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There's a downside too. Royalty doesn't cook their own meals. Their time is more valuable than that. Likewise, America doesn't make it's own underwear. We hav

There's a downside too. Royalty doesn't cook their own meals. Their time is more valuable than that. Likewise, America doesn't make it's own underwear. We have China to do that. Similarly, they have us to make safe airplanes and complex satellite equipment. Closing trade to the extent that we're making our own underwear INSTEAD of satellite parts can't really be chocked up as a win. It just promotes the notion that China should build their own satellite parts and we should make our own underwear. If making underwear isn't enough to feed a Chinese family, why would we with that destiny upon American families? Tl;Dr, America makes complex, high quality machines and equipment. Refined oil products. Things that require quality over quantity. Things that you can't substitute a generic for. Those are our bread and butter exports. Cheap crap that gets thrown away, like Apple computers, are China's bread and butter. We can either accept these facts and balance markets accordingly (and stay on top at the same time) or we can compartmentalize the world and all be stuck spinning our wheels and duplicating lots of effort, cold-war style, but with stupid-crap like personal computers instead of nuclear weapons and spaceships.

varjag 7y ago
Microelectronics, both cheap and expensive, is really the same technology. You move out the high volume base, engineering careers become dead ends and low volume high value products become problematic too. "Let's move production to China and keep R&D here" is a pipe dream.
- zelon88 7y ago
  Not when it's illegal to export your IP. Those are the contracts where America makes money. All the non-descript brown buildings you pass by on your way to work are the manufacturing/heat-treating/welding/plating shops that make every piece of machinery that flies overhead. Name me one piece of a commercial airliner that you are allowed to source from China. I'll wait. So when you consider what we're currently making, Apple Computers in a massive factory with suicide nets over the windows is a race to the bottom. Nobody wants to compete with Chinese manufacturing on their home turf of cheap Wal-Mart goods. We'll be living in dog cages too if we do that. We want to make airplanes and spaceships and meaningful technology.
  - varjag 7y ago
    You can legislate IP as much as you want if all your engineering jobs have followed production. Not sure what the analogy with planes is all about, it's exactly the thing they are both manufactured and designed in the same country.
    - zelon88 7y ago
      The analogy with planes is that planes pay the bills. Spaceships pay the bills. Coffee cups and Wal-Mart items won't pay the bills. Building iPhones doesn't pay China's bills (they're citizenry is impoverished) so why would we want to compete with them for jobs to build iPhones? Let them keep doing it! We keep building spaceships and airplanes. The analogy is.... We're currently building high-tech, high value items where the engineering matters. The manufacturing matters. China buys airplanes from the USA because no commercial airport (including the ones in China) would allow a Chinese-made plane to land there. Our country isn't held afloat by manufacturing jobs at Apple, or Samsung, or Fisher Price, or Vtech, or Daewoo. It's held together by General Dynamics. General Electric. Boeing. Rolls-Royce. Airbus. Big spenders who contractually must source the highest possible quality out of a domestic supply chain irrespective of price. These are $30-50/hr jobs that put food on America's table. Making iPhones is a $10/hr job with marginal quality. Throw a handful of iPhones and see what sticks. We're competing with China for jobs they're willing to do for $2/hr jobs. For what?
      - charliesome 7y ago
        > China buys airplanes from the USA because no commercial airport (including the ones in China) would allow a Chinese-made plane to land there. This is a ridiculous assertion to make when there are indeed Chinese planes landing at Chinese airports. It's true that the majority of airplanes Chinese airlines currently operate are manufactured outside of China, but this is not the reason.
  - lostlogin 7y ago
    > Name me one piece of a commercial airliner that you are allowed to source from China. I'll wait Boeing have opened a plant there which seems to do interiors now, and it moving into other areas in the future. Rudder parts are made at a separate facility in a different. These are for the 787 and 737. The link claims there are 9,000 Boeing’s flying with Chinese made parts. http://europe.chinadaily.com.cn/business/2016-09/10/content_26758707.htm http://europe.chinadaily.com.cn/business/2016-09/10/content_... https://www.google.co.nz/amp/s/mobile.reuters.com/article/amp/idUSKBN1OE06C https://www.google.co.nz/amp/s/mobile.reuters.com/article/am... https://www.google.co.nz/amp/s/qz.com/1497137/boeings-china-plant-delivers-first-jet-a-737-max-for-air-china/amp/ https://www.google.co.nz/amp/s/qz.com/1497137/boeings-china-...
gigatexal 7y ago
There’s so little of substance in this post and so much xenophobia and hyperbolic thinking I’m surprised it’s not been downvoted to smitherenes. China is the second largest economy in the world. They’ve got many smart individuals in business and engineering and everything in between. And for someone writing on a tech board like HN to think that tech won’t pull China and India and the Philippines and other countries onto the same plane as western powerhouses is just myopic. Tech and education over time lifts all boats.
- groby_b 7y ago
  Except e.g. Uyghur boats. Those get summarily sunk. Hong Kong boats will be set on fire instead. No, tech is not a universal equalizer by itself. Without an entire socioeconomic environment to support innovation, gains will be at best temporary. (On the flipside, we lately seem to be entertaining the idea of converting the US to an autocratic environment too, so we can certainly achieve leveling that way)
  - gigatexal 7y ago
    Yeah ... the heavy handed nature of a Communism and Xi’s leadership, I think, will lead to a revolution one day. But even if not there’s a growing middle class that will propel consumption ever more. Who would have thought that China would be such a large global economy say 30 years ago?
tylerjwilk00 7y ago
Manufacturing is a ladder. You use the previous generation manufacturing to create the new. Once you lack certain manufacturing processes by moving it over seas you are in a sense kicking your own ladder out from underneath you. The trade wars now are a response to realizing large pieces of the ladder are gone.
- munk-a 7y ago
  Actually US businesses were doing fine for the most part, except for those trying, and failing, to compete with the ladder replacements that moved overseas. There is a militarily strategic reason for keeping domestic production of your full supply chain, but most businesses don't care because (and this is a shocker) corporations aren't Americans, nor are they Chinese or any other nationality. They are greedy and self-interested and don't give a hoot about their country of residence.
  - la_barba 7y ago
    Caring about the market, and not societies, is the kind of capitalism, that the US has been heavily promoting for quite a while. But seems like young people are starting to catch on to this social-democracy thing..
  - mochris 7y ago
    And American consumers don't actually care about this. If they did, they'd happily pay the premium for American made goods. They don't generally pay the premiums, because they don't think the price premiums are worth it. Unfortunately, the authoritarian-right has decided to centrally plan the economy.
  - hoseja 7y ago
    Seems to me Chinese corporations are Chinese and their executives(' families) can be disappeared on demand to make it stay so.
- criddell 7y ago
  I remember a few years ago reading how Dell had lost the ability to make their own computers gradually over time. On the face of it, every bit of manufacturing and design they moved out of the US made sense, but all of it added up over time meant that they had effectively lost control of the computers they were selling. It was an interesting story that but my google-fu isn't strong enough to find it.
wyldfire 7y ago
> Similarly, they have us to make safe airplanes and complex satellite equipment. This sounds borderline tongue-in-cheek [1]. [1] https://newrepublic.com/article/154944/boeing-737-max-crash-course https://newrepublic.com/article/154944/boeing-737-max-crash-...
maerF0x0 7y ago
One problem is that of distribution. Many Chinese families are seeing their livelihood improved by the "underwear" jobs. However, a small group of US families are profiting from the sales of "satellites". 2nd problem is we're buying $336 billion more underwear than selling satellites. At some point we have to have a balanced flow or we'll go broke. https://en.wikipedia.org/wiki/China%E2%80%93United_States_trade_war https://en.wikipedia.org/wiki/China%E2%80%93United_States_tr...
- munk-a 7y ago
  Except, and this point gets bungled in the media all the time, the trade deficit doesn't matter. There are some economic reasons (the entire world's currency is based on the dollar) and there are some political reasons (all countries benefit from the free movement of goods so anyone trying to force a balancing would be ostracized), there is also the fact that the US military is strong enough to defend against seizure but, here are the two really big reasons you should walk away with: 1. We are no longer on a precious metal standard so there is no limit to the supply of money. 2. States don't do business with states, individuals do business with individuals - you, personally, likely have a severe trade deficit with Apple (or your computer vendor of choice) you have purchase their services for money but they have never directly purchased yours. This does not matter you are at a deficit and surplus with a variety of players and the world keeps on turning.
  - maerF0x0 7y ago
    > you, personally, likely have a severe trade deficit with Apple Yes, but I do not have a trade deficit on the whole as well. I understand the analogy of a single trade deficit doesnt matter. But the deficit on the whole does matter, no?
    - AlexTWithBeard 7y ago
      I think you're right. There's plenty of articles explaining why deficit is not a problem, but despite of all the economic theory I find this view very weird. In the bottom line, if you're consuming more than you're manufacturing, mostly likely you're in trouble.
pinkfoot 7y ago
> they have us to make safe airplanes You make safe airplanes? :)
adventured 7y ago
> Closing trade to the extent that we're making our own underwear INSTEAD of satellite parts can't really be chocked up as a win. If you remove the instead part of that (which doesn't make sense as an either-or), it's a big win if your goal is to remove manufacturing, jobs and capital from a strategic superpower competitor like China. If in-sourcing underwear to the US results in only 1,000 net additional jobs - making a billion pairs of underwear per year - and results in the loss of 20,000 low paid manufacturing jobs, supply chain, infrastructure, tax revenue, etc. in China. That is a win, if your goal is to make China slightly weaker. If the US nets out to even and China loses, it's a win for the US - if you view China as a superpower competitor for the next century (which nearly everyone in DC does today). If the US could use increased automation to pull back every bit of outsourced manufacturing, even in a fictional zero net gain scenario (ie no net job gains, no net tax benefit, no net capital retention benefit, etc), it makes the US more powerful versus the rest of the world, as the rest of the world loses trillions of dollars in outsourced manufacturing value (ie an enormous injection of capital to be used to build out their nations, as in China or presently as is happening in Vietnam). If you're a politician in DC you would view that as a useful increase in US hegemony. Apparel in-sourcing, as one example, has already begun globally. It's only going to get more aggressive over the coming decades. Developed nations will pull back various pieces of their manufacturing chains, as substantial automation gains make it reasonable to do so. When you combine those gains with the upside of geographic location - being close to your customers, eg for rapid trend adjustment purposes in apparel - the in-sourcing advantage is strong.
ako 7y ago
Except that china also makes complex things, like planes and satelites. They don't need america for that.
- josefresco 7y ago
  ... with stolen IP from America.
  - denzil_correa 7y ago
    They have learnt historical lessons from the USA who stole IP from the U.K. https://www.apnews.com/b40414d22f2248428ce11ff36b88dc53 https://www.apnews.com/b40414d22f2248428ce11ff36b88dc53
    - reaperducer 7y ago
      Why would you compare the actions of a developing country 200 years ago working within that timeframe's norms to the actions of a developed country working within today's norms?
      - sangnoir 7y ago
        > working within that timeframe's norms As you'd imagine, the norm in the UK[1] was to be against "IP theft" 200 years ago, but the US had a more cavalier attitude then - I wonder why. 1. https://www.smithsonianmag.com/smart-news/how-industrial-espionage-started-americas-cotton-revolution-180967608/ https://www.smithsonianmag.com/smart-news/how-industrial-esp...
      - lostlogin 7y ago
        But it’s not the norm in China. If you are to decide what is normal, do you do this based on geography or population? Either way, China is a pretty big place.
      - kenned3 7y ago
        200 years ago, the behavoiur of the US was not consistant with the "norms" at the time. The UK had clear laws on this, and the US violated them. US leaders encouraged it. How is this not the same as what China is doing now?
la_barba 7y ago
I think you're overplaying the 'cheap crap' argument. China is quite a ways better than they were when that stereotype was passable. They can totally match what the US is doing in a large set of technology based industries. And also, because of the way supply chains work (they naturally form clusters around manufacturing hubs and engender very strong network effects) the US might not be in a position to make any high-tech product at all. It would be cheaper to manufacture it overseas rather than ship every single part/material to the US.
wcoenen 7y ago
Your "tldr" is roughly 100 words, same as the rest of your comment.

varjag 7y ago

Microelectronics, both cheap and expensive, is really the same technology. You move out the high volume base, engineering careers become dead ends and low volume high value products become problematic too. "Let's move production to China and keep R&D here" is a pipe dream.

zelon88 7y ago
Not when it's illegal to export your IP. Those are the contracts where America makes money. All the non-descript brown buildings you pass by on your way to work are the manufacturing/heat-treating/welding/plating shops that make every piece of machinery that flies overhead. Name me one piece of a commercial airliner that you are allowed to source from China. I'll wait. So when you consider what we're currently making, Apple Computers in a massive factory with suicide nets over the windows is a race to the bottom. Nobody wants to compete with Chinese manufacturing on their home turf of cheap Wal-Mart goods. We'll be living in dog cages too if we do that. We want to make airplanes and spaceships and meaningful technology.
- varjag 7y ago
  You can legislate IP as much as you want if all your engineering jobs have followed production. Not sure what the analogy with planes is all about, it's exactly the thing they are both manufactured and designed in the same country.
  - zelon88 7y ago
    The analogy with planes is that planes pay the bills. Spaceships pay the bills. Coffee cups and Wal-Mart items won't pay the bills. Building iPhones doesn't pay China's bills (they're citizenry is impoverished) so why would we want to compete with them for jobs to build iPhones? Let them keep doing it! We keep building spaceships and airplanes. The analogy is.... We're currently building high-tech, high value items where the engineering matters. The manufacturing matters. China buys airplanes from the USA because no commercial airport (including the ones in China) would allow a Chinese-made plane to land there. Our country isn't held afloat by manufacturing jobs at Apple, or Samsung, or Fisher Price, or Vtech, or Daewoo. It's held together by General Dynamics. General Electric. Boeing. Rolls-Royce. Airbus. Big spenders who contractually must source the highest possible quality out of a domestic supply chain irrespective of price. These are $30-50/hr jobs that put food on America's table. Making iPhones is a $10/hr job with marginal quality. Throw a handful of iPhones and see what sticks. We're competing with China for jobs they're willing to do for $2/hr jobs. For what?
    - charliesome 7y ago
      > China buys airplanes from the USA because no commercial airport (including the ones in China) would allow a Chinese-made plane to land there. This is a ridiculous assertion to make when there are indeed Chinese planes landing at Chinese airports. It's true that the majority of airplanes Chinese airlines currently operate are manufactured outside of China, but this is not the reason.
- lostlogin 7y ago
  > Name me one piece of a commercial airliner that you are allowed to source from China. I'll wait Boeing have opened a plant there which seems to do interiors now, and it moving into other areas in the future. Rudder parts are made at a separate facility in a different. These are for the 787 and 737. The link claims there are 9,000 Boeing’s flying with Chinese made parts. http://europe.chinadaily.com.cn/business/2016-09/10/content_26758707.htm http://europe.chinadaily.com.cn/business/2016-09/10/content_... https://www.google.co.nz/amp/s/mobile.reuters.com/article/amp/idUSKBN1OE06C https://www.google.co.nz/amp/s/mobile.reuters.com/article/am... https://www.google.co.nz/amp/s/qz.com/1497137/boeings-china-plant-delivers-first-jet-a-737-max-for-air-china/amp/ https://www.google.co.nz/amp/s/qz.com/1497137/boeings-china-...

gigatexal 7y ago

There’s so little of substance in this post and so much xenophobia and hyperbolic thinking I’m surprised it’s not been downvoted to smitherenes. China is the second largest economy in the world. They’ve got many smart individuals in business and engineering and everything in between. And for someone writing on a tech board like HN to think that tech won’t pull China and India and the Philippines and other countries onto the same plane as western powerhouses is just myopic. Tech and education over time lifts all boats.

groby_b 7y ago
Except e.g. Uyghur boats. Those get summarily sunk. Hong Kong boats will be set on fire instead. No, tech is not a universal equalizer by itself. Without an entire socioeconomic environment to support innovation, gains will be at best temporary. (On the flipside, we lately seem to be entertaining the idea of converting the US to an autocratic environment too, so we can certainly achieve leveling that way)
- gigatexal 7y ago
  Yeah ... the heavy handed nature of a Communism and Xi’s leadership, I think, will lead to a revolution one day. But even if not there’s a growing middle class that will propel consumption ever more. Who would have thought that China would be such a large global economy say 30 years ago?

tylerjwilk00 7y ago

Manufacturing is a ladder. You use the previous generation manufacturing to create the new. Once you lack certain manufacturing processes by moving it over seas you are in a sense kicking your own ladder out from underneath you. The trade wars now are a response to realizing large pieces of the ladder are gone.

munk-a 7y ago
Actually US businesses were doing fine for the most part, except for those trying, and failing, to compete with the ladder replacements that moved overseas. There is a militarily strategic reason for keeping domestic production of your full supply chain, but most businesses don't care because (and this is a shocker) corporations aren't Americans, nor are they Chinese or any other nationality. They are greedy and self-interested and don't give a hoot about their country of residence.
- la_barba 7y ago
  Caring about the market, and not societies, is the kind of capitalism, that the US has been heavily promoting for quite a while. But seems like young people are starting to catch on to this social-democracy thing..
- mochris 7y ago
  And American consumers don't actually care about this. If they did, they'd happily pay the premium for American made goods. They don't generally pay the premiums, because they don't think the price premiums are worth it. Unfortunately, the authoritarian-right has decided to centrally plan the economy.
- hoseja 7y ago
  Seems to me Chinese corporations are Chinese and their executives(' families) can be disappeared on demand to make it stay so.
criddell 7y ago
I remember a few years ago reading how Dell had lost the ability to make their own computers gradually over time. On the face of it, every bit of manufacturing and design they moved out of the US made sense, but all of it added up over time meant that they had effectively lost control of the computers they were selling. It was an interesting story that but my google-fu isn't strong enough to find it.

wyldfire 7y ago

> Similarly, they have us to make safe airplanes and complex satellite equipment. This sounds borderline tongue-in-cheek [1]. [1] https://newrepublic.com/article/154944/boeing-737-max-crash-course https://newrepublic.com/article/154944/boeing-737-max-crash-...

maerF0x0 7y ago

One problem is that of distribution. Many Chinese families are seeing their livelihood improved by the "underwear" jobs. However, a small group of US families are profiting from the sales of "satellites". 2nd problem is we're buying $336 billion more underwear than selling satellites. At some point we have to have a balanced flow or we'll go broke. https://en.wikipedia.org/wiki/China%E2%80%93United_States_trade_war https://en.wikipedia.org/wiki/China%E2%80%93United_States_tr...

munk-a 7y ago
Except, and this point gets bungled in the media all the time, the trade deficit doesn't matter. There are some economic reasons (the entire world's currency is based on the dollar) and there are some political reasons (all countries benefit from the free movement of goods so anyone trying to force a balancing would be ostracized), there is also the fact that the US military is strong enough to defend against seizure but, here are the two really big reasons you should walk away with: 1. We are no longer on a precious metal standard so there is no limit to the supply of money. 2. States don't do business with states, individuals do business with individuals - you, personally, likely have a severe trade deficit with Apple (or your computer vendor of choice) you have purchase their services for money but they have never directly purchased yours. This does not matter you are at a deficit and surplus with a variety of players and the world keeps on turning.
- maerF0x0 7y ago
  > you, personally, likely have a severe trade deficit with Apple Yes, but I do not have a trade deficit on the whole as well. I understand the analogy of a single trade deficit doesnt matter. But the deficit on the whole does matter, no?
  - AlexTWithBeard 7y ago
    I think you're right. There's plenty of articles explaining why deficit is not a problem, but despite of all the economic theory I find this view very weird. In the bottom line, if you're consuming more than you're manufacturing, mostly likely you're in trouble.

pinkfoot 7y ago

> they have us to make safe airplanes You make safe airplanes? :)

adventured 7y ago

> Closing trade to the extent that we're making our own underwear INSTEAD of satellite parts can't really be chocked up as a win. If you remove the instead part of that (which doesn't make sense as an either-or), it's a big win if your goal is to remove manufacturing, jobs and capital from a strategic superpower competitor like China. If in-sourcing underwear to the US results in only 1,000 net additional jobs - making a billion pairs of underwear per year - and results in the loss of 20,000 low paid manufacturing jobs, supply chain, infrastructure, tax revenue, etc. in China. That is a win, if your goal is to make China slightly weaker. If the US nets out to even and China loses, it's a win for the US - if you view China as a superpower competitor for the next century (which nearly everyone in DC does today). If the US could use increased automation to pull back every bit of outsourced manufacturing, even in a fictional zero net gain scenario (ie no net job gains, no net tax benefit, no net capital retention benefit, etc), it makes the US more powerful versus the rest of the world, as the rest of the world loses trillions of dollars in outsourced manufacturing value (ie an enormous injection of capital to be used to build out their nations, as in China or presently as is happening in Vietnam). If you're a politician in DC you would view that as a useful increase in US hegemony. Apparel in-sourcing, as one example, has already begun globally. It's only going to get more aggressive over the coming decades. Developed nations will pull back various pieces of their manufacturing chains, as substantial automation gains make it reasonable to do so. When you combine those gains with the upside of geographic location - being close to your customers, eg for rapid trend adjustment purposes in apparel - the in-sourcing advantage is strong.

ako 7y ago

Except that china also makes complex things, like planes and satelites. They don't need america for that.

josefresco 7y ago
... with stolen IP from America.
- denzil_correa 7y ago
  They have learnt historical lessons from the USA who stole IP from the U.K. https://www.apnews.com/b40414d22f2248428ce11ff36b88dc53 https://www.apnews.com/b40414d22f2248428ce11ff36b88dc53
  - reaperducer 7y ago
    Why would you compare the actions of a developing country 200 years ago working within that timeframe's norms to the actions of a developed country working within today's norms?
    - sangnoir 7y ago
      > working within that timeframe's norms As you'd imagine, the norm in the UK[1] was to be against "IP theft" 200 years ago, but the US had a more cavalier attitude then - I wonder why. 1. https://www.smithsonianmag.com/smart-news/how-industrial-espionage-started-americas-cotton-revolution-180967608/ https://www.smithsonianmag.com/smart-news/how-industrial-esp...
    - lostlogin 7y ago
      But it’s not the norm in China. If you are to decide what is normal, do you do this based on geography or population? Either way, China is a pretty big place.
    - kenned3 7y ago
      200 years ago, the behavoiur of the US was not consistant with the "norms" at the time. The UK had clear laws on this, and the US violated them. US leaders encouraged it. How is this not the same as what China is doing now?

la_barba 7y ago

I think you're overplaying the 'cheap crap' argument. China is quite a ways better than they were when that stereotype was passable. They can totally match what the US is doing in a large set of technology based industries. And also, because of the way supply chains work (they naturally form clusters around manufacturing hubs and engender very strong network effects) the US might not be in a position to make any high-tech product at all. It would be cheaper to manufacture it overseas rather than ship every single part/material to the US.

wcoenen 7y ago

Your "tldr" is roughly 100 words, same as the rest of your comment.