America Can’t Even Produce the Things It Invented(nytimes.com)
nytimes.com
America Can’t Even Produce the Things It Invented
https://www.nytimes.com/2021/01/04/opinion/manufacturing-united-states-masks.html
193 comments
Dems used to be pro labor, Repubs used to be pro business (on balance, but kind of served both when it made sense).
In the ‘80s Dems saw being default pro business was more lucrative and jumped ship.
Now both parties play both hands and workers get shafted.
Oh but the Dems are pro workers! No, they are not. They pretend they are. The only ones who are pro worker also sold out (Bernie) and went globalist —Compare his positions in the 80s vs now.
In the ‘80s Dems saw being default pro business was more lucrative and jumped ship.
Now both parties play both hands and workers get shafted.
Oh but the Dems are pro workers! No, they are not. They pretend they are. The only ones who are pro worker also sold out (Bernie) and went globalist —Compare his positions in the 80s vs now.
anonunivgrad(1)
Comparative advantage never made any sense. It's a model of a world without technology, without supply chains, without increasing returns to scale, and only two countries.
You sort of had me until the last claim (no more than two countries), I know for a fact their models are more advanced than that. Any actual economist care to chime in and explain comparative advantage?
This is an amazing article, which provides both views
https://www.investopedia.com/terms/c/comparativeadvantage.as...
There are models with more than two countries, but no consensus on which to use. Most economists couldn't name one of these models, or anyone who has ever studied the question.
Replacing all the financial and political elites is a good idea, they have demonstrated incompetence at running the economy.
But it is too easy to blame them and overlook the role of the public. Particularly in politics, where it cannot be overlooked that the voters vote for whoever they want. This didn't creep up on the US - this was a 30-40 year process overseen by the Boomers which anyone could have seen coming had they looked. Many did, it was obvious China was the future. It is well worth being sober, realistic and evidence based about what they did and whether their successes and failures were correctly learned by the next generation.
I think the 30s and under have learned a lot more lessons about the environment and social theory than developed an understanding of why China is becoming the pre-eminent world power, why it is led by Communists and whether the US should have done things differently.
But it is too easy to blame them and overlook the role of the public. Particularly in politics, where it cannot be overlooked that the voters vote for whoever they want. This didn't creep up on the US - this was a 30-40 year process overseen by the Boomers which anyone could have seen coming had they looked. Many did, it was obvious China was the future. It is well worth being sober, realistic and evidence based about what they did and whether their successes and failures were correctly learned by the next generation.
I think the 30s and under have learned a lot more lessons about the environment and social theory than developed an understanding of why China is becoming the pre-eminent world power, why it is led by Communists and whether the US should have done things differently.
I think this all started as some kind of national security consensus that we would help China by having free trade with them.
It worked in that millions of Chinese have been uplifted (of course this is vast oversimplification: they helped themselves and many other countries also trade with them), but has definitely failed if we ever thought to make the Chinese government less authoritarian as a side effect.
It was definitely paid for by American workers. I don't know what economists were smoking when they thought the entire blue collar workforce would be retrained into better jobs, but that's the theory they kept forwarding.
I've also heard that this has helped America by keeping inflation low. What they mean when they say "inflation" is almost always "wage inflation". You can see the mindset in the Covid relief debates- God Forbid we give people more money than the slave wages they get from corporations- they might not work! Corporations might have to pay more in wages!
It worked in that millions of Chinese have been uplifted (of course this is vast oversimplification: they helped themselves and many other countries also trade with them), but has definitely failed if we ever thought to make the Chinese government less authoritarian as a side effect.
It was definitely paid for by American workers. I don't know what economists were smoking when they thought the entire blue collar workforce would be retrained into better jobs, but that's the theory they kept forwarding.
I've also heard that this has helped America by keeping inflation low. What they mean when they say "inflation" is almost always "wage inflation". You can see the mindset in the Covid relief debates- God Forbid we give people more money than the slave wages they get from corporations- they might not work! Corporations might have to pay more in wages!
In a sense this has kept inflation low. China's factories and population can produce more cheap knick knacks than America can ever consume. Instead of newly printed money chasing after an inexhaustible supply of things to order from Amazon, it chases after things that are actually limited in quantity like land, stocks, gold, and bitcoin.
Why the obsession with manufacturing jobs? Unemployment was still low (at least pre-covid) and total compensation, while not growing as fast as some people would like, is still higher than ever.
Manufacturing requires the ability to marshal human, technological and financial resources at scale. The US policy for the last 50 years has been to invest heavily in the technological and financial capabilities of the equation and outsource the human capability to other countries.
COVID-19 has made it apparent that there are significant advantages to having the operational capabilities to organize human resources at scale. The US, for example, was unable to staff an effective test and trace program even while a significant percentage of its population sat idle or to mobilize healthcare resources to hot spots. Effectively the US traded 300,000 lives because the US couldn't effectively organize 300,000 people quickly.
COVID-19 has made it apparent that there are significant advantages to having the operational capabilities to organize human resources at scale. The US, for example, was unable to staff an effective test and trace program even while a significant percentage of its population sat idle or to mobilize healthcare resources to hot spots. Effectively the US traded 300,000 lives because the US couldn't effectively organize 300,000 people quickly.
Your politicians failed you.
You vote for them, and you feel good if they win. But then what happens? Nothing.
The rich keeps getting richer. While the poor stays poor. And the middle class becomes poorer.
The elites just wants to make more money. And what do they do? They buy out the politicians, in order to keep themselves rich.
And what’s the biggest lie that they’ve sold you?
That trickle-down-economics works for everyone.
You vote for them, and you feel good if they win. But then what happens? Nothing.
The rich keeps getting richer. While the poor stays poor. And the middle class becomes poorer.
The elites just wants to make more money. And what do they do? They buy out the politicians, in order to keep themselves rich.
And what’s the biggest lie that they’ve sold you?
That trickle-down-economics works for everyone.
Who is the "you" here? Given that this is a tech focused website, I bet a lot of people on here have done very well in recent years. Hard to consider the 20- and 30- something year olds making $500k/year at a FAANG or a few million dollars when the unicorn they work for IPOs an oppressed class.
That's a small part even of the people here.
And yet they are. Petite bourgeoisie and all that.
20- and 30- somethings at FAANG is hardly a picture of America as a whole. Also if 20- and 30- somethings ignore the rest of our neighbors in other fields because “F you got mine”, we’re hardly better than the elitists.
Better than the elitists? They are the elite.
Ha! I was going to edit my post with exactly that, that is correct. 500K/year is probably top 2%?
The elite are not the ones making a tech salary and spending 1/4 of it on their rent. The elite are the few who are writing those tech salary paychecks.
Agreed. The difference between the top .01% and top 2% is many magnitudes larger than the difference between those 2% and the other 98%. (Sorry no source.). But both seem to contribute to the increasing inequality.
I bet the people making $7.25 an hour would consider the $500k/year FAANG crowd pretty elite. Also if you own enough tech stock then you are also kind of writing the paychecks.
The problem isn't comparative advantage, it's that the US left the poor states to languish with poor education. So instead of higher quality manufacturing / blue collar jobs, non-educated folks got minimum wage service jobs.
The US is at or near the top of all western countries on educational spending per student:
https://nces.ed.gov/programs/coe/indicator_cmd.asp
https://nces.ed.gov/programs/coe/indicator_cmd.asp
The US also has the highest spending in health care per capita.
Spending does not equal outcomes.
Spending does not equal outcomes.
Yes, I agree. But the comment implied neglect, which is false. Our education system is a mess, but it's not due to neglect, and it doesn't have anything to do with manufacturing being shipped abroad.
As a side note, the US has the second highest public spending per capita (second only to Norway, last I checked). Our Government spends more per citizen than all but one "socialist" country. We then of course spend another doubling of that in private expenditures, and, yes, get worse outcomes.
The US is in a very bad spot.
As a side note, the US has the second highest public spending per capita (second only to Norway, last I checked). Our Government spends more per citizen than all but one "socialist" country. We then of course spend another doubling of that in private expenditures, and, yes, get worse outcomes.
The US is in a very bad spot.
While I am generally sympathetic to the education and healthcare points, I would be interested in seeing the public spending per capita after defense spending.
I should have been clearer: that is public spending on healthcare:
https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...
Thanks for clarifying.
How much of that public spending is on the prison industrial complex? On "law and order?" Not all public spending is equal.
That is public spending on healthcare:
https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...
https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...
There are not enough "higher quality manufacturing / blue collar jobs." The US has embraced an economic model of outsourcing manufacturing and shifting to an economy based around intellectual property, finance, and other knowledge work. What's left is low-skill, low-pay service jobs, where outsourcing is not possible, but where technology is instead the threat.
And knowledge jobs are jobs for smart people. Most people are not smart enough to do those jobs and no amount of money spent on education (the US spends more than almost every other western country, at every level) can change that.
And knowledge jobs are jobs for smart people. Most people are not smart enough to do those jobs and no amount of money spent on education (the US spends more than almost every other western country, at every level) can change that.
Yeah, think very carefully before having kids. What kind of life will they have in this country if they are not technical elites of some kind? In the old days, you always needed labor for the farm or factory, but not anymore..
> the US left the poor states to languish with poor education
Why didn't state funding pick up the tab?
Why didn't state funding pick up the tab?
Those Elites are back in power in a few days. Enjoy it. America voted for it.
The stock market and housing prices are higher than ever, so a large part of the population is doing good. Not just the elites have benefited from the spoils, people with retirement portfolios and paid-off houses are sitting nice and flush.
84% of wealth in the stock market is in the hands of the top 10%
Not sure about housing.
Not sure about housing.
I did not believe this to be true, but after researching it turns out that your figure is accurate for 2016 and that it's likely only gotten worse since then.
Page 19 of this document produced by the NBER states that indeed, the wealthiest 10% own 84% of all publicly traded stocks, mutual funds, trusts, or various pension account assets:
https://www.nber.org/system/files/working_papers/w24085/w240...
It has many other interesting insights that are worth quickly reading through, for example you mention you are unsure about housing, but that report says the top 10% own 41% of all housing in the U.S.
The other interesting figure is debt, where the top 10% owe 28% of all debt.
Page 19 of this document produced by the NBER states that indeed, the wealthiest 10% own 84% of all publicly traded stocks, mutual funds, trusts, or various pension account assets:
https://www.nber.org/system/files/working_papers/w24085/w240...
It has many other interesting insights that are worth quickly reading through, for example you mention you are unsure about housing, but that report says the top 10% own 41% of all housing in the U.S.
The other interesting figure is debt, where the top 10% owe 28% of all debt.
67.4% of Americans own a home. You don't need to be in the be in the top 10% to benefit.
https://www.census.gov/housing/hvs/files/currenthvspress.pdf
https://www.census.gov/housing/hvs/files/currenthvspress.pdf
That's not exactly what "home ownership rate" means. Home ownership rate is the proportion of occupied homes which are owned by their occupants. If your town has one hundred occupied homes, then 67 of those occupied homes would be owned (or being paid for on mortgagee) by the people living inside.
Adult children living at home, adults living in homes with roommates, people underwater on their mortgage, etc would all count towards a higher home ownership rate.
Adult children living at home, adults living in homes with roommates, people underwater on their mortgage, etc would all count towards a higher home ownership rate.
Rising housing prices help people underwater on their mortgage get above water.
I wouldn’t call ownership a benefit for the 71% of home owners with a mortgage.
> Zillow’s Negative Equity 2012 Q3 data; we find 29% (20.6 million) of homeowners own their home outright
https://www.zillow.com/research/free-and-clear-american-mort...
> Zillow’s Negative Equity 2012 Q3 data; we find 29% (20.6 million) of homeowners own their home outright
https://www.zillow.com/research/free-and-clear-american-mort...
At least one Nobel prize-winning economist has noted that home ownership is not all that it's made out to be.
https://www.bloomberg.com/news/articles/2013-10-15/the-econo...
https://www.bloomberg.com/news/articles/2013-10-15/the-econo...
Just flip it around, would plummeting housing prices benefit homeowners with a mortgage? No, that's a disaster (see the 2007 housing crash). Borrowing, especially at the extreme low rates, on an appreciating asset is great, paying debt on a depreciating asset is a nightmare.
Flip what around? A mortgage doesn’t give you the benefits of being wealthy. Whether the market is good or bad. Anyway, the point is moot as the parent report shows the top 10% also own 41% of the houses, so the initial argument stands that the wealthy are benefiting the most.
Thanks for the link. I’m on mobile and only got a second hand source on my comment below. I totally agree it must be worse now. It would be interesting to see the latest numbers.
10% of the population is 33 million people. There's a sleight-of-hand going on here where people whine about a tiny number of billionaires and CEOs screwing over the masses and then point to statistics that actual show the average upper middle class household doing very well.
I bet a large fraction of the posters on here who complain about being oppressed by economic inequality are themselves part of the top 10% too (and have benefited greatly from the trend towards more inequality).
I bet a large fraction of the posters on here who complain about being oppressed by economic inequality are themselves part of the top 10% too (and have benefited greatly from the trend towards more inequality).
Quit down playing the inequality. Let me make the math easier. Of 10 people, one owns 86% of the stock. The other 9 fight for the other 14%. You are trying to justify that and it’s unfortunate. Also, the few billionaires are still very much a problem. However, the top 10% still displays a large inequality, quite the opposite of “doing very well”. And, I’m glad there are 10%’ers who are pro-equality, they aren’t complaining about being oppressed. They are displaying solidarity with the less fortunate and I hope they are showing it by voting for pro equality measures and politicians (an oxy-moron, I know, but there’s a few good ones).
More like one owns 86% of the stock, 4.5 own no stock at all, and the remaining 4.5 fight it out.
45% of Americans do not own a shred of stock at all, including indirectly through mutual funds or retirement accounts [1].
1: https://news.gallup.com/poll/266807/percentage-americans-own...
45% of Americans do not own a shred of stock at all, including indirectly through mutual funds or retirement accounts [1].
1: https://news.gallup.com/poll/266807/percentage-americans-own...
True, it’s hard to relate to the people defending the status quo in these comments. I think I am usually pretty good at understanding the other side of the argument, but tough for me here.
Much of that stock market wealth is tied up in the retirement accounts of people who are about to retire or are retired. A large portion of it is the elites without a doubt, but much of it is just people who've been contributing to a 401k for the last 50 years. Obviously they should both be in the upper percentages of income/wealth as well as own much of the stock market. They've been contributing for years and years.
iphorde(3)
Can you provide source for these numbers?
It's always interesting to me when people react like this to an internet comment without sharing any research they did themselves.
To me a forum like this is like when I'd be sitting around in uni wondering aloud about some problem and someone will say "Well, maybe if you use the fact that the functions which invert the sign of the √2 and √3 parts in Q(√2, √3) are automorphisms, then you can see that the group containing them and their composition is just Z2×Z2".
The truth of that part isn't important. It's the fact that it's a good faith hint. It's my job to go find the truth given this mild heuristic.
They're the ones doing me the favour so I have to contribute in order to get more information. In this case, I can attempt to find an error in the proof or to ask clarification. But if I were to ask them to write out a proof then I'm being a fool and I'll get fewer hints from them in future.
I noticed that most people who really know their field don't cite their assertions. It makes sense. So now I'm not surprised when people don't provide a citation. It's just a hint. They didn't sign up to be my tutor.
To me a forum like this is like when I'd be sitting around in uni wondering aloud about some problem and someone will say "Well, maybe if you use the fact that the functions which invert the sign of the √2 and √3 parts in Q(√2, √3) are automorphisms, then you can see that the group containing them and their composition is just Z2×Z2".
The truth of that part isn't important. It's the fact that it's a good faith hint. It's my job to go find the truth given this mild heuristic.
They're the ones doing me the favour so I have to contribute in order to get more information. In this case, I can attempt to find an error in the proof or to ask clarification. But if I were to ask them to write out a proof then I'm being a fool and I'll get fewer hints from them in future.
I noticed that most people who really know their field don't cite their assertions. It makes sense. So now I'm not surprised when people don't provide a citation. It's just a hint. They didn't sign up to be my tutor.
It's always interesting to me when people react like this to an internet comment without sharing any research they did themselves.
I didn't do any particular research here, because it conflicts with the preexisting knowledge I have about the subject, and because my experience tells me that figures like these, which can be, and especially when they actually are used to further political narrative, are often misleading, and/or wrong. However, I didn't want to accuse the commenter of any bias or misconduct, hence I phrased my question to leave out my skepticism.
The truth of that part isn't important. It's the fact that it's a good faith hint.
You actually hit the spot: you can assume good faith when sitting around in uni and asking people to help you calculate Galois groups. You cannot assume good faith when talking to strangers online on politically charged topics: even if they are themselves operating in good faith, it is highly likely that they were fed, as you call them, "hints", by bad faith actors. Hence, I ask for sources.
I noticed that most people who really know their field don't cite their assertions. It makes sense. So now I'm not surprised when people don't provide a citation.
That's because they can rely on their authority and experience to establish trust, and they have reputation to protect in case their assertions are actually completely wrong. None of this is true when talking to random, anonymous people online.
I didn't do any particular research here, because it conflicts with the preexisting knowledge I have about the subject, and because my experience tells me that figures like these, which can be, and especially when they actually are used to further political narrative, are often misleading, and/or wrong. However, I didn't want to accuse the commenter of any bias or misconduct, hence I phrased my question to leave out my skepticism.
The truth of that part isn't important. It's the fact that it's a good faith hint.
You actually hit the spot: you can assume good faith when sitting around in uni and asking people to help you calculate Galois groups. You cannot assume good faith when talking to strangers online on politically charged topics: even if they are themselves operating in good faith, it is highly likely that they were fed, as you call them, "hints", by bad faith actors. Hence, I ask for sources.
I noticed that most people who really know their field don't cite their assertions. It makes sense. So now I'm not surprised when people don't provide a citation.
That's because they can rely on their authority and experience to establish trust, and they have reputation to protect in case their assertions are actually completely wrong. None of this is true when talking to random, anonymous people online.
I was about to comment the same. The parent saying “not just the elites have benefited” is ignorant.
https://money.com/stock-ownership-10-percent-richest/
https://money.com/stock-ownership-10-percent-richest/
So there's also a generational divide. This isn't a good thing.
Well of course there is a generational divide and it's a great thing and exactly what one should expect.
Someone who is 60 years old has had approximately 30-35 years worth of time to invest and accumulate assets compared to someone 30 years old who has only had 5-10 years worth of time.
What would you have expected to see in the alternative?
Someone who is 60 years old has had approximately 30-35 years worth of time to invest and accumulate assets compared to someone 30 years old who has only had 5-10 years worth of time.
What would you have expected to see in the alternative?
At least in the UK it's a lot more uneven than that. House prices have increased far far above inflation over the 20th century (not entirely evenly). So those who invested in property at low prices are now sitting on large nest eggs, while young people are unable to make similar investments as they are already priced out of the market.
Sure but that's because a house in London is a fundamentally different asset today than it was say 30-40 years ago. I live in Toronto and people in my generation complain about housing prices here as well, that their parents bought a house for super cheap back in the 70s and 80s and now they have no chance to afford anything.
What's not discussed is that these cities were much smaller back then, had far fewer services both private and government, had much higher crime and pollution and a host of issues that have all been substantially ameliorated over the decades, specifically the 90s.
If people want the experience that their parents had to find cheap housing, then they have to move to a location that is in a similar state today that London or Toronto was in 30 years ago. Those places do exist and there's no shortage of affordable and cheap housing in Canada, many parts of the U.S., and I suspect the UK.
The problem is that what people my generation really want are all the benefits that have come over the past 3-4 decades without the cost of paying for those benefits, and that's just not likely to happen.
What's not discussed is that these cities were much smaller back then, had far fewer services both private and government, had much higher crime and pollution and a host of issues that have all been substantially ameliorated over the decades, specifically the 90s.
If people want the experience that their parents had to find cheap housing, then they have to move to a location that is in a similar state today that London or Toronto was in 30 years ago. Those places do exist and there's no shortage of affordable and cheap housing in Canada, many parts of the U.S., and I suspect the UK.
The problem is that what people my generation really want are all the benefits that have come over the past 3-4 decades without the cost of paying for those benefits, and that's just not likely to happen.
Right, good luck predicting and buying a house in the next London. Just like my stock pick is going to be the One in 30 years.
Asking without irony: What place in Canada today would be equal to Toronto in the 1990s?
1990s? Ottawa, Edmonton, maybe the Waterloo region.
But there are also places like Calgary, Winnipeg, London and Halifax that are smaller, much more affordable, and have a decent standard of living. The issue is that if you compare Halifax or Winnipeg to Toronto it's a no brainer that Toronto is just significantly ahead in development, but it's not like people in Halifax are struggling to find work, or are poor or living in bad conditions. There are plenty of good places across Canada to raise a family and enjoy a good standard of living.
But there are also places like Calgary, Winnipeg, London and Halifax that are smaller, much more affordable, and have a decent standard of living. The issue is that if you compare Halifax or Winnipeg to Toronto it's a no brainer that Toronto is just significantly ahead in development, but it's not like people in Halifax are struggling to find work, or are poor or living in bad conditions. There are plenty of good places across Canada to raise a family and enjoy a good standard of living.
Montreal is significantly cheaper than Toronto (even though prices have picked up in the past 5 years or so) and would provide something similar to Toronto 90's prices with arguably similar services.
> So there's also a generational divide. This isn't a good thing.
This almost reads like satire. You're saying it's a problem that people who have worked their entire life have more wealth than people who have more recently begun their career?
This almost reads like satire. You're saying it's a problem that people who have worked their entire life have more wealth than people who have more recently begun their career?
I won't dispute that retirement portfolios and people with real estate have done quite well. But I personally think that many of these people are only doing well on-paper. This is only speculation, and you may rightfully call me a doomer, but I feel like most of this wealth is virtual.
Hard assets such as real estate and buildings are hardly considered virtual. More real than printed up dollars I’d say.
Paid off houses? Mortgage rates are under 3% meaning people doing well can deploy that savings and cash into the stock market, other investments, furthering the wealth gap. No reason to pay off property when money is this cheap.
"Higher" is measured in dollars, so isn't a high stock market and housing price consistent with the US dollar simply decreasing in value?
If wages haven't risen in proportion, then this doesn't seem like a win.
If wages haven't risen in proportion, then this doesn't seem like a win.
> The stock market and housing prices are higher than ever, so a large part of the population is doing good.
confusing the map for the terrain
confusing the map for the terrain
> people with retirement portfolios and paid-off houses
That's definitely not everyone.
That's definitely not everyone.
Also a pretty broad brush to paint a whole "class" of people that being the "elites".
So few of these conversations actually discuss the reasons American manufacturing is so uncompetitive and assume it's entirely legislative/outside factors.
As I been told, cost is rarely the primary factor - Chinese manufacturing is insanely flexible. You can set up a plant with almost no capital, be able to retool at a moment's notice to a customer's whim, and add and drop employees to production at the drop of a hat.
Meanwhile, in the US, unless you are talking about very expensive CNC processes, batch production is not a thing. If you set up a production line, everything needs to be stable and long term. You need permits. You need employee contracts. You need to train people. You can't handle a lot of turnover. You bring in robots, and that requires more specialization and training.
I firmly believe that things which increase fluidity in the labor market will be key to improving US manufacturing. Things like affordable healthcare and housing. Make it so that people can comfortably live in a gig economy.
As I been told, cost is rarely the primary factor - Chinese manufacturing is insanely flexible. You can set up a plant with almost no capital, be able to retool at a moment's notice to a customer's whim, and add and drop employees to production at the drop of a hat.
Meanwhile, in the US, unless you are talking about very expensive CNC processes, batch production is not a thing. If you set up a production line, everything needs to be stable and long term. You need permits. You need employee contracts. You need to train people. You can't handle a lot of turnover. You bring in robots, and that requires more specialization and training.
I firmly believe that things which increase fluidity in the labor market will be key to improving US manufacturing. Things like affordable healthcare and housing. Make it so that people can comfortably live in a gig economy.
All your points are down to lowering cost by exploiting workers more.
Lower capital needed due to low salaries, no employee protection, no building or environmental regulation, no employee contracts, no training… Is that really what you want for your country? I imagine you don't see yourself working one of those unprotected low-paying jobs however.
Lower capital needed due to low salaries, no employee protection, no building or environmental regulation, no employee contracts, no training… Is that really what you want for your country? I imagine you don't see yourself working one of those unprotected low-paying jobs however.
If I was part of a developing nation then, yes, I would absolutely want those jobs. They tend to be the best jobs in the region and one of the key ways to advance your social class. There's a pretty strong amount of research backing up this position: https://www.nber.org/papers/w9669
It's one of the main reasons we've seen such a sharp reduction in poverty at basically every single monetary value you could measure it at https://imgur.com/a/qIB24jP.
What you appear to be characterizing as strictly bad worker exploitation is a key part of the best known way to reduce global poverty.
It's one of the main reasons we've seen such a sharp reduction in poverty at basically every single monetary value you could measure it at https://imgur.com/a/qIB24jP.
What you appear to be characterizing as strictly bad worker exploitation is a key part of the best known way to reduce global poverty.
The point is that this may be good for a developing nation, but it's not a solution you should want for a developed nation. The parent comment identifies lowering labor costs as a solution to develop US manufacturing.
I think my argument is that putting the onus for welfare on employers is clearly counter-intuitive.
I already spent a fair share of my working life in unprotected, low-paying jobs. And they wouldn't have been nearly so bad if I didn't have to worry about things like healthcare or outrageous housing costs.
I already spent a fair share of my working life in unprotected, low-paying jobs. And they wouldn't have been nearly so bad if I didn't have to worry about things like healthcare or outrageous housing costs.
> actually discuss the reasons
On topics where the fraction of HN readership with professional expertise is relatively small, it seems HN infrastructure and culture often isn't able to surface that expertise, to sustain the quality of discussion which exists when the fraction is large.
I wonder if there might be some form of low hanging fruit, like maybe a cultural convention of creating a "professionals" comment tree, where people are expected to apply a stricter-than-usual test of whether they have the expertise to comment? Attempting to create a lump of critical mass professional discussion.
On topics where the fraction of HN readership with professional expertise is relatively small, it seems HN infrastructure and culture often isn't able to surface that expertise, to sustain the quality of discussion which exists when the fraction is large.
I wonder if there might be some form of low hanging fruit, like maybe a cultural convention of creating a "professionals" comment tree, where people are expected to apply a stricter-than-usual test of whether they have the expertise to comment? Attempting to create a lump of critical mass professional discussion.
> flexible
I don't disagree, and very not my field, but I found it curious that France's manufacturing exports per capita remain 2x the US[1], despite not having a reputation for flexibility.
Germany remains 4x. Which raises a question, with respect to manufacturing exports, why does the US look like a smaller EU, rather than like a larger France or Germany?
[1] https://tcdata360.worldbank.org/indicators/mnfc.ex?country=B...
I don't disagree, and very not my field, but I found it curious that France's manufacturing exports per capita remain 2x the US[1], despite not having a reputation for flexibility.
Germany remains 4x. Which raises a question, with respect to manufacturing exports, why does the US look like a smaller EU, rather than like a larger France or Germany?
[1] https://tcdata360.worldbank.org/indicators/mnfc.ex?country=B...
Germany has 2 advantages:
1) A deliberate political aim to maintain a manufacturing base, prosecuted over decades; and
2) A currency which is deliberately kept cheap by use of ballast (the PIGS - Portugal, Italy, Greece and Spain) - countries whose currencies would, on their own be considerably cheaper than the amalgamated Euro.
The US could, if it wanted to have both of these advantages, which is why I'm pretty bullish on the potential for the US manufacturing future, if not on the reality:
1) is political and requires expensive action that is broadly not favored by either party - protectionism, boosterism, technical training, PPPs. Concerted effort at Federal and State levels. We do it for Defense but not for other sectors.
2) would look reasonably achievable but somehow the Fed has missed its inflationary targets for the few years, so I'm a little skeptical about the chances. Also if you look at the dollar's relative price over the last 30 years it broadly approximates a sine wave that we're on the upwards slope of (past performance yada yada etc)
The US could, if it wanted to have both of these advantages, which is why I'm pretty bullish on the potential for the US manufacturing future, if not on the reality:
1) is political and requires expensive action that is broadly not favored by either party - protectionism, boosterism, technical training, PPPs. Concerted effort at Federal and State levels. We do it for Defense but not for other sectors.
2) would look reasonably achievable but somehow the Fed has missed its inflationary targets for the few years, so I'm a little skeptical about the chances. Also if you look at the dollar's relative price over the last 30 years it broadly approximates a sine wave that we're on the upwards slope of (past performance yada yada etc)
"Made in America" is a nice slogan, but "Not Made by an Enemy" would be more apt. Made in an Ally would be fine too (Canada, Mexico, Western Europe...)
> "Not Made by an Enemy" would be more apt
If there is one thing America is good at making, it's enemies.
If there is one thing America is good at making, it's enemies.
Haven't heard that one. That would be the best expression -- Made by an Ally to co-brand with Made in America. Made in America protectionism raises the ire of all its allies (which over the last 4 years it has trashed).
What you call "enemy" is, in this case, simply a fully independent nation. That is, one free to have goals and strategies that put its interest first. What you call "allies" are subordinate nations, free to pursue their own interest as long as it doesn't conflict with the interest of the US. The US are a perfectly independent nation. So is China.
I felt like we should have done that with Saudi oil after 9/11. Why did we let them have no consequences when their policies were most directly responsible for it, out of all countries in the world? We should have put a tariff on their oil and used Canadian crude until they stopped promoting extreme Wahabiism.
Because it would have crashed the US economy. The US was highly dependent on Saudi oil back then, and Canada could not have come close to filling that gap (their output was 2m barrels per day circa 1999/2000, the US needed both all of that supply and OPEC supply).
Over time the US has removed its dependency on Saudi oil, courtesy of fracking. OPEC oil is no longer necessary for the US economy.
The most interesting thing about Saudi Arabia going forward is that the US will eventually benefit from destroy them as China is the primary beneficiary of Saudi oil (which will also make US oil that much more valuable, we'll send it to Saudi's #2 and #3 customers, Japan & South Korea). I'd expect the hawks in DC to eventually consider turning Saudi Arabia into another Syria.
The second most interesting thing about Saudi Arabia, is their population to barrels of production ratio. It keeps plunging as the Saudi population soars and oil production can't keep up. A revolution is inevitable; that ratio plunging represents a ticking timebomb of the non-elite population's future wealth rapidly declining (while they perpetually fail to develop an alternative economy).
Over time the US has removed its dependency on Saudi oil, courtesy of fracking. OPEC oil is no longer necessary for the US economy.
The most interesting thing about Saudi Arabia going forward is that the US will eventually benefit from destroy them as China is the primary beneficiary of Saudi oil (which will also make US oil that much more valuable, we'll send it to Saudi's #2 and #3 customers, Japan & South Korea). I'd expect the hawks in DC to eventually consider turning Saudi Arabia into another Syria.
The second most interesting thing about Saudi Arabia, is their population to barrels of production ratio. It keeps plunging as the Saudi population soars and oil production can't keep up. A revolution is inevitable; that ratio plunging represents a ticking timebomb of the non-elite population's future wealth rapidly declining (while they perpetually fail to develop an alternative economy).
No, a US tariff on Saudi Arabia wouldn't matter for either country. Make it an embargo, with other nations coerced into cooperating, and it would matter.
The US was getting oil from closer places like Mexico and Venezuela. Some came from Africa. Saudi Arabia only mattered due to the overall effect on world price. Europe would buy from Saudi Arabia, so Europe didn't need to buy from where the US was buying.
The US was getting oil from closer places like Mexico and Venezuela. Some came from Africa. Saudi Arabia only mattered due to the overall effect on world price. Europe would buy from Saudi Arabia, so Europe didn't need to buy from where the US was buying.
“Made using labor and environmental standards that would be illegal in this country” could work too.
I would like that.
Especially when it's countries where it's as expensive to manufacture as here. And with whom we have free trade (meaning our products gets preferential treatments there too!)
Especially when it's countries where it's as expensive to manufacture as here. And with whom we have free trade (meaning our products gets preferential treatments there too!)
Real manufacturing output is a lot higher than it was back in the supposed heyday of manufacturing.
https://fred.stlouisfed.org/series/OUTMS
Manufacturing employment, on the other hand, is down substantially because of automation.
https://fred.stlouisfed.org/series/OUTMS
Manufacturing employment, on the other hand, is down substantially because of automation.
How much of manufacturing output growth was driven by the boom in the oil/gas industry? People hear manufacturing and think electronics or cars, but petroleum and coal was 2x the size of the auto manufacturing last time I looked.
I think what companies really want is manufacturing as a service, much like cloud computing economics but for physical goods manufacturing. They want the ability to scale without building their own infrastructure, they don't want to deal with the personnel, they want to be able to lock-in only the capacity they know they will use and get a discount. The problem is that unlike cloud computing which can automatically scale, manufacturing as a service is all about people. You have to remove people from the equation to the point that the only people are debugging the machines.
Well I'm no economist, but this seems inevitable if (1) consumers want cheap products and (2) production is cheaper elsewhere. Given those conditions, any company that wants to survive will have to move production abroad (and those that do not will quickly be replaced).
So if we want to keep domestic production, either consumers need to voluntarily choose more expensive alternatives -- which seems unlikely to happen -- or we have to put tariffs or other restrictions on import of goods. The EU does this for a variety of agricultural products to protect farming, for example.
Or is there another way out?
So if we want to keep domestic production, either consumers need to voluntarily choose more expensive alternatives -- which seems unlikely to happen -- or we have to put tariffs or other restrictions on import of goods. The EU does this for a variety of agricultural products to protect farming, for example.
Or is there another way out?
Computer controlled manufacturing, robotics, and other forms of automation, like Elon Musk's gigafactories.
I don't know the reality of the gigafactories though:
- how many "corner cases" are handled by humans
- would it (un)scale for things with smaller production numbers?
I don't know the reality of the gigafactories though:
- how many "corner cases" are handled by humans
- would it (un)scale for things with smaller production numbers?
Increasing automation to push prices might keep the factories within the country, but it won't save manufacturing jobs.
I wish Silicon Valley wasn’t just about software, particularly adtech. Some of the most brilliant minds are working on optimizing click ratios. There is some hardware tech (Apple, nVidia, Intel, Tesla), but vast majority of the engineers are working on cushy jobs paying $400k to serve ads.
SV should be leading investments in Semiconductors, automation and manufacturing tech. It doesn’t even live up to its name. If you’ve been following how difficult it is to manufacture things at scale (Tesla), it’s a hard problem. Manufacturing is difficult.
Serving ads isn’t of national strategic importance. It’s just juicy. “Someone’s gotta make stuff” - Elon. It’s true even if you don’t like the guy.
SV should be leading investments in Semiconductors, automation and manufacturing tech. It doesn’t even live up to its name. If you’ve been following how difficult it is to manufacture things at scale (Tesla), it’s a hard problem. Manufacturing is difficult.
Serving ads isn’t of national strategic importance. It’s just juicy. “Someone’s gotta make stuff” - Elon. It’s true even if you don’t like the guy.
Thinking about SV as just adtech is pretty reductionist. Through another lens, SV basically solved big data and global software distribution and scalability.
Big tech has contributed to both the tools that allow handling massive data streams and ML. That foundation is what is helping data-driven manufacturing companies pull ahead.
Big tech has contributed to both the tools that allow handling massive data streams and ML. That foundation is what is helping data-driven manufacturing companies pull ahead.
And what purpose is that big data stuff typically used for? Something related to serving ads.
For Tesla, collecting self-driving training data as well as general fleet data. For Square, collecting transaction data to mitigate risk so that merchants worldwide can take payments. For Uber/Lyft predicting areas where there will be people needing rides to optimize transportation needs.
Plenty of real-world applications other than ads.
Plenty of real-world applications other than ads.
I used to work with a guy that liked to talk about how much porn has helped technology - primarily that the desire for privacy (in viewing and purchasing) helped drive SSL adoption. I'm sure he was being facetious, but the idea that an industry like porn or ads might drive technology that then can benefit other 'worthy' industries seems obvious to me.
I'm reminded of a story I read about a dictator that took over a country, who while corrupt, actually funneled more money into infrastructure than anyone before him and became very popular with the people.
sort of deal with the devil though.
sort of deal with the devil though.
>to optimize transportation needs.
You mean to optimize Uber and Lyft revenue
You mean to optimize Uber and Lyft revenue
> big data and global software distribution and scalability.
Big tech has contributed to both the tools that allow handling massive data streams and ML
Yes, because mass surveillance is good.
Yes, because mass surveillance is good.
>Thinking about SV as just adtech is pretty reductionist.
Is it though? On a revenue basis I wonder what percentage is made up by adtech?
>SV basically solved big data and global software distribution and scalability
In order to serve more ads...
Is it though? On a revenue basis I wonder what percentage is made up by adtech?
>SV basically solved big data and global software distribution and scalability
In order to serve more ads...
Agree, it is deliberately reductionist to provoke discussion about what we're not doing in SV.
What do you think we should be doing in SV in addition these technologies?
What do you think we should be doing in SV in addition these technologies?
Investment follows returns, or at least the speculative possibility of returns. Unfortunately, semiconductors, automation and manufacturing tech doesn't have the same upside capability. If you want 10-100X returns, you look elsewhere.
Well the return on investment is in fact greater than it appears for critical industries. It’s just that the upside is not entirely captured in dollars or RMB, or any other monetary currency for that matter.
So when people, who have been habituated to looking at numbers denominated in dollars, think about it they effectively have blinders on.
So when people, who have been habituated to looking at numbers denominated in dollars, think about it they effectively have blinders on.
Fair point. I explained why financial investors are not interested in those technologies.
The advantage of financial returns is that they are measurable and currency broadly accepted.
People have subjective opinions on what constitutes non-financial returns and you can't buy a house with happiness.
If the proposal is that more people should invest time in non-monetary pursuits, then what alternative incentive motivate them. Presumably people working in ad-tech could leave retrain for another career if they wanted.
The advantage of financial returns is that they are measurable and currency broadly accepted.
People have subjective opinions on what constitutes non-financial returns and you can't buy a house with happiness.
If the proposal is that more people should invest time in non-monetary pursuits, then what alternative incentive motivate them. Presumably people working in ad-tech could leave retrain for another career if they wanted.
Very true. It would be great if these brights were working on important stuff like how to deal with plastics recycling and separation. Instead it’s about extracting as much as possible from existing tech.
It reminds me a little of the situation with journalism and news. We have less and less reporters collecting information but more and more websites and blogs that dissect and debate the same information.
It reminds me a little of the situation with journalism and news. We have less and less reporters collecting information but more and more websites and blogs that dissect and debate the same information.
There are infinite ways to retort this, but let’s go with the easiest and point to the company literally dealing with plastics recyling and separation that raised $55 million today
https://venturebeat.com/2021/01/04/amp-robotics-raises-55-mi...
https://venturebeat.com/2021/01/04/amp-robotics-raises-55-mi...
> working on important stuff like how to deal with plastics recycling and separation
Do you happen to have any helpful analysis, articles, companies, etc. along these lines? I have thought it would be a fun thing to work on, but I have struggled to know where to look and haven’t found anything particular in my searching.
Do you happen to have any helpful analysis, articles, companies, etc. along these lines? I have thought it would be a fun thing to work on, but I have struggled to know where to look and haven’t found anything particular in my searching.
When you look at recycling facilities there are people sorting the trash that goes by them on conveyor belts. To automate this you need to somehow detect what the item is and then you need to be able to handle it. Seems like a great challenge for computer vision or other sensors and then robotics. Or have robots that can find trash in oceans or on beaches and remove it. This would be super useful but unfortunately our system rewards producing trash way more than removing or even better avoiding it.
Let’s not ignore biotech. It’s experiencing a tremendous boom in SV (and in the Berkeley-Emeryville area). It gets way less attention than Tesla and Facebook, for some reason... probably because its products and innovations are much harder to explain to the public. (Though that may be an overly cynical answer with regards to the media.)
I thought these technologies are still early and in the research phase. That would make sense for them to operate in stealth mode. Tesla sells vehicles to the public (and let's be real, Elon is a big PR department). Are these companies producing useful products currently? It seems that you're implying that they are and that we (me) aren't aware of them, so I'm curious if you could expand on this and enlighten us. I do know investors are dumping a ton of money into bio-tech, just not aware of products that are being sold.
Regarding products, I'd divide biotech into three very broad categories, medical, industrial, and food. Medical biotech is generally the most well-established, from Genentech (now Roche) on down to the companies being created today. Most of that work are novel and very promising therapies for a range of diseases, and diagnostics/prognostics to detect and track disease states. Both are generally at the level that's popularly known as "personalized medicine" (specific to your genome, epigenetics, and in some cases microbiome). Some of the diagnostics in development and hitting the market now would be considered sorcery just five years ago.
Industrial biotech is harnessing biological and biochemical processes for industry and production. That's much smaller but growing fast; people outside the industry would be shocked to discover what chemicals and other products can and will be produced simply by fermenting various microbes. Zymergen is one company doing this, and among the biggest but by no means the only one.
Recently there's been a surge in biotech-based food production. Most people don't realize that the Impossible Burger (and other products from Impossible) taste so "meaty" because it contains transgenic yeast that secretes cow heme. There are companies that are creating cow dairy products from transgenic yeast - you can actually buy their ice cream today - and companies like Memphis Meats are working on cell-cultured meat, made entirely from animal-free processes , minus the initial cell biopsy. Same with Finless Foods. All of the above are within a couple miles of each other, and these are only a few examples.
Industrial biotech is harnessing biological and biochemical processes for industry and production. That's much smaller but growing fast; people outside the industry would be shocked to discover what chemicals and other products can and will be produced simply by fermenting various microbes. Zymergen is one company doing this, and among the biggest but by no means the only one.
Recently there's been a surge in biotech-based food production. Most people don't realize that the Impossible Burger (and other products from Impossible) taste so "meaty" because it contains transgenic yeast that secretes cow heme. There are companies that are creating cow dairy products from transgenic yeast - you can actually buy their ice cream today - and companies like Memphis Meats are working on cell-cultured meat, made entirely from animal-free processes , minus the initial cell biopsy. Same with Finless Foods. All of the above are within a couple miles of each other, and these are only a few examples.
Yes, I get all this, but is anyone selling a product? For example, a company like Finless Foods (which I'm decently familiar with) isn't selling meat to customers yet. For this reason it is unsurprising that the general public doesn't know about them, let alone to the same degree that they do for Facebook (billions of users) and Tesla (~1 million vehicles sold). I'm saying these are unfair comparisons (that's at least 6 orders of magnitude difference in users!). If people could get FF in their local supermarket I'd understand your point, but they're (like every other cell-cultured meat company) producing small quantities, learning how to refine the product, and how to scale. It is wildly misleading to say that FF or MM should have the same recognition as Facebook or Tesla. I was asking if there are companies NOT in the research phase and are producing products that I or someone I know would be using. Such a biotech company would be a fair comparison to FB or Tesla and I'd understand the criticism of the lack of fame to them. But you cannot compare companies with 0 users (or 0 planned users for at least a year) to companies with millions or billions of users. That's an insane comparison, regardless of how groundbreaking these technologies could be. Yes, lots of potential, but they aren't there yet. It is potential.
Apple: Made by Foxconn, not in the US.
nVidia: Made by TSMC, not in the US.
Intel and Tesla are made in the US afaik, but even the hardware startups we do have still tend to manufacture abroad.
Intel and Tesla are made in the US afaik, but even the hardware startups we do have still tend to manufacture abroad.
Apple: assembled by Foxconn.
If your premise were accurate, the primary value would be in Foxconn and they'd destroy Apple by competing with them and take their $60 billion per year in profit.
Most of the value is from Apple and the other component makers, not the company doing primitive assembly. Further, Foxconn makes nothing in the iPhone, so once again it's very obviously not "made by Foxconn." And that's why Foxconn gets such a tiny slice of the profit.
If your premise were accurate, the primary value would be in Foxconn and they'd destroy Apple by competing with them and take their $60 billion per year in profit.
Most of the value is from Apple and the other component makers, not the company doing primitive assembly. Further, Foxconn makes nothing in the iPhone, so once again it's very obviously not "made by Foxconn." And that's why Foxconn gets such a tiny slice of the profit.
There are different ways of doing outsourcing. Companies like IBM (and Dell, at one point) outsourced more and more of their value chain, until eventually all they contributed to their products was their logo.
I believe Apple is trying to go down a different path, by staying involved in the minutiae of manufacturing, materials science, etc, basically everything but actually doing the manufacturing.
I believe Apple is trying to go down a different path, by staying involved in the minutiae of manufacturing, materials science, etc, basically everything but actually doing the manufacturing.
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Intel is global they have fabs in Israel, Ireland, and China too.
https://www.intel.com/content/www/us/en/support/articles/000...
https://www.intel.com/content/www/us/en/support/articles/000...
The fab in China is 20 year old tech. Primarily chipsets.
SpaceX rockets are still made in the US. Go work for them.
Seriously, you do not want to be assembling iPhones. Build a robot to do that tedious work instead.
Seriously, you do not want to be assembling iPhones. Build a robot to do that tedious work instead.
How much of the electronics in Teslas are made in the USA though?
It took 2 days for the Moderna vaccine to be created, and it still hasn't been approved in the EU. We could be doing amazing things in bio with mRNA, Crisper and deep learning but the entire thing is so wrapped up in regulation in order to protect the incumbents that it is not a space worth working in.
2 days to determine what the Moderna vaccine should be from a computer. Building the vaccine, bio-reacting it to scale and testing across appropriate populations took a considerable amount of time. Health regulations are in place for a reason, to protect the public not to protect incumbents. Sometimes I am sure it does, other times it makes sure poor products don't go into the public market.
> 2 days to determine what the Moderna vaccine should be from a computer
This step used to take years. And require state of the art facilities, with biohazard containment, viral samples, etc.
Now? Given a virus sequence done in a lab on the other side of the planet, one can design a vaccine in a day. Sure, it took many years of research (and in coronaviruses in particular) to reach this stage, specially on how to stabilize the spike protein. But one cannot understate how amazing this new technology is.
And then once done you can send the results to a machine to get it "built". At a low scale, sure, but it's still impressive.
With the mRNA approach we no longer have to resort to things like using eggs to make the vaccines, we can use the cellular machinery for that. It's mind-boggling.
This step used to take years. And require state of the art facilities, with biohazard containment, viral samples, etc.
Now? Given a virus sequence done in a lab on the other side of the planet, one can design a vaccine in a day. Sure, it took many years of research (and in coronaviruses in particular) to reach this stage, specially on how to stabilize the spike protein. But one cannot understate how amazing this new technology is.
And then once done you can send the results to a machine to get it "built". At a low scale, sure, but it's still impressive.
With the mRNA approach we no longer have to resort to things like using eggs to make the vaccines, we can use the cellular machinery for that. It's mind-boggling.
Oh I think you are misconstruing my statement. It is an incredible feat what’s been done on these vaccines. I assume you got youre intel from the bio eats world podcast. I’m pointing out that jumping the testing that slows the vaccine to market is a bad move.
Hardware manufacturers have a ton of additional labor needed to produce things. The engineers can't all be paid 200k+ or they'll bleed the company dry. The highest margins are realized in markets with the lowest overhead. That's where everybody shifted to.
I share the lament of the GP comment. It seems like it would better if there was hardware engineering and engineers weren't paid 200k+. That the market has shifted seems like a failure of the economic system.
Money wants to make more money. And it doesn't care about national boundaries. It also isn't good at pricing catastrophes like the collapse-of-the-US-financial-system-because-of-the-collapse-of-the-electrical-grid catastrophe that we can't recover from because we can't make the transforms anymore and China won't sell them to us and our ports won't work without computers anyway, and so on.
You're mistaken, China will most definitely sell that to us. It is in their interest. To problem is if the US will be able to afford it.
I also wonder about this kind of stuff.
I think about things like this: What if all the wallstreet quants and sv adtech guys were all put on a nuclear fusion project?
It would be like an unstoppable force against an immovable project.
I think about things like this: What if all the wallstreet quants and sv adtech guys were all put on a nuclear fusion project?
It would be like an unstoppable force against an immovable project.
Most stories like these completely misunderstand the issues with american manufacturing.
It's easy to see lower American manufacturing employment and increasing Chinese manufacturing and conclude that American jobs are simply moving to china, but this narrative doesn't hold up to basic scrutiny.
Take for example steel production. American employment in the industry has fallen by 55% since 1989, while chinese production is now 5 times higher. Case closed right? Well no. In that time period, the US built over 40 Million Tons of steel production capacity, 46% of its total capacity. Further, while chinese production has increased dramatically, they are not a major exporter of steel to the US, peaking at 7th largest trading partner in 2015 and currently not even in the top 10. Our biggest steel trading partners are Canada, Mexico, and Brazil.
Looking at the situation more granularly, we see that US steel production has been approximately constant since the early 80s, whereas Chinese steel production didn't ramp up till the 00s, around the same time that the decrease in US steel employment leveled off.
There has been a major shift in how steel is produced over the past few decades. Over this time period, blast furnaces have been shutting down and been replaced with basic oxygen and electric arc furnaces which require less manpower to produce steel. In 1920 it took 3 man hours to produce 1 ton of steel in the US, now 1 man-hour produces 300 tons. Further there have been major shifts in consumption. The US is consuming less steel as most of its infrastrucuture is already built up, and as new products use less steel (either because stronger steels can do more with less or other materials like aluminum and plastics are used instead). China is employing many more steel workers to work less efficient plants, making lower grade steels to fuel its transition into a developed nation.
While this is merely one example, the story is similar in a number of industries - employment goes down in the US, up in China, but there is no decrease in productivity in the US which closely coincides with an increase in production in or exports from China. In general, productivity and capital investment in the US actually remains steady despite shrinking employment, and where there are decreases in productivity, they tend to correlate with reduction of demand, for example in the auto industry.
When people think about automation, they typically picture robots doing what they had been doing. In most industries that hasn't happened, so most people conclude that automation hasn't had any serious impact yet. But the real change is typically in much more mundane process improvement. You don't need as many people to do the same amount of work, and the work that needs doing tends to be different from what was done in the past - more desk jobs and information processing, as well as more low cost unskilled labor, with the blue collar professional in the middle mostly made obsolete. Trade wars with China or subsidies for "onshoring" aren't going to change anything, unfortunately recreating the prosperity of our past will require complicated holistic changes to many sectors, informed by a firm understanding of manufacturing technology and economics.
It's easy to see lower American manufacturing employment and increasing Chinese manufacturing and conclude that American jobs are simply moving to china, but this narrative doesn't hold up to basic scrutiny.
Take for example steel production. American employment in the industry has fallen by 55% since 1989, while chinese production is now 5 times higher. Case closed right? Well no. In that time period, the US built over 40 Million Tons of steel production capacity, 46% of its total capacity. Further, while chinese production has increased dramatically, they are not a major exporter of steel to the US, peaking at 7th largest trading partner in 2015 and currently not even in the top 10. Our biggest steel trading partners are Canada, Mexico, and Brazil.
Looking at the situation more granularly, we see that US steel production has been approximately constant since the early 80s, whereas Chinese steel production didn't ramp up till the 00s, around the same time that the decrease in US steel employment leveled off.
There has been a major shift in how steel is produced over the past few decades. Over this time period, blast furnaces have been shutting down and been replaced with basic oxygen and electric arc furnaces which require less manpower to produce steel. In 1920 it took 3 man hours to produce 1 ton of steel in the US, now 1 man-hour produces 300 tons. Further there have been major shifts in consumption. The US is consuming less steel as most of its infrastrucuture is already built up, and as new products use less steel (either because stronger steels can do more with less or other materials like aluminum and plastics are used instead). China is employing many more steel workers to work less efficient plants, making lower grade steels to fuel its transition into a developed nation.
While this is merely one example, the story is similar in a number of industries - employment goes down in the US, up in China, but there is no decrease in productivity in the US which closely coincides with an increase in production in or exports from China. In general, productivity and capital investment in the US actually remains steady despite shrinking employment, and where there are decreases in productivity, they tend to correlate with reduction of demand, for example in the auto industry.
When people think about automation, they typically picture robots doing what they had been doing. In most industries that hasn't happened, so most people conclude that automation hasn't had any serious impact yet. But the real change is typically in much more mundane process improvement. You don't need as many people to do the same amount of work, and the work that needs doing tends to be different from what was done in the past - more desk jobs and information processing, as well as more low cost unskilled labor, with the blue collar professional in the middle mostly made obsolete. Trade wars with China or subsidies for "onshoring" aren't going to change anything, unfortunately recreating the prosperity of our past will require complicated holistic changes to many sectors, informed by a firm understanding of manufacturing technology and economics.
“Take for example steel production. American employment in the industry has fallen by 55% since 1989, while chinese production is now 5 times higher.
...
Looking at the situation more granularly, we see that US steel production has been approximately constant since the early 80s, whereas Chinese steel production didn't ramp up till the 00s, around the same time that the decrease in US steel employment leveled off.”
Do you know of any data sources for this? I’d like to look at other industries as well.
...
Looking at the situation more granularly, we see that US steel production has been approximately constant since the early 80s, whereas Chinese steel production didn't ramp up till the 00s, around the same time that the decrease in US steel employment leveled off.”
Do you know of any data sources for this? I’d like to look at other industries as well.
I remember this fortunately got at least a bit of debate time in US primary season. It looks like (as many things) there are multiple causes, and automation is definitely a huge one that can’t be ignored when talking about losing manufacturing jobs.
Wow, thank you for such a thorough and informative comment.
I don't see any talk of removing US dollar as a reserve currency.
The only reason China is so export oriented is because they need to earn dollars to buy oil. If they didn't need to buy oil in dollars, they would reorient their factories to sell their manufactured goods domestically, giving everyone a high standard of living. Instead, they are making more and more goods for our fat American consumption just to earn more and more dollars.
Sure, removing dollar as a reserve currency will make all of us poorer by global standards but we won't need to import manufactured goods from China any longer.
The only reason China is so export oriented is because they need to earn dollars to buy oil. If they didn't need to buy oil in dollars, they would reorient their factories to sell their manufactured goods domestically, giving everyone a high standard of living. Instead, they are making more and more goods for our fat American consumption just to earn more and more dollars.
Sure, removing dollar as a reserve currency will make all of us poorer by global standards but we won't need to import manufactured goods from China any longer.
Your post contains many errors.
1) The "Petroyuan"... Should this ever happen, Oil will be priced in Yuan. https://eurasiantimes.com/petro-dollar-vs-petro-yuan-is-chin...
2) this is NOT the reason china exports. They do this as they have a large labour advantage, very lax pollution laws and can make things for far cheaper then others can. You can determne this for yourself once you realize that China doesnt only export to the USA. When China exports to the EU for example they earn Euro notes. They can convert Euro's to USD if needed, but i dont think their primary goal is to accumulate USD, espeically given their massive USD Bond holdings. If anything, they are probably looking to sell USD bonds to diversify.
3) removing the US as a reserve curency wont just make americans "poorer" - it will have a devistating impact on your ability to borrow. Since the US gvt constantly runs a deficit who will finance this when other nations no longer want/need USD?
4) The US needs to import because as the article stated, they no longer manufacture things. Try going to a city like "bridgeport, Connecticut" and see the mothballed factories. It will take decades to undue the damage outsourcing has caused.
1) The "Petroyuan"... Should this ever happen, Oil will be priced in Yuan. https://eurasiantimes.com/petro-dollar-vs-petro-yuan-is-chin...
2) this is NOT the reason china exports. They do this as they have a large labour advantage, very lax pollution laws and can make things for far cheaper then others can. You can determne this for yourself once you realize that China doesnt only export to the USA. When China exports to the EU for example they earn Euro notes. They can convert Euro's to USD if needed, but i dont think their primary goal is to accumulate USD, espeically given their massive USD Bond holdings. If anything, they are probably looking to sell USD bonds to diversify.
3) removing the US as a reserve curency wont just make americans "poorer" - it will have a devistating impact on your ability to borrow. Since the US gvt constantly runs a deficit who will finance this when other nations no longer want/need USD?
4) The US needs to import because as the article stated, they no longer manufacture things. Try going to a city like "bridgeport, Connecticut" and see the mothballed factories. It will take decades to undue the damage outsourcing has caused.
I understand everything you said. I meant weaning the US dollar as a reserve currency gradually instead of abruptly. We are already getting some ways there by printing to pay for the massive deficits.
What I meant is that we cannot have our cake and eat it too. If we want to assemble smartphones here, our workers will have to accept the life of those workers. Those workers don't own cars, live in shitty shacks and have no wlb to speak of. But considering that so many people are clamoring for such jobs, maybe that's what we should go for.
What I meant is that we cannot have our cake and eat it too. If we want to assemble smartphones here, our workers will have to accept the life of those workers. Those workers don't own cars, live in shitty shacks and have no wlb to speak of. But considering that so many people are clamoring for such jobs, maybe that's what we should go for.
How many countries in the world manufacture commercial airliners? How many countries in the world manufacture automobiles sold around the world (don't forget a lot of 'foreign' cars are manufactured in the United States)? How many countries in the world has a private company manufacturing re-usable rocketry capable of carrying crews to the ISS?
I've been reading these scaremongering stories all my life. First it was Japan eating our lunch. Where are they now? Then it was Mexico poised to take all our manufacturing. Didn't happen. Now everyone is scared about China. Pretty soon they're going to realize they don't want to be in the business of manufacturing screws, either. There's simply no money in it.
Meanwhile U.S. manufacturing has been growing. That's something the NY Times is conspicuously silent about.
I'm not saying the U.S. doesn't have social and political issues we need to get sorted out - but there's never been a time in our history that we haven't had social and political issues we need to get sorted out. I'm not saying we don't have progress to achieve. I'm saying I'm sick and tired about hearing how the U.S. no longer manufactures screws and consumer electronics. There's a bigger picture to consider.
I've been reading these scaremongering stories all my life. First it was Japan eating our lunch. Where are they now? Then it was Mexico poised to take all our manufacturing. Didn't happen. Now everyone is scared about China. Pretty soon they're going to realize they don't want to be in the business of manufacturing screws, either. There's simply no money in it.
Meanwhile U.S. manufacturing has been growing. That's something the NY Times is conspicuously silent about.
I'm not saying the U.S. doesn't have social and political issues we need to get sorted out - but there's never been a time in our history that we haven't had social and political issues we need to get sorted out. I'm not saying we don't have progress to achieve. I'm saying I'm sick and tired about hearing how the U.S. no longer manufactures screws and consumer electronics. There's a bigger picture to consider.
What's funny to me is that people complain about US automakers losing... with no mention of Tesla at all.
At a certain point, does automation/robotics swing the manufacturing base back towards the west?
It's mostly being deployed in Asia, where the demand is high and the supply of complementary parts is also high.
PCB manufacturing is almost completely automated, for example. Didn't move back.
PCB manufacturing is almost completely automated, for example. Didn't move back.
Unlikely in our lifetime. The same automation will be available in the east, but with cheaper technicians, electricity, taxes, regulation, and land.
Also, what is there to automate in the U.S.? Most of what could be a target of automation is already in China.
Well if cheap labour is not an input then there's no reason that the manufacturing has to be done somewhere with cheap labour costs.
But the automation will need engineers and technicians. China is likely not super reliant if at all on the west for automation expertise, and is likely closing any gap that may exist. They have a legion of more and more well educated people to fill those roles.
I’m super worried that the U.S. is turning into Russia, i.e., a corrupt oligarchy with no want or ability to mobilize and educate its people. China saw that happening to themselves and specifically steered away from it back in the 80s.
I’m super worried that the U.S. is turning into Russia, i.e., a corrupt oligarchy with no want or ability to mobilize and educate its people. China saw that happening to themselves and specifically steered away from it back in the 80s.
On the plus side, if China innovates new technologies, it will make everyone else's life better too, as US innovation has done for the last century or so.
Yes, but no.
Automation could, should and will bring back more manufacturing towards the west, in the sense that the west will produce more goods, in terms of net quantity/value compared to today.
It does not necessarily mean more jobs.
It does not mean the west will produce a higher percentage of global products.
Paul Krugman, amongst others, has written about the subject, I will try to link articles once I get home.
Quick edit: example: GM produces more cars than before the crisis but employs less people
Edit 2: here's one https://www.scientificamerican.com/article/krugman-trade-job...
Automation could, should and will bring back more manufacturing towards the west, in the sense that the west will produce more goods, in terms of net quantity/value compared to today.
It does not necessarily mean more jobs.
It does not mean the west will produce a higher percentage of global products.
Paul Krugman, amongst others, has written about the subject, I will try to link articles once I get home.
Quick edit: example: GM produces more cars than before the crisis but employs less people
Edit 2: here's one https://www.scientificamerican.com/article/krugman-trade-job...
Might not mean more jobs in the west, but I suppose it will mean less jobs for the east.
No, the job market isn't zero sum. If the west produces more goods/services it needs a higher input of lesser tier goods and services to which value can be added.
It depends, but probably not.
The main benefit would be transportation/logistics, but intercontinental freight shipping is pretty cheap and fast (especially China -> USA).
Assuming equivalent machine costs (Chinese firms can potentially get government backed deals from to local & international vendors), equivalent financing (subsidized loans are common in China), equivalent operating costs (rent in the US is ridiculously expensive), equivalent labor costs (you still need skilled technicians to operate, maintain & repair the machines, and China has a much larger pool of labor), and equivalent access to input materials (the supply chain is mostly in China/East Asia, so it is often cheaper and faster to source components in Asia than in North America), then yes it would make sense from a cost perspective to reshore operations to the USA. Given that none of these conditions are met, and given that American firms are ideologically committed to their balance sheet it seems unlikely that there is much will to make any changes here.
> Assuming equivalent machine costs
I know of at least one automation equipment company that prices their machines in China at about half of what they charge to US customers, because that's the price point that the market will bear. Exact same machines, same specs. Just like any other region-based price discrimination.
I know of at least one automation equipment company that prices their machines in China at about half of what they charge to US customers, because that's the price point that the market will bear. Exact same machines, same specs. Just like any other region-based price discrimination.
But without the need for cheap labour, it becomes much easier for governments to impose tariffs on imports (or provide subsidiaries, etc), to even the scales, no?
No, the automation/robotics train has already left and China is leading there too.
No. Because China is working on that too. This is what their Made in China 2025 initiative is all about: https://en.wikipedia.org/wiki/Made_in_China_2025
"The plan aims to upgrade the manufacturing capabilities of Chinese industries, growing from labor-intensive workshops into a more technology-intensive powerhouse.[6] The goals of Made in China 2025 include increasing the Chinese-domestic content of core materials to 40 percent by 2020 and 70 percent by 2025."
This is a major source of all the economic anxieties the US government and allies are feeling.
China isn't just a source of cheap labor anymore. Cheap labor was what it had to offer because it was so under developed but they aren't blind to history. They know they have to move up the value chain and have been gradually but steadily moving up.
"The plan aims to upgrade the manufacturing capabilities of Chinese industries, growing from labor-intensive workshops into a more technology-intensive powerhouse.[6] The goals of Made in China 2025 include increasing the Chinese-domestic content of core materials to 40 percent by 2020 and 70 percent by 2025."
This is a major source of all the economic anxieties the US government and allies are feeling.
China isn't just a source of cheap labor anymore. Cheap labor was what it had to offer because it was so under developed but they aren't blind to history. They know they have to move up the value chain and have been gradually but steadily moving up.
But cheap labour is a sustainable advantage that the west can never rival. Everything else, we can compete on, in theory.
It's not an advantage that China can maintain though, hence the movement upwards. China, and other countries like that, was cheap because they were underdeveloped and the goals/wants of their population were minimal. But now some of the highest home prices in the world are in Shanghai. Many of China's coastal cities have gotten wealthy and China's remaining source of cheap labor are in the interior cities, hence the development of major railways into the interior, etc. But everyone knows how that story is going to go. The interior cities will also become wealthy and then the last remaining source of cheap manual labor will dry up. Making your people wealthier and moving up the value chain are good goals but once you get there you need to switch. which is what China is preparing for.
Not until the USD loses reserve status. Until then,
it’s cheaper to print and export these USD tokens for imports rather than to exert labor to make stuff to trade for imports.
Manufacturing coupled with enviro taxes is coming back to West.
China is able to manipulate its exchange rate to regulate the relative prices of imports and exports. So are ~200 other economies in the world. The US doesn't have an exchange rate to fiddle with. Hell, it can hardly produce domestic inflation with its low interest rates, let alone devalue its currency.
Cf. https://en.wikipedia.org/wiki/Exorbitant_privilege
Cf. https://en.wikipedia.org/wiki/Exorbitant_privilege
True, but there is a reason it's been called "exorbitant privilege" - while nothing here is clear cut there lots of reasonable people would argue that there is a net benefit to US.
Yes. To abuse mathematical language, the first-order effects of the exorbitant privilege are very positive for the US. Some negative second-order effects are arguable (strategic capacity / robustness); some are reminiscent of your typical third-world lobbying for a kind of state capitalism. Then, this has beneficiaries and losers.
"Good jobs" in particular is such specious rhetoric.
"Good jobs" in particular is such specious rhetoric.
If China can move to DCEP (Chinese state crypto) and get their borrowers to follow their lead, the US will find itself in a tough position. In the end game for China, they displace the US and can avoid the dollar in trade.
If it was that easy to displace the dollar, someone would have done it already. What advantage does a Chinese cryptocurrency have over a traditional one?
This. August 15th of this year will be FIFTIETH anniversary of Nixon telling the rest of the world that their dollars held in reserve are redeemable for precisely one bag of dicks.
If the world was ever going to de-dollarize, they would have done it at any point in the last half-century.
If the world was ever going to de-dollarize, they would have done it at any point in the last half-century.
You think noone tried? They just got assasinated.
"Comparative Advantage", something something about corn and wool, meanwhile the whole supply chain was moved to China, our middle class was decimated and we went into tremendous amounts of debt to pretend everything was fine...
Left, right... whatever. The elites have failed us.