedia.org/wiki/Huissier https://de.wikipedia.org/wiki/Weibel_(Amtsdiener)
:)
This site had it all. I think I had something like 4 or 5 overlaying popups/infocards, plus ads. When I tried to scroll it redirected me to the next page, and then it hijacked the back button on top of that.
Revisited to count the garbage: Donation beg, cookies, sticky ad on the bottom, "Add to home screen", "install our app", notification bell button. White space in the content area, with an ad underneath. No content visible at all.
This is not true.
He only said they are going to try and process some cocoa in Ghana.
"we intend to process more and more of our cocoa in our country" https://youtu.be/gs_dD7qKfX8?t=317
It'll take decades and they will grow more to supply both markets, if their market is successful.
What's with the hysterical headlines - "Awkward moment when President of Ghana says they intend to process cacao", "Ghana will no longer sell cocoa to Switzerland", "Ghana President shuts down Swiss President", "Ghana President Publicly Denied Cocoa Export to Switzerland."
I thought maybe short sellers, but I can't see a link.
Is it just some addictive meme, I guess the random covid bits are like an attack vector or something?
Depending on how the markets react, prices may go up, and many of the really cheap brands could disappear from the shelves, or just have their fat/sugar contents increased. There's also a non-zero chance that new African brands will grab a part of the low-end of the market, with protectionist measures implemented to respond to them.
And I don't see why the big markets (EU, US) would want to protect Swiss companies.
Now, if other African countries tried doing this to the EU and re. other raw materials on the other hand...
Ghana's electricity supply is 51% fossil fuel, whereas Switzerland is 2.5%.
But its a lot easier to build solar plants in Accra than in Bern...
I think that Europe is at a fundamental disadvantage over the medium/long-term, due to the burden of its welfare states.
Its surprising to see that taxes over basically all categories are lower in Ghana than in Europe (except corporate taxes).
The minimum monthly aged pension is €6.60 in Ghana, vs €1,080 in Switzerland. Life expectancy is 20 years longer in Switzerland than Ghana, but the retirement age is only 4 years later.
The end effect of these extremely early and generous pensions is that economies become stratified, to ensure that these pension payments are maintained, and taxes are heaped on individuals to pay for it.
Europe needs a widespread increase of the aged pension age to 70, cease all migration from regions with high usage of welfare state service, and begin a large, multi-generational modular nuclear power plant building plan.
That said, the potential for Ghanaians to thrive is astounding. Incremental improvements will yield incremental gains. It is a tropical paradise emerging from the weight of poverty.
Also, the mangoes are hands-down the finest I have ever tasted.
If you look at this list, you'll know something is horribly wrong with these economies: https://en.wikipedia.org/wiki/List_of_countries_by_tax_reven...
The ones at the top are all European except for Cuba...
However I think Ghana is in the wrong here because extorting other nations to give them anything free of charge by withholding trade goods will simply means that the trade goods will eventually be sourced elsewhere.
Regardless what you think about rich vs poor, medicine vs goods, and such, IP is property and using a world wide organization to deprive another of their rights is never a good idea. (no whataboutism please). Yes it is medicine, yes it is important, but that does not mean it has to be free. It should be something that can be negotiated but going nuclear in trade never benefits anyone and usually affects the poorest of world the most.
My suggestion, just up the LID
[0]https://www.uncommoncacao.com/blog/2020/10/20/the-lid-in-gha...
What about access to cocoa not being a right?
Coco is special in that production is limited.
Thus it makes sense to roast closer to the time when the coffee is made available for sale; shipping from African countries up to Europe, would increase the "latency" a great deal.
I'm sure modern packaging gives a decent shelf life, and TBH I don't worry much about the use-before label on coffee around here, but that's generally because it doesn't last long on the shelf anyway. :)
If you think you're not being paid enough, increase the price along with creating your own products. It seems weird to me to not let foreign countries buy your raw materials just because you want to produce more stuff yourself.
It's not like I will start buying chocolate made in ghana because they don't want to sell their cocoa anymore. I will still buy from the brands I like and are used to most of the times, which is a local brand.
Who makes that decision? Cocoa slavery is a thing because the economics of raw material pricing is complicated by many factors but the demand is very simple and very high.
I'd expect the price for beans as-delivered to Switzerland is likely to go up. The price for beans as-offered in Ghana is likely to go down. The latter matters more to Ghana cocoa farmers.
Depending on how big the export is in relation to your economy, it can certainly have a negative effect: https://en.wikipedia.org/wiki/Dutch_disease
That seems to be what happened with Mars and Hershey (i.e. a price increase) though put in the terms of not paying farmers enough and trade war. It's unclear to me whether Mars and Hershey are now getting less cocoa than they did because cocoa is being diverted to domestic production, or the same amount and paying more.