Obviously, cheaper workers work for less, but that's not exactly efficiency, (1) more a question of fairness, (2) can be done domestically (low-cost immigrant workers) and (3) there's plenty of cheap workers worldwide, not just in China.
Another potential advantage could be, factories are closer to natural resources, but it seems to me that that's not as much a question of efficiency, as it is of lax (enforcement of) environmental standards. Which I personally don't see as a net gain, even if it results in cheaper production.
The only real advantage I can see is concentration of skill - e.g. people say that you basically have to develop electronics in Shenzhen, there's simply not enough talent in the US and EU - but I wonder if the efficiency gains are offset by innovation losses. Again, IMO it would be better to have a local high-skilled population of engineers & entrepreneurs.
A factory in China is just as efficient as a factory in Spain. But if China has most of the factories, and supporting industries, and supporting education, etc. it suddenly becomes more efficient. But then if China decides it doesn't like you, you're screwed. So it's the concentration of skill you mention, but also concentration of all kinds of relevant infrastructure.
As for cheaper workers - it's a temporary "efficiency" in financial terms, in forms of price arbitrage. Over time it evaporates. Even as the 2019 was coming to an end, China was already too expensive for many industries - being the world's factory enabled them to enrich their citizens, and suddenly there was a middle class that demanded humane working conditions and employee protection and what not. So suddenly poorer countries became of interest for future manufacturing...
> A factory in China is just as efficient as a factory in Spain. But if China has most of the factories, and supporting industries, and supporting education, etc. it suddenly becomes more efficient.
But I'd argue that shouldn't be considered "globalization": there's nothing "global" about concentrating things in one country. It's just outsourcing.
It is efficiency, really, because it's making better use of an underutilized resource. Over time, of course, the price of labor evens out because the resource is no longer underutilized.
> more a question of fairness
If it's fairness you want, telling companies to hire locally isn't going to cut it. That's the opposite of fairness, really—you would be subsidizing local workers whose wages are already higher at the expense of foreign labor that has more need for the income.
> Another potential advantage could be, factories are closer to natural resources, but it seems to me that that's not as much a question of efficiency, as it is of lax (enforcement of) environmental standards.
Locating factories near their required materials is a net gain even when ideal environmental standards are maintained. It's almost always cheaper (economically and environmentally) to ship end products where they need to go than it would be to ship raw materials around to distributed factories. Concentrating manufacturing in one area also makes it easier to confine the environmental impact.
The price would have evened out if labor could cross borders as freely as the goods that it produces - then it would flow to areas where it's in high demand. But with borders and immigration controls and different laws (esp. environment and labor) in different jurisdictions, it's not really a free market. Instead, it looks a great deal like a contraption that's deliberately designed to allow transnational corporations to extract massive economic rents from otherwise pointless brokerage (outsourcing).
That would certainly speed up the process. However, labor prices are still gradually rising in China and other common outsourcing areas despite these restrictions. As are environmental standards. I'm not saying it's an ideal free market—there are governments involved, after all. But free or not, the trade is still advantageous for both sides.
Not really, if that was the case for ex, everyone doing similar jobs would be getting paid the same in US or EU. I am not saying things dont get evened out to an extent, but people are harder to move than the goods they produce.
> It is efficiency, really, because it's making better use of an underutilized resource. Over time, of course, the price of labor evens out because the resource is no longer underutilized.
It's not efficiency at all, it's stagnation. Since the 80s instead of trying to innovate and automate production lines too many companies have been hopping from country-to-country looking for the cheapest labor pool. We lost 40 years of manufacturing innovations because they were economically unnecessary due to offshoring.
But they are run by people, those people are the ones crafting the legal and regulatory environment that encourages this behavior, and we can certainly blame them.
It sounds to me like you're saying that it is unfair to strangers that you would help out your family first before helping them.
Most countries do subsidize local workers and industry. Should it be another way?
The United States actually does heavily subsidize foreigners for the benefit of the rich and powerful, at the expense of its citizens. Most work visa programs are an example of this.
This is the problem with the globalist mindset. Chinese workers are ultimately working for China. Chinese companies are always inclined to help Chinese people and the Chinese government. So telling domestic firms to be neutral in national loyalty is essentially telling them to be loyal to China.
A government not pressuring firms to hire and buy locally is deeply unfair to the point where I would argue it is a dereliction of their duty to the people.
Well, yes, it is unfair to the strangers that you're favoring the people you personally care about when others are worse off. Being unfair doesn't necessarily make it wrong. You're free to help whoever you want—with your own resources. However, organizations distributing resources they took by force, or enforcing their own rules on others, ought to be held to higher standards.
> Chinese workers are ultimately working for China.
Chinese workers are ultimately working for themselves and their own families, just like all workers everywhere. Not for the Chinese government. If you have a problem with the Chinese government forcibly and unjustly profiting from the labor of Chinese workers, great! So do I. The same goes for every other government, both foreign and domestic.
And I think that a government has an obligation to prioritize its own citizens before foreigners. And it appears that people here disagree with me.
Most governments do this. The Chinese government certainly does this for its own citizens. I wish that US government was as protectionist as the Chinese government is.
As it is now, American citizens pay taxes to subsidize our exploitation. The only people who benefit from the current immigration system are billionaires. The government is more concerned with the pursuit of capital for the elites than they are with the welfare of the people.
Thankfully, this administration has actually been enforcing the rules with H1-B visas. So lots of people I know have gotten great jobs in the last few years as visas are no longer rubber stamped. H1-B is nothing but a scam to help tech billionaires.
But yeah, putting outsiders above those you have a responsibility to care for is wrong. Volunteering at a soup kitchen does not excuse neglecting your own children. It brings me no comfort that the American middle class was eviscerated to help China. And yet that is trotted out whenever an American expresses frustration at how they have been harmed by globalization. It would be like if someone said: Sure, your bike was stolen, but at least the bike thief is happy, so it is ok.
- work visas aren't subsidized. not even close. it costs a lot to sponsor and the workers pay taxes without benefits. not to mention the brain drain.
- you've grouped people as working for countries. people work for their own benefit and compete globally. as long as countries ensure their trading partners have humane working conditions, it's up to each person to remain globally competitive. your wage is a loose function of value generated for the employer.
There are probably advantages for many large corporations. e.g. Nike, Apple. Design in the US, manufacture in China (or equivalent), reap profits in the US
What perhaps we should be thinking about is the second order effects of unfettered globalization. In the good times we only see the advantages. Ultimately, it looks like it is better to have some redundancy (in certain areas/sectors at least) to be able to deal with situations like these
Are US engineers imagining the same ideas about being irreplaceable that an earlier generation of American machinists, tool-and-die experts, and manufacturing workers also did?
Not at all. Being close to your inputs means you don’t have to ship them as far to make use of them. And the shorter the distance you have to ship them, the less you will pay for shipping. Lower overhead equals higher efficiency.
It’s like, why were car factories in the U.S. clustered around the Great Lakes? Because car factories need steel, and the steel mills were in Pennsylvania. And why were the steel mills in Pennsylvania? Because steel mills need coal, and the coal mines were in Appalachia. You could theoretically build these factories anywhere, but the company that built close to their inputs would have an economic edge over the company that didn’t.
Companies focused on cost cutting, outsourcing and the like, but in doing so sacrificing agility and deep knowledge, and sometime even cost.
That's exactly the argument that Tim Cook used a few years ago. He said that an iPhone not manufactured in China would cost 30k USD...before quickly moving manufacturing out of China. These arguments sound nice, but are lies. When offshoring first started the cheap labor pool was the only thing that mattered, and it still is.
This is why a factory in Spain or the USA is not as efficient as one in China (or vice-versa). Institutional knowledge has to be built up over time. You can't just start a factory in a place with no skilled labor for it. It's going to be way too expensive.
Just look at the US and compare to the EU. The EU has very few influential (or large) tech companies. The US has many of them. There's clearly some kind of concentration going on there and some of it probably is due to skill and thus efficiency. It's not that individual European developers are necessarily worse, but rather that as a collective (for some reason) they don't produce the same results as Americans do. I imagine that the same applies to factories.
(Apologies to Sir Winston Churchill)
I'm not sure how you're defining efficiency, but in the Netflix special American Factory, it would seem like the chinese workers were not only cheaper but also more productive.
that didn't happen overnight, that happened by politicians playing people against each other and invoking the all too common negative traits of envy, jealousy, and even anger. The mantras of you did not win life's lottery, its not fair, you deserve, they stole, has really done a number at not just manufacturing levels but in all aspects of life.
A single, sensationalized data point.
Never thought of it this way, but you're right, at least in spirit. Efficiency is probably not the right word but I couldn't agree more. This drive towards ruthless efficiency actually hurts us in being more productive. We all need to rethink the endgame that capitalism, low cost - high efficiency systems inevitably leads us towards.
Unions and strikes are a political topic, and we should probably figure out how to handle it better, probably some middle ground between fairness and efficiency (I’m not really well versed in the topic), but regardless companies bypassing the discussion completely by just having a factory in China is wrong and anti-competitive.
For the most part globalization is good but the pandemic has certainly highlighted the value of strategic redundancy or at least an emergency plan B.
It has, let’s say, not aged gracefully.
Europe was mired in endless wars for millenia. It's now in the longest stretch of peace in centuries and, by sheer coincidence, at its highest levels of trade.
In the rest of the world trade has steadily risen and wars and deaths from wars have fallen steadily. Correlation might not be causation, but it would interesting know what third factor explains both "more trade" and "fewer wars" other than "it's hard to fight a war with the people who feed you".
Before World War II, Britain had its trading empire, France had its empire, Japan had its empire, etc. Oceanic trade between nations not in the same empire ran a high risk of the cargo simply being confiscated or destroyed by one of the imperial navies. A key pillar of the US's strategy in the Cold War was to use its naval supremacy to prevent the return to the imperial trading system; in other words, it extended to nations an offer of the ability to trade freely on the world's oceans in exchange for that nation's joining the US in opposing the Soviets.
The United States also suppressed wars. For example, the 2 nations that arguably had the most powerful pre-WWII militaries (Britain and France) allied with Israel to attack Egypt after Egypt nationalized the Suez Canal, but the United States, worried that the Soviets could enter the conflict, threatened Britain and France with economic sanctions unless they withdrew, which they did.
I guess you could argue that things could somehow have turned out even worse than that, but that feels like a reach.
The world has more trade than ever, and fewer wars than ever.
If you're referring to WW1, lowering a risk and completely eliminating it are different things.
It's aged wonderfully. The Europeans proved its premise in spades between 1914 and 1945.
If that's the case then the US government's efforts to take supplies away from some of our closest allies is even more dangerous and short-sighted than I initially thought.
A month ago I would have said a mask factory in Canada vs. US is nearly equal in terms of national security because Canada could be trusted to help in a time of crisis. I'm sure many Canadians felt the same way. Now I'm not so sure that's true and I certainly don't blame the Canadians.
https://www.economist.com/buttonwoods-notebook/2017/06/14/th...
Do you have any particular recommendations/sources for further discussion around this argument?
Speaking as someone who is currently spending his days sourcing medical equipment for his medical center: the cheapest US-based face shield costs nearly 3x what the average face shield in China does (the most expensive US face shield is >10x). Even with shipping hiccoughs and the desire to buy American, I can't justify purchasing 1/3 the personal protective equipment.
But the question is:
how much premium would you be willing to pay for a local supplier?
If the american company was "only" 50% more expensive, would it work out after the pandemic?
I mean, as a personal consumer, yes - I'd pay a premium on my own products to buy American. I do, in fact, do that when it's an option.
As an organizational representative, though, that's iffier. Healthcare reimbursement is pretty heavily regulated (most of the wild price fluctuation you see has to do with numbers used for public-facing negotiations, not the contracted rates we actually ever get paid.) The only way we get by is by minimizing costs; we can't really increase revenue effectively, except by increasing volume of services. As it is, operating margins in hospitals tend to run at about 2% - it's razor, razor thin. Upping expenses 50% on "critical" items (which for us is, you know, a huge proportion of our stuff) would put us out of business.
It's not something we can do unilaterally. Either it has be funded through an increase in funding earmarked for that, or something equivalent.
I disagree. They took many months to report SARS to WHO, yes. But this time, reporting to WHO took ~5 days. It was discovered by dr Zhang Jixian on Dec 26, then reported to WHO on Dec 31. Then it took them about another week to sequence the genome and share it with the world. Plus the whole lockdown shows that they obviously made plans beforehand. The difference is huge.
Take a look at this timeline by the American Medical Association: https://jamanetwork.com/journals/jama/fullarticle/2762130
We've now been able to trace the earliest case back to November, but nobody knew about it until late December, so that doesn't count as cover-up.
It wasn't good enough, that's true. And before human-to-human transmission was confirmed, they should have been a bit faster, though I would argue they couldn't have been much more faster than about a week or two.
Mistakes definitely have been made, and it still isn't good enough, but "they haven't learned and they won't learn" is quite simply not true, and is more based on prejudice than fact.
False. It took much longer than five days. The WHO was indeed notified on the 31st but the Chinese government organs knew about this long before. First CCTV report that I recall was around the 15th. First confirmed cases were early December. There’s even US intel reports dating back to November.
But when this started, the Chinese system did what the Chinese system always does: try to save face and pretend all is okay. I do not share any optimism that this trait will change especially given the crushing blows to press freedom in the last ten years.
Could you link to a source? I have not been able to find any sources that definitively point to something concrete (as opposed to merely rumors and heresay).
> There’s even US intel reports dating back to November.
Ah yes, the CIA reports from November. I find this highly suspicious. How did the CIA know about it that early? And if they did know about it that early, why did they not do anything about it, like preparing America for the coming onslaught?
And please forgive me but US reports about China are not exactly the most trustworthy given the current environment.
> But when this started, the Chinese system did what the Chinese system always does: try to save face and pretend all is okay.
Believe what you will. I believe otherwise (or at least, I believe in a more nuanced story than you do): there was indeed face-saving going on by city-level authorities, but once human-to-human transmission was confirmed, the central government stepped in and kicked the city-level authorities on their asses. Now, the city-level authorities have been fired, and I believe the central government will do something to discourage similar behavior in the future.
The Chinese government is not a monolith. See also https://twitter.com/dbey85/status/1246370465209188357?s=20
COVID-19 is not SARS. It's less lethal but far more contagious. SARS would not have been such a big issue because it doesn't spread as easily.
Sars 2 is to Sars 1 as Mario 2 is to Mario 1. About the only thing similar is the characters.
How many times have we seen another variant of bird flu in the past 15 years? I lost count. Some of them even jumped to humans. But when that happened, we didn't immediately raise alarms of an upcoming pandemic: a virus jumping to humans does not always mean human to human transmission is possible.
You can read the effect on Toronto hospitals in 2002 by SARS-1 to get an idea of the panic it caused, wiping out whole ICU teams. Just like SARS-2 (Covid-19.)
It doesn't matter how wrong other people are or how bad some thing some people do in some country is. Two wrongs don't make a right and you can't vandalize HN like this. If you want to trash-talk, there are other places to do it.
This is an important issue, so please be careful about verifying your claims before you make them.
If anybody in public healthcare seriously wants to know more, contact me and I'll narrow down the dates, symptoms and locations and you can verify if it was corona virus or a different illness.
https://www.nationalreview.com/the-morning-jolt/chinas-devas...
Based on those dates, it's possible Covid-19 was on Chinese airliners as early as Dec. 1 - 8. Wuhan has an international airport that connects to Shanghai (Pudong), which is a major international hub.
So that moves the onset possibly back into November.
Researchers should be looking at Chinese death certificates for the month of November if they're looking for patient zero.
(I've read about one unconfirmed US flu case in October that sounds like corona, but I'll look around for some more info.)
The first patient was admitted to the hospital on 16 December 2019,[1] and the first lab result indicating a SARS-like coronavirus came back on 27 December 2019.[2]
> First confirmed cases were early December.
Those cases were not known about in early December. They were discovered after-the-fact, when people went over hospital records to try to find earlier, previously undetected cases. As I wrote above, nobody had any idea that there was a new coronavirus until 27 December, when the first lab results came in.
1. https://www.thelancet.com/journals/lancet/article/PIIS0140-6...
2. https://www.caixinglobal.com/2020-02-29/in-depth-how-early-s...
3. The Caixin article is reprinted here: https://www.straitstimes.com/asia/east-asia/how-early-signs-...
And the hospitals. Not even China can just one day decide, out of the blue, to build two large-scale specialized hospitals in 10 days. Having that capability requires recognizing the need for it and preparing beforehand - which is another thing they've learned from the past pandemics.
Also technically it is better for income inequality in global terms if it converges to a global median. That is why so many hate it because they are the ones with their ox gored by reduced inequity and they don't even consider themselves that rich!
I recognize that is a glib and misleading truth in many ways given PPI differences mean that a salary to be locally comfortable in one locale could lead to homeless starvation in another, that inequality exists both locally and globally. It is more a note about the irony than any statement of morals.
Whereas the current state of affairs is that China just stops exporting masks, and there's nothing we can do about it.
But you eliminate other failure modes related to the pandemic that don't involve the plant physically not operating due to worker sickness or curve-flattening measures. If Canada produces their own masks then the US can't take them.
https://www.theguardian.com/global/commentisfree/2020/jan/23...
It was only the intervention at the highest level of the Canadian government that stopped this.
It's worth pointing out that without Canadian nurses from Windsor who cross the border every day to work in Detroit hospitals, the healthcare system in Detroit wouldn't function.
Or that apparently the pulp used to make the 3M masks comes from softwood from British Columbia.
I'm sure Chrystia Freeland made these points and many others abundantly clear when she got on the phone with the Trump administration.
I never voted Liberal, never have, but honestly, Freeland is decent.
Trudeau's dad said it best, to Nixon, in 1969:
"Living next to you is in some ways like sleeping with an elephant. No matter how friendly and even-tempered is the beast, if I can call it that, one is affected by every twitch and grunt," said the late Pierre Trudeau.
I looked into the pulp claim, and it's true that pulp is used to make some types of lesser surgical masks. But there's no reason to think there is anything all that special about that pulp - it could be sourced from the US too at somewhat higher cost.
It's amazing how quickly the very proposition that we can get by without any state-level macroeconomic planning, -- and that the free market organically produces superior results -- is shown to be an ideological fantasy the moment s*hit hits the fan, with bare shelves and missing medical equipment and millions set to be without health insurance in the US...
My opinion: States that retain some capacity of a planned economy will do better in scenarios like this. And with climate change becoming more serious, there will be more of these kinds of crisis.
yes, this is a mystery. Free market should have fixed that. Even if the last roll of toilet paper would cost $1000000 the shelf should not be empty. Is the price regulated in some way?
Indeed. The PPE/toilet paper/tasting kit/flour shortages are becoming farcical at this point. It feels like the Soviet Union, where wonderful pronouncements about the plenitude of _______ are made, but then you discover otherwise at the grocery, or the doctor.
Of course, in 2020, the solution to these problems is rationing.
It's almost as if rationing is the only way to solve these kinds of shortages. But since the rationing is per-shopping visit, people just hoard by hitting up multiple stores in one shopping trip...
I think the Canadians worked that out a few years ago when the Trump administration declared Canadian steel a security threat to the United States so they could impose trade restrictions in contravention of our treaty obligations.
To be fair, before WW2 Canada was a protectorate of Britain as well. Such is the fate of smaller players on the world stage.
For example, companies in New Zealand are pursuing a coronavirus vaccine. Do you think they really doubt the willingness of Moderna [0] (Boston based biotech company) to sell them the vaccine if it is successful? I'd be willing to bet that no, the primary concern is how long they would have to wait to buy it.
[0] Arbitrary choice, replace with anyone who gets a vaccine past trials
Whether it means all manufacturing will move away from China or if it means that they will spread it globally, is an interesting question. China will have more incidents of pandemics for sure, because they haven't learned from the last one, and they won't learn from this one. It's certainly less efficient to have the same products being produced everywhere, but maybe ruthless efficiency isn't good for the world or its citizens, especially when it comes to income inequality.