Comment by maxklein | Hacker News Reader

Comment by maxklein | Hacker News Reader

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China is taking all the massive cash it is making now because there is no other really big and cheap factory, and sticking it into infrastructure. Buildings, roads, subways, minority villages - all of that is being built up.

Even if you have a crash, a built road is still there and a built office still exists. Pudong is empty because the offices are expensive and it's not really in town - if a crash happens that forces the government to reconsider whom they want to target pudong at, then there will be enough people moving in there when the prices are right.

China is not developed, it's developing. It's not borrowing from the future - the U.S is borrowing from the future and giving it to china. China is taking the money and building infrastructure.

Property is not expensive in china. There is no excessive inflation or speculation. China has the typical bubble of any rapidly growing economy, but the huge internal market, massive infrastructure development, and large population of highly educated people, and the introduction of chinese businessmen to secondary markets in Africa and South America mean that the fundamentals of the chinese economy are fine. If there is any bubble, it will blow over and growth will continue.

Infrastructure for infrastructure's sake? If it crashes and forces the government to re-think things, you think this happens instantly? That crash is figuring things out and filling up the excess capacity.

Better to spend it on roads than on cheap Chinese merchandise.

I happen to like cheap chinese merchandise. I'd rather pay $1500 for a Macbook Pro manufactured there than $2000 for one manufactured here.

Long term that's a losing strategy. It means you are willing to export all your production facilities to another country, creating a massive trade-imbalance in the process.

Think about how strange it is that not just your macbook, but almost everything you can buy has been manufactured on the other side of the planet, can be transported, imported and still be sold cheaper than you could produce it locally.

It's a bit like selling your birthright.

Also, don't forget that those workers abroad are usually working in circumstances that local authorities would not tolerate.

A nice bit of backstory about moving production to China.

A few years ago, rubbermaid was forced to raise its prices because of the developments on the raw materials market.

Wall-mart refused to accept the rise, dropped the rubbermaid product line, rubbermaid filed for bankruptcy, and then the whole production was moved to China and wall-mart signed a distribution deal with the new owners of the moulds.

No, all it means I'd prefer Chinese people to do what they're good at, and Americans do what they're good at. If we can't manufacture cost-effectively in this country, then it's fine for it to happen somewhere else. I don't view manufacturing plants as a birthright.

Manufacturing cost effectively and manufacturing cost effectively while maintaining workplace safety, paying a living wage and respecting the environment are two different things, and it is the latter that you are comparing with the former.

So the only reason why you can buy that stuff manufactured in China cheaper is because of a combination of lack of respect for human beings, sloppy environmental controls and unsafe work place practices.

If those were brought up to the same standards that are held in the developed countries the prices would be roughly the same after import duties and transportation costs are figured in.

> Manufacturing cost effectively and manufacturing cost effectively while maintaining workplace safety, paying a living wage and respecting the environment are two different things, and it is the latter that you are comparing with the former.

It would be interesting to see some objective measurements about how much of the cost difference is explained by which differences in practice. For example, I think the "living wage" paid to manufacturing employees in the U.S. frequently exceeds the real living wage by a substantial margin, which they exact from their employers via a monopoly on labor (unions).

Let me give you just one example, not even looking at the cost of waste processing and such, because they don't apply to this story.

A friend of mine is an interesting character, something of a mechanical/electrical genius, he can literally fix any machinery.

One of his jobs involved flying to China to help with the repair of a machine that mass produced latex condoms.

While he was there the proud owner of the condom factory announced he had just finished the creation of a factory for car jacks that were sold in large numbers to the big three car manufacturers for inclusion with their vehicles.

He got a tour of the 'new' factory.

He described a scene straight out of the worst of the beginnings of the industrial age. Workers, mostly women and children stood at endless tables in very bad light operating hand operated machine tools and tool-and-die stamping machines.

Plenty of them were missing fingers or worse, and the pace was literally feverish, the noise deafening.

It was the most unsafe machine shop he has ever seen and he's been in quite a few of them. Now, arguably this is low tech stuff, not comparable with your macbook, and I'd hope that Apple held their suppliers to a higher standard.

But responsible waste management and safety cost a lot of money when you factor them in to the end price of a product, no matter whether it's a nike shoe, a macbook or a car jack.

Fair enough, but Apple apparently has very stringent inspection practices with the factories it maintains overseas in order to ensure things like this aren't going on. Yet they still choose to do business here rather than there. I admit it's possible they are simply lying about these practices, but I think it's more likely that a substantial portion of the savings have nothing to do with human rights or basic environmental issues.

Even supposing Apple has perfect inspections, the workers only need money to buy goods on their local market - and their local goods and services going to be much cheaper because they're manufactured under those same poor working conditions. So Apple still gains from Chinese working conditions.

"So the only reason why you can buy that stuff manufactured in China cheaper is because of a combination of lack of respect for human beings, sloppy environmental controls and unsafe work place practices."

I wonder if it is so easy, though. I don't like the bad conditions in factories and exploitation of labor. On the other hand, if the alternative is no factories and no work, perhaps the awful factory is the better option? It's not as if those workers would go home to their luxury weekend lofts if the factories would be shut down.

Just a thought to throw into the ring - I am not sure what is wrong or right in this case (unless you look at the bigger picture, political system or whatever is causing poverty).

The only thing Americans are better at than the Chinese are jobs that require a lot of America-specific knowledge (Lawyers, marketers) and doing service jobs that require proximity (doctors, gardeners).

This idea that people in developing countries can't compete with us in software or engineering or whatever is bizarre, slightly racist, and without a much basis in reality (since they already do).

I don't disagree with you, but the fact remains that they have a competitive advantage in manufacturing at the current juncture. That's what I meant by "what Chinese people are good at."

Wow, that's a pretty arrogant/offensive post. I would assume you were trolling if I saw this on any other site.

You are really suggesting that violating countless human rights laws, more or less using slavery, etc. is how one can "manufacture cost-effectively"? I wish people who felt like that were apprehended and forced to work in such places...

> more or less using slavery

My understanding is that most Chinese people working in factories have the option to go back to subsistence farming if they wish.

So they can go back to themselves and their family having almost literally nothing.

What is offensive about your post is the suggestion that the US is somehow "not good at" production because we don't have the option to utterly disregard human rights and abuse the employer power to give people an "offer they can't refuse".

We all buy, indeed rely on being able to buy, this cheap stuff, so I didn't intend to single you out as evil for also doing so. One just has to remember we have such low prices now because humans somewhere far away are being treated inhumanely. It is unlikely that this will continue indefinitely.

> built road is still there and a built office still exists

You could equally well say this of a house foreclosed on by a bank in the U.S. during the housing crisis. But do you really have any doubt that such houses lying fallow and the resources that go into reselling them are both economic losses? The same will be and is true of the empty offices and untravelled roads in China.

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