Posted on 12/21/2011 4:37:03 AM PST by Kaslin
Republicans and Democrats, liberals as well as conservatives, have bought into anti-Chinese trade demagoguery. Former House Speaker Nancy Pelosi suggested that tariffs against China are a "key part of our 'Make It in America' agenda." During his 2010 campaign, Senate Majority Leader Harry Reid, D-Nev., called his tea party-backed Republican challenger, Sharron Angle, "a foreign worker's best friend." In a recent news conference, President Barack Obama gave his support to the anti-China campaign, declaring that China "has been very aggressive in gaming the trading system to its advantage," adding that "we can and should take action against countries that are keeping their currencies undervalued ... (and) that, above all, means China."
Republican 2012 presidential candidates have jumped on the anti-China bandwagon. Mitt Romney wrote: "If I am fortunate enough to be elected president, I will work to fundamentally alter our economic relationship with China. ... I will begin on Day One by designating China as the currency manipulator it is." Former Sen. Rick Santorum, R-Pa., was even more challenging, saying, "I want to go to war with China."
Let's look at the magnitude of our trade with China. An excellent place to start is a recent publication (8/8/2011) by Galina Hale and Bart Hobijn, two economists at the Federal Reserve Bank of San Francisco, titled "The U.S. Content of 'Made in China.'" One of the several questions they ask is: What is the fraction of U.S. consumer spending for goods made in China? Their data sources are the U.S. Census Bureau, the Bureau of Labor Statistics and the Commerce Department's Bureau of Economic Analysis.
Hale and Hobijn find that the vast majority of goods and services sold in the United States are produced here. In 2010, total imports were about 16 percent of U.S. gross domestic product, and of that, 2.5 percent came from China. A total of 88.5 percent of U.S. consumer spending is on items made in the United States, the bulk of which are domestically produced services -- such as medical care, housing, transportation, etc. -- which make up about two-thirds of spending. Chinese goods account for 2.7 percent of U.S. personal consumption expenditures, about one-quarter of the 11.5 percent foreign share. Chinese imported goods consist mainly of furniture and household equipment; other durables; and clothing and shoes. In the clothing and shoes category, 35.6 percent of U.S. consumer purchases in 2010 were items with the "Made in China" label.
Much of what China sells us has considerable "local content." Hale and Hobijn give the example of sneakers that might sell for $70. They point out that most of that price goes for transportation in the U.S., rent for the store where they are sold, profits for shareholders of the U.S. retailer, and marketing costs, which include the salaries, wages and benefits paid to the U.S. workers and managers responsible for getting sneakers to consumers. On average, 55 cents of every dollar spent on goods made in China goes for marketing services produced in the U.S.
Going hand in hand with today's trade demagoguery is talk about decline in U.S. manufacturing. For the year 2008, the Federal Reserve estimated that the value of U.S. manufacturing output was about $3.7 trillion. If the U.S. manufacturing sector were a separate economy -- with its own GDP -- it would be tied with Germany as the world's fourth-richest economy. Today's manufacturing worker is so productive that the value of his average output is $234,220, three times higher than it was in 1980 and twice as high as it was in 1990. That means more can be produced with fewer workers, resulting in a precipitous fall in manufacturing jobs, from 19.5 million jobs in 1979 to a little more than 10 million today.
The bottom line is that we Americans are allowing ourselves to be suckered into believing that China is the source of our unemployment problems when the true culprit is Congress and the White House.
No, wealthy needn't be solely derived from outputting tangible assets. If you provide services, information, ideas, etc. that someone else deems valuable and is willing to pay for, then that's obviously a means to obtain wealth.
Excellent point for the "Patriotic Protectionists" here decrying the "Free Traitors" to explain.
They all have satellite or cable TV or something like it.
Cable box/sat receiver are probably $100 in components....designed by Intel and Broadcom and Freescale in California and Texas and Oregon. 70% of the component values are in the R&D and sales portion. Asian manufacturing gets about 3% margin of profit on assembly and manufacturing.
Say they can make 50% of the content in a receiver box and only end up with a dollar or two out of the $100 for that box, while Intel and Freescale will get treble or 10x that in domestic profit just selling a single chip into the design.
And yet, after you buy the "chinese" hardware for a pittance, you'll still end up paying $50-100+ PER MONTH to the anti-capitalist, anti-American Hollywood content providers!.
It was not even possible to consider such a consumer model in the 50's, 60's or even early 70's.
Anyway, you can't make a clear cut case that it benefits one side or the other completely. You can't even say that it's parasitic one way or the other instead of symbiotic.
And I damn sure don't see any "Patriotic Protectionists" giving up their big screen Dish-TV.
Why is it better for a kid in Oakland to have a dead-end job making TV's or assembling cable boxes* than it is for him to have a job unloading cargo containers containing cable boxes designed by six engineers in Oregon?
*And until you fix the EPA/OSHA/EEOC nonsense, you can't even begin to consider having a plastic manufacturing plant for him to work in.
Yup, astute observation. Some of the observed shift away from manufacturing can be attributed to changes in technology.
Similarly worth considering, is that much of the manufacturing processes are automated now and not as labor-intensive as they used to be. The gains in productivity are so large that you simply don't need as many workers to carry out the same tasks. This parallels what occurred in agriculture, which is what employed most people 200+ years ago. With the advent of the Industrial Revolution, there was a shift away from agricultural employment to manufacturing over the decades. Nowadays, agriculture only makes up a minor fraction of the labor market.
Yup, astute observation. Some of the observed shift away from manufacturing can be attributed to changes in technology.
Similarly worth considering, is that much of the manufacturing processes are automated now and not as labor-intensive as they used to be. The gains in productivity are so large that you simply don't need as many workers to carry out the same tasks. This parallels what occurred in agriculture, which is what employed most people 200+ years ago. With the advent of the Industrial Revolution, there was a shift away from agricultural employment to manufacturing over the decades. Nowadays, agriculture only makes up a minor fraction of the labor market.
You've been brainwashed. Private sector union participation is at 7% of the total workforce and declining. That is a good thing. However it has nothing to do with off shoring. The jobs that what to China were almost exclusively non-union.
So in a global conflict where the ChiComs are the enemy, think taiwan, what are these manufactures in China going to produce? Weapons to kill Americans that's what. That American owned factory will be confiscated and turned into a munitions factory in a millisecond.
This point is continuously overlooked by all of those who worry themselves to death about the loss of "manufacturing jobs". It's not jobs we're after, it's output. Build me a machine that will totally automate building a car without human intervention and the price of cars will plummet. Now build me a machine that builds those machines, also without human intervention. That will cause massive unemployment in the automobile sector. But is that a bad thing? If anyone thinks so they should go to Washington DC and get loan to start up a buggy whip factory that will employ thousands of members of the Buggy Whip Workers Union.
And there is always plenty of work to do somewhere. If the government would just get out the way those seeking work would find those jobs that really need to be done. We don't need as many people making buggy whips these days and we don't need as many working in manufacturing. So are we out of work? I don't think so.
+1
Reality bump.
Conservatives used to understand obvious stuff like that.
What happened??
The issue isn't the "machine" per say, IT'S WHERE THE "MACHINE" IS LOCATED.
LOL. A cable box has zero overlap with AK47 tooling. And before you get your Star Trek fantasies out, a consumer grade satellite TV receiver does you no good trying to build aerospace/military avionics, unless they want 100% failure rate in the field.
Well, if it was my machine I would pick some nice safe right to work state and build me a factory. Sending it to China would be just crazy. This machine needs first class engineering and software support.
Pure sophistry. Three percent margin? The manufacturers all moved to China for 3%? Who are you trying to fool?
Seventy percent of the cost of making millions of boxes is in R&D. This is absurd.
Making these points while debating rational people is a waste of time. Fools might believe this, though.
Sure, where it makes sense. And it doesn't have anything to do with "Trade Policy."
You used to be able to count on IP protection in the US as a reason to keep the engineering jobs here. Now there's so much litigation and patent trolls, it's not necessarily so.
There is a massive amount of denial in these parts. Never seen so many conservatives, so utterly wrong about something important, in my life. It's like mass hypnosis. "Patriotic Protectionist" pod people. (Mine has better alliteration than yours!)
It's like 17th century doctors demanding more leeches for the dying patient.
We can agree that the patient is in trouble. But bleeding him out ain't gonna help things.
YOU are ignorant at best. Here is an example of a benign factory turned into a deadly production facility. A christmas light factory was converted into a proximity fuze production facility during WWII
First large scale production of tubes for the new fuzes[1] was at a General Electric plant in Cleveland, Ohio formerly used for manufacture of Christmas-tree lamps. Fuze assembly was completed at General Electric plants in Schenectady, New York and Bridgeport, Connecticut.[10]
Keep LOL-ing the joke is on us.
Good points.
Even if the assembling cable box jobs were considered better than unloading boxes jobs, I seriously doubt that starting a trade war with China and other low wage developing countries is going to help us here, when what we need to do is increase exports. But trade wars is the type of Trump-like election nonsense we hear, rather than serious proposals to increase exports.
RE :And until you fix the EPA/OSHA/EEOC nonsense, you can't even begin to consider having a plastic manufacturing plant for him to work in
While Obama and Democrats talk jobs,jobs,jobs they still treat employers like it's privilege to hire a worker.
"Supersonic inertial guidance system" and "cable box."
I'm not trying to browbeat you, but you really need to understand the g-shock requirements, radiation hardening and thermal packaging issues to name a very few problems before you get carried away with your argument.
A WWII era proximity fuse on a bomb is a subsonic toy compared to modern military technology in a supersonic Chinese cruise missile or ICBM....which they build now in dedicated factories without any help from us.
Using consumer-grade technology from Intel or Broadcom in Chinese military equipment would make it completely useless as soon as they launched it at 100G's. Do you understand that?
Yes, but I wonder how much of the manufacturing sector in specific is unionized.
Further, the mere threat of unionization itself is something that manufacturers are harassed with—for instance, look at what happened recently with Boeing vs. the NLRB. It's yet another risk that has to be factored into a firm's business calculus whenever they make decisions about where to establish new facilities, etc. And I'm sure quite a few have decided it's simply not worth it and that they'd be better off constructing their plants elsewhere.
So yes, like I said, gangster unions + insane tax rates + crushing regulatory burdens (especially the EPA) make for a decidedly unfriendly business climate in the USA, even moreso for manufacturers IMO.
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