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I have two very raw ideas about this slowly taking form in my brain. 1. Factories produce wealth. If you look at the nations doing good and the nations doing b

I have two very raw ideas about this slowly taking form in my brain. 1. Factories produce wealth. If you look at the nations doing good and the nations doing bad[1], factories, I think, make a difference. USA completely moved their means of production to Asia, thinking they could produce cheap and make huge profits. Works for Apple. Doesn't work for the consumer. These jobs are just missing. Nobody can buy. So people borrow. Until the lenders crash, because they can't pay back. But the banks have to lend, that's their business! And when companies don't borrow because they don't build factories, then the consumer has to borrow. Needs to, because he doesn't get payed well. 2. With factories gone, our system doesn't work anymore. Forget Asia. Robots. And someday not even big robots in factories, but a desktop replicator. There is so many jobs that will just cease to exist. Sure, there will be new ones, but some researches claim that already today robots take more jobs than create. Especially combined with the low investments. Corporate profits are at an all time high, savings are at an all time high, money is cheap (negative interest rate!) but still investments are low. Companies aren't borrowing. Nations are still playing the ordo-liberal game and cut spending. Consumers are the only ones borrowing. It's insane. It's like capitalism forgot how capitalism work. Companies should borrow, invest, earn, pay their workers, and the workers consume. Now companies save, pull profits, cut wages and replace workers by cheaper means of production and the jobless borrow to consume. Every couple of years this crashes because people can't pay their loans. Government takes over the debt to reset the cycle, but because their increased debt they have to cut their spending. [1] I audaciously define good/bad in way that it serves my argument.

idiotdummy 9y ago
>It's like capitalism forgot how capitalism work. Capitalism is fine, and America (and the entire global population) is wealthier than it ever has been. >Companies should borrow, invest, earn, pay their workers, and the workers consume. Now companies save, pull profits, cut wages and replace workers by cheaper means of production and the jobless borrow to consume None of this makes sense in the context of a closed ecosystem. Saving money doesn't remove it from the economy.
pavlov 9y ago
If you look at the nations doing good and the nations doing bad[1], factories, I think, make a difference. I'd like to know what your definition actually is because there seems to be very little connection. Some examples: Italy and Japan are first-world nations with lots of factories but middling growth. Bangladesh is a poor nation with lots of factories but weak prospects. [Edit -- in my original post I referred to Switzerland because I misremembered the stats. It does have a smaller share of labor force in industry than neighboring Germany or Italy, but Swiss manufacturing is still very significant. Thanks to the posters who corrected my mistake.]
- graeme 9y ago
  Your general point is a good one, but the Japanese example is perhaps bad. The definition of recession doesn't work well in a country with a shrinking population. Japan's per capita income is growing, and labour force participation is up. https://www.vox.com/2015/11/17/9749264/japan-recession-abenomics https://www.vox.com/2015/11/17/9749264/japan-recession-abeno...
- hrydgard 9y ago
  Switzerland absolutely has factories. Mostly mid/high end mechanical stuff but they are there, and people work in them.
- turbinerneiter 9y ago
  Well, Switzerland is rich because they have our tax-money. They also do have a lot of high-tech, precision engineering industry, don't they? Japan is an interesting example - they have negative interest rates since a very long time. Basically, I was talking about Germany. The German automotive industry plus the machinery section create a lot of well paying industry jobs (although the well-paying part is really hollowed out and wages rising way to slow in Germany). The political landscape is stable (although I despise the conservative government). Germans version of Trump/Brexit/Le Pen has about 8% in the surveys for the election. Gini-Index is way more healthy than in other nations (although getting worse). But you are completely right, there is a lot of things missing in the picture (or wrong).
FussyZeus 9y ago
Automation will be the first blow to Capitalism, the richer nations around the world are already experiencing the first stages of post-capitalism where resources and goods are so cheap that there's no point in selling them anymore. Once we do get to the mythical replicator, that's it, material goods no longer have value. That is the logical point where Capitalism ceases to function.
- turbinerneiter 9y ago
  > resources and goods are so cheap that there's no point in selling them anymore That's a good point. Adjacent, but related, I was thinking about starting a company to develop, make and sell educational tools to school. Think micro:bit-like boards, robot kits, water rocket kits, stuff to do experiments, along with the content for the teacher. I didn't do it for a lot of reasons, but one issue I constantly ran into was that market_size * price * profit_span was always just small. Not worth it.
- jp555 9y ago
  The human capacity for desire is infinite. We will never stop learning to do more with less (economizing = economy). Do you also believe everything that will ever be invented has already been invented? Less resource allocation for X means more resources to invent Y.
  - FussyZeus 9y ago
    Of course not. I'm saying that once we have a machine that can build any material using nothing but energy (the Star Trek replicator, basically) and once we have sufficient access to for lack of a better word, infinite energy, then material goods no longer have value. Capitalism is built on the idea of scarcity, once scarcity is obsolete, I see no reason why Capitalism would not also be obsolete. Example: Platinum is a valuable metal because the supply is limited and the process to acquire more is difficult, costly, and dangerous. If for example you invented a machine that could turn, I don't know, wrought iron into platinum, then the value of platinum decreases. So, once you have this deus ex machina that can create matter from energy, anywhere, at any time at very little cost, then any and all material goods that were once scarce and therefore valuable now are worth whatever the energy cost is to get them made by the replicator and no more.
api_or_ipa 9y ago
I refute your first point by drawing a comparison with Spanish attempts at Mercantilism. As Ricardo famously pointed out, accumulation of gold from the new world didn't help Spain in the long run. In the long run, the only thing that's important to a country's economic development is focusing on what you do well, and do that thing a lot. In economics terms, this means focusing on your comparative advantage. Broadly speaking, America is really good at organizing businesses to achieve a goal. Her citizens speak English, the language of international trade, and her shorelines allow convenient trade with both Europe and Asia. Her currency is still the gold standard of international trade and people throughout the world travel to the US to study in it's world leading universities. In this mindset, America's problem with manufacturing jobs is the other side of having a productive IP economy. Large demand for US technology supports a strong US dollar, making physical exports comparatively expensive. The best example of this is the familiar phrasing on the back of every Apple product: 'Designed in California'. Your second point deals with the consequences of this economic reality and really speaks towards the redistribution policies the US Government pursues. International trade is said to produce dispersed benefits, but concentrated loses. Importing lower priced manufactured goods benefits consumers with lower prices, but eliminates manufacturing jobs. The role of government is to reverse or dampen these consequences[0]. [0]: government intervention always has a cost. See the 'Leaky Bucket' analogy.
- verelo 9y ago
  tl;dr; people are basic creatures, we associate the object with the money, the market doesn't work like that. I really struggle to comprehend the relationship between "factory work" and business results. They money is in the value, if I control the production but the value isn't captured in the production line [it is captured in the R&D, sales, marketing, etc], it doesn't matter where I choose to produce. I think the reason people talk about factories shrinking being an issue is because they need physicality to understand the market, but in reality, it has little to do with the actual outcomes. Case in point is every technology company that has no physical product, and even those that do, often don't produce in the same company that they sell, yet head offices continue to be just fine as do the countries they're based in.
kasey_junk 9y ago
The USA didn't move their means of production to Asia, they moved their overflow. http://www.marketwatch.com/story/us-manufacturing-dead-output-has-doubled-in-three-decades-2016-03-28 http://www.marketwatch.com/story/us-manufacturing-dead-outpu... Manufacturing jobs have gone away due to productivity increases, not due to factories leaving. So if your claim is that manufacturing jobs produce wealth your argument might logically fit what happened, but if that were true we could just setup a factory to create something on one end of the floor and deconstruct it on the other...boom problem solved.
- turbinerneiter 9y ago
  > So if your claim is that manufacturing jobs produce wealth ... It's more like these jobs distribute the wealth, rather then produce it. But I also think that growth slows when wealth isn't distributed. I'm going to stop replying to everybody now, but I like the input and there are many valid points being raised.
thephyber 9y ago
The two points, vaguely, seem to describe thoughts I've had, but lots of your brief statements are either over-simplified or outright wrong: > USA completely moved their means of production to Asia > These jobs are just missing > Until the lenders crash, because they can't pay back > Needs to, because he doesn't get payed well > Companies aren't borrowing > It's like capitalism forgot how capitalism work. We live in a time when consumers have been trained (err brainwashed) by corporations, which have the advantage in the information asymmetry of sales/marketing/behavior. Consumers are saving more than $2k a year on cheaper goods because of globalization, but they only look at one side of their ledger. They didn't bother to save more, to reinvest in their own skills/education, to start their own businesses. Instead, consumers are increasingly spending more on personal entertainment, squandering that savings generated by a global supply chain. Companies are borrowing and spending MASSIVE amounts to repay their investors. Some companies have made huge capital investments (Amazon, Apple, Nvidia, Microsoft, Samsung, Intel, AMD, Tesla/SolarCity, pharma, and all of their supply chains). Even fintech is making big investments (feature-filled ATMs, check scanning, Visa/MC/AMEX machine learning of spending behavior). The problem is that all of these companies are huge, which means that they are already very good at optimizing and scaling their growth. This means that productivity rises, so the employee headcount rises less than linearly with product growth. Looking at more traditional types of manufacturing: Caterpillar, John Deere, Polaris, GE, Boeing, etc are all more productive than ever. But their businesses are also more susceptible to changes in the value of the US dollar, or geopolitical events which may close borders or affect intellectual property enforcement. And (non-Tesla) car manufacturing left Michigan for better markets. In the beginning, the South was advantageous because of weaker unions and lower cost of living. Later, Mexico was superior because of the low labor costs matched with superior export market (lower peso value and large number of free-trade countries to export to). In that market, the US was at a disadvantage because it was such a strong and mature/developed market. Capitalism isn't a person. It is an observation of a system, which doesn't really describe modern America and hasn't for nearly a century. We are far more of a hybrid capitalist/socialist since we have high taxes, high regulation, high barrier to entry in many markets (due to licensing requirements), high employee/labor protections, intricate zoning and NIMBY issues, etc. We live in a time when rent seekers and government regulation have largely skewed our markets. Lobbyists have extended Intellectual Property lifetimes and patent trolls have gamed our system to suck profits out of the more innovative companies.

idiotdummy 9y ago

>It's like capitalism forgot how capitalism work. Capitalism is fine, and America (and the entire global population) is wealthier than it ever has been. >Companies should borrow, invest, earn, pay their workers, and the workers consume. Now companies save, pull profits, cut wages and replace workers by cheaper means of production and the jobless borrow to consume None of this makes sense in the context of a closed ecosystem. Saving money doesn't remove it from the economy.

pavlov 9y ago

If you look at the nations doing good and the nations doing bad[1], factories, I think, make a difference. I'd like to know what your definition actually is because there seems to be very little connection. Some examples: Italy and Japan are first-world nations with lots of factories but middling growth. Bangladesh is a poor nation with lots of factories but weak prospects. [Edit -- in my original post I referred to Switzerland because I misremembered the stats. It does have a smaller share of labor force in industry than neighboring Germany or Italy, but Swiss manufacturing is still very significant. Thanks to the posters who corrected my mistake.]

graeme 9y ago
Your general point is a good one, but the Japanese example is perhaps bad. The definition of recession doesn't work well in a country with a shrinking population. Japan's per capita income is growing, and labour force participation is up. https://www.vox.com/2015/11/17/9749264/japan-recession-abenomics https://www.vox.com/2015/11/17/9749264/japan-recession-abeno...
hrydgard 9y ago
Switzerland absolutely has factories. Mostly mid/high end mechanical stuff but they are there, and people work in them.
turbinerneiter 9y ago
Well, Switzerland is rich because they have our tax-money. They also do have a lot of high-tech, precision engineering industry, don't they? Japan is an interesting example - they have negative interest rates since a very long time. Basically, I was talking about Germany. The German automotive industry plus the machinery section create a lot of well paying industry jobs (although the well-paying part is really hollowed out and wages rising way to slow in Germany). The political landscape is stable (although I despise the conservative government). Germans version of Trump/Brexit/Le Pen has about 8% in the surveys for the election. Gini-Index is way more healthy than in other nations (although getting worse). But you are completely right, there is a lot of things missing in the picture (or wrong).

FussyZeus 9y ago

Automation will be the first blow to Capitalism, the richer nations around the world are already experiencing the first stages of post-capitalism where resources and goods are so cheap that there's no point in selling them anymore. Once we do get to the mythical replicator, that's it, material goods no longer have value. That is the logical point where Capitalism ceases to function.

turbinerneiter 9y ago
> resources and goods are so cheap that there's no point in selling them anymore That's a good point. Adjacent, but related, I was thinking about starting a company to develop, make and sell educational tools to school. Think micro:bit-like boards, robot kits, water rocket kits, stuff to do experiments, along with the content for the teacher. I didn't do it for a lot of reasons, but one issue I constantly ran into was that market_size * price * profit_span was always just small. Not worth it.
jp555 9y ago
The human capacity for desire is infinite. We will never stop learning to do more with less (economizing = economy). Do you also believe everything that will ever be invented has already been invented? Less resource allocation for X means more resources to invent Y.
- FussyZeus 9y ago
  Of course not. I'm saying that once we have a machine that can build any material using nothing but energy (the Star Trek replicator, basically) and once we have sufficient access to for lack of a better word, infinite energy, then material goods no longer have value. Capitalism is built on the idea of scarcity, once scarcity is obsolete, I see no reason why Capitalism would not also be obsolete. Example: Platinum is a valuable metal because the supply is limited and the process to acquire more is difficult, costly, and dangerous. If for example you invented a machine that could turn, I don't know, wrought iron into platinum, then the value of platinum decreases. So, once you have this deus ex machina that can create matter from energy, anywhere, at any time at very little cost, then any and all material goods that were once scarce and therefore valuable now are worth whatever the energy cost is to get them made by the replicator and no more.

api_or_ipa 9y ago

I refute your first point by drawing a comparison with Spanish attempts at Mercantilism. As Ricardo famously pointed out, accumulation of gold from the new world didn't help Spain in the long run. In the long run, the only thing that's important to a country's economic development is focusing on what you do well, and do that thing a lot. In economics terms, this means focusing on your comparative advantage. Broadly speaking, America is really good at organizing businesses to achieve a goal. Her citizens speak English, the language of international trade, and her shorelines allow convenient trade with both Europe and Asia. Her currency is still the gold standard of international trade and people throughout the world travel to the US to study in it's world leading universities. In this mindset, America's problem with manufacturing jobs is the other side of having a productive IP economy. Large demand for US technology supports a strong US dollar, making physical exports comparatively expensive. The best example of this is the familiar phrasing on the back of every Apple product: 'Designed in California'. Your second point deals with the consequences of this economic reality and really speaks towards the redistribution policies the US Government pursues. International trade is said to produce dispersed benefits, but concentrated loses. Importing lower priced manufactured goods benefits consumers with lower prices, but eliminates manufacturing jobs. The role of government is to reverse or dampen these consequences[0]. [0]: government intervention always has a cost. See the 'Leaky Bucket' analogy.

verelo 9y ago
tl;dr; people are basic creatures, we associate the object with the money, the market doesn't work like that. I really struggle to comprehend the relationship between "factory work" and business results. They money is in the value, if I control the production but the value isn't captured in the production line [it is captured in the R&D, sales, marketing, etc], it doesn't matter where I choose to produce. I think the reason people talk about factories shrinking being an issue is because they need physicality to understand the market, but in reality, it has little to do with the actual outcomes. Case in point is every technology company that has no physical product, and even those that do, often don't produce in the same company that they sell, yet head offices continue to be just fine as do the countries they're based in.

kasey_junk 9y ago

The USA didn't move their means of production to Asia, they moved their overflow. http://www.marketwatch.com/story/us-manufacturing-dead-output-has-doubled-in-three-decades-2016-03-28 http://www.marketwatch.com/story/us-manufacturing-dead-outpu... Manufacturing jobs have gone away due to productivity increases, not due to factories leaving. So if your claim is that manufacturing jobs produce wealth your argument might logically fit what happened, but if that were true we could just setup a factory to create something on one end of the floor and deconstruct it on the other...boom problem solved.

turbinerneiter 9y ago
> So if your claim is that manufacturing jobs produce wealth ... It's more like these jobs distribute the wealth, rather then produce it. But I also think that growth slows when wealth isn't distributed. I'm going to stop replying to everybody now, but I like the input and there are many valid points being raised.

thephyber 9y ago

The two points, vaguely, seem to describe thoughts I've had, but lots of your brief statements are either over-simplified or outright wrong: > USA completely moved their means of production to Asia > These jobs are just missing > Until the lenders crash, because they can't pay back > Needs to, because he doesn't get payed well > Companies aren't borrowing > It's like capitalism forgot how capitalism work. We live in a time when consumers have been trained (err brainwashed) by corporations, which have the advantage in the information asymmetry of sales/marketing/behavior. Consumers are saving more than $2k a year on cheaper goods because of globalization, but they only look at one side of their ledger. They didn't bother to save more, to reinvest in their own skills/education, to start their own businesses. Instead, consumers are increasingly spending more on personal entertainment, squandering that savings generated by a global supply chain. Companies are borrowing and spending MASSIVE amounts to repay their investors. Some companies have made huge capital investments (Amazon, Apple, Nvidia, Microsoft, Samsung, Intel, AMD, Tesla/SolarCity, pharma, and all of their supply chains). Even fintech is making big investments (feature-filled ATMs, check scanning, Visa/MC/AMEX machine learning of spending behavior). The problem is that all of these companies are huge, which means that they are already very good at optimizing and scaling their growth. This means that productivity rises, so the employee headcount rises less than linearly with product growth. Looking at more traditional types of manufacturing: Caterpillar, John Deere, Polaris, GE, Boeing, etc are all more productive than ever. But their businesses are also more susceptible to changes in the value of the US dollar, or geopolitical events which may close borders or affect intellectual property enforcement. And (non-Tesla) car manufacturing left Michigan for better markets. In the beginning, the South was advantageous because of weaker unions and lower cost of living. Later, Mexico was superior because of the low labor costs matched with superior export market (lower peso value and large number of free-trade countries to export to). In that market, the US was at a disadvantage because it was such a strong and mature/developed market. Capitalism isn't a person. It is an observation of a system, which doesn't really describe modern America and hasn't for nearly a century. We are far more of a hybrid capitalist/socialist since we have high taxes, high regulation, high barrier to entry in many markets (due to licensing requirements), high employee/labor protections, intricate zoning and NIMBY issues, etc. We live in a time when rent seekers and government regulation have largely skewed our markets. Lobbyists have extended Intellectual Property lifetimes and patent trolls have gamed our system to suck profits out of the more innovative companies.