Economic Development: From the Roof, or From the Foundations?

An interesting thread by Kamil Galeev:

Why the USSR failed? There are two ways for a poor, underdeveloped country to industrialise: Soviet vs Chinese way. Soviet way is to build the edifice of industrial economy from the foundations. Chinese way is to build it from the roof. 1st way sounds good, 2nd actually works.

To proceed further, I need to introduce a new concept. Let’s divide the manufacturing industry into two unequal sectors, Front End vs Back End: Front End – they make whatever you see on the supermarket shelf Back End – they make whatever that stands behind, that you don’t see
Front End industries are making consumer goods. That is, whatever you buy, as an individual. Toys, clothes, furniture, appliances all falls under this category. The list of top selling amazon products gives a not bad idea what the front end sector is, and how it looks like.
Still, the production of ready consumer goods comprises only the final, ultimate element of manufacturing chain. The rear part of the chain remains hidden from our sight. We call it the Back End Back end products are not recognisable. You never bought an SMX 700 radial forge.

Read the whole thing.

I’m reminded of something Peter Drucker wrote in 1969:

In any aid program, the economist, especially the development economist employed by government, tends to impose his own values on the choice of priorities and projects. Understandably he likes things that look big, impressive, and “advanced”: a petrochemical plant, for instance. He likes the things he knows the poor “ought” to have. He has nothing but contempt for the “frivolous,” e.g., small luxuries. In this respect there is amazingly little difference between the Russian planners and the economists in the governments of the most “capitalist” nation.

The factory girl or the salesgirl in Lima or Bombay (or the Harlem ghetto) wants a lipstick. She lives in a horrible slum and knows perfectly well that she cannot, in her lifetime, afford the kind of house she would like to live in—the kind of house her counterpart in the rich countries (or the white suburbs) can afford. She knows perfectly well that neither she nor her brothers can get the kind of education they would like to have. She probably knows perfectly well that—if lucky—she will marry some boy as poor as herself and as little educated who, within a few years, \vill start beating her out of sheer despair. But at least she can, for a few short years, try to look like the kind of human being she wants to be, respects, and knows she ought to be. There is no purchase that gives her as much true value for a few cents as cheap cosmetics.

A cosmetics plant gives more employment per dollar of investment than a petrochemical plant. It trains more people capable of developing and running a modem economy. It generates managers, technicians, and salesmen. Yet the economist despises it. And the reliance on aid makes it possible for his moralism to prevail over economics and for his desire for control to prevent development.

(The Age of Discontinuity)

Of course Drucker understood the importance of the petrochemical plant; his argument is that things work better when the petrochemical plants are called forth by the cosmetics factories and other consumer-facing businesses, rather than planned from the top.

I don’t think the above points just apply to poor & undeveloped nations.  In the US, the development of the computer and semiconductor industries benefited greatly from the sales volumes and technical challenges created by the computer game field…which is not the kind of thing that a central planner would be likely to earmark as a critical industry for the future.

In a market economy, ‘industrial policy’ intended to spur vital industries via subsidies and tax incentives will often seem to make sense–the US certainly does need it own ability to produce high-end chips, for example–but carries the danger of starving other industries of investment dollars and talent. And some of those industries may turn out to have been just as critical, or more critical, than the ones focused on by the industrial policymakers.

Worthwhile Reading and Watching

The Middle Ages may have been more colorful than usually thought, based on an inventory of garments belonging to people in medieval Valencia.

Memnon of Rhodes says “There is a subset of the US precariat class that is quickly becoming the new face of genteel poverty — characterized by a combination of high academic achievement and poor financial prospects (think post docs, academics, journalists, nonprofit staff).”. Noah Smith opines “This is the Bernie base. They are people who *could* get high paying jobs thanks to their general intelligence and education level, but are downwardly mobile due to some combination of emotional problems, chasing “cool” professions, disdain for the business world, and laziness.”

I note that to the extent these people earn over $150K and lives in dense urban areas, they will be categorized as ‘elites’ according to a categorization used in a widely-circulated Rasmussen survey of political attitudes.

(I never heard the term ‘precariat’ before, but it seems useful)

Bad election narratives, by Musa al-Gharbi, summarized and discussed at the Assistant Village Idiot’s blog.

Glenn Reynolds: Is AI Coming for Your Kids?  The example of the kid asking ChatGPT about how cars are made, and then talking with it about counting, is impressive, and there is obviously a lot of value in this kind of thing. But, the possibilities for the ‘nudging’ of political, social, and philosophical attitudes, in the direction desired by the creators of the system, is immense. See my post Stories and Society for some related thoughts.

Canada: the ongoing disaster and the possibilities for change, at Stuart Schneiderman’s blog, along with several other interesting items.

Several discussions going on about the the prospects for manufacturing in America:

Andrew McCalip says “We have an existential manufacturing problem in America.”

Zane Hensperger writes about reindustrialization and especially about machine shops.

Bill Waddell has several essays at LinkedIn, including Manufacturing in the Age of Tariffs, The Ethics of Free Trade, and 12 Million Middle Class Jobs Sacrificed on the Altar of Globalization.

Marc Andreessen says “From near total dominance in manufacturing to near total dominance in technology. What happens if we dominate in both? Let’s find out!” 

For contrast, a WSJ article: Factories Aren’t the Future.  I do wonder whether, when thinking about factories, the economist who wrote the article visualizes processes like this.

And finally, watch this mountain lion experimenting with a swing.

Happy Thanksgiving to all!

Vectors of Societal Destruction – and the Growing Pushback Against Them

In Thomas Pynchon’s novel Gravity’s Rainbow, one of the characters explains a  ‘European-style gangster hit’,  which he says consists of three shots: head, heart, and stomach.  Yes, that should definitely ensure the target’s demise.

It struck me that this comprehensive approach to high-certainty murder provides a pretty good analogy for some of the malign happenings in America and in many other Western nations, and I wrote a post on that theme last year.  In my analogy, ‘stomach’ represents the basic, essential physical infrastructure of society–energy and food supply, in particular.  ‘Head’ represents the society’s aggregate thought processes: how decisions are made, how truth is distinguished from falsehood.  And ‘heart’ represents the society’s spirit: how people feel about their fellow citizens, their families, friends, and associates, and their overall society.

Over recent years, all of these things are under assault…and, given that 2024 is an election year, I think it’s fair to note that the ideology of the Democratic Party is a major factor in driving all of these malign trends.

Stomach: The suicidal energy policies of Germany could serve as a poster child here, but similar trends are in place in other countries, although mostly not so far along.  (The US state of California seems to want to be next on the list of bad examples.)  The destructive farming policies of Sri Lanka, implemented with the enthusiastic cheerleading of Western experts, now have echoes in Canada and in the Netherlands. And energy and agriculture are of course closely coupled…for the production of fertilizer, for the operation of farm equipment, and for the transportation of supplies to the farms and the transportation of agricultural products to process and distribution centers and ultimately to consumers.

Nearly all physical goods and products come ultimately from farms or from mines. At least in the US and in much of Europe, regulations and litigation have made it very difficult to open new mines and even to keep existing ones in operation. Yet there are very extensive materials requirements for the wind, solar, and battery systems required for the envisaged ‘energy transition’…and the answer, if one asks where these materials should come from, seems to be only ‘not from here.’

Pressuring people and entire economies for maximum use of wind and solar…while at the same time amping up the difficulties and disrespect facing the people and companies involved in the extraction and processing of the necessary materials…is a sure recipe for shortages and Greenflation.

Speaking of disrespect, the American businessman and politician Michael Bloomberg, has made some rather remarkable assertions about both farming and manufacturing.  With regard to farming, he said:

“I could teach anybody, even people in this room, no offense intended, to be a farmer,” Bloomberg told the audience at the Distinguished Speakers Series at the University of Oxford Saïd Business School.  “It’s a process. You dig a hole, you put a seed in, you put dirt on top, add water, up comes the corn.”

…and regarding manufacturing:

“You put the piece of metal on the lathe, you turn the crank in the direction of the arrow and you can have a job. And we created a lot of jobs.”

All of which elides the vast array of knowledge and skills required in order to do either farming or manufacturing successfully. I doubt that Bloomberg, for all his knowledge of information technology and finance, has much comprehension of any of these areas.  What he projects here is a feeling of contempt for people who are involved in the physical world rather than his own symbolic world of information technology and media.

Journalists and politicians, in particular, seem to have little grasp of those essential technologies, which I have metaphorically classified under ‘stomach’, even at the most fundamental levels.  And too many political leaders think…even while preaching about their respect for Science, that they can ignore people with actual, practical experience with energy and the other technologies which they wish to control.  For example:

Trudeau’s green hydrogen announcement, as big an international energy policy statement as there has been in memory, was held far from Canada’s energy heartland, and included no one from the energy sector that is currently shouldering the load.

Not only were they not invited, but Trudeau went out of his way to make an absurd statement about the lack of an economic case for LNG that was akin to a drama teacher going on stage at the Detroit Auto Show and telling the audience to get rid of all their wrenches because he didn’t think they were needed anymore.

Head:  The cognitive methods that have made Western societies thrive are under assault. Such benign things as asking students to get the right answer and to show their work are denounced as racism.   Debate and discussion have become difficult as disagreement is often perceived as a threat.  In law, the adversary system itself is under attack as lawyers are pressured not to represent unpopular clients…something that has long been the case in totalitarian nations and in areas dominated by mobs and by lynch law.

A vital part of the toolkit that has driven progress–social progress as well as technological progress–has been the open discussion enabled by the spirit of free speech.  This is under severe attack, not least on university campuses.   A recent Quillette article provides multiple data points on campus hostility to allowing speakers whose view might offend somebody. Link   A 2017 study, based on a sampling of all US registered voters, shows that 30% of Americans favor banning speakers “if the guest’s words are considered to be hateful or offensive by some.”   Among Democrats–and professors and administrators are much more likely to be Democrats than to be Republicans–the corresponding number is 40%. And for Democrat women–a demographic which is in the ascendency in key roles on campus–the opposition to free speech, as measured by the above question, is 47%.   Link  Not a hopeful sign for the future of campus free speech or for the direction that American society will evolve as students who have come of age in its universities move out into the wider world.

In science, ideas and conclusions which conflict with established views and prestigious people are increasingly likely to be condemned and suppressed as ‘misinformation.’  This paper Link argues persuasively that identity politics and censorship go hand in hand.  Major scientific publications are now evaluating submitted papers based on (what someone thinks are) the moral implications of the proposed conclusions, not just on the truth or falsity of those conclusions–see Alex Tabarrok’s recent post as well as this Quillette article.

There are of course precedents for this kind of thing.  As the blogger Neo notes, “The Soviets actively squelched science that contradicted certain political messages they wished to get across.”   The agricultural catastrophe that was brought about by the nonsensical but politically-correct and politically-enforced theories of Lysenko is well-documented history, but the damage is much broader than that.  This article mentions that the Soviets at one point banned resonance theory, in chemistry, as “bourgeois pseudoscience.”  The field of cybernetics–feedback systems and automatic control–was at one point denounced as “a misanthropic pseudo-theory”, among other things.  (It is interesting to note that “few of these critics had any access to primary sources on cybernetics”…the denunciations were largely based on other Soviet anti-cybernetics sources.)

In Arthur Koestler’s novel Darkness at Noon, protagonist Rubashov is an Old Bolshevik who has been arrested by the Stalinist regime. The book represents his musings while awaiting trial and likely execution.

A short time ago, our leading agriculturalist, B., was shot with thirty of his collaborators because he maintained the opinion that nitrate artificial manure was superior to potash.  No. 1 is all for potash; therefore B. and the thirty had to be liquidated as saboteurs.  In a nationally centralized agriculture, the alternative of nitrate or potash is of enormous importance: it can decide the issue of the next war.  If No. 1 was in the right, history will absolve him.  If he was wrong…

Note that phrase in a nationally centralized agriculture.  When things are centralized, decisions become overwhelmingly important. There will be strong pressure against allowing dissidents to “interfere with” what has been determined to be the One Best Way.

The assault on what I have called “cognitive methods that have made Westerns societies thrive” has not originated only from the universities, but they have been the most influential source of this destructive challenge. Which is ironic, given that the great growth of educational institutions was driven by and premised on the Enlightenment ideals that all too many of these institutions seem focused on negating.

There was once a rather sinister toy: it consisted of a box with a switch on the side. When you turned the switch to on, the box would open, and a hand would come out, and the thing would turn itself off.  The behavior of much of western academia seems modeled after the behavior of that box.  Unfortunately, it’s not just themselves that these institutions may succeed in turning off.

Read more

Automation and Ice Cream

A guy named Ken Fox, who posts frequently at X, designs automation systems–electrical components, pneumatics, and software–especially for the food processing industry.  Here’s his ice cream cone filler at work: video.

There are a lot more videos at his X feed.

When people talk about manufacturing, they usually seem to think about metalworking in one form or another–but there are other important types of manufacturing, including the process industries…refining, fertilizer manufacturing, plastics processing…pharmaceuticals manufacturing…and food processing.

Also, I notice that a lot of people judge the level of automation in a particular company or across an entire national economy by counting robots.  I don’t think this is a very good metric.  How many humanoid robots would it take to equal the performance of Ken’s ice cream cone filler, or any of the other automation systems in his video collection?  You could in principle make a CNC machine tool by having a humanoid robot turn the wheels on a manual machine tool, but it makes a lot more sense to just mount the servos directly on the machine.  Similarly, elevators could in principle have been automated by having a humanoid robot handle the controls, but it was simpler to just build the logic into the system.

There will be a big role for humanoid robots, certainly, but I suspect that in many cases they will be a temporary bridge to a more comprehensive system.

Anyhow, enjoy the videos!

Turks and Chinese, Help us Make the Ammunition

(The title of this post was inspired by a WWII song:  Praise the Lord and Pass the Ammunition)

WSJ has an article about a new artillery-shell factory in Texas, which is run by General Dynamics.  The plant makes 155mm shells and is part of an effort to increase the US output of these items from 30,000/month to 100,000/month.

The plant is highly automated:

Walking past new hydraulic presses and orange robots handling semifinished artillery shells, U.S. Army Secretary Christine Wormuth had a question for a manufacturing company executive.

“Do the Russians have this technology?” Wormuth asked Ibrahim Kulekci, chief executive of the Turkish firm that designed and installed key machinery in the plant.  

Kulekci said they wouldn’t get it from his firm. “Keep it that way,” Wormuth responded.

The Turkish firm, Repkon, supplies the heavy presses used to form the steel, which no US-based vendor could provide in the required time frame.  I have no reason to doubt the sincerity of Mr Kulekci’s statement…but what if his government decides differently at some point?  Even if we already have the presses here in the US, what if we need further expansion?  How effectively can we continue to operate the existing presses if product support and spare parts from the vendor are cut off?

These are not imaginary issues.  During the Gulf War, a Swiss company, Swatch AG, and its Micro Crystal division refused to send key components used in the bomb guidance equipment used on the JDAM missile–it’s not clear whether the company was acting on its own initiative or at the direction of the Swiss government. And in 1939, the French licensed the design of the Rolls-Royce Merlin engine (the engine that powered the Spitfire and Hurricane, among other airplane) and contracted with the Ford Motor Company to manufacture these engines.

But when war was declared on September 3 of that year, Henry Ford–who had strong neutrality and ‘antiwar’ beliefs–pulled the Ford equipment and people. No Merlins for you, Mr Frenchman!

I find it interesting that Secretary of the Army Wormuth asked about Russia rather than China, or about both.  And speaking of China:  the robots in the plant are made by a German company called Kuka…which has been owned (since 2016) by the Chinese appliance maker Midea.  Again, what if Midea should decide, with a little encouragement from their government, that they aren’t interested in selling these robots to the US anymore, or indeed supporting the ones that they have already sold?

It may well be that General Dynamics management had no realistic alternative to these sourcing decisions given the time frames required.  But the US has gotten itself into a situation where almost any sustained military operation can be significantly impeded by decisions of non-US countries and companies to cut off critical components required to make munitions, aircraft, or other key items.

I’m reminded of the UK’s shell crisis of 1915, which led to the appointment of David Lloyd George as Minister of Munitions, and, shortly thereafter, his election as Prime Minister, replacing Asquith.

We need serious action to improve defense supply chain resilience, and it needs to be focused on actual results, rather than just wildly handing out money for favored political constituencies.  It strikes me that maybe Doug Burgum would be a good man to head up such an effort.

I’m also reminded of a Kipling poem:

Batteries Out of Ammunition

If any mourn us in the workshop, say
We died because the shift kept holiday