Premature Deindustrialization

[@derickgabrillo1579]

I was once discussing my case study in my economics class about the effects of the 2008 financial crisis on the Philippine economy and my teacher asked how we could reduce blows that our export market took in the crisis and I suggested building institutions and infrastructure that would encourage SMEs to expand and to emphasize internal trade to reduce our reliance on exports and external trade in general. He just gave me that "ew. protectionist much? that won't fly, gotta make dem exports" look.

[@angelkitty11]

Yep, Philippines can actually benefit nicely from internal trade growth due to its large population. And developing domestic market can help soften the blows of export market.

[@etbedtalksAOH]

I bet in case of India efforts like a uniform tax system like GST which got implemented recently would be a gamechanger at least in the long run despite its initial bottlenecks.

[@MakaranduManda]

Awsm....by the way, India could still consider export oriented growth in the near term at least,, since cost of automation tech access and it's usage is still high there.... But in the long term, what is said makes complete sense. ..To conclude: 1. Internal growth 2. Service oriented 3. Consumption led Using Information as oil, smarts as convergents, networking as the fuel for markets

[@natalkumar6132]

And the Rupee hits 78 against the dollar and we have huge inflation.

[@DanKann86]

Service lead growth and consumerism are very important growth engines. For smaller countries (India is too large), I will not discount manufacturing is also an important driver for the foreseeable future.

[@RonishSMehta]

Would love to see a video in detail on CSR ( corporate social responsibility)

[@hooksx]

Ronish Mehta I don't think the Koch brothers are into that type of thing Ronish.

[@matrixman8582]

That implies that finding ways to provide the best product/service at the best price is not socially responsible

[@antonioricardo7677]

The issue with service and consumer-led growth is that it lacks the wage development that manufacturing had. Helpdesks arent exactly a high paying, great potential career, you can't make a country develop with a nation of IT support, and unlike manufacturing, there is 0 incentive to move high paying services to offshore. While with the consumer approach, its important to know what is being consumed by the population, you need to have a domestic production, otherwise you will face successive balance of payment crisis and lack of international reserves.

[@sandeepvk]

The problem with India is a viscous circle of farming industry contributing to 60% of workforce and only 17% to GDP. This needs to change and more people need to move to a manufacturing sector. Automation is step 2 for India. However democracies don't have the gumption to make large scale long term change as Govts changes every 5 years or so. The solution is complicated and needs to be looked on in a case to case basis

[@harsh.thakkar]

Sandy Agree but the economy has to improve on many levels and in a majority of areas to improve that. Education might be a good start , followed by cutting down on Red tape.

[@sandeepvk]

REd tape can only be reduced by having a small Govt and removing the licence Raj. Govt should only focus on Education, healthcare, and infrastructure.

[@tanmaykitkat]

True that brother, couldn't agree more.

[@Wikant18]

@@sandeepvk Its kinda similiar in Poland. 11% of our labor is employed agriculture but it only makes up 2% of the gdp. But our government is reallocating them quickly and its changing rapidly.

[@sandeepvk]

@@Wikant18 what programs are they using to move these workforce? Our nation has poor manufacturing sector growth due to unions, High Taxes and lack of central planning. Most of the farmers are I'll suited for service sector work force. Urbanization is however helping move some of them out of agriculture into cities.

[@WallaceRoseVincent]

Mistake: Manufacturing jobs ADD VALUE to what you are manufacturing. That means if 10 workers make 10 cars vs. 10 workers making 10 hamburgers .... much more wealth is created with 10 cars hence there is more capital to pay wages and benefits workers. That's why manufacturing is a focus of developing nations. It also has the by product of technology transfer. For example, as Japanese companies learned to make small metal toys in the 50s and 60s they developed into making much more complex products that had a greater valule added component. China has done the exact same thing. All this has been at the expense of labor in the USA.

[@jvb5590]

I like your new graphics. Thank you so much for your videos.

[@brazilianlady885]

As I've said before, AI and automation are not as great as we expected. Businesses are very complex to hand them to machines.

[@marcv2648]

My view of AI is that they are little more than enhanced sensor systems. Yes they are fantastic sensor/decision systems, but not much more than that.

[@Ramprasad-pb4ml]

Great video... But in India where is Jammu and Kashmir??

[@harsh.thakkar]

ram prasad its a disputed territory some parts although claimed by India are not actually governed by India (POK & whatever the Chinese side is called) so that's the actual J&K under Indian jurisdiction.

[@martianmanhunter5]

Harsh Thakkar that's ok but the given map is not even showing the area actually administered by India.

[@anshumangupta7442]

No J&K ? Entire North India has gone somewhere 😂😂

[@michaelspence2508]

Automation seems to disincentivize investing in human capital. The ability to produce high quality labor is key to being able to join the middle class. And while it's possible for households to invest in their own human capital, that's an additional financial burden for them. So it seems like automation is another force squeezing the middle class out of existence.

[@NIsForNoobCakes]

Automation still incentivizes human capital, but only for "superstar" workers. The few workers that do remain at a modern factory are superbly skilled and highly trained machine operators--but the others who only turned screws or applied paint are gone, because the robot can substitute their labor for less. Robots seem to function as a floor to marginal productivity (a "minimum wage," if you will), below which it isn't worth hiring a human. Given that a robot works much the same in India as it does the United States it's becoming cheaper and easier for firms to buy robots to make their output rather than reform the entire school system or labor culture.

[@michaelspence2508]

Good point, although it sounds like my larger point stands. Robots do seem to put destructive pressure on the middle class. You make an interesting point comparing the marginal productivity floor to minimum wage. If I understand correctly, you're saying that, just like the actual minimum wage destroys jobs by making it not worth it to hire humans whose labor is worth less than the minimum wage, robots destroy (certain) jobs by making it not worth it to hire humans whose skill is below a certain threshold. (Maybe we should call the marginal productivity floor, "Minimum Skill") This is a point I've made to people in the past. You don't need to believe that jobs are finite (the Lump of Labor fallacy) to believe that automation and AI can have a destructive force on the ability of people to be employable at the lower levels of skill. And of course, as time goes on, improvements in AI causes Minimum Skill to rise. And yes, the Market is adaptable, and AI is harder to program for some things than others. But it's an open question how many people certain sectors can afford to absorb. Could the market support 100x as many youtubers? Maybe. Certainly with improving software tools you might have teenagers making films we wouldn't normally see outside a movie theater in something like 15-20 years. The future promises to be a very weird place, no matter what happens.

[@NIsForNoobCakes]

In some sense this already happens in places like Saudi Arabia. The oil industry is heavily capital-weighted and fantastically productive, but beyond that the market doesn't really exist for anything else but oil extraction and leisure. So Gulf petrostates end up buying off the rest of their society with oil revenue--Saudi labor force participation is something like 20% and the government just pays off the rest of the population with the revenue it skims off Saudi Aramco. In the USA I think we are seeing the beginnings of a top-down yet bottom-up movement to a similar arrangement. The fantastic high-productivity CEOs of Silicon Valley who make billions out of a workforce of mere hundreds are very pro-welfare state and many want to implement a universal income. The "corporate masters" against such expansions are often large employers of many low-productivity workers, like Walmart.

[@michaelspence2508]

Another interesting point. That seems to indicate that once automation reaches the point where companies like Walmart are replacing large percentages of their workforce (like say, stockers) with machines, that will coincide with a reduced opposition to Basic Incomes schemes. That's actually quite a relief. It's also nice to know that this sort of thing has been tried already and apparently works. My biggest concern with growing automation was never that it spelled unavoidable doom for the lower skilled members of the workforce, but that opposition and indecision would stop us from addressing it properly. (I still see respectable economists trying to use the Luddite Fallacy to say that automation is nothing to worry about) Of course, politics is still politics, so I'm sure the transition won't be as smooth as it could be, but the world looks a lot more prepared for this transition than I thought.

[@NIsForNoobCakes]

The resultant society will in fact be highly unequal. Gulf society is dominated by a handful of princes and magnates. That said life goes on and Dubai is nicer than many cities in Europe. Income distribution is, in the long run, determined by productivity distribution. In a society where productivity is highly unequal then so will the incomes.

[@Mujangga]

If automation mass produces products, won't they be cheap enough for people in India to buy?

[@dogukan127]

Mujangga ıf the economic structure allows people to have other jobs, yea.

[@Mujangga]

"Economic Structure"... As if that can exist without people...? All economic activity is conducted by individuals: there is _no_ invisible, god-like force controlling people. Only Law Enforcement, which also a human activity can limit people's employment opportunities. If there is such a thing as an Economic Structure, it is a result of government action.

[@dogukan127]

Mujangga ı dont think you got what i mean. Economic structure refers to distribution of jobs based on sizes of sectors in an economy. The problem with automation is the structure we are shifting into isnt productively absorbing as much as we d seen so far in economic growth.

[@parthvaze6834]

Learning something new

[@politicalcrazy3007]

It is very effective video for thinking future in new ways, following from Turkey.

[@italktoomuch6442]

The design of that map is exceptionally awful.

[@pelumiobasa3104]

Can you guys do videos on behavioural economics

[@Easynimics]

Great contribution

[@hooksx]

Did Koch brothers fund this channel? What about Mr. Cowan's research at the Mercatus Center? Is it biased?

[@prakadox]

Since the incentive for the employer is not there to invest in the workers, some form of a common skill development is needed. Extend the tax incentives that are currently being given for paying back mortgages to include reskilling adults. Let employers be given tax breaks if employees under them get more certifications. Chuck the entire annual exam based system to a monthly system where people can get tested for skills every month.

[@GG_1318]

no such thing as premature, you should always be industrialised

[@vishwajeetagrawal5923]

Good video! But please respect sovereign borders. A state of India is missing in the map.

[@aninditaganguly590]

The map used to depict India is wrong.

[@indiemakerpodcast]

Nice

[@takashimurakami6420]

Services and consumer products need people to use services and buy products. If robots will kill the humans job and eliminate meddle class, who is going to consume or use services? Robots don't consume or use services so far. If some real substancial advance in technology and science will not change the present reality, we all be living in castle of cards. Producing foods and goods and houses and transportation are the basis of solid economic society.

[@josephsmith1893]

Manufacturing are all mostly done by machines now... Companies are turning to machines for even when they only need to build limited quantities of parts, just ask Boeing and Airbus. I actually design machines for one of these Aerospace companies.

[@robertochavez6644]

Interesting how colonialism is completely skipped when mentioning the conomic development of the west. USA manufacturing was massive? yeah, it rings a bell.

[@retak4110]

Can't we just have no industrialization at all but a rich agricultural country (highly productive agribusiness and food sector, large farmlands with a low population)

[@bruhmoment8108]

No

[@Vajrapani108]

And who will manufacture tractors and fertilizers?