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What "hollowed out middle class" in America are things like "The Jones Act". The major problem in America is not foreign competition. The barrier to industry i

What "hollowed out middle class" in America are things like "The Jones Act". The major problem in America is not foreign competition. The barrier to industry is not opening up relations with China. The major problem in America, and has been since at least the 1970s is a managerial crisis. It is a crisis imposed on the working class by incompetent monolithic bureaucracies in government and in corporate culture. The problem is exactly the sort of problems imposed on the public by things like the "Jones Act". It is that incompetent buffoons attempt to impose rules on the country to accomplish one thing, which fails utterly, and then has a whole host of undesirable side effects that are aggressively ignored and/or downplayed by apologists like yourself. It is this managerial crisis that saw the rise of massive conglomerates in the 60s and 70s that ate up industry all over the midwest, liquidated them, and leveraged the assets to purchase more small and medium business. This was considered marvels of efficiency then... which in actually has turned out to be a series of accountancy scams and pyramid schemes that all hinged on exploiting incompentely design regulation. It is the protectionism and subsidies and cronyism in this country that has destroyed it's competitiveness. It has never been, and probably never will be, the willingness of the American worker to compete with foreign labor. Advocating for more protectionism and cronyism and regulatory capture is going to make the problem worse, not better. IF you need proof of this look no further to what the Federal government has done to the semiconductor industry in the past year.

hn_throwaway_99 4y ago
This is just opinion spewing. That said, the comment you are replying to didn't provide any sources, but if you google, for example, "china outsourcing effect on middle class", it's easy to find research supporting the conclusion that outsourcing had a real negative effect on large swaths of Americans. Also, as a counterpoint, lots of other countries that have had a more robust middle class in the past 2 decades have stricter regulations than the US does.
- Aunche 4y ago
  > if you google, for example, "china outsourcing effect on middle class", it's easy to find research supporting the conclusion If your topic is broad enough, you can abuse napkin math any way you want to reach any sort of conclusion. Virtually all instances of protectionism has caused the industry being protected to stagnate. We saw this with automobiles, and we're seeing this with Boeing. If Intel weren't facing competition from TSMC and Samsung, they would happily milk their 14mm process for who knows how long. The only time when protectionism is a unequivocally a good thing is with services with no obvious societal benefit. I don't think China loses out from not having Instagram or Facebook. Even if their domestic alternatives are worse, they aren't missing out on much. Likewise, I don't think we'd lose out much if everyone was forced to use Youtube Shorts instead of TikTok.
- ghastmaster 4y ago
  If entity A can create something(labor/product) cheaper (more efficiently) than entity B, then B can purchase that something for cheaper than what it would cost B to do/produce it. Now B has extra resources to devote to what B is efficient at creating and A purchases products that B is efficient at producing at less than what it would cost A. The net result is each entity has spent less time and resources for goods and services, and can use the savings (capital) to devote to future endeavors. This basic idea scales up to the country level provided all the rules and regulations do not interfere. The problem with the shrinking status of the lower classes in the USA is not division of labor throughout the world. The imbalance of worldwide division of labor is primarily a symptom of disastrous monetary policy by the Federal Reserve bank and Congress and ill conceived regulations.
  - surement 4y ago
    unfortunate that you're getting downvoted for explaining comparative advantage; none of these "we could face unfair competition from other countries" comments seem to understand this basic concept
    - ghastmaster 4y ago
      To be fair, I did tarnish the simple explanation with an opinion on why the lower classes are worse off. I knew the risk I was taking when I added that.
danaris 4y ago
You said a lot of words there, but I'm having a real trouble understanding just what you think it is that this "managerial crisis" actually involves.
- thereisnospork 4y ago
  not the OP, but there is a whole lot of failure to build infrastructure (housing, roads, public transit) quickly, cheaply, and/or in adequate quantity that results from governance issues (and not say a concrete shortage).
mediaman 4y ago
I don't disagree that private equity has, historically, not been great at adding value. Sometimes they're good at cutting waste such as private jets and fat management perks. They're finance people, not product people, and that shows up in what they do to companies. More leverage than innovation. But it's wrong to ignore the impact of competition from very low wage countries. China truly has hollowed out a lot of industrial operations, especially those that ship easily and are not super high tech. (One might object and say that we don't care about industries that are not bleeding edge. It's true, degreed engineers don't have to care. Tell that to someone without a college degree.) I'm here to tell you that it is extremely difficult to compete against low-cost country labor if you're doing basic to mid-level industrial manufacturing, because I'm a partner in a company that does that. I spend a lot of time thinking about how to avoid making things they make, because I pay people a reasonable wage, I have to pay their health benefits, I have to pay skilled machinists and engineers, and all of it is 6-20x the hourly costs of their equivalents overseas. Some just say, well, automate all of it! And anyone who has experience in manufacturing knows that's not a great answer. "Lights-out manufacturing" is a bullshit myth propagated by people who know nothing about manufacturing except watching a couple YouTube videos. Because the labor that can be automated is already fairly limited. It's already mostly automated! It's the mechanics, machinists, tool and die makers, electricians, mechatronics specialists, production managers, procurement, quality managers, mechanical engineers who are most of your cost. Team leads whose jobs are mostly to monitor the machines and tweak the dials. They're good jobs and they pay quite well. A lot more than their equivalents in China. It's not the automatable direct labor that gets you - it's the skilled overhead labor costs inherent to manufacturing. So, this business does quite well against its domestic competition. But what can I do when the Chinese competition reliably comes over and offers a product for half the cost? Mostly the answer is to avoid making that stuff, and specialize in smaller, higher margin niches. Which works, and is an answer for the business. But it means much less production happening domestically, because the niche stuff is usually a fraction of the volume. And that has lots of knock-on effects throughout the economy. Go to Germany and talk to people in their industrial sector, like I have. You hear the same story. Factories shutting down because of low cost labor country competition. Magazines catering to Americans talk about how Germany has beaten this, but you'll find the reality when you talk with people in depressed German towns that have had yet another factory move away. This isn't only an American story. But sure. Let's just blame the accountants and their "pyramid schemes." There's our villain. Investigation complete!
frozenport 4y ago
In this case the "managerial class" would repeal the Jones Act and marvel at the resulting efficiency?
BurningFrog 4y ago
> ...incompetent buffoons attempt to impose rules on the country to accomplish one thing, which fails utterly" This is NOT what the Jones Act is. The Jones Act is a very successful attempt by certain special interests to make money by instituting a law sending tons of money their way. If we believe this model, one way to repeal the Jones Act is to somehow pay off those interests.

hn_throwaway_99 4y ago

This is just opinion spewing. That said, the comment you are replying to didn't provide any sources, but if you google, for example, "china outsourcing effect on middle class", it's easy to find research supporting the conclusion that outsourcing had a real negative effect on large swaths of Americans. Also, as a counterpoint, lots of other countries that have had a more robust middle class in the past 2 decades have stricter regulations than the US does.

Aunche 4y ago
> if you google, for example, "china outsourcing effect on middle class", it's easy to find research supporting the conclusion If your topic is broad enough, you can abuse napkin math any way you want to reach any sort of conclusion. Virtually all instances of protectionism has caused the industry being protected to stagnate. We saw this with automobiles, and we're seeing this with Boeing. If Intel weren't facing competition from TSMC and Samsung, they would happily milk their 14mm process for who knows how long. The only time when protectionism is a unequivocally a good thing is with services with no obvious societal benefit. I don't think China loses out from not having Instagram or Facebook. Even if their domestic alternatives are worse, they aren't missing out on much. Likewise, I don't think we'd lose out much if everyone was forced to use Youtube Shorts instead of TikTok.
ghastmaster 4y ago
If entity A can create something(labor/product) cheaper (more efficiently) than entity B, then B can purchase that something for cheaper than what it would cost B to do/produce it. Now B has extra resources to devote to what B is efficient at creating and A purchases products that B is efficient at producing at less than what it would cost A. The net result is each entity has spent less time and resources for goods and services, and can use the savings (capital) to devote to future endeavors. This basic idea scales up to the country level provided all the rules and regulations do not interfere. The problem with the shrinking status of the lower classes in the USA is not division of labor throughout the world. The imbalance of worldwide division of labor is primarily a symptom of disastrous monetary policy by the Federal Reserve bank and Congress and ill conceived regulations.
- surement 4y ago
  unfortunate that you're getting downvoted for explaining comparative advantage; none of these "we could face unfair competition from other countries" comments seem to understand this basic concept
  - ghastmaster 4y ago
    To be fair, I did tarnish the simple explanation with an opinion on why the lower classes are worse off. I knew the risk I was taking when I added that.

danaris 4y ago

You said a lot of words there, but I'm having a real trouble understanding just what you think it is that this "managerial crisis" actually involves.

thereisnospork 4y ago
not the OP, but there is a whole lot of failure to build infrastructure (housing, roads, public transit) quickly, cheaply, and/or in adequate quantity that results from governance issues (and not say a concrete shortage).

mediaman 4y ago

I don't disagree that private equity has, historically, not been great at adding value. Sometimes they're good at cutting waste such as private jets and fat management perks. They're finance people, not product people, and that shows up in what they do to companies. More leverage than innovation. But it's wrong to ignore the impact of competition from very low wage countries. China truly has hollowed out a lot of industrial operations, especially those that ship easily and are not super high tech. (One might object and say that we don't care about industries that are not bleeding edge. It's true, degreed engineers don't have to care. Tell that to someone without a college degree.) I'm here to tell you that it is extremely difficult to compete against low-cost country labor if you're doing basic to mid-level industrial manufacturing, because I'm a partner in a company that does that. I spend a lot of time thinking about how to avoid making things they make, because I pay people a reasonable wage, I have to pay their health benefits, I have to pay skilled machinists and engineers, and all of it is 6-20x the hourly costs of their equivalents overseas. Some just say, well, automate all of it! And anyone who has experience in manufacturing knows that's not a great answer. "Lights-out manufacturing" is a bullshit myth propagated by people who know nothing about manufacturing except watching a couple YouTube videos. Because the labor that can be automated is already fairly limited. It's already mostly automated! It's the mechanics, machinists, tool and die makers, electricians, mechatronics specialists, production managers, procurement, quality managers, mechanical engineers who are most of your cost. Team leads whose jobs are mostly to monitor the machines and tweak the dials. They're good jobs and they pay quite well. A lot more than their equivalents in China. It's not the automatable direct labor that gets you - it's the skilled overhead labor costs inherent to manufacturing. So, this business does quite well against its domestic competition. But what can I do when the Chinese competition reliably comes over and offers a product for half the cost? Mostly the answer is to avoid making that stuff, and specialize in smaller, higher margin niches. Which works, and is an answer for the business. But it means much less production happening domestically, because the niche stuff is usually a fraction of the volume. And that has lots of knock-on effects throughout the economy. Go to Germany and talk to people in their industrial sector, like I have. You hear the same story. Factories shutting down because of low cost labor country competition. Magazines catering to Americans talk about how Germany has beaten this, but you'll find the reality when you talk with people in depressed German towns that have had yet another factory move away. This isn't only an American story. But sure. Let's just blame the accountants and their "pyramid schemes." There's our villain. Investigation complete!

frozenport 4y ago

In this case the "managerial class" would repeal the Jones Act and marvel at the resulting efficiency?

BurningFrog 4y ago

> ...incompetent buffoons attempt to impose rules on the country to accomplish one thing, which fails utterly" This is NOT what the Jones Act is. The Jones Act is a very successful attempt by certain special interests to make money by instituting a law sending tons of money their way. If we believe this model, one way to repeal the Jones Act is to somehow pay off those interests.