Re: Adam Smith vs Alexander Hamilton on Manufacturing

[zinov@xxxxxxxxxx]

> There's no reason to assume that profits are equal in both.
> Manufacturing may generate more profits than agriculture. E.g., $500
> profit for manufacturing, $200 for agriculture.

If investments are being made by competent investors, the profitability
should be about the same for investments made in agriculture and
manufacturing.

> Demand for clothing is inelastic because people can't survive without
> clothing.

Even in the case of food, which is an absolute necessity to continue
living, if people do not have the money to afford the food, they either
will go without (becoming malnourished, and, if they cannot obtain it at
all, eventually starve to death) or obtain it by some other means. As for
clothing, people in poor countries will often continue to wear clothing
with holes in it, whereas people in rich countries will not only in most
cases quickly replace clothes with holes, but buy more clothing than is
needed.

So there will be limits to how much the profitability can be increased.

> > There is no need to rely on the capital of a single man. The capitalists can 
> > pool together their capital if there is an employment of it that is more
> > profitable.
>
> In practice, they don't. All massive infrastructure projects were funded
> by government.

Is that because the capital investment is large, or is it because of the
reason that I mentioned (that they are public goods)? In the latter case,
the benefit of subsidies would not generalise to cases where there are
foreign competitors.