Hello Olin,

> I've been silently biting my tongue waiting for this latest political 
> thread
> to die out or finally be put to death by James, but neither has happened.
> (It's surprising to see so much political discussion on a list where
> political discussion is banned, and even more surprising not to see James
> put a stop to it immediately when it starts.  If a line isn't drawn 
> clearly
> and solidly in the beginning, it becomes harder and harder to draw the 
> line
> at all.  James is undermining his own credibility by letting this go on, 
> but
> that's just my opinion of course.)

I respect your opinion, but of course I disagree (I side with Russell on 
this issue).

Everyone on this list has a choice of whether or not to read a particular 
thread. I do not read every single message on PicList - I scan the subjects, 
and only read those topics that I find interesting. Sometimes I discriminate 
based on the author of the message - there are people on this list whose 
expertise I value especially, and I use their replies as digests.

The reason I've been so active lately is because I got the flu and have been 
staying at home since Monday. Since I'm feeling better I'll probably go back 
to work starting next week, and you won't see so many of my posts anymore. 
:-)

[snip]
>  There are many ways to grow your own large industry while competing
> with foreign large industry.  You find niches and start small.  Large
> industry may seem like an unbeatable giant, but analyse it carefully and 
> you
> will see weaknesses that are hard for them to fix and easy for you to
> exploit exactly because you are small.  In many ways you have the 
> advantage.
> You have access to cheaper labor (we are assuming a country just starting 
> to
> industrialize), possibly closer to some raw materials, small management
> structure to react faster, better flexibility to do exactly what the
> customer wants with less overhead of customization.  Think about it
> carefully and you see you have some formidable advantages.
[snip]

I understand and in part agree with what you're saying. In fact, if it 
wasn't for a book that I read recently (Landes, The Wealth and Poverty of 
Nations), and some stuff I read on Wikipedia, our points of view would have 
coincided completely. :D

The key thing to remember about machinery is that it increases productivity 
of labor, and with it worker's incomes. So even though a country's 
comparative advantage today may lie in its abundant supply of cheap labor, 
it will remain poor unless it industrializes.

Subsidies are not necessary for the development of heavy industry, but they 
may considerably speed up the process. Some countries consider them 
necessary initially, but you are probably right in that they are a bad idea 
in the long run.

Best regards,

Vitaliy 

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