Thursday, December 20, 2012

TINA vs. LOIS

Margaret Thatcher famously said “There Is No Alternative” but to maintain the historical approach to generating flourishing via GDP growth (usually via lowering trade barriers to international trade); this perspective is often labelled as “TINA”.  

This idea has always left me feeling uncomfortable (and my recent studies in Ecological Economics, which included a review of the history of the purpose and benefits or trade, have given some of the reasons why - perhaps the subject for another blog post).  

Anyhow, despite Thatcher's assertion an alternative has been proposed “Local Ownership, Import Substitution”.  This includes social as well as economic aspects to creating flourishing; 

This perspective is often labelled as “LOIS”,  and used in sentences such as “The alternative to TINA is LOIS”!

LOIS is based on, among other things, the idea of "local multipliers".

For more see: 
P.S. All this was prompted by my updates to the following Wikipedia pages - which could use some more work... 

6 comments:

  1. More on the macro-economic problems with "comparative advantage" - a part of the theory which is used to support the, IMHO, very poor results of TINA was recently documented in this post: http://www.businessspectator.com.au/article/2014/6/2/global-news/why-industrial-strength-born-diversity

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  2. I also recommend Michael Shuman's latest book "Local Dollars, Local Sense" for an investment view of the benefits of LOIS vs. TINA. The biggest point: if you only invest in the larger companies able to list on large stock exchanges (the businesses who operationalize TINA) you are only exposed to 50% of the market by $ value (this is a U.S.number). This means it doesn't matter how diversified your portfolio invested via stock markets you're missing out on the opportunities and risks of half the market! Doesn't sound diversified to me!

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  3. Also a comment I posted on Facebook recently in response to praise and concern for the latest global trade deal - the Trans-Pacific Partnership (TPP):

    I believe have a problem by what we mean by the word "trade". I'd be pleased to be corrected - I'm not claiming expertise. I did a bit of study around this as part of my Ecological Economics studies at York University - Faculty of Environmental Studies (For more see my post http://blog.antonyupward.name/2012/12/managing-without-growth-vs-end-of-growth.html, the Canadian Society for Ecological Economics and others).

    My understanding of the definition of trade is from economists who understood the relationship between nature and the economy - writing in mid/late 1700's (incl. Adam Smith - see https://twitter.com/GreenAdamSmith for much more - and others - ask me for names!).

    So...If by trade we mean I buy something from you (who live somewhere else from me - next door, next watershed, next country, other side of the planet) that I can neither make nor grow in my location *NOR* (and this is the crucial bit) can I buy / own *IN YOUR LOCATION* the resources to make / grow that thing then trade is a very good thing for all. As the saying goes raising all boats. (The original example was I think the English buying Wine from Portugal and the English selling woolen cloth to the Portuguese - https://books.google.ca/books?id=tisdyTq8SrIC&pg=PT482&lpg=PT482 !)

    Barriers to this sort of trade (other than to prevent environmental damage like carbon emissions for transportation) is I understand "a (very) good thing" for both of the *local* economies on either side of the transaction. Both localities can grow and have the opportunity to innovate while remaining reasonably in control of their own destines and able to look after their own people according to those peoples desires, goals, wishes and world-views.

    The problem comes when I can buy (or steal by force i.e. colonization) in your location the resources to make / grow that thing (i.e. the the British buying the vine yards in Portugal or sending gun boats up the Yangtze river - aka "gun boat diplomacy" - both of which were part of UK "trade" policy at one time). This is not trade as was originally understood in the mid/late 1700's; this is now now non-local ownership and control!

    Taking ownership / control from you in your location means you loose control and power over what happens where you are. Jobs can leave, the means of creating value can be destroyed for short term profit, etc. etc.

    But now, as I understand it, all the current "trade" agreements assume that both zero barriers to buy/sell *AND* zero barriers to ownership are needed for (so called) "fair trade". Not to be confused with "FairTrade" which of course seeks to pay a fair price and not to "own/control" the means of production in the sellers location.

    In summary: there really is an alternative to "TINA" - and that's "LOIS" - see the original blog post above this comment: http://blog.antonyupward.name/2012/12/tina-vs-lois.html.

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  4. To build on the above...

    Try something I've often done for myself: run little thought experiment in your head about the two definitions of trade - one where you can own / control "the means of production" in the remote location and one where you can't. Just based on basic logic I can't understand how if I control/own something in your location how things are going to be (in the long term) good for you. Very quickly it ends up with me selling things to you that you used to be able to produce for yourself with resources you owned/controlled, from half way around the world, while I get all the profit.

    As one example: Its common these days for Ontario grown carrots to be sent to California while at exactly the same time the reverse happens. The trucks even pass each other on the highway.

    How can this be good for the people in *BOTH* places *IF* what they both care about is a combination of increasing wealth, the social good of everyone and a healthy environment in which we can all have the possibility for flourishing?

    Can someone explain to me how the now normal definition of trade as buying/selling and ownership is good?

    (I also note that urbanist Jane Jacobs had the same conclusion as the early economists in here wonderful book "Systems of Survival" in which she identified two complementary moral / ethical systems that humans have for meeting their needs - but demonstrated a "monstrous hybrid" if one mixed them up - on purpose or accidentally. It seems to me that the new normal definition of trade is one such hybrid!)

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  5. This recent summary of a post to the Financial Times by David Ing suggests that we're reached "Peak Trade" - which implies that LOIS may be winner over TINA. An intriguing possibility! blogs.ft.com/beyond-brics/2014/11/19/peak-trade-and-chinas-role-in-5-charts

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  6. Perhaps on the other side of this pro-LOIS argument...

    Love it if someone can help me understand the flaw in my thinking...

    I believe the folks who argue for both freedom of movement of goods/services *AND* capital say that if I have capital to invest in my location, but there is are no "good" local investments, then that capital is likely to sit idle - hence opportunities for more economic activity / economic growth / wealth generation are lost.

    But if I can move that capital to where the "best" opportunities exist (where neo-liberal definitions of best would all be uniquely measured in financial terms) then in total there will be more economic activity more quickly.

    And when one considers the crying need for investment in some parts of the world to enable them to have the level well-being of (health, food, shelter, education) that they desire, having capital sit idle in one location only because of some “arbitrary” trade barrier to freedom of movement of capital is a bad thing.

    So my question is where is the flaw in this thinking. i.e. if we only pursued LOIS (i.e. only freedom of trade in goods/services as discussed above) wouldn’t that opportunity to raise all boats through freedom of movement of capital be lost - and wouldn’t that net-net be a bad thing?

    Of course this puts aside the questions of the harm / negative consequences of:
    — how I came to have this excess capital in the first place - based on first mover advantage to monetize an innovation and "gun boat diplomacy" and "colonization" (see above).
    —the social and environmental impact of the loss of power in the location when the capital is invested (again explored above)

    Also on a probably related question. I am also not sure how freedom of movement of people fits into this - the EU has a lot of this in its trade agenda, NAFTA and the new CETA a little, and as I understand it the (now very likely dead) Trans-Pacific Partnership - almost none at all.

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