Part of the problem here is that the existence of some kind of universal "more regulations / less regulations" slider is an illusion. It allows the problem to be cast in partisan terms when that isn't the problem at all, because the problem isn't more or less lines of regulatory code but rather higher or lower regulatory efficiency.
Some regulations save a thousand lives at a 0.02% increase in costs. Repealing those is bad. Enacting them is good. Some regulations save two lives at a 5000% increase in cost, which could equally be saved by some less expensive regulation. Enacting those is bad. Repealing them is good.
The real problem is that politicians lack the qualifications and incentives to do this well. If good rules don't exist, then someone gets hurt and there is a call for "more rules" rather than "better rules". Politicians who don't know what they're doing pass bad rules. The bad rules cause costs to exceed what they are in China, so manufacturing moves to China. Then the local lobby for improving the rules evaporates because there are no longer local manufacturers to propose or lobby for more efficient rules, and the continued existence of those rules on the books causes no more to form.
We clearly need to throw away the existing rules -- they're not working -- the question is, how do we actually get better ones?
This is something that eludes most people, especially among progressives.
Not to get political but this reminded me of covid-19. Masks and social distancing are an obvious 0.02% increase in costs that save a thousand lives. Lockdowns and extended stay-at-home orders and shutting down businesses so that we start needing to send out trillions upon trillions of stimulus cash to keep companies and people afloat start to cross into "save 2 lives at a 5000% increase in cost" territory
Taiwan is an example of a country that managed to eliminate covid-19 without lockdowns, so it is possible, but part of their success is likely due to the fact that the authorities acted very early to impose strict quarantine rules and contact tracing (when there were fewer than 10 new cases per day!) AFAIK every other country that has managed to eliminate community transmission has done so via lockdowns.
'The observed temporary excess mortality likely arises because people in vulnerable groups die weeks or months earlier than they would otherwise, due to the timing and severity of the unusual external event.' https://www.medrxiv.org/content/10.1101/2020.11.11.20229708v...
You're in a car crash? To bad hospital is saturated. You got 4th degree burn in a burning building? To bad hospital is saturated.
Do you realise that is the problem?
Hospitals are saturated, because we want to keep these people alive for few more months. Younger people don't need hospitalization.
You are in car crash, too bad hospitals are only admitting people with covid. This is current situation in Poland.
Youngers are less affected but some absolutely do need hospitalization. Reality is not as black or white as you're making it.
The situation is like that in Poland ... and the solution is geronticide ?
Correct solution is to treat covid like very strong flu.
As I understand it, the US status as a global reserve currency requires us to maintain a perpetual trade deficit - other countries need dollars and we must give it to them. This is done by buying goods from overseas which has eroded our manufacturing base, as the foreign demand for the dollar is greater than the local demand (which means there is a cheaper manufacturing market).
I'm not sure what regulation you could enact here that wouldn't severely depresses other sectors as they exist today.
Fused with Graeber and @dredmorbius phrasing where "deregulation" means "pro-monopoly" and "anti-competitive".
I'd like to learn more about "regulatory efficiency".
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Law (et al) is much like source code. Technical debt, path dependencies, tooling stack, managing complexity and risk. You get the idea.
So of course there's evergreen debates about refactoring, rewrites, paradigms.
Germany still has a strong industrial base, without a race to the bottom and with strong unions. So it is possible :)
A lot, and I mean a LOT, of German industrial base is now located abroad, in Poland, Czechia, Slovakia, Hungary, Romania. These countries are rather close, but because they belonged to the Soviet Bloc, their economic development was retarded so much that local wages are 20-30 % of wages in Bavaria, but the workforce is qualified and the infrastructure adequate. This is a historic anomaly you do not have in the U.S.
Come here (I am in Czechia) and look around, the countryside around cities is absolutely dotted with German-owned factories that mostly produce parts. Those parts are then moved by trucks to Germany where the final product is assembled - and so the miracle of higher "work productivity" in BRD is created. Of course you have nominally higher productivity if you finalize products.
This is, by the way, how Viktor Orbán gets his political way. Hungary is absolutely vital part of German industrial base and German industry gets premium conditions on the ground. So for all the shouting about values and rule of law, German CDU/CSU and Orbán always find a way to coexist.
And as for race to the bottom, look to former East Germany. There, people want German wages from German bosses. They do not get them, most of the industry moved abroad where cheaper workforce is. Former GDR is an economic periphery where anti-system parties command majority of the vote.
Wages in the US are artificially high because of the dollar's position, but the US needs to either a) match the wages of the countries producing similar stuff or b) increase productivity and value to the levels of countries like Germany.
Since b) requires decades in factories, supply chains, trade agreements and most importantly training in actually producing things which means science and engineering, exactly the occupations an increasingly large portion of the US population has been taught to abhor, it is very unlikely to happen. The US has spent the last decades destroying all those things, so the only real option is to sadly let wages fall to levels markets are willing to pay for. It will bring a lot of suffering but is the consequence of decades of mismanagement and complacency, and it is unavoidable so it will either happen by will or by force. And we know it won't happen by will.
Of course there is always c) keep forcing the rest of the world to pay for the US standard of living while they themselves live beneath their means, but that is the actual problem now so how much longer can it last?
If you’re going to make US manufactured goods cost competitive with foreign goods, much of it has to come out of that 95% operating revenue that is operating expenses, most of which will be employee wages. There’s no way around this.
Factories will need to adjust their prices, now you take that as you will, and if one is naive one can think it means executives will take a pay cut while workers do not, but in the end it mean less wealth for everyone, less money for taxes, less money for shareholders, less money for executives, and of course less money for workers. That is less wealth for the nation.
So yes, owners will take smaller profits, along with everyone else.
Our entire society is built on this, though. Silicon Valley wouldn't exist if electronics couldn't be produced for comparatively cheaper overseas. You bring up an interesting moral point, but if you're serious about that there's a lot of reckoning society will have to deal with. It's not just going to affect minimum wage lol. It'll affect wages across the board. You're really talking about totally reforming the economy
Silicon Valley literally exists because it was an electronics manufacturing center.
So I guess not?
Asian or "factory" countries (not necessarily from Asia but for illustration) have an "artificially" held minimum wage, which indirectly subsidizes the US minimum wage. This is happening to all wages not just minimum wages mind you, so the market needs rebalancing. Wages need rebalancing, taxes need rebalancing, but most wages, including the minimum wage need to come down (in real terms not necessarily in fiat terms).
It's hard to parse what you are asking for - what more economic incentive would you imagine there to be; I think the problem with this line of thinking is that you are taking a far too simplistic model of the world where our problems are caused by people being "lazy". I think the world you are wishing for existed - it's probably the hunter/gatherer model; any more sophisticated organization of civilization requires some level of socialization. I think your "darwinistic" approach is a flawed philosophy upon which it build a nation or a global superpower.
It's interesting because the article posits, and makes a very good case for, systemic issues that has caused the erosion of manufacturing base - however politically we are unable to move beyond simply understood talking points such as "minimum wage".
Of course, all things aren't always equal, but if you're going to argue its going to be different this time around, i think there is some onus to argue why the present would be different from the past.
It's because they build the machines to build the product the Chinese manufacture. The Germans have forced themselves to be at the top of the Manufacturing Food Chain (engineering, etc) while letting the Chinese/Rest of the world build the crap we buy.
I don't think we could get there manufacturing the "Trinkets" the Chinese mostly manufacture, that is a a race to the bottom where either automation or cheap labor win.
Chinese manufacturing is now at a very high level, to the point where many western brands have effectively become "fabless", leveraging the fact that Chinese brands still struggle with poor reputation even domestically. In this symbiotic relationship, the fact that Germany is literally "the land of virtue" in Chinese might play a role.
Chinese labor has now too become relatively expensive, its economy is moving to become a service economy, and manufacturing gets outsourced from China to even cheaper countries.
The thought that comes to mind is when American railways tried to import German locomotives in the 1960s. They were appealing because they offered higher horsepower ratings than anything domestic, but they required too much babying and maintenance to keep healthy and were quickly scrapped. I hear strikingly similar things from people buying German cars today-- everything tends to be expensive to keep running after the warranty expires.
I wonder if American manufacturing needs to develop its own meme. I'd suggest the old line about GM products-- they'll run poorly for a lot longer competing products run at all. That could be a compelling argument when you're selling to a manufacturing sector that's rolling out in low-development countries with unstable infrastructure, poor environmental conditions, and low-training staff.
That gives us a niche we can target and use as a base to re-bootstrap ourselves into competitiveness. We need to be decidedly better than bottom-bit Chinese (etc.) tooling, which is probably still within our abilities, and if we overdeliver there, we can begin to position American-made as a premium choice.
I agree with you that trying to compete on low-cost, low-margin is a race to the bottom. We could conceivably bring manufacturing of iPhones back to America. I would also imagine that manufacturing of silicon is largely automated, so the US could try to build the best fabs.
Reading this as a non-American. Isn't 'opportunity' the whole reason behind immigration?
If your country relies on continuous supply of heroes and not sound systems and policies, no one single person can save you.
its called being a capitalist; anyone leaving money (capital) on the table by favoring thier home country will get squashed by those who dont...
Assuming that the goal is saving the American industry (whatever that means) - if the plan is 'good people will save it' then failure is already baked in. That plan never works. The plan should be 'whoever saves it will become fabulously and disgustingly wealthy' - then greedy opportunists will save it for you and people can go protest about how greedy they are.
Relying on good people to act is dicey. Relying on greedy people to act is a safe path.
You discuss tool and die makers, a very highly skilled profession; one that I would argue takes many years of training and labor to master. I would further argue that in the manufacturing world, when it comes to hands on work, tool and die guys are near the very top.
Yet at the same time, you talk about cutting the minimum wage. Tool and die makers (of any sort) aren't going to be working for minimum wage.
While I don't disagree with the importance of American manufacturing, I think your prescription is wrong. We don't need lower wages, we need better education, more apprenticeships, more buy in from industry to spend money on training their employees. Because sooner than people think, China will have labor cost parity with the US, and we'll find that labor cost isn't solely the reason they are a manufacturing power house.
Instead companies who manufacture in China should be taxed at much higher rates to account for the negative externalities they benefit from otherwise.
As for bringing back manufacturing home, you need to find two things to make that work. First massive subsidies and tariffs to drive up the cost of foreign imports, imposing huge costs on tax payers and consumers; and tens of millions of people willing to work in factories. The US long term unemployment rate in 2019 was about a third of a percent. Where are you going to find the money, and where are you going to find the people?
I don't mean wages, I mean safety, overtime, etc. Labor needs to be valued at home and abroad.
The article points out other ways to reduce the cost of domestic labor: namely, shifting away from high payroll taxes and severing the link between health insurance and employment.
That’s not what Germany has done but there’s little doubt that Germany’s manufacturing ability is held in a higher regard globally.
So i challenge the “have to”. It’s the unproven talk of a particular tribe but i stress unproven since economics is a social science. That means there’s lots of science but is fundamentally stories we tell each other and not akin to, for example, the unassailable truth of gravitational pull.
You're not going to defeat China by cutting wages unless you address the societal issues that cause US wages to be high. We already haven't raised the federal minimum wage in decades.
We should work for slave-like wages voluntarily or have it forced upon us?
This is a poorly thought out argument. Cost of living, housing, etc. is obviously different in US, you might end up with less income than is necessary for survival. What makes you think you will be able to find any workers at all, let alone those trained to the necessary standard and skill?
It should be obvious that appropriate responce to a crime (slave labour) being committed is not to commit the same crime yourself.
Any products with stolen materials, stolen labour, or stolen taxes should not be allowed on the market at all.
Manufacturing is still moving to SE Asian countries (Viet Nam in particular), but even there producers are increasingly moving production in India and East Africa because of rising costs (e.g., wages).
I agree with you on the tariffs. China should not be able to outcompete us because they pollute and use slave labor. Force them to compete on fair terms.
There are quite a few European countries with very robust manufacturing bases who are far more regulated (both from a labor and capital perspective). So, minimum wages, labor unions etc have little to do with the US' manufacturing base. In fact, one could argue that weaker unions, if anything, have contributed to the decimation of the manufacturing base.
Not so, import taxes and one avenue that should be explored is true carbon costs/impact factored in. Why should something made locally be more expensive than something made the other side of the World and shipped all that distance. Clearly some impact costs not being factored and the whole carbon aspect should be utilised for many benefits - balancing out imports for one.
Only difference is that the wealthy in the US will carry more of the burden instead of the working class.
And that’s why we don’t have many advocates for it even though it will solve the manufacturing problem almost overnight
Moving inflation to 6% will create millions of working class jobs in the US due to both a weaker dollar and cheaper money supply for value creation.
The losers in all of this are wealthy Americans. They will see their assets depreciate and buying power diminish. And that’s why we don’t do it.
But I guess since what you want is inflation that is one way to get it, tho it will not be 6% but closer to 30%.
Yield curve control has not worked for anyone, it is a death spiral that results in zombie economies, at best.
How does this harm a working class American that derives all of their income from working wages as opposed to assets?
> it will not be 6% but closer to 30
Cite and example where a country did not default/print money for their debt payments and inflation went to 30%
> Yield curve control has not worked for anyone, it is a death spiral that results in zombie economies, at best.
How does this harm a working class American that derives all of their income from working wages as opposed to assets?
Lastly, address how any of the above prevents an increase in manufacturing jobs, which was the intent of the measures originally listed.
Their wage-dollars will now buy less stuff.
> Cite and example where a country did not default/print money for their debt payments and inflation went to 30%
The US has the world reserve fiat currency, so there are no examples because a fiat reserve currency has never existed before, but we know hyperinflation is a likely outcome. Now, from the experience we do have, ~30% inflation like in the 70s is the best we can hope for. A zombie economy like japan's would frankly be fantastic given the conditions.
>How does this harm a working class American that derives all of their income from working wages as opposed to assets?
Their wage-dollars will now buy less stuff.
> Lastly, address how any of the above prevents an increase in manufacturing jobs, which was the intent of the measures originally listed.
Don't worry, americans will have plenty of $1/hour manufacturing jobs like asians do now (or the nominal equivalente to $1 in a hyper-inflationary world). The US doesn't have the technical capacity or workforce to compete in high paying manufacturing any more and will take decades of pain to build.
Well, you don't seem to understand the fundamental problem. Whatever labor force exists in America should see rapidly growing wages because the unemployment rate is relatively low. The reality is that not only do we not see inflation the fed has set the interest rates to almost zero and injected an insane amount of money into the stock market with no change in sight. There is slack in the system, a lot of slack. This causes wage growth to stagnate while rich people in the USA still make loads money off Chinese labor. They don't have to care about Americans because there are work forces abroad waiting for them.
>The US has the world reserve fiat currency, so there are no examples because a fiat reserve currency has never existed before, but we know
This is completely irrelevant. The primary benefit of a world reserve fiat currency is running a trade surplus without financing but if you don't produce anything, not even housing that advantage is meaningless.
>hyperinflation is a likely outcome.
Banning investments into real estate might not be optimal but hyperinflation is not going to happen because the economy isn't even close to it's production capacity.
>Now, from the experience we do have, ~30% inflation like in the 70s is the best we can hope for.
There is a response to your commend that disputes that we even had this "experience".
>A zombie economy like japan's would frankly be fantastic given the conditions.
The USA is already partially a zombie. You have public companies with record stock growth despite no changes in fundamentals. It's easier to make money off the stock market because that's where the rich are using the watering can of the fed even though there are lots of withering plants surrounding the almond farm. The stock market looks significantly brighter than it should.
https://fred.stlouisfed.org/series/FPCPITOTLZGUSA
You are now outright lying.
Only if they don't find a better alternative than real estate.
I have about $20k in bank accounts. I owe $450k at 2.5%
6% inflation? Don't throw me in the briar patch!
Minimum wage already isn't really a living wage in much of the country. Rolling back regulations is jumping headfirst into slavery, whereas.. I'm very critical of China but don't see the connection between their expanding industry and slavery. Businesses are diversifying their supply chain in the face of this pandemic.
Arrogance, this is one of the factors that killed US manufacturing.
They spent years training the Chinese side-by-side in the US.
In the end they still haven’t exactly caught up to the quality we had in the US. However, they now have 5x the tool & die makers in China.
To compete, you really do have to cut minimum wage. You have to loosen regulations, and importantly, you have to do massive tariffs / sanctions on China for the next decade.
There are enough people still here to teach and expand the Industry. However, if you don’t start now. Like today. We won’t ever recover. Once enough manufacturing is gone, it’ll be impossible to come back - we are almost there.
You are competing against a foreign power who uses slaves. You either let free people work for what ever wage they can achieve or we risk becoming slaves ourselves.