When the North American Free Trade Agreement was first signed in 1994, proponents said it would eventually create jobs for the U.S. economy.
17 years later, a new report estimates, the American worker only has hundreds of thousands of job losses to show for it.
According to a report by Economic Policy Institute economist Robert Scott, entitled "Heading South: U.S.-Mexico trade and job displacement after NAFTA," an estimated 682,900 U.S. jobs have been "lost or displaced" because of the agreement and the resulting trade deficit.
I know it's HuffPo, but still, free trade doesn't exactly benefit people below the very top, and those that get fairly terrible jobs in places we outsource to.
not sure I can make much productive headway without explaining mainstream econ's own accounts of why shareholders might rationally decide to overpay senior management. It's not really intuitive unless it's possible to appreciate that it is actually the default outcome. Do you know any good syntheses of principal-agent problems in general for the layman? I can't think of any easily. The realistic ones out of my corporate finance handbook are too detailed.
For anyone else: the empirics makes it very suggestive that skyrocketing 0.1% wages are related to US-specific corporate governance issues. There's a whole pile of Stuff that makes bad behavior by US senior management especially likely (especially diffuse and weakened stakeholders, CEOs with excessive equity and board power, etc.), and a whole pile of statistics that US senior management do behave uniquely badly.
ronya on
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HacksawJ. Duggan Esq.Wrestler at LawRegistered Userregular
edited November 2012
Apple has the majority of their operations in America, despite assembling most of their gadgets in other countries. They actually employ more Americans than Not Americans, by orders of magnitude. That's pretty much the norm for companies who sell mucho SKU to the American market. Companies that do the opposite are rare, and are usually foreign conglomerates to begin with.
Hacksaw on
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Captain Marcusnow arrives the hour of actionRegistered Userregular
Why is protectionism so bad? I know it creates inefficiencies in the market or something like that, but shouldn't a business that's based in a country be regulated to serve that country's best interests?
Sure, we've been signing free trade agreements like crazy, but all they seem to do is benefit foreign workers and megacorporations but not Americans. The government's job is to serve its citizens, not those of foreigners or "business". Free trade for its own sake is a dumb idea.
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
This thread was going so well, and now it's exhausting to keep up with
One misconception that I'd like to clear up is this "CEO compensation is pulled from a hat" idea. Boards of directors determine CEO compensation through consultation with professional compensation consultants who review all of the data on pay at other comparable companies. Based on this data, the board negotiates against the CEO, and all of the pay data is disclosed to shareholders, who now even have the right to vote on It. The vote is non Binding, but everyone who has ignored a no vote has been sued, and the main body that advises institutional investors on proxy voting (ISS) will recommend that the shareholders vote against each board member if the vote is ignored.
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HacksawJ. Duggan Esq.Wrestler at LawRegistered Userregular
Businesses that have actual, physical operations in this country still have to run those operations according to the letter of US law. The problem is that US law is pretty lenient when it comes to restraining the more awful base impulses and actions that arise from the current toxic cesspit that is US corporate culture.
When the North American Free Trade Agreement was first signed in 1994, proponents said it would eventually create jobs for the U.S. economy.
17 years later, a new report estimates, the American worker only has hundreds of thousands of job losses to show for it.
According to a report by Economic Policy Institute economist Robert Scott, entitled "Heading South: U.S.-Mexico trade and job displacement after NAFTA," an estimated 682,900 U.S. jobs have been "lost or displaced" because of the agreement and the resulting trade deficit.
I know it's HuffPo, but still, free trade doesn't exactly benefit people below the very top, and those that get fairly terrible jobs in places we outsource to.
Quick note: at the early 2000s such studies generally showed American job increases, not losses. Impose a broad trend of technological growth atop this, faster in the US than in Mexico, and you get an obvious eventual decline in US manufacturing employment in the relevant Mexico-exporting sectors. Come on, it's been seventeen years.
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HacksawJ. Duggan Esq.Wrestler at LawRegistered Userregular
I mean, there is an argument to be made for US economic protectionism, especially vis a vis developing world environmental policy. The problem is, engaging in said protectionism means people like you and I likely wouldn't be able to afford iPhones, or whathaveyou. Free Trade means cheaper stuff. Try telling your average American consumer to give up on getting cheap stuff when already they can barely afford it to begin with.
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mrt144King of the NumbernamesRegistered Userregular
I mean, there is an argument to be made for US economic protectionism, especially vis a vis developing world environmental policy. The problem is, engaging in said protectionism means people like you and I likely wouldn't be able to afford iPhones, or whathaveyou. Free Trade means cheaper stuff. Try telling your average American consumer to give up on getting cheap stuff when already they can barely afford it to begin with.
gotta pick your battles on this one.
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HacksawJ. Duggan Esq.Wrestler at LawRegistered Userregular
If we're going to blame anything for a severe drop in manufacturing jobs in the US, mechanization is the main culprit. It was only a matter of time until we figured out how to make robots that do it faster, better, and more efficiently.
This thread was going so well, and now it's exhausting to keep up with
One misconception that I'd like to clear up is this "CEO compensation is pulled from a hat" idea. Boards of directors determine CEO compensation through consultation with professional compensation consultants who review all of the data on pay at other comparable companies. Based on this data, the board negotiates against the CEO, and all of the pay data is disclosed to shareholders, who now even have the right to vote on It. The vote is non Binding, but everyone who has ignored a no vote has been sued, and the main body that advises institutional investors on proxy voting (ISS) will recommend that the shareholders vote against each board member if the vote is ignored.
there's some evidence to suggest that such advisory bodies increase wages too much, and the US does rely especially much on them
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HacksawJ. Duggan Esq.Wrestler at LawRegistered Userregular
I mean, there is an argument to be made for US economic protectionism, especially vis a vis developing world environmental policy. The problem is, engaging in said protectionism means people like you and I likely wouldn't be able to afford iPhones, or whathaveyou. Free Trade means cheaper stuff. Try telling your average American consumer to give up on getting cheap stuff when already they can barely afford it to begin with.
gotta pick your battles on this one.
Yup. You're never going to convince the frugal American shopper to Buy American when it could mean paying twice as much for a product of no discernible difference in quality.
Edit: when the product is already expensive to begin with, that is.
This thread was going so well, and now it's exhausting to keep up with
One misconception that I'd like to clear up is this "CEO compensation is pulled from a hat" idea. Boards of directors determine CEO compensation through consultation with professional compensation consultants who review all of the data on pay at other comparable companies. Based on this data, the board negotiates against the CEO, and all of the pay data is disclosed to shareholders, who now even have the right to vote on It. The vote is non Binding, but everyone who has ignored a no vote has been sued, and the main body that advises institutional investors on proxy voting (ISS) will recommend that the shareholders vote against each board member if the vote is ignored.
My problem here is similar to the housing bubble. When you're only determining your numbers in relative terms, there's no anchor to keep it grounded.
If we're going to blame anything for a severe drop in manufacturing jobs in the US, mechanization is the main culprit. It was only a matter of time until we figured out how to make robots that do it faster, better, and more efficiently.
Who builds the robots?
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HacksawJ. Duggan Esq.Wrestler at LawRegistered Userregular
If we're going to blame anything for a severe drop in manufacturing jobs in the US, mechanization is the main culprit. It was only a matter of time until we figured out how to make robots that do it faster, better, and more efficiently.
No, I read them and understood them. You kept pushing the "no protectionism" argument, and there's Krugman arguing that some protectionism can be good.
Also, I knew you would point out the caveats with glee.
There's a difference between the limited short-term protectionism that Krugman says can be okay sometimes in abnormal conditions, vs comments like "Also, sorry, I care more about American jobs than Chinese jobs. I'm American and I'm not a globalist" that imply protectionism as a permanent operating assumption.
I can agree with at, but by the same token I feel that if you're going to sell a product in a country then you should have the decency to employ them, or be an employer in that country, especially if it won't affect your bottom line that much, and by the same token if you're going to make a product in a country, you should have the decency to pay the people who work for you enough to buy the product they're making - that is the problem the Chinese are having now - making all this technology for other people to buy.
I'm actually a fan of everyone having a job and making a decent living, world-wide, but, again, how do you get around resource depletion?
If everyone in the world, down to the last man, bought and iPhone, because they wanted one, we might, in theory, run out of materials to make iPhones. What if we ran out of materials to make the microprocessor? These things are not impossible; they're inevitable unless we can somehow create more resources from nothing. No one answers that point sufficiently since it breaks the "everyone can be equal and happy and have what they want" mindset.
Also, I understand the impulse to paint me as Ross Perot personified, but my opinions are a little more nuanced than they're being made out to be.
You work in an industry(software dev) where your end product uses practically the same resources to ship 10 units as 1000 as 10000000 and you don't see how we can globally move away from a purely resource dependent economy?
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HacksawJ. Duggan Esq.Wrestler at LawRegistered Userregular
Kidding aside, I actually once worked with a Chinese stage carpenter who said that while the Chinese had semi-unreliable standards when it came to manufactured goods, the Cambodians had no standards at all and were downright incompetent when it came making stuff. He was... an amusing man.
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mrt144King of the NumbernamesRegistered Userregular
Kidding aside, I actually once worked with a Chinese stage carpenter who said that while the Chinese had semi-unreliable standards when it came to manufactured goods, the Cambodians had no standards at all and were downright incompetent when it came making stuff. He was... an amusing man.
Kidding aside, I actually once worked with a Chinese stage carpenter who said that while the Chinese had semi-unreliable standards when it came to manufactured goods, the Cambodians had no standards at all and were downright incompetent when it came making stuff. He was... an amusing man.
I've been told that these same makers of cheapo crap brush was also used on post war Germany and Japan, which hardly ring true anymore. Quality takes time, and in the case of countries that are trying to basically leap forward 3 centuries economically, It's probably a function of building of the industrial knowledge base of the skilled and semi skilled workers. Those guys who have been at a job for 3 decades and know all the tricks don't just walk in off the farm 2 years after you open a plant.
I mean, there is an argument to be made for US economic protectionism, especially vis a vis developing world environmental policy. The problem is, engaging in said protectionism means people like you and I likely wouldn't be able to afford iPhones, or whathaveyou. Free Trade means cheaper stuff. Try telling your average American consumer to give up on getting cheap stuff when already they can barely afford it to begin with.
This argument makes absolutely no sense to me
When the Motorola RAZR hit the US market it cost $499 on contract. There was no kind of additional fee required to own one, you just walked in, renewed your $10 per month line, and bought it. It was the best selling phone for more than five years after its release.
Three years later the iPhone cost $599 on contract, while costing consumers $20 per month additional per line. It eventually usurped the RAZR as the best-selling phone in the US, when its cost over the two-year contract was always substantially larger, even after price drops.
Consumers will pay a lot, lot, lot more than tech companies are currently charging them. Some of this has to do with wireless subsidies skyrocketing, but its mostly due to competition. You'd be a lunatic to launch any kind of handheld device at the $599 price plus additional monthly fees, even full-size tablets barely reach that price level and they are substantially more capable devices.
The kind of pricing we see now in the smartphone market (99 cents plus $20 per month) is not at all representative of the history of the industry. Both Motorola and Apple had record-breaking market penetration and profitability even when their products were priced far out of the reach of most US consumers. What we're seeing now is merely the long tail of innovation reaching those who couldn't afford it before, because the market for 99 cents phones is an order of magnitude larger than that for $500 phones. If you can get your product costs down low enough (thanks to rock-bottom labor costs and sky-high carrier subsidies) you can reach a much bigger market segment.
In order to compete, all manufacturers have to race to the bottom on labor costs. In order to compete, all carriers have to subsidize as much of the remaining cost as possible to maintain accessible pricing.
Meanwhile the consumer is still just as capable of spending $599 on a smartphone with the requisite data plans (in volumes large enough to generate huge profits), but they've been conditioned by this plummet in prices to never be willing to accept that again. The quest for volume has overridden profit margins.
If we're going to blame anything for a severe drop in manufacturing jobs in the US, mechanization is the main culprit. It was only a matter of time until we figured out how to make robots that do it faster, better, and more efficiently.
Who builds the robots?
Okay this is the dumbest line of reasoning, and I'm tired of seeing it over and over.
If making/maintaining/programming the robots required anywhere near the amount of labor they were replacing, no one would ever make the robots. 1 robot with minimal maintenance needs replace 3 workers, forever. You only build the robot once. If it takes 6000 hours to build, that means it takes 1 year of robot labor, before its becomes job-negative. Even if they only last 10 years each, that means each person making a robot is 10 people not making cars. And that ignores the whole faster/better/less waste.
Hell a large number of the parts for the robots are made by robots(pick machines for electronics, cnc mills/lathes for the physical parts, etc.
This thread was going so well, and now it's exhausting to keep up with
One misconception that I'd like to clear up is this "CEO compensation is pulled from a hat" idea. Boards of directors determine CEO compensation through consultation with professional compensation consultants who review all of the data on pay at other comparable companies. Based on this data, the board negotiates against the CEO, and all of the pay data is disclosed to shareholders, who now even have the right to vote on It. The vote is non Binding, but everyone who has ignored a no vote has been sued, and the main body that advises institutional investors on proxy voting (ISS) will recommend that the shareholders vote against each board member if the vote is ignored.
there's some evidence to suggest that such advisory bodies increase wages too much, and the US does rely especially much on them
The use of compensation consultants is actually considered a good governance practice, and Dodd-Frank both regulated them and encouraged there use. What data do you have suggesting that they lead to higher wages? I ask because while in practice they almost never give you a report that says your proposed pay is h reasonable, my experience is that they systematically underestimate industry compensation by using archaic reference codes to identify competitors who may not even really be in the same line of business as you.
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
If we're going to blame anything for a severe drop in manufacturing jobs in the US, mechanization is the main culprit. It was only a matter of time until we figured out how to make robots that do it faster, better, and more efficiently.
Who builds the robots?
Okay this is the dumbest line of reasoning, and I'm tired of seeing it over and over.
If making/maintaining/programming the robots required anywhere near the amount of labor they were replacing, no one would ever make the robots. 1 robot with minimal maintenance needs replace 3 workers, forever. You only build the robot once. If it takes 6000 hours to build, that means it takes 1 year of robot labor, before its becomes job-negative. Even if they only last 10 years each, that means each person making a robot is 10 people not making cars. And that ignores the whole faster/better/less waste.
Hell a large number of the parts for the robots are made by robots(pick machines for electronics, cnc mills/lathes for the physical parts, etc.
I think the interesting question is what do we do once the robots build and maintain each other almost entirely, and so all manual labor (even things like shipping and unloading trucks) becomes obsolete? This is part of why I think the answer needs to be a focus on people, not jobs, and therefore why we need to focus on redistribution instead of wages.
I mean, there is an argument to be made for US economic protectionism, especially vis a vis developing world environmental policy. The problem is, engaging in said protectionism means people like you and I likely wouldn't be able to afford iPhones, or whathaveyou. Free Trade means cheaper stuff. Try telling your average American consumer to give up on getting cheap stuff when already they can barely afford it to begin with.
This argument makes absolutely no sense to me
When the Motorola RAZR hit the US market it cost $499 on contract. There was no kind of additional fee required to own one, you just walked in, renewed your $10 per month line, and bought it. It was the best selling phone for more than five years after its release.
Three years later the iPhone cost $599 on contract, while costing consumers $20 per month additional per line. It eventually usurped the RAZR as the best-selling phone in the US, when its cost over the two-year contract was always substantially larger, even after price drops.
Consumers will pay a lot, lot, lot more than tech companies are currently charging them. Some of this has to do with wireless subsidies skyrocketing, but its mostly due to competition. You'd be a lunatic to launch any kind of handheld device at the $599 price plus additional monthly fees, even full-size tablets barely reach that price level and they are substantially more capable devices.
The kind of pricing we see now in the smartphone market (99 cents plus $20 per month) is not at all representative of the history of the industry. Both Motorola and Apple had record-breaking market penetration and profitability even when their products were priced far out of the reach of most US consumers. What we're seeing now is merely the long tail of innovation reaching those who couldn't afford it before, because the market for 99 cents phones is an order of magnitude larger than that for $500 phones. If you can get your product costs down low enough (thanks to rock-bottom labor costs and sky-high carrier subsidies) you can reach a much bigger market segment.
In order to compete, all manufacturers have to race to the bottom on labor costs. In order to compete, all carriers have to subsidize as much of the remaining cost as possible to maintain accessible pricing.
Meanwhile the consumer is still just as capable of spending $599 on a smartphone with the requisite data plans (in volumes large enough to generate huge profits), but they've been conditioned by this plummet in prices to never be willing to accept that again. The quest for volume has overridden profit margins.
Direct to consumer goods like iPhones and other electronics wouldn't even be the really nasty part.
For the US, simple stuff like steel isn't even made in sufficient quantities in the US anymore to meet demand, and generally only exists for very quality intensive work. It's free trade with India/China, or no steel. We use a lot of steel plate/copper tubes/ stainless products etc where I work. And the price difference between Indian/Chinese and US/Euro is insane. Like something that costs 50k from Europe will cost 12k from India(and that's for stuff with strict quality standards-enforced or not who knows till you open the crate). Have fun in new home construction, when the price of wiring and plumbing jumps 10 fold. Or building cars with US steel that costs 5 times as much.
Even a lot of the stuff we do make, is raw materials mined somewhere else, often for environmental reasons, or metal that comes to the US in raw melted billets. Copper mining is a dirty business. We don't produce enough oil for ourselves. Coffee, rare earth metals, pretty much anything that comes in an Ore, we don't mine enough in the US to meet our needs.
I mean, there is an argument to be made for US economic protectionism, especially vis a vis developing world environmental policy. The problem is, engaging in said protectionism means people like you and I likely wouldn't be able to afford iPhones, or whathaveyou. Free Trade means cheaper stuff. Try telling your average American consumer to give up on getting cheap stuff when already they can barely afford it to begin with.
This argument makes absolutely no sense to me
When the Motorola RAZR hit the US market it cost $499 on contract. There was no kind of additional fee required to own one, you just walked in, renewed your $10 per month line, and bought it. It was the best selling phone for more than five years after its release.
Three years later the iPhone cost $599 on contract, while costing consumers $20 per month additional per line. It eventually usurped the RAZR as the best-selling phone in the US, when its cost over the two-year contract was always substantially larger, even after price drops.
Consumers will pay a lot, lot, lot more than tech companies are currently charging them. Some of this has to do with wireless subsidies skyrocketing, but its mostly due to competition. You'd be a lunatic to launch any kind of handheld device at the $599 price plus additional monthly fees, even full-size tablets barely reach that price level and they are substantially more capable devices.
The kind of pricing we see now in the smartphone market (99 cents plus $20 per month) is not at all representative of the history of the industry. Both Motorola and Apple had record-breaking market penetration and profitability even when their products were priced far out of the reach of most US consumers. What we're seeing now is merely the long tail of innovation reaching those who couldn't afford it before, because the market for 99 cents phones is an order of magnitude larger than that for $500 phones. If you can get your product costs down low enough (thanks to rock-bottom labor costs and sky-high carrier subsidies) you can reach a much bigger market segment.
In order to compete, all manufacturers have to race to the bottom on labor costs. In order to compete, all carriers have to subsidize as much of the remaining cost as possible to maintain accessible pricing.
Meanwhile the consumer is still just as capable of spending $599 on a smartphone with the requisite data plans (in volumes large enough to generate huge profits), but they've been conditioned by this plummet in prices to never be willing to accept that again. The quest for volume has overridden profit margins.
Direct to consumer goods like iPhones and other electronics wouldn't even be the really nasty part.
For the US, simple stuff like steel isn't even made in sufficient quantities in the US anymore to meet demand, and generally only exists for very quality intensive work. It's free trade with India/China, or no steel. We use a lot of steel plate/copper tubes/ stainless products etc where I work. And the price difference between Indian/Chinese and US/Euro is insane. Like something that costs 50k from Europe will cost 12k from India(and that's for stuff with strict quality standards-enforced or not who knows till you open the crate). Have fun in new home construction, when the price of wiring and plumbing jumps 10 fold. Or building cars with US steel that costs 5 times as much.
Even a lot of the stuff we do make, is raw materials mined somewhere else, often for environmental reasons, or metal that comes to the US in raw melted billets. Copper mining is a dirty business. We don't produce enough oil for ourselves. Coffee, rare earth metals, pretty much anything that comes in an Ore, we don't mine enough in the US to meet our needs.
Using other people's stuff while hoarding your own is good national policy for the most finite of resources (see China and their foreign policy in regards to the Rare Earths for processors.) National monopolies arise, as well as the economist favorite natural monopoly..
A wage standard is important for enforcing a standard of living for a class/country, in theory. Unfortunately, with the globalization of the marketplace, and the reduction in information costs/transportation equalization, there has been tremendous downward pressure on wages for the lowest rung. There has also been a significant increase in the expected education to attain a middle class lifestyle (and even that, it being more of just 'buying your ticket', rather than ensuring gainful employment)..
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Captain Marcusnow arrives the hour of actionRegistered Userregular
Direct to consumer goods like iPhones and other electronics wouldn't even be the really nasty part.
For the US, simple stuff like steel isn't even made in sufficient quantities in the US anymore to meet demand, and generally only exists for very quality intensive work. It's free trade with India/China, or no steel. We use a lot of steel plate/copper tubes/ stainless products etc where I work. And the price difference between Indian/Chinese and US/Euro is insane. Like something that costs 50k from Europe will cost 12k from India(and that's for stuff with strict quality standards-enforced or not who knows till you open the crate). Have fun in new home construction, when the price of wiring and plumbing jumps 10 fold. Or building cars with US steel that costs 5 times as much.
Even a lot of the stuff we do make, is raw materials mined somewhere else, often for environmental reasons, or metal that comes to the US in raw melted billets. Copper mining is a dirty business. We don't produce enough oil for ourselves. Coffee, rare earth metals, pretty much anything that comes in an Ore, we don't mine enough in the US to meet our needs.
Surely if we switched our energy production to renewables and our engines to run on electricity we would have enough petroleum for industrial feedstocks? I feel that a large part of the problem is the "disposable" culture, where you can just throw away anything and it'll be fine. I read somewhere that a third of all the copper ever mined is buried in landfills. Mandatory corporate* and individual recycling should be instituted using the laws in California as a baseline. In addition, quality standards should be imposed on manufacturers- no more consumer goods that break after only three months of use!
After implementing these materials-saving techniques, we'll hopefully have a little breathing room as far as raw materials go. Then we can start to pass small tariffs and bring jobs back to America.
*When I worked at an office supply store, we threw away everything. Paper, plastic, metal, you name it.
For the US, simple stuff like steel isn't even made in sufficient quantities in the US anymore to meet demand...
Are there no iron mines in America? I recall that the steel companies closed the plants and shipped the jobs off to foreign lands. Unconscionable! Especially for an industry vital to our national security. The computers China makes come pre-packaged with viruses designed to spy on our corporations and military and steal secrets! Israel has the right idea- we need to make the things essential to our military/infrastructure right here in the U.S. Right now we get a lot of the stuff from China (toxic drywall anyone?) and despite what the hippies think, they are a totalitarian regime that routinely shoots religious and political dissidents in the back of the head and harvests their organs. They are not our friends.
Steel is actually a really interesting case in that most steel has been recycled several times, and in the US we recycle steel by shipping scrap back to China along with coal in the bulk carriers return leg. Where they remelt it and ship it back to us.
But as for mining in general the US doesn't do a lot of ore mining. A company in WI has been trying to open a copper mine for years and can't get it approved by the state.
No, I read them and understood them. You kept pushing the "no protectionism" argument, and there's Krugman arguing that some protectionism can be good.
Also, I knew you would point out the caveats with glee.
There's a difference between the limited short-term protectionism that Krugman says can be okay sometimes in abnormal conditions, vs comments like "Also, sorry, I care more about American jobs than Chinese jobs. I'm American and I'm not a globalist" that imply protectionism as a permanent operating assumption.
I can agree with at, but by the same token I feel that if you're going to sell a product in a country then you should have the decency to employ them, or be an employer in that country, especially if it won't affect your bottom line that much, and by the same token if you're going to make a product in a country, you should have the decency to pay the people who work for you enough to buy the product they're making - that is the problem the Chinese are having now - making all this technology for other people to buy.
I'm actually a fan of everyone having a job and making a decent living, world-wide, but, again, how do you get around resource depletion?
If everyone in the world, down to the last man, bought and iPhone, because they wanted one, we might, in theory, run out of materials to make iPhones. What if we ran out of materials to make the microprocessor? These things are not impossible; they're inevitable unless we can somehow create more resources from nothing. No one answers that point sufficiently since it breaks the "everyone can be equal and happy and have what they want" mindset.
Also, I understand the impulse to paint me as Ross Perot personified, but my opinions are a little more nuanced than they're being made out to be.
You work in an industry(software dev) where your end product uses practically the same resources to ship 10 units as 1000 as 10000000 and you don't see how we can globally move away from a purely resource dependent economy?
I am not talking about the economy.
I'm talking about having enough resources and materials to create the things people buy and the things people need to enjoy the current standard of living in the U.S.
Finite resources + Infinite consumption = ????
Also, if software developers could invent replicators, you would actually have a point.
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
I mean, there is an argument to be made for US economic protectionism, especially vis a vis developing world environmental policy. The problem is, engaging in said protectionism means people like you and I likely wouldn't be able to afford iPhones, or whathaveyou. Free Trade means cheaper stuff. Try telling your average American consumer to give up on getting cheap stuff when already they can barely afford it to begin with.
This argument makes absolutely no sense to me
When the Motorola RAZR hit the US market it cost $499 on contract. There was no kind of additional fee required to own one, you just walked in, renewed your $10 per month line, and bought it. It was the best selling phone for more than five years after its release.
Three years later the iPhone cost $599 on contract, while costing consumers $20 per month additional per line. It eventually usurped the RAZR as the best-selling phone in the US, when its cost over the two-year contract was always substantially larger, even after price drops.
Consumers will pay a lot, lot, lot more than tech companies are currently charging them. Some of this has to do with wireless subsidies skyrocketing, but its mostly due to competition. You'd be a lunatic to launch any kind of handheld device at the $599 price plus additional monthly fees, even full-size tablets barely reach that price level and they are substantially more capable devices.
The kind of pricing we see now in the smartphone market (99 cents plus $20 per month) is not at all representative of the history of the industry. Both Motorola and Apple had record-breaking market penetration and profitability even when their products were priced far out of the reach of most US consumers. What we're seeing now is merely the long tail of innovation reaching those who couldn't afford it before, because the market for 99 cents phones is an order of magnitude larger than that for $500 phones. If you can get your product costs down low enough (thanks to rock-bottom labor costs and sky-high carrier subsidies) you can reach a much bigger market segment.
In order to compete, all manufacturers have to race to the bottom on labor costs. In order to compete, all carriers have to subsidize as much of the remaining cost as possible to maintain accessible pricing.
Meanwhile the consumer is still just as capable of spending $599 on a smartphone with the requisite data plans (in volumes large enough to generate huge profits), but they've been conditioned by this plummet in prices to never be willing to accept that again. The quest for volume has overridden profit margins.
Direct to consumer goods like iPhones and other electronics wouldn't even be the really nasty part.
For the US, simple stuff like steel isn't even made in sufficient quantities in the US anymore to meet demand, and generally only exists for very quality intensive work. It's free trade with India/China, or no steel. We use a lot of steel plate/copper tubes/ stainless products etc where I work. And the price difference between Indian/Chinese and US/Euro is insane. Like something that costs 50k from Europe will cost 12k from India(and that's for stuff with strict quality standards-enforced or not who knows till you open the crate). Have fun in new home construction, when the price of wiring and plumbing jumps 10 fold. Or building cars with US steel that costs 5 times as much.
Even a lot of the stuff we do make, is raw materials mined somewhere else, often for environmental reasons, or metal that comes to the US in raw melted billets. Copper mining is a dirty business. We don't produce enough oil for ourselves. Coffee, rare earth metals, pretty much anything that comes in an Ore, we don't mine enough in the US to meet our needs.
Using other people's stuff while hoarding your own is good national policy for the most finite of resources (see China and their foreign policy in regards to the Rare Earths for processors.) National monopolies arise, as well as the economist favorite natural monopoly..
A wage standard is important for enforcing a standard of living for a class/country, in theory. Unfortunately, with the globalization of the marketplace, and the reduction in information costs/transportation equalization, there has been tremendous downward pressure on wages for the lowest rung. There has also been a significant increase in the expected education to attain a middle class lifestyle (and even that, it being more of just 'buying your ticket', rather than ensuring gainful employment)..
Why are you so fixated on this strange form of protectionism where the government creates a pantomime of an economy designed to employ people at high wages instead of one designed at actually creating wealth? Why would this be superior to the government allowing a real market to exist and providing a stronger safety net? Automation and outsourcing can be good things when they lead to greater efficiencies.
The market is a seperate issue from people's standards of living, and your forced coupling of the two will only result in less wealth for everyone. I know you said this style of redistribution would not work in America (the main thinkers in the tax policy community disagree, but put that asside) but your non-market aimed at employment requires at least as strong of a government as my negative income tax, and so, if the idea is to strengthen the government to protect the people's interests, why not actually do that instead of enforcing this macabre show of an economy with not real motivation or purpose.
Edit: just to say it, a market based around providing jobs to an inefficient degree rather than making profits seems like the most complete dismantling of the American dream that is possible, not to mention a fast road to stagnation and our loss of status as the main world power.
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
No, I read them and understood them. You kept pushing the "no protectionism" argument, and there's Krugman arguing that some protectionism can be good.
Also, I knew you would point out the caveats with glee.
There's a difference between the limited short-term protectionism that Krugman says can be okay sometimes in abnormal conditions, vs comments like "Also, sorry, I care more about American jobs than Chinese jobs. I'm American and I'm not a globalist" that imply protectionism as a permanent operating assumption.
I can agree with at, but by the same token I feel that if you're going to sell a product in a country then you should have the decency to employ them, or be an employer in that country, especially if it won't affect your bottom line that much, and by the same token if you're going to make a product in a country, you should have the decency to pay the people who work for you enough to buy the product they're making - that is the problem the Chinese are having now - making all this technology for other people to buy.
I'm actually a fan of everyone having a job and making a decent living, world-wide, but, again, how do you get around resource depletion?
If everyone in the world, down to the last man, bought and iPhone, because they wanted one, we might, in theory, run out of materials to make iPhones. What if we ran out of materials to make the microprocessor? These things are not impossible; they're inevitable unless we can somehow create more resources from nothing. No one answers that point sufficiently since it breaks the "everyone can be equal and happy and have what they want" mindset.
Also, I understand the impulse to paint me as Ross Perot personified, but my opinions are a little more nuanced than they're being made out to be.
You work in an industry(software dev) where your end product uses practically the same resources to ship 10 units as 1000 as 10000000 and you don't see how we can globally move away from a purely resource dependent economy?
I am not talking about the economy.
I'm talking about having enough resources and materials to create the things people buy and the things people need to enjoy the current standard of living in the U.S.
Finite resources + Infinite consumption = ????
Also, if software developers could invent replicators, you would actually have a point.
You do realize that pegging the US standard of living at its current level means we will soon have one of the lowest standards if living in the world, right? Today you will be devoting enourmous resources to securing the resources and setting up the infrastructure to build iPhones in America, at a much lower profit margin than they ate currently built, and then you will either force the prices to stay low or wages to go up so much (in part on Apple's back) that people can afford US made iPhones. Who will invent the next big thing then? Why would the US government even want the next big thing to be invented, when it will just cost us a fortune to secure the resources and build the infrastructure to make it here? Your world will soon have us driving our conventional made in the USA cars and talking on out us made iPhones while the rest of the world enjoys flying cars and neural implants that provide direct Internet access with a thought.
The vast majority of people who shop at Walmart go their, not because they prefer the store, but because it's the only place they can afford. And the reason it's the only place they can afford is because companies like Walmart have been lowering the salaries for American workers.
:psyduck:
I am charitably going to assume that you're just a particularly subtle economist. So: blunt question time. Are you willing to claim, with a straight face, that a hypothetical Walmart that paid its workers, oh, let's say twice as much, would employ just as many workers as it does now?
I've held off thus far with this question because I didn't feel it particularly special or needing of attention.
But, well, I feel like it should be asked and should be answered.
If economists have all the answers, why the fuck isn't it working? I think economists are making terrible mistakes with the terms "globilization" and "competition" like they should even be considered. I think your defaulting to the "I'm right because I'm an economist and here's a whole bunch of words to show it and some edge cases from the past 200 years that show my theories."
I think if you look deep and hard, once America and Europe pull out of cheap manufactured goods from Asia, that there's no more competition to be had. If someone wants to compete on the global scale, it's going to have to be the Asia that makes the move more towards economies of the west. Meaning, paying people money and a fair living wage. Because those are your consumers.
There's a reason why "Made in America" was a thing.
I really don't think that if someone has a choice of an Americonn board of Foxconn board there's going to be much hemming and hawing because one is $10 more expensive. I really don't. At least not among the first world. Like I said, probably in the Middle East and Africa.
Then again, knowing what I know of the software world, they'd probably opt for American made because standards (ethical and physical) and not getting spied on is a major concern (transparency of services?).
I think you have the right idea, I think you're the one that can give us the most insight, but I think you're flat dead wrong about this.
Also to answer your question, I don't think it would be able to afford twice as many workers because there isn't that much money. So the problem is, is capitalism the answer to standard of living?
not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
The Economist has a great article this week summarizing where economics is as a profession with respect to the minimum wage. I would recommend it to everyone in this thread. It outlines the traditional argument that minimum wages reduce employment opportunities for the poor; but then goes on to explain how since the late nineties research and consensus has moved strongly in the direction of that not happening. Which IMHO goes to show once more that competitive models of the labor market fail to describe reality.
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
The vast majority of people who shop at Walmart go their, not because they prefer the store, but because it's the only place they can afford. And the reason it's the only place they can afford is because companies like Walmart have been lowering the salaries for American workers.
:psyduck:
I am charitably going to assume that you're just a particularly subtle economist. So: blunt question time. Are you willing to claim, with a straight face, that a hypothetical Walmart that paid its workers, oh, let's say twice as much, would employ just as many workers as it does now?
I've held off thus far with this question because I didn't feel it particularly special or needing of attention.
But, well, I feel like it should be asked and should be answered.
If economists have all the answers, why the fuck isn't it working? I think economists are making terrible mistakes with the terms "globilization" and "competition" like they should even be considered. I think your defaulting to the "I'm right because I'm an economist and here's a whole bunch of words to show it and some edge cases from the past 200 years that show my theories."
I think if you look deep and hard, once America and Europe pull out of cheap manufactured goods from Asia, that there's no more competition to be had. If someone wants to compete on the global scale, it's going to have to be the Asia that makes the move more towards economies of the west. Meaning, paying people money and a fair living wage. Because those are your consumers.
There's a reason why "Made in America" was a thing.
I really don't think that if someone has a choice of an Americonn board of Foxconn board there's going to be much hemming and hawing because one is $10 more expensive. I really don't. At least not among the first world. Like I said, probably in the Middle East and Africa.
Then again, knowing what I know of the software world, they'd probably opt for American made because standards (ethical and physical) and not getting spied on is a major concern (transparency of services?).
I think you have the right idea, I think you're the one that can give us the most insight, but I think you're flat dead wrong about this.
Also to answer your question, I don't think it would be able to afford twice as many workers because there isn't that much money. So the problem is, is capitalism the answer to standard of living?
I'm just a humble lawyer, but I would suggest that you consider the global economy from a more macro level instead of just looking at manufacturing. The US government needs to borrow to continue to provide services (and basically always has except for a brief, glorious moment engineered by the tragic hero Andrew Jackson before he made the situation even worse through his hubris in thinking he could destroy the bank). We largely borrow from China, Japan and other Asian countries, who buy out bonds in part because it helps them to keep their own currencies weak (beneficial to them as export based economies). Adopt protectionism, and all of a sudden they have no reason to buy our bonds, and we lose the ability to borrow all together.
But let's say we decide protectionism is the best approach, and the rest of the world does as well. We are comparatively resource poor, especially w/r/t the resources needed to produce modern electronics, and other countries have larger, better trained work forces and better manufacturing infrastructures than we have. Made in America was more of a thing when the American manufacturing worker was among the most well trained in the world and had access to the best tools. This is no longer the case.
I do agree with your last paragraph though. The answer to this problem is not naked capitalism. It is harnessing the resources generated by our capitalist system to provide for our people. Trying to integrate wealth creation and wealth distribution is a fool's errand. Far more efficient to create wealth in the optimal manner and then distribute it in a way the is most beneficial to all.
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HacksawJ. Duggan Esq.Wrestler at LawRegistered Userregular
I mean, there is an argument to be made for US economic protectionism, especially vis a vis developing world environmental policy. The problem is, engaging in said protectionism means people like you and I likely wouldn't be able to afford iPhones, or whathaveyou. Free Trade means cheaper stuff. Try telling your average American consumer to give up on getting cheap stuff when already they can barely afford it to begin with.
This argument makes absolutely no sense to me
When the Motorola RAZR hit the US market it cost $499 on contract. There was no kind of additional fee required to own one, you just walked in, renewed your $10 per month line, and bought it. It was the best selling phone for more than five years after its release.
Three years later the iPhone cost $599 on contract, while costing consumers $20 per month additional per line. It eventually usurped the RAZR as the best-selling phone in the US, when its cost over the two-year contract was always substantially larger, even after price drops.
Consumers will pay a lot, lot, lot more than tech companies are currently charging them. Some of this has to do with wireless subsidies skyrocketing, but its mostly due to competition. You'd be a lunatic to launch any kind of handheld device at the $599 price plus additional monthly fees, even full-size tablets barely reach that price level and they are substantially more capable devices.
The kind of pricing we see now in the smartphone market (99 cents plus $20 per month) is not at all representative of the history of the industry. Both Motorola and Apple had record-breaking market penetration and profitability even when their products were priced far out of the reach of most US consumers. What we're seeing now is merely the long tail of innovation reaching those who couldn't afford it before, because the market for 99 cents phones is an order of magnitude larger than that for $500 phones. If you can get your product costs down low enough (thanks to rock-bottom labor costs and sky-high carrier subsidies) you can reach a much bigger market segment.
In order to compete, all manufacturers have to race to the bottom on labor costs. In order to compete, all carriers have to subsidize as much of the remaining cost as possible to maintain accessible pricing.
Meanwhile the consumer is still just as capable of spending $599 on a smartphone with the requisite data plans (in volumes large enough to generate huge profits), but they've been conditioned by this plummet in prices to never be willing to accept that again. The quest for volume has overridden profit margins.
Apple is a weird case in that you're essentially paying extra for the sake of owning an Apple product. It's kind of like how real estate in California is expensive because you're paying to live in California, which is apparently a privilege.
Steel is actually a really interesting case in that most steel has been recycled several times, and in the US we recycle steel by shipping scrap back to China along with coal in the bulk carriers return leg. Where they remelt it and ship it back to us.
But as for mining in general the US doesn't do a lot of ore mining. A company in WI has been trying to open a copper mine for years and can't get it approved by the state.
This is probably due to environmental concerns. Mining metals is a dirty venture, and the EPA (as well as most states, rightfully) will hound the shit out of anyone who wants to open mining operations in the great 48 to make sure they don't fuck up the surrounding countryside with waste runoff and the like.
Um, aren't the boards made up of CEOs and Senior Execs of other companies? Why would they propose reasonable salaries when they want the same outrageous salaries thrown at them by their board? And what was the fix for this "scratch my back, scratch your back"... was it allowing the shareholders to now vote? Who has more voting power? The middle class with a few hundred shares in their 401(k)s? Or the institutional and 1%'ers who hold 100s of thousands of shares of a company?
The vast majority of people who shop at Walmart go their, not because they prefer the store, but because it's the only place they can afford. And the reason it's the only place they can afford is because companies like Walmart have been lowering the salaries for American workers.
:psyduck:
I am charitably going to assume that you're just a particularly subtle economist. So: blunt question time. Are you willing to claim, with a straight face, that a hypothetical Walmart that paid its workers, oh, let's say twice as much, would employ just as many workers as it does now?
I've held off thus far with this question because I didn't feel it particularly special or needing of attention.
But, well, I feel like it should be asked and should be answered.
If economists have all the answers, why the fuck isn't it working? I think economists are making terrible mistakes with the terms "globalization" and "competition" like they should even be considered. I think you're defaulting to the "I'm right because I'm an economist and here's a whole bunch of words to show it and some edge cases from the past 200 years that show my theories."
I think if you look deep and hard, once America and Europe pull out of cheap manufactured goods from Asia, that there's no more competition to be had. If someone wants to compete on the global scale, it's going to have to be the Asia that makes the move more towards economies of the west. Meaning, paying people money and a fair living wage. Because those are your consumers.
There's a reason why "Made in America" was a thing.
I really don't think that if someone has a choice of an Americonn board of Foxconn board there's going to be much hemming and hawing because one is $10 more expensive. I really don't. At least not among the first world. Like I said, probably in the Middle East and Africa.
Then again, knowing what I know of the software world, they'd probably opt for American made because standards (ethical and physical) and not getting spied on is a major concern (transparency of services?).
I think you have the right idea, I think you're the one that can give us the most insight, but I think you're flat dead wrong about this.
Also to answer your question, I don't think it would be able to afford twice as many workers because there isn't that much money. So the problem is, is capitalism the answer to standard of living?
For the record, I threw that barb at Schrodinger because he is misrepresenting his narrative and Marmoset is falling for it. Schrodinger knows, fully well, that employment will fall in his scenario: that unskilled workers will pushed out of the workforce because they cannot operate in his favoured retail model. He just doesn't care: it's a cost of elevating the wages of those remaining employed that he is prepared to pay, and if unskilled workers cannot earn the legal level of wages, so be it. Marmoset, on the other hand, has no idea what is happening and sees it as a costless wage hike.
Now you can up and defend this disemployment tactic on assorted grounds: dynamic investment incentives or political forces, say. You can even argue that it is efficiency-improving (think about innovation: innovators don't capture all the benefit of their innovations, but by definition that also means that even foreseeable innovations are underinvested). But it is worth acknowledging the inherent initial regressivity of it. We do as much for conservative-favoured ideas like sales taxes, after all.
As for competition, and consumers: let me give the mainstream line. Competition makes us richer on average, and the answer to uneven benefits is redistribution. And as for consumption, other things equal, a nation paying all of its workers more does not increase demand more than it increases costs.
I think you can figure as much, but it is worth pointing it out explicitly because this quasi-Fordism is an exceptionally dangerous myth to protecting how the welfare state works. No, paying the same workers more is not profit-increasing, Ford got away with it because it retained the best employees and not by hiking demand for his products, and anyone trying to pull that card is lying to you and you need to see where its interests lie (see: Walmart).
As for competition: prohibiting imports from Asia will not make Europe or America better off on net (note that, in particular, you should be targeting modern trade-surplus Germany more than modern trade-deficit Japan). It will not be better off to the same extent it would not be better off if it prohibited a mysterious invention that transformed a small amount of American wheat into a large amount of electronics, to borrow a textbook example.
The reason why the US has a tremendous trade deficit is because it exports dollars and Treasuries, in vast amounts. Like any other resource-rich country, their manufacturing industry suffers to the extent it cannot convince foreigners to buy as much of its stuff because those foreigners are buying dollars instead (ask Canada and Australia, for instance). And like with these countries, the question is where all this revenue has been going. What does the US buy with its excess foreign currency? Who benefits?
The left-wing in the US has remained generally quiet about protectionism ever since Clinton and the 1990s triumph of the DLC. This is why it is willing to uphold the likes of Krugman as its standard-bearer, for instance - the same international-trade-economist Krugman who spent his Slate years slamming the remnants of the old left (and new right alike). It is increasingly the domain of the nationalist right-wing, particularly as the left increasingly draws its strength from labour in non-tradable sectors, which unambiguously benefit from buying cheaper stuff, and the manufacturing industry continues its relentless automation. This is why I am not particularly enthusiastic about dragging this all up again: all the stuff I could possibly say is already out there, and it is needlessly divisive to modern American left-wing discussions.
ronya on
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JuliusCaptain of Serenityon my shipRegistered Userregular
If we're going to blame anything for a severe drop in manufacturing jobs in the US, mechanization is the main culprit. It was only a matter of time until we figured out how to make robots that do it faster, better, and more efficiently.
Who builds the robots?
Okay this is the dumbest line of reasoning, and I'm tired of seeing it over and over.
If making/maintaining/programming the robots required anywhere near the amount of labor they were replacing, no one would ever make the robots. 1 robot with minimal maintenance needs replace 3 workers, forever. You only build the robot once. If it takes 6000 hours to build, that means it takes 1 year of robot labor, before its becomes job-negative. Even if they only last 10 years each, that means each person making a robot is 10 people not making cars. And that ignores the whole faster/better/less waste.
Hell a large number of the parts for the robots are made by robots(pick machines for electronics, cnc mills/lathes for the physical parts, etc.
I think the interesting question is what do we do once the robots build and maintain each other almost entirely, and so all manual labor (even things like shipping and unloading trucks) becomes obsolete?
Um, aren't the boards made up of CEOs and Senior Execs of other companies? Why would they propose reasonable salaries when they want the same outrageous salaries thrown at them by their board? And what was the fix for this "scratch my back, scratch your back"... was it allowing the shareholders to now vote? Who has more voting power? The middle class with a few hundred shares in their 401(k)s? Or the institutional and 1%'ers who hold 100s of thousands of shares of a company?
You wish shareholdership was that concentrated. The problem in the US is precisely that shareholdership is weak and therefore is unable to prevent CEOs from raiding funds that could be going to investment instead. Realize that statistically your 0.1%ers are senior management rather than capital owners per se. It is why your traditional labour-capital mechanisms are blunted, as was hashed out in the Twinkie thread.
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I know it's HuffPo, but still, free trade doesn't exactly benefit people below the very top, and those that get fairly terrible jobs in places we outsource to.
not sure I can make much productive headway without explaining mainstream econ's own accounts of why shareholders might rationally decide to overpay senior management. It's not really intuitive unless it's possible to appreciate that it is actually the default outcome. Do you know any good syntheses of principal-agent problems in general for the layman? I can't think of any easily. The realistic ones out of my corporate finance handbook are too detailed.
For anyone else: the empirics makes it very suggestive that skyrocketing 0.1% wages are related to US-specific corporate governance issues. There's a whole pile of Stuff that makes bad behavior by US senior management especially likely (especially diffuse and weakened stakeholders, CEOs with excessive equity and board power, etc.), and a whole pile of statistics that US senior management do behave uniquely badly.
Sure, we've been signing free trade agreements like crazy, but all they seem to do is benefit foreign workers and megacorporations but not Americans. The government's job is to serve its citizens, not those of foreigners or "business". Free trade for its own sake is a dumb idea.
One misconception that I'd like to clear up is this "CEO compensation is pulled from a hat" idea. Boards of directors determine CEO compensation through consultation with professional compensation consultants who review all of the data on pay at other comparable companies. Based on this data, the board negotiates against the CEO, and all of the pay data is disclosed to shareholders, who now even have the right to vote on It. The vote is non Binding, but everyone who has ignored a no vote has been sued, and the main body that advises institutional investors on proxy voting (ISS) will recommend that the shareholders vote against each board member if the vote is ignored.
Quick note: at the early 2000s such studies generally showed American job increases, not losses. Impose a broad trend of technological growth atop this, faster in the US than in Mexico, and you get an obvious eventual decline in US manufacturing employment in the relevant Mexico-exporting sectors. Come on, it's been seventeen years.
gotta pick your battles on this one.
there's some evidence to suggest that such advisory bodies increase wages too much, and the US does rely especially much on them
Yup. You're never going to convince the frugal American shopper to Buy American when it could mean paying twice as much for a product of no discernible difference in quality.
Edit: when the product is already expensive to begin with, that is.
My problem here is similar to the housing bubble. When you're only determining your numbers in relative terms, there's no anchor to keep it grounded.
Who builds the robots?
Cambodians.
You work in an industry(software dev) where your end product uses practically the same resources to ship 10 units as 1000 as 10000000 and you don't see how we can globally move away from a purely resource dependent economy?
Asian on asian racism is kinda funny
I've been told that these same makers of cheapo crap brush was also used on post war Germany and Japan, which hardly ring true anymore. Quality takes time, and in the case of countries that are trying to basically leap forward 3 centuries economically, It's probably a function of building of the industrial knowledge base of the skilled and semi skilled workers. Those guys who have been at a job for 3 decades and know all the tricks don't just walk in off the farm 2 years after you open a plant.
This argument makes absolutely no sense to me
When the Motorola RAZR hit the US market it cost $499 on contract. There was no kind of additional fee required to own one, you just walked in, renewed your $10 per month line, and bought it. It was the best selling phone for more than five years after its release.
Three years later the iPhone cost $599 on contract, while costing consumers $20 per month additional per line. It eventually usurped the RAZR as the best-selling phone in the US, when its cost over the two-year contract was always substantially larger, even after price drops.
Consumers will pay a lot, lot, lot more than tech companies are currently charging them. Some of this has to do with wireless subsidies skyrocketing, but its mostly due to competition. You'd be a lunatic to launch any kind of handheld device at the $599 price plus additional monthly fees, even full-size tablets barely reach that price level and they are substantially more capable devices.
The kind of pricing we see now in the smartphone market (99 cents plus $20 per month) is not at all representative of the history of the industry. Both Motorola and Apple had record-breaking market penetration and profitability even when their products were priced far out of the reach of most US consumers. What we're seeing now is merely the long tail of innovation reaching those who couldn't afford it before, because the market for 99 cents phones is an order of magnitude larger than that for $500 phones. If you can get your product costs down low enough (thanks to rock-bottom labor costs and sky-high carrier subsidies) you can reach a much bigger market segment.
In order to compete, all manufacturers have to race to the bottom on labor costs. In order to compete, all carriers have to subsidize as much of the remaining cost as possible to maintain accessible pricing.
Meanwhile the consumer is still just as capable of spending $599 on a smartphone with the requisite data plans (in volumes large enough to generate huge profits), but they've been conditioned by this plummet in prices to never be willing to accept that again. The quest for volume has overridden profit margins.
Okay this is the dumbest line of reasoning, and I'm tired of seeing it over and over.
If making/maintaining/programming the robots required anywhere near the amount of labor they were replacing, no one would ever make the robots. 1 robot with minimal maintenance needs replace 3 workers, forever. You only build the robot once. If it takes 6000 hours to build, that means it takes 1 year of robot labor, before its becomes job-negative. Even if they only last 10 years each, that means each person making a robot is 10 people not making cars. And that ignores the whole faster/better/less waste.
Hell a large number of the parts for the robots are made by robots(pick machines for electronics, cnc mills/lathes for the physical parts, etc.
The use of compensation consultants is actually considered a good governance practice, and Dodd-Frank both regulated them and encouraged there use. What data do you have suggesting that they lead to higher wages? I ask because while in practice they almost never give you a report that says your proposed pay is h reasonable, my experience is that they systematically underestimate industry compensation by using archaic reference codes to identify competitors who may not even really be in the same line of business as you.
I think the interesting question is what do we do once the robots build and maintain each other almost entirely, and so all manual labor (even things like shipping and unloading trucks) becomes obsolete? This is part of why I think the answer needs to be a focus on people, not jobs, and therefore why we need to focus on redistribution instead of wages.
Direct to consumer goods like iPhones and other electronics wouldn't even be the really nasty part.
For the US, simple stuff like steel isn't even made in sufficient quantities in the US anymore to meet demand, and generally only exists for very quality intensive work. It's free trade with India/China, or no steel. We use a lot of steel plate/copper tubes/ stainless products etc where I work. And the price difference between Indian/Chinese and US/Euro is insane. Like something that costs 50k from Europe will cost 12k from India(and that's for stuff with strict quality standards-enforced or not who knows till you open the crate). Have fun in new home construction, when the price of wiring and plumbing jumps 10 fold. Or building cars with US steel that costs 5 times as much.
Even a lot of the stuff we do make, is raw materials mined somewhere else, often for environmental reasons, or metal that comes to the US in raw melted billets. Copper mining is a dirty business. We don't produce enough oil for ourselves. Coffee, rare earth metals, pretty much anything that comes in an Ore, we don't mine enough in the US to meet our needs.
Using other people's stuff while hoarding your own is good national policy for the most finite of resources (see China and their foreign policy in regards to the Rare Earths for processors.) National monopolies arise, as well as the economist favorite natural monopoly..
A wage standard is important for enforcing a standard of living for a class/country, in theory. Unfortunately, with the globalization of the marketplace, and the reduction in information costs/transportation equalization, there has been tremendous downward pressure on wages for the lowest rung. There has also been a significant increase in the expected education to attain a middle class lifestyle (and even that, it being more of just 'buying your ticket', rather than ensuring gainful employment)..
Surely if we switched our energy production to renewables and our engines to run on electricity we would have enough petroleum for industrial feedstocks? I feel that a large part of the problem is the "disposable" culture, where you can just throw away anything and it'll be fine. I read somewhere that a third of all the copper ever mined is buried in landfills. Mandatory corporate* and individual recycling should be instituted using the laws in California as a baseline. In addition, quality standards should be imposed on manufacturers- no more consumer goods that break after only three months of use!
After implementing these materials-saving techniques, we'll hopefully have a little breathing room as far as raw materials go. Then we can start to pass small tariffs and bring jobs back to America.
*When I worked at an office supply store, we threw away everything. Paper, plastic, metal, you name it.
Actually, hold on a sec-
Are there no iron mines in America? I recall that the steel companies closed the plants and shipped the jobs off to foreign lands. Unconscionable! Especially for an industry vital to our national security. The computers China makes come pre-packaged with viruses designed to spy on our corporations and military and steal secrets! Israel has the right idea- we need to make the things essential to our military/infrastructure right here in the U.S. Right now we get a lot of the stuff from China (toxic drywall anyone?) and despite what the hippies think, they are a totalitarian regime that routinely shoots religious and political dissidents in the back of the head and harvests their organs. They are not our friends.
But as for mining in general the US doesn't do a lot of ore mining. A company in WI has been trying to open a copper mine for years and can't get it approved by the state.
I am not talking about the economy.
I'm talking about having enough resources and materials to create the things people buy and the things people need to enjoy the current standard of living in the U.S.
Finite resources + Infinite consumption = ????
Also, if software developers could invent replicators, you would actually have a point.
Why are you so fixated on this strange form of protectionism where the government creates a pantomime of an economy designed to employ people at high wages instead of one designed at actually creating wealth? Why would this be superior to the government allowing a real market to exist and providing a stronger safety net? Automation and outsourcing can be good things when they lead to greater efficiencies.
The market is a seperate issue from people's standards of living, and your forced coupling of the two will only result in less wealth for everyone. I know you said this style of redistribution would not work in America (the main thinkers in the tax policy community disagree, but put that asside) but your non-market aimed at employment requires at least as strong of a government as my negative income tax, and so, if the idea is to strengthen the government to protect the people's interests, why not actually do that instead of enforcing this macabre show of an economy with not real motivation or purpose.
Edit: just to say it, a market based around providing jobs to an inefficient degree rather than making profits seems like the most complete dismantling of the American dream that is possible, not to mention a fast road to stagnation and our loss of status as the main world power.
You do realize that pegging the US standard of living at its current level means we will soon have one of the lowest standards if living in the world, right? Today you will be devoting enourmous resources to securing the resources and setting up the infrastructure to build iPhones in America, at a much lower profit margin than they ate currently built, and then you will either force the prices to stay low or wages to go up so much (in part on Apple's back) that people can afford US made iPhones. Who will invent the next big thing then? Why would the US government even want the next big thing to be invented, when it will just cost us a fortune to secure the resources and build the infrastructure to make it here? Your world will soon have us driving our conventional made in the USA cars and talking on out us made iPhones while the rest of the world enjoys flying cars and neural implants that provide direct Internet access with a thought.
I've held off thus far with this question because I didn't feel it particularly special or needing of attention.
But, well, I feel like it should be asked and should be answered.
If economists have all the answers, why the fuck isn't it working? I think economists are making terrible mistakes with the terms "globilization" and "competition" like they should even be considered. I think your defaulting to the "I'm right because I'm an economist and here's a whole bunch of words to show it and some edge cases from the past 200 years that show my theories."
I think if you look deep and hard, once America and Europe pull out of cheap manufactured goods from Asia, that there's no more competition to be had. If someone wants to compete on the global scale, it's going to have to be the Asia that makes the move more towards economies of the west. Meaning, paying people money and a fair living wage. Because those are your consumers.
There's a reason why "Made in America" was a thing.
I really don't think that if someone has a choice of an Americonn board of Foxconn board there's going to be much hemming and hawing because one is $10 more expensive. I really don't. At least not among the first world. Like I said, probably in the Middle East and Africa.
Then again, knowing what I know of the software world, they'd probably opt for American made because standards (ethical and physical) and not getting spied on is a major concern (transparency of services?).
I think you have the right idea, I think you're the one that can give us the most insight, but I think you're flat dead wrong about this.
Also to answer your question, I don't think it would be able to afford twice as many workers because there isn't that much money. So the problem is, is capitalism the answer to standard of living?
I'm just a humble lawyer, but I would suggest that you consider the global economy from a more macro level instead of just looking at manufacturing. The US government needs to borrow to continue to provide services (and basically always has except for a brief, glorious moment engineered by the tragic hero Andrew Jackson before he made the situation even worse through his hubris in thinking he could destroy the bank). We largely borrow from China, Japan and other Asian countries, who buy out bonds in part because it helps them to keep their own currencies weak (beneficial to them as export based economies). Adopt protectionism, and all of a sudden they have no reason to buy our bonds, and we lose the ability to borrow all together.
But let's say we decide protectionism is the best approach, and the rest of the world does as well. We are comparatively resource poor, especially w/r/t the resources needed to produce modern electronics, and other countries have larger, better trained work forces and better manufacturing infrastructures than we have. Made in America was more of a thing when the American manufacturing worker was among the most well trained in the world and had access to the best tools. This is no longer the case.
I do agree with your last paragraph though. The answer to this problem is not naked capitalism. It is harnessing the resources generated by our capitalist system to provide for our people. Trying to integrate wealth creation and wealth distribution is a fool's errand. Far more efficient to create wealth in the optimal manner and then distribute it in a way the is most beneficial to all.
Apple is a weird case in that you're essentially paying extra for the sake of owning an Apple product. It's kind of like how real estate in California is expensive because you're paying to live in California, which is apparently a privilege.
This is probably due to environmental concerns. Mining metals is a dirty venture, and the EPA (as well as most states, rightfully) will hound the shit out of anyone who wants to open mining operations in the great 48 to make sure they don't fuck up the surrounding countryside with waste runoff and the like.
For the record, I threw that barb at Schrodinger because he is misrepresenting his narrative and Marmoset is falling for it. Schrodinger knows, fully well, that employment will fall in his scenario: that unskilled workers will pushed out of the workforce because they cannot operate in his favoured retail model. He just doesn't care: it's a cost of elevating the wages of those remaining employed that he is prepared to pay, and if unskilled workers cannot earn the legal level of wages, so be it. Marmoset, on the other hand, has no idea what is happening and sees it as a costless wage hike.
Now you can up and defend this disemployment tactic on assorted grounds: dynamic investment incentives or political forces, say. You can even argue that it is efficiency-improving (think about innovation: innovators don't capture all the benefit of their innovations, but by definition that also means that even foreseeable innovations are underinvested). But it is worth acknowledging the inherent initial regressivity of it. We do as much for conservative-favoured ideas like sales taxes, after all.
As for competition, and consumers: let me give the mainstream line. Competition makes us richer on average, and the answer to uneven benefits is redistribution. And as for consumption, other things equal, a nation paying all of its workers more does not increase demand more than it increases costs.
I think you can figure as much, but it is worth pointing it out explicitly because this quasi-Fordism is an exceptionally dangerous myth to protecting how the welfare state works. No, paying the same workers more is not profit-increasing, Ford got away with it because it retained the best employees and not by hiking demand for his products, and anyone trying to pull that card is lying to you and you need to see where its interests lie (see: Walmart).
As for competition: prohibiting imports from Asia will not make Europe or America better off on net (note that, in particular, you should be targeting modern trade-surplus Germany more than modern trade-deficit Japan). It will not be better off to the same extent it would not be better off if it prohibited a mysterious invention that transformed a small amount of American wheat into a large amount of electronics, to borrow a textbook example.
The reason why the US has a tremendous trade deficit is because it exports dollars and Treasuries, in vast amounts. Like any other resource-rich country, their manufacturing industry suffers to the extent it cannot convince foreigners to buy as much of its stuff because those foreigners are buying dollars instead (ask Canada and Australia, for instance). And like with these countries, the question is where all this revenue has been going. What does the US buy with its excess foreign currency? Who benefits?
The left-wing in the US has remained generally quiet about protectionism ever since Clinton and the 1990s triumph of the DLC. This is why it is willing to uphold the likes of Krugman as its standard-bearer, for instance - the same international-trade-economist Krugman who spent his Slate years slamming the remnants of the old left (and new right alike). It is increasingly the domain of the nationalist right-wing, particularly as the left increasingly draws its strength from labour in non-tradable sectors, which unambiguously benefit from buying cheaper stuff, and the manufacturing industry continues its relentless automation. This is why I am not particularly enthusiastic about dragging this all up again: all the stuff I could possibly say is already out there, and it is needlessly divisive to modern American left-wing discussions.
We sent Kyle Reese back in time.
You wish shareholdership was that concentrated. The problem in the US is precisely that shareholdership is weak and therefore is unable to prevent CEOs from raiding funds that could be going to investment instead. Realize that statistically your 0.1%ers are senior management rather than capital owners per se. It is why your traditional labour-capital mechanisms are blunted, as was hashed out in the Twinkie thread.