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Yang is totally wrong about automation. The main cause of the shift of manufacturing from US to China is trade policy and China’s monetary policy. If automati

by aey 7y ago

Yang is totally wrong about automation. The main cause of the shift of manufacturing from US to China is trade policy and China’s monetary policy. If automation was the problem, then US would be price competitive on goods with China. Somehow US automation is only good enough to eliminate jobs in the US, but not good enough to compete with cheap labor in China.

ivalm 7y ago
Whatever automation you can do in the US you can also do in China but with lower regulation. Whatever labor costs left over are also cheaper. What I mean is that automation is not an inherent advantage of the US.
- aey 7y ago
  Nowadays 100%. 20 years ago China didn’t have a high technology sector that could have supported large scale factory automation, and factories where built to scale labor. 100% agree with regulation. That’s why US trade policy is the main cause of the decline. It should reflect regulatory arbitrage. It’s utterly pointless to save the environment in the US and poison it in China.
- jbay808 7y ago
  Absolutely. In fact industrial automation components (robots, servos, linear bearings, etc) have been in huge demand from China. Suppliers often sell the same components there for half the price as they charge in the US for the same quality and quantities. Domestic Chinese companies are becoming major suppliers of a lot of factory automation equipment like presses, laser welders, coil winders, etc. There's no reason to think the US has an advantage in automation. In fact, it's much easier as an automation engineer to design automation processes for the factory that's around the corner than to do so for a factory in another time zone that 90% of your team has never seen in person.
bryanrasmussen 7y ago
it is a characteristic of technology that what costs too much in one generation will in each following generation cost less - at some future point the quality of automation found in the U.S now will no longer be prohibitively expensive in China.
aeternum 7y ago
Manufacturing is probably the worst example because trade policy has definitely had an impact there. However, look at other industries: Tier-1 tech support being replaced by chat bots, order-takers being replaced by kiosks and apps, realtors being replaced by self-service apps (ie redfin). Whether by outsourcing or automation, the cause is the same: Loss of low-skilled jobs in return for cheaper products & services. The challenge is to find the best method to leverage those cheaper products and services to improve quality of life for everyone, especially those who's skills become obsolete.
- aey 7y ago
  Sorry that is just plain wrong. As of 2019 support services are mostly outsourced to India/Philippines or other places. US call center jobs lost to chatbots vs India is negligible at this point. Redfin has a tiny fraction of real estate sales, and hasn’t broken into it anywhere locally, or is showing any real signs that it will. Turns out it’s a little harder to self serve a home purchase vs a cab or vacation rental.
ThrustVectoring 7y ago
The US's position as a prestige currency of choice certainly contributes, too. Foreign savers really want dollar safety, so the US has a net capital outflow in the form of Treasuries, which means it must take a net inflow of goods and services. The end result is that American consumers pay less than they should for goods, all because other governments can't or won't provide the safe assets that their citizens desire. These low consumer goods prices are definitely not good for domestic manufacturers.
ethbro 7y ago
> If automation was the problem, then US would be price competitive on goods with China. This (and the article's similar approach) is only half of the equation. 'If automation was the problem and cheaper than offshored labor, then US would be price competitive on goods with China' There are two independent variables: the cost of offshore labor (China recently, SE Asia and Africa now) & the cost of automation. Businesses are going to pursue whatever is most cost effective. But people are incorrectly ignoring automation because it isn't a problem now. Put more restrictions on offshoring labor (thereby raising its cost) and automation is going to start looking very important.
manicdee 7y ago
Don’t forget persistent currency manipulation meaning that goods manufactured exactly the same way with the same cost of goods sold would be 30% cheaper in the USA because of the devalued Yuan.

by aey 7y ago

ivalm 7y ago

Whatever automation you can do in the US you can also do in China but with lower regulation. Whatever labor costs left over are also cheaper. What I mean is that automation is not an inherent advantage of the US.

aey 7y ago
Nowadays 100%. 20 years ago China didn’t have a high technology sector that could have supported large scale factory automation, and factories where built to scale labor. 100% agree with regulation. That’s why US trade policy is the main cause of the decline. It should reflect regulatory arbitrage. It’s utterly pointless to save the environment in the US and poison it in China.
jbay808 7y ago
Absolutely. In fact industrial automation components (robots, servos, linear bearings, etc) have been in huge demand from China. Suppliers often sell the same components there for half the price as they charge in the US for the same quality and quantities. Domestic Chinese companies are becoming major suppliers of a lot of factory automation equipment like presses, laser welders, coil winders, etc. There's no reason to think the US has an advantage in automation. In fact, it's much easier as an automation engineer to design automation processes for the factory that's around the corner than to do so for a factory in another time zone that 90% of your team has never seen in person.

bryanrasmussen 7y ago

it is a characteristic of technology that what costs too much in one generation will in each following generation cost less - at some future point the quality of automation found in the U.S now will no longer be prohibitively expensive in China.

aeternum 7y ago

Manufacturing is probably the worst example because trade policy has definitely had an impact there. However, look at other industries: Tier-1 tech support being replaced by chat bots, order-takers being replaced by kiosks and apps, realtors being replaced by self-service apps (ie redfin). Whether by outsourcing or automation, the cause is the same: Loss of low-skilled jobs in return for cheaper products & services. The challenge is to find the best method to leverage those cheaper products and services to improve quality of life for everyone, especially those who's skills become obsolete.

aey 7y ago
Sorry that is just plain wrong. As of 2019 support services are mostly outsourced to India/Philippines or other places. US call center jobs lost to chatbots vs India is negligible at this point. Redfin has a tiny fraction of real estate sales, and hasn’t broken into it anywhere locally, or is showing any real signs that it will. Turns out it’s a little harder to self serve a home purchase vs a cab or vacation rental.

ThrustVectoring 7y ago

The US's position as a prestige currency of choice certainly contributes, too. Foreign savers really want dollar safety, so the US has a net capital outflow in the form of Treasuries, which means it must take a net inflow of goods and services. The end result is that American consumers pay less than they should for goods, all because other governments can't or won't provide the safe assets that their citizens desire. These low consumer goods prices are definitely not good for domestic manufacturers.

ethbro 7y ago

> If automation was the problem, then US would be price competitive on goods with China. This (and the article's similar approach) is only half of the equation. 'If automation was the problem and cheaper than offshored labor, then US would be price competitive on goods with China' There are two independent variables: the cost of offshore labor (China recently, SE Asia and Africa now) & the cost of automation. Businesses are going to pursue whatever is most cost effective. But people are incorrectly ignoring automation because it isn't a problem now. Put more restrictions on offshoring labor (thereby raising its cost) and automation is going to start looking very important.

manicdee 7y ago

Don’t forget persistent currency manipulation meaning that goods manufactured exactly the same way with the same cost of goods sold would be 30% cheaper in the USA because of the devalued Yuan.