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To: zonder who wrote (21121)	1/12/2005 10:32:12 AM
From: Knighty Tin	Read Replies (1) \| Respond to of 116555

I prepare slides for a living as a little league third base coach. <VBG>

To: zonder who wrote (21121)	1/12/2005 12:32:50 PM
From: GraceZ	Read Replies (2) \| Respond to of 116555

You told me why it is that you should know these things at the same time you make it clear with your arguments that you don't actually understand the process. The way I know you don't understand this stuff is because I do and your mistakes in logic are apparent. How I know what I know isn't relevant to the debate and neither are your credentials. Daily on CNBC we are treated to a parade of individuals whose credentials exceed that which you describe, yet they seem to have a fool's understanding of how an economy works. You claim to have this education and experience with developing countries and you seem to know why a developing country can't go head to head against an industry where they have no absolute or comparative advantage, or economies of scale but what you apparently don't yet understand is why they shouldn't try, why their economy, as a whole, is better off using those scare resources somewhere else in their economy. Soda bottling, a modern bottling plant, is capital intensive and uses little human labor. A developed country like the US has lots of capital, but relatively expensive labor. Here it is almost always cheaper to replace human labor with a machine. A developing country has an abundance of labor and scarce capital. In a developing country they are frequently better off using human labor where a machine might work. As the country becomes wealthier, builds up capital resources, it will increasingly replace human labor (which will become more expensive) with that of a machine. The only way for a developing country to turn into a developed one is to use their scarce capital in the most efficient way, to take advantage of the resource that it has in abundance, which is labor. In this way it capitalizes on the weakness of the more developed countries, this is where it has an advantage. Developed countries, OTOH, are wealthier on the whole when they shed those industries which are labor intensive and replace them with capital intensive industries because they don't have a pray of competing against low cost labor countries unless they remove labor from the equation using capital equipment. Both the developed and the developing country are better off when they don't impeded this creative destruction. This process is always thwarted by people with your level of understanding in both the developed countries and the developing one. They see the destruction of a local industry or a local brand and those jobs that go with it and assume that it needs protection. Here we put up barriers against countries with cheap labor, there they put up restrictions against importing goods which they can't possibly create more efficiently with the mistaken notion that it will give their infant industries time to mature. All this does is keep both countries poorer than they might otherwise be because it impedes the process of moving scarce resources to where they have the greatest return.