> Commenting on my own comment, I forgot to mention that "predatory dumping" is
> not, to my knowledge, discussed by List, who, however, says some extremely
> sophisticated things about price levels and the solvency of hte banking system.
> So your reference to List makes me wonder whether you are in fact familiar with
> the argument I'm making. Check out those graphs in Machine that Changed the
> World and tell me domestic demand doesn't affect the Japanese auto industry.
Eh? List does indeed talk about how foreign imports can trash your manufacturing sector (one of his examples is the crushing of the Indian textile industry by the Brits, via some mightily effective trade policies). The problem is, List's stuff is very nebulous about the whole role of consumption, his model is the alliance of Iron and Rye, i.e. a kind of co-cartel between agrarian and industrial groups.
And yes, domestic demand does indeed affect the Japanese auto industry -- but demand in the USA and the rest of Asia, and not just within Japan, proper. In general, "Machine" suffers from a curious hyperfixation on the magic of outsourcing -- their productivity stats concentrate on final assembly, and make the US and EU producers look much more inefficient than they actually were or are, and they fail to note that Japan's surge also had lots to do with US stupidity (or rather, the rentier policy of letting the American industrial base go to hell, so as to stomp real wages and smash unions) rather than productivity per se. But that's a different issue, of course...
-- Dennis