America Can’t Even Produce the Things It Invented
nytimes.com
nytimes.com
"Comparative Advantage", something something about corn and wool, meanwhile the whole supply chain was moved to China, our middle class was decimated and we went into tremendous amounts of debt to pretend everything was fine...
Left, right... whatever. The elites have failed us.
In the ‘80s Dems saw being default pro business was more lucrative and jumped ship.
Now both parties play both hands and workers get shafted.
Oh but the Dems are pro workers! No, they are not. They pretend they are. The only ones who are pro worker also sold out (Bernie) and went globalist —Compare his positions in the 80s vs now.
But it is too easy to blame them and overlook the role of the public. Particularly in politics, where it cannot be overlooked that the voters vote for whoever they want. This didn't creep up on the US - this was a 30-40 year process overseen by the Boomers which anyone could have seen coming had they looked. Many did, it was obvious China was the future. It is well worth being sober, realistic and evidence based about what they did and whether their successes and failures were correctly learned by the next generation.
I think the 30s and under have learned a lot more lessons about the environment and social theory than developed an understanding of why China is becoming the pre-eminent world power, why it is led by Communists and whether the US should have done things differently.
It worked in that millions of Chinese have been uplifted (of course this is vast oversimplification: they helped themselves and many other countries also trade with them), but has definitely failed if we ever thought to make the Chinese government less authoritarian as a side effect.
It was definitely paid for by American workers. I don't know what economists were smoking when they thought the entire blue collar workforce would be retrained into better jobs, but that's the theory they kept forwarding.
I've also heard that this has helped America by keeping inflation low. What they mean when they say "inflation" is almost always "wage inflation". You can see the mindset in the Covid relief debates- God Forbid we give people more money than the slave wages they get from corporations- they might not work! Corporations might have to pay more in wages!
COVID-19 has made it apparent that there are significant advantages to having the operational capabilities to organize human resources at scale. The US, for example, was unable to staff an effective test and trace program even while a significant percentage of its population sat idle or to mobilize healthcare resources to hot spots. Effectively the US traded 300,000 lives because the US couldn't effectively organize 300,000 people quickly.
You vote for them, and you feel good if they win. But then what happens? Nothing.
The rich keeps getting richer. While the poor stays poor. And the middle class becomes poorer.
The elites just wants to make more money. And what do they do? They buy out the politicians, in order to keep themselves rich.
And what’s the biggest lie that they’ve sold you?
That trickle-down-economics works for everyone.
Spending does not equal outcomes.
As a side note, the US has the second highest public spending per capita (second only to Norway, last I checked). Our Government spends more per citizen than all but one "socialist" country. We then of course spend another doubling of that in private expenditures, and, yes, get worse outcomes.
The US is in a very bad spot.
https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...
And knowledge jobs are jobs for smart people. Most people are not smart enough to do those jobs and no amount of money spent on education (the US spends more than almost every other western country, at every level) can change that.
Why didn't state funding pick up the tab?
Not sure about housing.
Page 19 of this document produced by the NBER states that indeed, the wealthiest 10% own 84% of all publicly traded stocks, mutual funds, trusts, or various pension account assets:
https://www.nber.org/system/files/working_papers/w24085/w240...
It has many other interesting insights that are worth quickly reading through, for example you mention you are unsure about housing, but that report says the top 10% own 41% of all housing in the U.S.
The other interesting figure is debt, where the top 10% owe 28% of all debt.
https://www.census.gov/housing/hvs/files/currenthvspress.pdf
Adult children living at home, adults living in homes with roommates, people underwater on their mortgage, etc would all count towards a higher home ownership rate.
> Zillow’s Negative Equity 2012 Q3 data; we find 29% (20.6 million) of homeowners own their home outright
https://www.zillow.com/research/free-and-clear-american-mort...
https://www.bloomberg.com/news/articles/2013-10-15/the-econo...
I bet a large fraction of the posters on here who complain about being oppressed by economic inequality are themselves part of the top 10% too (and have benefited greatly from the trend towards more inequality).
45% of Americans do not own a shred of stock at all, including indirectly through mutual funds or retirement accounts [1].
1: https://news.gallup.com/poll/266807/percentage-americans-own...
To me a forum like this is like when I'd be sitting around in uni wondering aloud about some problem and someone will say "Well, maybe if you use the fact that the functions which invert the sign of the √2 and √3 parts in Q(√2, √3) are automorphisms, then you can see that the group containing them and their composition is just Z2×Z2".
The truth of that part isn't important. It's the fact that it's a good faith hint. It's my job to go find the truth given this mild heuristic.
They're the ones doing me the favour so I have to contribute in order to get more information. In this case, I can attempt to find an error in the proof or to ask clarification. But if I were to ask them to write out a proof then I'm being a fool and I'll get fewer hints from them in future.
I noticed that most people who really know their field don't cite their assertions. It makes sense. So now I'm not surprised when people don't provide a citation. It's just a hint. They didn't sign up to be my tutor.
I didn't do any particular research here, because it conflicts with the preexisting knowledge I have about the subject, and because my experience tells me that figures like these, which can be, and especially when they actually are used to further political narrative, are often misleading, and/or wrong. However, I didn't want to accuse the commenter of any bias or misconduct, hence I phrased my question to leave out my skepticism.
The truth of that part isn't important. It's the fact that it's a good faith hint.
You actually hit the spot: you can assume good faith when sitting around in uni and asking people to help you calculate Galois groups. You cannot assume good faith when talking to strangers online on politically charged topics: even if they are themselves operating in good faith, it is highly likely that they were fed, as you call them, "hints", by bad faith actors. Hence, I ask for sources.
I noticed that most people who really know their field don't cite their assertions. It makes sense. So now I'm not surprised when people don't provide a citation.
That's because they can rely on their authority and experience to establish trust, and they have reputation to protect in case their assertions are actually completely wrong. None of this is true when talking to random, anonymous people online.
Someone who is 60 years old has had approximately 30-35 years worth of time to invest and accumulate assets compared to someone 30 years old who has only had 5-10 years worth of time.
What would you have expected to see in the alternative?
What's not discussed is that these cities were much smaller back then, had far fewer services both private and government, had much higher crime and pollution and a host of issues that have all been substantially ameliorated over the decades, specifically the 90s.
If people want the experience that their parents had to find cheap housing, then they have to move to a location that is in a similar state today that London or Toronto was in 30 years ago. Those places do exist and there's no shortage of affordable and cheap housing in Canada, many parts of the U.S., and I suspect the UK.
The problem is that what people my generation really want are all the benefits that have come over the past 3-4 decades without the cost of paying for those benefits, and that's just not likely to happen.
But there are also places like Calgary, Winnipeg, London and Halifax that are smaller, much more affordable, and have a decent standard of living. The issue is that if you compare Halifax or Winnipeg to Toronto it's a no brainer that Toronto is just significantly ahead in development, but it's not like people in Halifax are struggling to find work, or are poor or living in bad conditions. There are plenty of good places across Canada to raise a family and enjoy a good standard of living.
This almost reads like satire. You're saying it's a problem that people who have worked their entire life have more wealth than people who have more recently begun their career?
If wages haven't risen in proportion, then this doesn't seem like a win.
confusing the map for the terrain
That's definitely not everyone.
As I been told, cost is rarely the primary factor - Chinese manufacturing is insanely flexible. You can set up a plant with almost no capital, be able to retool at a moment's notice to a customer's whim, and add and drop employees to production at the drop of a hat.
Meanwhile, in the US, unless you are talking about very expensive CNC processes, batch production is not a thing. If you set up a production line, everything needs to be stable and long term. You need permits. You need employee contracts. You need to train people. You can't handle a lot of turnover. You bring in robots, and that requires more specialization and training.
I firmly believe that things which increase fluidity in the labor market will be key to improving US manufacturing. Things like affordable healthcare and housing. Make it so that people can comfortably live in a gig economy.
I don't disagree, and very not my field, but I found it curious that France's manufacturing exports per capita remain 2x the US[1], despite not having a reputation for flexibility.
Germany remains 4x. Which raises a question, with respect to manufacturing exports, why does the US look like a smaller EU, rather than like a larger France or Germany?
[1] https://tcdata360.worldbank.org/indicators/mnfc.ex?country=B...
The US could, if it wanted to have both of these advantages, which is why I'm pretty bullish on the potential for the US manufacturing future, if not on the reality:
1) is political and requires expensive action that is broadly not favored by either party - protectionism, boosterism, technical training, PPPs. Concerted effort at Federal and State levels. We do it for Defense but not for other sectors.
2) would look reasonably achievable but somehow the Fed has missed its inflationary targets for the few years, so I'm a little skeptical about the chances. Also if you look at the dollar's relative price over the last 30 years it broadly approximates a sine wave that we're on the upwards slope of (past performance yada yada etc)
Lower capital needed due to low salaries, no employee protection, no building or environmental regulation, no employee contracts, no training… Is that really what you want for your country? I imagine you don't see yourself working one of those unprotected low-paying jobs however.
It's one of the main reasons we've seen such a sharp reduction in poverty at basically every single monetary value you could measure it at https://imgur.com/a/qIB24jP.
What you appear to be characterizing as strictly bad worker exploitation is a key part of the best known way to reduce global poverty.
I already spent a fair share of my working life in unprotected, low-paying jobs. And they wouldn't have been nearly so bad if I didn't have to worry about things like healthcare or outrageous housing costs.
On topics where the fraction of HN readership with professional expertise is relatively small, it seems HN infrastructure and culture often isn't able to surface that expertise, to sustain the quality of discussion which exists when the fraction is large.
I wonder if there might be some form of low hanging fruit, like maybe a cultural convention of creating a "professionals" comment tree, where people are expected to apply a stricter-than-usual test of whether they have the expertise to comment? Attempting to create a lump of critical mass professional discussion.
Over time the US has removed its dependency on Saudi oil, courtesy of fracking. OPEC oil is no longer necessary for the US economy.
The most interesting thing about Saudi Arabia going forward is that the US will eventually benefit from destroy them as China is the primary beneficiary of Saudi oil (which will also make US oil that much more valuable, we'll send it to Saudi's #2 and #3 customers, Japan & South Korea). I'd expect the hawks in DC to eventually consider turning Saudi Arabia into another Syria.
The second most interesting thing about Saudi Arabia, is their population to barrels of production ratio. It keeps plunging as the Saudi population soars and oil production can't keep up. A revolution is inevitable; that ratio plunging represents a ticking timebomb of the non-elite population's future wealth rapidly declining (while they perpetually fail to develop an alternative economy).
The US was getting oil from closer places like Mexico and Venezuela. Some came from Africa. Saudi Arabia only mattered due to the overall effect on world price. Europe would buy from Saudi Arabia, so Europe didn't need to buy from where the US was buying.
Especially when it's countries where it's as expensive to manufacture as here. And with whom we have free trade (meaning our products gets preferential treatments there too!)
If there is one thing America is good at making, it's enemies.
https://fred.stlouisfed.org/series/OUTMS
Manufacturing employment, on the other hand, is down substantially because of automation.
So if we want to keep domestic production, either consumers need to voluntarily choose more expensive alternatives -- which seems unlikely to happen -- or we have to put tariffs or other restrictions on import of goods. The EU does this for a variety of agricultural products to protect farming, for example.
Or is there another way out?
I don't know the reality of the gigafactories though:
- how many "corner cases" are handled by humans
- would it (un)scale for things with smaller production numbers?
SV should be leading investments in Semiconductors, automation and manufacturing tech. It doesn’t even live up to its name. If you’ve been following how difficult it is to manufacture things at scale (Tesla), it’s a hard problem. Manufacturing is difficult.
Serving ads isn’t of national strategic importance. It’s just juicy. “Someone’s gotta make stuff” - Elon. It’s true even if you don’t like the guy.
Industrial biotech is harnessing biological and biochemical processes for industry and production. That's much smaller but growing fast; people outside the industry would be shocked to discover what chemicals and other products can and will be produced simply by fermenting various microbes. Zymergen is one company doing this, and among the biggest but by no means the only one.
Recently there's been a surge in biotech-based food production. Most people don't realize that the Impossible Burger (and other products from Impossible) taste so "meaty" because it contains transgenic yeast that secretes cow heme. There are companies that are creating cow dairy products from transgenic yeast - you can actually buy their ice cream today - and companies like Memphis Meats are working on cell-cultured meat, made entirely from animal-free processes , minus the initial cell biopsy. Same with Finless Foods. All of the above are within a couple miles of each other, and these are only a few examples.
It reminds me a little of the situation with journalism and news. We have less and less reporters collecting information but more and more websites and blogs that dissect and debate the same information.
https://venturebeat.com/2021/01/04/amp-robotics-raises-55-mi...
Do you happen to have any helpful analysis, articles, companies, etc. along these lines? I have thought it would be a fun thing to work on, but I have struggled to know where to look and haven’t found anything particular in my searching.
Big tech has contributed to both the tools that allow handling massive data streams and ML. That foundation is what is helping data-driven manufacturing companies pull ahead.
Plenty of real-world applications other than ads.
sort of deal with the devil though.
You mean to optimize Uber and Lyft revenue
Yes, because mass surveillance is good.
Is it though? On a revenue basis I wonder what percentage is made up by adtech?
>SV basically solved big data and global software distribution and scalability
In order to serve more ads...
What do you think we should be doing in SV in addition these technologies?
Intel and Tesla are made in the US afaik, but even the hardware startups we do have still tend to manufacture abroad.
If your premise were accurate, the primary value would be in Foxconn and they'd destroy Apple by competing with them and take their $60 billion per year in profit.
Most of the value is from Apple and the other component makers, not the company doing primitive assembly. Further, Foxconn makes nothing in the iPhone, so once again it's very obviously not "made by Foxconn." And that's why Foxconn gets such a tiny slice of the profit.
I believe Apple is trying to go down a different path, by staying involved in the minutiae of manufacturing, materials science, etc, basically everything but actually doing the manufacturing.
https://www.intel.com/content/www/us/en/support/articles/000...
Seriously, you do not want to be assembling iPhones. Build a robot to do that tedious work instead.
So when people, who have been habituated to looking at numbers denominated in dollars, think about it they effectively have blinders on.
The advantage of financial returns is that they are measurable and currency broadly accepted.
People have subjective opinions on what constitutes non-financial returns and you can't buy a house with happiness.
If the proposal is that more people should invest time in non-monetary pursuits, then what alternative incentive motivate them. Presumably people working in ad-tech could leave retrain for another career if they wanted.
I think about things like this: What if all the wallstreet quants and sv adtech guys were all put on a nuclear fusion project?
It would be like an unstoppable force against an immovable project.
This step used to take years. And require state of the art facilities, with biohazard containment, viral samples, etc.
Now? Given a virus sequence done in a lab on the other side of the planet, one can design a vaccine in a day. Sure, it took many years of research (and in coronaviruses in particular) to reach this stage, specially on how to stabilize the spike protein. But one cannot understate how amazing this new technology is.
And then once done you can send the results to a machine to get it "built". At a low scale, sure, but it's still impressive.
With the mRNA approach we no longer have to resort to things like using eggs to make the vaccines, we can use the cellular machinery for that. It's mind-boggling.
It's easy to see lower American manufacturing employment and increasing Chinese manufacturing and conclude that American jobs are simply moving to china, but this narrative doesn't hold up to basic scrutiny.
Take for example steel production. American employment in the industry has fallen by 55% since 1989, while chinese production is now 5 times higher. Case closed right? Well no. In that time period, the US built over 40 Million Tons of steel production capacity, 46% of its total capacity. Further, while chinese production has increased dramatically, they are not a major exporter of steel to the US, peaking at 7th largest trading partner in 2015 and currently not even in the top 10. Our biggest steel trading partners are Canada, Mexico, and Brazil.
Looking at the situation more granularly, we see that US steel production has been approximately constant since the early 80s, whereas Chinese steel production didn't ramp up till the 00s, around the same time that the decrease in US steel employment leveled off.
There has been a major shift in how steel is produced over the past few decades. Over this time period, blast furnaces have been shutting down and been replaced with basic oxygen and electric arc furnaces which require less manpower to produce steel. In 1920 it took 3 man hours to produce 1 ton of steel in the US, now 1 man-hour produces 300 tons. Further there have been major shifts in consumption. The US is consuming less steel as most of its infrastrucuture is already built up, and as new products use less steel (either because stronger steels can do more with less or other materials like aluminum and plastics are used instead). China is employing many more steel workers to work less efficient plants, making lower grade steels to fuel its transition into a developed nation.
While this is merely one example, the story is similar in a number of industries - employment goes down in the US, up in China, but there is no decrease in productivity in the US which closely coincides with an increase in production in or exports from China. In general, productivity and capital investment in the US actually remains steady despite shrinking employment, and where there are decreases in productivity, they tend to correlate with reduction of demand, for example in the auto industry.
When people think about automation, they typically picture robots doing what they had been doing. In most industries that hasn't happened, so most people conclude that automation hasn't had any serious impact yet. But the real change is typically in much more mundane process improvement. You don't need as many people to do the same amount of work, and the work that needs doing tends to be different from what was done in the past - more desk jobs and information processing, as well as more low cost unskilled labor, with the blue collar professional in the middle mostly made obsolete. Trade wars with China or subsidies for "onshoring" aren't going to change anything, unfortunately recreating the prosperity of our past will require complicated holistic changes to many sectors, informed by a firm understanding of manufacturing technology and economics.
...
Looking at the situation more granularly, we see that US steel production has been approximately constant since the early 80s, whereas Chinese steel production didn't ramp up till the 00s, around the same time that the decrease in US steel employment leveled off.”
Do you know of any data sources for this? I’d like to look at other industries as well.
The only reason China is so export oriented is because they need to earn dollars to buy oil. If they didn't need to buy oil in dollars, they would reorient their factories to sell their manufactured goods domestically, giving everyone a high standard of living. Instead, they are making more and more goods for our fat American consumption just to earn more and more dollars.
Sure, removing dollar as a reserve currency will make all of us poorer by global standards but we won't need to import manufactured goods from China any longer.
1) The "Petroyuan"... Should this ever happen, Oil will be priced in Yuan. https://eurasiantimes.com/petro-dollar-vs-petro-yuan-is-chin...
2) this is NOT the reason china exports. They do this as they have a large labour advantage, very lax pollution laws and can make things for far cheaper then others can. You can determne this for yourself once you realize that China doesnt only export to the USA. When China exports to the EU for example they earn Euro notes. They can convert Euro's to USD if needed, but i dont think their primary goal is to accumulate USD, espeically given their massive USD Bond holdings. If anything, they are probably looking to sell USD bonds to diversify.
3) removing the US as a reserve curency wont just make americans "poorer" - it will have a devistating impact on your ability to borrow. Since the US gvt constantly runs a deficit who will finance this when other nations no longer want/need USD?
4) The US needs to import because as the article stated, they no longer manufacture things. Try going to a city like "bridgeport, Connecticut" and see the mothballed factories. It will take decades to undue the damage outsourcing has caused.
What I meant is that we cannot have our cake and eat it too. If we want to assemble smartphones here, our workers will have to accept the life of those workers. Those workers don't own cars, live in shitty shacks and have no wlb to speak of. But considering that so many people are clamoring for such jobs, maybe that's what we should go for.
I've been reading these scaremongering stories all my life. First it was Japan eating our lunch. Where are they now? Then it was Mexico poised to take all our manufacturing. Didn't happen. Now everyone is scared about China. Pretty soon they're going to realize they don't want to be in the business of manufacturing screws, either. There's simply no money in it.
Meanwhile U.S. manufacturing has been growing. That's something the NY Times is conspicuously silent about.
I'm not saying the U.S. doesn't have social and political issues we need to get sorted out - but there's never been a time in our history that we haven't had social and political issues we need to get sorted out. I'm not saying we don't have progress to achieve. I'm saying I'm sick and tired about hearing how the U.S. no longer manufactures screws and consumer electronics. There's a bigger picture to consider.
"The plan aims to upgrade the manufacturing capabilities of Chinese industries, growing from labor-intensive workshops into a more technology-intensive powerhouse.[6] The goals of Made in China 2025 include increasing the Chinese-domestic content of core materials to 40 percent by 2020 and 70 percent by 2025."
This is a major source of all the economic anxieties the US government and allies are feeling.
China isn't just a source of cheap labor anymore. Cheap labor was what it had to offer because it was so under developed but they aren't blind to history. They know they have to move up the value chain and have been gradually but steadily moving up.
PCB manufacturing is almost completely automated, for example. Didn't move back.
I’m super worried that the U.S. is turning into Russia, i.e., a corrupt oligarchy with no want or ability to mobilize and educate its people. China saw that happening to themselves and specifically steered away from it back in the 80s.
I know of at least one automation equipment company that prices their machines in China at about half of what they charge to US customers, because that's the price point that the market will bear. Exact same machines, same specs. Just like any other region-based price discrimination.
Automation could, should and will bring back more manufacturing towards the west, in the sense that the west will produce more goods, in terms of net quantity/value compared to today.
It does not necessarily mean more jobs.
It does not mean the west will produce a higher percentage of global products.
Paul Krugman, amongst others, has written about the subject, I will try to link articles once I get home.
Quick edit: example: GM produces more cars than before the crisis but employs less people
Edit 2: here's one https://www.scientificamerican.com/article/krugman-trade-job...
"Good jobs" in particular is such specious rhetoric.
If the world was ever going to de-dollarize, they would have done it at any point in the last half-century.