8 ms·

The weird part for me is this: While the economy was evolving, Production was offshored from US for cost-reasons, but also in part to focus on higher-skill lab

The weird part for me is this: While the economy was evolving, Production was offshored from US for cost-reasons, but also in part to focus on higher-skill labor in US, delegating the low-skill mass-production to China. Over time, China also developed mid/high level skills, complemented their low-skill production offering with it and now competes in new industries, new tech, etc. So...to compete with China, the country with 4x the US-population, the solution is that low-skill labor needs to return to US....? Shouldn't instead the focus be to again foster mid/high-skill labor, moving the part that is offshored again towards low-skill labor...?

like_any_other 2y ago
The problem is ecosystem effects. High-tech industries evolve from and depend on low-tech ones. There is a limit to how much they can be separated.
digikata 2y ago
I think the mistake here is the model of low-skill/high-skill labor is not a useful distinction. Manufacturing is high skill period, however there are low-infrastructure and high-infrastructure products and factories. The labor wages themselves are a factor, but an increasingly minor factor in product costs. By bypassing investment in US manufacturing skills and infra, the US sat itself on the sidelines for the ability to build, staff, and supply modern low, medium and high infrastructure factories. It's not impossible to build back, but it would require long term stable policies to favor it at more levels than just tariffs.
- toomuchtodo 2y ago
  The solution is to pay everyone a living wage, regardless of job, and disconnect healthcare from employment. Lots of inertia against those ideas though. So, instead, "good manufacturing jobs" is the parroted point. Any job is a good job if you can live off of it. (tariffs do nothing to address labor shortages in healthcare, teaching, and other domestic service based sectors, for example)
  - ninetyninenine 2y ago
    That’s a solution of human rights and is orthogonal to becoming competitive to China. No question human rights needs to be fulfilled and we need to pay people living wages. But the conversation here has he orthogonal goal of being competitive with China as well. I can assure you just paying everyone living wages is one of the main reasons why we are not competitive with China. It’s the main reason why China is beating us today. So paying everyone living wages doesn’t really do anything to solve the problem because the products created by people who are paid living wages are by definition more expensive due to labor costs. What tariffs do is they allow us to pay people living wages and sell expensive products and still be competitive because products from China are tariffed to be the same price.
    - maxsilver 2y ago
      > So paying everyone living wages doesn’t really do anything to solve the problem because the products created by people who are paid living wages are by definition more expensive due to labor costs. They aren't though. In America, "Paying living wages" always means "pay way more", because America underpays labour and overcharges for literally everything (products, services, basic cost of living -- every product on American soil has a insane profit margin on it) In China, "Paying living wages" doesn't necessarily mean "pay labor more", because they have stronger control over pricing and margins, so it often actually means "make orgs charge way less". You end up with Chinese folks living in a major city in China, with a 2bed apartment that costs $200USD/month, and a meal out cost $2USD/each, cars that start at like $6k, and they get paid $5USD/hr, but they feel like they're living well, despite only making around $640USD/month, because they can save 10% of their income each month, and have like 40% of their income as discretionary spending, and still get to own their apartment. But in the US, a 2bed apartment in a big city like that costs at least $2,000/month or more, a meal out there costs at least $20/each, and a basic starter car starts at like $26k, so you can pay someone in a ostensibly-"high labor cost" job of $20/hr, and they feel like their constantly underwater, and have zero chance of ever owning a home, because they only have like 20% of their income as discretionary spending, and they can't save anything at all. (and that's before we even mention differences like how you don't have to worry about being hit with a crazy bill for an ER visit or an Ambulance in China, but Americans have to worry about that 24/7/365). (It's the same reason many American's dream of getting a job in Europe and leaving the US, because despite making less money-on-paper, you get to generate more real wealth and do so with less life risk and life stress) The Factories and the labor pool and the infrastructure being absent in the US is hard to solve for, of course -- but it isn't even the hardest part of any of this. The American view of capitalism would have to be completely rewritten to be more diverse, more equitable, and more inclusive to Americans who do actual labor, before Americans could be anywhere close to competitive with most of these Chinese industries.
- rickdeckard 2y ago
  Not disagreeing with you, but isn't the issue that the US stopped investing in the skills and infra which made mass-production low-skill in the first place? Instead, the offshore-destinations kept offering more and more services in the value-chain, until the entire skillset to actually create the low-skill labor processes to offshore was replaced with "let the offshore company manage".
  - digikata 2y ago
    Yes climbing the value chain was a necessity for nations like China. But in the US popularized in the 90's, was a business strategy trend that strongly discounted the value of long term capital investments - particularly for this discussion, investment in factories. They do require extra management attention and they do tie companies to strategies in longer time frames at lower margins - but they deliver long term value and long term synergistic growth benefits (in the vein of go slow to go fast). Many US business elected to chase short term growth, and short term and higher margins and minimize long term investments. See a list of leading US companies that are off of being king of the hill - Boeing, GE, Intel, ... leading industrial US companies continually divested from manufacturing, or shorted long term investment, not because it wasn't profitable, but because it wasn't profitable enough in the moment. It took decades, and many dividends and stock growth was taken in the middle, but the shortfall manifests in time.
    - tharmas 2y ago
      Agreed. Well articulated. >Many US business elected to chase short term growth, and short term and higher margins and minimize long term investments. I would like to add that this was due to the influence of Milton Friedman. He put the emphasis on shareholder returns being the most important, without considering the survival of the company itself.
      - paganel 2y ago
        More generally, the financialization of the US economy (and of the Western economy more generally speaking) has a big part of the blame in this. Yes, more evolved financial markets provided easier access capital, but, as it so happens in those types of situations, access to capital and enjoyment of said (liquid/financial) capital became a target in itself, the rest of society didn't matter. In fact, the whole (Western) society was moulded around (liquid/financial) capital, it became its raison d'être.
- rrrrrrrrrrrryan 2y ago
  > The labor wages themselves are a factor, but an increasingly minor factor in product costs. Not disagree with your main points, but labor inputs are still very much a huge part of product costs, and often the biggest driver of where to build a new factory when a company is scaling up. Companies aim to build their new factories wherever there's a sufficient pool of cheap labor with the necessary skills.
  - 9rx 2y ago
    > Companies aim to build their new factories wherever there's a sufficient pool of cheap labor with the necessary skills. Of course, even where labor cost is truly inconsequential, you would still do that as all the correlations that come alongside cheap labor are still very attractive to manufacturing.
- 486sx33 2y ago
  Actually I think it’s variation of this. Tariffs can protect high skill jobs with high value product output. They can also force the Chinese to make cheap stuff even cheaper ( back down below $1 goods plus tariffs ). We don’t want the Chinese making high value goods at slightly lower prices. We want Americans making high value goods and we want to push cheap stuff as cheap as possible. Next step is enforcing environmental rules on Chinese goods and requiring escrow of the funds to pay the Chinese in American accounts until the goods are inspected and pass.
  - vixen99 2y ago
    Yes, they could make more use of the Uyghurs. https://www.state.gov/forced-labor-in-chinas-xinjiang-region/ https://www.state.gov/forced-labor-in-chinas-xinjiang-region... not to mention other slaves. https://worldpopulationreview.com/country-rankings/countries-that-still-have-slavery https://worldpopulationreview.com/country-rankings/countries...
    - Kbelicius 2y ago
      Your second links puts the number of slaves in China at 4 per 1000. The USA is at 3.3 per 1000. Why not mention that the USA could make more use of their slaves?
      - ninetyninenine 2y ago
        Because patriotism demands that we never look at ourselves in the mirror.
  - seanmcdirmid 2y ago
    America already makes high value goods in China and takes most of the value from them since they did the IP and the software for those products. China desperately wants in on that, they are no longer happy making the product while America takes most of the profit! They would swap places with America in a heartbeat if that’s what Trump is offering.
- deleted 2y ago
  [deleted]
- TheOtherHobbes 2y ago
  The distinction is between high- and low- skill politicians and managers, not labour. One of the foundations of conservatism is the priority of hierarchy over effectiveness. In a conservative culture it doesn't matter how well things work as long as the right people in charge. We're seeing the limit of this now, where it's literally more important to maintain hierarchy by denying facts and rationality than to "lose face" by admitting that power isn't absolute. You can't run a modern country like this. You can't plan for the future, make effective decisions, govern, have a working legal system, build housing, create health care - anything at all - when all decisions are made according to the whims of a despot. Power and resources - including wealth - have to be distributed. Or at least there has to be the illusion they're somewhat distributed. Anything else guarantees terminal contraction and decay.
- mschuster91 2y ago
  > I think the mistake here is the model of low-skill/high-skill labor is not a useful distinction. IMHO it still is. There are tasks, especially in assembly, that for now require humans to do because robots can't match our dexterity. Stuff like mounting through-hole components like a cable from the battery compartment to the main PCB. That's a few seconds worth of time, and you need barely more than a few days worth of training to get a worker up to speed - a low-skill job. China, Thailand, Vietnam and a bunch of other places have an ample supply of people coming out of utter poverty, which means the pressure on wages is massive - a Chinese worker on average earns about 13200 dollars a year [1], an American worker is 3x-4x that amount and more if the shop is unionized. And on top of that, Chinese workers work 996, American or European workers have much MUCH more employee rights. The problem is, low-skill employment opportunities are going down and down because automation gets better. For now, China can compete because Chinese workers are cheaper than machines... but once that changes, it's going to get nasty. > The labor wages themselves are a factor, but an increasingly minor factor in product costs. There's soft factors as well. Stuff like workplace safety/OSHA regulations, environmental regulations... Silicon Valley is a bunch of Superfund sites from decades of toxic emissions. China? They barely have regulations in place, and other sweatshop countries are even worse. The core problem we're talking about anyway is that a certain percentage of any population is just, plain and simple, dumb as rocks. Over half the US population is barely literate [2]. No matter how good your education systems are, no matter how much money you invest into equality in schools, no matter how much you protect them from stuff like lead - they are dumb, will remain dumb, and probably their children will also remain dumb. In ye olde times you put them on farms, meatpacking or in factories so they had gainful employment... but that all went away, and now we got hordes of utterly dumb people with no hope of ever getting smart and, crucially, no hope of ever getting a meaningful job. [1] https://www.statista.com/statistics/743509/china-average-yearly-wages-in-manufacturing/ https://www.statista.com/statistics/743509/china-average-yea... [2] https://www.thenationalliteracyinstitute.com/post/literacy-statistics-2024-2025-where-we-are-now https://www.thenationalliteracyinstitute.com/post/literacy-s...
_bin_ 2y ago
Trump et al. really run a motte-and-bailey argument here. They woo reasonable people who agree that critical industries: food, energy, defense-adjacent, metals, etc. - must have substantial capacity on-shore or at least very near. They then flip to what amounts to massive handouts for his rust belt base, basically saying we should make everything here. The obvious answer is this: 1. it doesn't matter if our t-shirts are made in Bangladesh. 2. it does matter if our stuff is made in an enemy nation (china). 3. U.S. labor is too expensive to move back to mass manufacturing the way we used to do it, c.f. baumol's cost disease. 4. offshoring and illegal labor have suppressed investment in automation and manufacturing technology for decades, which will be painful to undo. The sensible outcome of these facts is 1. Focus on moving everything out of china to other cheap countries with reasonable levels of human capital. 2. Focus on re-shoring critical industries. 3. Launch moonshot investments into robotics and automation. Bringing back a big chunk of manufacturing is sustainable; bringing back jobs is not. 4. Invest in large-scale roll-out of SMR energy so we have reliable power for this new industrial build.
- deadfoxygrandpa 2y ago
  china isnt an enemy nation unless we decide we want to fight them
  - pixl97 2y ago
    Or, if they decided to take lands belonging to allies. Though after this administration I'm not sure we'll have any allies left.
    - seanmcdirmid 2y ago
      If Trump’s term ends with NATO still intact I’ll be surprised.
      - mr_toad 2y ago
        If the US left NATO the remaining members would have even more incentive to stick together.
Delphiza 2y ago
Moving the low-cost jobs offshore was fine until automation filled a lot of those jobs. Now the high skilled automation skills and infrastructure (production lines and robots) are also offshore. I have done my fair share of western factory tours and the number of people on the factory floor is soberingly low... they are simply not needed, as they line runs like a vast, complicated machine.
- seanmcdirmid 2y ago
  Japan led in automation in the 90s before the rise of China put a stop to those investments paying off. Now China is making those same investments at a time when the tech is much better. America could solve its manufacturing problem in the future just by importing China automation tech.
  - FpUser 2y ago
    >"America could solve its manufacturing problem in the future just by importing China automation tech." Assuming there is no embargo by then.
    - seanmcdirmid 2y ago
      It is theoretical, I also doubt China would help the USA develop like that directly and lose its advantage. We would have to trade something really valuable in return (like modern semiconductor or jet turbine tech).
recoup-papyrus 2y ago
[dead]

like_any_other 2y ago

The problem is ecosystem effects. High-tech industries evolve from and depend on low-tech ones. There is a limit to how much they can be separated.

digikata 2y ago

I think the mistake here is the model of low-skill/high-skill labor is not a useful distinction. Manufacturing is high skill period, however there are low-infrastructure and high-infrastructure products and factories. The labor wages themselves are a factor, but an increasingly minor factor in product costs. By bypassing investment in US manufacturing skills and infra, the US sat itself on the sidelines for the ability to build, staff, and supply modern low, medium and high infrastructure factories. It's not impossible to build back, but it would require long term stable policies to favor it at more levels than just tariffs.

toomuchtodo 2y ago
The solution is to pay everyone a living wage, regardless of job, and disconnect healthcare from employment. Lots of inertia against those ideas though. So, instead, "good manufacturing jobs" is the parroted point. Any job is a good job if you can live off of it. (tariffs do nothing to address labor shortages in healthcare, teaching, and other domestic service based sectors, for example)
- ninetyninenine 2y ago
  That’s a solution of human rights and is orthogonal to becoming competitive to China. No question human rights needs to be fulfilled and we need to pay people living wages. But the conversation here has he orthogonal goal of being competitive with China as well. I can assure you just paying everyone living wages is one of the main reasons why we are not competitive with China. It’s the main reason why China is beating us today. So paying everyone living wages doesn’t really do anything to solve the problem because the products created by people who are paid living wages are by definition more expensive due to labor costs. What tariffs do is they allow us to pay people living wages and sell expensive products and still be competitive because products from China are tariffed to be the same price.
  - maxsilver 2y ago
    > So paying everyone living wages doesn’t really do anything to solve the problem because the products created by people who are paid living wages are by definition more expensive due to labor costs. They aren't though. In America, "Paying living wages" always means "pay way more", because America underpays labour and overcharges for literally everything (products, services, basic cost of living -- every product on American soil has a insane profit margin on it) In China, "Paying living wages" doesn't necessarily mean "pay labor more", because they have stronger control over pricing and margins, so it often actually means "make orgs charge way less". You end up with Chinese folks living in a major city in China, with a 2bed apartment that costs $200USD/month, and a meal out cost $2USD/each, cars that start at like $6k, and they get paid $5USD/hr, but they feel like they're living well, despite only making around $640USD/month, because they can save 10% of their income each month, and have like 40% of their income as discretionary spending, and still get to own their apartment. But in the US, a 2bed apartment in a big city like that costs at least $2,000/month or more, a meal out there costs at least $20/each, and a basic starter car starts at like $26k, so you can pay someone in a ostensibly-"high labor cost" job of $20/hr, and they feel like their constantly underwater, and have zero chance of ever owning a home, because they only have like 20% of their income as discretionary spending, and they can't save anything at all. (and that's before we even mention differences like how you don't have to worry about being hit with a crazy bill for an ER visit or an Ambulance in China, but Americans have to worry about that 24/7/365). (It's the same reason many American's dream of getting a job in Europe and leaving the US, because despite making less money-on-paper, you get to generate more real wealth and do so with less life risk and life stress) The Factories and the labor pool and the infrastructure being absent in the US is hard to solve for, of course -- but it isn't even the hardest part of any of this. The American view of capitalism would have to be completely rewritten to be more diverse, more equitable, and more inclusive to Americans who do actual labor, before Americans could be anywhere close to competitive with most of these Chinese industries.
rickdeckard 2y ago
Not disagreeing with you, but isn't the issue that the US stopped investing in the skills and infra which made mass-production low-skill in the first place? Instead, the offshore-destinations kept offering more and more services in the value-chain, until the entire skillset to actually create the low-skill labor processes to offshore was replaced with "let the offshore company manage".
- digikata 2y ago
  Yes climbing the value chain was a necessity for nations like China. But in the US popularized in the 90's, was a business strategy trend that strongly discounted the value of long term capital investments - particularly for this discussion, investment in factories. They do require extra management attention and they do tie companies to strategies in longer time frames at lower margins - but they deliver long term value and long term synergistic growth benefits (in the vein of go slow to go fast). Many US business elected to chase short term growth, and short term and higher margins and minimize long term investments. See a list of leading US companies that are off of being king of the hill - Boeing, GE, Intel, ... leading industrial US companies continually divested from manufacturing, or shorted long term investment, not because it wasn't profitable, but because it wasn't profitable enough in the moment. It took decades, and many dividends and stock growth was taken in the middle, but the shortfall manifests in time.
  - tharmas 2y ago
    Agreed. Well articulated. >Many US business elected to chase short term growth, and short term and higher margins and minimize long term investments. I would like to add that this was due to the influence of Milton Friedman. He put the emphasis on shareholder returns being the most important, without considering the survival of the company itself.
    - paganel 2y ago
      More generally, the financialization of the US economy (and of the Western economy more generally speaking) has a big part of the blame in this. Yes, more evolved financial markets provided easier access capital, but, as it so happens in those types of situations, access to capital and enjoyment of said (liquid/financial) capital became a target in itself, the rest of society didn't matter. In fact, the whole (Western) society was moulded around (liquid/financial) capital, it became its raison d'être.
rrrrrrrrrrrryan 2y ago
> The labor wages themselves are a factor, but an increasingly minor factor in product costs. Not disagree with your main points, but labor inputs are still very much a huge part of product costs, and often the biggest driver of where to build a new factory when a company is scaling up. Companies aim to build their new factories wherever there's a sufficient pool of cheap labor with the necessary skills.
- 9rx 2y ago
  > Companies aim to build their new factories wherever there's a sufficient pool of cheap labor with the necessary skills. Of course, even where labor cost is truly inconsequential, you would still do that as all the correlations that come alongside cheap labor are still very attractive to manufacturing.
486sx33 2y ago
Actually I think it’s variation of this. Tariffs can protect high skill jobs with high value product output. They can also force the Chinese to make cheap stuff even cheaper ( back down below $1 goods plus tariffs ). We don’t want the Chinese making high value goods at slightly lower prices. We want Americans making high value goods and we want to push cheap stuff as cheap as possible. Next step is enforcing environmental rules on Chinese goods and requiring escrow of the funds to pay the Chinese in American accounts until the goods are inspected and pass.
- vixen99 2y ago
  Yes, they could make more use of the Uyghurs. https://www.state.gov/forced-labor-in-chinas-xinjiang-region/ https://www.state.gov/forced-labor-in-chinas-xinjiang-region... not to mention other slaves. https://worldpopulationreview.com/country-rankings/countries-that-still-have-slavery https://worldpopulationreview.com/country-rankings/countries...
  - Kbelicius 2y ago
    Your second links puts the number of slaves in China at 4 per 1000. The USA is at 3.3 per 1000. Why not mention that the USA could make more use of their slaves?
    - ninetyninenine 2y ago
      Because patriotism demands that we never look at ourselves in the mirror.
- seanmcdirmid 2y ago
  America already makes high value goods in China and takes most of the value from them since they did the IP and the software for those products. China desperately wants in on that, they are no longer happy making the product while America takes most of the profit! They would swap places with America in a heartbeat if that’s what Trump is offering.
deleted 2y ago
[deleted]
TheOtherHobbes 2y ago
The distinction is between high- and low- skill politicians and managers, not labour. One of the foundations of conservatism is the priority of hierarchy over effectiveness. In a conservative culture it doesn't matter how well things work as long as the right people in charge. We're seeing the limit of this now, where it's literally more important to maintain hierarchy by denying facts and rationality than to "lose face" by admitting that power isn't absolute. You can't run a modern country like this. You can't plan for the future, make effective decisions, govern, have a working legal system, build housing, create health care - anything at all - when all decisions are made according to the whims of a despot. Power and resources - including wealth - have to be distributed. Or at least there has to be the illusion they're somewhat distributed. Anything else guarantees terminal contraction and decay.
mschuster91 2y ago
> I think the mistake here is the model of low-skill/high-skill labor is not a useful distinction. IMHO it still is. There are tasks, especially in assembly, that for now require humans to do because robots can't match our dexterity. Stuff like mounting through-hole components like a cable from the battery compartment to the main PCB. That's a few seconds worth of time, and you need barely more than a few days worth of training to get a worker up to speed - a low-skill job. China, Thailand, Vietnam and a bunch of other places have an ample supply of people coming out of utter poverty, which means the pressure on wages is massive - a Chinese worker on average earns about 13200 dollars a year [1], an American worker is 3x-4x that amount and more if the shop is unionized. And on top of that, Chinese workers work 996, American or European workers have much MUCH more employee rights. The problem is, low-skill employment opportunities are going down and down because automation gets better. For now, China can compete because Chinese workers are cheaper than machines... but once that changes, it's going to get nasty. > The labor wages themselves are a factor, but an increasingly minor factor in product costs. There's soft factors as well. Stuff like workplace safety/OSHA regulations, environmental regulations... Silicon Valley is a bunch of Superfund sites from decades of toxic emissions. China? They barely have regulations in place, and other sweatshop countries are even worse. The core problem we're talking about anyway is that a certain percentage of any population is just, plain and simple, dumb as rocks. Over half the US population is barely literate [2]. No matter how good your education systems are, no matter how much money you invest into equality in schools, no matter how much you protect them from stuff like lead - they are dumb, will remain dumb, and probably their children will also remain dumb. In ye olde times you put them on farms, meatpacking or in factories so they had gainful employment... but that all went away, and now we got hordes of utterly dumb people with no hope of ever getting smart and, crucially, no hope of ever getting a meaningful job. [1] https://www.statista.com/statistics/743509/china-average-yearly-wages-in-manufacturing/ https://www.statista.com/statistics/743509/china-average-yea... [2] https://www.thenationalliteracyinstitute.com/post/literacy-statistics-2024-2025-where-we-are-now https://www.thenationalliteracyinstitute.com/post/literacy-s...

_bin_ 2y ago

Trump et al. really run a motte-and-bailey argument here. They woo reasonable people who agree that critical industries: food, energy, defense-adjacent, metals, etc. - must have substantial capacity on-shore or at least very near. They then flip to what amounts to massive handouts for his rust belt base, basically saying we should make everything here. The obvious answer is this: 1. it doesn't matter if our t-shirts are made in Bangladesh. 2. it does matter if our stuff is made in an enemy nation (china). 3. U.S. labor is too expensive to move back to mass manufacturing the way we used to do it, c.f. baumol's cost disease. 4. offshoring and illegal labor have suppressed investment in automation and manufacturing technology for decades, which will be painful to undo. The sensible outcome of these facts is 1. Focus on moving everything out of china to other cheap countries with reasonable levels of human capital. 2. Focus on re-shoring critical industries. 3. Launch moonshot investments into robotics and automation. Bringing back a big chunk of manufacturing is sustainable; bringing back jobs is not. 4. Invest in large-scale roll-out of SMR energy so we have reliable power for this new industrial build.

deadfoxygrandpa 2y ago
china isnt an enemy nation unless we decide we want to fight them
- pixl97 2y ago
  Or, if they decided to take lands belonging to allies. Though after this administration I'm not sure we'll have any allies left.
  - seanmcdirmid 2y ago
    If Trump’s term ends with NATO still intact I’ll be surprised.
    - mr_toad 2y ago
      If the US left NATO the remaining members would have even more incentive to stick together.

Delphiza 2y ago

Moving the low-cost jobs offshore was fine until automation filled a lot of those jobs. Now the high skilled automation skills and infrastructure (production lines and robots) are also offshore. I have done my fair share of western factory tours and the number of people on the factory floor is soberingly low... they are simply not needed, as they line runs like a vast, complicated machine.

seanmcdirmid 2y ago
Japan led in automation in the 90s before the rise of China put a stop to those investments paying off. Now China is making those same investments at a time when the tech is much better. America could solve its manufacturing problem in the future just by importing China automation tech.
- FpUser 2y ago
  >"America could solve its manufacturing problem in the future just by importing China automation tech." Assuming there is no embargo by then.
  - seanmcdirmid 2y ago
    It is theoretical, I also doubt China would help the USA develop like that directly and lose its advantage. We would have to trade something really valuable in return (like modern semiconductor or jet turbine tech).

recoup-papyrus 2y ago

[dead]