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Kiwi analyst Michael Parker on why robots and modern China are ruining Adam Smith's Wealth of Natio
The Interest ^ | December 5, 2016 | Gareth Vaughan

Posted on 12/04/2016 11:44:08 PM PST by 2ndDivisionVet

Chinese robots appear to be bringing to an end a path of "serial industrialisation" across Asia that has run for 60-odd years, says Hong Kong-based Bernstein analyst and ex-pat Kiwi Michael Parker.

In a research note entitled Adam Smith vs Chinese Robots...The end of The Wealth of Nations, in one chart (not ours), Parker points out that instead of shedding low cost manufacturing as it develops, China is getting rid of the workers but not the work.

Parker notes that Adam Smith's Wealth of Nations, published in 1776, remained broadly relevant to capital allocation decisions globally for 240 years. Basically, if an individual, company, or country has an advantage in producing something, then the individual, company or country should specialise in producing that one thing, and trade for everything else. But, Parker, says, in recent years this concept has run into two forces that Smith could not have contemplated, being robots and modern China....

(Excerpt) Read more at interest.co.nz ...


TOPICS: Business/Economy; Computers/Internet; Society
KEYWORDS: automation; china; robots; trump
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FULL TITLE: Kiwi analyst Michael Parker on why robots and modern China are ruining Adam Smith's Wealth of Nations treatise and will frustrate Donald Trump
1 posted on 12/04/2016 11:44:08 PM PST by 2ndDivisionVet
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To: 2ndDivisionVet

https://youtu.be/4TC3iKGOLb8


2 posted on 12/05/2016 12:09:14 AM PST by smokingfrog ( sleep with one eye open (<o> ---)
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To: 2ndDivisionVet
... why robots and modern China are ruining Adam Smith's Wealth of Nations treatise and will frustrate Donald Trump

They may frustrate President Trump, yet he will triumph slowly but surely over the years of his administration (hopefully 8 years). Our country has an advantage in producing something. We have some of the finest scientific minds and universities (of course they also turn out liberal idiots but the good outweighs the bad). We build some of the finest military equipment, as well as technology for going to outer space. That includes designing and building robots. China isn't the only one investing in robots.

As President Trump unleashes American talent (and puts up tariffs and barriers to cheap imports), we can unleash robots to supply goods for ourselves and not depend on imports. Trump is the right man at the right time to turn things around for the USA. Hopefully illegal immigrants will be our chief export in the short term.

3 posted on 12/05/2016 12:13:56 AM PST by roadcat
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To: 2ndDivisionVet

OK, I read the article. Robots are the future of manufacturing. Supposedly robots are already making products in the USA. Conversely, the nation with the most robots will be the best at making products. The auto industry has a robot factory in Brazil. Wanted one in the USA. The unions would not allow its workers to be done away with. The robot factory was not built in the USA. Therefore, the robot nations win and the USA does not. China does not allow the Unions to mess up the future. China will be the leader of the 21 Century. 2nd place is not horrible. In terms of a race; the USA will be drafting on the leader(idol speculation).


4 posted on 12/05/2016 12:22:51 AM PST by Trumpet 1 (US Constitution is my guide.)
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To: Trumpet 1

The nation or nations with the buying power win. Without markets, production is pointless. If a given nation has buying power due to a large market, and the United States certainly has one of the largest if not the largest, then it holds most or all of the cards, given the will to direct trade with external partners in a manner that is beneficial to the domestic market. The domestic market is driven by consumers, you, me and all legal residents. Governments acting to the detriment of US legal residents should be penalized, in order to maintain the health and buying power of the market. Just how that is to be accomplished is a matter that is yet to be determined. It doesn’t necessarily have to be punitive, but punitive measures must always remain on the table.


5 posted on 12/05/2016 12:34:14 AM PST by RegulatorCountry
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To: 2ndDivisionVet

The authors are stretching for confirmation of their thesis. China investing $3 billion per year in buying robots from the Swiss, Germans, Japanese and Americans is not going to have an appreciable relative effect on their economic development. I would be more impressed if they had their own robotics industry, but that takes ingenuity.


6 posted on 12/05/2016 12:39:39 AM PST by Praxeologue
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To: Praxeologue

China still has zero respect for intellectual property. So, they’re buying robots. They’ll disassemble them, figure out how to make them cheaply and proceed to do so very rapidly. The nations from whom the intellectual property was stolen will block the sale of these robots in their markets, but that doesn’t remove the benefit to China. Goods manufactured via ill-gotten intellectual property will still be sold, and the robots themselves will be sold to nations that do not have legal restrictions due to intellectual property rights.

It’s piracy, what China has been doing for going on thirty years. We’ve been going along with a wink and a nod because there’s a lot of money to be made in labor arbitrage and in markup of cheap imported goods from China. It has to be clamped down upon.


7 posted on 12/05/2016 12:45:32 AM PST by RegulatorCountry
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To: RegulatorCountry; 2ndDivisionVet
Here is a reply which I wrote in July and partly in August, long before the election of Donald Trump:

We consider the implications of automation as conservatives. The implications are not limited to job displacement but to the very structure of our economic system and therefore the very existence of our liberties.

The public eternally argues whether automation produces more jobs than it eliminates. If we look at the Industrial Revolution which was a form of automation, it clearly produced more jobs than it cost. The problem was the Industrial Revolution affected farms greatly and made many agricultural workers redundant who flocked to the cities and infested places like London's gin alleys. The social dislocation was brutal and vividly described by Dickens.

But it was not "automation" alone that caused dislocations (a point we might keep in mind in an age of outsourcing), the cloture movement in England and Ireland and the Crofters in Scotland caused huge social dislocations. The Scots emigrated around the world giving us the likes of Carnegie. One can even connect the dots to the Irish potato famine, their migrations not just to America where they produced presidents like Barack Obama but throughout the Empire.

The dislocations, however caused, inevitably produced reactions. Those who cite the virtues of technological advancement cite the reaction of the Luddites as an example of overreaction and misplaced grievance. To destroy the looms being powered by water and later by steam in order to bring back a cottage industry was a futile reaction.

Eventually the Industrial Revolution caught up and provided jobs but the difficulty in human terms was seen in the time lag between redundancy and new industries creating new jobs. Besides the time lag there was also a culture lag. An agricultural worker who kept time by the sun and the seasons was not the sort of fellow to show up to work on time and tie himself to a tedious machine for 12 hours, six days a week. Something to consider when we seek to explain the failures of the Great Society and its training programs to make worker bees in the inner-city. In this context we think of a checkout employee at Walmart and we see a tedious repetitive task, highly automated and intentionally designed by very smart people to be operated as mindlessly as possible by less clever people who are utterly ignorant of the workings of the technology they operate. In fact, the whole idea of this transformation is to discourage individual initiative where the rubber meets the road. Human drones make the best employees in this situation.

In addition to the time lag and the culture lag there is an education lag which is extremely challenging because it is a moving target. As the digital revolution incessantly rolls over it becomes exponentially more sophisticated in bewilderingly short spaces of time, it's new technical skills require new language (literally so in computer programming), new ways of thinking (with the binary system instead of thinking in 10s), a whole new concept of time and space (your x-ray might well be read in real-time by a radiologist in India). The digital revolution requires a difficult to define alteration in conceptual thinking regarding sectors of the economy. Advertising in newspapers is going the way of delivering the mail by pony express. Marketing is now being redefined by social media. Delivery of medical services must now take into account the fact that I can look my symptoms up on the Internet and challenge my doctor's diagnosis, often to his ill-disguised annoyance. Meanwhile, there is a bit of irony which might be appreciated today by Luddites of old when an Englishman's x-ray is read by an Indian doctor, reversing the mercantilist manufacture of garments in England with Indian cotton. Old-fashioned industries are utterly revolutionized by computers: horizontal drilling and fracking in oil recovery; subterranean radar in mining and oil exploration; gene splicing of grains in agriculture, much feared by my neighbors here in Germany-or is theirs merely a protectionist reaction?

Since the object of automating labor is to substitute machines for people at a cost benefit, automation seeks low hanging fruit and is most profitably deployed where it will eliminate the most workers. These workers are human which means they come in many flavors: many will be intelligent but many will not be clever enough to adapt to cyber world; many will be ambitious but many will also be lazy and prone to dependency; many will be fit but many will also be alcoholic and drug dependent; many will be young but many will be old and uneducable; many will be mobile but many will also be tied to the soil or family and unable to pull up stakes to find employment in geographically as well as psychically far removed venues; many will be resilient but many will also be defeatist. We conservatives should never forget that victims as well as survivors of the computer revolution will vote. We should never forget that leftists will pander to the losers and demagogue capitalism for producing technological progress which they will describe as exploitation. They are liable to win this debate because they tend to win debates by controlling the language, co-opting institutions, and with cynical race and class demagoguery. They are liable to win because they are likely to get the government to subsidize their side.

Leftists will be eager to demonize capitalism as the author of dislocation just as they exploit "climate change" to destroy capitalism. The strategy will be to create a class of victims of those left behind to create a political force to impose government controls over the entire economic system. Community organizing will be moved from a geographical locus to a class basis. Demagoguery will rise as the left seeks to divert inquiry away from other causes of job dislocation such as burdensome and ubiquitous government regulations, a suffocating tax structure, unwise trade deals promoting job exfiltration from America, unnecessary and misdirected environmental restrictions, open border infiltration of job seekers, an ever expanding and deadening public as well as private debt, a political system waxing increasingly corrupt as it increasingly engages in market distorting crony capitalism, a pathetically incompetent educational system, and, ultimately worse of all, a debilitating victim and dependency culture.

Here we see ingredients for a toxic cocktail of dislocation and systemic breakdown which could become a perfect storm if the timing is right. This list does not even contemplate several foreseeable crises such as the entitlement funding balloon bursting in a few years nor does it contemplate the unforeseeable black swan events which the gods whimsically introduce into human affairs to confound all wise men. In the storm, should it come, the left will not let a good crisis go to waste. History suggests the right will simply muddle. All of the leftist inspired, government imposed causes of job dislocation catalogued above will only be made the more acute by automation and the dislocation caused by robots. If Chinese factories are automating and eliminating 90% of their workers, the impact on American employment statistics will be devastating. In a perfect storm, or in a gradually gathering storm, the remedy offered by the left for failed socialism, that is for government policies which have brought us to this place will be more, not less, socialism. That is the whole idea of not letting a crisis go to waste.

Conservatives, however, do have the answers and have had the answers for years: abandon the nonsense that diversity is strength, stop immigration, preserve the tremendous benefits to our economy of international trade but render trade fair as well as free, end crony capitalism, get the federal government out of education, cut taxes, cut regulation, cut spending.

Finally, if conservatives do not left will certainly deal with the employment and social dislocations inevitably to be caused by technology which for short we might call "robotisastion" which has been somewhat obscured by the wave of immigration but which is inevitable and is well advanced in some industries. The problem for conservatives will be to maintain the social fabric and to maintain a hold on the political destiny of the country and still maintain a conservative, capitalist policy where wealth is created by machines that do not pay Social Security, do not pay income taxes, and do not pay for health insurance. Those who can assemble the capital to create these machines can be made immensely wealthy and there is no present provision (or conservative ideology) either for providing for the workers the machines displace or for distributing not just goods and services made by these machines but that wealth created by the machines. We have a social system based on wages which provides taxation and the insurance and the mortgage money that makes our society work. What happens when the wage system is replaced by machines?

Yes, of course we have the historic examples of the Industrial Revolution which generated dislocations as an agrarian society was replaced with a modern industrial society that ultimately provided more jobs than it displaced. Ultimately, robotisastion will no doubt have the same effect but the pace of the dislocations will be far more rapid than that which occurred during the centuries since the industrial revolution began around 1800. The reaction of the Luddites, the squalor of London, the real suffering of people in those days occurred even though the transition took more than a century but the digital revolution has not just miniaturized technology, it has shrunk time. We must expect an acceleration, an extension, an intensification of the dislocations normally attendant on the introduction of revolutionary technology.

Perfect storm or gathering storm, conservatism must know what it believes in order to know what to do. If we do not provide conservative solutions we will find the voters accepting statist solutions which inevitably trade our liberty for leftist demagoguery.

Postscript: all of this is now coming to a head in the person of President-elect Trump. The point of this long reply in retrospect is to point out his responsibility not just to a few manufacturing jobs in the American Rust Belt but to the whole society, that is, he must understand that to save one portion of society from the rigors of outsourcing, immigration, automation, the digital revolution, or predatory trade wars, is inevitably to disfavor other sections of the economy. "Other sections of the economy" is a euphemism for the lives of real people.


8 posted on 12/05/2016 1:09:58 AM PST by nathanbedford (attack, repeat, attack! Bull Halsey)
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To: RegulatorCountry
I don't know if you meant to, but you just regurgitated the left wing/Paul Krugman/Keynesian/Obama view of economics.

If you consider yourself a conservative, take the time to reconsider. A nation's power and wealth is all about its ability to produce, not consume. Read a little Milton Friedman, or Hayek!

9 posted on 12/05/2016 1:10:42 AM PST by Wayne07
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To: RegulatorCountry
Watch this short Milton Friedman video:

https://www.youtube.com/watch?v=Hrg1CArkuNc

10 posted on 12/05/2016 1:17:21 AM PST by Wayne07
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To: Trumpet 1

We need to be the #1 robot nation. That means Americans need an educational system that gives them the ability to create things like robots instead of being stuck in jobs that will be replaced by them, eventually.


11 posted on 12/05/2016 1:39:14 AM PST by ari-freedom (Chicken Little Concerned for Trump people are almost as annoying as NeverTrumpers!)
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To: 2ndDivisionVet; All

Very interesting post and thread. Thanks to all posters. BUMP!


12 posted on 12/05/2016 2:07:57 AM PST by PGalt (CONGRATULATIONS Donald Trump)
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To: 2ndDivisionVet

ok robots put most out of work except for the robot mfgrs who become fabulously wealthy.

Time for a WPA-2? Helicopter money? More Chinese bus tours with tour guides to LV and Grand Canyon? If not that, then what?


13 posted on 12/05/2016 2:32:57 AM PST by SteveH
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To: Trumpet 1

So Millenials and Gen X’er’s how’d that demand for a $15 minimum wage work out, eh? Feeling a little stupid now I bet...turns out their employers didn’t think they were worth as much as they thought they were after all. Good, they needed to learn a few lessons the hard way...


14 posted on 12/05/2016 2:45:45 AM PST by jsanders2001
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To: Praxeologue
> I would be more impressed if they had their own robotics industry, but that takes ingenuity.

Russia and China have found its much easier to just let the U.S. be the innovator, develop the technology, and spend their money then just send in spies steal it unfortunately. Been that way for a long, long time.

15 posted on 12/05/2016 2:49:40 AM PST by jsanders2001
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To: nathanbedford
Thank you for (re)posting these thoughts.

A free market sees the rise of unanticipated industries. We will see an emergence of robot-support technicians.

A teen can make some money flipping burgers but will make great money keeping the flipping robot running smoothly.

16 posted on 12/05/2016 3:43:49 AM PST by corkoman
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To: RegulatorCountry

I agree with you, when I lived on Taiwan back in the sixties, I saw the blatant disregard for intellectual property.

However if you or anyone else were to examine Chinese history you would see where that cultural ‘norm’ came from. The Chinese as a whole have always battled famine and a great deal of the fight has been the wholesale theft of ‘any’ idea that seemed workable in providing food and other material necessities to their families.

In other words the whole concept of intellectual property theft is a non-starter with the Chinese people. That theft has allowed them to survive and now today to thrive in a modern industrialized world.


17 posted on 12/05/2016 3:48:37 AM PST by The Working Man
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To: 2ndDivisionVet

bfl


18 posted on 12/05/2016 4:24:38 AM PST by rlmorel (Orwell described Liberals when he wrote of those who "repudiate morality while laying claim to it.")
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To: SteveH

WPA-2, Yes. We will have to create some systems of easy employment with reasonably obtainable standards.
The First World is drastically under estimating what it will mean personally when most the population is unqualified to find good jobs or promising careers. We have not even begun this important conversation in a national sense. My concern is we may have to allow a twenty to thirty years to pass before society admits that something invaluable is on the verge of extinction. That something being a sense of self worth that can only be acquired by working and successful completion of projects.


19 posted on 12/05/2016 4:49:22 AM PST by lee martell
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To: Trumpet 1
(idol speculation)
Which one in particular, Baal, Nebo, Gad?
20 posted on 12/05/2016 5:04:44 AM PST by Tennessean4Bush (An optimist believes we live in the best of all possible worlds. A pessimist fears this is true.)
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