Why American manufacturing is becoming less efficient
economist.com
economist.com
UK to Pittsburgh to Detroit to Silicon Valley to Shenzen, et cetera. Everybody assumes that new hubs will get created in Vietnam or Mexico or Africa or similar that will displace the Chinese hubs.
But it seems manufacturing is now automated enough that the advantages of a hub outweigh the advantages of cheap labor elsewhere. And there's no doubt that Shenzen has a concentration of resources and talent in electronics manufacturing unmatched anywhere else in the world. So it seems possible that Shenzen will never lose this pre-eminence in electronics manufacturing the way that Silicon Valley lost it.
How long did it take to build that concentration?
So now they got what they wanted? pre-revolutionary manufacturing? low pay, low responsibility, little growth. Uncompetative(in a bad way)! Way to go.
How exactly does outsourcing jobs and automation increase a factory worker's pay?
Like the US, Europe is diverse and large parts of it not at all homogenous
Tho, we also have to acknowledge that "moving to the other side of the continent, because of jobs and housing" is much more common in the us than in Europe.
Edit: My child comments make some very good points which me, living in a rich country, didn't fully consider. I think it's still very different, but not as different as my comment makes it out to be.
Expat life is always good anywhere east of Berlin, you probably don't live the typical polish life. I also have a great time when I stay in Czech republic and Slovakia, but the locals make like 25% of my wage on average
And the average Pole owns 2x more housing than the average German (number I made up for exemplification) who's most likely gonna be a rentoid for life.
From what I noticed Poland (and Czechia) are still an attractive place for skilled migration from the EU working in the service sectors, as the constant growth and low-ish taxes and CoL, make it a better place for building wealth and buying housing than Germany.
On the other hand, Germany is a better palce if you're on minimum wage unskilled style jobs and/or will depend on state support to live, as the German state is quite generous with the poor.
My point is they're both attractive, just for different demographics.
(offer valid for eu citizens only, terms and conditions may apply.)
What I was talking about was skilled workers in the service sectors (IT, etc), which are definitely not rich, but 100% working class.
Like it or not, most wealthless working class people want to build wealth, especially with the ever increasing wealth inequality that no government wants to tackle, and some countries are better than others for that purpose and for different workers/professions, so it's normal that people will go where that proces is easier depending on their profession.
Some countries have very generous social nets at the expense of high taxes and low growth, making wealth building impossible for the wealthless newcomers, other countries have low safety nets but low taxes and better growth opportunities for the skilled and ambitious workers who are into buildings wealth. Different strokes for different folks.
That is the statement I made. I don't think the hard statistics presented so far contradict that.
* Albania * Bulgaria * Romania * Croatia * Hungary * Poland <<< * Greece * Latvia * ....
So, while all of these are 'upper-middle income', relative to other EU countries, Poland is 22/27. If you look at Europe as a continent, then Ukraine and Moldova combined have less than half the polish GDP.
It's all relative, and "poor" even more so.
Thanks for the info on the migration balance, tho!
Just because there are some major companies in a country, experts at extracting wealth from the global economy, it'll push the GDP up, but that doesn't mean you'll necessarily get to see any of that money.
West-East divide between European countries almost does not exist anymore. Czechia is richer than Spain, Slovenia is dead close to UK. Where we had like 3x gap 30 years ago there's at most a 1.4x gap. Poorest: Portugal vs Bulgaria. Richest: Denmark to Slovenia. And groups already intersect.
"Eastern Europe" the way it lives in public imagination, within the EU, only exists in rural Bulgaria and some of the poorest (mostly Eastern) parts of Romania. There, it is mostly due to the ethnic composition of population and will probably always stay that way.
USA, Linux, Firefox 119.
arcvhive.xxx and cloudflare famously don't play nice with each other.
Labour productivity, today, is a very hard metric to understand. I'm not sure it means anything as an aggregate.
The ideal/goal of industrial policy (mostly determined in trade agreements) forthe last 40+ years has been... I think Apple is the cleanest, best understood example.
Apple US (or Ireland) houses the engineering. The marketing. It's where the "creativity" lives. It's where the intellectual property is. Where the "platform strategy" takes place. Where "network effects live."
Foxconn (taiwan+china) is where the hard capital investments live. It's where the factories are. Where the workers are.
United States (apple) gets most of the profit. They get most of the market returns (see apple share price, Vs foxcon/etc.). Most of the taxable corporate income. The lion's share of high paying jobs.
China (via foxconn/etc.) gets jobs. Industrial development. Labour productivity... all the benefits of manufacturing.
That was the deal. It was (and still is) what the US and China wanted. They both liked the deal. It worked well. Both governments got what they expected and more.
Apple (and others) did very well. Insane profit margins, market caps... financial returns beyond all expectation. What they wanted.
China did get lots of jobs, industrialised their economy, developed whole regions. They also got what they wanted... in spades.
This had had consequences though.
Instead of modernising manufacturing and continuing to get real productivity gains... Manufacturing got to go backwards. More labour intensive options work again. Fewer capital intensive, high productivity options, were necessary.
That game is kind of played out, but we did not go down the path of manufacturing efficiency. Trying to design the factories of the 2030s now... inevitably speculative work. Risky. Hard.
Meanwhile, the market is used to factories/manufacturing representing the low risk, low margin part of the economy. The proverbial "commodity" business.
Adding innovation, risk to big chunky investments for tight margins... you can see why US (especially the financiers) wanted out of this game originally.
Meanwhile, 1950s manufacturing-based suburban lifestyles... that mind's eye ideal is... Hard to know where reality relates to this now or in the future.
Are we just going to ignore all the productivity gains that china got from moving away from an agrarian economy to a manufacturing economy? In the same vein, are we going to ignore all the labor in North America that was freed from doing low value tasks like assembling phones?
Yes. I am, at least.
You can write your own comment emphasizing ut instead, if you like. Then I can write a snarky, "are we just gonna.." comment in reply.
Or.. we could just discuss it without the snark. In fact, let's please do that.
What is the meaning of the claim that assembly is "low value?" To whom? The consumer? The worker? Financier? Company?
I called it "low margin" and capital intensive... because these are the economic/financial characteristics.
The obvious contrast is Tesla. The level of productivity with which model 3s are built now is clearly a vast improvement over where it was and the improvements (single casting for e.g.) keep coming. As long as US / UK and EU manufacturing continues to substitute making things in factories for making them in the street, and heavy industry for light industry, it's hardly a surprise that productivity overall is going nowhere.
Brief examples:
Divorce? That's not a fractured family, it's an extra household of goods (e.g., TVs, sofa, outfitted kitchen, etc.). It increases demand for housing, which drives up those prices. End up with more stuff than you need? Put it in storage.
Weight control / obesity? Aside from the gym, there's fad diet books, meds, meds, and more meds, etc. As you add weight, you naturally need new clothes.
No free time? The solution is fast food or shite frozen meals, etc. Not to worry, the "Healthcare" Industrial Complex welcomes this "solution".
To your point, the system favors revenue over efficiency. Profits over prevention.
We live in the present tense, not the future.
Hence the primacy of the tactical over the strategic.
Imagine if we saw 2x as many prevention ads as we see "now now now" ads, would our mindset not change?
> Imagine if we saw 2x as many prevention ads
Many business models are predicated upon the "now now now", instant gratification mentality.
I'm as capitalist as they come, but that doesn't mean all should be for sale.
Said no one ever. Also, are we just going to ignore the entire industry trying to fix marriages? eg. marriage counselors, self help books. Sure, they might be of questionable usefulness, but solving relationship problems is hard. I'd hardly characterize it as "solving for symptoms, not root problems".
The same applies for your other examples. For obesity: turns out getting people to voluntarily eat less is hard, so we have an entire industry devoted to losing weight without the suffering. We might actually have finally solved it with GLP agonists. If it worked and made people lean, is it really "solving for symptoms, not root problems"? In the end you still lost weight. Who cares if you needed to use willpower or not?
And you're correct. "Said no one ever." *That* is exactly my point. Thanks.
Read my last line / paragraph and work backwards from there, please.
Normalize something, making it ubiquitous (to the point it's oblivious) doesn't make it right.
What about all the lawyers that get to charge huge rates for providing services in these cases? Is that really "productive"? In the grand scheme of things, I don't think so. It shows up as GDP, but it's really a tax (or leach) on society, sort of like tax-prep services and healthcare insurers.
In a way, I think OP might be right: the root problem isn't being solved. The root problem, however, is a source of huge disagreement I'm sure. Personally, I think one of the roots is people getting into bad relationships in the first place. They could avoid most of this trouble and expense by simply not getting married to Mr./Ms. Wrong. Society pushing people to get married is part of the problem here, though the other part is now society actually allows people to get divorced, instead of pressuring (or forcing) them to stay together miserably, even with abusive and/or violent partners. Of course, this is changing: people really are getting married less, which the divorce lawyers probably aren't happy about.
The other root problem, IMO, is that I think marriage as a social model has probably largely outlived its usefulness, and society needs to come up with some other model for relationships. But I'm probably 20-100 years ahead of my time with this thinking.
Rent in UK averages 880$/month, GDP per capita is 46k.
There’s nuances to these numbers, but the US economy is really strong in many ways.
/s but maybe not really
The value of healthcare is defined in terms of results not how much is charged for those services.
But how do you measure "healthcare results" then?
Infant mortality? Life expectancy? Waiting times? Percentage of population who gets some sort of services regardless of quality? The quality of those services even though not everyone can get them?
Getting an unnecessary MRI costs money but doesn’t provide any net benefit. As such treatments aren’t what’s valuable.
Similarly preventing a Cholera outbreak via proper sanitation is more valuable than treating that outbreak. Defining GDP in such a way as to avoid the broken window fallacy is tricky.
The GNI[1] grew from 18,388.0 in 2015 to 25,796.4 in 2022. The "Rental income of persons with capital consumption adjustment" component of that, which includes imputations, grew from 601.4 to 878.3 in the same period. From these numbers we can conclude that rental income growth only made up 3.7% of GNI growth. This doesn't support the claim that "the American economy is only "growing" because Americans are constantly reselling houses to each other for ever-increasing prices".
[1] GNI is supposed to be equal to GDP in theory, but for various reasons they vary slightly. For the purposes of this discussion we can assume they're interchangeable.
Last I checked, much of the revenue from the Big Tech companies comes from advertising, which is not a productive endeavor, it's really just parasitic (i.e., I equate advertisers with mosquitoes and flatworms).
Just as a wild guess, I'd say most of America's GDP that comes from actually productive industries comes from 1) military hardware, 2) entertainment (music/Hollywood/streaming services to distribute those), probably 3) automaking (including foreign-owned factories), and 4) agriculture/mining/oil.
Actually making things that people need is obviously a large and essential part of 'the economy', and, well, what people actually need, even if it is 'a small percentage of GDP' or other economic/market measurements.
US state intervention into the free market - a.k.a 'Bidenomics' - is in its early stages and will require multi-decadal commitment to seed and train an entire generation of skilled workers in the new / old manufacturing industries. Redirecting excess capital from the services to as-yet unprofitable de facto state enterprises will only bear fruit when those enterprises start producing products which become competitive in the global market. The timeline is measured in decades, US can see it through, though will need an 'economic deep state' to see the policies through the oscillations of the democratic political system
For mass reindustralization, you need reforms and technically skilled people. For example you will need way more oil and cheap energy. You also must stop shitting on imaginary "white men", and offer them free industrial-tech education. Army did that quite a lot, but that avenue is closed now.
Would you agree that huge wastage (up to 90%) is a reason for legit criticism?
I don't know the US, but in France the government overhead cost for Healthcare is 20% (for every 100€ collected for public healthcare, 80€ is paid to doctors/hospitals/medecine/nurses/PT, 20€ is paid to operations/public servants), and social security is sightly more effective, with 13 to 18% overhead (but it isn't really government, it's weird). A federal government will necessarily be less effective (as you probably have more layers), so I guess for the US I would expect something like 30% overhead?
Still 90% wastage seems high.