We were sold down the river by our own elites, particularly on Wall Street and with the full complicity of the Economics Departments of the west.
"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.
Dems used to be pro labor, Repubs used to be pro business (on balance, but kind of served both when it made sense).
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.
Comparative advantage never made any sense. It's a model of a world without technology, without supply chains, without increasing returns to scale, and only two countries.
Replacing all the financial and political elites is a good idea, they have demonstrated incompetence at running the economy.
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.
I think this all started as some kind of national security consensus that we would help China by having free trade with them.
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!
Why the obsession with manufacturing jobs? Unemployment was still low (at least pre-covid) and total compensation, while not growing as fast as some people would like, is still higher than ever.
The problem isn't comparative advantage, it's that the US left the poor states to languish with poor education. So instead of higher quality manufacturing / blue collar jobs, non-educated folks got minimum wage service jobs.
The stock market and housing prices are higher than ever, so a large part of the population is doing good. Not just the elites have benefited from the spoils, people with retirement portfolios and paid-off houses are sitting nice and flush.
So few of these conversations actually discuss the reasons American manufacturing is so uncompetitive and assume it's entirely legislative/outside factors.
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?
All your points are down to lowering cost by exploiting workers more.
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.
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.
"Made in America" is a nice slogan, but "Not Made by an Enemy" would be more apt. Made in an Ally would be fine too (Canada, Mexico, Western Europe...)
I felt like we should have done that with Saudi oil after 9/11. Why did we let them have no consequences when their policies were most directly responsible for it, out of all countries in the world? We should have put a tariff on their oil and used Canadian crude until they stopped promoting extreme Wahabiism.
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!)
What you call "enemy" is, in this case, simply a fully independent nation. That is, one free to have goals and strategies that put its interest first. What you call "allies" are subordinate nations, free to pursue their own interest as long as it doesn't conflict with the interest of the US. The US are a perfectly independent nation. So is China.
Haven't heard that one. That would be the best expression -- Made by an Ally to co-brand with Made in America. Made in America protectionism raises the ire of all its allies (which over the last 4 years it has trashed).
How much of manufacturing output growth was driven by the boom in the oil/gas industry? People hear manufacturing and think electronics or cars, but petroleum and coal was 2x the size of the auto manufacturing last time I looked.
I think what companies really want is manufacturing as a service, much like cloud computing economics but for physical goods manufacturing. They want the ability to scale without building their own infrastructure, they don't want to deal with the personnel, they want to be able to lock-in only the capacity they know they will use and get a discount. The problem is that unlike cloud computing which can automatically scale, manufacturing as a service is all about people. You have to remove people from the equation to the point that the only people are debugging the machines.
Well I'm no economist, but this seems inevitable if (1) consumers want cheap products and (2) production is cheaper elsewhere. Given those conditions, any company that wants to survive will have to move production abroad (and those that do not will quickly be replaced).
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.
I wish Silicon Valley wasn’t just about software, particularly adtech. Some of the most brilliant minds are working on optimizing click ratios. There is some hardware tech (Apple, nVidia, Intel, Tesla), but vast majority of the engineers are working on cushy jobs paying $400k to serve ads.
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.
Let’s not ignore biotech. It’s experiencing a tremendous boom in SV (and in the Berkeley-Emeryville area). It gets way less attention than Tesla and Facebook, for some reason... probably because its products and innovations are much harder to explain to the public. (Though that may be an overly cynical answer with regards to the media.)
Very true. It would be great if these brights were working on important stuff like how to deal with plastics recycling and separation. Instead it’s about extracting as much as possible from existing tech.
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.
Thinking about SV as just adtech is pretty reductionist. Through another lens, SV basically solved big data and global software distribution and scalability.
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.
Money wants to make more money. And it doesn't care about national boundaries. It also isn't good at pricing catastrophes like the collapse-of-the-US-financial-system-because-of-the-collapse-of-the-electrical-grid catastrophe that we can't recover from because we can't make the transforms anymore and China won't sell them to us and our ports won't work without computers anyway, and so on.
Investment follows returns, or at least the speculative possibility of returns. Unfortunately, semiconductors, automation and manufacturing tech doesn't have the same upside capability. If you want 10-100X returns, you look elsewhere.
Hardware manufacturers have a ton of additional labor needed to produce things. The engineers can't all be paid 200k+ or they'll bleed the company dry. The highest margins are realized in markets with the lowest overhead. That's where everybody shifted to.
It took 2 days for the Moderna vaccine to be created, and it still hasn't been approved in the EU. We could be doing amazing things in bio with mRNA, Crisper and deep learning but the entire thing is so wrapped up in regulation in order to protect the incumbents that it is not a space worth working in.
Most stories like these completely misunderstand the issues with american manufacturing.
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.
“Take for example steel production. American employment in the industry has fallen by 55% since 1989, while chinese production is now 5 times higher.
...
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.
I remember this fortunately got at least a bit of debate time in US primary season. It looks like (as many things) there are multiple causes, and automation is definitely a huge one that can’t be ignored when talking about losing manufacturing jobs.
I don't see any talk of removing US dollar as a reserve currency.
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.
How many countries in the world manufacture commercial airliners? How many countries in the world manufacture automobiles sold around the world (don't forget a lot of 'foreign' cars are manufactured in the United States)? How many countries in the world has a private company manufacturing re-usable rocketry capable of carrying crews to the ISS?
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.
China is able to manipulate its exchange rate to regulate the relative prices of imports and exports. So are ~200 other economies in the world. The US doesn't have an exchange rate to fiddle with. Hell, it can hardly produce domestic inflation with its low interest rates, let alone devalue its currency.
True, but there is a reason it's been called "exorbitant privilege" - while nothing here is clear cut there lots of reasonable people would argue that there is a net benefit to US.
If China can move to DCEP (Chinese state crypto) and get their borrowers to follow their lead, the US will find itself in a tough position. In the end game for China, they displace the US and can avoid the dollar in trade.
[+] [-] recursivedoubts|5 years ago|reply
"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.
[+] [-] mc32|5 years ago|reply
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.
[+] [-] viburnum|5 years ago|reply
[+] [-] roenxi|5 years ago|reply
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.
[+] [-] jhallenworld|5 years ago|reply
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!
[+] [-] esoterica|5 years ago|reply
[+] [-] blackrock|5 years ago|reply
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.
[+] [-] babaganoosh89|5 years ago|reply
[+] [-] iphorde|5 years ago|reply
[+] [-] nikanj|5 years ago|reply
[+] [-] legitster|5 years ago|reply
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.
[+] [-] mncharity|5 years ago|reply
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...
[+] [-] benhurmarcel|5 years ago|reply
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.
[+] [-] mncharity|5 years ago|reply
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.
[+] [-] liminal|5 years ago|reply
[+] [-] earthboundkid|5 years ago|reply
[+] [-] jl6|5 years ago|reply
[+] [-] 908B64B197|5 years ago|reply
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!)
[+] [-] ryandrake|5 years ago|reply
If there is one thing America is good at making, it's enemies.
[+] [-] Udik|5 years ago|reply
[+] [-] boringg|5 years ago|reply
[+] [-] esoterica|5 years ago|reply
https://fred.stlouisfed.org/series/OUTMS
Manufacturing employment, on the other hand, is down substantially because of automation.
[+] [-] WillPostForFood|5 years ago|reply
[+] [-] mips_avatar|5 years ago|reply
[+] [-] roland_nilsson|5 years ago|reply
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?
[+] [-] m463|5 years ago|reply
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?
[+] [-] fermienrico|5 years ago|reply
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.
[+] [-] haram_masala|5 years ago|reply
[+] [-] spaetzleesser|5 years ago|reply
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.
[+] [-] aeternum|5 years ago|reply
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.
[+] [-] nikanj|5 years ago|reply
Intel and Tesla are made in the US afaik, but even the hardware startups we do have still tend to manufacture abroad.
[+] [-] javajosh|5 years ago|reply
[+] [-] s1artibartfast|5 years ago|reply
[+] [-] m463|5 years ago|reply
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.
[+] [-] kevin_thibedeau|5 years ago|reply
[+] [-] tomjen3|5 years ago|reply
[+] [-] jjk166|5 years ago|reply
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.
[+] [-] kernel-dump|5 years ago|reply
...
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.
[+] [-] chillacy|5 years ago|reply
[+] [-] glial|5 years ago|reply
[+] [-] nine_zeros|5 years ago|reply
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.
[+] [-] taylodl|5 years ago|reply
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.
[+] [-] Tycho|5 years ago|reply
[+] [-] EdwinLarkin|5 years ago|reply
[+] [-] prionassembly|5 years ago|reply
Cf. https://en.wikipedia.org/wiki/Exorbitant_privilege
[+] [-] ska|5 years ago|reply
[+] [-] twobitshifter|5 years ago|reply