Walmart's push for USA made stuff hits snag

[realibrad]

Exactly right. Countries and companies don't dump to control an industry, they dump to control an industry and thus make even more money.

Two other points on Realibrad's post. First, the displaced workers are disproportionately absorbed into the "new economy" as low wage, lower class employees, which weakens the middle class and requires more government services whilst reducing government income. This also increases the risk of collapsing into socialism or totalitarianism, as the more people without hope of success, the more people willing to give up freedom for change. Also, very little of our service sector relies on foreign customers. In fact, our service sector is becoming increasingly out-sourced to cheaper foreign countries as their citizens become more English-literate even as ours become less so.

Second, we need real wealth to purchase all those newly cheap imports. Service jobs don't create wealth, they merely move it around to make life better. There are only a few sources of wealth production - manufacturing, mining, fishing, agriculture. Most of the easily accessible valuable resources are gone, meaning increasing environmental damage to get the rest. Fishing stocks are seriously depleted; in fact we've already been fishing down the food chain, harvesting previously undesirable species as more desirable species decline to non-feasible stocks, for a few decades. We do still shine in agriculture and will for the foreseeable future, but agriculture is a comparatively low density form of wealth creation, and as it becomes increasingly a big agribusiness industry it also has the same wealth distribution problems as moving to a service economy.

At some point, we'll be faced with either selling off Hawaii and/or Alaska to pay our debts, or defaulting on those debts. And a nation which cannot supply its own needs and no longer has credit is in very bad shape.

So a few things.

First, the country that "takes away" an industry has to do it at a cost. If the firm that wanted the jobs produced a product of equal quality at a lower price, they would have taken over the market anyway. The funding that allows the firm to dump products came from somewhere, so they robbed peter to pay paul. At some point, the firm that "took away" the jobs would have to product the product at a cost that would make entry of another firm wanted to do the same. So in the long run, things would break even as they would not be able to hold off competition with out efficient production.

Service jobs are important. Its sad that people dont understand this concept better, but I guess its not intuitive for most. In explaining this, I'm also going to explain why you see growing income inequality.


You have 3 people. Person 1 is super smart and creative. People 2 and 3 are of average intelligence and are hard working.

Person 3 owns his own company. He has great ideas, but gets far more customers than he can service. Person 1 hires people 2 and 3 to do small tasks so that he can do more work, and make more money. Person 1 becomes more efficient because he can now focus on more productive things because people 2 and 3 do the less productive work. The net benefit is that person 1 has now created 2 jobs, and is making more money for himself, and for those working under him.

Now comes person 4. person 4 is a lot like person 1, and also wants to hire people to do the less productive work. Person 4 offers persons 2 and 3 to work for him, making a little more than under person 1. Persons 2 and 3 leave, and make more money.

Now, person 1 and person 4 are competing for the limited labor resources of people 2 and 3. Now, Imagine that there are now 200 more persons who are the hard workers, but are unskilled.

Person 1 and Person 4 look at those 200 people and realize the potential labor that could make them more money. The set up a model that if they pay those people x amount, they can make even more money. But if they have to pay y amount, the will make money, but not as much as if they payed X.

Person 1 and person 4 have only so much demand to fill, and with 200 people to split the demand, the wage would have to be pretty low. If there were 100 people, you would still have a cap on potential income, because that hard worker would have to bring back more value than what they were paid.

Persons 1 and persons 4 will always make more money, as what they bring to the market inherently has more value. Anyone can be a hard worker, but only a few are smart and creative. Society wants smart and creative products, and will buy it when it comes along.

Service jobs make those smart and creative people more productive. Increased productivity means more things at a lower cost. If you make $8hr in economy A, but in economy b your $8 buys you more things, and better things, which would you rather have.

 

[Engineer]

If you think that replacing good paying (plus benefits) manufacturing jobs with McService jobs is a great thing, you're full of shit.

Enjoy your growing welfare state.

/thread

 

[realibrad]

If you think that replacing good paying (plus benefits) manufacturing jobs with McService jobs is a great thing, you're full of shit.

Enjoy your growing welfare state.

/thread

What you are suggesting is that the only jobs that would come in are service sector jobs. The reason those "Good Paying" jobs left is because it made the products too expensive. The poor now have access to more things, because those things got a lot cheaper. Manufacturing jobs are just not that valuable compared to what they once were. Its not like the cars of today are the same as cars of 20 years go. Today's cars are far more complex and have far more luxuries. There is no way to pay people at the rates manufacturing workers got paid 20 years ago, and cars still be affordable.

 

[Engineer]

What you are suggesting is that the only jobs that would come in are service sector jobs. The reason those "Good Paying" jobs left is because it made the products too expensive. The poor now have access to more things, because those things got a lot cheaper. Manufacturing jobs are just not that valuable compared to what they once were. Its not like the cars of today are the same as cars of 20 years go. Today's cars are far more complex and have far more luxuries. There is no way to pay people at the rates manufacturing workers got paid 20 years ago, and cars still be affordable.

I'm not suggesting anything, the data shows that a disproportionate number of jobs now being formed are low wage, no benefit service (retail, fast food, etc) jobs, period.

Yes, and now you have a lot more poor people and the number is rising...but it's OK...as long as 'you're' doing OK, all is well.

LOL, according to you, the poor are better off now because the middle class jobs above theirs were sent out. That's a hoot. How about the middle class, are they also doing better? Why are welfare and poverty rates rising? Why are wages stagnant? Just keep on living in the bubble economy...one pop after another, with your head in the sand.

Just remember, Ross Perot says "I told you so".

 

[ControlD]

What you are suggesting is that the only jobs that would come in are service sector jobs. The reason those "Good Paying" jobs left is because it made the products too expensive. The poor now have access to more things, because those things got a lot cheaper. Manufacturing jobs are just not that valuable compared to what they once were. Its not like the cars of today are the same as cars of 20 years go. Today's cars are far more complex and have far more luxuries. There is no way to pay people at the rates manufacturing workers got paid 20 years ago, and cars still be affordable.

I would argue that this is already not the case. Even with much of the manufacturing of automobiles being moved to non USA plants the average new car price has risen above what is considered as "affordable" to median income Americans.

https://autos.yahoo.com/news/average-american-can-no-longer-afford-%E2%80%9Caverage-priced%E2%80%9D-new-car-or-truck--and-why-it-s-getting-worse-013001053.html

 

[Matt1970]

What you are suggesting is that the only jobs that would come in are service sector jobs. The reason those "Good Paying" jobs left is because it made the products too expensive. The poor now have access to more things, because those things got a lot cheaper. Manufacturing jobs are just not that valuable compared to what they once were. Its not like the cars of today are the same as cars of 20 years go. Today's cars are far more complex and have far more luxuries. There is no way to pay people at the rates manufacturing workers got paid 20 years ago, and cars still be affordable.

But how many of those things are they really affording? You can claim you are affording a TV and computer in every room, cell phone in everyone's pocket, cable, wifi, yada yada yada but when it comes time to pay the rent or buy food you need Uncle Sam's help. And adjusted for inflation we pay 50% for cars than we did in 1980. Average cost of a car in 1980 $7,200.00 Adjusted for inflation that would be $20,300 in 2013 dollars. Average cost in 2013 was $31,352. http://www.thepeoplehistory.com/70yearsofpricechange.html

 

[Engineer]

I would argue that this is already not the case. Even with much of the manufacturing of automobiles being moved to non USA plants the average new car price has risen above what is considered as "affordable" to median income Americans.

https://autos.yahoo.com/news/average-american-can-no-longer-afford-%E2%80%9Caverage-priced%E2%80%9D-new-car-or-truck--and-why-it-s-getting-worse-013001053.html

I'm not convinced that much of the US automotive manufacturing has been moved out. From what I've seen, I'm not so sure that more hasn't moved in, albeit to lower paying plants in the South (Georgia, Alabama, Texas), than have moved out. Suppliers, on the other hand, you might be right. Just not sure on that one.

 

[Engineer]

But how many of those things are they really affording? You can claim you are affording a TV and computer in every room, cell phone in everyone's pocket, cable, wifi, yada yada yada but when it comes time to pay the rent or buy food you need Uncle Sam's help. And adjusted for inflation we pay 50% for cars than we did in 1980. Average cost of a car in 1980 $7,200.00 Adjusted for inflation that would be $20,300 in 2013 dollars. Average cost in 2013 was $31,352. http://www.thepeoplehistory.com/70yearsofpricechange.html

You silly boy, that's what 7 and 8 year loans are for, bah.

Take your job, ship it out and then, jump in and help you with long term financing to help pick up the slack and your lack of purchasing power. All problems solved.

 

[Matt1970]

Just remember, Ross Perot says "I told you so".

Yep. And he wasn't the first to warn us. I remember the ads growing up that said something to the effect of every time you buy and imported car 1.2 Americans lose their jobs. We all knew it. It's not rocket science. If you keep sending a cut of your money overseas you are going to have problems.

 

[Matt1970]

I'm not convinced that much of the US automotive manufacturing has been moved out. From what I've seen, I'm not so sure that more hasn't moved in, albeit to lower paying plants in the South (Georgia, Alabama, Texas), than have moved out. Suppliers, on the other hand, you might be right. Just not sure on that one.

If memory serves from that Detroit thread we had the big three have had revenue fall 45% in the past 4-5 decades. Just driving down the road and seeing all the Toyotas, Hyundai, Nissans and what not paints a pretty good picture. Even those that now manufacture here in the US still send a portion overseas back to the mothership.

 

[Matt1970]

You silly boy, that's what 7 and 8 year loans are for, bah.

Take your job, ship it out and then, jump in and help you with long term financing to help pick up the slack and your lack of purchasing power. All problems solved.

Good point. The 3 and 5 year car loans are starting to look like a luxury.

 

[werepossum]

So a few things.

First, the country that "takes away" an industry has to do it at a cost. If the firm that wanted the jobs produced a product of equal quality at a lower price, they would have taken over the market anyway. The funding that allows the firm to dump products came from somewhere, so they robbed peter to pay paul. At some point, the firm that "took away" the jobs would have to product the product at a cost that would make entry of another firm wanted to do the same. So in the long run, things would break even as they would not be able to hold off competition with out efficient production.

Service jobs are important. Its sad that people dont understand this concept better, but I guess its not intuitive for most. In explaining this, I'm also going to explain why you see growing income inequality.


You have 3 people. Person 1 is super smart and creative. People 2 and 3 are of average intelligence and are hard working.

Person 3 owns his own company. He has great ideas, but gets far more customers than he can service. Person 1 hires people 2 and 3 to do small tasks so that he can do more work, and make more money. Person 1 becomes more efficient because he can now focus on more productive things because people 2 and 3 do the less productive work. The net benefit is that person 1 has now created 2 jobs, and is making more money for himself, and for those working under him.

Now comes person 4. person 4 is a lot like person 1, and also wants to hire people to do the less productive work. Person 4 offers persons 2 and 3 to work for him, making a little more than under person 1. Persons 2 and 3 leave, and make more money.

Now, person 1 and person 4 are competing for the limited labor resources of people 2 and 3. Now, Imagine that there are now 200 more persons who are the hard workers, but are unskilled.

Person 1 and Person 4 look at those 200 people and realize the potential labor that could make them more money. The set up a model that if they pay those people x amount, they can make even more money. But if they have to pay y amount, the will make money, but not as much as if they payed X.

Person 1 and person 4 have only so much demand to fill, and with 200 people to split the demand, the wage would have to be pretty low. If there were 100 people, you would still have a cap on potential income, because that hard worker would have to bring back more value than what they were paid.

Persons 1 and persons 4 will always make more money, as what they bring to the market inherently has more value. Anyone can be a hard worker, but only a few are smart and creative. Society wants smart and creative products, and will buy it when it comes along.

Service jobs make those smart and creative people more productive. Increased productivity means more things at a lower cost. If you make $8hr in economy A, but in economy b your $8 buys you more things, and better things, which would you rather have.

They rob Peter to pay Paul because they know that once Paul has no competition, Paul can charge much more and can thus repay Peter with a healthy interest. And yes, these must always be countries with low production costs, otherwise the monopoly would always remain vulnerable.

On service jobs, I'm not arguing that they aren't important. Unless they are government mandated jobs, obviously they are important or they wouldn't exist. My two points on service jobs are that they pay less on average and that they create no wealth which we can then trade for real products we desire. To the extent that we sell services to the people from whom we buy real products that last one is immaterial, but the vast majority of service jobs are internal. Even worse, the trend is to export service jobs as well. That leaves a gap of created wealth, so to keep up our consumption we must either borrow or trade things like stocks (which take with them a portion of profits), bonds (which must be repaid with interest), or real property (which is finite.)

 

[realibrad]

I'm not suggesting anything, the data shows that a disproportionate number of jobs now being formed are low wage, no benefit service (retail, fast food, etc) jobs, period.

Yes, and now you have a lot more poor people and the number is rising...but it's OK...as long as 'you're' doing OK, all is well.

LOL, according to you, the poor are better off now because the middle class jobs above theirs were sent out. That's a hoot. How about the middle class, are they also doing better? Why are welfare and poverty rates rising? Why are wages stagnant? Just keep on living in the bubble economy...one pop after another, with your head in the sand.

Just remember, Ross Perot says "I told you so".

My argument was that service jobs do not come at the expense of higher paying jobs.

If the jobs "Lost" were to come back, they would not be at the wages people would need to live a middle class life.

@ DaveStall. That is a horrible misunderstanding of what is going on. The link you posted is very misguided. What it did was to look at all cars purchased and then avg that number, regardless of the income bracket people fell into. There are plenty of cars in the $20,000 range that would be a great fit for middle class families.

The avg car of today does not even come close to the avg car from the 80s. The avg car of today has anti-lock breaks, automatic transmission, AC, power everything. Show me a car from 1980 that has everything a modern car has and adjust it for inflation, and show me how its even close.

To the main thing that I wanted to refute. The reason service sector jobs are growing, is because that is where the demand is. The world population is growing and there just isint as much to do that would bring in a middle class job. Show me a market that is not in the US, that could be stolen and brought here to bring in a middle class life style. Because it surly is not manufacturing.

 

[Zaap]

Ah, the National Pity Party continues.

Keep whining, that'll solve everything. Everyone else in the world feels sooooooooo sorry for first worlders who want to have their cake and eat it too.

If a nation is going to embrace dumbed-down cultures (check) shun education and skills (check) and basically adopt a sub-third world mindset and have nothing really of value to offer the industrial world vs. your counterparts elsewhere in the world, then guess what?

You're going to achieve equilibrium with them. In a shrinking world, money will spread itself around.

All I see is people whining over the inevitable, pissing and moaning about who warned them about what and when- when NO BODY was heeding the real writing on the wall, just a bunch of people cruising along thinking they're the most special people on the planet, and that business will just reward them for being special and naturally above everyone else.


Now that it's finally hitting home that a culture that goes into massive debt so its colleges can turn out "navel lint gazing" majors in record numbers, shuns actually knowing how do do anything useful -yet thinks its more skilled than all those 'savages' everywhere else who are just perpetual 2nd graders- a culture that falls for hard work being "Jobs Americans won't do, so suuure! Ship in the third world in record numbers and give them amnesty!" it's finally hitting home that this ends up turning the first world into the third world, and that the only people that will profit from it are the corrupt politicians and their cronies that have cheerlead it on- everyone else gets to be that much poorer, and the middle class gets to be just plain poor.

But rather than take any responsibility and do something about it, and kick all the knuckleheads out that are the architects of it- most would rather sit around whining. National Pity Party time. (Even as we let the politicians double-down on third-worldizing the nation even further- amnesty! Anyone who shows up with no ID can vote- not that we're keeping track or anything! More taxes! More debt!)

Maybe all the whining and tears will generate enough sympathy that those profiting handsomely off third worldizing the country will feel pangs of guilt and *sniffle* stop making so much money and go "awwww, you poor babies, yes, let's return things to the way they were because *sniffle* gosh darn it, you ARE the most special people on the planet!"

Yeah. That'll work.

So keep the National Pity Party rolling! Kleenex all around! More tears!!

 

[ControlD]

My argument was that service jobs do not come at the expense of higher paying jobs.

If the jobs "Lost" were to come back, they would not be at the wages people would need to live a middle class life.

@ DaveStall. That is a horrible misunderstanding of what is going on. The link you posted is very misguided. What it did was to look at all cars purchased and then avg that number, regardless of the income bracket people fell into. There are plenty of cars in the $20,000 range that would be a great fit for middle class families.

The avg car of today does not even come close to the avg car from the 80s. The avg car of today has anti-lock breaks, automatic transmission, AC, power everything. Show me a car from 1980 that has everything a modern car has and adjust it for inflation, and show me how its even close.

I suppose the exact same thing could have been said about the average 1980 car compared to one made in 1960. What would be interesting to see is if the same metric (flawed or not) held in 1980 in regards to the average automobile price compared to the median income. I don't know the answer, just curious.

 

[BoberFett]

You silly boy, that's what 7 and 8 year loans are for, bah.

Take your job, ship it out and then, jump in and help you with long term financing to help pick up the slack and your lack of purchasing power. All problems solved.

This would have been a non-issue had consumers told corporations to take their products and cram them up their collective asses when they became too expensive and incomes weren't keeping up. But Americans were too busy trying to impress the neighbors with toys they couldn't afford to do that.

 

[realibrad]

I suppose the exact same thing could have been said about the average 1980 car compared to one made in 1960. What would be interesting to see is if the same metric (flawed or not) held in 1980 in regards to the average automobile price compared to the median income. I don't know the answer, just curious.

The problem is that it feels like its an apples to apples thing. Its measuring the avg car price from different times. The problem is that its all relative. The price of horses would be the same thing. Relative to the alternatives, horses have become very expensive as a mode for transportation. Cars from the 30s are not comparable to the cars from the 50s, or 70s, or today. That is because society was in a very different place. Cars of today are packed so full of things that my Scion tC is a far better can than anything made in the 80s to me. I enjoy airbags, and AC, and power everything. Some of the technology did not even exist, so there is really no way to measure the value of today's cars against the past.

 

[Matt1970]

If the jobs "Lost" were to come back, they would not be at the wages people would need to live a middle class life.
.

That depends on which middle class you are talking about. Are you referring to the one where dad worked in a factory, the family probably had one car and the most expensive thing in the house was the one TV everyone crowded around every night? The one where also you were more likely to be wearing your brothers hand-me-downs and you shared his toys? Or are you referring to the one with a TV and computer in every room, cell phone in everyone's pocket, cable, wifi, X-Box, Playstaion?

 

[Engineer]

This would have been a non-issue had consumers told corporations to take their products and cram them up their collective asses when they became too expensive and incomes weren't keeping up. But Americans were too busy trying to impress the neighbors with toys they couldn't afford to do that.

Considering that the average age of a US car on the road is at an all time high of just over 11 years, I'm not so sure that the above model holds true any more.

Either the cars simply last longer (and that may be part of the case) or fewer people are buying new cars and holding on to what they have.

 

[realibrad]

They rob Peter to pay Paul because they know that once Paul has no competition, Paul can charge much more and can thus repay Peter with a healthy interest. And yes, these must always be countries with low production costs, otherwise the monopoly would always remain vulnerable.

On service jobs, I'm not arguing that they aren't important. Unless they are government mandated jobs, obviously they are important or they wouldn't exist. My two points on service jobs are that they pay less on average and that they create no wealth which we can then trade for real products we desire. To the extent that we sell services to the people from whom we buy real products that last one is immaterial, but the vast majority of service jobs are internal. Even worse, the trend is to export service jobs as well. That leaves a gap of created wealth, so to keep up our consumption we must either borrow or trade things like stocks (which take with them a portion of profits), bonds (which must be repaid with interest), or real property (which is finite.)

Sorry, I missed your response.

So, the new firm that controls everything becomes a monopoly and gets to charge a larger price than before because they now control everything due to lack of competition. The problem with that is now they must make up all that money, and prices will rise. There will be a small window where overall prices have gone up. The thing about the world is that things adjust. Competitors will see profits to be made, and will in fact come back to the market. It will be small at first, but with today's abilities, that window of higher prices will be smaller than ever. It used to be that monopolies could be around for maybe a life time. Now, monopolies break down very quickly. Look around, and look at the worlds monopolies. Most of them have the power they have because of government backing, and not because they have won out over the market.

The one that resonates on here would be Microsoft. But, look at apple and their market share. Look at android taking over in the mobile sector. Computer sales are down, and MS does not really seem like the monopoly it once was, and its been around for how long now?

Off the top of my head, I cant think of when dumping has worked, so please reply or PM me, because I honestly dont see the issue in reality.

 

[werepossum]

Sorry, I missed your response.

So, the new firm that controls everything becomes a monopoly and gets to charge a larger price than before because they now control everything due to lack of competition. The problem with that is now they must make up all that money, and prices will rise. There will be a small window where overall prices have gone up. The thing about the world is that things adjust. Competitors will see profits to be made, and will in fact come back to the market. It will be small at first, but with today's abilities, that window of higher prices will be smaller than ever. It used to be that monopolies could be around for maybe a life time. Now, monopolies break down very quickly. Look around, and look at the worlds monopolies. Most of them have the power they have because of government backing, and not because they have won out over the market.

The one that resonates on here would be Microsoft. But, look at apple and their market share. Look at android taking over in the mobile sector. Computer sales are down, and MS does not really seem like the monopoly it once was, and its been around for how long now?

Off the top of my head, I cant think of when dumping has worked, so please reply or PM me, because I honestly dont see the issue in reality.

No, you are correct that it will always be limited temporally unless the force of government gets involved. South Korea used to dump memory chips; now many are made in China. Even some American major appliance manufacturing is coming back because major appliance manufacturing labor costs in China are approaching those in the US, which with shipping costs and difference in taxes (between importing to sell and manufacturing and also local/state tax breaks for bringing in jobs) makes American manufacturing look more attractive. Fortunes have been lost trying and failing to establish a monopoly or simply mis-estimating how long and how profitable the subsequent monopoly would be.

 

[realibrad]

No, you are correct that it will always be limited temporally unless the force of government gets involved. South Korea used to dump memory chips; now many are made in China. Even some American major appliance manufacturing is coming back because major appliance manufacturing labor costs in China are approaching those in the US, which with shipping costs and difference in taxes (between importing to sell and manufacturing and also local/state tax breaks for bringing in jobs) makes American manufacturing look more attractive. Fortunes have been lost trying and failing to establish a monopoly or simply mis-estimating how long and how profitable the subsequent monopoly would be.

So that is the answer to the problem is it not. Product dumping only works with government backing. Governments must generate revenue and they way they do that is through taxes. So the value simply is taken from one area, put into another with the hope that its a net benefit. So when I look through history, I don't see it helping the country that does "steal" the jobs, I just see the business owners benefiting.

If the argument was that product dumping hurt everyone but the owners of the business, then I would agree. But the argument seems to be that dumping hurts the US, and helps the country that takes the jobs, and I just dont see data for that.

 

[werepossum]

So that is the answer to the problem is it not. Product dumping only works with government backing. Governments must generate revenue and they way they do that is through taxes. So the value simply is taken from one area, put into another with the hope that its a net benefit. So when I look through history, I don't see it helping the country that does "steal" the jobs, I just see the business owners benefiting.

If the argument was that product dumping hurt everyone but the owners of the business, then I would agree. But the argument seems to be that dumping hurts the US, and helps the country that takes the jobs, and I just dont see data for that.

While they still have to defend their monopoly against other low cost production nations, the American jobs are largely gone for good. Some major appliance manufacturing is coming back, but with great difficulty and currently only the very high end. See the OP's lnks for similar problems. It is immensely difficult for a high labor cost/high tax and regulatory burden nation to return to or enter a manufacturing sector once the expertise is gone and the tooling scrapped.

Put it this way - when a blender was made in an American plant with American ownership for $20 and sold for $30, all that $30 remained in the American economy. When the same blender is made in China for $10 and sold for $25, the company and sales chain together make 50% more profit and the consumer saves $5. Looks like a bargain, right? But that $10 leaves the American economy and enters the Chinese economy, and at the current trade imbalance we might get $2 back. The Chinese are not in the business of collecting little green pictures of dead Americans as a hobby, so we must send them something worth $8 to make them whole on that blender. Since we've already accounted for the trade we send to China, that leaves IP, stock, bonds, or real property. So we're good, right?

Not really. IP and stock both transfer ownership, so that part of that $15 aggregate profit now goes to the Chinese, raising the amount we're in the hole. Bonds must be paid back with interest, raising the amount we're in the hole. Real property is currently considered investment and touted as a good thing, but there's a finite amount of real property available and for practical purposes a finite amount of increased value for that real property. (Meaning that while in theory we can build a Taj Mahal on every block and sell those, in practice we'd just drop the price of Taj Mahals until the cost of building them exceeds the price buyers will pay.) Essentially we're the farmer who has discovered that selling off bits of the farm pays better than farming; we're living comparatively high on the hog for the moment, but at some point we're going to run out of farm to sell and at that point we'll be unable to return to farming. Or in America's case, at some point we're going to run out of IP and real property to sell and at that point we'll be unable to return to manufacturing. At that point we'll have to either stage a socialist revolution and seize all that land "for the people", or become a Chinese colony in fact if not in name.

 

[realibrad]

While they still have to defend their monopoly against other low cost production nations, the American jobs are largely gone for good. Some major appliance manufacturing is coming back, but with great difficulty and currently only the very high end. See the OP's lnks for similar problems. It is immensely difficult for a high labor cost/high tax and regulatory burden nation to return to or enter a manufacturing sector once the expertise is gone and the tooling scrapped.

Put it this way - when a blender was made in an American plant with American ownership for $20 and sold for $30, all that $30 remained in the American economy. When the same blender is made in China for $10 and sold for $25, the company and sales chain together make 50% more profit and the consumer saves $5. Looks like a bargain, right? But that $10 leaves the American economy and enters the Chinese economy, and at the current trade imbalance we might get $2 back. The Chinese are not in the business of collecting little green pictures of dead Americans as a hobby, so we must send them something worth $8 to make them whole on that blender. Since we've already accounted for the trade we send to China, that leaves IP, stock, bonds, or real property. So we're good, right?

Not really. IP and stock both transfer ownership, so that part of that $15 aggregate profit now goes to the Chinese, raising the amount we're in the hole. Bonds must be paid back with interest, raising the amount we're in the hole. Real property is currently considered investment and touted as a good thing, but there's a finite amount of real property available and for practical purposes a finite amount of increased value for that real property. (Meaning that while in theory we can build a Taj Mahal on every block and sell those, in practice we'd just drop the price of Taj Mahals until the cost of building them exceeds the price buyers will pay.) Essentially we're the farmer who has discovered that selling off bits of the farm pays better than farming; we're living comparatively high on the hog for the moment, but at some point we're going to run out of farm to sell and at that point we'll be unable to return to farming. Or in America's case, at some point we're going to run out of IP and real property to sell and at that point we'll be unable to return to manufacturing. At that point we'll have to either stage a socialist revolution and seize all that land "for the people", or become a Chinese colony in fact if not in name.

Thats gloomy.

You miss 1 major thing though. What is the reason that China can produce a blender for $10?

Once you get wealth pumped into China, you get people wanting more things, just like you see in every other developed country. That grows Ag demand, and you then see the US fill the demand. There are no profits in the long run right, so this is simply an adjustment in the global economy. China is consuming massive amounts of stuff right now, and its growing. Its middle class is also growing, and they will want people to produce things.

In capitalism there are winners and losers. The losers lost because they could not compete, and the winners won because they did it better. You can have illegal activity, and government regulation can be inserted there, but on the whole, we want global competition.

 

[Engineer]

Thats gloomy.

You miss 1 major thing though. What is the reason that China can produce a blender for $10?

Because they pay their employees shit wages..and...wait for it...their money is not even close to being on equal footing with ours. Let China's currency float against the US dollar and quit using the Chinese government to keep it pegged to the dollar and see where all of this goes.