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It is an opportunity cost though, no? That wealth could have resulted in domestic progress. If I am making Jeans in 1995 in America, but in 2000 I lay off work

It is an opportunity cost though, no? That wealth could have resulted in domestic progress. If I am making Jeans in 1995 in America, but in 2000 I lay off workers, shut down cotton fields, dying processes, etc. and off shore it, while hiring 2 people instead of 50 - to manage suppliers, that indeed, unquestionably has resulted in loss of wealth. Can you explain how this would be a zero sum game? I know @naval keeps tooting that and it makes sense to me in macroeconomically, but I can't convince myself - I think of a closed thermodynamic system with system energy = work done + heat transfer out. That's how I think of the economic systems too when it comes to microeconomics.

refurb 6y ago
My comment was more that it's not a zero sum game and that a significant part of China's growth was not at the expense of the US (but part of it obviously was). By offshoring the manufacturing of jeans, American jobs were lost, correct. But presumably the cost of manufacturing was lowered which opened up new markets (can charge less and still make a profit) and those profits flowed back into the US. And at the same time, American consumers benefited by lower cost jeans (whether price decrease or a slowing of price increases). The Chinese benefited because they were get a piece of that overall value chain - the manufacturing part.
- fermienrico 6y ago
  > those profits flowed back into the US We are on the same page then - those profits do flow back to the US, but as huge pays for CEOs, executives and the upper echelons of the company. This was the original premise of my argument, and you're right - it is not a zero sum game strictly speaking. We haven't done enough to make sure the middleclass wages rise with the increased economic output. American wages have been stagnant [1] even though those companies have brought back wealth. If there were laws that oversee buy-backs, disproportional executive pays, corporate taxes, and other systems that ensure that profits do actually benefit the nation - we would have been in a better position. I am not a proponent of some kind of socialistic marxist society; Capitalism with strict laws and checks/balances is great. [1] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
- bduerst 6y ago
  Pretty Much - I seem to remember an Economist article talking about how the 2000's saw some of the largest gains for the middle class globally, with China's middle class being one of the contributing factors. But you're right, jobs are not zero sum either. They create new jobs, which in turn create other new jobs, and so forth. If they didn't, we'd all pretty much be unemployed except for farmers.

refurb 6y ago

My comment was more that it's not a zero sum game and that a significant part of China's growth was not at the expense of the US (but part of it obviously was). By offshoring the manufacturing of jeans, American jobs were lost, correct. But presumably the cost of manufacturing was lowered which opened up new markets (can charge less and still make a profit) and those profits flowed back into the US. And at the same time, American consumers benefited by lower cost jeans (whether price decrease or a slowing of price increases). The Chinese benefited because they were get a piece of that overall value chain - the manufacturing part.

fermienrico 6y ago
> those profits flowed back into the US We are on the same page then - those profits do flow back to the US, but as huge pays for CEOs, executives and the upper echelons of the company. This was the original premise of my argument, and you're right - it is not a zero sum game strictly speaking. We haven't done enough to make sure the middleclass wages rise with the increased economic output. American wages have been stagnant [1] even though those companies have brought back wealth. If there were laws that oversee buy-backs, disproportional executive pays, corporate taxes, and other systems that ensure that profits do actually benefit the nation - we would have been in a better position. I am not a proponent of some kind of socialistic marxist society; Capitalism with strict laws and checks/balances is great. [1] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
bduerst 6y ago
Pretty Much - I seem to remember an Economist article talking about how the 2000's saw some of the largest gains for the middle class globally, with China's middle class being one of the contributing factors. But you're right, jobs are not zero sum either. They create new jobs, which in turn create other new jobs, and so forth. If they didn't, we'd all pretty much be unemployed except for farmers.