America Is Losing the Shoe Race with China
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The idea of a race, a zero sum game when it comes to development, is an uniquely Western way of thinking. This is how we drive ourselves. We won't go to the moon - who cares about that? Unless of course the Soviets are trying to get there ... then we will spare no expense.
In other words it is a ploy that pundits promote in order to get money to their military industrial backers.
The GDP pr person in China is between 1/6 to 1/3 of the US (depending on how you measure). Any Chinese leader, including Xi, will tell you that the China will be developing, catching up, for the next many decades.
It's not uniquely "Western" - as Indian, Pakistani, Vietnamese, and even Chinese strategy has shown.
That said, it is a reductive way to think about power and society, which is the point of this article, and something I agree with as well.
A "race" implies an existential competition, which nation state competition should NOT be. Doesn't mean we shouldn't build deterrence, but it doesn't mean falling into the depths of McCarthyism.
> ploy that pundits promote in order to get money to their military industrial backers.
There is a real competition, but overly histrionic punditry on both the US and Chinese sides might inadvertently lead us into an accidental war.
There is a lack of mutual understanding in the upper echelons of power in both Beijing and Washington DC that is leading to myopic competition.
Also just in simple things like “lack of mutual understanding”. I don’t think that is true. I think the Chinese understand the mechanics of western government and politics quite well, whereas we in the west have very little understanding of the Chinese ditto - simply because we don’t bother as we are the top dog.
The same issues in the US with regards to Chinese policy exist in the Chinese view of the US as well.
Most policymakers and staffers on either side of the Pacific haven't actually spent extended time or intercultural experience with the other, and those who have the experience with both Asia and the US remained in the private sector due to better prospects and (in the Chinese case) inability to join the civil service due to age and examination restrictions and (in the US case) due to clearance restrictions.
On top of that, those in the policymaking level are those who had around 20-30 YoE within their country's civil service, meaning most policymakers and senior staffers today started their careers in the late 80s/early 90s.
This is a major reason why Chinese policymakers have been fairly hawkish compared to a decade ago, as the early 1990s was an existential decade for China - the Tiannamen Square Massacre and subsequent sanctions, the Taiwan Straits Crisis, and the bombing of the Chinese Embassy in Belgrade all solidified an anti-American viewpoint among Chinese policymakers who started their careers in that era, unlike the policymakers from 1973 to early 90s who had experience working closely with the US (eg. there was even a US Army listening post in Turpan staffed by both US and PLA soldiers during the 70s and 80s [0]).
[0] - https://www.nytimes.com/1981/06/18/world/us-and-peking-join-...
I am not saying that US politicians should go and study in China but the claim of equivalence in counter party understanding is just not true at all.
The Chinese hawkishness today is reaction to the changed attitude of Americans, they were (naively) hoping for the better all the way up to the Biden admin; the experiences of 90es/early 2000es drove China closer to the west regardless of the events you mentioned.
Most leaders with a US educational background were primarily part of the Hu Jintao administration.
No one in the current Standing Committee of the Politburo spent an extended (as in multi-year) stay within the US or the West [0] (attending Bowling Green or UI for a couple weeks to months is not enough time to truly understand the US) nor are they technocrats (Hu's administration was unique in the amount of practitioner Engineers it had in its standing committee).
> The Chinese hawkishness today is reaction to the changed attitude of Americans
It very much did start in the 1990s [1] at the policymaking level and remained an active part of Chinese planning [2] for decades [3][4].
[0] - https://en.m.wikipedia.org/wiki/20th_Politburo_Standing_Comm...
[1] - https://millercenter.org/the-presidency/presidential-oral-hi...
[2] - https://www.jis.pku.edu.cn/docs/2018-07/20180703142847819805...
[3] - https://core.ac.uk/download/pdf/323960205.pdf
[4] - http://dangshi.people.com.cn/n/2014/0504/c384616-24971840.ht...
China started its hawkish transition as soon as Xi became president, not during the Biden or Trump administration. Where we are right now was a result of gradual aggression increasing since 2012.
Top that off, Xi is the first (hopefully last) princeling president who brought in a lot of other princelings as well into senior leadership positions. I’m surprised this didn’t implode, and maybe either the technocrat approach had problems (not enough red family support?) or they are somehow coasting and building on achievements during Hu (probably a combination, Hu was really weak because he didn’t have red family support).
The technocratic model was dependent on regional execution, and while some of the coastal provinces had fairly motivated and professional cadres, a lot of the interior regions had limited administrative capacity.
Xi's admin (most likely Li Keqiang) pushed a lot of QoL improvements like indoor plumbing, better quality of rural and vocational schools, more efficient distribution of direct benefits, etc but it's still very much a work in progress.
Also, Hu's model was definetly opposed by the "Red Family" due to the corruption and perceived undermining of the values of the Chinese Revolution [0], and they had the pretention of thinking they were much like the "Gang of Four"
Yep! There's a reason why I linked that specific reunion.
It was a who's who of the Red Families in 2011 (including Xi's), and it was there that Xi Jinping's leadership challenge to Bo Xilai truly began.
"参加纪念活动的有：叶帅之女叶向真、叶帅的侄子叶选基、胡耀邦之子胡德平、华国锋之子苏华、彭真之子傅洋、习仲勋之女习乾平、陆定一之子陆德、王若飞之子王兴、黄炎培之子黄方毅、肖劲光之女肖凯、张爱萍之子张胜、纪登奎之子纪坡民、苏振华的子女苏承军和苏承业、张鼎丞之女张延忠、谭震林之女谭径远和女婿虞大江（江华之子）、耿飚之子耿远志、杨成武之女杨俊生和杨杨、张廷发之子张鹏、马文瑞之女马晓力、罗青长之子罗援、彭冲之子许海星、严佑民之子严小江、李琪之女李海文、包惠僧之子包楚弓、齐燕铭之女齐翔延、李鑫之子李赤子、贺炳炎之子贺陵生、王诤之子王苏民、程世才之子程力、周希汉之子周泰阳、史进前之子史小刚等。周总理和叶帅等人当年身边的工作人员以及当年执行逮捕“四人帮”命令的8341部队的部分老同志也参加了纪念活动"
> Li Keqiang wasn’t a Xi ally and was constantly sidelined by him
Towards the end that's true, but Li still had plenty of autonomy in his role and a lot of the social reforms and poverty eradication policies that happened in Xi 1 and 2 were really similar to the policies Li promulgated.
China has also dramatically increased the size of its military fleet, released movies (Wolf Warrior) to build nationalistic zeal and it's Diplomats have taken a liking to that nationalistic / aggressive stance.
There is no 'projection' here. It's simply acknowledging that China's war investments have grown dramatically and it's own diplomacy has shifted as a result.
Going further, nor does technological "leadership" guarantee a better quality of life.
Technological leadership - and military advantage - do contributed to what rulers really care about.
US might be full of people who can make social media apps, not many who can build a factory and actually produce stuff, and this was discussed here before: https://news.ycombinator.com/item?id=36828861 (same goes fo EU).
There's a reason I posted it.
Also visit a Costco or Walmart next time and look at the "Made in" tag.
Further, when you consider the aggregate production in Mexico, Vietnam, Malaysia, Taiwan, Japan, Thailand, etc and recognize that an awful lot of it, including electronics, is managed and built by US manufacturing outssourcers like Jabil, it become pretty obvious the US hasn’t lost its edge in manufacturing. It’s just shut down the Knick nack production onshore. Rebuilding those factories in a crisis could be done rapidly, and the labor skill required to oversee a machine pressing scissors is pretty low - that’s why it can be offshored to an unskilled labor pool with such ease.
China dominates these through a willingness to exploit itself for a very low margin and extreme scales. These are definitely advantages - if you don’t care about your people and are willing to destroy your environment for dominance in producing forks, you’ll probably be allowed to. The margins are so low and the barrier to reentry is tiny.
High end custom stuff, sure... but at the end of the day, you need cheap shoes for millions of people to wear every day, and not a lot of those are made in US.
I live in a small eu country and here, the chinese (hisense) bought one of our companies, just to be able to do the final assembly stage of electronics, to stick the "made in eu" sticker on.. everything else is done elswehere, including that companies original products. And we used to be a former socialist country that produced everything, from cars to computers, tvs, etc.... now we don't have enough basic electricians and plumbers for household work, before even thinking about building any kind of massive production facilities. Even kids want to be influencers, not assembly line workers (and we have to import those too).
You don't get cheap products in a country where workers aren't cheap.
This isn't an issue of "the US cannot manufacture their own shoes", it's an issue of "the US customers have gotten used to paying prices that are too low to be achievable in humane conditions".
Shoes would become more expensive once you have to pay the workers, but there will still be enough shoes for everyone.
> Even kids want to be influencers, not assembly line workers (and we have to import those too).
Not every kid who wants to be an astronaut becomes an astronaut.
> we used to be a former socialist country that produced everything, from cars to computers, tvs, etc....
The west can and will easily reenter these markets once it becomes profitable or necessary to do so.
Of course this process would be costly and would require quite a few people to change careers, but its far from infeasible
The manufacturer of vehicles, airplanes, factory automation equipment, high end weapons, medical equipment, and a huge array of high end stuff that requires real expertise and is easily transferable to making forks, is still quite well alive in the US and there are few parallels on earth other than in Europe.
Economic specialization has meant the western countries specialized in extremely high end manufacturing and the engineering and management of low end manufacturing globally. In a crisis the turn around to bring it home would be breathtaking.
Now everyone wants to go to college, many to study something where there are literally no real jobs (with added benefit) available (ancient greek, comparative literature, sociology, etc.), and then end up in the public sector, where it doesn't matter if you studied electrical engineering or latin language, all college diplomas are worth the same.
I mean sure, everybody wants to be a superhero, etc. (or pewdiepie-sized influencer for the more younger generations), but once you're 14yo, ending elementary school, you have to choose your next level of education (general gymnasium, one of the technical highschools, economics, construction, cosmetics, etc.), and back then a lot more people chose their actual future careers at that moment than now, where parents push them to gymnasiums, colleges, where some fail (and some somehow succeed), and you then have baristas and warehouse workers with masters degrees and not enough electricians, construction yard workers, factory workers, etc. (electricians etc. are especially bad, because you actually need a high school diploma (or similarly hard alternatives) to do the job).
Polar sailors or jet pilots work as well.
American manufacturing exceeds at anything energy intensive or which can be automated. We suck at manual tooling, as Cooke points out.
That applies to, in general, anything big. Big production runs. Big in mass. We’re good at big.
Taiwan. Foxconn is a Taiwanese company, though most of their factories are in China and their founder is a notorious CCP collaborationist.
Here’s what Tim Cook, CEO of Apple, had to say:
"There's a confusion about China. The popular conception is that companies come to China because of low labor cost. I'm not sure what part of China they go to, but the truth is China stopped being the low-labor-cost country many years ago. And that is not the reason to come to China from a supply point of view. The reason is because of the skill, and the quantity of skill in one location and the type of skill it is...The products we do require really advanced tooling, and the precision that you have to have, the tooling and working with the materials that we do are state of the art. And the tooling skill is very deep here. In the U.S., you could have a meeting of tooling engineers and I'm not sure we could fill the room. In China, you could fill multiple football fields..."
Source:
https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-...
That doesn’t mean China is unable to do this themselves, but it’s just not their focus. I’m sure the decoupling we are doing and export controls will change that faster than would otherwise happen.
The specific market though the US is unable to easily rebuild and bootstrap is end to end semiconductor manufacturing. Our supply chain is almost entirely tied to East Asian manufacturing which is a geopolitical and economic problem for us. Part of decoupling is trying to break that by creating a bipolar manufacturing structure for semiconductors, and increasingly battery and solar.
Sure, one could probably find even lower labor costs elsewhere, and the infra in place is definitely a benefit, but let's not pretend we couldn't just as easily do it in the US if it weren't for those pesky labor costs.
But then you visit one of the electronics markets in shenzen, and see why everything is still there. Just look at eg. "strange parts" videos on youtube. Need 64 gig memory chips for iphones? Just visit a physical store and buy a few. Need more? Just ask the guy there, and he'll find someone to sell them to you. Walmart ordered christmas ornaments from your plastic company? Need blinking led modules? There are 5 companies nearby that will sell them to you, and you can get them in days, not months. Something like this doesn't exist anywhere else.
Fast forward to today, per Cook’s own words, China “stopped being the low-labor-cost-country” it once was, so in effect we’re not only back to paying higher prices, now we also no longer have the capabilities to manufacture and engineer that we once had, so it’s a massive net loss for the entire country, and yet Tim Cook is essentially calling people out of touch for suggesting the US could handle the job - when companies like his own are the very reason it no longer easily can today.
Friendly suggestion for Apple and other American corporations: please consider using some of those tens of billions in cash on hand each of your companies have, and invest in helping fix the problem you contributed to: help bring manufacturing and tooling engineering back to your home country. You can solve some of the most difficult engineering problems in the world, you can design a chip that squeezes billions of transistors into a tiny fingernail sized chip, and you can make pocket sized phones that have changed the world. You can do this too!
Apple is big. But not that big. It responds to economic signals just like anyone else. The problem is at the policy layer, not individual actors.
This ignores that US tooling engineers wages would likely have been prohibitive enough to allow enough of them to be coordinated for Apples visions, or that there's enough of them by the time ipod rolled around in 2000s. Some large engineering endeavours takes a lot of specialized talent, and at some point PRC enabled access to another tier of scale and cost of talent that most countries couldn't replicate - there was simply a new tier of talent/supply chain agglomeration you get when PRC admin throws 400m bodies at a problem build up entire concentrated industrial parks / supply chains. If X commodity consumer product need 10 units of talent at 10 cost, US only has 5 at the cost of 15, PRC has 40 and can do it for the cost of 8 due to various structural advantages on top of talent access. The more fundemental bottleneck is US simply doesn't have 10 units of talent, and never had the economics of combining 10 units of talent that can do X for the cost of 10, so the envisioned product is not possible in US, ever. Of course Apple could have payed more and settled for less to protect US workers.
European here: I have some products made in USA in my house besides Intel CPUs and Micron DRAM/NAND: a plastic AeroPress coffee maker with paper filters, a plastic Oral-B toothbrush. Nothing fancy or expensive. Do those items strike you like some exotic, precise, high-margin widgets that only the US can make? Spoiler alert: they aren't, even after the EU import taxes and VAT.
So how come US can make mass market commodity tooth brushes and plastic coffee makers locally considering the high wages but we pretend it's not possible? I'm not american so I don't have the right perspective as the locals but from my vantage point it doesn't seem impossible that the US can make other stuff that's usually offshored to the cheapest bidder in Asia. To me, the issue seems corporate greed that refuses to do it, not that it's not possible to make profit making commodity goods in the US as the proof is in the pudding above.
Another proof is that I have a shit tonne of Swiss-made commodity goods in my house that aren't some nanometric precision widgets but for example my plastic trash can and another toothbrush, and Switzerland also has some of the highest wages in the world.
America’s advantages are deep, risk-taking capital markets and cheap energy. Our hurdles are high labour costs and stricter-than-China environmental rules.
Our advantage against China is in energy and scale-intensive production that can be automated and done cleanly. This applies to most extrusion methods, which make cheap goods. It also applies to heavy machinery, which is why we make lots of big engines and electric motors.
That being said almost all of the non-grocery products in the U.S. are already made elsewhere with cheap labor, i.e. Asia, Latin and South America, etc.
I assuming James Lewis of Strategic Technologies Program should:
>The digital economy depends on cloud computing, next generation networks (like 5G and 6G), and software (like AI products) and these are technologies where the United States has a strong if not dominant position.
Focuses on counter-productive digital economy i.e. tutoring, that PRC deliberately crushed to redirect effort at synergizing digital economy with real economy, i.e. ai to boost industrial output and now we are seeing intelligent gigafactory efforts accross multiple strategic sectors. Sure no one proxy indicator matters, but multiple proxy indicators across value chain and S&T do, and we're not talking about shoes, which no one thinks is a "crucial" industry. Like if article was titled US is losing the, ship building, renewable energy, ev, hypersonics, shoe race, readers would go, that's a few fairly important sectors to lag on, also whytf is shoes in there.
>China is good at manufacturing what others have invented but no longer so good at innovation itself. This is the result of political change. China was becoming a leading innovator when it was politically open, before 2012. ... Under different political leadership, China would be a much more formidable competitor, but China made a political decision that values continued party control over innovation and its ability to innovate is at risk.
It's telling he thinks PRC pre 2012 (aka pre Xi) was more innovative. Going to chalk it up to another blob shibboleth to not fall out of favour with Washington Overton masters from how often I see this repeated all of a sudden. Reality seems to be PRC innovation has enhanced by leap and bounds while retaining massive second mover advantage. They can afford to be a year or two behind on LLM craze and watch US spend trillions to find what's worth replicating/monetizing in the digital space. Meanwhile, US going to have to figure out how to reindustrialize and mass manufacture things it innovates, without all the training data on manufacturing locked in minds of specialists on Chinese manufacturing floors. What's gotten US into current mess is precisely PRC has been exceptionally good at innovating on manufacturing (process) and can out make US using second mover advantage in more and more strategic sectors it choose to catch up on. Yesterday it shoes, tomorrow it's MRIs.
I've had discussions with you on HN before and they were fairly acrimonious. If there were block functionality on HN I'd do it to you.
I don't want to get banned on HN for flame wars.
https://github.com/insin/comments-owl-for-hacker-news/
But you posted this article, I have opinion, which is not directed solely at you but others interested (and especially not interested) in reading. If you're going to post blobby/wonky discourse piece that needs to be called out on, I'll criticize the piece accordingly. I'll take effort to not directly to _your_ comments from now on.
US can still pull itself out of the pit it dig itself and has some adventages but also worth to look where old empires such as Greek, Roman, Egypt, Mongolia, Persia are today. UK also is not a paradise today.
Loosing race maybe will take few decades longer but you just have to follow the current trajectory to make prediction unless trajectory changes and currently doesn't look good unfortunately.
I'm European but been living in SE Asia for decade and the progress they did in last 10 years is stunning.
I think we just spent the last hundred years proving that there’s no net-benefit to widescale competition - it is deterministic at this point that widescale competition only benefits those who seed and stoke competitive fears.
All, and I mean every single social benefit that is a net benefit globally, has come from cooperation in spite of or in the shadow of some supposed resource competition
Cooperation is the only possible sustainable future set of actions for people who aren’t psychopathic resource exploiting tyrants
Determining what goals to cooperate towards is the number one challenge of our time and what we should be putting all of our effort into
How do we peacefully cooperate as a global community of 8 billion people?
If you want to work on something, work on that problem
In other words, profit is the only thing that matters.
This is a practical definition of insanity.
Can an activity be sustainable without involving profit or depending on profitable activities? Please share examples.
When transactions are informed and voluntary and there is profit in a competitive market that is wealth created. The key is to have these conditions and many real economies struggle with this because the payback for corruption and monopoly is high.
A great deal of computerized products/services are today intentionally made to require constant upkeep so that they can produce an ongoing revenue stream when when no real work is needed. That's obviously not economically ideal, and their revenue is in some sense a measure of drag.
Consider for example music streaming. At 3 minutes per song and using 128 kbps Opus, you could have your favorite 100,000 tracks stored on your phone for about $15 worth of flash storage. From that perspective, Spotify revenue seems like an absurd thing to include as a measure of "progress", particularly if you mostly listen to music from 30+ years ago, which of course is not being made anymore.
Non-profit organizations, on the other hand, depend on donations or service payments for their revenue. While they do not declare a "profit" at tax time, any surplus they generate is typically reinvested in their operations or distributed to employees or members. Therefore, while they don't show a profit for tax purposes, they do generate surplus funds (aka profits) or depend on for funds from other activities that do.
My university recorded a bunch of lectures for remote students a decade ago when I was there. They could release them to the public (in fact, while I was there, anyone could go view them for free in person in the library) at essentially no cost, creating a large amount of wealth but no profit. But they haven't and likely won't.
In 2020, the government artificially tanked interest rates, causing asset holders (e.g. homeowners) to profit greatly without creating any wealth.
Anyway, the other poster's point was that profit generating activity is not the only activity or the most important activity. And in this very moment you and I are doing that with our discussion. There are other benefits to having a good communication network, and it makes sense to measure the coverage and capacity of the network, not the amount of money people make using it, which is just one small part of its use.
Profit is the difference between the cost of some activity vs the benefit of that activity. How else can you measure wealth creation?
> My university recorded a bunch of lectures for remote students a decade ago when I was there. They could release them to the public (in fact, while I was there, anyone could go view them for free in person in the library) at essentially no cost, creating a large amount of wealth but no profit. But they haven't and likely won't.
Have you considered that the university may fear getting sued?
https://news.ycombinator.com/item?id=26136320
> In 2020, the government artificially tanked interest rates, causing asset holders (e.g. homeowners) to profit greatly without creating any wealth.
To explain why the above statement is nonsensical it would take a couple paragraphs but I expect most readers will not need that. It speaks for itself.
> profit generating activity is not the only activity or the most important activity.
To spend and benefit from wealth you have to create it and profit is a measure of wealth creation. How did you read my words and reach the conclusion that I think profit generating activity is “the only activity or the most important activity”?
> And in this very moment you and I are doing that with our discussion.
Yes, we are enjoying leisure time because of activities that generated surplus wealth (including knowledge) by millions / billions of individuals now and in history. Without surplus wealth our lives might be more like those of our relatives in the animal kingdom.
Profit, as in dollars in minus dollars out, is much easier to calculate, but only tangentially relates to wealth.
Whether a regulation may prevent it doesn't change the fact that they could generate massive wealth with no one profiting or incurring a loss by distributing it. For the purposes of the thought experiment, assume it already had captions for the remote students for whom it was recorded.
What do you think is nonsensical? That the government (or the Fed under the direction of the government) intentionally pushed down interest rates with a policy of QE? That lowering rates increased the price of existing assets, generating a profit for the owners? Or that this was just inflation, not wealth creation?
In any case, when rates dropped, first thing I did was buy a house, which almost immediately went up by 30% (based on comps). So apparently the reasoning at least had some predictive power. I also made some large stock gains going 100% into the market, but was too timid to use margin to multiply that.
The original comment that you quoted and responded to was criticizing the article for implying that profit generating activity is all that matters (and hence the metric to measure instead of e.g. network deployment), ignoring non-profit activity which is arguably more important.
Yes any reasonable definition of "wealth" will depend on utility metrics that vary from person to person. Despite these differences there is ample evidence that societies are able to measure wealth just fine using conventional currency units such as dollars, shekels, euros, ... These units can be exchanged back for things that depend on utility metrics that vary from person to person. It is these utility differences that drive the modern economy. If two parties have the same value for a good or service why would they transact with each other? Always there must a difference in value for a voluntary transaction to happen.
>That the government (or the Fed under the direction of the government) intentionally pushed down interest rates with a policy of QE? That lowering rates increased the price of existing assets, generating a profit for the owners? Or that this was just inflation, not wealth creation?
By design currencies lose value and they are meant for short term holding. When a ruler shirks all the measurements using that ruler are larger was there wealth created? Obviously not. Wealth is "stuff": factories, power plants, roads, cars, houses, farms, ... The amount of currency may double and prices of everything double but wealth can be unchanged.
> In any case, when rates dropped, first thing I did was buy a house, which almost immediately went up by 30% (based on comps). So apparently the reasoning at least had some predictive power.
A lotto winner shares their "system" with you, do you believe "its predictive power"? So let's consider your logic: When zoning restrictions or lots of immigration causes a housing shortage so a few houses sell for double the price does that mean the wealth in all houses has doubled? What do you think will happen to cost of housing if populations decline? Are populations due to decline anywhere? What happened to price of oil when there was too much of it during COVID?
> I also made some large stock gains going 100% into the market, but was too timid to use margin to multiply that.
So next time maybe you and certainly others like you will be tempted to use leverage causing valuations to climb ever higher pulling in others to do the same thing and how do you think this will end when the price bubble pops? Do you think price bubbles create wealth? They create the illusion of wealth because people think the paper wealth is wealth but paper wealth is not wealth. When Telsa stock price doubles in a day it is unlikely that the amount of Tesla stuff has doubled in a day. What happened is a few shareholders changed how they feel about Tesla and stock prices represent those feelings rather than wealth. This is true about all bubbles including housing.
> Profit, as in dollars in minus dollars out, is much easier to calculate, but only tangentially relates to wealth.
Surplus value can also be measured in heads of cattle, pork bellies, bushels of wheat, gallons of oil, units of energy, hours of labor, ... all of which convert to universal currency units based on supply / demand for these goods.
> The original comment that you quoted and responded to was criticizing the article for implying that profit generating activity is all that matters (and hence the metric to measure instead of e.g. network deployment), ignoring non-profit activity which is arguably more important.
Yes, I asked "Can an activity be sustainable without involving profit or depending on profitable activities? Please share examples."
Notice so far I have yet to get any examples.
I also said that "When transactions are informed and voluntary and there is profit in a competitive market that is wealth created."
So what is the purpose of those who deploy communications networks? Create wealth? Spend wealth? If spending wealth is the purpose then profits do not matter. If wealth creation is the purpose, how else to judge success if not by whether the benefit is more than costs (aka there is a profit)? Why do it otherwise?
I explicitly used covid inflation as an example where wealth was not created. Asset owners made large profits not because they created anything or provided any value, but simply because the unit of account changed to their benefit (notably here, the government did not report increased inflation for almost 2 years after it happened. Anyone looking at asset prices saw it immediately).
I gave an example of a highly valuable activity one can do using a network which generates no revenue and has no cost (keeping in mind the original statement being criticized was purely about revenue from services that use the network, not the network itself): having 1:1 video chats with your loved ones. It neither spends nor creates wealth, but it can nonetheless contribute to our notion of "success" in creating the network.
The purpose of a communication network is to enable communication. There are plenty of non-commercial reasons to do that. In fact the Internet originally had rules against commercial use.
You're absolutely right that there is often disagreement and controversy around how to properly measure inflation and the real purchasing power of money over time. Reasonable people can disagree on the right methodology. That said, I don't think the disagreements are so large as to render inflation measures meaningless. There are established economic principles and data sources used to estimate inflation (CPI, PCE, etc.), and while imperfect, they do provide a useful gauge. The Fed and other economic authorities put a lot of work into getting the numbers right, even if some will inevitably dispute them.
> I explicitly used covid inflation as an example where wealth was not created. Asset owners made large profits not because they created anything or provided any value, but simply because the unit of account changed to their benefit (notably here, the government did not report increased inflation for almost 2 years after it happened. Anyone looking at asset prices saw it immediately).
Do you think that when the amount of money in circulation doubles and prices double this creates “large profits” for those selling at the doubled prices? You seem intelligent so I am struggling to make sense of your comment above.
Certainly tax laws should be changed so that citizens do not pay capital gains taxes due to gains that are due to government money printing and inflation. This is controversial because the wealthy would benefit far more from fixing this.
> The purpose of a communication network is to enable communication. There are plenty of non-commercial reasons to do that. In fact the Internet originally had rules against commercial use.
I did not ask what the purpose of a communication network is. I asked “what is the purpose of those who deploy communications networks?” Do you see the difference this makes? Governments may deploy them for reliable communications during war as was the purpose of the early internet - what matters is robustness and performance and profit is an alien concept for such projects since they are funded by taxes. When communications networks are built by sellers of communication services however (potential) profit is the number one concern to make sure the business is sustainable.
Any sort of public infrastructure such as electric grid, railways, internet, water supply and treatment, roads, libraries, educational institutions.
In Western countries tax due depends on there being some surplus to tax and if there is insufficient surplus there is no tax and you may qualify for government benefits instead. Taxes paid can only be earned sustainably from activities that generate a surplus. How else could it be?
> There are countries with mandatory military service today and they're doing fine.
How many of these countries have governments that do not depend on taxes? If the government depend on taxes and military service depends on government then military service depends on taxes as well does it not? And if military service depends on taxes it also depends on the surplus that these taxes are collected from else how can military service be sustainable? Solider need food, housing, etc some surplus generating activity must pay for that. It used to be an army would pay for itself by looting etc but clearly that is not sustainable.
> Slavery is perfectly sustainable; it existed across the globe for thousands of years. There are reasons it's not great, but sustainability isn't one.
Societies that use slavery have difficulty competing with ones that do not. If the use of slavery was sustainable why did slave using societies not have the geopolitical power to keep doing it? You think slave owners gave up their slaves from goodness of their hearts?
The whole notion of "a surplus" also doesn't really make sense. Beyond food and basic shelter to keep people barely alive, everything can be considered to be "a surplus".
I'm not familiar with how the EU works, but in the US, we control our own currency. Since 1970, there's been 4 years that enough taxes were collected to cover spending. "Governments need taxes to buy things" is not how things work. We've also had a trade deficit since the 70s, so no "surplus" there.
Legal slavery still exists today including in the US (the constitution still explicitly allows it), so I'm not sure where it was outcompeted. But yes people are now uncomfortable with it, and I wouldn't be surprised if e.g. the US abolishes it during my lifetime.
This is again all beside the point, which is just that non-profit-seeking activity is important too.
How it that a significant portion of Americans, typically around 40% to 45%, do not owe federal income taxes? This includes people whose income falls below the standard deduction threshold, which varies depending on filing status, and those who qualify for enough tax credits to offset their tax liability. Does 40-45% of America have no revenue? Where do they live? What do they eat? They have revenue but not surplus revenue (as defined by tax code) so they pay no tax on their revenue.
> The whole notion of "a surplus" also doesn't really make sense. Beyond food and basic shelter to keep people barely alive, everything can be considered to be "a surplus".
That some complain about Western “basic food” and “basic shelter” is an indicator of how wealthy we are. Add to this “basic medicine”, “basic safety and rights”, “basic entertainment”, “basic transportation”.... What fraction of the global population alive today would trade places with those who enjoy these modern western “basics”? Same question but roll back time a few centuries? On the flip side, would you be willing to have your family and friends trade places with random people from centuries ago?
> I'm not familiar with how the EU works, but in the US, we control our own currency. Since 1970, there's been 4 years that enough taxes were collected to cover spending. "Governments need taxes to buy things" is not how things work. We've also had a trade deficit since the 70s, so no "surplus" there.
You raise tangential topics that it would take paragraphs to explain. Hopefully readers will not be confused.
> Legal slavery still exists today including in the US (the constitution still explicitly allows it), so I'm not sure where it was outcompeted.
You seriously believe today there is slavery in America? EU? Do you think your credibility improves when you argue as you do above?
> This is again all beside the point, which is just that non-profit-seeking activity is important too.
How did you read my words and reach the conclusion that I think non-profit-seeking activity is unimportant?
How wealth is spent is far *more important* than how wealth is created since if you are going to squander wealth what is the point of creating it. Notice to spend and benefit from wealth you have to create it and profit is a measure of wealth creation.
On slavery, I'm not familiar with the EU, but of course we have it in the US. I thought it was common knowledge that slavery (i.e. forced labor) is one of the punishments we have for crimes? I see news articles from as recently as 2018 about prisoners being given solitary confinement for refusing to work (I'll leave you to look into the psychological and physical effects of that and decide whether it qualifies as torture).
Arguably, the way we do child support is slavery-adjacent as well; support orders are not based on the child's needs or the level of expenses pre-separation, but on the level of income. So if you were frugal (and e.g. planning to FIRE) before separation, suddenly you can have a very large liability until several years after they become an adult (including needing to pay for college even if you otherwise wouldn't have done so), essentially requiring decades of additional work. Falling to continue producing that income can result in imprisonment.
The standard deduction and various tax credits are indeed designed to account for basic living expenses and ensure that those with lower incomes are not burdened with federal income taxes. While these deductions and credits may not cover all living expenses for everyone, they serve as a proxy for the essential costs of living.
The fact that 40-45% of Americans do not owe federal income taxes demonstrates that the tax system does consider the financial situation of individuals and their ability to pay taxes. The standard deduction is set at a level that is deemed sufficient to cover basic living expenses for most people. If an individual's income falls below this threshold, they are not required to pay federal income taxes because their revenue is essentially going towards covering their basic needs.
Furthermore, tax credits like the Earned Income Tax Credit (EITC) are specifically designed to provide additional financial support for low-income working individuals and families. These credits are a way for the government to acknowledge that these individuals may struggle to make ends meet even though they have revenue.
> You also have the 0% bracket for capital gains being several times the standard deduction. Do rich people living off investments just automatically have 3x the living expenses of W2 earners?
Regarding the 0% capital gains tax bracket being higher than the standard deduction, this is a separate issue related to how different types of income are taxed. It does not negate the fact that the standard deduction and tax credits are intended to account for living expenses and reduce the tax burden on those with lower incomes.
> On slavery, I'm not familiar with the EU, but of course we have it in the US. I thought it was common knowledge that slavery (i.e. forced labor) is one of the punishments we have for crimes?
While it's true that many US prisoners do work, characterizing it as "slavery" is misleading. The 13th Amendment abolished slavery but allows "involuntary servitude" as punishment for a crime. However, forced labor and slavery are not equivalent. Prisoners who work are paid wages (albeit low), have basic labor protections, and work as part of their rehabilitation and to offset incarceration costs. Solitary confinement, while highly controversial, is not used solely for refusing to work. The comparison to slavery ignores the profound historical differences between the brutal chattel slavery of the past and modern prison labor.
> Arguably, the way we do child support is slavery-adjacent as well;
On child support, you oversimplify how support is calculated. Child support is based on the child's best interests and seeks to maintain their standard of living. Support calculations consider both parents' incomes, time spent with the child, and the costs of the child's needs. While wealthier parents may pay more, the goal is for the child to benefit from the totality of both parents' incomes as they would in an intact household. Characterizing this as "slavery-adjacent" because a parent must work to pay support is hyperbolic - parents have always had to work to provide for their children. Imprisonment for nonpayment is rare and occurs only in cases of willful refusal to pay despite having the means.