4 ms·

Uhm, what? For a developed country, the US has very cheap labor already. And there are minimum wages laws to deal with as well. How exactly would the US comp

by ytinas 17y ago

Uhm, what? For a developed country, the US has very cheap labor already. And there are minimum wages laws to deal with as well. How exactly would the US compete with labor as cheap as it is in China? I can't imagine you actually mean slavery here (and I'm not convinced that would be cheaper in any case, morals aside), but I don't know what you could mean.

sethg 17y ago
The dollar-denominated cost of unskilled labor in the US can’t get much lower, but if the dollar-to-[insert some foreign currency here] exchange rate goes down, then US exports will become cheaper when denominated in that foreign currency.
yannis 17y ago
On most manufactured goods the labor component is not as high as people think. Assume an industry where the labor portion is 30%. By a combination of a lower dollar value as well as better efficiencies and better automation it is not unlikely to end up with a product which is perhaps within a 15% difference of a comparative Asian one. A 15% difference will easily be marketable for a better quality product. (If you factored transportation costs it even looks better). I don't mean slavery, I believe in a living wage, but I am sure if one does the sums there are a lot of industries that could be rejuvenated if policy could be redirected properly. One of the problems of the US is its large internal market which resulted in the average US firm not to be geared for exports. This also needs to be addressed. Let me give you an example, I worked in Dubai three years back (large construction industry) on an average quote for machinery that typically goes into large buildings say Fire Pumps the range of prices would be: US 100K (non-negotiable) US 90-105K (European very negotiable) Asian 85K (negotiable) Order placed normally with European firm for US 88K Any factory with not a full order book could marginally cost the products and have a full order book.
- ytinas 17y ago
  Ok, fair enough. I suppose in the case of some of our manufacturing industries the labor was sent oversees not because it had to be fundamentally cheaper, but because it was easier than dealing with the unions.

by ytinas 17y ago

sethg 17y ago

The dollar-denominated cost of unskilled labor in the US can’t get much lower, but if the dollar-to-[insert some foreign currency here] exchange rate goes down, then US exports will become cheaper when denominated in that foreign currency.

yannis 17y ago

On most manufactured goods the labor component is not as high as people think. Assume an industry where the labor portion is 30%. By a combination of a lower dollar value as well as better efficiencies and better automation it is not unlikely to end up with a product which is perhaps within a 15% difference of a comparative Asian one. A 15% difference will easily be marketable for a better quality product. (If you factored transportation costs it even looks better). I don't mean slavery, I believe in a living wage, but I am sure if one does the sums there are a lot of industries that could be rejuvenated if policy could be redirected properly. One of the problems of the US is its large internal market which resulted in the average US firm not to be geared for exports. This also needs to be addressed. Let me give you an example, I worked in Dubai three years back (large construction industry) on an average quote for machinery that typically goes into large buildings say Fire Pumps the range of prices would be: US 100K (non-negotiable) US 90-105K (European very negotiable) Asian 85K (negotiable) Order placed normally with European firm for US 88K Any factory with not a full order book could marginally cost the products and have a full order book.

ytinas 17y ago
Ok, fair enough. I suppose in the case of some of our manufacturing industries the labor was sent oversees not because it had to be fundamentally cheaper, but because it was easier than dealing with the unions.