@obi - there's simply no way a small economy can be self-sufficient. There will always be things it has to import or export. Let say you have a bad wheat crop, which happens occasionally. You need to import. If you have a surplus, you could store it or you could sell it to earn some more money (unless the state buys it, but where does it get the money?).

Lets say your government runs a deficit. It needs to borrow money. Printing money causes inflation, which is bad. Borrowing money from domestic banks causes crowding out and raises domestic interest rates, which crowds out other lenders and stifles investment. You need to search for other financial markets which have excess liquidity to borrow from.

And to be completely self-sufficient, you not only need EVERY raw material in the world - or come up with an alternative to the ones you don't have - but you also need to have sufficient populations to produce them. So instead of mining the aluminum in the Congo, sending it to Japan to be made into components and then to the USA for assembly into cars, it all has to be done domestically, which is a tall order. I mean, for foodstuffs, there are so many foods that are seasonal or just don't grow above the tropics. Good luck getting coffee, chocolate, coconuts, or bananas. Or if you live in the tropics, have fun growing and cereal crops.

So while you do need less of everything, you still need to have everything, which is not feasible. Larger countries have more natural resources and thus its more likely that they could do it. The USSR could almost be self-sustaining. Ukraine had more than enough wheat, the Urals, minerals and ores, Siberia had timber, the Caucasus had petrol and natural gas, and they had tons of manufacturing centers. I'd say the only countries that could be self-sustaining in a modern economy today would be USA, China, and Russia. Even then, the economies would be crippled, so I suggest we don't do it.

btw, this is a great way to study for my Econ-301 final tomorrow lol

"What essential goods produced outside the US can't be produced inside the US? If the answer is energy - the truth is the US has enough oil and gas reserves to satisfy 100% of domestic demand. I'm not saying the solution is necessarily to increase our production to do that, but a combination of increased production and drastically reduced consumption."
Self sufficiency? America has enough to satisfy the domestic demand for not, but at the current rate they are producing oil it can only last 45ish more years, if they rank up production 5 times their current rate, it will last for 10ish years.

That isn't stable for long...

"Anyway the solution to the small country problem is to conglomerate. I don't know why we have dozens of small economically inviable countries. I'm in favor of voluntary empires (mergers of tropical and temperate countries to form self-sufficient economic units)."
bigger=less efficient, currently the most powerful countries in the world, in terms of per capita are Singapore, Lichtenstein, Luxembourg and Qatar, all rather small countries. Bigger empires become less efficient and overall make it harder to produce at the capita you wont.

Also this is not to mention that we don't have enough recourses to spread around this world evenly. So we have to sell resources to those who can afford them, otherwise it becomes a lottocracy deciding who gets what.


More later, I have to go to school...

"Well there are lots of things that we consume that we cannot produce domestically. Lots of raw materials, from lithium to copper to bananas, rice, cocoa, coffee, etc that we need to import. Where are we to get fresh fruits and vegetables during the winter"

Hawaii and Puerto Rico produce coffee. Hawaii produces bananas. Rice is grown throughout the southern US and California. Copper, my god, we produce tons of copper. There's actually a town called Copperopolis in California. I don't have the data, but I'd wager we produce significantly more copper than we import. You're right about cocoa, but I don't know if I'd call that 'essential'. Maybe for chocolate lovers. As for fruit and vegetables, while not all - quite a lot of our production comes from areas that don't experience *winter*. Citrus fruit production is done exclusively in states like California, Texas, Florida, etc. The US produces as much citrus as any other country in the world, including India and Mexico.

"It doesn't allow countries to specialize. Instead of putting more people to work in scientific research or computer technology we'd be stuck staffing clothing factories and other entities that are now inefficient for us to do"

Specialization has caused huge swaths of the populated areas of the US to become bombed out moon bases. Go to the old industrial towns of the rustbelt, go to Youngstown and Akron, OH, go to Flint, MI, and see what the effects of specialization have been. We have such a huge population that we will never be short of people to work in computer and hi-tech jobs. As it is our idea of putting people to work is to throw them into part-time service sector jobs. Our has become de-industrialized through trade and we don't have the foggiest idea of what to do with the huge amount of people who were manufacturing with no place to go except to give them low-pay low-skill jobs as a band-aid measure.

It makes no sense that a country as huge as ours is importing so much. Importing does nothing to increase our tax base. There's no reason we should be importing steel and automobiles when they're produced right in our backyard.

Specialization is even worse for poor agricultural countries who have a monocrop economy. Take for example Gambia. If the groundnut crop has problems, their whole economy is doomed. I don't know we think putting all our eggs in one or two baskets makes sense in terms of economic strategy. You're setting yourself up for failure and making yourself extremely vulnerable to the vicissitudes of the market.

Those countries you mention aren't powerful, they just have small populations. In terms of GDP their economic output is tiny. Luxembourg's GDP is 53 billion. USA's GDP is 14.12 trillion. It's not a matter of efficiency to say that Lux has a higher per capita income. They have only a half of a million people from which to divide their GDP. They are beneficiaries of the fact that they are used as a tax haven because of their banking secrecy laws.

An easy way to figure out whether it's easier for a small or rich country to be self-sufficient is to look at trade as a % of GDP.

http://www.nationmaster.com/graph/eco_tra_of_gdp-economy-trade-of-gdp

Look at the countries at the top of that list -
# 1 Singapore: 456.09 % 2005
# 2 Hong Kong: 383.35 % 2005
# 3 Luxembourg: 293.87 % 2005
# 4 Equatorial Guinea: 275.23 % 1998
# 5 Seychelles: 230.7 % 2005
# 6 Malaysia: 223.25 % 2005
# 7 Guyana: 211.84 % 2005
# 8 Swaziland: 183.72 % 2005
# 9 Puerto Rico: 181.21 % 2001
# 10 Estonia:

The only anomaly on the top 25 of that list is Malaysia, possibly Vietnam (#23). Very tiny countries are at the top.

"It certainly would be interesting if a Caribbean of Latin American conglomerate were to form. Or a West African one..."

Well I don't think regional blocs solve the problem. As you pointed out to Fasces, temperate climes can't produce goods produced in tropical climates and vice versa. Horizontal conglomeration only intensifies the problems of specialization from trade, because these countries produce the same thing - especially a West African bloc. Free trade within these newly merged countries will devastate their own domestic production through the introduction of intensified competition. They will not increase their self-sufficiency. Instead I favor vertical mergers, tropical countries merging with temperate. In essence, I think the old colonial empires made sense economically, the problem was the fact that the temperate countries politically dominated the tropical ones, causing great exploitation of the latter.

Although islands/extremely tiny countries should merge horizontally first. For example, it'd make sense if Jamaica, Barbados, Grenada, Trinidad, Belize, etc all formed a political union to increase their economies of scale before merging with a temperate country.

"Those countries you mention aren't powerful, they just have small populations. In terms of GDP their economic output is tiny. Luxembourg's GDP is 53 billion. USA's GDP is 14.12 trillion. It's not a matter of efficiency to say that Lux has a higher per capita income. They have only a half of a million people from which to divide their GDP. They are beneficiaries of the fact that they are used as a tax haven because of their banking secrecy laws."
And the latter points in that post explain why smaller countries are better off and better to have...

I am not looking for self sufficient, I am looking for globalization but local governments

"Well I don't think regional blocs solve the problem. As you pointed out to Fasces, temperate climes can't produce goods produced in tropical climates and vice versa. Horizontal conglomeration only intensifies the problems of specialization from trade, because these countries produce the same thing - especially a West African bloc. Free trade within these newly merged countries will devastate their own domestic production through the introduction of intensified competition. They will not increase their self-sufficiency. Instead I favor vertical mergers, tropical countries merging with temperate. In essence, I think the old colonial empires made sense economically, the problem was the fact that the temperate countries politically dominated the tropical ones, causing great exploitation of the latter."
Ironically, I agree.

Do you really believe the Germans would have been more economically productive had they remained a bunch of divided principalities? Ditto Italy?

If you're convinced small is the way to go, why aren't you voting BQ?

"Those countries you mention aren't powerful, they just have small populations. In terms of GDP their economic output is tiny. Luxembourg's GDP is 53 billion. USA's GDP is 14.12 trillion."
But the difference is Luxembourg is 1/600 of America, we shouldn't think their GDP would be bigger, but per capita it is. Why? Mostly because smaller countries and governments have an easier time managing the issues inside the country.

"Ironically, I agree."

That contradicts your point about how small is better. If small is better than empires need to be dissolved into fragments, which is exactly what happened.

"That contradicts your point about how small is better. If small is better than empires need to be dissolved into fragments, which is exactly what happened."
What I meant is that colonial empires make a lot more sense then Continental ones.

"Mostly because smaller countries and governments have an easier time managing the issues inside the country."

Really - Cyprus is militarily occupied and ethnically divided between two sides that can't agree on how to unify the country. Sri Lanka has been consumed throughout virtually all of its history by ethnic civil war. Ireland can't resolve its religious issues with the UK in the North. Fiji is consumed by political upheavals and military coups. Solomon Islands is having similar problems. The smaller the country in Africa typically the more bizarre and kleptocratic the ruler (Equatorial Guinea has had a history of having probably the most repressive government on the continent, Swaziland is no slouch in that department) Lesotho is actually begging South Africa to annex it. Kuwait's high per capita income couldn't defend it from an Iraqi invasion. Iceland just had a financial meltdown.

And I'd point out that nearly all the Central Asian countries on Russia's frontier have had massive political disturbances, unrest, and government changes (the color revolutions). Russia itself has not.

I never said in terms of military mussel. However N. Ireland and Cyprus want to separate. As in make a new small contry.

Africa is the exception because everyone is dirt poor then, so with big countries the people can actually have an army to defend the country.

"And I'd point out that nearly all the Central Asian countries on Russia's frontier have had massive political disturbances, unrest, and government changes (the color revolutions). Russia itself has not."
I'd also like to say the it started when the USSR tried to annex all of them

Putin, so what i'm getting at is that we want the same thing - conglomeration and the formation of larger economic unions, but the differences that we have is that you want each conglomerate to be self-sufficient while I say that they should be specialized.

You say specialization is bad, that is caused the rust belt, and the creation of many useless, low paying jobs. Meanwhile, I see specialization as the reason Silicon Valley formed, and how Detroit turned into a huge industrial city. If you think of it on a smaller scale, perhaps, then you can see some of the benefits? I mean why should some country try to do everything, such as produce oil for example, when another can do it for half the price? Specialization is the reason prices are so low today. Yes, that causes more volatility in markets, but with the benefit of relatively stable prices (besides the oil bubbles....economists are still working on how bubbles form. As of now, the best they have is "people are stupid").

What you cited is not the effects of specialization, but globalization. they are two separate, but intertwined things. You're not mad that the region developed into an industrial center, but that the factories moved to other parts of the globe. In the long run (the very long run) global prices will stabilize and globalization will not have as much of an impact, because eventually, a worker in China will be paid just as much as a worker in the US, or in India. It won't happen in my lifetime probably, but it will happen

I never thought I'd be posting here, but Fasces, the small, rich countries you're pointing out - Monaco, Hong Kong, Luxembourg, Singapore - which abnormally rich areas in larger countries before they became independant. It's not that they're rich because they're small, but rather they're small because they're rich. A simple confusion of cause and effect. In the Middle Ages the size of an empire could cause its downfall (read: Rome) but in this day and age, I would argue the larger the state the better.

"Putin, so what i'm getting at is that we want the same thing - conglomeration and the formation of larger economic unions, but the differences that we have is that you want each conglomerate to be self-sufficient while I say that they should be specialized.

You say specialization is bad, that is caused the rust belt, and the creation of many useless, low paying jobs. Meanwhile, I see specialization as the reason Silicon Valley formed, and how Detroit turned into a huge industrial city. If you think of it on a smaller scale, perhaps, then you can see some of the benefits? I mean why should some country try to do everything, such as produce oil for example, when another can do it for half the price? Specialization is the reason prices are so low today. Yes, that causes more volatility in markets, but with the benefit of relatively stable prices"
I can actually agree to that.
"(besides the oil bubbles....economists are still working on how bubbles form. As of now, the best they have is "people are stupid")."
I can't think of any better reason then people are stupid, its 100% true and something I have said countless times.

"What you cited is not the effects of specialization, but globalization. they are two separate, but intertwined things. You're not mad that the region developed into an industrial center, but that the factories moved to other parts of the globe. In the long run (the very long run) global prices will stabilize and globalization will not have as much of an impact, because eventually, a worker in China will be paid just as much as a worker in the US, or in India. It won't happen in my lifetime probably, but it will happen"
I disagree, the fact is the reason why the Labour left the west and moved to India and China was because it was cheaper to do so there. If it becomes just as expensive to produce there, then it will move back to the states. The price of oil is a factor in production, if the cost to produce something in America is just as big as the cost in China, then we would produce in America to save on transportation costs. Labour will always move to the cheapest end of the market, and the day it stops is the day globalization falls.

"I never thought I'd be posting here, but Fasces, the small, rich countries you're pointing out - Monaco, Hong Kong, Luxembourg, Singapore - which abnormally rich areas in larger countries before they became independant. It's not that they're rich because they're small, but rather they're small because they're rich. A simple confusion of cause and effect. In the Middle Ages the size of an empire could cause its downfall (read: Rome) but in this day and age, I would argue the larger the state the better."
I disagree, becoming small because there rich doesn't make sense. The fact is the must be a reason that the smaller the state, the richer the inhabitants (on average).

" which abnormally rich areas in larger countries before they became independant. It's not that they're rich because they're small, but rather they're small because they're rich"

Very well put.

"What you cited is not the effects of specialization, but globalization. they are two separate, but intertwined things. You're not mad that the region developed into an industrial center, but that the factories moved to other parts of the globe."

I'm seeing a distinction without a difference. The country as a whole is specializing as a result of free trade/"globalization". That's the whole point of free trade, that it enables countries with comparative advantages to specialize in those fields and thus in theory produce goods cheaply. So, I'm very much complaining about the effects of specialization and the kind of highly disruptive social dislocation it causes. Because of specialization, the US gutted its manufacturing base. It has shifted its economy into the service and financial sectors at the expense of industrial production, because of its 'comparative advantage' in capital.

And no I don't think the fact that these regions specialized to begin with is a cause for great celebration. States which have all their economic eggs in one basket are extremely vulnerable to any kind of structural changes in the market. Look at West Virginia, completely dependent on coal for anything. Already an impoverished state, it is going to be completely left out of an economy which shifts to develop greener sources of energy. The results will be devastating. They've already felt the effects of a reduced dependence on coal.

States are organisms, not machines. You can't just remove or replace parts with new ones and expect everything to be the same. The decay has lasting long-term effects. The specialization argument depends on this notion that structural transformations in the economy only have short-term costs, which are outweighed by "cheaper goods". But, as you already pointed out. Fuel prices are rising tremendously. Food prices and other basic commodity prices have also been rising. The producers of the world - India, China, etc have been facing significant problems with inflation for years now. The tumult in the Middle East was largely induced by rising food prices which had been going on for a while.

If the whole point of specialization is that goods are cheaper but yet the most essential goods of all - food and fuel have been rising tremendously then what exactly are the positives, especially when you consider the costs of restructuring?

"I mean why should some country try to do everything, such as produce oil for example, when another can do it for half the price?"

Because oil is essential for the economy to survive and not producing it leaves you vulnerable to blackmail from hostile countries. The best explanation I can give is by referring to Settlers of Cataan. The best strategy is to have settlements on as many different types of goods as possible, so that if your opponent blocks one, you still have most of what you need to grow and expand. I know this is a bad analogy, but when you consider the fact that the global economy has been severely impacted by multiple oil shocks (1973 and 1980), it's not a small point. Europe learned this recently when Russia shut off the pipes in the controversy with Ukraine. Large swaths of Europe were left with little or no energy as a result. I would guess that even most hardened free traders even believe domestic oil production is necessary.

Fasces, Putin's example's earlier: Lesotho, Cyprus, Sri Lanka, countless pacific island countries - are condradictions of your statement "the smaller the state, the richer the inhabitants (on average)." But take Singapore, for example. There was (and obviously still is) an immense difference in wealth between the Malaysian mainland and Singapore, and thus the Singaporeans felt the rest of their country was a weight on their shoulders, and poof! Small, rich country. I'm sure it's the same story for Monaco and Luxembourg. These countries (read: cities) cut themselves off from the rest of the country due to a large difference in wealth, throwing off the general statistic that small countries are, in general, less wealthy.

I'd like to see you consistently winning in some high profile tournament with mindless application of this strategy. The composition of the board is pretty important and quite often the best strategy is to settle areas around goods with 6 or 8 on it with appropriate port nearby. So if you believe in the validity of your example, you should actually acknowledge that the choice between autarchy and specialization depends on the environmental setup.

That was at Putin of course.

No because your only looking at countries compared to the world average you can't compare African and Southern Asian economies to Europe's and America's:
Sir Lanka 5,220
India (chosen given its proximity to Sir Lanka) 3,339

Cyprus 21,000
Turkey 12,300

Lesotho is different because South Africa is a more European Style economy rather then African style like Lesotho and all her borders.

"quite often the best strategy is to settle areas around goods with 6 or 8 on it with appropriate port nearby. So if you believe in the validity of your example, you should actually acknowledge that the choice between autarchy and specialization depends on the environmental setup."

I'm not getting your point. I agree that only larger countries (especially larger countries that have diverse climates) can be self-sufficient (addressing the environmental set-up issue), which is why I called for conglomeration in cases of small countries which cannot produce all the goods and raw materials needed to be viable and self-sufficient.

As for your settlers issue, I'd ask the following question. All things being equal - if given a choice between a player who has multiple different commodities with multiple different numbers or a player who has specialized in one good but relies on a port, which would you choose? The free traders are essentially arguing that specialization is preferable in all cases, regardless of environmental set-up. They argue that even very large economies which are capable of producing all essential goods should specialize.

NO! Self Sufficiency is not achievable, government becomes to big and inefficient and the state falls under the weight of the government, we are already seeing that with powers such as the US.

Anyway lets carry this topic over to here:
http://www.webdiplomacy.net/forum.php?viewthread=717139#717139

so this can get back on topic...

"I'm not getting your point. I agree that only larger countries (especially larger countries that have diverse climates) can be self-sufficient (addressing the environmental set-up issue), which is why I called for conglomeration in cases of small countries which cannot produce all the goods and raw materials needed to be viable and self-sufficient."

From all the posts in this thread, I was only interested in your Settlers example so I don't get what your trying to communicate either.

"As for your settlers issue, I'd ask the following question. All things being equal - if given a choice between a player who has multiple different commodities with multiple different numbers or a player who has specialized in one good but relies on a port, which would you choose? The free traders are essentially arguing that specialization is preferable in all cases, regardless of environmental set-up. They argue that even very large economies which are capable of producing all essential goods should specialize."

How can this even be an "all things being equal" issue? The first case is solidly executed classic mixed strategy while the second case is just a strategy that no solid player would ever try and that's because you never specialize in only one good (you specialize in two - either brick and timber or ore and wheat) and you never build your initial settlement on port (you expand there in early game if you go the ore and wheat way). Specialization doesn't mean you have to produce only one good, that might be even impossible under certain board configurations. If you formulate the question in the way I suggested (as a choice between 2 solid strategies), I would pick the brick and timber strategy, since it is the most straightforward and effective one (if it suffices that effective equals picked most times by solid players). I have special affinity to ore and wheat way but it is more prone to luck since it depends on development cards and placing of the robber. The mixed strategy you preffer is useful when the thoughts behind the initial placement of your opponents are difficult to decrypt, since it leaves more possibilities open.

All in all, as I already said, if you consistently choose the mixed strategy, you are not playing optimally even if it suits your playstyle well. The Diplomacy equivalent would be something like never opening to the Channel as France. Sometimes it's a solid play but if Germany is willing to Sealion, you're doing it wrong. Again, it depends on the set-up, in this case the environment consists of the characters of other players.


The issue with specialization on the level of countries is that while it expands the global production possibilities frontier, this expansions isn't necessarily beneficial to all countries. While I as European benefit from the fact that American manufacturing shifted to China, some Americans definitely do not. Paradoxically, the staunchly "always free-trade" politicians further the well-being of other countries' citizens more than the well-being of their own citizens.