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There are two main reasons that individuals don't build their own houses and cars from scratch. 1) They don't know how. Specialization is a thing. But this is

There are two main reasons that individuals don't build their own houses and cars from scratch. 1) They don't know how. Specialization is a thing. But this is a thing that applies to individuals rather than nations. You don't need every person to know how to mine ore or hang drywall as long as somebody does. But a country the size of the US could certainly contain someone who knows how to do any given thing. 2) They get paid more to do something else. This is the argument that you get paid $200,000 to be a doctor and people who mine ore get paid $80,000 so it's better for you to do $2000 more work as a doctor and then pay someone $800 for ore than to put on a miner's hat yourself. But this is again something that applies to individuals rather than countries. There are people in the US who already get paid less than $80,000, or less than $30,000, or even who are unemployed. It makes no sense to convert doctors into miners but it makes plenty of sense for the people who are currently doing something that pays even less.

mechagodzilla 2y ago
So applying this to China and the USA - the USA has a median household income of ~$80k, and China, in terms of purchasing power parity, has a median household income of $32k. China has a workforce of ~775M people vs 163M people in the USA. The USA has ~7M unemployed people. For the USA to stop importing goods from China, we would need to 1) stop consuming those goods altogether (even if they're intermediate goods that go into things we do manufacture), or 2) employ US workers to make those goods instead of whatever they're currently doing (either employed or unemployed). Employed Americans largely earn a lot more than employed chinese people, and there just aren't very many unemployed Americans. Based on the value of imports to the US from China vs Chinese GDP($440B vs $17.8T), we import about 2.5% of their output, or the equivalent of ~20M people's output if we naively scale. I don't think there is any way around the fact that significantly reducing imports from other countries means we significantly reduce our consumption in absolute terms (i.e. we have a poorer standard of living), just out of spite for other countries.
- AnthonyMouse 2y ago
  > the equivalent of ~20M people's output if we naively scale Or about 12% of the US labor force. Meanwhile the 12th percentile US income is ~$22,000, i.e. less than the $32k median in China, and half of the jobs there are above that median. Obviously these numbers are all useless napkin math and none of it really works like that, but the premise isn't inherently absurd. If China is subsidizing manufacturing in order to capture manufacturing jobs and those jobs pay more than what many in the lowest quartile of the US are currently making, there are people who could be made better off by having those jobs back, and they'd still only be paid about what we're currently paying to China. And this before considering the general arguments about advantages to proximity of manufacturing, e.g. being able to talk to the people in the factory in your timezone in your language assists in product development so the location of the factory has an easier time developing new products. Which allows not just the manufacturing jobs but the whole rest of the company to be there, instead of those jobs starting to get eroded going forward.
  - SideQuark 2y ago
    The US manufactures more than ever, and the % of GDP in manufacturing has been flat for 70+ years now. The jobs didn’t leave, so they’re never coming back. They got automated. Just like we need vastly less farmers than in 1900 to farm more than ever, we need vastly manufacturing jobs to manufacture more than ever.
    - AnthonyMouse 2y ago
      Automation increases production efficiency. Jevon's paradox says this will generally increase consumption, and in fact it has, so US consumption has gone up but production is flat. The difference comes from increasing imports from manufacturing in China. If the US manufactured the additional stuff instead of importing it, it would have more manufacturing jobs than it does now.
      - aj7 2y ago
        At what wages? Come on, man. Do you know what the average wage is in China on an iPhone assembly line? The pressures on workers?
- supportengineer 2y ago
  It should be easy to reduce our consumption, the average American is consuming an enormous amount of useless junk.
master_crab 2y ago
Specialization also applies to nations. It is literally the foundation on which David Ricardo described the comparative advantage economic model. We can argue some nations have been pretty unfair with their tariff rates over the years, but let’s not ignore 200 years of economic science.
- AnthonyMouse 2y ago
  That applies when your model of a country is on the scale of something like Switzerland or Ireland, which is to say something on the scale of Pennsylvania or Colorado. The US is more on the scale of a continent than a country.
- WillPostForFood 2y ago
  Economics isn't science, and while Ricardo has some brilliant insights, it isn't a science; he barely models anything. It isn't even a hypothesis since you can never really test it. The core of his idea is this: the rate of profits can never be increased but by a fall in wages [...] If, therefore, by the extension of foreign trade, or by improvements in machinery, the food and necessaries of the labourer can be brought to market at a reduced price, profits will rise. I.e., use trade to get to lower wages
squigz 2y ago
> Specialization is a thing. But this is a thing that applies to individuals rather than nations. You don't need every person to know how to mine ore or hang drywall as long as somebody does. But a country the size of the US could certainly contain someone who knows how to do any given thing. When you scale up the thinking past rudimentaries like 'hanging drywall', it still applies to nations - instead of "do we have enough people who know how to mine ore" it's "do we have the capability of mining enough ore to meet our needs" and the various intricacies that come with those massive-scale problems - problems that are much more easily solved when backed by a global economy.
- AnthonyMouse 2y ago
  That's something different than specialization. Suppose you have enough mining production to meet half of domestic demand. Then you still have mining production, and know how to do it, and if it was necessary you could scale it up or reduce domestic consumption somewhat from the uses that aren't as important. Whereas if you outsource all of it or nearly so, i.e. actual specialization, it's a vulnerability whether to enemy action or just a single point of failure that subjects the whole world to unexpected localized turmoil in the only place that makes that.
bluGill 2y ago
You missed one: the person they can pay is better. I have rebuilt engines, but my cars go a mechanic because it is done in a day not a month. I can texture drywall but I need a lot more practice before it looks even like it should. I know 'scabs' who did a job while the union was on strike - the union people were 10x faster for similer quality - give a few months and they would be that fast. (The strike didn't last that long)
- oceanplexian 2y ago
  It’s interesting you brought up scabs because other than a local service economy, the entire concept of a union can’t exist in a globalized economy. Companies will simply pay labor overseas in countries where organized labor is illegal.
  - bluGill 2y ago
    Unions so long as they don't demand too much (normally money but could be other factors) can exist just fine. Experience is valuable as is having the factory close to the engineers. Local shipping helps. Automation means there are not many in the factory as well so you can pay more.
mmooss 2y ago
It's a revolutionary economic argument that specialization doesn't apply to countries, and you omitted organized groups of individuals called 'companies'. Economic structures are far larger and deeper than individuals (or companies). > a country the size of the US could certainly contain someone who knows how to do any given thing. Ore may be much cheaper to mine in another country - maybe because of geology or weather or because they have a great tradition of mining including more local skills, or because their economy is better structured for it - financiers with expertise in financing it, laws and regulations that are better designed (because of greater local knowledge). Those things actually happen. And don't think such specializations are transferrable; nobody really succeeds in doing that - just try changing one company's culture. Why haven't other Silicon Valleys and Apple Computers been developed, despite so many efforts? What is the sense of wasting resources on things the country doesn't do well, so some nationalists can ... do what?
- aj7 2y ago
  Exactly.
- AnthonyMouse 2y ago
  > It's a revolutionary economic argument that specialization doesn't apply to countries It isn't. The point of specialization is that people can become experts in things, so that not everyone has to be able to do everything. But the goal explicitly isn't for there to be only one person or only one company that knows how to do something -- that's a monopoly, and it's very bad. And if there are going to be a dozen companies that know how to do something (rather than needing every individual at every company to know how to do it), at least one of those companies can be in the US. > Ore may be much cheaper to mine in another country Ore isn't really specialization at all, it's resource availability. You simply cannot mine something in a country that doesn't have any. But the US is big enough to have almost everything and even to the extent that it doesn't, it can a) sell mining equipment to those countries that have it and b) ensure that it's more than one country acting as a supplier of those things, instead of allowing a dependency to form on a single one. > Why haven't other Silicon Valleys and Apple Computers been developed, despite so many efforts? Apple is an abnormal edge case because in the middle of their existence there was a monopolist (Microsoft) excluding all other competitors while keeping Apple around in an attempt to fend off antitrust scrutiny for their unlawful practices. That allowed Apple to a) invest in designing high quality products while Microsoft was stamping out any other competitors and b) build a strong brand (because the alternative was Microsoft). To replicate that in other circumstances you have a chicken and egg problem, because you need the scale to have the resources to design high quality products and build a strong brand, but you don't have those resources or that brand with which to achieve that scale. The only ones who do are the other large behemoths, but large incumbent bureaucracies tend to become mismanaged and there aren't actually that many of them. You also don't want others to replicate Apple, because Apple is a vertically integrated conglomerate. Everyone keeps trying to because they see Apple making a lot of money, but what they should be doing is playing "your margin is my opportunity" and establishing a competitive market where devices are made of fungible components using open standards, because that's how you defeat Apple instead of becoming Apple. It's no coincidence that PCs still have more desktop market share than Android has mobile market share, because the PC platform is still more open than mobile and to the extent that Microsoft has been losing market share it's because they're increasingly trying to lock down the platform and abuse their customers. If you have two closed platforms, the one with more resources is going to win, because then it's Apple vs. just you and Apple is bigger. But if you have an open platform, then it's Apple vs. everyone and everyone is bigger. > What is the sense of wasting resources on things the country doesn't do well, so some nationalists can ... do what? Not be dependent on a single supplier for 80-100% of the global production of some important product.
WalterBright 2y ago
> hang drywall I can frame, but I'm a disaster at hanging drywall. I finally hired a craftsman to do it, and zip slap bang he had hung it and it was straight and the joints were tight and even and I could hardly believe it.
aj7 2y ago
Nobody is concerned with any of that. A $15,000 Chinese mechanical engineer is just as productive as an American who expects $70,000 for his efforts. This repeats over and over, from the lowest level workers to the executives. It is destroying the lives of our non-elite workers, who in turn, voted for a mad man. It’s only going to get worse. The hunger for knowledge and development is much stronger outside the U.S. than inside. Tariffs are going to put our high tech industries under enormous pressure. There are two reasons. It makes sense to import parts and lower tech components of everything we manufacture because our trading partners have developed an economic advantage in the production of those types of parts. If we make materials and those lower tech factors of production more expensive, we kill ourselves. It’s economic suicide. And high tech industries live by exporting. In equilibrium, the market outside the U.S. is much larger than the internal market. As we are to China and the rest of the world, as Germany, roughly, is to us, we will prosper only by exporting high tech, advanced design products. Everything we do has to cultivate that process.
mr_toad 2y ago
> But this is again something that applies to individuals rather than countries. It applies to countries too. It’s the core argument of comparative advantage, and it’s been mainstream economic theory for over 200 years. Your argument is incomplete because you’re not considering the wages paid in other countries, and crucially, the exchange rate. https://en.wikipedia.org/wiki/Comparative_advantage https://en.wikipedia.org/wiki/Comparative_advantage

mechagodzilla 2y ago

So applying this to China and the USA - the USA has a median household income of ~$80k, and China, in terms of purchasing power parity, has a median household income of $32k. China has a workforce of ~775M people vs 163M people in the USA. The USA has ~7M unemployed people. For the USA to stop importing goods from China, we would need to 1) stop consuming those goods altogether (even if they're intermediate goods that go into things we do manufacture), or 2) employ US workers to make those goods instead of whatever they're currently doing (either employed or unemployed). Employed Americans largely earn a lot more than employed chinese people, and there just aren't very many unemployed Americans. Based on the value of imports to the US from China vs Chinese GDP($440B vs $17.8T), we import about 2.5% of their output, or the equivalent of ~20M people's output if we naively scale. I don't think there is any way around the fact that significantly reducing imports from other countries means we significantly reduce our consumption in absolute terms (i.e. we have a poorer standard of living), just out of spite for other countries.

AnthonyMouse 2y ago
> the equivalent of ~20M people's output if we naively scale Or about 12% of the US labor force. Meanwhile the 12th percentile US income is ~$22,000, i.e. less than the $32k median in China, and half of the jobs there are above that median. Obviously these numbers are all useless napkin math and none of it really works like that, but the premise isn't inherently absurd. If China is subsidizing manufacturing in order to capture manufacturing jobs and those jobs pay more than what many in the lowest quartile of the US are currently making, there are people who could be made better off by having those jobs back, and they'd still only be paid about what we're currently paying to China. And this before considering the general arguments about advantages to proximity of manufacturing, e.g. being able to talk to the people in the factory in your timezone in your language assists in product development so the location of the factory has an easier time developing new products. Which allows not just the manufacturing jobs but the whole rest of the company to be there, instead of those jobs starting to get eroded going forward.
- SideQuark 2y ago
  The US manufactures more than ever, and the % of GDP in manufacturing has been flat for 70+ years now. The jobs didn’t leave, so they’re never coming back. They got automated. Just like we need vastly less farmers than in 1900 to farm more than ever, we need vastly manufacturing jobs to manufacture more than ever.
  - AnthonyMouse 2y ago
    Automation increases production efficiency. Jevon's paradox says this will generally increase consumption, and in fact it has, so US consumption has gone up but production is flat. The difference comes from increasing imports from manufacturing in China. If the US manufactured the additional stuff instead of importing it, it would have more manufacturing jobs than it does now.
    - aj7 2y ago
      At what wages? Come on, man. Do you know what the average wage is in China on an iPhone assembly line? The pressures on workers?
supportengineer 2y ago
It should be easy to reduce our consumption, the average American is consuming an enormous amount of useless junk.

master_crab 2y ago

Specialization also applies to nations. It is literally the foundation on which David Ricardo described the comparative advantage economic model. We can argue some nations have been pretty unfair with their tariff rates over the years, but let’s not ignore 200 years of economic science.

AnthonyMouse 2y ago
That applies when your model of a country is on the scale of something like Switzerland or Ireland, which is to say something on the scale of Pennsylvania or Colorado. The US is more on the scale of a continent than a country.
WillPostForFood 2y ago
Economics isn't science, and while Ricardo has some brilliant insights, it isn't a science; he barely models anything. It isn't even a hypothesis since you can never really test it. The core of his idea is this: the rate of profits can never be increased but by a fall in wages [...] If, therefore, by the extension of foreign trade, or by improvements in machinery, the food and necessaries of the labourer can be brought to market at a reduced price, profits will rise. I.e., use trade to get to lower wages

squigz 2y ago

> Specialization is a thing. But this is a thing that applies to individuals rather than nations. You don't need every person to know how to mine ore or hang drywall as long as somebody does. But a country the size of the US could certainly contain someone who knows how to do any given thing. When you scale up the thinking past rudimentaries like 'hanging drywall', it still applies to nations - instead of "do we have enough people who know how to mine ore" it's "do we have the capability of mining enough ore to meet our needs" and the various intricacies that come with those massive-scale problems - problems that are much more easily solved when backed by a global economy.

AnthonyMouse 2y ago
That's something different than specialization. Suppose you have enough mining production to meet half of domestic demand. Then you still have mining production, and know how to do it, and if it was necessary you could scale it up or reduce domestic consumption somewhat from the uses that aren't as important. Whereas if you outsource all of it or nearly so, i.e. actual specialization, it's a vulnerability whether to enemy action or just a single point of failure that subjects the whole world to unexpected localized turmoil in the only place that makes that.

bluGill 2y ago

You missed one: the person they can pay is better. I have rebuilt engines, but my cars go a mechanic because it is done in a day not a month. I can texture drywall but I need a lot more practice before it looks even like it should. I know 'scabs' who did a job while the union was on strike - the union people were 10x faster for similer quality - give a few months and they would be that fast. (The strike didn't last that long)

oceanplexian 2y ago
It’s interesting you brought up scabs because other than a local service economy, the entire concept of a union can’t exist in a globalized economy. Companies will simply pay labor overseas in countries where organized labor is illegal.
- bluGill 2y ago
  Unions so long as they don't demand too much (normally money but could be other factors) can exist just fine. Experience is valuable as is having the factory close to the engineers. Local shipping helps. Automation means there are not many in the factory as well so you can pay more.

mmooss 2y ago

It's a revolutionary economic argument that specialization doesn't apply to countries, and you omitted organized groups of individuals called 'companies'. Economic structures are far larger and deeper than individuals (or companies). > a country the size of the US could certainly contain someone who knows how to do any given thing. Ore may be much cheaper to mine in another country - maybe because of geology or weather or because they have a great tradition of mining including more local skills, or because their economy is better structured for it - financiers with expertise in financing it, laws and regulations that are better designed (because of greater local knowledge). Those things actually happen. And don't think such specializations are transferrable; nobody really succeeds in doing that - just try changing one company's culture. Why haven't other Silicon Valleys and Apple Computers been developed, despite so many efforts? What is the sense of wasting resources on things the country doesn't do well, so some nationalists can ... do what?

aj7 2y ago
Exactly.
AnthonyMouse 2y ago
> It's a revolutionary economic argument that specialization doesn't apply to countries It isn't. The point of specialization is that people can become experts in things, so that not everyone has to be able to do everything. But the goal explicitly isn't for there to be only one person or only one company that knows how to do something -- that's a monopoly, and it's very bad. And if there are going to be a dozen companies that know how to do something (rather than needing every individual at every company to know how to do it), at least one of those companies can be in the US. > Ore may be much cheaper to mine in another country Ore isn't really specialization at all, it's resource availability. You simply cannot mine something in a country that doesn't have any. But the US is big enough to have almost everything and even to the extent that it doesn't, it can a) sell mining equipment to those countries that have it and b) ensure that it's more than one country acting as a supplier of those things, instead of allowing a dependency to form on a single one. > Why haven't other Silicon Valleys and Apple Computers been developed, despite so many efforts? Apple is an abnormal edge case because in the middle of their existence there was a monopolist (Microsoft) excluding all other competitors while keeping Apple around in an attempt to fend off antitrust scrutiny for their unlawful practices. That allowed Apple to a) invest in designing high quality products while Microsoft was stamping out any other competitors and b) build a strong brand (because the alternative was Microsoft). To replicate that in other circumstances you have a chicken and egg problem, because you need the scale to have the resources to design high quality products and build a strong brand, but you don't have those resources or that brand with which to achieve that scale. The only ones who do are the other large behemoths, but large incumbent bureaucracies tend to become mismanaged and there aren't actually that many of them. You also don't want others to replicate Apple, because Apple is a vertically integrated conglomerate. Everyone keeps trying to because they see Apple making a lot of money, but what they should be doing is playing "your margin is my opportunity" and establishing a competitive market where devices are made of fungible components using open standards, because that's how you defeat Apple instead of becoming Apple. It's no coincidence that PCs still have more desktop market share than Android has mobile market share, because the PC platform is still more open than mobile and to the extent that Microsoft has been losing market share it's because they're increasingly trying to lock down the platform and abuse their customers. If you have two closed platforms, the one with more resources is going to win, because then it's Apple vs. just you and Apple is bigger. But if you have an open platform, then it's Apple vs. everyone and everyone is bigger. > What is the sense of wasting resources on things the country doesn't do well, so some nationalists can ... do what? Not be dependent on a single supplier for 80-100% of the global production of some important product.

WalterBright 2y ago

> hang drywall I can frame, but I'm a disaster at hanging drywall. I finally hired a craftsman to do it, and zip slap bang he had hung it and it was straight and the joints were tight and even and I could hardly believe it.

aj7 2y ago

Nobody is concerned with any of that. A $15,000 Chinese mechanical engineer is just as productive as an American who expects $70,000 for his efforts. This repeats over and over, from the lowest level workers to the executives. It is destroying the lives of our non-elite workers, who in turn, voted for a mad man. It’s only going to get worse. The hunger for knowledge and development is much stronger outside the U.S. than inside. Tariffs are going to put our high tech industries under enormous pressure. There are two reasons. It makes sense to import parts and lower tech components of everything we manufacture because our trading partners have developed an economic advantage in the production of those types of parts. If we make materials and those lower tech factors of production more expensive, we kill ourselves. It’s economic suicide. And high tech industries live by exporting. In equilibrium, the market outside the U.S. is much larger than the internal market. As we are to China and the rest of the world, as Germany, roughly, is to us, we will prosper only by exporting high tech, advanced design products. Everything we do has to cultivate that process.

mr_toad 2y ago

> But this is again something that applies to individuals rather than countries. It applies to countries too. It’s the core argument of comparative advantage, and it’s been mainstream economic theory for over 200 years. Your argument is incomplete because you’re not considering the wages paid in other countries, and crucially, the exchange rate. https://en.wikipedia.org/wiki/Comparative_advantage https://en.wikipedia.org/wiki/Comparative_advantage