[QUOTE=RickJay]
This “the robots are going to take our jobs and destroy the economy” crap has been spewed since the 1970s. Turned out to be false then and it’s false now.
[/QUOTE]
And before robots it was the assembly line, or steam power, or water power, or…etc etc, back through time. It’s amusing how these themes recur over and over again.
The tax code can be written to accommodate attempts to circumvent the spirit of the law, as well. Just like how when American citizens move to another country, their income is still taxed. Companies who move offshore to dodge the original tax can still be taxed (or tariffed). Why not? There can be exceptions. Companies who move entirely offshore for legitimate reasons could be required to prove that they’re offshoring for reasons other than dodging the tax. Then they wouldn’t have to pay the penalty.
I’m not saying this would ever be done, but there’s no reason it *can’t *be. I believe American people matter more than large companies. Now more than ever in our nation’s history, large companies are posting record-breaking profits and passing very little of that on to anybody but their stockholders.
And I might point out that I would be thrilled to get trained to glue tiny little bits together under a microscope if I could work here in Connecticut in a building that I was actually able to freaking get into in a damned wheelchair.
Believe me, an air conditioned ‘desk’ [sitting] job compared to some jobs I have had in the past would be lovely. On the other hand thanks to working haz mat I know I can grab a breath, close my eyes and make it across a fairly large warehouse and get into a Scott airpack…
Wiki to the rescue:
It’s Econ 101. You may not like it but there it is. Protectionism is shooting yourself in the foot because you have a splinter in your hand. I guess, in a way, you’ve solved the splinter problem, because now you have a much bigger problem to worry about.
Does this include Rolls Royce, yacht, caviar and mansion producers?
You know, I don’t think you (the OP) really understand the problem. It’s not the Chinese, it’s the robots that are the problem. If you go to this UN site:
National Accounts Main Aggregates Database
You can pull world manufacturing data. If you look at this, specifically the second spreadsheet(Warning: Excel Spreadsheet), you will see that US manufacturing as risen at a healthy clip over most of the last 40 years. You will also see that we are the world’s second largest manufacturer responsible for >17% (by value) of all goods manufactured last year worldwide. The death of US industry is highly exaggerated though the death of US manufacturing jobs is not. The problem is the robots.
It can be, if the labor is as productive as more expensive labor. I could hire drug addicts for $4 an hour to mow lawns, but it’s only a competitive advantage over other lawn-care companies if my guys do a decent job.
Sure it is.
Say the product is automobiles. Country A might be able to make them cheaply because they have abundant deposits of metals and petroleum. Country B might be able to make them cheaply because they use sophisticated robots and automated processes. Country C might be able to make them cheaply because they pay the workers less than A or B.
Inexpensive labor is one possible source of comparative advantage, and for some nations, the only one.
I don’t, I’m referring to the current situation.
That’s actually what’s happening right now. You can’t jump directly from an agrarian society to an industrialized one with a thriving middle class, though.
The U.S. went through the same process already.
We’re better off with a wealthy, productive China/India/Brazil than a poor one, absolutely. But that takes time. It’s happening right now.
How’s that?
So if the assembly-line workers at Ferrari can’t afford 458s, Ferrari is doomed?
I agree with the premise but I would not say robots are a “problem”. They are multipliers of productivity.
Americans love to hate all those Chinese and Mexicans for “stealing their jobs” and the “big corporations” for “exporting jobs”. Everybody in America knows that “big corporations exporting jobs” is a fact.
Except that it is not true, not a fact at all.
According to U.S. Government statistics the country had about the same number of industrial workers in 1972 as it did 26 years later in 1998, about 17.6 million. Between those two dates the number oscillated above and below that number. Between 1972 and 1998 industrial output in USD doubled which means productivity doubled.
Since the number of industrial jobs remained stable this means job positions were being created in other fields, like computers.
By 2008, contrary to popular perception, industrial output had grown by 17% with respect to 1998 but the number of industrial jobs had decreased by 22% to 13.7 million which means an increase in productivity by 50%.
Americans are not losing jobs to China or to México or to “illegal immigrants”; Americans are losing jobs to automation and increased productivity. That’s the fact of it.
After WWII American industry was the only one left standing and America had the monopoly in industrial goods. With a high school education one could make a good living.
But as Europe and Japan rebuilt that monopoly came to an end and American goods had to compete with those of Japan and Europe. In the last 20 years India, China and other countries have joined the club of industrial producers and consumers.
China is growing a very solid middle class and also has many millionaires. Contrary to what most Americans think, China has a very solid internal demand which is growing fast.
The notion that “we need to go back in time” has always failed. Farming jobs were lost to farming machinery and the world is a better place for it. Machinery, computers, robots, all have multiplied productivity and freed people to do other things.
America would like to go back to the days when just by being an American, even with little or no education, one could make a good living while educated people elsewhere in the world starved.
Sorry, it’s not going to happen and it shouldn’t happen. Americans need to get used to the idea that they need to compete with everybody else, that they have been extremely lucky with their history in the last 100 years and that if their situation is what it is today there is no one to blame except themselves. In today’s world if you want to make good money you need to have a good education and produce something of value that others, at home or abroad, will buy. Contrary to ignorant popular perception it does not have to be industrial goods. Not at all. It is ignorant and simplistic to believe only material or industrial goods are of value. Just ask Bill Gates. Or the owners of Amazon or eBay or Google. You just need to produce something that is of value to others.
Just ask Germany. They have a strong economy and sell to China more than they buy from them. Maybe Germany is buying tons of Chinese cheap crap but they are selling them expensive crap. Germany is selling China engineering services and high-tech industrial goods. That is what America can do but the notion that an ignorant American deserves a better life than a Chinese scientist or engineer is insulting to decent people.
Well said.
Why American people? Don’t Chinese people matter more than large companies? Why about African people?
Are you for or against taking jobs away from Chinese workers, as is now happening:
Morally, if it was wrong to move a manufacturing function from the US (or Taiwan) to mainland China, it is wrong to move it back.
Now, I do think companies owe some measure of loyalty to their existing employees. A tiny cost difference shouldn’t justify moving your shoe factory from Massachusetts to a rising low income nation such as Ghana. But if there is a big cost difference, you are doing wrong to your customers, and to the people of Ghana, if you keep routine factory production work here.
Protectionism is a strategy to help one’s own nation by keeping others in poverty. While it succeeds quite well at keeping poor nations poor, it does nothing for our own living standards.
Perhaps you’ll say that shipping jobs to Ghana is OK if Ghanaians are paid US minimum wages. But the only way to get to that laudable goal is one step at a time, as we have seen in China.
Rolls Royce and Ferrari aren’t independent car manufacturers anymore. They haven’t been for decades. Turns out they couldn’t make a business out of selling to just millionaires. Ferrari was bought by Fiat and Rolls Royce was bought by Volkswagen.
It seems to be working in some limited markets. For my hobby (knives, guns and boots) there’s something about hand-crafted American-made products that gets to you, even if you discount buyers who prefer American-made regardless.
That’s to be expected. You cannot buy everything from overseas. If you see a building being constructed, the steel that the building is constructed around was almost certainly fabricated by a domestic company and (obviously) is being put in place by a local company (the term of art is “erection,” wonderfully enough.) When the guys welding those steel beams do so, they use welding wire made in the USA because that’s just where it’s made. It’s a difficult product to make and not easily found anywhere else.
You’ll also have things like, say, knives that American companies simply make better. Or maybe there is some local condition that makes it easier to make something - Canada doesn’t import a lot of maple syrup, but it has to import all its coffee. Americans mostly watch American movies, because that’s where all the big studios are. They fly mostly in American planes, because the USA is the world’s biggest manufacturer of jet aircraft.
Of course, Americans then make a fortune by selling things they make well - like jet aircraft - overseas. People bitch and moan that their T-shirts are made in China, but when the rising Chinese middle class decides to fly somewhere, they aren’t doing it in Chinese jets. Millions of them fly in Boeings, hundreds upon hundreds of fine Boeing airliners imported for what I assume are absolute truckloads of cash.
It’s not super clear to me why Americans absolutely need to sew T-shirts as opposed to manufacturing airplanes. The ability to construct state-of-the-art aircraft strikes me as being a pretty good thing to be good at.
[QUOTE=sailor]
Just ask Germany. They have a strong economy and sell to China more than they buy from them. Maybe Germany is buying tons of Chinese cheap crap but they are selling them expensive crap. Germany is selling China engineering services and high-tech industrial goods. That is what America can do but the notion that an ignorant American deserves a better life than a Chinese scientist or engineer is insulting to decent people.
[/QUOTE]
Excellent post…you hit all the high points and did it very well, IMHO FWIW. Just so you know, though, we DO send high end manufactured goods and value added services to the Chinese…IIRC we are either their second or third largest importer of goods and services (I think Germany is number 1).
I’m sure Chinese people matter more than American people to China. So too do (and should) Americans mean more than Chinese people to America. I’m American, so there’s your answer.
Red herring in a discussion about the American economy and job market, I won’t address this tangent.
Companies that oursource their labor to cheap overseas workers do NOT pass that savings on to their customers. They pass it on to their stockholders and fund bonuses for upper management. Have Nikes gotten any cheaper since offshoring to drastically reduce labor costs? That’s a big fat FUCK no! A reduction in labor costs does not translate into lower costs, *especially *where luxury goods are concerned (see: Nikes, diamonds). There are many factors in pricing, labor is but one of these.
I worked for a call center at an insurance company for 5 years. This encompassed a period before, during, and after we outsourced 50% of our call volume to the Philippines and 100% of our paperwork to India. Our rates continued increasing, as ever. Profits, the stock price, and shareholder value went through the roof. Employees were cut as our workload decreased (not me, thankfully, I found another job before it got that bad).
That’s another think I’d like to see a cite for.
I mean, if they didn’t lower their prices, how would they compete with companies that used higher wage labor?
That’s all well and fine, but a world fenced up by big trade barriers is a world where everyone, sooner or later, is going to be worse off.
That is just plainly false. In fact, they absolutely DO pass the savings on, which is why things that are largely made in such places are as cheap as they are. Children’s clothing is, for instance, substantially cheaper than it used to be, once you adjust for inflation.
I don’t know if Nikes are cheaper than they used to be, but then if you restrict your shoe choices to Nikes you’re stupid and deserved to be fleeced. SHOES, as a group, are certainly as affordable as they have ever been.
A lot of the bad feelings are based on assumptions which are just false. People should know and consider the following points.
America is not losing industrial jobs to China, it is losing industrial jobs to automation and increased productivity and this is freeing up labor for other sectors, mostly services, which are more productive.
It is not important whether a job is in industrial manufacturing or services or whatever. What is important is that a job creates value. It shows much ignorance that people insist on “manufacturing jobs” when most wealth in the last years has been created in other sectors like information and computers. Just ask Bill Gates.
You want jobs which create or add value and it does not matter in what sector. Automation and efficiency gains have made manufacturing jobs less valuable when compared with other jobs just like happened to farming before that or a lot of office jobs which have been replaced by computers. Why do people insist on trying to hang on to jobs which are of little value instead of looking at the future and trying to get into jobs which add high value?
Contrary to myth the real cost of living has declined steadily and people live better than ever before. Google declining cost of living in America and you will find several studies which show that consumer goods are cheaper than ever before. The real cost of food and clothes in terms of time worked has declined to a small fraction of what it was 50 or 100 years ago.
The cost of purchasing an automobile is smaller and the product is much better than could even be imagined 50 years ago. Energy, including gasoline, is cheaper. The cost of building a house is much lower than it was and the quality of housing is much higher. The value of land has not decreased proportionally but that is value being transferred to other Americans not to anyone in China. It is American homeowners who are “greedy” and want more for their homes when they sell them. In real terms the overall cost of housing has remained stable over the long term but this is due to the cost of land (scarce resource) going up while the cost of building has decreased. Houses today are bigger and better than they were 50 years ago and are built at a fraction of the price. All the foregoing is pretty much true in all the developed world.
So people who complain about worsening conditions just are basing their complaint of false information and false expectations. You really do not want to go back to living conditions 50 or 100 years ago.
What is changing is the nature of jobs but that is something which has happened non-stop throughout history. The farmer had to retrain for industrial jobs, then computers and information, etc. Some people will suffer as they need to retrain but those who refuse will suffer the most. I can imagine field hands in the 19th century when farm jobs were decreasing and they felt it was the end of the world. “What? I have to learn to read and write to get a job in a factory?” It is the same today except the world demands more training and education. There is no way around that. To live well you need more education today than a century ago but today even those without education live better that a century ago. It depends on whether you consider absolute terms or comparative to other people and the rest of the world.
Beside the point that protectionism has never in history worked as intended in the long run, there is another point to be made to those who propose protectionist measures: What gives you the right or the moral authority to take away the freedom of a person to purchase what is most convenient for him and his family? Individually you are free to pay more for American-made goods if that’s what you want to do but why should the family down the street be forced to do it at their own expense?
And to those who say Chinese workers have an unfair advantage because they work for less than Americans and they should be paid a higher salary and benefits equal to American workers: Germany, and European nations in general, have higher salaries and benefits. This is one reason which makes America more competitive. Would you accept that the world, in order to accept imports from America, impose on America the condition that American workers should have all the benefits of German workers (universal health care, 4 weeks vacation, etc.)?
I thought from the left of center tone of your posts that you might not be a nationalist, and so tried what would then have been a reasonable approach. I was wrong.
In any individual case, you can be right. But back when the US had a policy of economic nationalism (nineteenth century), we were mired in deep poverty, just like the Philippines (one of those countries you mentioned and presumably don’t much care about) today. So there’s a strong case for putting work where it can be done most efficiently helping both the importer and the exporter.
I did read the part in your post about this being personal for you. Of course that changes things. Since I have never lost a job due to capitalism’s creative destruction, it makes it easier to take a 20,000 foot perspective.
Sailor: He shoots,… he scores!
Good post and so exactly right. I have seen estimates that 95% of the working populace had to switch careers due to the industrial revolution. All the millions of people that for generations had been working the land and those that supported them were forced to leave the family farms and go to the cities in droves as new innovations made their contributions less valuable. Now it is happening again due to automation and computers and we are only seeing the start of the trend. Wait a decade and we will have cars that drive themselves; what will happen to all those truck drivers?
And there are other effects that are much more subtle. For instance, the world wide emergence of social programs (social security) in the early part of the 1900s was due to the increasing industrialization. As workers followed the jobs to cities, they didn’t have the family farm to go home to and die at anymore. They didn’t have the family support structure as their children may not even be in the same city and even if they were, they had to go to the factory to work 10-12 hours a day. What to do? Governments world wide were forced to provide benefits for the care of the old and the infirm. This had nothing to do with socialism or communism, it was a natural reaction to the changing economy. The changing market forces got even more powerful in this regard when women started entering the workforce in droves. I believe that this trend had a lot to do with the creation of medicare; after all if the women can’t stay home to take care of the aging parents, someone needs to step up to the plate.
