4 ms·

Personally, if the west can't build stuff it is only a matter of time before we are the customer and the prices start rising and our debt starts to crunch. Ther

Personally, if the west can't build stuff it is only a matter of time before we are the customer and the prices start rising and our debt starts to crunch. There will be some part/component that during conflict becomes necessary but no ability to manufacture. We will have lost our knowledge and it'll take decades to recover, if we can recover at all. The billionaires will escape unscathed. I agree with point 4. If we had distributed supply chain then things may work better longer term but I am amazed that businesses still look to offshore everything without looking at the long term prospects of their workers and communities.

sudosysgen 5y ago
Short of an amazing breakthrough in automation, this is basically inevitable. If you think about it in terms of labour values (I know, but stick with it) the West basically gets to do unequal exchange, the average westerner consumes a lot more labour-hours than they actually work. Now the reason for that is that behind every hour of work of an average westerner there's a lot more capital helping, and more educational capital too. But if developing countries do get closer, then inevitably prices will start rising. Not all industries can benefit so much from added capital. Those that can, and the service economy, are done in developped countries. Those that can't, are done in developing countries. If the two equalize, then the inequality in labour hours will equalize and westerners will either have to work more or consume less of products that are made in developing countries.
- jollybean 5y ago
  There's no reason to think that there will be some kind of 'equalization'. There is no natural force driving it. You could argue the trade imbalance in which money flows a little bit more in one direction, but that can actually go on so long as the 'Richer Nations' are growing the economic base and expanding the money supply in serviceable terms. But what's hidden in the obvious discussion of which direction money is flowing in trade ... is the direction that surplus is flowing. The economic surplus is pretty much on the side of the more powerful countries. Everyone benefits, but the rich nations benefit more. Almost all of the corporate value (i.e. net profits) in the iPhone is realized in the US. The consumer surpluses are also vast but they are distributed to whoever actually buys an iPhone. As long as trade isn't too imbalanced and much of the actual cash can be returned to 'Rich Nations' by sale of services etc., and, those net consumer/industrial surpluses remain big ... the equilibrium of 'poor countries doing labour and rich countries doing services' can go on essentially forever. The factors that will change are: 1) China is going 'up market' and will provide more advanced things. 2) The Rest of the World will start to provide competitive labour - and more importantly - be vehicles of consumption as well making rich export markets for everyone. 3) AI will probably affect production in fairly significant ways. Robots with a little bit of dexterity and AI might very well be able to do some tricky assembly ... can you imagine that they could actually lay out, fold and cut fabric? And then sew together pieces? I can see that happening. Finally, I would say it's definitely not good to look at all of this as a 'zero sum' game, and ultimately wealth is only relative anyhow. If we ignore the geostrategic and social issues about power, and 'liberal democracy' etc. - there's every opportunity for a lot of poor nations to move up the ladder very quickly (already happening) and for rich countries to stay rich. As those nations 'catch up' their rate of acceleration slows down somewhat as it's rather difficult to 'get ahead' let alone 'stay ahead' for long. I don't even think China will ever actually 'get ahead' - they are, per capita, still quite poor on the whole and their growth is slowing. As cultural values start to shift, the very measures we use for 'Purchasing Power Parity' start to shift as well. For example, how do we put a price on clean air, vacation, basic freedoms? And from a less secular but still hugely relevant perspective - living among one's culture, with one's 'people', the architecture, the view from your office/home, the lovely bike path to work, the gardens, the local bier garden where you see your friends, the local football team etc. etc.. People already to value those things a lot (see: Europe) they just don't directly factor into our equations. Over the next few decades we're going to rely less heavily on GDP and more on other measures.
  - sudosysgen 5y ago
    Well, of course there is a reason. It's very simple. Growth rates are much lower in richer countries than the rest of the world. As an economy matures, the growth rate slows down. Therefore there is a a tendency towards equalization. It doesn't need to become exactly equal. The gap just needs to shorten. And it does, at exponential speeds. Already the average GDP in the West is only twice the worldwide average, this only shrinks every year.
imtringued 5y ago
Exporting your deficit to the US forever can't work. It doesn't solve the paradox of saving. Eventually you have to realize that the us treasuries you were buying won't be honored and everything you exported was a free gift to the US. In short, the IOUs you spent so many real resources to acquire are an illusion if you take too long to turn them in. Honestly, anyone who falls for a paradox of competition deserves it.

sudosysgen 5y ago

Short of an amazing breakthrough in automation, this is basically inevitable. If you think about it in terms of labour values (I know, but stick with it) the West basically gets to do unequal exchange, the average westerner consumes a lot more labour-hours than they actually work. Now the reason for that is that behind every hour of work of an average westerner there's a lot more capital helping, and more educational capital too. But if developing countries do get closer, then inevitably prices will start rising. Not all industries can benefit so much from added capital. Those that can, and the service economy, are done in developped countries. Those that can't, are done in developing countries. If the two equalize, then the inequality in labour hours will equalize and westerners will either have to work more or consume less of products that are made in developing countries.

jollybean 5y ago
There's no reason to think that there will be some kind of 'equalization'. There is no natural force driving it. You could argue the trade imbalance in which money flows a little bit more in one direction, but that can actually go on so long as the 'Richer Nations' are growing the economic base and expanding the money supply in serviceable terms. But what's hidden in the obvious discussion of which direction money is flowing in trade ... is the direction that surplus is flowing. The economic surplus is pretty much on the side of the more powerful countries. Everyone benefits, but the rich nations benefit more. Almost all of the corporate value (i.e. net profits) in the iPhone is realized in the US. The consumer surpluses are also vast but they are distributed to whoever actually buys an iPhone. As long as trade isn't too imbalanced and much of the actual cash can be returned to 'Rich Nations' by sale of services etc., and, those net consumer/industrial surpluses remain big ... the equilibrium of 'poor countries doing labour and rich countries doing services' can go on essentially forever. The factors that will change are: 1) China is going 'up market' and will provide more advanced things. 2) The Rest of the World will start to provide competitive labour - and more importantly - be vehicles of consumption as well making rich export markets for everyone. 3) AI will probably affect production in fairly significant ways. Robots with a little bit of dexterity and AI might very well be able to do some tricky assembly ... can you imagine that they could actually lay out, fold and cut fabric? And then sew together pieces? I can see that happening. Finally, I would say it's definitely not good to look at all of this as a 'zero sum' game, and ultimately wealth is only relative anyhow. If we ignore the geostrategic and social issues about power, and 'liberal democracy' etc. - there's every opportunity for a lot of poor nations to move up the ladder very quickly (already happening) and for rich countries to stay rich. As those nations 'catch up' their rate of acceleration slows down somewhat as it's rather difficult to 'get ahead' let alone 'stay ahead' for long. I don't even think China will ever actually 'get ahead' - they are, per capita, still quite poor on the whole and their growth is slowing. As cultural values start to shift, the very measures we use for 'Purchasing Power Parity' start to shift as well. For example, how do we put a price on clean air, vacation, basic freedoms? And from a less secular but still hugely relevant perspective - living among one's culture, with one's 'people', the architecture, the view from your office/home, the lovely bike path to work, the gardens, the local bier garden where you see your friends, the local football team etc. etc.. People already to value those things a lot (see: Europe) they just don't directly factor into our equations. Over the next few decades we're going to rely less heavily on GDP and more on other measures.
- sudosysgen 5y ago
  Well, of course there is a reason. It's very simple. Growth rates are much lower in richer countries than the rest of the world. As an economy matures, the growth rate slows down. Therefore there is a a tendency towards equalization. It doesn't need to become exactly equal. The gap just needs to shorten. And it does, at exponential speeds. Already the average GDP in the West is only twice the worldwide average, this only shrinks every year.

imtringued 5y ago

Exporting your deficit to the US forever can't work. It doesn't solve the paradox of saving. Eventually you have to realize that the us treasuries you were buying won't be honored and everything you exported was a free gift to the US. In short, the IOUs you spent so many real resources to acquire are an illusion if you take too long to turn them in. Honestly, anyone who falls for a paradox of competition deserves it.