4 ms·

Offshoring was almost always about labor. Wall Street wanted higher returns, so the jobs went to cheaper labor pools.

thoughtstheseus 6y ago
This has also exacerbated the wealth gap. Wealth flows to capital, not labor. When you open your labor pool to hyper competition (global) wages go down for the same labor supply. We need to make our society more people centric.
robomartin 6y ago
> Offshoring was almost always about labor. Wall Street wanted higher returns, so the jobs went to cheaper labor pools. Absolutely, 100%, without a doubt, wrong as can be. A complete and utter distortion of the realities that drive and have driven what has been an evolving landscape for decades. At first, when we were making forks, plates and linen abroad, sure. This has not been the case for a very long time. I would say thirty years, if not forty. What, then, is the reality of modern offshore manufacturing? The most important thing the Chinese have done is to build a FULLY INTEGRATED AND SHORT SUPPLY PIPELINE. Period. Next, they have a massive well-trained and capable technical workforce at every level. From assembly to technicians and engineers. While we were wasting time teaching our kids about Marxism they were educating technicians, engineers and scientists by the millions, as fast as they could. Many of them were educated in US and European universities and went on to spearhead industry efforts and education in China. After that, once again, while we were indoctrinating our kids on the virtues of Socialism and Marxism, they turned their country into one of the most entrepreneurial forces on earth. The drive you see out of China to just "get shit down" has to be experienced to be believed. It's incredible. I'll give you a simple example: Say I need to manufacture a part. I send out for quotes to 50 US-based companies and 50 Chinese companies (if I can even find 50 companies in the US). I will likely have more than 50 quotes from the Chines companies OVERNIGHT! More than 50 because some factories will likely connect you with others. The US-based companies? You are lucky if you get five quotes in four weeks. It's that bad. Actually, it's worse than that. There are other factors, of course. Cost of labor is likely almost dead last in the list of advantages they have. Why is the supply chain so important? Why are brains so important? Well, you saw it during this pandemic. The US could not make fucking N95 masks to, quite literally, save our lives. Why? Because we don't even make the cloth, elastic, thread and machines here. Everything is in China. And so, even if money was not important we could not make masks. Such a simple product and we simply could not make them. Still can't, not at scale. Say you want to make a relatively simple electronic device. Let's assume labor costs you zero in the US due to some amazing automation. You still can't compete with China. Why? Because the supply chain isn't here. It's in China. Which means every chip, wire, resistor, screw, sensor, piece of plastic, paper, packaging, box, manufacturing tools and equipment, test equipment, molds, etc. will have to come from China. Which, in turn, means your cost basis increased significantly. If you insist on doing a few things here (like molds and CNC machined parts) you will pay through your teeth, because our wages, taxes, regulatory and other factors cost too much. This is where the whole discussion about minimum wage starts to come in. If you are forced to pay someone a minimum of $15 per hour, pack it up and ship the work to China, because, whether you know it or not, your business is dead. In China there are towns that have evolved in order to optimize for certain product classes. Want to make microwave ovens and refrigerators? There's a town where your entire supply chain is within a one hour truck ride from your factory. The same business in the US would have to wait WEEKS TO MONTHS for parts and the supply lines would be nowhere near wherever they might care to locate within the US. Not any more. I realize that most people are not in manufacturing and simply don't have a clue. I get it. It is too easy to reduce reality to a single variable (labor) and ignore the fact that nothing in life is driven by a single variable. In fact, there are dozens, hundreds of variables that drive different realities. Companies don't offshore because they are greedy. They offshore because, if they don't, they cease to exist. We have reached a moment in time where, but for a few select market segments, the options have been reduced to one: China. The fact that our kids don't leave high school and college with a solid financial and entrepreneurial education predicts our future. What we are doing to our kids in our educational institutions (K-12-University) is simply criminal.
- robomartin 6y ago
  Here's another dose of reality: You can't downvote reality. You can downvote words on an internet page. That's fantastic. It doesn't change the truth and reality at all. All it does is change a silly little number in satisfying direction. Put a different way: Reality doesn't care. It's physics. It just is.
- tsimionescu 6y ago
  > Companies don't offshore because they are greedy. They offshore because, if they don't, they cease to exist. We have reached a moment in time where, but for a few select market segments, the options have been reduced to one: China. You're completely ignoring the base reason: why did China do this and the US didn't? Because it was cheaper for US companies to invest nothing and move production to China instead of doing it in the US. Because the US government, unlike the Chinese one, is not allowed to directly invest and create these sorts of supply chains itself, because companies start complaining (read: lobbying against it) that it's out competing them (muh free market!). In fact, the US did have all of this. After the war, US manufacturing was second to none in the world, and no one except maybe the USSR came even close. But US workers are expensive: cost of living is high, workers demand a work/life balance, regulations don't allow you to risk them losing hands for a slightly faster product. Along came China, which had far too many people to know what to do with. Cost of living was low, they were more than willing to force people to work as long as necessary, and if they collapse from exhaustion or lose a hand here and there, no problem, there's a billion more who can take their place. And so, even while they were still learning and had little know-how, it was so much cheaper to offshore things to China than to manufacture them locally, even with much worse yields and QA at that time, that companies started moving in droves. Now, if the US had not been run by capitalists, the US government could have easily stopped this. They could have eaisly prevented this from happening by disallowing companies to buy these factories abroad, or they could have bought and run any local factories that were getting shut down, and out-competed many companies on quality and branding. Instead, the US government, run by and for corporations, embraced this whole-heartedly, creating international treaties to facilitate the flight of manufacturing from the US, sometimes even enforcing cheap labor availability if countries tried getting out of line with pesky workers rights that would cut into US corporation bottom lines One thing they didn't count on though was that China did not intend to simply become a US colony, providing cheap labor to fuel US profits. They used this as an engine for their economy, investing in education and ever more efficient production as you pout out. Crucially, they also completely disregarded international IP laws designed to allow US companies to produce high-tech goods in other countries while not giving up the know-how. Instead, the Chinese government essentially applied an IP tax for all of this production and used the accumulated IP to start competing with the US on end products, not just manufacturing. Now, this is becoming unacceptable, since they are starting to actually eat into those profits, and even more frighteningly, to come up with their own technology that rivals US efforts. This is the culmination of the Chinese plan, and the side effect of US profit seeking and short-term thinking. Fortunately, this is starting to align US external policy goals more with US workers, even if US companies would still rather benefit from Chinese manufacturing. This will probably mean renewed investment in US manufacturing, incentives for US-built goods, and a resurrection of US engineering culture. But it may also mean a weakening of worker's rights if unions are not careful. So yes, you are right about the current state of Chinese manufacturing and their advantages, but you are completely ignoring US capitalists role in how we got from Mao to here. Your weird tangent about teaching children marxism or socialism in the most economically right-wing country on earth, I will just ignore.

This has also exacerbated the wealth gap. Wealth flows to capital, not labor. When you open your labor pool to hyper competition (global) wages go down for the same labor supply. We need to make our society more people centric.

robomartin 6y ago

> Offshoring was almost always about labor. Wall Street wanted higher returns, so the jobs went to cheaper labor pools. Absolutely, 100%, without a doubt, wrong as can be. A complete and utter distortion of the realities that drive and have driven what has been an evolving landscape for decades. At first, when we were making forks, plates and linen abroad, sure. This has not been the case for a very long time. I would say thirty years, if not forty. What, then, is the reality of modern offshore manufacturing? The most important thing the Chinese have done is to build a FULLY INTEGRATED AND SHORT SUPPLY PIPELINE. Period. Next, they have a massive well-trained and capable technical workforce at every level. From assembly to technicians and engineers. While we were wasting time teaching our kids about Marxism they were educating technicians, engineers and scientists by the millions, as fast as they could. Many of them were educated in US and European universities and went on to spearhead industry efforts and education in China. After that, once again, while we were indoctrinating our kids on the virtues of Socialism and Marxism, they turned their country into one of the most entrepreneurial forces on earth. The drive you see out of China to just "get shit down" has to be experienced to be believed. It's incredible. I'll give you a simple example: Say I need to manufacture a part. I send out for quotes to 50 US-based companies and 50 Chinese companies (if I can even find 50 companies in the US). I will likely have more than 50 quotes from the Chines companies OVERNIGHT! More than 50 because some factories will likely connect you with others. The US-based companies? You are lucky if you get five quotes in four weeks. It's that bad. Actually, it's worse than that. There are other factors, of course. Cost of labor is likely almost dead last in the list of advantages they have. Why is the supply chain so important? Why are brains so important? Well, you saw it during this pandemic. The US could not make fucking N95 masks to, quite literally, save our lives. Why? Because we don't even make the cloth, elastic, thread and machines here. Everything is in China. And so, even if money was not important we could not make masks. Such a simple product and we simply could not make them. Still can't, not at scale. Say you want to make a relatively simple electronic device. Let's assume labor costs you zero in the US due to some amazing automation. You still can't compete with China. Why? Because the supply chain isn't here. It's in China. Which means every chip, wire, resistor, screw, sensor, piece of plastic, paper, packaging, box, manufacturing tools and equipment, test equipment, molds, etc. will have to come from China. Which, in turn, means your cost basis increased significantly. If you insist on doing a few things here (like molds and CNC machined parts) you will pay through your teeth, because our wages, taxes, regulatory and other factors cost too much. This is where the whole discussion about minimum wage starts to come in. If you are forced to pay someone a minimum of $15 per hour, pack it up and ship the work to China, because, whether you know it or not, your business is dead. In China there are towns that have evolved in order to optimize for certain product classes. Want to make microwave ovens and refrigerators? There's a town where your entire supply chain is within a one hour truck ride from your factory. The same business in the US would have to wait WEEKS TO MONTHS for parts and the supply lines would be nowhere near wherever they might care to locate within the US. Not any more. I realize that most people are not in manufacturing and simply don't have a clue. I get it. It is too easy to reduce reality to a single variable (labor) and ignore the fact that nothing in life is driven by a single variable. In fact, there are dozens, hundreds of variables that drive different realities. Companies don't offshore because they are greedy. They offshore because, if they don't, they cease to exist. We have reached a moment in time where, but for a few select market segments, the options have been reduced to one: China. The fact that our kids don't leave high school and college with a solid financial and entrepreneurial education predicts our future. What we are doing to our kids in our educational institutions (K-12-University) is simply criminal.

robomartin 6y ago
Here's another dose of reality: You can't downvote reality. You can downvote words on an internet page. That's fantastic. It doesn't change the truth and reality at all. All it does is change a silly little number in satisfying direction. Put a different way: Reality doesn't care. It's physics. It just is.
tsimionescu 6y ago
> Companies don't offshore because they are greedy. They offshore because, if they don't, they cease to exist. We have reached a moment in time where, but for a few select market segments, the options have been reduced to one: China. You're completely ignoring the base reason: why did China do this and the US didn't? Because it was cheaper for US companies to invest nothing and move production to China instead of doing it in the US. Because the US government, unlike the Chinese one, is not allowed to directly invest and create these sorts of supply chains itself, because companies start complaining (read: lobbying against it) that it's out competing them (muh free market!). In fact, the US did have all of this. After the war, US manufacturing was second to none in the world, and no one except maybe the USSR came even close. But US workers are expensive: cost of living is high, workers demand a work/life balance, regulations don't allow you to risk them losing hands for a slightly faster product. Along came China, which had far too many people to know what to do with. Cost of living was low, they were more than willing to force people to work as long as necessary, and if they collapse from exhaustion or lose a hand here and there, no problem, there's a billion more who can take their place. And so, even while they were still learning and had little know-how, it was so much cheaper to offshore things to China than to manufacture them locally, even with much worse yields and QA at that time, that companies started moving in droves. Now, if the US had not been run by capitalists, the US government could have easily stopped this. They could have eaisly prevented this from happening by disallowing companies to buy these factories abroad, or they could have bought and run any local factories that were getting shut down, and out-competed many companies on quality and branding. Instead, the US government, run by and for corporations, embraced this whole-heartedly, creating international treaties to facilitate the flight of manufacturing from the US, sometimes even enforcing cheap labor availability if countries tried getting out of line with pesky workers rights that would cut into US corporation bottom lines One thing they didn't count on though was that China did not intend to simply become a US colony, providing cheap labor to fuel US profits. They used this as an engine for their economy, investing in education and ever more efficient production as you pout out. Crucially, they also completely disregarded international IP laws designed to allow US companies to produce high-tech goods in other countries while not giving up the know-how. Instead, the Chinese government essentially applied an IP tax for all of this production and used the accumulated IP to start competing with the US on end products, not just manufacturing. Now, this is becoming unacceptable, since they are starting to actually eat into those profits, and even more frighteningly, to come up with their own technology that rivals US efforts. This is the culmination of the Chinese plan, and the side effect of US profit seeking and short-term thinking. Fortunately, this is starting to align US external policy goals more with US workers, even if US companies would still rather benefit from Chinese manufacturing. This will probably mean renewed investment in US manufacturing, incentives for US-built goods, and a resurrection of US engineering culture. But it may also mean a weakening of worker's rights if unions are not careful. So yes, you are right about the current state of Chinese manufacturing and their advantages, but you are completely ignoring US capitalists role in how we got from Mao to here. Your weird tangent about teaching children marxism or socialism in the most economically right-wing country on earth, I will just ignore.