[PEN-L:12350] Thai Bubbles
The Thailand version of Asian miracle is real in terms of macroeconomic performance, the growth of manufacturing, and real changes in standards of living for an extraordinary number of Thais. But the miracle is only part of the story. Poverty, environmental degradation, urban congestion, AIDS, regional tensions and ethnic conflicts, real estate and property speculation, scams and scandals, and a military with political/economic power are also part of the Thai miracle. Bangkok is a mess. All of these problems are well recognized by all walks of life in Thailand. Surely a great case study in development and underdevelopment. One concern with the collapse of the Thai/SE Asian bubble is whether somehow it could spread over to East Asia or even this side of the Pac Rim. Probably not -- Thai/SEA imports from the industrial countries are probably too small, but maybe next time will be different. While it is true that China and Vietnam increasingly receive more Japanese investment, Thailand, Malaysia, and Indonesia will not suffer much once the collapsed bubble is digested. Japanese MNC's have carefully extended their domestic *keiretsu* networks into SEA and they cannot (or will not) extract themselves from these networks. After all, long-term markets, resources, and all the related institutions and infrastructure are in place. One must remember also that Japanese investment is in real plant and equipment, not in terms of speculative land purchases or even an aircraft carrier. (The Thai military just bought a used one). The fascinating thing about the Thai bubble collapse is how the political and economic powers will try to use the IMF resources and domestic "austerity" measures to impose the costs of speculation and underdevelopment problems on Thai workers and farmers. Will the Thai fat cats really be required to swallow the costs of the bloated bubble? Or can they push it off on someone else? Personal note/rumblings: last year I spent a week in Chachoengsao province (east of Bangkok) and stayed with my colleagues from an earlier time. It was lots of fun. The town of Chachoengsao has its own urbanization problems and even traffic jams! There was now a shopping mall with a multistory parking garage on the edge of town, and urban sprawl in lots of places. The first night we ate at a restaurant on the river and planned the week. One of my requests was to talk to farmers about their problems and concerns. They were slightly taken aback: "where are the farmers"? No longer just a short bike ride from town. Anyway after talking to rice, fish, shrimp, and mango farmers, I came to the conclusion that the Thai miracle wasn't the same as all of the nice macroeconomic performance reports coming out of Bangkok. Rice farmers in particular were bitter about low prices, angry that many of them were renting land from absentee landlords, and disgusted that the government did virtually nothing to support them.And this is in a province which monsoon rails and irrigation works make for an ideal farming setting. Some farmers, those that owned their land, did the best. The shrimp and mango farmers have their environmental problems -- and no EPA in sight. Many of the farmers' sons and daughters are drawn (propelled?) into the many factories in the Bangkok area; one fish farm was worked by Cambodians. During a previous trips, I visited one of those factories -- the Nike factory in Bangkok. A large amount of Nike's shoe production has been moved elsewhere in SE Asia. Part of the time stumbling around the countryside I was with one or two of my former colleagues. The rest of the time I was solo and used local transportation and hoofed it here-and-there and talked to farmers where-ever I could. In many ways the country-side had not changed in three decades or since my previous visit 8 years earlier. But a significant amount of the housing stock was much better (ie stucco houses instead of wood), there were more paved roads, and small mechanic tractors had replaced the water buffalo. The kids were clearly better fed, clothed, and healthier compared to my first time to Chachoengsao. One time I came across a beautiful new housing project going up -- it was about 70 km from Bangkok. It was such a contrast to the housing stock of the farmers in the immediate vicinity. In fact there was a lot of new housing (homes, apartments) be constructed and the finished ones might stay vacant for up to 2 years until they sold. That is, the development costs and prices were such that it might be two years before the bubble economy generated buyers. With the collapse of the bubble, there is a tremendous amount of housing, apartments, and shopping centers with not enuf buyers and customers. The people, as always, were very friendly and easy to engage in conversation. (All of the above is not very rigorous in terms of a research project, but good enuf to collect some observations and reflections.) The real
[PEN-L:11535] Urban Regional Econ: Help!
An unusual set of cosmic forces has propelled me into a new teaching assignment: Urban and Regional Economics. This is a senior level course with a prerequisite of intermediate microecon theory. Enrollment will probably be between 10 and 15. If PEN-Lers can provide some suggestions, text recommendation, journals, readings, web-sites, etc to consult I would be most grateful. It would be nice to identify some core readings and built the course from there. With a relatively small class I would like to have students work on case studies, have student presentations, and a class forum which minimize lectures and emphasizes class discussion and student interaction. I will happy to post my syllabus to PEN-L when I get-it-together. (Hopefully with your assistance!) Other: Michael P. and I are teaching a section of our Writing Proficiency course for our majors. It looks like we'll assign Doug H's Wall Street book as part of the course. Please post your suggestions to PEN-L. Thank you. Barney Hope [EMAIL PROTECTED] Dept of Ec CSU, Chico 95929 -0430
[PEN-L:5164] Trade Sanctions: Some US/Japan Auto Issues
Marc Breslow, Hopefully this will be helpful for your talk. Perhaps some Pen-lers can fill in my gaps, correct my errors, and provide some details. Good luck! Barney Hope [EMAIL PROTECTED] Some Perspectives on the US/Japan Auto Trade Issues I. The pre WW II expansion of the US auto industry plus the destruction of the industrial economies of Japan and Europe was viewed by US industrialist ( the US auto industry) as a permanent situation. In Japan and Europe, their dismal situation and the international market was viewed as an arena for competition. II. The US auto industry did not take international auto competition seriously in the 50's and 60's. (Example: VW, Honda) III. By the 1960's the Europeans and Japanese had small but a significant presence in the US market. (Especially the small car, fuel efficient sector) IV. With the 70's, oil price shocks, and growing imports, one could make the argument that the US industry was seriously mismanaged (and had been for some period of time). The US industry produced high price gas guzzlers and low quality products. V. The VER agreement (1980) between Japan and the US was an act of deperation by the US producers. This argreement was really a cartel. When you cannot or do not want to compete, set up a cartel. (At the time there was American bitterness toward the OPEC cartel; there was virtually no criticism directed toward the US/Japan auto cartel) VI. The VER drove up the prices of Japanese imports and the restriction of competition allowed significant increases in domestic prices as well. The cost to consumers was in the billions per year for the decade of the 1980's. (Maybe a PEN-Ler has some numbers). And the cartel-induced price increases spilled over into price increases in the used car market. VII. Furthermore, because the industry was so mismanged by the time the VER arrived, the industry pleaded their case for welfare from Reagan, et.al. The result was very favorable tax provisions in the Economic Recovery and Tax Act of 1981. (In the form of a favorable Accelerated Cost Recovery Sytem -- depreciation --,the investment tax credit provisions, and specious leasing provisions -- 'safe harbor leasing'). So Am auto comsumers had to pay extra twice: once when buying a car and again on April 15. Am auto workers paid three times: once for wage concessions, once for and "restructing", and again on April 15. (Make that four times if you want to count paying for autoexecutive compensation and bonuses) VIII. The VER was a critical factor in opening the door for implants.By 1990 the US auto executives realized (and I think publiclly stated) that the the 1980 VER was a mistake because of the implant intrusion. The depreciation of the $ after spring of 85 made implants even more attractive. The Japanese argue that if the US would do better at the macro level (like balancing the budget in 1984 --one of Reagan's plans in 81, remember?), you would not see the $ depreciation from 1971-1981 and from 1985-95).(Digression: I attended a conference between Thai and Japanese economists in Thailand in March of 1986. The Thais were unhappy with the Japanese AND the Americans in terms of trade, etc. A Thai economist asserted that you would not see fundamental correction with the US trade deficit until the dollar fell to 130yen/$. An unheard of level at the time! Well now we're about 85 yen/$ and no trade deficit solution in sight. IX. And then there was the Bush, et. al. trip to Tokyo in 1992. The auto execs were viewed by the Japanese as overpriced managers who had failed at managing their industry: why should the Japanese bail them out? At (about) the same time Iococca made the statement that "it is true, we sold our customers crap" (WSJ). So after admitting that the Am auto industry defauded their customers, why should those same customers buy Am autos? (And why should the Japanese buy "crap"?) X. The above is somewhat of an outline of a talk I gave at a Aoyama Gakuin U. in Tokyo last October. I was given a chance to pick my topic and I chose the auto one because the Am auto trade "negotiators" were in town. At the end of the formal talk, I was thanked for presenting something other than "Am propaganda". One of the questions in the discussion session dealth with what I thought of the numerical quotas which were (and are) being pushed by the Americans. My answer took me back to the above remarks: I emphasized the real problems centered in decades of mismangement of the US auto industry and
