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> US manufacturing output is double that of China's on a per-capita basis. Only on a dollar value basis. And that's heavily skewed on how an item's value is ca

> US manufacturing output is double that of China's on a per-capita basis. Only on a dollar value basis. And that's heavily skewed on how an item's value is calculated. When you use $50 of parts (all made in China) to assemble a machine that you sold at $500 , $50 of GDP value is attributed to China while $450 of GDP value is attributed to the US. But who did more "manufacturing"?

starspangled 1y ago
> Only on a dollar value basis. Uh, yes. > And that's heavily skewed on how an item's value is calculated. An item's value is calculated according to what it is bought and sold for. That's how value is determined. What would you rather it "skew" towards? > When you use $50 of parts (all made in China) to assemble a machine that you sold at $500 , $50 of GDP value is attributed to China while $450 of GDP value is attributed to the US. But who did more "manufacturing"? If an American company can design and develop and sell a product that requires $50 of parts and people are willing to pay $500 for it, then clearly that company created an enormous amount of value, didn't it? By definition almost. Manufacturing output or value is not a function of the number of beads of sweat or drops of blood or hours in a factory to make something. It is how much value (i.e., what others are willing to pay for) the things you create.
- coliveira 1y ago
  > then clearly that company created an enormous amount of value No, it is more like these companies monopolized access to the high income market and exploited this inefficiency. It is similar to buying a stock for $10 then increasing the bid ask spread to sell it for $100.
  - starspangled 1y ago
    > No, it is more like these companies monopolized access to the high income market and exploited this inefficiency. It is similar to buying a stock for $10 then increasing the bid ask spread to sell it for $100. Okay so we have this scenario you constructed where the Chinese company produced great value without engaging in any IP theft or unbalanced terms of trade or currency manipulation and the American company simply took that and gouged prices with anticompetitive practices. What exactly is your question? The hypothetical American company in your example did not create value, by definition. I don't see how that's particularly useful though.
  - intended 1y ago
    This applies to a very specific type of constrained market, and does not generalize in this manner, making your example trivial to argue against, and then confuse readers. If access was monopolized, then no competition would exist. Competition very much exists, and has resulted in a massive amounts of growth and improvement globally.
- hakfoo 1y ago
  I suspect in many cases, the "value add" an American firm provides is an intangible. In the pre-tariff omnishambles world, I could buy a more or less equivalent widget for $18 branded with a recognizable American brand, for $12 as a KWJIBO non-brand delivered from Amazon, or for $6 more-or-less manufacturer direct from AliExpress. Amazon added $6 of value by saying "I can get it to you in a timely manner and offer a confidence-reinforcing return policy." The American brand added another $6 of value for "this can probably be sourced consistently and people won't look at you weird trying to get it Shenzhen Tchang Zu Shrimp Cannery And Electrolytic Capacitor Plant #5 onto the approved vendor list." They didn't actually improve the widget itself, just logistics around it. That means their value-add is extremely tenuous, and has a limited moat.
  - starspangled 1y ago
    The fact remains that the data we have says the value of US manufacturing is about 50% of that of China. You have your own perceptions of value of course, but that's not how value is actually calculated. The same as people who perceive China's manufacturing to be worthless because they produce cheap flimsy junk is also not an indication of any reality other than their own.
  - selimthegrim 1y ago
    Well, I never thought that Toby Jones barbecue and foot massage would have a resurrection, but here we go.
- int_19h 1y ago
  The main reason why the American company can do this is because we have borders that allow said company to move goods across them, but prevent the cheap Chinese labor from moving to US. If not for the latter, US would be mostly speaking Mandarin by now and things would be a lot cheaper (and salaries would be a lot lower).
- deleted 1y ago
  [deleted]
AnIrishDuck 1y ago
What other system of value are you using here? Bottle caps? Nostalgia? While the dollar remains the global reserve currency, this is just a wild theory of trade. If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie? (they clearly already do this everywhere they can)
- motorest 1y ago
  > If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie? If you pay attention, you'll notice that's what China is doing. For decades, China's GDP growth towered over the US's. Around 2015, China's GDP PPP overtook the US's.
  - amilios 1y ago
    but not GDP per capita in purchasing power, in that the US is still far ahead. China's GDP PPP is greater, but with 4 times the population.
  - AnIrishDuck 1y ago
    Growth is trivial to achieve when you are starting from zero. My footnote very much alludes to this. This is incidentally what the US did to powers like Britain a century and a half ago. I just find it amusing that in this theory of trade China has found a way to do all the work while the US does nothing and takes all the value. Perhaps all that extra money is not as easy to claim as the OP suggests. Maybe economies are changing and purely physical goods are becoming less valuable...
    - motorest 1y ago
      > Growth is trivial to achieve when you are starting from zero. China currently reports the second highest GDP in the world.
      - AnIrishDuck 1y ago
seanmcdirmid 1y ago
The IP is important. Not only did you use $50 in parts, but the design, software, and marketing were done in the states. One critical flaw in MAGA thinking is that these inputs are worthless: the full value of an iPhone comes from China because that’s where it was assembled even if most of the value was actually added in the USA. China wants to be on the other side of the value chain as well and really don’t mind swapping places with the US (and it looks like that will happen long term now due to Trumpism).
- adrian_b 1y ago
  The value of the American "IP" consists more in the might of the US government than in the actual value of that "IP". A few years ago, Huawei was in a clear path of becoming the biggest producer of smartphones in the world, with smartphones that by now were based on their own IP, including CPUs and modems, even if Huawei had started 20 years ago by buying smartphone IP from companies like Siemens (which had been reckless enough to sell it). At that time, the latest Huawei designs were superior in performance to those of Qualcomm and superior in performance per dollar to those of Apple. The result was that the US government has started a campaign of sabotage against Huawei, because they did not like the result of a "free market". A couple of years later everything has repeated when there was the danger that Chinese manufacturers of flash memories will overcome Micron. So the percentage that American "IP" takes in the products of other countries is only maintained by quasi-military actions of the US government, which treats any commercial rivals as enemies against which any sanctions are justified.
  - seanmcdirmid 1y ago
    China is definitely getting there, no doubt. They won't be a place where assembly just happens anymore, it will be more like robots assemble things and people mostly focus on IP/software/etc... The fairness of the competition between American and China in IP, I'm sure if you are heavy on one side or the other its obvious, but to me it seems like there is truth in China stealing secrets and there is truth in America using quasi-military actions to protect what is basically a monopoly on a segment of high-value goods. But whatever you think, what Trump is doing now ultimately benefits China and hurts America in the short and long term.

starspangled 1y ago

> Only on a dollar value basis. Uh, yes. > And that's heavily skewed on how an item's value is calculated. An item's value is calculated according to what it is bought and sold for. That's how value is determined. What would you rather it "skew" towards? > When you use $50 of parts (all made in China) to assemble a machine that you sold at $500 , $50 of GDP value is attributed to China while $450 of GDP value is attributed to the US. But who did more "manufacturing"? If an American company can design and develop and sell a product that requires $50 of parts and people are willing to pay $500 for it, then clearly that company created an enormous amount of value, didn't it? By definition almost. Manufacturing output or value is not a function of the number of beads of sweat or drops of blood or hours in a factory to make something. It is how much value (i.e., what others are willing to pay for) the things you create.

coliveira 1y ago
> then clearly that company created an enormous amount of value No, it is more like these companies monopolized access to the high income market and exploited this inefficiency. It is similar to buying a stock for $10 then increasing the bid ask spread to sell it for $100.
- starspangled 1y ago
  > No, it is more like these companies monopolized access to the high income market and exploited this inefficiency. It is similar to buying a stock for $10 then increasing the bid ask spread to sell it for $100. Okay so we have this scenario you constructed where the Chinese company produced great value without engaging in any IP theft or unbalanced terms of trade or currency manipulation and the American company simply took that and gouged prices with anticompetitive practices. What exactly is your question? The hypothetical American company in your example did not create value, by definition. I don't see how that's particularly useful though.
- intended 1y ago
  This applies to a very specific type of constrained market, and does not generalize in this manner, making your example trivial to argue against, and then confuse readers. If access was monopolized, then no competition would exist. Competition very much exists, and has resulted in a massive amounts of growth and improvement globally.
hakfoo 1y ago
I suspect in many cases, the "value add" an American firm provides is an intangible. In the pre-tariff omnishambles world, I could buy a more or less equivalent widget for $18 branded with a recognizable American brand, for $12 as a KWJIBO non-brand delivered from Amazon, or for $6 more-or-less manufacturer direct from AliExpress. Amazon added $6 of value by saying "I can get it to you in a timely manner and offer a confidence-reinforcing return policy." The American brand added another $6 of value for "this can probably be sourced consistently and people won't look at you weird trying to get it Shenzhen Tchang Zu Shrimp Cannery And Electrolytic Capacitor Plant #5 onto the approved vendor list." They didn't actually improve the widget itself, just logistics around it. That means their value-add is extremely tenuous, and has a limited moat.
- starspangled 1y ago
  The fact remains that the data we have says the value of US manufacturing is about 50% of that of China. You have your own perceptions of value of course, but that's not how value is actually calculated. The same as people who perceive China's manufacturing to be worthless because they produce cheap flimsy junk is also not an indication of any reality other than their own.
- selimthegrim 1y ago
  Well, I never thought that Toby Jones barbecue and foot massage would have a resurrection, but here we go.
int_19h 1y ago
The main reason why the American company can do this is because we have borders that allow said company to move goods across them, but prevent the cheap Chinese labor from moving to US. If not for the latter, US would be mostly speaking Mandarin by now and things would be a lot cheaper (and salaries would be a lot lower).
deleted 1y ago
[deleted]

AnIrishDuck 1y ago

What other system of value are you using here? Bottle caps? Nostalgia? While the dollar remains the global reserve currency, this is just a wild theory of trade. If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie? (they clearly already do this everywhere they can)

motorest 1y ago
> If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie? If you pay attention, you'll notice that's what China is doing. For decades, China's GDP growth towered over the US's. Around 2015, China's GDP PPP overtook the US's.
- amilios 1y ago
  but not GDP per capita in purchasing power, in that the US is still far ahead. China's GDP PPP is greater, but with 4 times the population.
- AnIrishDuck 1y ago
  Growth is trivial to achieve when you are starting from zero. My footnote very much alludes to this. This is incidentally what the US did to powers like Britain a century and a half ago. I just find it amusing that in this theory of trade China has found a way to do all the work while the US does nothing and takes all the value. Perhaps all that extra money is not as easy to claim as the OP suggests. Maybe economies are changing and purely physical goods are becoming less valuable...
  - motorest 1y ago
    > Growth is trivial to achieve when you are starting from zero. China currently reports the second highest GDP in the world.
    - AnIrishDuck 1y ago

seanmcdirmid 1y ago

The IP is important. Not only did you use $50 in parts, but the design, software, and marketing were done in the states. One critical flaw in MAGA thinking is that these inputs are worthless: the full value of an iPhone comes from China because that’s where it was assembled even if most of the value was actually added in the USA. China wants to be on the other side of the value chain as well and really don’t mind swapping places with the US (and it looks like that will happen long term now due to Trumpism).

adrian_b 1y ago
The value of the American "IP" consists more in the might of the US government than in the actual value of that "IP". A few years ago, Huawei was in a clear path of becoming the biggest producer of smartphones in the world, with smartphones that by now were based on their own IP, including CPUs and modems, even if Huawei had started 20 years ago by buying smartphone IP from companies like Siemens (which had been reckless enough to sell it). At that time, the latest Huawei designs were superior in performance to those of Qualcomm and superior in performance per dollar to those of Apple. The result was that the US government has started a campaign of sabotage against Huawei, because they did not like the result of a "free market". A couple of years later everything has repeated when there was the danger that Chinese manufacturers of flash memories will overcome Micron. So the percentage that American "IP" takes in the products of other countries is only maintained by quasi-military actions of the US government, which treats any commercial rivals as enemies against which any sanctions are justified.
- seanmcdirmid 1y ago
  China is definitely getting there, no doubt. They won't be a place where assembly just happens anymore, it will be more like robots assemble things and people mostly focus on IP/software/etc... The fairness of the competition between American and China in IP, I'm sure if you are heavy on one side or the other its obvious, but to me it seems like there is truth in China stealing secrets and there is truth in America using quasi-military actions to protect what is basically a monopoly on a segment of high-value goods. But whatever you think, what Trump is doing now ultimately benefits China and hurts America in the short and long term.