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Interesting. A lot to explore there. How much is unskilled labor arbitrage versus specialization by region? What does "brittleness" really mean?

toss1 5y ago
Most of it starts out with lower-skilled labor arbitrage. However, in China, they are specifically working to steal technology from the west, by both requiring local "partnerships" for any business, and requiring exposure of IP, and training of workers. So, they are trying to leverage the low-cost labor abritrage into their own capabilities. They are big enough that if they can keep the arbitrage going long enough, a generation or two, the original local industries in other countries are hollowed out and no one knows how to build it anymore. This has already happened. This is also supported by keeping their own labor & environmental laws skirting abusive levels, so even if the wages increase, the overall costs are still lower than the other country. If we are very lucky and diligent, we may be able to overcome that by leapfrogging them with automation, but we still need to become a bit protectionist to overcome the differences in labor and environmental protections to bootstrap a higher-skilled and much more automation-leveraged labor force. also, we need to financially encourage non-Just-In-Time inventory management to reduce risk. The problem is again the short-term profits are increased by JIT management, but the tail risk of being screwed by supply chain issues is also largely increased. E.g., I just saw a headline on HN that BMW is eliminating touchscreens on several lines of cars because of chip supply issues. Higher costs, lower profits, and less-satisfied customers, but hey, they delayed the expense for those chips and didn't pay for warehouses to store them! And that is an example of "brittleness" — too many single points of failure, that do not have a redundant backup system. Avoiding this is why it is smarter to have multiple sources for every item, maintain inventory, power your factory (or especially data center) with feeds from two grids, etc..

toss1 5y ago

Most of it starts out with lower-skilled labor arbitrage. However, in China, they are specifically working to steal technology from the west, by both requiring local "partnerships" for any business, and requiring exposure of IP, and training of workers. So, they are trying to leverage the low-cost labor abritrage into their own capabilities. They are big enough that if they can keep the arbitrage going long enough, a generation or two, the original local industries in other countries are hollowed out and no one knows how to build it anymore. This has already happened. This is also supported by keeping their own labor & environmental laws skirting abusive levels, so even if the wages increase, the overall costs are still lower than the other country. If we are very lucky and diligent, we may be able to overcome that by leapfrogging them with automation, but we still need to become a bit protectionist to overcome the differences in labor and environmental protections to bootstrap a higher-skilled and much more automation-leveraged labor force. also, we need to financially encourage non-Just-In-Time inventory management to reduce risk. The problem is again the short-term profits are increased by JIT management, but the tail risk of being screwed by supply chain issues is also largely increased. E.g., I just saw a headline on HN that BMW is eliminating touchscreens on several lines of cars because of chip supply issues. Higher costs, lower profits, and less-satisfied customers, but hey, they delayed the expense for those chips and didn't pay for warehouses to store them! And that is an example of "brittleness" — too many single points of failure, that do not have a redundant backup system. Avoiding this is why it is smarter to have multiple sources for every item, maintain inventory, power your factory (or especially data center) with feeds from two grids, etc..