It will always be like this until scale ramps up and costs come down as infrastructure ramps up. China's advantage is always communicated as cheap labor but it's also the ability to almost infinitely scale production lines in a short period of time. America has mostly lost the muscle memory and tooling to do this. And that ability to scale matters with materials costs.
There are incentives that would benefit domestic producers and companies but those take time and don't make good soundbites for politicians.
The blunt tariff sledgehammer that was dropped isn't going to do it. Small experiments like the one in the article will try and mostly fail. Meanwhile producers will find loopholes and workarounds to tariffs. And the margins and viability of domestic designers and businesses will continue to weaken.
Consumers will increasingly eat the cost and lose the convenience.
I think it is worth mentioning how much more cheap capital is available for manufacturing. Chinese state policy—- monetary, fiscal, and social—- pushes up the savings rate, enormously lowering consumption, while restricting the range of consumer financial products. That puts more savings in state banks and keeps interest rates low.
This has come up at the expense of their own consumption however, and a reliance on exports instead. Thankfully China has been focusing on diversifying their export markets along with increasing internal consumption in the last decade.
There are the obvious explicit government initiatives to boost consumption, but they've also made some strides in reducing goods and luxury taxes. An Apple iPhone used to be 20-40% more in China (it is technically imported because it is made in an SEZ), but they are only priced at slightly higher than the states now. Cars used to be a huge splurge but cheap EVs are affordable by anyone with an OK job now (although you might not be able to park it if you live in a big city). On my trip a couple of months ago, the malls were booming in a way that I didn't see in 2016 when I left China.
Factorio taught me about supply chains, manufacturing bottlenecks, and tooling dependencies. These concerns don't really crop up in day-to-day programming, but they reveal a lot about why we struggle manufacturing anything in USA anymore.
If it's about supply chains and the like, Eve Online might be a better fit, it's got the factor of time, deal-making, social interaction, theft, war, blockades, undercutting, etc in there as well.
like, I can see a high school class set up their corporation, get mining set up, maybe own a station, get production running... but then a nullsec alliance is like haha fuck you and completely undercuts them, or the recurring player event where they block / destroy anything coming into or out of the main trade hub starts.
Factorio is pretty predictable... or maybe I've played it too often so I know what to consider for the long term. I should get some mods or change some settings to create calamities like in the old Sim City.
But we don't have a shortage of people who understand those things. You can learn them with a passive interest while hanging around with your laptop on the weekends. We have a shortage of people who understand how to actually make things in a non-copy/paste environment.
There are so many ways that mother nature says "fuck you, fuck your work" that you never get contact with in virtual environments. In fact the whole point of virtual environments it to remove that brutality. We have a dramatic shortage of young people who are interested in learning how to wrangle with mother nature OS rather than computer OS.
When I did IT in manufacturing, we outsourced most of the 'understand how to actually make things' tooling type people jobs. We didn't need them full time and could get way better experts via outsourcing than we could hire.
What we needed were wage slaves paid low enough to make the economics work, even in our small town without many employers that was the tricky bit. Especially every year when health insurance premiums went up. You want to help American manufacturing, move healthcare costs off their back and to the government.
>You want to help American manufacturing, move healthcare costs off their back and to the government.
This would be a big help but maybe too little too late. Maybe we just enjoyed an era of living off the backs of Chinese labor. Now with their increasing wealth, their own desire to move up the chain and their abysmal birthrates, that era is ending.
India also does not have a great birthrate and other structural problems while other asian countries dont have the numbers to completely replace China. It might be that many products we enjoyed just dont make sense anymore if no other country is willing to pick up the slack or there isn't some amazing innovation in automation. Other products might survive with massive inflation.
To be able to design any manufacturable item, you have to know that a wrench is used to tighten bolts, and a screwdriver must be able to reach the screw. There are people who don't. Some of them graduated engineering school with me.
I think you're both right. If the wood shop class was a class in how to run a wood shop (not just in how to run a lathe) it would be the best of both worlds.
Factorio is often described as a game for software developers (i.e. it feels like you're programming when you play). Are those really the critical skills that allowed China to grow in manufacturing so quickly?
I'm not sure shop classes fill that need either...
We bees to put injection molding machines in schools, CNC machines cutting the tooling, teach people how to make real things in real factories with realistic costs.
This is the expertise that left these shores 20 years ago. Tooling manufacturing, automation, semiconductor etc.
They have, at least in some places. Where I live (Austin TX) I've been in multiple high schools that have extensive Manual machine shop/3d printing/CNC/Electronics/etc labs for students to use. It might even be at the point where the nicest/most complete machine shops in town are actually in the suburban high schools. Go to the local FIRST https://www.firstinspires.org/ competition and talk to the kids from the high schools in the more expensive parts of town where their parents are getting tens of thousands of dollars in donations every year for the teams. Whether any random kid can use them is a different story, but they do 'work' if by success having both of your school's FIRST team leads go to MIT is any indication, as happened last year at the HS my kid graduated from.
So at least some of our students are being given the opportunity, and there are multiple paths to success, but maybe the largest difference is that while truly talented multi disciplinary young engineers (and I work with a few) are rare, they always have been. The real questions are probably around social issues, does giving your kid a phone remove the boredom that encourages them to tinker with stuff in the garage, is there a sweet spot of being able to afford an old car, but to poor to pay to fix it, force kids to learn hands on repair skills. Does being able to stop at radio shack/surplus/frys/metal supply/etc and browse racks of stuff on the way home from school encourage kids to build stuff to impress their friends, or is having it delivered in the mail enough. AKA, like me the other day, I stopped a microcenter to get a pedestrian computer peripheral I could have ordered from amazon, but discovered a ESP camera module that gave me 'ideas'.
I'm afraid we have far more basic problems than that - illiteracy in their fingers. We have people who can't use a knife or scissors, let alone a power tool.
3D printing is an excellent introduction to just making an actual object in the real world. It's cheap and accessible, and has obvious design limitations to fall into and learn from. The step from 3D printing to full CNC is a lot less than the step from nothing to 3D printing.
Not to mention intact families where parents had sufficient discretionary time (i.e. jobs that paid the bills with reasonable weekly hours) and a culture of prioritizing passing down knowledge to children and creating spaces in the home for them to pursue their individual interests and talents. People are not just atomized economic units.
3D is heavily used in China as well for small scale manufacturing and prototyping. It is a good place to start for middle or high school kids, and is pretty accessible and rather safe
The idea isn't to teach working with wood necessarily, the idea is to teach how to handle the myriad common problems that crop up when dealing with physical manufacturing.
3D printing would be good too, because on the surface it's just "model -> filament -> extruder -> built". But as anyone who has done 3D printing knows, it's constantly fighting 20 different parameters to try and coax your print to actually work out well. And even when you have it nailed down there are still 20 different things that can randomly sabotage it. And even with all that accounted for you still sometimes get off prints.
Not just that - the idea is to give students a taste of what it's like to make things with their hands. 3D printing is cool too, but it's much less hands-on.
Went to middle/high school in the 2000s and had not one second of home econ or shop or anything related to it, not even theoretical. The only tools I remember working with other than a pair of scissors, compass and ruler were a glue gun and a scalpel in science labs.
In Factorio you throw iron ore in an electric furnace and it turns into iron plates. In reality you need coal or coke or charcoal to reduce iron to its metal form. Steelmaking is one of the largest single source of CO2 for a reason.
This is just one example among many. The truth is every single facet of industrial production is incredibly complex and there does not exist a single video game that captures all the nuance. Period. Factorio abstracted away all the boring details of industrial production and that is why it is good entertainment. But it’s still just entertainment. To think someone would become knowledge about industrial production because he played Factorio is like thinking someone is a good driver because he played Mario Kart.
Getting kids aware of and interested in a topic is an important step. I mentor a high school robotics team, not because I have an illusion that those students could skip college and walk into a robotics design job, but because it gets them exposed to mechanics, engineering, programming, experimentation, working in a team, competing against nature and other teams, etc. Ultimately, I think it helps them refine their framework for “what do I like [or dislike] doing?”
China's biggest advantage wasn't just the ability to scale (which means available labor), but also having entire supply chains in relative proximity, tons of small manufacturers making all the little parts needed, all located in southern China.
That's a bit less true than it used to be. Shenzhen supposedly used to work that way. When some small factory ran out of capacitors in board assembly, they'd send a runner to Huaqiangbei for another reel. But now ordering has mostly moved online. There's less of a role for all those tiny stalls stocking components.
That just cuts out a layer in the distribution chain. The part you want is probably manufactured not too far away.
The US used to have manufacturing cities where you could get everything you needed in specific industries. There was the New York City garment district for clothes. Mary Quant, inventor of the miniskirt, writes in her autobiography, "Quant by Quant", about her first visit to New York with a native guide. She was getting things set up for manufacturing in days instead of the months it took in the UK.
Detroit had cars, of course. Most of the auto parts suppliers were nearby. Now, the US auto industry is very spread out. "Trenton Makes, the World Takes" is still on a huge sign in Trenton, NJ., but it's more nostalgia then reality. Waterbury, Connecticut had watch manufacturers and other mechanical precision devices.
Those centers of industry are mostly gone. Even Hollywood is in troublel
Cheap labor is the key in that scaling, though? Human labor is still far more flexible than anything else that we have. And a big part of that flexibility is how cheaply you can turn it off. There is a reason seasonal employment is a thing.
I live in Philadelphia. We had a lot of manufacturing here, but most of that vacated the city center in the 1970s and 1980s. I recently was doing some research into urban renewal around my neighborhood, and found a paper about the city's efforts to address a concentrated population of perpetually drunk homeless men, mostly centered in my neighborhood, mostly squatting in abandoned buildings or living in flophouses. The city's approach was effectively to remove them and spread them out - and bulldoze the neighborhood to make way for a federally funded highway, now I-95. A lot of manufacturing businesses just called it quits - the owners had made their money on the backs of cheap labor and hadn't really set up any kind of succession plan, but could retire comfortably. Others moved, mostly out of the city, and by the 90s, that labor was moving overseas.
And that's why I don't really foresee that kind of manufacturing coming back here. In order to survive the race-to-the-bottom pricing that the majority of Americans crave, you need a large labor force that will accept some form of sub-par living conditions. But if you can't earn a living wage, you can't afford to participate in the economy in a way that supports the manufacturing, and then you're back to those mid-century slums.
I'm dramatically oversimplifying things, my main point here is, I didn't really put together how much of early 20th century American manufacturing relied on chronically drunk homeless men.
When a consumer is buying labor embodied in a product, they don’t care whether that labor are unionized or what their wage per hour/day is.
They do care what the wage per unit produced is, which is why we see a lot of US manufacturing moving towards higher levels of automation to let the embodied labor per finished unit be lower and thus competitive in the market.
There are roughly half as many employed in manufacturing compared to 25 years ago. The declining trend started before this. At the same time American manufacturing output is at an all time high, measured in dollars. Wages are up. There are more jobs for things like mechanical engineers and millrights, fewer in packaging and assembly.
It is less a craving and more just a general response to availability? It isn't that people have a craving to spend less on things. But, if something is readily available for less, why would you pay more? Indeed, would you expect people to pay more for your goods, if someone else has equivalent goods for cheaper? Why?
Maybe? Clothing is a big counter to your claim here. As is anything that can be reliably machined.
Yes, there is "cheap" clothing. No, the more expensive clothing isn't necessarily better. A bog standard t-shirt is a bog standard t-shirt. With a minimum of quality control, and anything on top of that is not adding to the utility of it.
The machining revolution really hurts a lot of the idea that labor in is indicative of quality.
As a counterexample, some casual googling about cotton suggests that there is an ideal workflow which will result in superior cotton fibers before harvesting. Here is a quote from the conclusion section of the linked article:
"Cotton fiber quality is shaped by a mix of genetics, growing conditions, and field management techniques. High-grade cotton relies on precise measurements of fiber length, strength, and micronaire, along with maintaining proper color and cleanliness throughout its growth. These elements play a key role in determining processing efficiency and market value across the supply chain."
At the most basic, if one farmer harvests his cotton with no consideration of the above issues, whereas another farmer carefully studies, prepares, tests, etc based on the above considerations, wouldn't there be added value and added cost of production?
I personally believe that in a past era, farmers intuitively learned these factors and competed with each other to make their best harvests, and the bog standard t-shirt got a quality buff as a fringe benefit.
Whereas nowadays, the farmer has to drop quality for quantity to compete with digitally-connected markets.
You can personally believe it, but you also need to provide some evidence to the claim. Farmers that can't afford the R&D team necessary to learn a lot of this stuff will have trouble competing here. Such that, I'm comfortable claiming this sort of advantage will only consolidate the profits into bigger corporations.
And, indeed, if you look into high quality cotton supply, you find there are relatively few names.
Lower cost of a good is a generally good indicator that the good is low quality
Unfortunately the inverse is not true at all
Higher cost on a good is not at all a reliable indicator of whether or not the good is high quality
There is a pretty big incentive for producers and sellers to produce low quality goods and convince consumers they are high quality, so they can sell them for a high margin
Not necessarily, but it's total shit when you buy a t-shirt and it unravels after only wearing it a few times. That QC doesn't always happen is what's the problem, so buying the cheapest isn't wise.
I mean... sure? Has that been happening for you? I have had some shirts that didn't last as long as others. Oddly, I don't think they are the ones I paid the least for.
I'm fortunate that my clothes still last quite a while, so I don't know what to say. Still have some t-shirts from the 90s, oddly.
I can say that if you wash cottons with synthetics, that will shorten the life of the cottons. If you use any "stretch" or "no iron" clothing, you almost certainly have a synthetic mix. It isn't that they are lower quality. Nor are they designed to not last as long. They are designed for that stretch and to look flat as their main goal.
While it's true that they aren't designed to not last as long, not lasting as long is a side effect of their design decisions.
The primary reason for the tendency of clothing to wear out faster is the textile manufacturing processes allow for the production of thinner fabrics at a cheaper cost per yard. As anyone who sews or knits can tell you, thinner fabric wears out faster. It allows companies like Zara, H&M, Walmart, Rack, et al to sell their product at marginal cost increase for higher YoY profits with a faster replacement cycle.
Furthermore, it's a plainly stated business strategy of fast fashion that fungibility and the production of disposable consumables is core to their business. As that type of fashion cannibalized market share from more traditional brands that banked on quality more than affordability in the 90s, those same brands responded by creating separate imprints ( Off Fifth, Rack, et al ) or just wholesale adoption of the approach ( e.g. H&M ).
Fast forward to 2025 and we're having a conversation about whether or not the quality delta in clothing is real or a Mandela Effect. The reality is unfortunately the more banal "number go up by any means necessary" explanation.
Mostly agreed. This is what I meant by them not necessarily being lower quality. In many ways, it is a by product of the race to super thin threads. Which, amusingly, used to be a sign of ultra high quality. :D
And clothing has always been a consumable. Always.
It's the second thing. Americans are proud to pay for things they can afford. They look down on people who aren't paying their "fair share." For example, music and movie piracy was never the domain of the average consumer; it's mostly been for broke young people and enthusiasts who don't like DRM and the limits it puts on use. And part of the reason for that is that Spotify and Netflix et al. made it possible to continue consuming "respectably". If physical media were still the norm, piracy would be rampant, but not because Americans tend towards it naturally; bevause they would have been pushed toward it by the imperative consume wedded with the inability to pay.
A lot of dumb "just so" tales in economics are willful miscategorization of desperation as choice.
> It's where people pay me their excess money and get nothing in return, increasing their desperation
Wait, isn't that called 'campaign finance'?
The problem with competing with entrenched market interests is they can use their economic advantages to make the market impossible for newcomers to enter leading to de facto monopolies.
The anecdote that I heard was about GM, They'd have two guys doing two jobs on the same line, one of them would go off drinking for the day and the other guy just did both jobs half-assed, then they would switch the next day.
The assertion is that during times of high work, you have far fewer of them drinking. Pair that with low cost worker tenements and you are able to scale up manual tasks much more rapidly than what you see in most US locations nowadays.
I'm familiar with that for say, digging a ditch, or the n-martini lunch. Less so with "perpetually drunk and homeless" factory workers operating potentially dangerous machinery.
I interned at Daimler-Benz and assembly line workers had company-employed drink trolleys which would take your order early in the shift for what partially subsidized drinks/snacks you wanted delivered for your breaks during your shift. A tone would sound in the factory and workers would converge on the break area near them and pick up what they’d ordered earlier that day. On the menu was beer and plenty of workers would have multiple beers over the course of their shift.
These weren’t what you picture when someone says “perpetually drunk and homeless”, but I think a lot of Mercedes were assembled by workers with a perpetual low-level of alcohol on-board.
I worked a summer job at a factory that made box cars. 10x10 or larger sheets of 1/4 inch plate steel lifted on stacks with chain hoists, box cars tacked together, then put on a large rotisserie, so it could be turned as all the seams were welded. Anyhow, At lunch we all went out for shots and beers, and perhaps a doobie or two. While I did not see it, people did get squished. I survived my summer, but I did pickup a nicotine habit that lasted 20 years.
China's advantage is, and always will be, that the costs of labor in US are bloated by a huge amount of overhead for every working resident
In 2023, the BLS reported that benefits alone accounted for about 31% of total compensation, with wages and salaries comprising the remaining 69%. [1] This 31% includes direct costs like health insurance, retirement contributions, and paid leave.
Now in addition, consider employer-paid expenses that are not benefits or employee compensation: FICA, FUTA, SUID, SDI, FMLA, etc. That depends on your geography, but it can be up to 25-40% additional costs [2]
The all-in cost is at least 35% or more in additional spend [3]
In addition, none of the above capture indirect costs of compliance/overhead, with varied state and federal schemes.
As you can see, we are at a range of ~35-50% of additional costs for each new hire
Now, importantly, try to imagine the effect of this bloat at a national level: Every US business is effectively carrying deadweight of additional ~35-50% costs on its pricing decisions to its customers. Why? Because the bloat is embedded into every domestic input, like raw materials, services, utilities, you name it. This cost spike may impact a few foreign industries dependent on US inputs, but it certainly explodes over US shores, spiking prices of the inputs that most US producers depend for their final goods and services. Now think of what happens to domestic costs of doing business and operating a physical business in US.
So when your cost of production have additional ~35-50% overhead because of all sort of market-distorting mechanisms, blaming china for "cheap labor" is a convenient scapegoat, when in reality the blame should be on US policy of making our jobs artificially expensive.... to fund the state bloat.
Some of it is China’s willingness to make big capital investments. My wife was shocked at the low price of beech mushrooms at Ren’s Market and I found out these are grown in a huge factory in China where they are very proud that they only have to handle the mushrooms with a forklift. Contrast that to those white button Agricus mushrooms each of which is cut out from the mycelium individually with a knife.
When you look at solar panels and lithium batteries their biggest advantage is that they invest in large scale heavily automated factories. For really labor intensive and low value things like those dog beds Chinese labor is already too expensive and production is going to places like Bangladesh.
We have plenty of capital here. Far more than China.
The problem is the capital cannot be put to good use here. Either because (1) there's too much uncertainty around project progress (think oil pipelines stuck for decades in permitting limbo), or (2) the ROI doesn't work when you pay insanely high bloated compliance costs of hiring US staff.
Even our sky high productivity cannot overcome the large lard deadweight each of us has to carry, on behalf of the elite class
I remember a time when every product sold around the world carried the "MADE IN USA" brand. It included random trinkets.
That would come back quickly, if we all decided we had enough of antiwork laws, enough with all the deadweight, and focused on building instead of regulating.
OK. In that case lets not use "bloat", and instead just call it the biggest subsidy for the middle and upper classes, coming from the backs of the unemployed, lower class
Guess who's uninsured? Its not the META employee with fertility benefits.
Satire is whomever cannot see why Trump would be voted by the working class: whomever thinks the status quo was to the benefit of the lower, blue collar class... while the middle and upper class ride their (untouchable) govt benefits (SSN) to a secure retirement because the elite class has a secure bureaucratic job (while the lower classes struggle to find 1 part time job).
Meanwhile, the chinese eat the lunch of the working class who see their jobs being exported abroad, because no employer wants to pay for subsidies/retirement/salaries of an elite bureaucratic deadweight class (that makes the rules for themselves, and forgets the neediest).
The chinese eat the lunch of the working and neediest americans, who see their jobs being exported abroad, because of a huge, elite bureaucratic deadweight DC class that was paid to allow regulatory capture, while enjoying sucking US treasure that funded their benefits and retirement.
That same deadweight class in power right now, pushing this narrative that the meager benefits we have are still too high for what we're worth. As they begin the next phase of destroying and looting our country - Make America Poor Again.
Your narrative completely missed all of the monetary inflation that was created to keep prices from going down due to cheaper manufacturing. That was the wealth received from offshoring, having been centralized as monetary creation. But rather than this wealth being spent on deliberate goals to mitigate the economic damage of that offshoring (individual and industrial), a rallying cry of fake "fiscal responsibility" prevented most such public spending. So the new money was instead simply given away to banks to bid up to the asset bubble, ultimately putting that centralized wealth into private hands of asset holders while pricing wage earners out of the asset markets.
That was the political con of the past thirty+ years. Now that it has run its course, the game shifts to the next con - which seems to be turning America into some kind of impoverished authoritarian work camp where we appreciate being able to do unskilled factory work that China no longer wants to do. Acknowledging the last con gets the rubes to buy right into it. Finally some validation, what a breath of fresh air! Oh, and don't you know the real problem right now is actually them "illegals" ? Definitely not these elites, nope. This current bunch is totally different than that last bunch. See how they don't even respect those laws or norms the previous elites respected? So refreshingly different!
An elite that actively wants to let go of his own government sinecure, power and status (from reduction in team size, the ever-important status power signal at bigcorps) , is very different from an elite that wants to grow his team and status
That's a weird framing making for a very odd conclusion, given that he is expanding the powers of the government, claiming those powers vest directly in him, and increasing the number of enforcers of that power. It's like the CEO of a company eliminating the R&D department, cutting everyone else's pay, and bulking up on security guards to perform random searches looking for pretexts to fire more people. From my perspective, the bureaucracy was an ever growing amount of administrative overhead, but it was at least moderating authoritarian power and keeping the worst impulses of autocracy at bay.
I do agree they are not the same - reverting to autocracy is throwing the towel in on the American experiment. Previous elites in power at least had the decency to view their looting as a symbiotic parasitic relationship. What is the same is the dynamic of distracting the rubes with feel-good populist outrage while shamelessly robbing them blind.
The Netherlands has a social welfare system and it's economy is not collapsing.
However the Dutch government doesn't have an ideological fascination with factories. It has a more rational approach to make money with things that the Netherlands is actually good at.
I think what compounds it is that in the US dead weight States still have political power- when realistically all the bets should be on California,Texas and New York and the rest of the country should be grateful.
Perhaps the answer is a combination of a significant UBI (paid for by general federal spending, I could think of many worse reasons to accrue national debt) coupled with a much lower minimum wage? Incentivize companies not to treat labor as a cost sink, while still ensuring that people have enough capital to cover their cost of living. I'd wager productivity would also go up (and mental depression would go down) if things weren't quite as dire as they currently are.
In China it is naturally cheap, they have humongous super advanced vertical and horizontal supply chains at their doorstep.
Need plentiful, cheap three phase electricity? - check. Need some obscure part at scale and immediately?- check. Need advanced engineering? - check. etc. etc.
It's at the point where for many industries the risk/reward just do not make any sense at all (it'll just be loss making no matter how you spin it, government supports etc).
The chinese gov't also funds those things - but just not via taxes collected from people's incomes. They collect "profit" off foreign exports, debase the local currency to pay for it.
> taxing individuals directly begets the familiar resentment
but on the other hand, taxing individuals means those individuals should have some say over what taxation gets spent on (in theory), where as an authoritarian regime can simply ignore the populous.
I still think taxing individuals are better, despite it being slower and less agile at adapting.
Well, when you explain it like that, of course I have to agree.
Maybe 20 years ago I had the very clever original idea ( /s ) of allowing tax payers some autonomy over how to allocate at least some of their taxes. Like maybe I could earmark 5% of what I pay towards public school lunchs and restoring habitat for wild salmon.
I'm sure it's a terrible idea. Any more, I just want some experts to survey known tax regimes, summarize their pros and cons. Somehow ground this evergreen slap fight so we're not stuck rehashing what color to paint the bikeshed.
Want to build electronics? You'll need a variety of parts and raw materials that China and its surrounding countries produce, and the US doesn't*.
Want to make clothing? You'll need many different fabrics, buttons, zippers, dyes, etc that China and its surrounding countries produce, and the US doesn't*.
Want to make toys? You'll need plastics, dyes, injection-molding processes, etc that China and its surrounding countries produce or provide, and the US doesn't*.
And this goes all the way back to the mining, the farming, and the refining. The US just doesn't do these things*, even in the cases where we actually have the natural resources here.
This is all way before you even get to the point of engaging with China's skilled manufacturing workforce. (Because yes: these jobs do require skills; you can't just walk in off the street with zero prior experience or training and be correctly assembling widgets or sewing garments within the hour.)
* To counter pedants: Yes, the US may produce some small amounts of some of these things. But we don't produce them at anything like the scale required to ramp up full-on mass production of anything that relies on them to supply the demand of the entire country.
This take and the article get it utterly wrong. The ONLY real headline is,
"Americans have gotten so used to free money they can no longer even imagine producing anything and selling it at a reasonable price".
I'm a small farmer and can sell my garlic all day for $1 a bulb. But it's A LOT of work. If I bump the price to $5 less people buy but that doesn't mean I get to give up and say, "oh well, can't produce in America I guess... "
It's more than that, we've simultaneously allowed for monopolization and rollup of wholesale markets. So in context of the story, the US manufacturer is in a squeeze play between supply cost escalations through the Trump tax regime, and the on the demand side with the big retailers like Kroger and Walmart.
The "made in USA" stuff is bullshit, the policy people DNGAF. The people actually making stuff are screwed. This about about shifting taxation from income and capital gains to consumption.
Turns out China buys Iranian oil, China makes cheap products out of this oil. China builds lots of new cheap coal plants, west fades theirs out but moves part of their production to China.. etc.
Use of coal in Chinese energy production is not growing, peaked in 2013 according to their stats. They are also building massive solar and nuclear capacity.
But anyway, half of all global coal production is consumed in China. I hope they will manage to get rid of coal in the next 20 years.
It's not just cheap labor. It's labor that is abused, sometimes enslaved.
It's also lack of environmental regulation adherence. China has environmental regulations but they don't always demand compliance. I read about companies paying for scrubbers to be installed in factories and when a team comes to take a tour, still with original filters and low run hours.
Maybe 20 years ago? Wages are rising salaries and employers are playing nice so their employees don't jump ship elsewhere. The day of your employer keeping your ID card captive is long gone (unless you are a naked official).
> China has environmental regulations but they don't always demand compliance.
That was also a lot more common 20 years ago than today. These days, cities/provinces are held accountable for AQI reductions, so pretend inspections no longer help their metrics. But I totally get it, there is a lot of material from 2000 to 2015 or so, and they basically live forever on the internet.
>The study, which focuses on 2023 and early this year(2024), adds to a growing body of evidence that Beijing is using forced labor and mass internment camps to control the Uyghurs — and ramps up pressure on the European Union to finalize plans for a bloc-wide ban on imports of products made with forced labor.
Your comment:
>Maybe 20 years ago?
Unless it is suddenly 2030 and I missed the time shift, I am talking the past year or two.
That 8% is only if you include the labor costs of final assembly at the GM plant. But their inputs also were built by labor. GM buys turbochargers not out of thin air, but from Garrett Motion inc., in Plymouth Michigan, who also has sizeable labor costs. Repeat not just for turbochargers, but for the rest of GM's input supply line. If you include only their direct suppliers, the cost of a new car that goes to human wages is about 30-40%.
Chinese turbocharger suppliers have lower labor costs and therefore BYD, Changan, Great Wall and others have more pricing power vs GM and Ford products.
Yes, their song, tang, han, and shark models are all turbocharged.
But my broader point is that their entire supply chain is comprised of lower labor cost inputs. Whether it be the EV batteries, the windshield, or the air valve in each of the four tires.
> Maybe Americans could build cars that people living in Asia actually want? Hint someone in Jakarta doesn't want a 40k pick-up truck.
You'd be surprised. One of the things that really raised my eyebrows in Thailand was slum shacks with a gleaming new muscle pickup parked beside it. For some reason these are really popular and people spend an inordinate amount of income on them.
Counterpoint: cost of living is ridiculously cheaper in China vs. USA. Workers can be paid 3x less and still have a better QoL. It's a vastly more efficient economy in terms of human capital.
Counterpoint: China is the undisputed leader in renewable energy technology, including battery storage. I don't think they are doing it purely for environmental reasons, but they are doing it.
But the main reason why that cost of living is ridiculously cheaper is because human labor is so much less expensive. There's no free lunch - if the output is that much cheaper, that difference has to come out of someone's pocket eventually, even if it's not the person directly manufacturing the thing but someone down the line from them.
Or you can look from it from the opposite direction and imagine what would have happened if there was full freedom of movement between China and US (i.e. no visas etc) and thus an actual free market for labor. If you expect workers in such situation to steadily migrate from China to US but not vice versa (at least until cost of labor equalizes), this implies that the workers in China are somehow worse off in absolute quality of life even when accounting for relative cost-of-life differences. That is, if the relationship between two countries wasn't economically exploitative in some way, we wouldn't need to restrict the free flow of labor at the border.
America's cost of living issues are mostly because of bad regulation. The big three rising costs are housing, healthcare, and education, and all 3 have been horribly misregulated by the US gov leading to massive spikes in price.
> But the main reason why that cost of living is ridiculously cheaper is because human labor is so much less expensive.
That's a really bizarre take that is obviously false. The disenfranchised migrant laborer or prison slave producing your American groceries is earning approximately as much as a Chinese peasant, i.e. basically nothing.
There is however a vast difference in what the organization looks like above the laborer. In America: vast profits and consolidation. By contrast, China has more small businesses (think street food) and large enterprises are SOE or otherwise constrained by the political system.
As far as I know, this is not the case for migrant laborers at least, who often get paid more than federal minimum wage (because otherwise they can't get enough people even if they are undocumented immigrants).
In any case, if those were the main two reasons for the disparity, then we wouldn't see the same for other first world countries which have neither cheap migrant labor nor prison slaves. Yet cost of living is still significantly more expensive in, say, Finland than it is in China.
And why is cost of living ridiculously cheaper in China?
If you pay less in wages, goods cost less.
If you have less environmental regulations/ignore them, goods cost less.
Yes, they are the leader in renewable energy tech. They have also cornered the market with regards to the rare minerals that are some/most of the inputs. The link is not a coincidence.
In the US, housing and real estate have been driven up significantly to the benefit of the really rich. Increased rent, and increased house cost for existing structures just ends up lining the pockets of people rich enough to get priority access to new, cheap debt issuance. Inflation benefits those who are closest to the new money creation, while screwing those furthest away. All the while, everything gets more expensive with increasing rents.
it is exactly the case in china - just with different numbers. It's why shanghai and beijing has some of the highest property price to income ratios. Just like in san fran.
There's cheap property in the USA - rural areas and lower populated areas. Just like there are in china.
I agree. A lot of modern trade for the US is built around arbitrage on purchasing power. If all else costs the same, and you have to decide whether to pay someone $2 per hour to do it or $20, $2 always wins unless shipping it over is more expensive than the difference, which almost always isn’t.
Average salary in China has gone up quite a bit. It might be 1/3 but it's not $2.
I had a friend move his factory to China because the packaging and other costs were so much cheaper. I wish I'd asked for a breakdown. He didn't factor in/expect wages to be much of a savings.
I just pulled a random number but what I intended to say is that as long as differences in purchasing power exist and the dollar is the stronger currency, trade will move to where your dollar has more purchasing power for labor, as long as moving the finished goods back to the US isn’t prohibitively expensive.
That sounds like a very good argument for cracking down on illegal immigration, either by bringing people out of the shadows or by removing them. Currently American is going the removal route.
> China's advantage is always communicated as cheap labor but it's also the ability to almost infinitely scale production lines in a short period of time. America has mostly lost the muscle memory and tooling to do this.
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>There are incentives that would benefit domestic producers and companies but those take time and don't make good soundbites for politicians.
I heard a very compelling argument (at least to me), that the difference, as you say, isn't the labor. The labor cost difference is something like 5% in the China vs 8% in the US. The difference is ramp up time. If you have a product ready to be built, you can get it to market much faster manufacturing in China than the US.
As an example, the Tesla Gigafactory in Nevada took about 2 years (June 2014-July 2015)[1]
Tesla Gigafactory in China took 168 days to construct (January 2019-October 2019)[1]
The cost of the factory construction, materials and labor, isn't the biggest loss when deciding where to build your factory. The biggest cost is the opportunity cost of not manufacturing your product for 15 months and the potential of losing any first to market advantage if you have competition.
The time to get your product to market, especially if you're a new company with no income operating on investor money, the time spent trying to manufacture in the US can sink your company. The cost difference is much more manageable and, depending of the product, can often times be overcome by the price of shipping.
There's an attitude shift, too. US manufacturing is stuck in the past. If you want to build a widget, you want it finished, welded assembled and painted. you've got to do a bunch of work and take it to four different places before you're done. China's got a one stop shop attitude to get your widget made.
https://www.tiktok.com/t/ZTjEVB5p2/
I don't know if you're wrong in general, but your dates for the factory construction show 9 months in China vs 13 months in the US, not the 5 months vs two years you claim.
There are incentives that would benefit domestic producers and companies but those take time and don't make good soundbites for politicians.
The blunt tariff sledgehammer that was dropped isn't going to do it. Small experiments like the one in the article will try and mostly fail. Meanwhile producers will find loopholes and workarounds to tariffs. And the margins and viability of domestic designers and businesses will continue to weaken.
Consumers will increasingly eat the cost and lose the convenience.