Why would we be “fucked”? If China and India are at parity with the West, it is likely their wages would increase until there would no longer be any particular outsourcing advantage. There would also be a much large pool of people who would be in a position to purchase American products and services.
Raw numbers are fine, but there isn’t one product or service where you can say, “Wow, the Chinese are really good at this”. They are good at designing cheap knockoffs and making stuff for everyone else. Until they dismantle the state run monopolies and completely open their economy, they will still lag behind.
I just get tired of people talking up China like it’s nipping at our heels. Even if the U.S. GDP doesn’t grow at all, China would need 15 years of 10% GDP growth to catch up to us, and they have 4 times the population. If I’ve done my math right, they would need 30 years of that growth to match us in GDP per capita.
Not really, at least it’s several orders of magnitude better than China or India’s.
Fucked as in no longer the dominant super power.
There are plenty of them – but they’re mainly everyday, competantly-desgned and buiilt items. Often other people make them, but the Chines do it MUCH cheaper.
One product that comes to mind, since I’ve been working with them, as video lenses. They build them in Japan and the US, too, but the Chinese ones are well-built and are 10 times cheaper. If you had to buy a stack of them, you;d buy them from China and use the money you saved on getting better components for other parts of your system.
Another is LEDs and LED tracks. Sure, you can get them elsewhere, but tyhe Chinese ones are WAY cheaper (except for the ones made in, say, Korea.)
Heck, just google any of the China Marketplace websites that direct you to Chinese suppliers and compare their prices with the reest of the world.
http://www.asiannet.com/companies/
Just because it isn’t big and splashy, or you personally don’t hear about it, doesn’t mean it doesn’t exist.
China feels like the US circa 1900 in terms of checks on unfettered capitalism – in other words, we’re not playing on a level playing field. It would be interesting to speculate the cost of Chinese goods if they had OSHA, EPA, product safety laws and meaningful intellectual property enforcement.
As I said, they are good at making cheap knockoffs and stuff for everyone else. That’s simply because they have access to the cheapest labor, not any sort of skill or expertise. As time progress, China’s labor costs will go up, and they will be undercut by an even cheaper country, or cheap automation in developed countries. It wasn’t long ago that Mexico was posting these blistering growth rates, but they haven’t materialized into a 1st world country. Why? Because they lack the good governance, education, etc. etc. that drive the economies of 1st world countries.
When I see companies like Samung, Hyundai, or LG pop up, then it’s time to consider China as a serious rival. Until then? Fuggitabout it.
Yup we will stick with the W88 warhead so they can get a primer on our tech crown jewels.
Declan
They are the fine folks shooting down sattelites for shits and giggles. As long as they are trying to attain parity with the USA , its going to be a staple of military scenarios.
Declan
Exactly what they said about Japan.
Did you miss Japan cratering in the 90s? Their GDP is 1/3 of ours, and the GDP per capita is only 3/4s of ours. Besides, I don’t really see the comparison. Japan got to the place they did with a skilled, educated, and innovative economy, not through cheap manufacturing.
i hope that you’re not suggesting that China would risk the death of millions and the loss of trillions just to obtain the title of “sole international superpower”. That’s some video-game driven insanity right there. With the growth of international dependence, the likeliness of war shrinks by that much. If you look at where wars have sprung up since the globalization of world economies: The Middle East, and Africa, it involves nations with very little to lose in terms of cutting ties with a majority of the industrial world. With the collapse of the Soviet bloc (trading bloc), it united east and west in terms of economic interdependence. There won’t be much of a global war threat unless the Middle East and Africa choose to sync up and antagonize the rest of the world at the risk of the billions in aid and investments they receive already from the world they’re trying to antagonize.
In a US/China war scenario, China would lose trillions of dollars in assets and potential trade if they decided to cut diplomatic and economic ties with the US. And, as Throatwarbler said, I can’t come up with a single rational reason why they would do such a thing.
And back to the OP, why is a service economy bad? It’s bad because it’s hard to quantify. It’s much more difficult to assess the value added to a consulting analysis, or business plan, or computer program than it is to pin a number on how much a car is worth, or toy, or tube of toothpaste. It’s this loss of precision to gauge how much we’re producing as a nation that has some economists worried about the actual GDP of our nation, and if it’s being overestimated like a bubble. What if our non-material services aren’t as valuable as we think it is? What if it’s easily replicable or worse yet, overcome? Are we overestimating our worth? When will this catch up with us? That’s why the establishment of an industrial sector is so important - to insure against a collapse of the information sector. Otherwise, there’s nothing inherently wrong with being a service industry - unless it’s a service that we’re unable to export like barbering or waitressing.
That’s the second half of what people here are arguing. The definition of service industry. The service industry has to be a service that is easily exported, and that means not McDonalds but rather consulting, IT, and construction. Haliburton is exporting their knowledge of how to build roads, and IBM instead of shipping computers is shipping out business models. That is the service industry that’s important, not Wal Mart greeters or even telemarketers and customer service.
So are you suggesting that their products like autos have not kicked our asses in quality and reliability for years. We are cratering now , whats the point.
Japan absolutely started out with making cheap knockoffs. That is where economies start ,not where they finish. There was a town in Japan called Usa. They wanted to put manufactured in USA on their products. They don’t have to any more. Made in Japan used to be a joke.
Was a Town in Japan Renamed 'Usa' So Its Products Could Be Labeled 'Made in USA'? | Snopes.com Heres an article about it.
What is your point in this rambling mess?
It seems to me that most complaints about the “service” economy come down to one of a few things:
- The economy is different now than it used be.
- Things should be valued more than ideas and skills.
- Other countries are catching up to us.
My responses to each:
- And ever shall it always be. The new economy requires more training and more flexibility. Pining for the past is not useful.
- No, they shouldn’t. Everything starts as an idea, and the ability to do something useful (that is, a service) is often and should be more valuable. The old “teach a man to fish” maxim is appropriate.
- This is good. People everywhere should have the same opportunities for a comfortable life. Political and social freedom will follow when economic prosperity lets them think past today’s survival.
Your link specifically states that the idea that Japan had a town called Usa for that purpose is false and is an urban legend.
Their stuff isn’t a “cheap knockoff” – it’s designed from-scratch xompetantly engineered quality goods, at a much cheaper price than you’d get elsewhere. “Cheap Knockoff” is a put-down that doesn’t do it justice. And these are simply two examples of what they’re putting out. Some of this stuff literally is not being made elsewhere, and with the R&D labs – often from Western countries, I add – we can expect to see new items hitting the market.
Your comments seem to be attempting to say that Chinese goods are all cheaop imitations of the Good Stuff designed by us gys here in the US, and I’m telling you that that model is obsolete – they are themselves beginning to design the things they are building over there.
You are undoubtedly correct that they will eventually be undercut by even cheaper suppliers (and R&D) from elsewhere, such as South America. Economists have been pointing this out for years. None of this makes me feel any better about the situation for the US. When South America (or whoever is the cheap labor) looks for inspiration and design work, it won’t be the US. Until they get their own centers going, it’ll be the cheaper R&D centers in China, India, and elsewhere.
One of the big failures of the Soviet Union was that they did not value services and only counted the production of material goods. That is all they pushed: more industrial capacity. And look how far it got them.
This is false. Wealth is not zero-sum.
Yes, I do not understand those who insist China will always be a backwards country. China is following the steps of many other countries like Japan or Spain which started out as agrarian economies, then as cheap labor for manufacturing and then moved up to full first tier developed countries. China is clearly following the same path and unless something interrupts that I expect it to have a larger economy than the USA in 20~25 years.
They are already educating huge numbers of engineers and scientists, both in China and abroad. The Chinese goverment sponsors education like no other goverment and many Chinese are studying abroad. Some will stay abroad and many will return. Even those who remain abroad will be promoting Chinese interests abroad and business with China.
China already has a huge internal market. It is #1 for mobile phones. China is already in a position where it can set internal standards and these will have great weight abroad. They decreed that all mobile phones would be charged at 5V so they could be charged from a USB port and that has become a de facto standard world wide.
The two biggest telephone companies in the world are Chinese.
They were widely using VCD while Americans were still using video tapes.
Now they have developed a new video standard to compete with western standards for which they prefer to not have to pay royalties.
Audio Video Standard - Wikipedia
http://www.avs.org.cn/reference/AVS%20NAB%20Paper%20Final03.pdf
They are sending up satelites and putting people in orbit. This requires serious science. Or are they just copying what America did 40 years ago?
To say they are önly making cheap knockoffs is to not jknow what is going on.
Even more than that, Japan is a “service economy” too, with about the same percentage of GDP in the service sector as in the United States (about 67.9% value added, and 72% of total employment).
Japan’s economy isn’t geared to manufacturing any more than ours is.
So, conclusion that service economy isn’t necessarily “Bad” and that for most subjects that enter GD, there is no single absolute way of view things? … except for religion?
however to continue stirring the pot, China is literally decades away from challenging America as a superpower if current trends continue, but the models of GDP growth are projected linearly - i.e. consistent 8% growth for China and 4% growth for the US. if you project that on a log scale, you’d see some contrary numbers. plus, the projections for china now are assuming current institutions. if you factor in the continued liberalizaiton of the chinese cconomy and the development of their stock market (virtually nonexistant for all intents and purposes) china is about 20 years from being a veritable baby huey economically speaking.