Artisanal pickles and the U-curve of economic development.

Artisanal Pickles and the U-Curve of Economic Development

Artisanal Pickles and the U-Curve of Economic Development

Moneybox
A blog about business and economics.
Feb. 15 2012 10:57 AM

Artisanal Pickles and the U-Curve of Economic Development

Adam Davidson's column on artisanal pickles and Kate Boo's masterful book on Indian slum-dwellers has me working up a sketch of a theory in which economic development proceeds along a kind of U-shaped curve as regards artisanal production.

The way an economy starts out is that for various reasons (inherent technological limits, bad political institutions, unfortunate history, whatever) almost everyone is working in extremely low-productivity lines of work. Perhaps they're hand-sorting garbage like one of Boo's characters. In an economy like this, if you're fortunate to be one of the privileged few who's not stuck with a painfully low income (perhaps you have a rare high-productivity job, or perhaps you're a large landowner or are extracting political rents) then you have the privilege of enjoying access to an incredible level of artisanal production. A high-end government official in India is going to have a much easier time hiring a personal chef than would one in Taiwan, not despite India being poorer but because India is poorer. A country gets rich by shifting its workers into high-productivity lines of work. People go off the farm and into the factory and suddenly nobody can afford artisinal pickles anymore. The new industrial society features a middle class that's much larger as a share of the population, but the middle class into industrial consumption not only of refrigerators but also of things that can't be done very well on an industrial scale. To stick with food, English food got to be the worst in the world because England industrialized first, which I think is a result that generalizes to other relatively early industrializers. But eventually these manufacturing-oriented middle-class societies start to head out of the other end of the tube. Instead of workers rushing into high productivity industries (high productivity means cheaper goods means more consumer demand means more employment), highly productive sectors start shedding jobs (higher productivity + consumer satiations = job losses) and workers migrate into sectors where technology is not enhancing productivity. At times this looks dysfunctional—spending on high schools keeps going up, but the high schools' outputs are basically the same—but other times it looks glorious. English people aren't eating "more meals per capita" in 2012 than they did in 1982 but the food is much better.

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The post-industrial economy looks, in many respects, similar to the pre-industrial economy—highly inegalitarian, huge returns to rent-seeking, lots of economic opportunities involve somewhat servile social roles—but on other levels it's very different. We're having a big national fret-off this month about declining male workforce participation. In India, of course, they don't have this problem. The alternative to working is starving to death, so people sort garbage by hand and are considered fortunate compared to those who scavenge for garbage to deliver to the sorter. I don't personally consider that a triumph of the moral order relative to how things work here.