There’s a well-known economics joke that goes:
“Q: How many economists does it take to change a light bulb?
A: None, because if it needs changing, market forces will take care of it.”
The psychiatrist equivalent seems to be:
“A: None, but the lightbulb has to really want to change.”
These old chestnuts came to mind as I was reading Vaclav Smil’s new book, Made in the USA: The rise and retreat of American manufacturing. It’s exactly the kind of book I find very relaxing, with tons of information and empirical observation.
I’ll review it when it is officially published later this month. But, as a curtain raiser, the sections on how hard it has become to manufacture in the US (and by extension other advanced economies) are eye-opening. Low wages in Asia are not the main reason many manufacturers give for offshoring, but rather the complexity of the processes they have to go through to create a viable plant at home – training the workforce, lack of infrastructure, permits, legal obstacles or fear of legal challenge, planning permission – there’s no “can do” but rather an interlocking web of “no, sorry, can’t do”. Smil quotes one example of a planned investment that was pulled because the factory would be behind the local golf course in its priority of access to the water supply.
In another context, I was looking back at my notes on Joseph Tainter’s 1988 book, The Collapse of Complex Societies, a fascinating work. His argument was that sophisticated societies become too rigid in their complexity, impossible to simplify, resulting in the ultimate simplification of collapse.
Yesterday President Hollande announced a grand new industrial strategy aimed at increasing the share of manufacturing in the French economy – lower now than in the UK, never mind Germany. It isn’t clear that it addresses the kinds of obstacle Smil writes about in his book. How can we make it easier again for businesses to open major manufacturing plants, or build infrastructure, in our highly complex societies? As a start, we have to really want to do it.