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Comment by derriz | Hacker News Reader

Countries don’t have infinite supplies of labor and capital. The more of an economy dedicated to making cheap plastic toys or stitching tshirts, the less economic resources available for inventing the next iPhone. The very reason China is becoming more competitive in higher value-added economic activities is because China itself has moved away from low value economic activities - like manufacturing cheap clothing - these activities that have largely moved to poorer neighboring countries over the last decade or so.

And if you’re worried that the US is about to be out competed by China in the IP sphere, surely the US would be in a much weaker position if say 50% of its economy was focused on the production of cheap generic goods?

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yeah, i'm familiar with the just so stories told to us by economists, but the reality is that by moving the entire supply chain to asia there are huge knock on effects on our own ability to innovate and produce wealth

the us has papered over it w/credit (no coincidence that the credit card came out right when productive capacity was being shifted to asia) but eventually every country sits down to a banquet of consequences

same story as ever (florence under the medici, england under the whigs, etc) first productivity then usury

What economic "just so" stories have I presented? You accept that economic capacity is not infinite, right? Then you need to tell me from which sector would you reallocate workers to doing the things you listed: producing cheap plastic toys, low-value clothing, inexpensive electronics, TVs, computer assembly, low-value semi-conductors and CPU production.

Could you be more specific about the knock on effects of not making cheap plastic toys, etc. domestically? The US is still the clear global leader in technical innovation in nearly all sectors (and I'm not an American).

economic capacity is effectively infinite at this point, demand and raw inputs are the constraining factors (suggested reading: social credit (canadian not chinese)

Not making cheap plastic toys means you don't have the supply chain and expertise around plastics molding, which means you eventually lose the ability to produce housing for electronics, which means you eventually lose the ability to produce electronic components, etc. And as we see, this is exactly what has happened, just like we saw happen in Florence, England, etc. before when the elites became more interested in financialization/usury than in production.

I'm american and I don't think america is the clear global leader in technical innovation, particularly looking at electrification. We are pretty good at R&D but have lost a large part of our ability to manufacture due to the supply chain shift.

R&D is fine and all, but we've got (or had) a middle class to feed, and for the last fourty years we've been faking that with credit.

> economic capacity is effectively infinite at this point

This is a bizarre claim?

The total ability of an economy to produce goods and services is most certainly finite. For it to be infinite, we'd need infinite workers, infinite factories, infinite raw materials, infinite land, infinite infrastructure, infinite energy, etc.

I think the parent is referring to heavy financialisation of the economy in the West. As we've recently seen, such economy can grow quite unconstrained by the material concerns such as factories, energy or workers.

I’m not sure I understand? Financial services and insurance make up about 8% of US economy and 5% of that in Europe. I’ve seen no signs that these sectors or the economies they’re part of are growing in an unconstrained way?

What I mean is that the ability of the domestic economy to produce, with automation, is constrained mainly by demand and raw materials. Producing plastic toys would not make a dent in the productive capacity of the US and in fact would increase it by bringing the supply chain and expertise back to the US. This is obvious to anyone who hasn't had the misfortune of studying economics or listening to people who have. (I studied economics briefly in college.)

But of course, as I'm sure you recognize, that isn't the main point. The main point is that now we aren't even able to dominate high value manufacturing like microchips, despite being told we were only giving away the low end.

> But of course, as I'm sure you recognize..

I do not. When you say, “what I mean is economic capacity is constrained by demand and raw materials” - that’s a significant deviation from your claim that economic capacity is infinite which is why I asked you about it. I’m not a mind reader.

But even this claim makes no sense with your toy factory example. Building such a factory consumes no land, no construction workers or engineers’ time, requires no energy to construct or operate, requires no human effort at all to operate and all this can be done for zero cost?

Can you point to any example of such a factory anywhere in the world? I mean if this were possible, why would places like sub-Saharan not be full of such factories?

lol yeah ok man

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