Building Factories in Afghanistan
From a Washington Post article on how Afghans see the war:
“If you look around, you see nothing but jobless people,” said Qari Imam, 30, who sells children’s clothing in the market here. “A lot of people who join the Taliban are jobless, too. If you want to stop the fighting, don’t send us more troops; build us more factories.”
Of course we could build a bunch of factories, but that wouldn’t do any good unless the factories had customers. If I’m reading these slides right then textile products made in Afghanistan are not eligible for duty-free sale in the United States. Changing that rule might encourage some factory-building in Afghanistan. Similarly we see here that some of Afghanistan’s key trade partners have very high tariffs on Afghan agricultural products. Perhaps we could persuade Turkey and India that they don’t need to be charging 50+% taxes on imports of Afghan grapes. India is Afghanistan’s largest export market right now despite those high taxes; changing it would open some additional economic opportunities for people.
29 Responses to “Building Factories in Afghanistan”
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October 4th, 2009 at 5:49 pm
or, you know, we could send some more troops. With guns and bombs to blow sh*t up. Why don’t we do that? It seems easier.
October 4th, 2009 at 6:00 pm
Do both.
Factories with customers don’t do a lot of good if they keep getting suicide-bombed, either.
October 4th, 2009 at 6:04 pm
I recall that at the start of the whole Afghan business, when figuring out how to keep Pakistan cooperative was an important discussion topic, it was proposed that the most useful thing the US could have done for the Pakistani people was to remove or seriously lower textile tariffs. Didn’t happen, of course.
October 4th, 2009 at 6:13 pm
Or we could stop trying to eradicate their one successful product.
Why doesn’t the U.S. government make some arrangement so that we buy opium from Afghanistan to use in legal opiates like morphine?
October 4th, 2009 at 7:23 pm
It always amazed me that we wouldn’t even give Pakistan a break on textiles–the most obvious thing to do…and you think we’re going to do something sane and sensible regarding Afghanistan?
October 4th, 2009 at 7:48 pm
Too bad Afghanistan doesn’t have any natural resources that the world needs. If they had, oh I don’t know…oil, then all their problem would be solved. The could just pump it and sell it, and then they would be rich and happy. Just like Iraq. Amirite?
October 4th, 2009 at 7:58 pm
Hey, how about we build some factories right here? or re-fit and re-fill the ones we have to operate more sustainably and give US some jobs?
i don’t want to sound jingoistic, but if we’re gonna build a nation, well, ours is crying…
and, it is not isolationist to say i don’t give much of a crap about ‘beating’ the Taliban. At first i supported the action in Afghan because the people who attacked us on our home soil were there, and we were supposedly chasing them. further, the Taliban, when in power, gave comfort to and helped hide those murderous criminals, so the Taliban were fair game.
But now? not so clear. i’d still want to chase osama unto the planet Mars, but am not at all convinced that we have a beef with the now-out-of-power Taliban. yes, they are misogynist monsters, but the world is full of criminals and bigots and we simply cannot take them all on . (besides, if this was really our beef, we’d invade Saudi Arabia. fat chance, no?)
LET’S GIVE UP THIS WORLD POLICEMAN BUSINESS. we just keep killing the people we are supposedly ’saving’ and killing several of our own in the process.
And right at this historical moment, we are also squandering billions that we could be using for further stimulus–called that or not– [or maybe we'd be shoveling the money into the bonus package at some investment bank. take your choice. but at least it'd be paid out and spent here where it's needed.]
it sounds cute or whatever, but we really do need some serious nation building right here, right now.
October 4th, 2009 at 8:02 pm
@too many steves: the funny thing is, we do JUST THAT in Turkey…and started doing it for the exact same reason we keep destroying the poppy crop in Afghanistan: opium and heroin exports. I’ve been mystified from the start as to why we don’t offer the same set-up to Afghanistan that we do Turkey.
October 4th, 2009 at 9:58 pm
Misogynist monsters? Radicalized religious zealots wanting to impose a narrow world view and distorted educational curriculum on the populace? Nationalistic figures believing their ends can be achieved at the end of a gun? Yeah, such freaks should be hunted down and jailed or killed. Unfortunately we’d have to off a few million Americans under those rules.
October 4th, 2009 at 11:38 pm
” If I’m reading these slides right then textile products made in Afghanistan are not eligible for duty-free sale in the United States. Changing that rule might encourage some factory-building in Afghanistan.”
Factories (regardless of tariff rates) are only worthwhile if the productivity of the workers is high enough to justify their salaries.
If an uneducated Afghan (because the girls have never been to school and all the boys know is how to recite the Koran) can’t produce as much, for a given wage, as an uneducated Vietnamese peasant, or an uneducated Honduran, or an uneducated Fijian, why would anyone establish a factory there? (This is not a comment for or against globalization, it is simply a statement of the logic behind the problem.) This is, in a nutshell, the primary problem with Africa — the cost of establishing a factory (capital costs, electricity, telecom, security, etc) plus paying enough food to keep a worker alive is higher than the value that worker is capable of producing. I don’t see much reason to believe Afghanistan is much beyond Africa in this respect — less malaria, more drug addiction, it’s a toss up.
How do you move beyond this? Either the people find something they are especially skilled at doing, or they educate their kids to be skilled. I don’t see either happening there. And so they will remain in squalor for a long long time.
At some point there’ll be some bullshit from the US (perhaps with European assent, heck, maybe the US will even strong-arm the Japanese) and we’ll get tax credits or similar such bribes to try to get manufacturers to go there. Maybe we’ll see a factory making shoes or something. But it will have precious little effect, and in ten years when the US finally gets its act together, the factory will die the day the tax credits end.
October 4th, 2009 at 11:52 pm
@Benny
To be fair, Afghanistan actually has quite a bit of natural resources. It has been a major exporter of precious metals since the Copper Age, and would be again, if it were not for the whole no-one-wants-to-build-mines-if-they-will-be-raped-and-decapitated-for-doing-it thing.
October 5th, 2009 at 12:07 am
Vietnam GDP per capita: 2600
Afghanistan GDP per capita: 1000
We could probably get away with paying the Afghanis LESS than the Vietnamese. If there are areas that are secure enough to eliminate the risk of sabotage, then it might be worthwhile to open factories. Afghanistan has a millenia old tradition of weaving carpets that no vietnamese could match. Perhaps Persians and Turks could match it, or maybe Pakistanis, but again there is the price differential. I have a very good friend who is persian carpet-seller, and while the highest quality carpets are from a few cities in Iran, Afghan carpets are quite nice, and the supply costs for handmade wool carpets out of Afghanistan are ridiculously low, I’m talking less than 200 US for a 3+ square meter handmade wool carpet with traditional baloch designs made by some housewife. This is thousands of miles away from afghanistan, so I can’t even imagine the price paid by the merchant who actually bought it in afghanistan, drove it to iran, sold it in iran, etc etc. Figure material costs, transportation costs, holding costs (carpets don’t sell overnight), and you can imagine the cost of labor is really cheap.
They make carpets in china by the way. They’re cheaper than anything that comes out of traditional carpet-making countries. Except like most things out of china, they suck and the quality is horrible.
Afghans have skills. They could put them to use. They just need a stable country. You will never see investment there if the investors fear that they could easily lose their entire investment due to war etc.
October 5th, 2009 at 12:29 am
I’m surprised your preference to read reports over hearing something face to face (esp an ancecdote from a ‘man in the street interview’) did not lead you to this conclusion earlier; this is in the Civ – Mil plan, linked by Ackerman few weeks ago.
Page 10 (page 15 in the html reader)
October 5th, 2009 at 1:25 am
Problem: Afghanistan has surplus unemployment and poverty in its agricultural sector. Solution: convince another nation to import some of that surplus.
(Not orthodox as an economic analysis, of course, but as a political analysis it’s a reasonable first approximation.)
October 5th, 2009 at 1:54 am
”
Vietnam GDP per capita: 2600
Afghanistan GDP per capita: 1000
We could probably get away with paying the Afghanis LESS than the Vietnamese.
”
You are missing the point. It doesn’t matter if Afghan wages are less than those of Vietnam. What matters is the value produced per unit of wage. If that is lower (because the workers don’t try as hard, break every hour to say prayers, won’t work in the same building as women, it costs more to run the factory because of no electricity and high security, whatever) then Vietnam is a better deal.
This is my point wrt Africa — it doesn’t matter how low African wages go — the productivity is below the value of the food to keep a worker alive, at which point it is game over.
As for carpets, give me a break. How many people in the world want to buy carpets that are hand-made? For most people a carpet is something you throw on the floor and when it falls apart you buy a new one. So the one from China only lasts 5 years and the one from Afghanistan lasts 50 years — who cares, if the Chinese one costs $10?
The issue is not the world as you wish it to be, where craftmanship and traditions and whatever are rewarded. The issue is the actual world.
Skills that provide something the world is not especially interested in paying for (which is the case for handmade carpets) are worthless skills.
As for all those unemployed “farmers”. That’s because the country has the 28th highest birthrate in the world. It’s full of young adults who don’t have any land to work. 45% of the population under 14 — there’s a successful country waiting to be born…
What’s gating their agricultural productivity, such as it is, is lack of scientific farming and lack of fertilizer, not lack of labor.
October 5th, 2009 at 2:44 am
Yes, I’m quite sure India would greatly appreciate the U.S.’ establishment hectoring them about their trade and tariff policies.
October 5th, 2009 at 4:27 am
Why don’t we leave the entire area by next Wednesday, allow the Afghans to grow whatever the hell they want and then allow free trade with them?
October 5th, 2009 at 4:44 am
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October 5th, 2009 at 4:48 am
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October 5th, 2009 at 4:48 am
15: How many people in the world want to buy carpets that are hand-made? For most people a carpet is something you throw on the floor and when it falls apart you buy a new one. So the one from China only lasts 5 years and the one from Afghanistan lasts 50 years — who cares, if the Chinese one costs $10?
This is like a parody of some flyover country Wal-Mart shopper’s view of the world.
October 5th, 2009 at 5:25 am
Bob Roddis Says:
October 5th, 2009 at 4:27 am
Why don’t we leave the entire area by next Wednesday, allow the Afghans to grow whatever the hell they want and then allow free trade with them?
Then we’d have more time to stuff our mattresses with GOOLLLDDD!
October 5th, 2009 at 6:11 am
Yeah, we might as well build something while we are there. Or, at the very least, help THEM build something.
And sometimes a large part of that process is simply getting out of the way -not obstructing a proud people from carrying out for themselves a significant portion of the necessary rebuilding. And it always helps this process when you refrain from actively interrupting it or or interfering with it by forcibly applying failed SHOCK remedies like Free Market Global Capitalism mixed with high doses of explosives.
October 5th, 2009 at 7:24 am
[...] It could be implemented by the US and India, among others, and give succour to legal employers: cut tariffs on Afghan exports. We’re not talking heroin here: their textiles (think gorgeous Afghan rugs) are heavily [...]
October 5th, 2009 at 8:21 am
Shocking how Matt most definitely does not support building factories in America… or anything else that might get American’s jobs.
No, In America all that matters are the leeches of society: The financial types, the bankers, and stock brokers. People who vacuum up money and make it disappear forever.
October 5th, 2009 at 9:18 am
Joblessness and poverty create social unrest?
Well, Bob’s your uncle! Who’d athunk it?
October 5th, 2009 at 9:23 am
[...] Knapp | Monday, October 5, 2009 Matthew Yglesias suggests that one thing that could aid the fight in Afghanistan would be to lower tariffs against [...]
October 5th, 2009 at 11:55 am
Glenn Greenwald says:
October 5th, 2009 at 3:14 pm
As I understand it, every major successfully industrialized nation developed with the aid of substantial protectionist trade policies of some sort. This is simply necessary, in the short term, for the fledgeling industries in the develping nations to be able to compete with the more mature businesses in the developed nations. Of course, to acknowledge this and implement appropriate policies in Afghanistan would be to admit the exploitative nature of the WTO, the IMF, the World Bank; i.e. the neoliberal agenda, or “Washington consensus” as it is called. This would, in turn, threaten the competitive advantage that western nations enjoy, and inhibit the investment of western capital in emerging markets. Needless to say, this is unlikely to happen. And yet again, we are left in a situation where we must find a way to solve the problems facing the world without causing the least inconvenience to the rulers of said world.
October 6th, 2009 at 8:20 am
@28 Jason: “As I understand it, every major successfully industrialized nation developed with the aid of substantial protectionist trade policies of some sort. This is simply necessary, in the short term, for the fledgling industries in the developing nations to be able to compete with the more mature businesses in the developed nations. Of course, to acknowledge this and implement appropriate policies in Afghanistan would be to admit the exploitative nature of the WTO, the IMF, the World Bank; i.e. the neoliberal agenda, or “Washington consensus” as it is called.”
Beautifully said. And you are exactly right. If we want to get out of Afghanistan we must accomplish something positive while we are there. If we follow the usual tried and true methods of breaking what little there is of a weak nation’s economy, so that we dominate it, we will have, most assuredly, Afghanistan by the throat. But ironically, and tragically, if we follow this course, I believe in this particular situation our vice grip will be our undoing, because we will never be able to let go, and we likely be in Afghanistan, choking them to death, forever.