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Comment by WalterBright | Hacker News Reader

A long essay, which ignored the elephant in the room.

Prosperity and growth come from free markets. The correlation is very strong. Poor countries are poor because they eschew free markets.

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Yes, but also political stability and rule of law. It doesn’t have to be “rule of law” in the sense of liberal democracy. But it has to be reasonably fair and predictable for routine business issues. That’s one thing China has focused a lot on that doesn’t get mentioned much. Apart from politically charged topics or pillars of their industrial policy, you actually can get a relatively fair shake from Chinese courts these days.

Political stability and rule of law are essential ingredients for free markets.

In fact, "free" markets are downstream of them. Political stability and rule of law are important everywhere, whereas a fetish for free markets is something that's only important in some places.

We rarely get better results from healthcare or education (or infrastructure) from a free market system, and yet those are fundamental ingredients towards most human development (which can, but does not require free markets).

And anyway, what does a free market mean? Do regulations make markets less free or just shape them?

> We rarely get better results from healthcare or education (or infrastructure) from a free market system

Healthcare in the US was very good and inexpensive before the government got involved in it.

Public education does a very poor job in the US, at enormous cost.

> what does a free market mean?

It means a market where force and fraud are absent.

> Regulations

Regulations to reduce force and fraud are a proper function of government.

This is the standard advice from the World Bank, the IMF, etc., and it does developing countries a huge disservice. South Korea banned the import of foreign cars from 1968 to 1988 while it developed its own automobile industry (Japanese imports were banned until 1998). Now Huyndai Motor Group sells more cars than GM [0]. That firm absolutely could not have survived if exposed to the ravages of the free market during the two decades it took them to learn how to produce cars to a globally competitive level. There are many other examples of protectionism in the developmental success that is South Korea. The idea ("infant industry protection") comes from Alexander Hamilton. The US relied on it heavily, too, in its early history.

If South Korea had followed the standard developmental economists' advice they would still be sewing garments and growing soybeans instead of manufacturing semiconductors, consumer electronics, and appliances (among many other things).

[0] https://statranker.org/economy/leading-global-car-manufactur...

In 1965, Hong Kong tired of being poor and switched to free markets. Their prosperity boomed.

The only consistent correlation with prosperity is free markets.

Participation in the global economy != free market. Unless you think China is a free market?

China's economic revolution came about by switching to free markets.

China still have capital control and state-led economy, even if they're smart about it. The state create a market, remove barriers to entry in exchange for oversight , then pick and choose who consolidate and who doesn't once the market leaders emerge. If that's free market to you, everything post-mercantilism is, and the term loose some of it's power.

China did not go full free market. But it went far enough to create a huge prosperity boom.

Note that there's a continuum between communism and free market. It is not all or nothing. Experience, however, shows the more free market it is, the more prosperous it is.

Worth mentioning that Park Chung-hee's "five-year economic development plans"[1] were the centerpiece of Korea's economic development during the 1960-70s, and we can draw direct parallels between that and Stalin's five-year economic plans [2].

[1] https://en.wikipedia.org/wiki/Five-Year_Plans_of_South_Korea

[2] https://en.wikipedia.org/wiki/Five-year_plans_of_the_Soviet_...

The article comes to different conclusions. In fact cheap imports from China ravaged manufacturing in certain "poor countries". Can you reconcile your general thesis with that?

Free markets correlate with prosperity. Those "poor countries" are most likely unfree economies.

Maybe you would be more persuasive by discussing a concrete example where manufacturing was decimated by imports and yet more liberalization would be more economically beneficent thae protectionism (modulo say IMF, world bank policies), rather than parrot an ideological talking point without substantiating it with the concrete examples that form the empirical evidence for such general rules.

I cannot think of an example were protectionism made a country more prosperous.

I do agree with protectionism for the purpose of protecting strategic industries - but that comes at a cost to the country.

Off the top of my head due to proximity, Mainland Chinese requirement for Joint Ventures for foreign entrants trying to participate in their market led to a lot of technology and human capital transfer; the case of ARM China comes to my mind. I don't remember details beyond that, but instead of spending time reviewing sources I think this Gemini conversation on this topic should suffice for an introduction and overview https://gemini.google.com/share/42b75fbf2e61

I suppose that there is room to make argument to be made that less protectionism in these respects would have been more sustainable, but it won't be easy. It seems to me that one would have to point to one of:

- enormous short-term benefits of allowing foreign entities to enter the market while controlling their intellectual capital / capital equipment

- a reason why they would acquire such intellectual capital / capital equipment anyway through less protectionist means

- a reason why they would obtain a substitute for the long-term value represented by such intellectual capital / capital equipment

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