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What if a country has more buying power than others but is not the most efficient at manufacturing. Should that country simply ship off all jobs?

danbruc 9y ago
Is this actually possible and sustainable? Where would the money come from to buy everything if you are not producing anything at a price that others would be willing to pay?
- deleted 9y ago
  [deleted]
simonh 9y ago
All jobs are in manufacturing? Really? What is it that you manufacture?
apoorvkumar 9y ago
I believe that's how free trade works. US has dominated in technology due to the same effect. But the most important part is when a country chooses to not specialize in something, they have the ability to specialize in something else. US has to decide whether the opportunity cost of getting manufacturing back is worth it, given it won't be a very employable area with all the automation.
Broken_Hippo 9y ago
How did they get the buying power in the first place? Jobs of some sort. Teachers, construction workers, health care workers, programmers. Farmers, utility workers, electricians and craftsmen of different sorts. Case workers for the country's child protection agency. Folks that speak the local language who work in call centers. Sure, some of these are low-paying jobs, but lets face it: so are some factory jobs (i've worked in one and had friend that worked in others, which pay a little above minimum wage). Simply put, you aren't going to ship off all the jobs. So they aren't the best at manufacturing? So what? Obviously, if they have buying power, the country has some other strengths. They simply wouldn't show up when looking at manufacturing only.
- Arizhel 9y ago
  Most of the jobs you're talking about are absolutely useless to people in foreign nations. People in China don't care about your child protection case workers, health care workers, utility workers, construction workers, and teachers, because they have zero effect on their economy. What incentive is there for people in China to manufacture stuff and send it to your country if you have absolutely nothing to offer in return for trade? International trade only works when you have stuff to trade; you can't run an economy based on consumption only, and have the rest of the world working hard to provide you stuff to consume. That "buying power" comes from your nation exporting something, whether it's manufactured goods, specialized services, etc. Otherwise, it's eventually going to fall apart. What does the US export?
CWuestefeld 9y ago
This is pretty well understood, viz the Law of Comparative Advantage [1]. This doesn't tell us that you have to be the cheapest in the world, only that you should specialize in whatever you can do most efficiently. If your trade partners do the same, everyone wins. If they don't do the same, then they are causing themselves to lose out. [1] https://en.wikipedia.org/wiki/Comparative_advantage https://en.wikipedia.org/wiki/Comparative_advantage
- danbruc 9y ago
  But if you are unable to or stop being able to produce anything appealing to the world market, then you are loosing and opening your market is a really a bad idea.
  - CWuestefeld 9y ago
    No, that's not the case. Imagine a simple world with two countries (1 and 2) and two commodities (A and B). It might be that country 1 has something that allows them to produce both A and B with greater efficiency than can 2. But even when that's the case, they (and the whole world) do better when they continue to concentrate on producing the one for which they have the greatest advantage (say, A). Even if 1 can also produce B more efficiently than can 2, it works out better if they ignore that, leaving it to 2, and just concentrate on producing all the A they can. That solution doesn't change if there are more countries and more commodities. It might make the big picture more complicated, but it remains a better solution for both 2 and for the entire world if 2 concentrates on producing whatever it's best at. (Note that this is purely based on economics of commodities, and not national security. When some of those commodities are things like "missiles", it may well be that a country things they need to have a guaranteed secure supply, should one of their trading partners decide not to be friends anymore.)
    - danbruc 9y ago
      I don't think that is true, at least not generally. In the extrem case, if 1 can produce A and B at zero costs, why would it be better if 2 produced anything assuming that the costs are non-zero for A and B? And I see no obvious reason why that would change if we go from zero to small non-zero costs. It might be true if there is an unlimited demand for at least one of the goods and we simply fully utilize the production capacities of 1 and 2 but that is not a realistic scenario in general. And even then I don't think it would be true in general. What if 2 could not satisfy the demand for B?

danbruc 9y ago

Is this actually possible and sustainable? Where would the money come from to buy everything if you are not producing anything at a price that others would be willing to pay?

deleted 9y ago
[deleted]

simonh 9y ago

All jobs are in manufacturing? Really? What is it that you manufacture?

apoorvkumar 9y ago

I believe that's how free trade works. US has dominated in technology due to the same effect. But the most important part is when a country chooses to not specialize in something, they have the ability to specialize in something else. US has to decide whether the opportunity cost of getting manufacturing back is worth it, given it won't be a very employable area with all the automation.

Broken_Hippo 9y ago

How did they get the buying power in the first place? Jobs of some sort. Teachers, construction workers, health care workers, programmers. Farmers, utility workers, electricians and craftsmen of different sorts. Case workers for the country's child protection agency. Folks that speak the local language who work in call centers. Sure, some of these are low-paying jobs, but lets face it: so are some factory jobs (i've worked in one and had friend that worked in others, which pay a little above minimum wage). Simply put, you aren't going to ship off all the jobs. So they aren't the best at manufacturing? So what? Obviously, if they have buying power, the country has some other strengths. They simply wouldn't show up when looking at manufacturing only.

Arizhel 9y ago
Most of the jobs you're talking about are absolutely useless to people in foreign nations. People in China don't care about your child protection case workers, health care workers, utility workers, construction workers, and teachers, because they have zero effect on their economy. What incentive is there for people in China to manufacture stuff and send it to your country if you have absolutely nothing to offer in return for trade? International trade only works when you have stuff to trade; you can't run an economy based on consumption only, and have the rest of the world working hard to provide you stuff to consume. That "buying power" comes from your nation exporting something, whether it's manufactured goods, specialized services, etc. Otherwise, it's eventually going to fall apart. What does the US export?

CWuestefeld 9y ago

This is pretty well understood, viz the Law of Comparative Advantage [1]. This doesn't tell us that you have to be the cheapest in the world, only that you should specialize in whatever you can do most efficiently. If your trade partners do the same, everyone wins. If they don't do the same, then they are causing themselves to lose out. [1] https://en.wikipedia.org/wiki/Comparative_advantage https://en.wikipedia.org/wiki/Comparative_advantage

danbruc 9y ago
But if you are unable to or stop being able to produce anything appealing to the world market, then you are loosing and opening your market is a really a bad idea.
- CWuestefeld 9y ago
  No, that's not the case. Imagine a simple world with two countries (1 and 2) and two commodities (A and B). It might be that country 1 has something that allows them to produce both A and B with greater efficiency than can 2. But even when that's the case, they (and the whole world) do better when they continue to concentrate on producing the one for which they have the greatest advantage (say, A). Even if 1 can also produce B more efficiently than can 2, it works out better if they ignore that, leaving it to 2, and just concentrate on producing all the A they can. That solution doesn't change if there are more countries and more commodities. It might make the big picture more complicated, but it remains a better solution for both 2 and for the entire world if 2 concentrates on producing whatever it's best at. (Note that this is purely based on economics of commodities, and not national security. When some of those commodities are things like "missiles", it may well be that a country things they need to have a guaranteed secure supply, should one of their trading partners decide not to be friends anymore.)
  - danbruc 9y ago
    I don't think that is true, at least not generally. In the extrem case, if 1 can produce A and B at zero costs, why would it be better if 2 produced anything assuming that the costs are non-zero for A and B? And I see no obvious reason why that would change if we go from zero to small non-zero costs. It might be true if there is an unlimited demand for at least one of the goods and we simply fully utilize the production capacities of 1 and 2 but that is not a realistic scenario in general. And even then I don't think it would be true in general. What if 2 could not satisfy the demand for B?