Economically speaking it was a big advantage because you could get all the gadgets manufactured at chinese wages for the last decades-- electronics made in the US will be more expensive even after all the necessary investments are paid for (duh).
A possible model sector for how this could look like is agriculture: Most nations subsidize the shit out of it to keep a good chunk of it local (~$20 billion/year for the US). You could treat heavy industry/electronics manufacturing the same way, it would just cost taxpayers a bunch and also increase prices in general (because you then poach manpower and capital from other unsubsidized industries).
Look at the existing issues with the Rust Belt as an example. The higher cost of labor could be offset by higher worker productivity. The issues are in regulatory compliance, demands from politicians and unions. As soon as a major project is announced, the demands start flowing in. Look at what happened with Amazon's attempted fulfillment center in NYC. Look at the amazing strategic location and port infrastructure of a city like Baltimore, and ask why it cannot attract more development. There are major political obstacles which need to be tackled in every case. Even California's failed highspeed rail project should tell us something.
I suggest you watch American Factory (https://www.imdb.com/title/tt9351980/) to completely disabuse yourself of this notion.
Chinese engineer (in amazement) "You are allowed to do that?"
Yah, I need to watch that again.
>Among major economies and regions, the United States has the highest rate of production of goods and services per hour worked, with only a few small European economies outperforming it. Productivity rates in most parts of the world are well below the US’. Indeed, according to research conducted by The Conference Board, nearly 75% of the global population lives in economies where productivity rates are below the global average of US$21.6 per hour worked.
Of course, it may be reasonable to suspect that at least some of these productivity gaps are a result of different sectors which are served, ie manufacturing vs. services.
https://jacobin.com/2020/02/american-factory-julia-reichert-...
>A day before she quoted Marx at the Oscars, Jacobin briefly chatted with American Factory co-director Julia Reichert about her democratic socialism and long history on the Left.
>At Saturday’s Film Independent Spirit Awards ceremony Julia Reichert mentioned “income inequality” during her best documentary acceptance speech for American Factory. The first film released by Barack and Michelle Obama’s Higher Ground Productions, American Factory is about a Chinese capitalist who reopens a closed plant in Ohio, employing thousands of American workers.
https://www.imdb.com/review/rw5946906/
>The only effective means of worker power is through unionizing, and both Chinese and American executives resist it mightily, using pages from the exact same playbook, like targeting leaders and paying for propaganda campaigns. In a sense, the American executives going overseas was like finding a pool of scabs to cross the picket line. As one of the state congressmen observes in speaking to the workers, corporate profitability and treating workers respectfully via a living wage are not incompatible things, and it's shameful that they're treated that way out of unfettered greed in extreme capitalism. (Hmm, if only there was an international labor organization, lol)
>>The issues are in regulatory compliance, demands from politicians and unions. As soon as a major project is announced, the demands start flowing in.
Without getting into the weeds of the documentary's agenda or methods of argumentation - it isn't hard to see that the same methods employed on the mainland with low productivity per worker, will not magically produce different results in the US. Higher productivity, along with higher wages may require automating much of the production process. This may be more capital intensive up-front.
The USA for example includes about $7t of hedonic and imputed values that a) never happened in the real world, but b) exceed Japan's entire GDP.
Japan: Paves entirety of Yokohama
China: Tofu real estate and more...
I agree that it is silly. If the state or the public sector digs holes and refills them, it adds to GDP. Typically economists say, "Yes, GDP is a flawed metric, but it is better than no metric"
That said, we can evaluate the added benefits of automation and the productivity gains thereof, purely from first principles, without resorting to empiricism.
In the 1900s the USA took that crown. Most things became manufactured there. A lot thanks to Britain bankrupting itself to defeat Germany in WW1.
In the 2000s China has taken that crown. Now most things are manufactured there. But the owners and customers are in the US. The US corporations have outsourced their manufacturing to China and get rich from it.
And now the USA workers wonder if it was all actually a good idea?
The financiers are still getting rich and looking not to move their manufacturing back to the US but rather to a less developed and so cheaper country further abroad...
We were never asked.
Throw in the massive loss of manpower both from the war and from Spanish flu, then the damage from years of bombing in WW2.
It's largely about can you set up an effective ecosystem of suppliers.
The story of the Traitorous 8 https://en.wikipedia.org/wiki/Traitorous_eight is basically the tale of how free-market competition spawns the economic prosperity of an entire region. In those times, Boston's 95 ring was the favored home of semiconductor tech, but the popular story goes that Massachusetts enforced non-compete clauses while California didn't, and the result was the ascension of Silicon Valley as people out west intermingled between semiconductor and computer companies, traded ideas, started new firms from those ideas, etc.
Shenzhen is amazing because it's an entire village of micro-manufacturies... one bodega specializes in one type of capacitor, a neighborhood specializes in rapid prototype boards, there's institutional social connections between all these folks so you can just run to the other side of town if you need something for this week's production run or if your assembly line controller board failed.
As for why we can't reproduce that in the US, my best guess is we've had the "get big or get out" mentality since Nixon. VC's won't fund a bodega specializing in some obscure electronics niche -- we favor rapid injection of capital into something that can quickly grow and dominate an entire industry. "Lifestyle business" is a pejorative here. The Shenzhen model on the other hand is an interconnected cottage industry village of generalists that focus on small runs of whatever Temu gadget is trending today and can rapidly change and adapt week to week. No individual bodega dominates, but as an ecosystem it does. Something something anti-fragile.
Yes, there are also the megafactories that make our iphones and galaxies and have dormitories for the basically-slave-level workforce, so the models do mix. But it's largely a different business mindset -- ecosystem vs. winner-takes-all.
As in I witnessed a bespoke electric motor manufacturer that was in the ground floor garage space with a couple of guys neatly winding insulated copper around an iron bar cut to the size needed (very large).
You might see a massive train motor and say ‘where’d they get the funding to start this bespoke train motor company’. But it’s literally a couple of guys in an area where they have another couple of guys make the custom brushes, someone else doing the housing, they wind on the coils and boom you have a bespoke motor manufacturer. No investment needed.
But I'm just an armchair commentator here. I hangout here cause I'd love to hear some better firsthand experiences if my story is off.
I would guess labor costs and practices are a big aspect. We send all our kids to stupid school instead of paying them pennies to get their tiny little fingers to work building micro-controllers for us and stuff.
And will only be increasingly robotic with advances in AI.
- Anything you can easily automate (like pick & place machines for electronics, industrial robots for welding/assembly) will be automated anyway (no advantage for the US as location there)
- Even if you have 100% automation, you still need to pay (mainly) local workforce to set the whole thing up, and a lot of those jobs are even less competitive in the US wage-wise (construction crews, etc.)
Neither of those calculations is probably going to change much in the next decades. If you want to keep low-wage industry (like PCB assembly, heavy industry etc.) in a country like the US, then you will need to subsidise this with taxpayer money one way or the other (tariffs are essentially just that).
Agriculture is an example where this is already done (for obvious reasons related to people not starving in a trade crisis). But this is somewhat expensive (US agriculture subsidies are ~$20billion/year).
I think this will happen, and that some degree of it is a good idea (for strategic reasons), but framing this as a benefit for the average american is pretty much a lie-- because in the end, the taxpayer is on the hook for those subsidies, all those industries products are gonne get more expensive and other sectors are gonna get dragged down, too, because they have to compete for talent and might suffer from foreign trade retaliation.
Also note that this development (low-skill manufacturing migrates to growing, lower-wage country, then the migration propagates up the tech level) is something that occured basically exactly the same way in the past (with Japan in the 1990s).
> now they have all the factories and they also have rising standards of living so ... seems to be working for them?
This is basically the point of international trade.
Things also worked out for the US, because they reaped the fruits of that cheap Chinese labor-- all-American electronics would have been significantly more expensive.
I'd also like to point out that those living standards are WAY below US levels-- there is absolutely no way that US-americans with comparable education levels would be willing to work in comparable conditions.
Note also that artificially messing with this process has consequences: If the US had forced electronics and heavy industry to stay fully domestic starting in the 80s or so (with tariffs, regulations and subsidies), then their products would have stayed much less affordable for decades, and a lot of bright STEM graduates that made software/CPU development/Hi-tech happen might have taken cushy, tax-payer funded jobs instead...
If you watch manufacturing videos, its crazy how many people actually come together to make the cheap mundane things we take for granted: For example, count the number of people who touch this random RGB bluetooth speaker: https://www.youtube.com/watch?v=yFYxSX6xP2U
Maybe you could automate that, but it really would be more effort than its worth to set up robots to make what I assume is a fairly cheap product.
The goal isn't to have 50 people selling a batch of capacitors for $10, it's to sell them to Alfie for $6, Barbara for $12, and because it's absolutely critical for Colin he gets to pay $623
The western world is about maximising the value middlemen can extract.
You didnt answer the obvious question of the why things are the way they are now? US used to have their entire electronic supply chain, save from raw materials, in USA in the 70s... So why cant US build its own Shenzhen or Hong Kong? taxes? corporate taxes are relatively low in some US states, infrastructure? US has all the infrastructure needed. Engineers? US claims to have the best universities in the world...