I wish modern-day economists would be more aware of local maximums, which is the economic strategy the US seems to have adopted in the last 2-3 decades. Looks like China is targeting things beyond the local maximums, much like the US used to do back in the '50s and '60s, maybe also in the '70s.
Not sure things like the ARPANET would have been possible in today's world when the strategy of "looking for the local maximum" is the only one made use of.
Every rich Chinese I know is trying to leave China now. This includes even very well placed regime insiders.
A PLA 2 star general almost forcefully sent his daughter to live in Canada at the peak of COVID travel restrictions. I knew her from my days in a Canadian college.
A grandson of some revolutionary hero whom I took misfortune to acquaintance with by helping his daughter practice English, started recently asking me how immigration to Canada works, and if he can get along there without knowing English.
Even most zombiefied, hardcore pinkos who were going flag waving at West Georgia have shut up for good, and got in line for Canadian passports.
From the middle class you mention, factory owners I knew who were the most staunch, and stalwart when it came to hostile business environment, are now shutting down, selling at n-times discount, and pretty much running from the country.
It's done for.
North America is for the rich. There is no better place to be RICH (better than even Europe).
Western Europe is probably the best place in the world to be poor.
It seems that China is now the best place in the word to be middle class.
(I know very little about it, just basing it on the article and the other discussion here).
That the richest want to leave China for North America is not an indictment of China, it's an indictment of North America.
Majority of rich Chinese I know in Canada who aren't retired are essentially enjoying Canadian social services while contributing to PRC development. Their big spending improves niche BC economy while driving up housing prices. At end of day, Canada/West are just cheap retirement plans. Apart from capital flight which CCP can clamp down on, rich Chinese bailing to Canada aren't substantively detracting away from productivity in PRC.
>are now shutting down, selling at n-times discount, and pretty much running from the country.
And they'll get replaced by other PRC upstarts. Cycles of entrepreneur getting wealthy and then burn out in PRC only to retire abroad / in Canada has been happening since opening up. I saw first gen of new wealth capital flight in 2000s. It's nothing new. What is new is the number of PRC students who want to return and diaspora who went back to PRC to live in covid0. Reality is PRC is more enticing than ever, not enough for rich to ditch back up plans, but enough to keep growing.
>I read a lot of your previous posts. It feels you have zero idea how China works.
>You are too young, too simple.
I've read a lot of your China posts. You do good comment on manufacturing and industry post 2000s. Otherwise, from what I remember about your background, Russia / east Europe, schooling in Canada then work in SZ. It feels like you think your experiences when Russia was failing somehow explains a failing PRC that is mostly succeeding. You may have too much ex-soviet trauma like other east-european diaspora I talk to who try to extrapolate their experiences growing up in broken post soviet states to PRC because "commies bad".
I'm pretty sure I'm older than you, lived/worked in PRC before you (90s-10s) and stayed in touch with developments (beijing/shanghai) longer than you. Hardcore commies / regime insiders have been bailing China for comfy life in west since forever. Not the same industries will rejuvenate, things come/go according to industrial policy, but the cycle will continue. Xi killed industry my family was in dead for a few years, it's booming now. While other sectors stay dead. I've hanged with PLA generals, with more stars, and did all the "eye opening" experiences expats brag/allege gives real understanding of PRC. Except it doesn't. I also have family / relationships with PRC nationals who were part of elite patronage networks. Which is every bit as much of a shitshow as you allege, except I also recognize the broader political system largely works and read enough academic literature to have a sense of why. Whereas your recommended literature on understanding PRC at bottom of thread:
>The few people remaining brave enough to open their mouth are either from religious cults on one side, or former regime insiders themselves on another.
If this is cheek in tongue endorsement of FLG / Guo / other dissident media, then it explains a lot.
>diaspora decided to stay in the COVID ridden West, than to return to China.
Not for a lack of trying. Flights into PRC was extremely limited on top of quarantine. Most people with means I knew tried to go back, but couldn't due to hassle. Eventually they just waited out for vax.
Remember comparative value, which is a real thing.
China had very cheap labour that the US could never compete with.
China made outrageous amounts of stuff, and stocks Wallmart and Amazon shelves with it.
In my own lifetime, I have seen a seismic shift in material consumption of Americans, mostly for the better: the quantity, variety, quality of goods and even foodstuffs in a Wallmart today - cheap and accessible to most Americans - would blow someone from 1975 away.
The giant piece missing from the economic equations is 'consumer surplus' which is the 'profit' that consumers derive. When consumers get more choice, more quality and lower prices, they are making huge 'profits' that we simply don't put in the equations. Consumer Surpluses have been massive for the West.
At least for low-end manufacturing, it's been a massive neoliberal win-win.
Obviously, the storyline is changing, and for more advanced products it's a different issue. But for most things so far, it's 'good' trade.
Not a case now.
Skilled assembly line workers cost more in South China than in cheaper US states.
Amazons, Googles, Facebooks still keep pouring into China like there is no tomorrow.
I think a little of critical thinking will point to problem not being with the cost of labour.
Thought, the initial US MNCs push into China was definitely motivated by the borderline free workers.
Yes, it's the case now.
Average mfg. wages in China are still short of Mexico, and US salaries include all sorts of overhead, especially healthcare.
"Skilled assembly line workers cost more in South China than in cheaper US states." - for some things, not for most things.
"Amazons, Googles, Facebooks still keep pouring into China like there is no tomorrow." - Yes, and?
Without 'cheap labour' China would not exist, even today, the economic machine depends on it.
The surpluses wrought by the American/Western consumer are massive.
Walmart would have 1/2 of the goods, and they would be more expensive.
Americans consume considerably more goods than they would otherwise, and that's a measure of the enormous surplus being created by comparative value trade between the two nations.
The 'anti comparative value' argument made in the article is just hot air and speculation without a lot of data to pack it up.
Adam Smith is as correct as Isaac Newton, you can't just say 'gravity doesn't exist anymore'.
Irrelevant when 2/3 of inputs are in China and overseas shipping rates are 2x what they were 2 years ago.
The west self-harm is contradicting itself by allowing both heavy labor-regulations in their own countries and trade with countries with basically no labor-regulations. It's just like they hate their own low skill workers so much that the politicians intentionally destroyed the factory job market.
This is the problem but you have the motive wrong. It wasn't intentionally destroyed, it was a complete lack of concern about whether or not it was destroyed.
You have, on the one hand, unions and others who lobby for more regulations. They have perverse incentives. If they get a new regulation that increases US manufacturing costs by 2%, they get credit for protecting workers. But they don't get credit for regulations passed in the 1970s, so they're always asking for more, so the cost of US manufacturing is always going up.
Manufacturing companies would have the incentive to counterbalance this by lobbying against them, if they didn't have the alternative to offshore manufacturing to countries without this. But they do, so they do that instead.
So regulations that can't pass a cost benefit analysis, or that no longer make sense because things have changed or we know more now than we did then, are still on the books and have no obvious path to being removed.
Politicians have no incentive to fix this because their incentives are to make the lobbyists happy. The unions are happy that they get to take credit for passing more regulations all the time and the corporations are happy that they get to avoid all the regulations by manufacturing in other countries, so who is the lobby to fix it?
China arguable has better protection when it comes to mandatory severence pay and most workers don't work by the hours, or depend on the tips to survive. On the other hand, China don't have hyper-active unions, overtime limits are not strictly enforced. However, I remember reading a piece about a janitor in San Francisco who worked so many hours he's getting paid more than a regular programmer. So when it comes to that, regulations can't do much when someone's determined to get that overtime .
The core thing is, however, a lot more Chinese workers are willing to work that overtime and get that extra pay without complains, and the cost of living is simply way lower.
For an outsider, $15 per hour in the bay may seem high, but even if you work the full hours, you can save very little after housing and food. However, those workers in China are housed, fed, and they get to save all that they get.
The US has mandatory unemployment insurance which serves the same purpose, and none of the jobs that get paid in tips are in manufacturing.
Also, waitstaff in the US in practice generally get paid more than minimum wage, because the ones whose service is so poor they can't get more than that in tips will quit and take a job where tips aren't part of the compensation.
> The core thing is, however, a lot more Chinese workers are willing to work that overtime and get that extra pay without complains, and the cost of living is simply way lower.
The cost of living, especially the cost of housing, is certainly a major factor. But that's still a regulatory failure, because in that case the cause is zoning regulations.
There are tons of US PhDs working in manufacturing. Most of the interesting and high-leverage problems in manufacturing are in Chemical/Biochemical Engineering, Robotics, Controls, ...
When it comes to "stuff phds do in the manufacturing sector", the US is still a leader.
> The west self-harm is contradicting itself by allowing both heavy labor-regulations in their own countries and trade with countries with basically no labor-regulations.
This is accurate. If you want manufacturing capacity in the US, the correct thing to do is to raise the bar globally. Want to import? Great. Meet a minimum standard of labor and environmental regulations, perhaps different than the US labor regs, and even possibly lower in some dimensions, but qualitatively similar.
Of course, this is far easier said than done.
> It's just like they hate their own low skill workers so much that the politicians intentionally destroyed the factory job market.
WRT environmental regulations, it's much easier to turn a blind eye to something happening half-way around the world than something happening in your own town. Especially when that "something" is "Pittsburgh's skies blacker than night at noon due to cancerous smog".
WRT labor regulations & cost, you seem to claiming that the workers rights movement hated workers? Again, it's easy to say "make jobs safer and pay people more". It's much harder to so "and also we're going to accept permanent double-digit inflation."
I think, instead of malice, we can attribute the US's current situation to the fact that policies which make manufacturing more expensive are largely popular even among manufacturing laborers and policies which make imported goods more expensive are (a) horrendously difficult to "get right" and (b) largely unpopular.
I don't think they want to put more PhDs in manufacturing. They want to produce less PhDs.
What they want to copy from Germany is its Apprenticeship.
Super short term thinking.
[1] https://www.pewresearch.org/social-trends/2015/12/09/the-ame...
Overall, American households are increasingly wealthy, class divisions notwithstanding.
[0] https://www.rand.org/blog/2021/05/most-americans-consider-th...
I was asking, and still hoping to see, the metrics and data that point to demise of the US middle class.
Also, as a Physics PhD holder myself, I dislike that Physics PhDs are held up as the archetypal smart people to be allocated in society's best interest. My opinion is that most of them, myself included, were foolish to go that far in their education and would have better served themselves, and society, if they had stopped at a BS. We could unlock a large economic gain if we went back to fairly matching job responsibilities with the minimum required education.
It's circular -- while I think ads are absurd and am actively trying to remove as many of them from my life as possible, it's not like technologies that have been subsidized by optimizing ad clicking haven't come back around to help science out.
Just curious, especially if you mean the former.
I reserve the right to claim at some future date, possibly in the next few hours, "the circular payoff is mostly tapped out".
It may be funded by advertising, but Search is incredibly useful. And Facebook keeps me in touch with my extended friend circle, which as far as I'm concerned is an unconditional social good. Most of the people working on those products aren't working on the advertising part. And if a small percentage are, well, you can't fully optimize every system of humans.
I don't think this argument holds water.
By focusing on how they are funded, you're losing track of the fact that these companies provide incredibly valuable services.
It's probably less than that, in engineering. The real headcount numbers for advertising are in sales and sales operations.
"Thus Beijing prefers that the best talent in the country work in manufacturing sectors rather than consumer internet and finance. Personally, I think it has been a tragedy for the US that so many physics PhDs have gone to work in hedge funds and Silicon Valley."
"The US focus on efficiency has revealed the brittleness of its economy, which has neither the manufacturing capability to scale up domestic production of goods nor the logistics capacity to handle greater imports. Decades of American deindustrialization as well as an aversion against idle capacity has eroded domestic manufacturing."
"In the face of this challenge against a new peer competitor, the US has demonstrated a superb capacity for self-harm."
"For someone in the middle class, there has never been a better year to live in China. That comes down to the entrepreneurs, who are creating businesses to please people."
All, absolutely true as I've commented previously in other posts. The decline of America is primarily a story about misallocation of talent and the demise of the American middle class as a result.