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> However you have a country (China) with an authoritarian government that makes favored industries subsidized. This is overlooking the forest for one tree. Th

> However you have a country (China) with an authoritarian government that makes favored industries subsidized. This is overlooking the forest for one tree. The thing is, mean chinese manufacturing wages are $25k/year (purchasing parity adjusted! $15k unadjusted) for a 49h week. That is the reason that so much manufacturing/industry has shifted there, not some nebulous "Chinese government subsidies" (not saying those are not a thing, just that they don't really matter all that much). > It’s hard to quantify the long term strategic and militaristic disadvantage to not being able to make anything yourself if a world war occurs. Certainly. But forcing low-skill industry to stay at a relevant size in a high-wage country is expensive business (compare agriculture, which is subsidized basically for exactly this reason) and not straightforward (see Jones act). Presenting tariffs as a viable alternative to taxation is just beyond ridicule, but that has not stopped people so far either...

bryanlarsen 2y ago
They could move to Bangladesh or Africa and pay $3k / year. They aren't. China has many advantages beyond cheap wages.
- myrmidon 2y ago
  Absolutely. You do need a minimum baseline for infrastructure, government stability and workforce. Most of Africa is just starting to slowly get there, Bangladesh is already very relevant for textile production. I would expect the same basic trend to repeat that we saw with electronics manufacturing in 90s Japan: First cheap products move (very wage sensitive), then the local sector expands, wages rise with the whole local industry moving up the value chain, then at some point local wages become high enough for the whole process to repeat with the next low-wage country... I think trying to block this trend off with tariffs is a futile waste of taxpayer money which american consumers are gonna pay for. Spending tax money to keep some degree of self-sufficiency in critical industries (like with agriculture) can be a solid idea if done sparingly and cleverly, but that is not how the current US admin has approached this...
gcnnbdff 2y ago
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coliveira 2y ago
Salaries are just a small part of the reason industry works in China. The bigger picture is that China invests in the development of an industrial chain. This has many aspects: infrastructure, education, training, housing, and of course tax incentives. The USA decided to stop investing in practically all of these. Even scientific research, the last area in which the US used to lead, is now in jeopardy from both sides: competition from China and internal cuts.
- myrmidon 2y ago
  I'll concede that having a solid baseline of infrastructure, (political) stability and a motivated/educated workforce is necessary, and China did well in building this up. But I strongly disagree with your conclusion. Lets assume that the US did all of those perfectly: - Brilliantly educated workers with the perfect ratio of industry specific knowledge/experience - Cheap housing near industry hubs built by the state - The best and cheapest to use ports, roads and railway networks on the planet - No tax on manufacturing workers income Some of those are ludicrous/unrealistic for the US to provide. But even if you managed to do all this-- that still does not make US manufacturing industry competitive. Because those US workers will still want a locally competitive wage instead of <10$/hour.
  - coliveira 2y ago
    The reason the US is not competitive is exactly because it doesn't spend the money needed for that. China did it. To be more concrete, if the government spends money to build housing, workers don't need to pay so much to have a home. If the gov spends money on public transportation, workers don't need to buy expensive cars just to get to the job. If it spends money on free health care, then workers don't need to pay for expensive insurance. If the US spent money on (near) free higher education, workers wouldn't need to pay high costs on student loans. These are all items that make the US uncompetitive with other nations.
    - myrmidon 2y ago
      > The reason the US is not competitive is exactly because it doesn't spend the money needed for that. You are making some kind of logical jump here that I can not follow. I just listed basically the absolute best that the US could have ever done-- but even in that absolute dream scenario (tax free income for manufactoring workers? I mean in what world do you see something like that ever actually happening?), the US is still not competitive in a direct comparison, because US workers have just no reason to work manufacturing for 10€/hour (when they make ~30/hour right now). You can stack all the incentives you want-- the gap in wages/standards is so large that apart from straight up paying the difference (in either tariffs or subsidies, and that is a lot of money), you are not going to make US manufacturing competitive in a head-on comparison.

bryanlarsen 2y ago

They could move to Bangladesh or Africa and pay $3k / year. They aren't. China has many advantages beyond cheap wages.

myrmidon 2y ago
Absolutely. You do need a minimum baseline for infrastructure, government stability and workforce. Most of Africa is just starting to slowly get there, Bangladesh is already very relevant for textile production. I would expect the same basic trend to repeat that we saw with electronics manufacturing in 90s Japan: First cheap products move (very wage sensitive), then the local sector expands, wages rise with the whole local industry moving up the value chain, then at some point local wages become high enough for the whole process to repeat with the next low-wage country... I think trying to block this trend off with tariffs is a futile waste of taxpayer money which american consumers are gonna pay for. Spending tax money to keep some degree of self-sufficiency in critical industries (like with agriculture) can be a solid idea if done sparingly and cleverly, but that is not how the current US admin has approached this...

gcnnbdff 2y ago

[dead]

coliveira 2y ago

Salaries are just a small part of the reason industry works in China. The bigger picture is that China invests in the development of an industrial chain. This has many aspects: infrastructure, education, training, housing, and of course tax incentives. The USA decided to stop investing in practically all of these. Even scientific research, the last area in which the US used to lead, is now in jeopardy from both sides: competition from China and internal cuts.

myrmidon 2y ago
I'll concede that having a solid baseline of infrastructure, (political) stability and a motivated/educated workforce is necessary, and China did well in building this up. But I strongly disagree with your conclusion. Lets assume that the US did all of those perfectly: - Brilliantly educated workers with the perfect ratio of industry specific knowledge/experience - Cheap housing near industry hubs built by the state - The best and cheapest to use ports, roads and railway networks on the planet - No tax on manufacturing workers income Some of those are ludicrous/unrealistic for the US to provide. But even if you managed to do all this-- that still does not make US manufacturing industry competitive. Because those US workers will still want a locally competitive wage instead of <10$/hour.
- coliveira 2y ago
  The reason the US is not competitive is exactly because it doesn't spend the money needed for that. China did it. To be more concrete, if the government spends money to build housing, workers don't need to pay so much to have a home. If the gov spends money on public transportation, workers don't need to buy expensive cars just to get to the job. If it spends money on free health care, then workers don't need to pay for expensive insurance. If the US spent money on (near) free higher education, workers wouldn't need to pay high costs on student loans. These are all items that make the US uncompetitive with other nations.
  - myrmidon 2y ago
    > The reason the US is not competitive is exactly because it doesn't spend the money needed for that. You are making some kind of logical jump here that I can not follow. I just listed basically the absolute best that the US could have ever done-- but even in that absolute dream scenario (tax free income for manufactoring workers? I mean in what world do you see something like that ever actually happening?), the US is still not competitive in a direct comparison, because US workers have just no reason to work manufacturing for 10€/hour (when they make ~30/hour right now). You can stack all the incentives you want-- the gap in wages/standards is so large that apart from straight up paying the difference (in either tariffs or subsidies, and that is a lot of money), you are not going to make US manufacturing competitive in a head-on comparison.