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Comment by quanticle | Hacker News Reader

Advanced economies must still make things, but there's no rule that says that those things have to be made by people. In inflation-adjusted dollar value terms, the value of US manufacturing has never been higher. In employment terms, it's never been lower. While there are those who blame outsourcing for that, the vast majority of manufacturing job losses have been due to automation, rather than competition from abroad.

For example, look at this video of a MillTurn M60: https://www.youtube.com/watch?v=81UjjSH2iFw. This one machine replaces an entire shop floor of lathes and mills... and all their operators, too.

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The anomaly we observe today is caused by the fact that the profit from efficiency gains in production has been reaped almost entirely by the upper entrepreneurial class. Even if a house can be built much faster and more efficiently, it isn't more affordable to the average working man.

The average cost per area unit to build a new house has remained roughly stable for the past 40 years, houses are mostly more expensive because they are bigger (and because the land they sit on is often very expensive).

The profit reaped by the house buyer is in the significantly higher quality and comfort (and safety and energy efficiency) of an average home built today vs. an average home built 40 years ago, if not in the price actually paid. However, I would venture a guess that if you contracted to build a house to 1970s standards (leaving aside the legalities of doing that), you'd come in significantly below the average cost of new builds.

https://www.aei.org/publication/todays-new-homes-are-1000-sq...

This assumes the builders and buyers of houses are on the same page. Instead builders generally go up market and lower income buyers are stuck with older homes. Over time the U.S. economy is suck with aging BMW's instead of civics.

You often see the same disconnect between efficency's and 1BR apartments.

PS: Even really cheap things are missing. Such as a drain in a kitchen / bathroom incase of a leak or overflow. Ductwork in the walls for cables. Insulation tends to be half assed unless required for code, because it's not visible and builders are not suck with energy bills. Let alone something like solar hot water heaters.

Drop back one level of indirection and it looks like houses are more expensive because people want them to be more expensive.

Edit: I've tried to short ( by buying cheap ) this process multiple times and failed. You must be able to control timing of sale of the property or it won't work. And people who have credit now want more expensive property for inscrutable reasons ( like not understanding investment v. expenses ).

> Drop back one level of indirection and it looks like houses are more expensive because people want them to be more expensive.

Houses are more expensive because they're built mostly for the people who can afford more house.

What is considered a house has changed significantly, our expectation have grown both in size and amenities. Additionally, land use restrictions and migration have caused disproportionate demand in certain areas drastically increasing the cost.

This is wrong.

The drastic increase in land prices has been driven by untaxing land (e.g. prop 13), allowing the stream of rents derived from land monopolization to be privatized.

That, combined with rock bottom interest rates (driving down mortgage requirements) and opening property markets to wealthy foreigners has driven up the cost of property in coastal cities precipitously.

If interest rates and property taxes were jacked up, property prices would fall once again just as precipitously as they rose.

I agree with most of your comment. I never understood the idea behind prop 13. A naive interpretation seems to be that it lowers taxes on the one item where dead weight loss is very low. This is in addition to the argument that it's a plain handout to the rentier class.

>That, combined with rock bottom interest rates (driving down mortgage requirements)

Do changes in interest rates affect underwriting requirements? I have to admit that I don't know anything about mortgages, but they always looked like volatility products to me.

I do agree that the fall in interest rates has caused property prices to increase. This seems to be related to the fall in return on capital so it's unclear to me how rates might be "jacked up" and why that might be desirable.

>A naive interpretation seems to be that it lowers taxes on the one item where dead weight loss is very low.

The deadweight loss of a land tax is zero until it's raised above the unimproved rental yield of the land.

Lowering it is purely a mechanism for moving money into the pockets of land owners.

A land tax is more efficient than a property tax, but a higher property tax approximates a land tax sufficiently that the deadweight loss is minimal.

>Do changes in interest rates affect underwriting requirements?

Yes, since with lower interest rates you can afford a more expensive property since your monthly repayments will be lower.

That in turn pushes up the value of housing as people take out bigger and bigger mortgages to try and keep up with rising prices.

You can't understand prop 13 without understanding the environment in which it was passed. The price of houses was shooting up 20-30% a year, and people who had owned their houses for decades were being forced to sell because they couldn't pay the taxes.

The idea that somehow a higher property tax will keep prices under control is not borne out by experience.

Why on earth were property taxes rising along with the price of housing? Instead of collecting a flat percentage of the home value, the cities/state could have just divided the taxes they were going to collect across all properties, proportionate to their value.

Just because there's a property value boom doesn't mean that the regional budgets should expand by 20% year over year...

Where I lived pre-prop 13 taxes were based purely on the assessed value of the house. If the assessed value doubled in five years, so did the taxes. And there was no cap on tax rates.

I don't know if it was a state-level thing or if tax districts all did their own calculations back then.

> You can't understand prop 13 without understanding the environment in which it was passed. The price of houses was shooting up 20-30% a year, and people who had owned their houses for decades were being forced to sell because they couldn't pay the taxes.

Is that very different from the present day, in which there is very little property tax?

That's my point. It wasn't different, so people who say getting rid of prop 13 will somehow cause house prices to fall are probably wrong.

Most likely. But we don't know. For all we know, what's driving property prices is out-of-area investment. It almost certainly isn't rising wages.

Land prices are skyrocketing in NY, CA, London, Mumbai, Delhi, Beijing and Singapore, among many other places.

I didn't know that prop 13 applied in Beijing - I thought that was a CA law. I also didn't know that India and China changed their laws and allowed foreigners to buy land.

Blame the foreigners! Trump 2016! Or if you happen to live in Maharashtra, yay MNS! Mumbai for Marathis!

(For those unfamiliar, Trump is an American politician who believes Americans are lazy, greedy and stupid, and can't compete economically without violent thugs hindering the competition. MNS is a party that holds these same beliefs about Marathis.)

None of those cities had particularly high land taxes in the first place. CA is simply where property taxes are the most ridiculously low (thanks to prop 13).

Low interest rates has yield chasers looking for investments all over the globe. Additionally, most countries lowered their interest rates in response to the US doing so in order to prevent a sudden and sharp increase in their currencies via the carry trade.

NJ has property taxes 3x CA and has experienced a similar rise in prices.

https://wallethub.com/edu/states-with-the-highest-and-lowest...

What evidence do you have that some change in property taxes (e.g. Prop 13) has occurred simultaneously and globally and is somehow related to skyrocketing land prices?

Should I mention interest rates a third time?

I presume you realize that New Jersey has the same interest rates as everywhere else in the US?

I didn't disagree with you that low interest rates spur investment (including investment in land). It was the blaming foreigners and prop 13 that I was taking issue with.

https://www.wnyc.org/story/how-foreign-investment-driving-ho...

I can't imagine how the idea that higher property taxes = lower property prices & vice versa should be controversial.

I'm not disputing that either. I'm disputing the specific fact that Prop 13 has driven the simultaneous global increase in property values. You could certainly reduce real estate prices by raising taxes on them - that would just be a one-off drop rather than the continuous increase we've seen.

It's ridiculous to blame foreigners for the NIMBY policies that prevent building enough housing in NYC, SF, Mumbai, etc. If foreigners want to buy lots of housing we should just build more of it and sell to them. Trumpkins should at least aim for consistency, rather than simultaneously complaining when Mexicans sell us things and also complaining when Chinese buy things from us.

Is there anything that those foreigners can do to avoid being blamed for our problems? Let me guess, just pay for the wall?

From your article: “The money coming from China is really helping some projects get literally off the ground, and it’s increasing our housing stock

NYC != NYS NYC != Buffalo, NY Brooklyn != Staten Island Prospect Heights !=Great Kills Frankly, within a few blocks within a neighborhood inside NYC, you can get a ton of variability of pricing for all sorts of reasons.

I can name at least one Hamlet in NYS, and possibly one in NJ that had housing prices rise as taxes rose to among the highest in the state, if not the country. Conversely, I know of at least one town in NYS, and possibly Jersey, that effectively saw the reverse (lowered effective taxes, property values dropped)

The state of California versus San Fransisco has just as many issues. The pricing difference between SF versus Sacramento is huge.

People buy real estate, which is not the same as land, mind you, for all sorts of reasons The View, Neighborhood Amenities, Investments, transportation, it has sidewalks, the house has wood and not steel beams, what have you

China doesn't have property taxes at all.

In reality manufacturing costs of houses became cheaper.

Prefabricated buildings are nowadays pretty popular in europe and can be built in a very short time.

Even brick & mortar houses became cheaper.

Our 140m² house in a suburb of a German 300k city was only 180k€ right after the start of the financial crisis.

> What is considered a house has changed significantly

Houses have been relatively unchanged compared to other things like cars and computers. In fact, most people want little more than just a roof.

Underfloor heating, LED lighting, solar heaters, PV on the roof, heat pumps etc.

A lot of this is nothing new. Solar heaters were around in the 70s (though not that common), heat pumps have been around since the 70s, LED lighting has almost nothing to do with house construction (you just screw in an LED bulb now instead of a CF bulb or incandescent bulb, the Edison socket remains the same), and I don't think underfloor heating is all that common (nor is it new, they've had that since the 70s too). PV on the roof has nothing to do with house construction either; it's equally easy to add it to a new house as an old one. Heat pumps are really the only thing here which have a big effect on the design and construction of a house, because of the need for ducting, which really, really old houses usually don't have. But if your house is 40 years old or less, it was probably built with ducting for a central heating system of some kind, so putting in a heat pump isn't a big deal. Even on an old house, it's not that hard to retrofit one if you put the ducting in the attic.

Face it, house construction really hasn't changed much in a century, and definitely not since the 1950s. We're (in the US) still using 2x4 lumber assembled on-site, making walls with gypsum board, etc. Even "manufactured houses" use most of the same techniques and materials.

It certainly has changed since the 50s! You could still get good 2x4 stud lumber in the 50s.~

Thanks to mandatory building codes, innovation in building technique is basically outlawed. For instance, a 4"-thick monolithic concrete dome with basalt fiber reinforcement would likely survive a direct meteorite strike, but would not be code-compliant. The minimum thickness of a concrete wall assumes both a flat wall and steel rebar that may corrode, swell, and cause spalling in a wall less than 8" thick. Basalt fiber composite rebar does not count as reinforcement in some places.

Never mind about inflatable forms, building-sized 3-d printers, self-consolidating concrete, self-repairing concrete, translucent concrete, cast fused stone, centralized fiber-optic building lighting, 48V DC power outlets, advanced composite plumbing, composting toilets, or any other idea you might have that would be 1000x better than the bog-standard stick-built box, on a concrete slab, full of gypsum wallboard, copper wires, and PVC pipes that represents 99.99% of new site-built homes.

Sure, the codes stop you from buying a house that might kill you if the wind changes direction, but they specify only proven construction tech, without providing any economically viable way for new tech to become proven.

It seems that Basalt Fiber has been around since the 20s, according to Wikipedia; how long has it been used for rebar in construction though?

I'm not certain, but the existing manufacturers haven't yet figured out the best way to make their composite rods more "grippy". Seems like you can get them with a spiral groove or with a spiral ridge. So they haven't been around long enough for one form to win out over another.

Basalt fiber was also classified as a Soviet military secret for a while, so I'm thinking that applications useful for civilians, like concrete rebar, have probably been around since the 1990s.

You make some great points here, but I have a few nitpicks:

- We do have more advanced plumbing now. A lot of new houses are being built with PEX tubing, where the tubing is flexible and snaps together, instead of needing to be soldered or glued.

- What would be better than gypsum wallboard? It's dirt-cheap, not that expensive for labor, and people like the way it looks when painted. It also has reasonable insulation value. You could have concrete walls I guess, but I think that would be a lot more expensive, plus it's pretty hard to modify wiring if it's cast in concrete. Personally I think it'd be cool to have walls that are easy to take apart so you can modify the wiring behind them without having to do drywall work and painting, but there's no easy way to do that while having the smooth, painted wall look we enjoy now. The wooden paneling thing would work here, but went out of style decades ago along with shag carpets.

48VDC power outlets? What is the value here? Higher voltage is better for lower losses; it'd be better if we moved to 220VAC like the Europeans have, simply because of lower losses. And adapting appliances would be easy. 48VDC would require completely changing everything, for no real benefit except maybe lower shock hazard. GFCI outlets have mostly solved that problem.

I'm pretty sure a lot of people actually do have composting toilets these days; I don't think they're prevented by code. I've heard of people having them in basement bathrooms, so they don't need to add in expensive pump systems (as they would need to pump the toilet drain pipe's output up to the sewer level). The reason they're not more popular is because they smell (even if just a little) and require maintenance. Not many people really want to deal with that, they just want to flush their toilet and never see their poop again.

What would the benefit of centralized fiber-optic building lighting be? It sounds like a lot of labor cost, to deal with the fiber (which can't be bent in tight corners). Modern LED lighting has rendered this idea completely obsolete IMO. It's simple and cheap and completely compatible with existing Edison sockets. Heck, they're even making fluorescent replacement fixtures now (LED tubes which replace fluorescent tubes), so you're not limited to Edison socket stuff either. LEDs have completely revolutionized lighting; just look at cars now. You don't need to generate light centrally when you can cheaply generate it anywhere you want with LEDs. This sounds like a pie-in-the-sky idea from the 80s.

The main problem I see with building codes is the structure: wood isn't the greatest structural material for many reasons. However, there is more and more steel-frame housing being built, thanks to the lessons learned from commercial building where steel is king. Steel has huge advantages over wood: you can have much longer unsupported spans, and assembly time is shorter because the steel girders just bolt together on-site. As lumber has gotten more expensive, steel has become cost-competitive. Also, steel frames generally make for significantly thicker walls, which gives you better insulation.

That was throwing a bunch of random tech at the wall to see what sticks. But I'll play devil's advocate as best I can.

PEX has been around long enough to be allowed by code. Something I will now make up on the spot, which may or may not be better or worse than any existing plumbing technology, is not: BAM ceramic, wrapped in nylon fiber and epoxy. I don't know anything about how this material would perform as plumbing, and neither does anyone else. I only suspect that it would be practically immune to clogs. How would I know how it might actually perform in real-world conditions? No one would be allowed to live in the house I plumbed it with.

Gypsum wallboard might be topped by plastic or paper panels filled with phase-change materials, to help regulate the temperature of interior rooms. Some phase change materials are only about 4-7 times as expensive as crude gypsum. Sodium chloride sodium sulfate decahydrate sandwiched between HDPE sheets seems likely.

You can now buy 120V AC 60Hz outlets that have built in USB-A 5V DC charging ports. Some off-grid solar-powered homes have refrigerators that use 48V DC. I know my own home is filled with AC-DC or AC-AC transformers, most of them are not very efficient, and few follow any kind of standard for their connectors. 48V is the typical voltage used for Power-over-Ethernet. The advantage is that you can use one expensive and efficient power supply to power all the electronics devices in your house instead of 50 cheap and wasteful wall warts.

We couldn't upgrade US domestic voltage because we'd have to replace practically every 120V circuit breaker out there that is only rated for 120V on any given path to ground.

Some municipalities require a sewer connection for any building to be fit for occupancy. Some specifically regulate the disposal of human waste. Those regulations usually predate modern composting toilets. I have read news articles where eco-hippies are threatened with eviction from their own home when they ask to have their muni water and sewer shut off because they're going off grid for the benefit of mother Earth, or something. Not my thing, but some people are into it.

Fiber optic lighting can use high efficiency sulfur plasma lamps or direct solar to light interior space. The Smithsonian Museum uses it in some buildings, for a variety of reasons that don't include low cost. Direct solar fiber lighting avoids solar power conversion efficiency and heat or color rendering issues at the endpoint. Embedding optical fibers in concrete can produce translucent concrete, which has potential lighting applications, such as light-emitting countertops. The idea might actually be from the 80s; I'm not aware why it never really caught on except as a footnote on "whatever happened to the technology of the future?" type of shows that sometimes appear on the lesser-viewed niche television channels.

Steel also has a notable advantage over the wood studs available in 2016. You can get steel studs of consistent quality, and all of them are rolled straight and cut square. But it took an overly long time for them to make it into the building codes, and the codes for steel-stud construction are an order of magnitude more complex than for wood 2x4s, simple due to the greater number of options available to the builder. Steel studs have gauge thicknesses, shape, nominal dimensions, alloy compositions, anti-corrosion coatings, etc., whereas wooden 2x4s or 2x6s basically have a (mostly) integer lumber grade and decades of institutional builder knowledge behind them.

Can you imagine what the building industry would look like if builders adopted new structural members as readily as software pros switched languages and frameworks? Every house would be dirt cheap and look unimaginably awesome... and would unexpectedly kill 0.05% of occupants for no readily discernible reason. Builders don't need to go that far. They could adopt new tech more readily without worrying about killing anyone.

"Some phase change materials are only about 4-7 times as expensive as crude gypsum." In other words are prohibitely expensive.

Steel needs to be heavily regulated, mainly because there can be a zyllion things wrong with it. Wrong shapes/gauges/dimensions can cause stress concentrations, fractures, increased wear,tendency to warp, etc. Improper compositions can mean brittleness, bad welds, corrosion (galvanic one too! - same thing for coatings), expansion problems, on and on Wood is age old tech, you either get good quality lumber or you don't. You put oak and spruce next to each other and it looks cool. Try putting bronze and steel together and see how that works.

It is a good thing to require sewer connections, there are people who will happily dump, well, shit, right under your fence if it means paying few dollars less each month

And yes, I can image the last part. It would be a nice premise for a horror movie...

Usually the tech just kind of comes along and happens, when it's time comes, throwing random stuff at a wall worked out so great before (cough asbestos cough)

The cost of a phase change wallboard has to be weighed along with heating and cooling costs. In any case, gypsum is dirt cheap, as in literal dirt might be more expensive per ton. A material just 5 times as much as dirt cheap is still rather inexpensive. The costs will still be dominated by the machinery binding the material into a wallboard, shipping, and the installation labor.

And as you say, asbestos was a disaster. But building codes did not prevent diseases from an unforeseen inhalation hazard.

For your unproven plumbing tech, there's probably a good reason here: home builders can be sued years later for using something that leaks, since serious leaks cause floods and ruin whole houses. Insurance companies also don't want to insure something unproven like that. There should be some kind of system to prove new plumbing technologies experimentally before allowing them to be used in actual buildings, so that if they do fail, there's no losses.

Do you have any links about your phase-change panels? How would that help? And why wouldn't you just use a whole-house HVAC system?

The thing about wall warts really isn't true any more, and switching to 48VDC wouldn't help anyway. Most everyone's finally gotten away from the old iron-core wall-warts, and moved to extremely efficient SMPS-based ones. But even if they hadn't, switching to 48VDC wouldn't help because you still have to convert that down to a voltage that electronics can use (usually 5V or less). You can't transmit 5V over household wiring; the losses would be enormous, so you'd have to have huge copper bus-bars. And converting 48VDC to 5VDC isn't any easier than converting 120VAC to 5VDC, using modern SMPSes. (If this were the 80s, it'd be even worse because they didn't have inexpensive DC-to-DC converters back then.) I'm sorry, there just isn't any way to efficiently supply all your electronics from a single power supply. Modern electronics don't even use single voltages, much of the time: a typical computer uses 3.3V, 5V and 12V at a minimum (they used to also use -5V) from the main power supply, and then they regulate that down to 1.8V or less for the CPU with a power supply right on the motherboard.

Upgrading domestic US voltage would require big changes at wiring panels, because houses are set up with 240VAC split systems, where the house is fed with two 240V (line-to-line) hot lines from a 3-phase system, and then split with a grounded neutral line so that each side is 120V line-to-neutral. You could conceivably upgrade a US house to 240V Euro-spec, assuming the wiring's insulation is capable of 240V, but you'd have to change all the outlets and you'd have to completely replace the main panel. Replacing the breakers wouldn't work because the panel itself enforces this split system. Modifying the panel (changing the neutrals to hot) would probably be dangerous as the panel wasn't designed for that.

The sewer connection requirement is indeed crap. (pun intended) If someone doesn't want municipal water or sewer, they shouldn't have to pay for it. But on the other hand, is it even possible? A typical sink or shower still uses a lot of water; where are you going to drain that in a city? The city wants your waste water back so they can process it and reuse it. And dumping it outside could create a lot of problems, depending on the environment there.

I doubt that sulfur plasma is more efficient than LED. Cities are now replacing monochrome high-pressure sodium street lamps (used because of their efficiency) with LEDs. For direct solar lighting, that is indeed intriguing. However, you can go to Home Depot now and buy a lighting tube for around $150 that does the same thing for any upper-floor rooms: it has a collector on the roof, a reflective tube going through the attic, and then a lens on the ceiling of the room below to "funnel" light into the room. I have a relative with one in their house in the bathroom and it works quite well when it's light outside. There's no problem with code compliance. You do still need an electric light though, since the sun isn't always shining.

As for steel complexity, that shouldn't be a problem. There are builders who specialize in steel-frame houses, so presumably they have all this worked out and have picked their preferred options. "Andar Steel" is one I saw a while ago. According to them, assembly is much faster because the beams are all pre-cut and drilled at the factory, and then the "kit" is assembled on-site according to the plans, sorta like an IKEA kit. It's not like you have some yahoo "builder" who grabs some generic steel beams and tries to build a house out of them.

In what futuristic place does the average dwelling actually have such things?

These are luxuries most people cannot afford.

It's much weirder than that. All we have are partial theories. To wit: if it was easy, everybody would be doing that. Maybe that will be true in a few years; dunno. You get government or (something) money, start something like an Amazon store, it sustains you.

We've already seen the "everybody sells each other insurance" thing happen. That was the dystopian prediction back in the 1970s.

Since other factors ( other than land ) have declined in price, risk dominates the remaining cost. If all you look at is the winners in a risk-intensive market, it looks biased. And actual physical capital - machines that used to take up space - is no longer a guarantee of an income. Indeed, physical capital has its own risks.

The real problem is that people who have a lot of equity must do certain things to liquidate it. Those things will invariably add debt to the thing they sold. This debt accumulates until it strangles the firm.

They don't care because now they've left town with a suitcase full of money. And they nearly have to do that because risk.

Innovation slowly destroys constraints. Those constraints may or may not be lynchpins to what sustained you before.

"Advanced economies must still make things, but there's no rule that says that those things have to be made by people."

There is indeed such a rule, although perhaps it is currently unnamed or not elucidated clearly/consistently.

The economy is made up of people and those people come from families and those people and their families are at different levels of maturity and capability.

You don't take a 5yo child to an R-rated movie.

You don't take a 10yo out drinking.

Similarly:

You do not take an unskilled J6P from a broken, or barely functional family background and just slot them into a STEM fast track and expect a robotics programmer to pop out the other side - even if it's all subsidized and paid for.

You do not take a family/clan/social group right out of (relative) poverty and unsophistication and plop them right into sunnyvale and instruct them all to go get technical jobs and start living like good upper middle class folks.

Running an economy that has people in it (the only kind I know of) without ladder rungs on the bottom is as silly as running a grade school with only 5th and 6th grade. No amount of subsidies or social welfare or coaching or lunch programs are going to let you slot a 6yo into 5th grade.

In the same way, we have people and families and groups in any society that just aren't ready to walk into the googleplex and start coding. They aren't ready socially, they aren't ready economically and they aren't ready intellectually - and I mean this on a multi-generational scale.

They need more than one lifetime to make this leap and the way they do that is within an economy that has decent, meaningful work for everyone.

If you take those bottom rungs away you should absolutely expect the same kind of chaos and dysfunction as you would find in an elementary school with only the 5th and 6th grade.

Let me start with, I agree 100%. And then comes the "but".

The public policy prescription often made in order to achieve this goal is to bring manufacturing back. Unfortunately (?) in advanced economies manufacturing is no longer a steady source of plentiful blue-collar jobs.

I think that's what the parent comment was getting at with "there's no rule" - if you encourage the manufacturing sector, there's no rule that makes it create jobs when economic imperatives drive it to greater automation.

Jobs that are available to people without much education, savings, or assorted social capital are absolutely necessary to the stability of our society. I just don't think manufacturing can get us those in a country with developed-country living standards.

EDIT: Fixed lots of phone-keyboard typos.

IMO a lot of jobs that end up going to illegal immigrants could be good blue collar jobs. Sure, right now landscaping etc has plenty of cheap day labor, but reduce the supply and suddenly people can make living wages. Think about it, 12 million illegal aliens is simply huge downward wage pressure.

Granted, that would significantly increase costs and fewer people would have perfect landscaping. But, IMO we as a society would probably be better off.

PS: I know someone with a job that is basically this stuff, he makes ~40k with benefits in a cheap area of North Carolina. Meanwhile people in DC are getting 1/2 that and no benefits.

Yes, but someone is still loading the parts, changing and indexing the tool bits, doing inbound material inspection, final part inspection, packing, CNC programming, CNC maintenance, and other jobs associated. Sure, it's now 10 people instead of 50, but that's still better from a job creation standpoint than 1 (if we did all that work out of country and only did inbound inspection and logistics).

Automation is installed for two primary reasons: [labor] cost or repeatability. I agree that it's not just outsourcing as a cause, but rather a natural response to ongoing cost reduction in manufacturing.

Right but "fortunately" we can do that with marginal labour, which is more or less what we observe.

The great thing about globalisation is that it does seem to be a standard of living equaliser.

The bad part is that it's a long way to the bottom if you live in the west.

Exactly what type of labor isn't "marginal" then?

Banking? Investment advice? Construction? Software development?

Whom exactly decides whos work is marginal? Do "marginal" employees somehow deserve to be displaced by greedy upper management whom already make historically larger salaries as compared to them?

I guess I simply do not like that term and the negative profile and connotations it implies.

All labor is marginal. It must be paid for out of marginal increases in cash flow.

In the sense that labor doesn't meet its margins, there's a ... conflict.

When you say "greedy upper management", please understand that 1) absentee management ( they're caretakers and not owners ) and 2) attempts to "improve" compensation in the past are what led us here in the first place.

One comes from mutual-fund style finance and the other from "CEOs make too much money" in the 1970s/1980s leading to performance-based compensation. Since the people who measure performance work for upper management, what could possibly go wrong?

"All labor is marginal. It must be paid for out of marginal increases in cash flow."

And that's the real message here - the big difference is not between one type of labor vs. the other. The big difference is labor vs. capital - do you have to work to make your money, or have you "graduated" out of labor to making money with your assets.

Depending on your personal makeup, this can be either a curse or a roadmap.

In economics marginal simply means "another small unit of".

Does that answer my question about what type of work/labour is defined as "marginal" in the OP?

The marginal employee is the last one in a list ordered by a particular characteristic.

The marginal unit of production is the last one you can produced, or the theoretical one that you could produce next.

It is like the least significant bit of a large number. Flipping it doesn't have a very large impact.

I presume ancestor post meant "the minimally skilled laborer", which is an unskilled laborer plus the minimal amount of training. Since companies rarely train on their own dime anymore, I presume those businesses are hiring folks with a CNC machine maintenance and repair certificate from ITT Tech. That person is easily replaced.

The point is that "skilled machinist" or "machine operator" used to be a job that would give a room filled with people a middle class lifestyle. A machine shop channeled disposable income to 50 median guys, plus the owner, whereas the CNC shop now supports 9 cheap schmucks, one median dude, and 0.1 of an expensive nerd, plus the owner. The character of the business has changed to reduce labor costs, and has increased barrier to entry (CNC costs more than manual lathe, for instance) to reduce competition.

The Ford maxim still applies. You have to pay your workforce enough to buy the products that they make for you. Trade always balances. If you spend less money, there is less out there in the world for you to earn back.

The Ford maxim only applies when switching costs exceed a certain threshold. This was not done out of some Utopian sense of destiny ( although you wouldn't heard Ford tell you that ) but because turnover was killing them.

> The Ford maxim still applies. You have to pay your workforce enough to buy the products that they make for you.

Which is why it's very hard to get access to high-quality manufactured goods at any price point. By directly screwing the bottom third of the workforce, the economy crappyfied itself and screwed all but the very, very top of their members.

Now wonder the retro fashion is all over the place now.

Really? I believe that the top 25% "quality" products in most market segments are better than they've ever been (and usually cheaper as well).

A 2016 Toyota Camry is higher quality than a 1986 Mercedes was in 1986. A 2016 Macbook is higher quality than any 2006 laptop was in 2006. I can buy a high-quality dishwasher from Bosch, a high-quality washing machine from LG, a high-quality mini-split from any number of suppliers. And all of those things are more affordable than they've ever been.

I agree that fewer things are lifetime user-serviceable (for most users), but that's a different thing than inherent quality (which is roughly proxied by: how long do I expect it to reliably work without repair?). If my TV is beyond economic repair the first time it breaks, but it doesn't break for 10 years, I'm way ahead of the game as compared to the old days when I took vacuum tubes to the town radio repair shop for testing to determine which one I should replace.

> Really? I believe that the top 25% "quality" products in most market segments are better than they've ever been (and usually cheaper as well).

Agree. We can get quality things that are pretty inexpensive. But housing became very unaffordable. A big part of our income goes to housing. That means, we spend less money buying things. Furthermore, we don't have enough money to go out. (bars, restaurants, generally services)

All labor is a tool for capital to produce more capital. The fact that the laborers seem to mostly survive the process is incidental.

I agree. I write software for CNC machines, mostly sensor monitoring as well as tool lifetime and offset data exchanging. Most of our customers order our software for precision as well as to reduce human error.

If they're not made by people, then the profits from the manufacture will flow to owners of capital. When enough people can't find gainful employment with meaningful prospects of economic advancement, then you have a political problem. Yea yeah basic income, get back to me when capital owners are willing to pay much higher taxes to fund it.

>Yea yeah basic income, get back to me when capital owners are willing to pay much higher taxes to fund it.

They'll have to if they want the demand side of the market economy to continue to exist.

You can have basic income without income or business tax. Thomas Paine's Agrarian Justice proposed just such a system.

https://www.ssa.gov/history/paine4.html

Do you see the rubber pads on the floor and the dirty chair in front of the operators console?

Surely it cuts down on the number of operators required compared to mid-20th century production methods, but these machines still require dedicated people to set the up and supervise.

One positive difference is that an experience machine operator may now have a career path open didn't exist in years past: he could move up to the role of a CNC machining programmer.

> the vast majority of manufacturing job losses have been due to automation, rather than competition from abroad

Source?

[0] puts the figure [1] for import related job loss at 25-27 percent for losses in manufacturing, 10 for the wider US economy. Something else must have been responsible for the other 73-75 percent.

[0] https://core.ac.uk/download/files/153/6793105.pdf [1] Circa 1999, though.

..all the 1980s doomsday books about robots in Japan taking over the Western jobs. The lore lives, even if the robots in Japan turned out to be people in China.

There is none, it's made up. Yearly productivity gains are lower than they've been since the late 70s, and well less than half of what they averaged from 1947-1973.

>the vast majority of manufacturing job losses have been due to automation, rather than competition from abroad

The reason why this lie is so commonly repeated is that technology makes a better scapegoat than the American elites for declining standards of living.

You can't jab a pitchfork into technology.

You can jab a pitchfork into the American elites who formulate trade policy that ships jobs overseas.

This misdirection and the anger it fomented is largely responsible for the sudden rise of Donald Trump.

...Who plans to get rich by selling pitchforks, but has no intention of allowing them to be used - except possibly to remove his competitors.

I'd guess that only around 10% of the US population - 20% at best - has any practical understanding of how the US economy and political system actually works.

It's the easiest thing in the world to move blame towards immigrants, high rents, automation, Google, and just about any other target far removed from the actual architects of declining general living standards.

We'll see. Trump has said that he will prevent TTIP/TPP and put a 40% tax on Chinese imports, but who knows if he will follow through.

I certainly don't think that he'd be at all bothered by the economic fallout of those things.

If Trump really wanted to make America great again, he'd drop all import tariffs, put a 40% tax on American exports, and throw some chum in the water.

When the acquisition-merger frenzy dies down, the last corporations standing would not be ones that you would want to encounter in a dark alley. And, apparently, they would all be software development houses, agribusinesses, LEO launches, and pizza delivery chains. Americans would no longer do anything that they are not objectively best at doing in the global marketplace. They could not afford to even try anything else.

But whatever. Let's just try the Hawley-Smoot tactic all over again, and see if it turns out differently this time.

The further we get into the future, the more it resembles Snow Crash to me

Why would you want to tax exports? It is as damaging as taxing imports, as it stands into exactly the same kind of barrier.

It's way better to base taxation choices on the need to collect money, plus a rare, exceptional sin tax. Taxation choices based on commercial strategies are almost universally poor.

Sorry. That was intended to project as facetious. This US presidential elections cycle has made me more cynical and pessimistic than ever. I was just making a modest proposal for an all-new horribly bad idea rather than repeating the same old horribly bad idea once more.

The best trade policy for everyone is to have no artificial barriers to trade at all. But such a policy cannot be as easily exploited for votes.

You simply won't get an argument about foreign commerce that sounds too stupid to be taken seriously.

This export tax, for example, it was not only proposed but even implemented several times around the world - Russia has once gone to the extent of forbidding agricultural exports.

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