"USA has shot itself in the foot and is now responsible for it's own demise."

Indeed, I lost my last full time job with a USA company down here when they decided to move all manufacturing to Shanghai. It wasn't just that labour was cheaper, the other reason was our environmental protection laws.

Most of the article is way out of date. Today China is manufacturing superior goods to the USA, especially for film and television and at 1/3 the price and with excellent customer service. One of the local companies I do some work for had a bit of a problem with some HMI ballasts. In no time the Chinese manufacturer had an engineer on a plane.
I still buy some items from the USA, just from the few surviving guys working in a garage.

Bob.

the AFL-CIO claims that over 50,000 factories in America have disappeared along with more than 6 million manufacturing jobs. For these reasons, AFL-CIO President Richard Trumka in the film urges people who pick up a product Made in China to “think about your relative that just got laid off or the factory that just got shut down. Think about the school that is doing with less because the manufacturing base has gone and the tax base has left. Think about the lower income that you’re receiving now because we’re not making products, and we’re not buying our own products.”

While that's true it's also true that the unionized working class had a big hand in creating the problem: they wanted cheaper goods then they could buy when made in USA (by themselves), so to solve that problem the jobs of some of them were moved somewhere else so the bigger half could have luxury items. This in turn made those people who now had nicer appliances, technology, etc. say "I want more" and more jobs were moved to give in to their demand. Just look in schools: school unions say outsourcing to China is a bad thing, but schools demand the cheapest equipment and the newest technology, all made in China.

While it sounds silly from one standpoint, the fact "I can't afford to buy stuff I make" keeps you in your job: if you could afford it then the cost would have to be lower then what you're being paid to produce it, thus lowering your pay.

There's a Made in America store not far from me that I want to go to but the only reason I'd have to head that way is to go to the store and I'm already pretty busy. They ship stuff though. :)

"While it sounds silly from one standpoint, the fact "I can't afford to buy stuff I make" keeps you in your job: if you could afford it then the cost would have to be lower then what you're being paid to produce it, thus lowering your pay."

Except the labour component of consumer goods is very small.
Automation should mean a worker can make it and afford it.
During my life I've watched as electronic goods (TVs, radios) went from very labour intensive point to point wiring to robotic pick and place, hardly a worker to be seen.
At the same time the cost of shipping raw materials and finished goods has gone up in real terms. The "home team" shoud have a bigger advantage today.

If you want to be really concerned then understand this is not just happening with manufacturing. A graphic artist I know told me more and more of the work she does is being outsourced to India. That I can understand because of the difference in wages in a labour intensive process.

Bob.

"Except the labour component of consumer goods is very small."

Perfectly right...

... and automation to the needed degree of competitiveness will also make equivalently many man-hours (= jobs) redundant...

... and there is a limit as to how many refrigerators a family can use.

>It wasn't just that labour was cheaper, the other reason was our environmental protection laws.

That's a big part of it. Lifting environmental restrictions here isn't the answer either. What the Chinese have done to their environment is just horrible.

I"ve been pondering for some time that our real problem isn't "jobs," it's "work."

I live in an area where one farmer can produce more food than a hundred could fifty years ago.

For what we truly "need," technology is making human labor redundant.

Just not sure where it's all leading, but it isn't likely to be good unless we change our value system in ways that are totally radical to what most of us believe and think we are practicing.

tom

Read Kurt Vonnegut's "Player Piano," a very grim projection from one writer.

Jack

Far as unions go in the US, a bit of non-biased history... Google.

Henry Ford is often thought the start of it, where he had some really nasty factory conditions -- he later hired goons or thugs or muscle [whichever name you prefer] to literally fight striking workers in what turned out to be pitched battles. Rumors say that this was the beginning of Ford's [& by extension Ford Motor's] association with the mob -- as the unions grew to where they were handling large amounts of cash it's often alleged the mob either took control or was heavily involved in the unions too. However going with the unions proved a bit of a Faustian bargain, where wages & benefits increased but working conditions very often did not improve, with many of the same factories remaining in production through most of the 20th century -- drug & alcohol abuse were somewhat common [may still be according to a fairly recent TV news expose] as the only way for many to get through a workday. How the auto workers unions effect today's economy is mostly seen I think through the gov's bailout of GM, where they received very favorable terms. Otherwise they just don't have the numbers, & thus the clout that they used to.

The areas where unions have the most economic effects today are the trades & gov employees. In the trades union wages of coarse add costs, & because of that also spurs the employment of undocumented immigrants in many places. That's not for or against immigrants, illegal or otherwise, but there's little arguing the gov gets less revenues than if this employment wasn't often under the table. With gov employees it's created a symbiont arrangement, where creating gov jobs = creating votes, which has led to higher wage & benefit scales than non-gov employees doing equivalent jobs. More employees means more costs means more revenue has to come in if the books are going to balance. Again, stressing a neutral tone, some people feel that adding gov employees means that you have to have something for them to do, leading to non-biz friendly regs etc. that have big economic effects -- I'm not saying that I believe this or not, but rather it's a simplified summary of how a large part of the population along with many economists feel.

Far as US workers go, again from a neutral perspective...

We've been caught in a vicious circle starting in the 70s - 80s... one cause has been the changed philosophy, right or wrong, of corporations &/or corporate leadership, who have come to view their primary responsibility as increasing the value of stock share prices -- believe it or not that was not the way they always thought of themselves. The easiest way to increase share prices is to cut costs [unless you're a Google or Facebook] -- product or service quality actually has little to do with it, since stock traders focus on what fellow traders will think of a stock price tomorrow, much more than they're concerned with what a company's customers/clients think 6 months from now. You cut costs by buying cheaper or fewer raw goods, equipment, & employees.

With fewer higher paid jobs real incomes dropped [perhaps buying power would be a better term], & the market shrunk for higher priced goods, meaning that cost cutting intended originally to increase profits was now necessary just to have a market for your products/services. At the same time ever increasing numbers of people became employed in the lower paying service sector or industries, since that's where the most jobs were/are. So now we are, have been in a cycle where most every easy cost cutting measure eventually means a smaller market, so you'll have to cut costs yet again, which again will lead to a yet smaller market. That's the basic spiral you get into when you transition from an economy focused on creating something to an economy based on servicing the needs of the population. In a nutshell more & more people work & buy at Walmart, while the fast food joints worry about how to keep their dollar menu [if back in 1980 I had said they'd even have a dollar menu in 2012 you'd have thought me insane].

China & the Arab Spring...

I'll start with the Arab Spring, & end quickly by saying regardless anything else, it shows people turn to the streets when they can no longer meet their basic needs in life -- otherwise the living conditions in a country like Egypt hadn't changed radically for years, so why didn't the same things happen a year, or 5 years, or a decade sooner? Greece is another, though more complicated example, tied up as it is with debate on many things EU. Ban low cost imported goods &/or services in the US, & you'll have the same thing, maybe worse. Store shelves would empty, employees would be fired or laid off, & what goods were available would be unaffordable to most. That's why when union folks &/or politicians &/or whatever gov talk about restricting Chinese imports it may be intended to persuade people & companies to slowly change things, but mostly it's just blowing smoke. It might make some people feel good -- good enough to vote for whomever -- but it's not going to happen any time soon. Back in the late 70s groups of Detroit auto workers would go around smashing imported cars [I kid you not] & what good did that do them? It raised insurance rates & made sure those effected thought of *all* auto workers as scum. Change in this regard can happen over time, is starting to happen now by baby steps, with manufacturing *very* slowly returning to US shores.

China's economic model is changing -- does have to change regardless of how anyone feels about it, because the country's changing. Their common biz practices are changing as well -- will have to change regardless how anyone non-Chinese feels, because their own citizens have increasing demands. People are people, & quality comparisons of people, like quality comparisons of their work &/or the goods they produce, are at best generalizations, at worst have a racial component. Stuff like culture, schools, living conditions etc. do play a role, but where a person was born, lives, or works has little to no effect on the best that person can accomplish given ideal circumstances. Companies like Microsoft offer proof of that. But just as there's a universal good, there's universal bad... things like greed have no nationality. Name a country & rest assured, there are companies there producing great stuff as well as companies making stuff so bad it's dangerous, just as there are companies that may be more environmentally friendly & companies that are the opposite. Truth is, wherever you live it's in a glass house, so careful throwing stones. :)

>"Peter Navarro is a business professor at the University of California-Irvine. He wrote, produced, and directed the documentary “Death By China.” "

As a highly paid author & prof, Navarro doesn't *Have* to shop at Walmart, so perhaps he's unaware of the implications, or perhaps he's ringing the warning bell to accelerate the return of manufacturing, or maybe preaching to the choir, in a way maintaining his customer base? Navarro has had political aspirations, running as a Democrat in a '96 Congressional race, so this may be an initial step to running for whatever office again. Navarro apparently quotes Trumka, who asks that I think about people laid off because of Chinese made goods. Instead I'd ask Navarro to think about this...

In the 70s I went to go to work one morning, finding that union members had called a wild-cat strike. It was made rather apparent that I couldn't report to work when they proceeded to show me they would turn the van I was driving on it's side. As a new hire I was not yet union, so promptly fired. The job I'd left was no longer available, so I went on unemployment, eventually escaping the Detroit area for another state in order to find a decent paying, full-time job. Some time before that, just out of High School, I worked for the headquarters of a supermarket chain in computer operations -- aside from the one System's Analyst we were paid little over minimum wage in the early '70s. The union called a strike & won wages of ~$30k yr. for warehouse workers, & $10-13 hr. for grocery store cashiers. Full-time grocery store jobs almost disappeared, with cashiers who formerly made ~$8 hr before the strike being replaced by minimum wage part-time employees -- something that still lasts today. In the early '70s there were quite a few grocery chains in MI -- all but 1 pulled out of the state entirely. I could talk about the [huge lack of] quality of the autos coming out of Detroit factories in the 70s & 80s -- I've got 10+ years in dealer service dept.s -- with cars/trucks that wouldn't run to get them off the car hauler (i.e. delivery truck). I might mention my best friend's uncle, who retired from the line at a Chevy plant -- Trumka's predecessors made sure he had plenty of money, but did nothing to improve working conditions... he didn't live to see his late 50s. I wouldn't dream of bothering Trumka with that sort of thing myself -- he's got enough worries making sure he doesn't wind up like Hoffa [still hits the news from time to time when the feds get a tip on somewhere else to look for his body]. As mentioned, there are allegations of union - mob ties.

Google.

While the longer post just presents info you can find [& verify] using Google, these are just a couple few personal thoughts...

The problems with automation today are 1) it doesn't, can't do everything, & 2) it requires a large initial investment. Foxconn is adding a lot of automation, but they've got a pretty much guaranteed market for what they produce & obvious motivation to reduce employee grievances. When someone talks about automation as a cure for higher wages, they need to consider what would entice investors to pony up the needed initial funding -- answer that question & that's what you need. Obviously we've proven over the last few years that having the gov throw money at whatever companies doesn't work -- people need their own incentives, because without them they produce bunk [look at the problems Russia's having reforming their defense industries].

Automation doesn't necessarily mean overall fewer jobs. If that were the case developed countries would have never survived the Industrial Revolution. Modern farming would have meant dire unemployment half a century ago. Ask yourself if we'd be better off still having local Blacksmiths? It simply doesn't work that way -- blacksmiths learned to do something else, like working on cars. What's crucial is creating value which in turns creates wealth which pays wages for all sorts of jobs.

SCS develops Vegas which we buy which pays their salaries which they spend on food, housing etc. Honda's Ohio plant buys locally produced components, buys [fewer] overseas produced components, pays their workforce to assemble vehicles, takes the money from vehicle sales & distributes that to suppliers, workers, the gov etc., & they all spend that money the same way. Lower costs can mean lower prices can mean more volume can mean there's still a profit as a means of incentive to keep doing it. There are several reasons for automation, but when everything works as it should the same if not more money flows, is distributed, & it pays for value created by other businesses -- wealth doesn't just flow into some king's treasure vault, because even if the king were that greedy, sitting in a vault makes it useless.

The problem in the US today is that we have too few jobs creating value, so people have to take jobs like building maintenance or working at Walmarts which do not create any value -- it's a necessary cost of doing business, so kept at a minimum. Investing can create value, by providing needed funds to start or expand a business -- stock market investing OTOH has increasing become about making money off price fluctuations, & while money made is often spend, there's no real value created at all. Making a music CD/album or a movie can most certainly create value -- some of the current means of distribution just bleed off funds, same as quant traders in the stock market. Currency speculation is parasitic -- banking, like investment can lead to creating value.

The argument for fair free trade is essentially that as long as a country's workforce is busy creating value, doesn't matter where the money from their wages flows. Back to SCS, you can safely assume they're using PCs with components made overseas -- the problem isn't those parts are being made in some other country, but rather it's that if you're working as a cashier at the local drugstore you can't easily afford Vegas Pro. That's not so much a problem because the price of Vegas Pro is too high, but rather you make too little. The free-trade argument would go: the cure is to work for higher wages creating value that can be sold world-wide. It's really not that different from a couple centuries ago when/where you might slaughter a chicken & barter with the blacksmith to have your horse(s) shoed -- done fairly everybody wins.

The argument against it is naturally that other countries may not play fair. With claims of Chinese currency manipulation, trade is often seen as very unfair. OTOH going to extremes, not coincidentally giving union leaders talking points for reelection, can be seen as equally unfair by the Chinese. That's why there's diplomacy -- hopefully done right it lowers some of the speed bumps.

You'd think the the benefits of automation would have transferred to Americans as a whole. Yes and no. Prices are cheaper, but that doesn't mean the American consumers have received the full benefit of it. All you have to do is look at the redistribution of wealth upwards over the last thirty years. Companies want to make American profit levels at Chinese labor prices. Instead of passing the saving along to consumers, they've kept a lot of the savings. But manufacturing industries are really a small part of the problem. Finance eats up twice as much as it did a couple of decades ago. We're paying for the losses generated by bet-the-farm trades from grossly overpaid paper-pushers.

Thanks SuperG

> "You'd think the the benefits of automation would have transferred to Americans as a whole. Yes and no. Prices are cheaper, but that doesn't mean the American consumers have received the full benefit of it. All you have to do is look at the redistribution of wealth upwards over the last thirty years."

1st off I Really wish we were moving faster to more automated & more equal societies.

But automation doesn't necessarily save money -- it can also perform tasks that humans are ill suited for, & sometimes the expected cost savings have more to do with the risks of hiring people & having to deal with them. A maybe decent example is automated drug warehousing, where it would be cheaper to have people pulling orders, but the costs of theft & security to try & prevent theft are high enough that automation is a viable alternative.

As far as talking about redistribution of wealth, the discussion can either be political or pragmatic. The political discussion I'll leave alone -- we've been drowning in enough political marketing for the last year, & besides, political differences are so ingrained by now that any debate turns into a talking points shouting match. Being *purely pragmatic* OTOH, what drives people to do a good job, to try & improve, to in a word, succeed? I'm sure most everyone can think of several answers... I'm also sure that most everyone will recognize many people are motivated by greed. It's not nice, it's not pretty, but there it is. If the SCS site got hacked or developed a glitch where every app & loop set etc. was priced for just a $1, how many of the people in the SCS forums [who you'd expect to be more SCS fans] would try to get all they could at that price? Most people would figure it's a mistake & SCS would never deliver, but quite a few would order everything they could regardless -- you see this sort of thing all the time on the deal sites, & frankly greed outweighs the almost certainty you're wasting your time. And then people get upset when what they knew going in was a mistake, turns out to be just that, a mistake.

At any rate, & again being purely practical, take away greed as an incentive to grow a biz &/or invest, and a whole bunch of investment & other economic activity just stops, dead in its tracks. Youtube & anything Google would go away, win8 would be the last release from MS, Facebook would be shuttered & so on. The Donald Trumps & Warren Buffetts of the world may later in life decide to "try to buy their way into Heaven", but truth is there's never been anything stopping them from giving their assets away to the poor. Some will point out that Trump has created a lot of jobs, & he has, but mostly people look at him & [maybe secretly] wish they were in his place. Some of those people will try, & from their ranks the next Google or Amazon or Facebook might be born.

> "Companies want to make American profit levels at Chinese labor prices."

I'm sure there are quite a few CEOs that would drool at the prospect. But Chinese labor prices are actually not that cheap any more -- that's one reason you see more countries starting to take their place, & together with design theft & logistics problems, reasons why some manufacturing is returning to US shores. The Chinese gov tries to keep wages rising while artificially keeping prices down but that's Not going to work forever. That's not to say companies like Intel & Apple aren't making what us common folk might consider too much profit. They both have competition so they're not a consumer's only choice, but beyond encouraging competition & stopping monopolistic practices there's not much gov can do. The current political debate in the US seems to be: raise taxes & they can move to a country with less taxes -- cap profits & you reduce the incentive to create &/or grow business -- make hiring people more expensive, not just by increasing wages, taxes, & regs, but by mandating benefits, & companies do less hiring. I'm not sure anyone knows the answers -- we just voted for one side of the argument in Congress & for the opposing side in the Whitehouse... I know I don't know the cure, but suspect that as usual it's somewhere in the middle.

> "Finance eats up twice as much as it did a couple of decades ago."

I have a bit of trouble with that statement, given interest rates are about as close to free as they've ever been, & right now there are loads of investors with capital just sitting parked while they desperately look for someplace to put their money that gives any sort of a return. A couple/few decades ago you could at least put it in CDs & get interest to offset inflation &/or devaluation -- today with the gov printing money the value of the dollar drops, so if you park it you're losing money on top of losing money. That said, banks are extra cautious nowadays -- hopefully they'll loosen up a bit once the current tax BS is behind us so they can better predict the future.

> "Companies want to make American profit levels at Chinese labor prices."

I import goods for my business and I can tell you one country I import from is the USA because initially I wanted products of quality and an assurance that the chemicals that are on the label are in the product. What I can tell you is that a number of companies have all or some of their product made in China and label it “Made in USA” or by implication just put their company name on the label along with their US address. For obvious reasons I am not going to name the companies. Some of this knowledge has come from research and picking up on little things like removing the “Made in China” sticky label and occasionally missing on or two. The other source is direct contact from businesses in China who clearly search out websites that sell a US brand product and actually say in emails that they do manufacture the brands. So I ordered some product from China and yes it was exactly the same as that being sold by the US company; but at a fraction of the cost.

> "So I ordered some product from China and yes it was exactly the same as that being sold by the US company; but at a fraction of the cost."

Do be careful though, as much as whatever products you buy warrant it. Some stuff is rebranded; some is made for name brands; some stuff is made on the same lines as stuff made for name brands, but may or may not be produced at the same specs; some stuff is brand name designs/specs stolen, copied, shared with other plants, & again may be 100% the same or not; some stuff is just counterfeit, including packaging & any manuals etc., though usually I think that sort of thing is lesser quality -- someone may copy a design yet still have the desire to sell a top quality product, while the counterfeiter is already into scamming the buyer so usually doesn't care. Companies in the US encounter counterfeits sent in for warranty service, & some are so close in appearance they may not be able to visibly see any difference until they check serial #s, which may all be the same.

At any rate the quality of the product depends on the company -- not on where it's located. The US & EU have more regs, so an honest person has more of a tendency to stay honest, but that sort of thing doesn't bother someone who's dishonest to begin with. China is weak on (C) enforcement -- the US & EU are not, so you won't see copies. Importers/exporters are not all honest either. While US companies may import most every part of an item, they're usually required to say something like assembled in the USA. Or if they export US made components for assembly they say something like Assembled in Mexico From US Manufactured Parts. I would expect any US company re-labeling stuff from Made In China to Made In USA would be the subject of complaints to the State's &/or Federal Atty., & hopefully prosecuted, though I don't know if the same laws & such apply to export or if there's some loophole.

> "I import goods for my business ... I wanted products of quality and an assurance that the chemicals that are on the label are in the product."

I can only speak to what US companies regularly encounter -- they've found they either need someone that can monitor operations on site, at least making spot checks, &/or they have to have the stuff analyzed, spot-checking shipments that come in. That's more so with overseas suppliers, but happens with US suppliers too, depending on the company selling the product & how much a premium they place on their brand. There's a recent case where a regulated US facility was re-packaging medicines from bulk into the sizes/portions hospitals & clinics used -- they didn't follow proper sanitary procedures, people have died, there will be all sorts of lawsuits & some folks may/may not go to jail, but that does nothing for the dead. Had the hospitals & clinics spot-checked those meds those people would be alive.

Long story short, I think US & EU quality is *usually* somewhere between good & best, simply because people in the US & EU demand better quality as consumers -- I order some minor stuff from China/Hong Kong direct, & I've received some stuff that was not as good as the cheapest junk at the Dollar store... I'm talking about stuff like incredibly cheap watches, most of which are OK, but some few are so bad you would never, ever see them on *any* store shelf -- IOW the stuff we consider junk is still nicer than some of the stuff sold elsewhere in the world. We have more regs, but the gov can't check, can't see everything, & neither honesty, integrity, greed, nor dishonesty know any borders.

U.S. Secretary of State Hillary Clinton's recent 10-day tour across Africa represented a strategic caving-in of sorts. In many of the places she visited, the Chinese had gotten there first. In fact, China is everywhere in Africa these days, both exploiting the continent's vast natural riches and pursuing infrastructure projects long promised but never quite delivered by the West.

Building railroads from inland areas to the coast, with the eventual prospect of a network that spans sub-Saharan Africa? Putting in highways at affordable prices across the continent? Constructing state-of-the-art office complexes, within budgets that African nations can afford?

These are all goals that African leaders have pursued for a long time. In the past, a toxic combination of corruption, murky ties between ex-colonizing countries (and their business elites) and the new rulers, and overly complex planning structures derailed project after project. Given the ability to deliver projects on time and on budget, the Chinese offer Africa's governments and people a clean-cut deal: If you work with us, we will build it — period. No ifs, ands, or buts.



http://blogs.hbr.org/cs/2012/09/how_chinas_approach_beats_the.html