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Comment by oblio | Hacker News Reader

> So the book argues that when developing countries are pressured into free trade agreements

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).

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That's where China was smart I guess. They didn't sign any treaty which forced them into free trade or IP protection, but instead slowly allowed their industries to build up via IP theft and strong protectionism. Now they have giant companies on par with the West's. Whereas everyone who joined the EU in the decade of 2000 (and the Washington Consensus before that in the nineties) is now a pawn of the Western capital with no clear path of escaping the trap of mediocrity.

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.

They did sign those treaties (e.g. with WTO membership), they just ignored them.

And no one cared, it something that needs to be reckoned with.

They didn't exactly ignore them.

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.

I really think China is making a huge mistake actually. See how TSMC (Taiwan) and Samsung are free to buy ASMLs EUV machines, while China is blocked. Part of that is due to their rampant IP theft. Why sell machines to China if they're just going to copy them?

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.

> See how TSMC (Taiwan) and Samsung are free to buy ASMLs EUV machines, while China is blocked. Part of that is due to their rampant IP theft. Why sell machines to China if they're just going to copy them?

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 people who think China can be contained are being naive. As an academic, I am extremely impressed with the improvement in scientific publications in CS out of China of late. In 10 years, they are now killing it on a consistent basis (personal anecdote: a paper from Tsinghua or Shanghai Jiao Tong on average is as good as one from Berkeley, Stanford or MIT). I have a feeling it has to do with the reality that Chinese nationals (or people with some ethnic/language connection) are an integral part of cutting edge science globally. It is extremely do-able to entice these individuals back. Western countries have severely under invested in research .. even back when I got my PhD (like a decade ago), my job packages were far superior in Asia (not just China) than in the West.

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.

> (personal anecdote: a paper from Tsinghua or Shanghai Jiao Tong on average is as good as one from Berkeley, Stanford or MIT)

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...

Those links provided doesn’t seem to have anything to do with Berkeley, Stanford nor MIT?

Also, only one of them has anything to do with theft. The other two are simply unrelated news stories about people with links to China - one was a US researcher who may have lied to get a visa, the other simply a "policy breach".

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.

The IP theft is indeed quite 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...

>> See how TSMC (Taiwan) and Samsung are free to buy ASMLs EUV machines, while China is blocked. Part of that is due to their rampant IP theft. Why sell machines to China if they're just going to copy them?

> 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.

Israel seems to be selling chips to Chinese companies and weapons to Azerbaidjan unhindered by US pressure though.

https://www.nbcnews.com/think/opinion/cheap-drones-china-tur...

> I really think China is making a huge mistake actually. See how TSMC (Taiwan) and Samsung are free to buy ASMLs EUV machines, while China is blocked. Part of that is due to their rampant IP theft. Why sell machines to China if they're just going to copy them?

Because China can waggle a huge target market to tempt people into repeating well documented mistakes

I think it's healthy to have a diverse set of mid and upper market companies. Chinese companies will ultimately buy their way into up market businesses. One antidote that I can readily think of is the acquisition of the street wear company Bape buy a the Chinese/Hong Kong manufacturer I.T Group. Forbes magazine is another company that was acquired by a Chinese company.

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

Hong Kong companies have better brand reputations than Chinese companies but gradually there are more Chinese brands gaining better reputations.

I would expect this to continue. In fact, there are probably a few brands that are Chinese that you don’t realize are Chinese.

I’m not sure the whole swallowing of Hong Kong (and ignoring the two systems one country thing decades before it was set to lapse) is helping with brand reputation.

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?

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.

I think it's also fair to note that "Africa" is a huge place with huge income distributions. I can see South Africa and North Africa aligning more with the West, and East Africa going more to China.

I doubt it. There's already lots of african resentment towards china's particular brand of economic exploitation. There have been murders already.

> Part of that is due to their rampant IP theft

Weren’t South Korea, Taiwan, and even Japan once known for their rampant IP theft?

The US was to and not that long ago.

>Japan once known for their rampant IP theft?

Yes they stole even IBM Mainframe OS's repeatedly....and sold it.

IP theft allowed China to acquire much needed technical know-how and to build up their manufacturing industry.

Uuh have you not heard of xiaomi or oneplus? They're already creating high value goods.

DJI drones is another example

Indeed. My 4 year old Oneplus phone taught me that China can make a phone just as good as anyone else. It's a quality product and was at a great price.

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.

> 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.

> 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.

Isn't Apple extremely well known for it's production lines being in China?

Yes but apple users casually happen to ignore that fact when it comes up

well, it's still better than buying stuff from Chinese company if you are trying to "de-chinaze". Also, I don't think you have any other option. ah, aren't samsung phones made in South Korea? so you do have alternatives.

The 1 child policy is probably a big issue but IP theft is partly how the US industrialized. The textile mills of the North that kicked off industrialization in the US was based off of IP stolen from Britain. In fact, many of the practices that the Chinese are using were also used by the Americans: smuggling plans, hiring key employees, tariffs, etc.

https://www.realclearmarkets.com/articles/2018/07/30/ip_thef...!

http://web.mit.edu/heikki/www/antebellum_tariff_draft1.pdf

Even domestically, the reason Hollywood is the center of the film industry is because California was too far from the East coast for patents on moving picture cameras to be effectively enforced.

I thought it has more to do with weather, particularly ~300 sunny days per year.

It was a bit of both. I think I first read about this in Lessig's Free Culture [1], but even Wikipedia mentions some of this: somewhat ironically because of the MPAA's current heavy-handed tactics, Hollywood was founded on piracy and patents infringement. Some moviemakers moved West to explore new territories and climates (Wikipedia mentions D.W. Griffith) but others soon followed suit in order to avoid Edison's patents. It can be argued that Hollywood was made possible by people who broke the law [2]

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...

> "without copyright there will be no writers"

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.

That's ostensibly for the translator (of course it's more for the publisher). You can get (typically Edwardian-era or earlier) public domain translations, or the original Latin, for free in lots of places.

I read it in russian, and I specially checked that russian translator died almost a hundred years ago.

Ah, yes that was rather Anglocentric of me, apologies. And that's a lousy situation--any idea why that's the case?

They have a public domain English translation free at gutenberg.org

"but without copyright there will be no writers"

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?

Isn't the underlying problem here the idea of Intellectual Property doesn't really correspond to real property? If I have an ax I use to provide lumber to our town and you steal it physically from me, that's theft. But if you see my ax, understand how it works, and make your own to also cut lumber, is that really theft? Or is it net beneficial to the town, as now people have more cut lumber to choose from and perhaps lower prices? However, if I lobby to get an IP law, how does that serve the community? It only protects me from competition.

The theory is that nobody will invest in e.g. researching how to build a complicated lumber cutting machine if they don't have protections against their competitor copying the results.

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.

Certainly depends on your utility function and the degree to which the ends justify the means. Is it good to steal from an apothecary to treat your ill wife? etc.

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

One might argue that the us did it in a time where markets weren't really developed on a global scale like they are today, so that comparison is only valid to a certain degree.

Some protection is good but there is this sort of hedonic drive to keep extending protection even though only a certain amount is needed to keep industries alive. At that point it is purely a wealth transfer.

It depends on how much the invention cost in the first place.

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...

fact remains, that there are dificlties.

Are you a troll? The difficulty is clearly not coming from chinese IP theft but american fear.

> See how TSMC (Taiwan) and Samsung are free to buy ASMLs EUV machines, while China is blocked.

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.

>"...Part of that is due to their rampant IP theft..."

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.

The one child policy is an example of a highly organized authoritarian society making a big, potentially fatal mistake, because no real debate with genuine dissent could be had.

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.

> But at the same time they don't have the positive image and reputation needed to be a big exporter of high-value goods.

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.

How can you compare China (population ~1.4bn) to any EU country (population average ~10mn - several orders of magnitude less, even in the case of the largest country)? Size is an advantage, not a disadvantage!

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.

Unfortunately for us the US will first need to learn that it’s better to keep US citizens out of prison, being productive in the workforce than locked up.

Broken window fallacy rules US economic thinking. Just that the broken windows are the lives of the prisoners and their families while the profits go to privatized prisons and their investors.

“several orders of magnitude less” for values of “several” equalling 2.... no need for the extra hyperbole.

Funny you say that because exactly the opposite thing happened to China. They were completely taken advantage of in the 19th century and didn't fully recover from that until a 100 years later when Nixon and Kissinger in one of their "4D chess" moves restarted diplomatic relations as a way to limit the Soviets.

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.

A popular revolution in 1989 China would have restored Chinese culture. It was the CCP that squashed it.

> A popular revolution in 1989 China would have restored Chinese culture. It was the CCP that squashed it.

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.

Sooner than that I’d even say. Even a China with GDP per capita 1/4 of the US would pass that bar I think. 1/2 the US would make quality of living comparable to the US, given how relatively bad the US is in QoL, if you assume an urbanized priority vs suburban

> Whereas everyone who joined the EU in the decade of 2000 (and the Washington Consensus before that in the nineties) is now a pawn of the Western capital with no clear path of escaping the trap of mediocrity.

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.

Life in the Czech Republic is fine, as far as I am concerned. No violent places like Chiapas in Mexico.

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.

Yeah, I agree. I did not mean for someone from Czechia to take it personally. I am sorry about that and I will do better and be more considerate.

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.

Also a Romanian here. My take is similar to yours, but I would go even further in saying that the 90s were even more catastrophic in terms of privatization and liberalization. Remember the 'shock therapy' years? Prices doubling every few months? Entire industries collapsing, prized factories being sold for scrap metal? Millions losing their jobs etc. - a lot of that stuff didn't have to happen that way. A lot of it was forced via Washington Consensus type reforms.

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.

In the long run, free trade might not be a cost...

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 Poland some share similar sentiment, but it was better to get rid of of all these inflexible, low quality companies than providing them with life support. Problem was with management and technology. You would need to get rid of whole management hierarchy, and at that time there was nobody who could replace it. Some relicts from communism still lingers here and there, for 30 years after fall of communism unable to turn profit. Or corrupted managers moving ideas or technologies to “friendly” companies outside. If you allowed these companies to exist there would be a more chance for forming oligarchies like in Ukraine, instead of that we have more robust middle class.

I don't know the situation in Poland very well, but I think in general in Romania you (assuming you're Polish) are perceived as a success story.

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).

That's a story told by the neoliberals. Meanwhile, a some of the communist-era companies survived and are thriving: PKO BP, Orlen, LOTOS, KGHM, PGNiG etc. The post-communist management and culture didn't prevent them from transforming into basically modern companies that aren't different from their foreign competitors.

one bank, 3 distribution companies, and one from mining segment. I wouldn't call this a success.

I've been in Massachusetts for a while, which is a small American state. And guess what? 20 years ago there used to be many more local supermarket chains, that over time were increasingly absorbed or destroyed by massive national chains. I feel like this same story plays out all over the world, except that when you have countries like in Europe it feels like a more personal type of event e.g. "those foreign superchains are out to get our local wholesome stuff." But in reality maybe it's mostly just business.

Romania still has at least one local supermarket chain I can think of: Oncos. I’m not sure how many locations they have outside of Transylvania, though.

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.

That's on our government.

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.

Well, it's a matter of leverage, isn't it?

Fellow Romanian here, a person very close to me died of heart-failure in the middle of the street in downtown Bucharest 10+ years ago, not a block away from her employer's HQs at the time. She was in her early 40s, her employer was BCR (the bank that had just been acquired by Erste), and said close person had had a few fights with the new Austrian rulers to be, she was part of the bank's trade-union body, she didn't want her colleagues' jobs to go away after the purchase. The jobs did go away after the purchase, in droves.

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.

My far relatives (but still the same last name) drilled oil in Romania before you could even call it really drilling, it was more like bucketing from what I was told. Maybe it was a bit exaggerated though the job was probably quite dangerous anyway as my relative almost burned to death. He was really lucky to survive with the burns he had - almost his whole skin was gone. The positive thing was, he grew a continuous layer of new skin and until his death looked very young.

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.

I'm from a country where there are several locally owned supermarkets. They're all very nice but eye wateringly expensive. I'd love if Aldi/Carrefour/Costco moved in.

This is the counter argument. By protecting an inefficient sector you make it harder for every other sector to operate. If Ghana moves to protect their Chocolate manufacturing that will likely come at the expense of their Cocoa growers.

The best way seems to start with low level work and move up the chain.

> that will likely come at the expense of their Cocoa growers.

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.

I think the quality of beans in Ghana is improving but they are still significantly behind Central and South America. As someone who worked making high quality chocolate in the US, people are less likely to invest in exploitative cacoa production just as much as low quality beans.

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.

This. People in the US love to talk about how sad it is when mom and pop groceries stores close but people are just voting with their wallets.

>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.

That's already known factor though. The reason of the free movement of labour to make up for capital movements like these.

> Do you know why I know them? Because there are 0 (zero!) local supermarket chains left. They've all been bought by foreign companies.

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?

Sort of yes. While a lot of the benefits of the development that comes with the growth of the grocery industry in Oregon will stay local, the surplus will not. It ends up in Ohio or inside pensions or investor pockets.

But this isn't a great analogy because the U.S. federal government keeps interstate trade much more homogeneous than the EU.

> the U.S. federal government keeps interstate trade

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 =)

"They've all been bought by foreign companies."

But were the local owners forced to sell? And is there an actual issue with them selling to foreign companies?

Are those supermarkets really all that French or Belgian anymore?

In practice, many large companies are owned by investors from all over the world looking for diversification.

The specific ownership and the details are irrelevant, what matters is that a large chunk of their profits is extracted out of the country and doesn't get reinvested.

Is that really true? The international supermarkets may chose to invest by open new stores....secondly, they had to buy the local supermarkets in the first place...that went somewhere...maybe that was reinvested locally. It is not clear cut.

> they had to buy the local supermarkets in the first place

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.

Thats not how the economy works. Walmart profits don't get "invested" in the States. They get invested into Walmart. The wages and taxes those wages fuel always gets applied locally. Nothing is being "extracted". Thats just nationalist bullshit used to fuel protectionism.

If the very well paid jobs stay in the home country, how do you call that?

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.

AFAIU, neither wages nor investments count as profits - those are paid to owners / shareholders.

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.

So if wallmart buys a chain that wasn't competitive because they didn't decided to have wages so low their employees require foodstamps do you think that helps the local economy?

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.

The top management for sure is French/German/Belgian. At least big chunks of it. And the owners (individuals/companies) are French/German/Belgian.

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.

Yep. The story about large corporations being totally nationeless is a pure fantasy. For example, just a couple years ago Fiat-Chrystler decided to move production from one of its best factories in Poland to one of its worst (in terms of quality and costs per unit), located in Italy. It made zero sense for the business and was only made as a favor to Italian politicians.

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.

> It made zero sense for the business

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.

Aldi the 3rd (or 4th) biggest supermarket chain is still owned essentially by the Aldi families (there are in fact 2 Aldi chains, because the brothers could stand each other.

They are planning to fuse the two companies together btw. - both brothers have been dead for years now.

https://www.manager-magazin.de/unternehmen/handel/aldi-nord-...

Especially if the Romanian chains were bought with stocks.

WW3 was fought with soft power and economics. Now some countries own other countries and nobody is complaining.

I hear quite a lot of complaints from all sorts of people about their economic victimhood. I've got complaints myself about what global economics are doing for our prospects as a species.

Considering that at the end of WWII, large swathes of global population were subject to colonial rule, particularly in Africa and Asia, I wonder how the current situation you describe compares.

Soft power and economics have been used as weapons for centuries Do you really think that their current or recent use is enough to warrant the moniker “WW3”?

I don’t

Similar things are happening in Croatia.

To the point that when I traveled around a couple of years ago along the coast, most people I met along the way seemed to be more confortable speaking German than English.

Serbian/Croatian/Bosnian/Kosovar familiarity with German is something that dates from the era of Yugoslavia, it has little to do with corporate sway in the modern EU.

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.

Yeah this was about 10 years ago. Thanks for the overview.

Althought I did see enough Lidl and Aldi around.

As far as I know the history of my country Croatia familiarity with Germanic nations dates from Habsburg Monarchy[1] meaning 300+ years.

[1] https://en.wikipedia.org/wiki/Habsburg_Monarchy

In Hapsburg times, only a fairly small elite outside of Austria knew German. Most people in the Empire knew only their own language (or sometimes e.g. their own language and some degree of Hungarian). It wasn’t until after the fall of the Austro-Hungarian Empire that the average person – due to modern state-schooling curricula, business contacts with German speakers, or going to work in Germany – began to know German.

There is quite a body of scholarship on the sociolinguistics of the Austro-Hungarian Empire, if you are curious.

Public/state workers had to know German, military personnel had to know German and as the education system was building in Habsburg Monarchy and Austro-Hungarian Empire children and university students were learning German. There are more than 2000 German words in Croatian language today dating back from Habsburg Monarchy and Austro-Hungarian Empire.

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.

Public/state workers and university students were a small elite until the 20th century, as were schoolchildren until a fairly late date. Also, the demographics you speak of were males, meaning that you are leaving out a half of the population.

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.

Speaking of the Ottoman empire, when I watched a Turkish show recently I was surprised to hear a number of words I had no idea were Turkish origin. (Well, could be the other way around too I guess. But they sounded Turkish.) Sanduk, čizma, budala, paramparčad, kapija, sandžak, inat, kutija, ajde just off the top of my head.

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.

When I visited Croatia I got the impression that many older locals liked me and Germany in general. I came to realize that this does not have to be a good thing when people started to speak positively about Hitler :( Apparently, many Croatians are Nazi sympathizers and in the same vein dislike England. At least that's what my croatian friend told me.

As a counterexample, the US has 50 states, and no internal protectionism. Yet there are no "colony" states.

puerto rico?

Is not a state.

The starting point for the US states is/was much closer than that of random countries around the world, to each other.

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).

The original 13 colonies were pretty diverse. For example, some of them had slave economies and some didn't. That's a huge difference. Even today, some states are much larger than others, some are very populous compared to others, some are resource intensive others are manufacturing intensive, different ethnicity populations, etc. Their economies are diverse.

> 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.

You sidestep the security aspect.

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?

I infer then you agree that free trade does not convert countries into colonies.

Free trade rarely is as free as in theory, was my point.

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? :-)

Still didn't turn them into colonies, despite free interstate trade.

Your thesis was free trade turns countries into colonies. It clearly doesn't. It's other things that turn countries into colonies.

Not the previous commenter but do you recognise that these things can hamper local economies?

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

Do you have a counter factual?

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.

It's hard to say, but...

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 :-))

Neither Hong Kong or Singapore are or were particularly protectionist and largely utilized their location to be entrepôt economies and port cities. They both lack a domestic industrial base and heavily rely on being attractive location for multinationals.

> Do you know why I know them? Because there are 0 (zero!) local supermarket chains left. They've all been bought by 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.

So keep your money in a Romanian bank and buy locally sourced goods when there are alternatives available. I'm not talking about bananas.

In 2002-2005 I worked with all the supermarket and hypermarket chains in Romania, I still have a couple of friends in CxO positions in the top 5 companies; you are missing the full picture on what happened there, but the story is too long for a comment here; the 2007 change had zero impact of what already happened in the early 2000s.

I wanted to keep it simple for non-Romanians. The process started as Romania was implementing the EU acquis, after 1999.

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.

That is the point, the main idea is wrong. The 2 major factors were lack of experience of the Romanian owners (I had very close friends that worked at the failed Univers'all chain, it was total chaos) and capital to build the right format at the right quality.

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