Globalization 4.0...

[Hatterasguy]

My thinking on this subject has changed 180 degrees in the last year. The closer I get to this at school, and the more I see in real life the more my thinking is changing.

Anyway, here are my points.

I am very familer with economics and how if one country is good at producing good X and so so on good Y; and another is good at producing good Y and so so on X, if they trade they are better off. etc, etc, etc.

However I have been making some observations as I have traveled around this country and I don't think thats quite true.

Sure China may be better at making steel, and we can get it cheaper to produce cheaper goods. But, BUT, to do so we lose good paying factory jobs. Jobs that are not being replaced. So while the finished product is cheaper in price, it doesn't make up for the lost wages. The steel worker who was making $25 an hour could afford to spend an extra few dollars on a hammer. But the former steel worker who now can only find a job at a piss ant store for $12 an hour, doesn't give a damn that the Chinese hammer is $5 cheaper. He lost half his income that he will never recover.
Sure some of these workers will retrain and get other jobs, thats the argument. But what other jobs? Most of the good paying jobs are being outsourced. I have driven through a number of towns in CT that used to be very well off manufacturing towns. Now you either come from the coastal area and already have money, or you work for $8 an hour. The good jobs are gone, never to return. When we lose Sikorsky all those good paying jobs in my area will be gone forever, Poland will get them.

Now lets look at FL, I spent several days driving around in central FL looking at property, lots of abandon sub divisions. Anyway its all built on nothing. Their are no jobs down their. You are either retired, make your money up north and have a summer home, work for Disney, or your broke. There entire economy is fake, its based on old people in the Villages spending money, and people from up north buying places and taking vacations. Thats not an economy, its a sham that will fall apart when the baby boomers die off.

From what I have seen thats the problem with this "service" economy thats been forming. Its based on nothing, we shuffle money around and sell burgers to eachother. When you make something, like a ship, or steel, or equipment, you create something. You create real wealth, wealth that you can build a country on. Sure you can create wealth by designing a ship and having a Korean ship yard build it, but its all paper. Your not creating good jobs in this country, and those people with good jobs spend money. Why do the Koreans even need you? They could just design the damn thing themselves, flag it and make money with it.

Another downside is the crap thats pawned off on us as a good product. I cannot think of ONE product that used to be US made but is now made in China that got better. Sure they are cheaper, but they are crap! I would happily pay more for a better made American product.

Now don't think I'm against free trade, or for tariffs. I'm not saying anything of the sort. Trade is vital, its foolish to argue that its not. Tariffs in general are a bad idea. Although I would love to see them more on certain goods, because our stuff is heavily taxed/tarriffed in another country. Say our cars in Japan, vs their cars being sold over here. I think the playing field should be level. Either no tariff on the product, but if they insist we will match it.

My point is this, I think the globalization/outsourcing pendulum has swung a bit to far to fast. Everything has its drawbacks, nothing is perfect. I think a lot of what has happend over the past 20 years or so only benifits a certain group of people. The vast majority see little benifit or are hurt by it(both domestic and over seas). You may argue that overall we are better off. I would say some of us are, I certainly am in my little area of the world. But I don't think someone working in Detroit would say that they are better off today, than say their fathers were. Where does it stop? At this rate 80% of the population is going to be working at Walmart/farming serving the 20% that makes money off this.

[raymr]

Put in other words, with every Chinese product we buy, we validate their economic model and hence their way of life. We can't just keep buying unrealistically low priced stuff without coming to a point of reckoning. That moment is here, with our legions of rusted, shut down factories and shrinking manufacturing expertise, and we have to decide if we really want to continue down that path.

[Fulcrum525]

And now a word from Hatterasguy...



But on a serious note I think your right. As someone who does 95% of work on their house/car i've never understood this service economy. I know that most people can't do alot of this repair work by themselves....However some items have become so cheap that theres no services to repair them anymore. Case in point, you have a 5 year old tv that breaks. It would cost more to repair then to buy a new one so there are few if any tv repair shops anymore. Many a time i've seen perfectly good lawn mowers on the side of the road that had maybe one thing wrong with them but the owner still thought it better to buy a new one then get the old one fixed. There used to be loads of small repair shops in my area, not anymore. (Anyone remember the shoe repair shop in West Hartford where the Corner Pug is now?)

[aklim]

This is like the general store that tries to go toe to toe with Wal*Mart. You can't. We need to find something that they cannot do at this time and be good at it. We can try to wish it away abut at the end of the day, it is still going to be there. This is a fact of business. You need to keep evolving or get crushed.

[MTI]

Add to the process, when an American retailer, who just happens to be the largest retailer in the world . . tells an American company that they have to provide a product at a specified price point, and the only way to do that is to have it manufactured overseas, it creates pressure to abandon domestic production.

[Emmerich]

In an economy like India where pennies per day is a raise, why would you not outsource? If you can reduce the costs of good sold, everybody down to the consumer benefits. The fact that your industry in the US goes under is not your concern, you are obligated to your stockholders, not the competitors. The problems came in when the tried to force things overseas that don't fit overseas. Anything requiring local service, or the ability to speak English clearly is what damages that type of job shifting. This then cause sales to fall, which is counterproductive to what you are trying to accomplish. IN other words, it doesn't matter if it was cheap to make if nobody is buying it.

When you have auto worker in Detroit making huge salaries for flipping over bell housings on conveyor belts, THEY CAN'T COMPETE. Be thankful we have a third world ****hole next door to the south instead of a manufacturing powerhouse like Japan. That ocean in between is a great equalizer. That and the fact Japan has no natural resources (they have people resources, China has both).

[Mistress]

Just my 2 dracmas worth- if you buy it right the first time you don't have to buy it again. Do we really need to buy more tainted crap from another country when the clean up from the aftermath costs us twice as much? Doesn't sound like good economics to me. As far human rights concerns go- the Chinese killed off about half its future work force with that little "tainted milk" snafu and did a lousy job at trying to cover it up. We on the other hand treat our elderly who worked most of their lives making this country what is like crap and can't even give them decent healthcare in return for their efforts. Today we treat our workforce like crap and we can't even guarantee the job will be there tomorrow. The parallels are uncanny, the Chinese have more dramatic cover ups- their officials commit suicide ours try and figure out if the bank they stashed the analog tape recorder in will still be in business tomorrow! Just remember this "Communism Works- On Paper." Beans counters pppffftttt.

[MS Fowler]

The real problem in China is what will all those people do? The Chinese government simply must find real jobs for all those people or face huge riots, and other forms of turmoil. OTOH, the western democracies are not growing.

[raymr]

On a dollar for dollar basis, we can't compete. $12 an hour is about 25K per year, which is barely above the poverty line for a family of four. Now consider that people in India and China work for just a few dollars per day. Theres no way we can drop wages by that amount, and there is nothing that we can do that anyone else can't. Everyone builds super computers, jets and spaceships these days.

Globalization benefits the guys who move currency and resources around the world, and helps some 3rd world economies. If you buy stocks in such companies, good for you. But it is a false promise for everyone else. You can't squeeze any more blood out of this rock.

[tankdriver]

Originally Posted by Emmerich

The problems came in when the tried to force things overseas that don't fit overseas. Anything requiring local service, or the ability to speak English clearly is what damages that type of job shifting. This then cause sales to fall, which is counterproductive to what you are trying to accomplish. IN other words, it doesn't matter if it was cheap to make if nobody is buying it.

Not so. No business has gone under because their call center is in India.



As you mentioned, it is business that drove globalization. They slash costs 80% and drop prices 15%. Manufacturing will always be cheaper in 3rd world countries. But, cheaper goods do not always benefit consumers. Poorer quality goods have to be bought more often. As mentioned, repairs are not worth it. If a TV is $200 less than it could be, but instead of replacing every 10 years you replace every 4 years, you haven't gained anything. The TV manufacturer sure has though.
The US has decided to export its low paying jobs and import high paying ones. The result eventually is going to be that those not educated enough for those high paying jobs are going to have to move to a different country. Or become criminals, or live off welfare. Then, again eventually, countries like China and India will start taking bites out of those high paying jobs. India invented its own supercomputers a half century ago after the US said they could only buy Crays if they let a military base on their soil. India discovered the secret of nuclear weapons on its own. Eventually, as the low paying manufacturing jobs allow more Indians to send their kids to universities, they will steal white collar jobs from America.

Globalization is just another example of why we must have controls on business.

[Hatterasguy]

Originally Posted by raymr

On a dollar for dollar basis, we can't compete. $12 an hour is about 25K per year, which is barely above the poverty line for a family of four. Now consider that people in India and China work for just a few dollars per day. Theres no way we can drop wages by that amount, and there is nothing that we can do that anyone else can't. Everyone builds super computers, jets and spaceships these days.

Globalization benefits the guys who move currency and resources around the world, and helps some 3rd world economies. If you buy stocks in such companies, good for you. But it is a false promise for everyone else. You can't squeeze any more blood out of this rock.

Thats exactly what I'm saying. It only benifits a small group of people, everyone else is going to get screwed.

We can't compete with their labor, but if we add some taxes or tariffs we can level the playing field a bit.

[pj67coll]

Originally Posted by Hatterasguy

Thats exactly what I'm saying. It only benifits a small group of people, everyone else is going to get screwed.

We can't compete with their labor, but if we add some taxes or tariffs we can level the playing field a bit.

Globalization is a playing field leveler in and of itself. That doesn't just mean that everybody else rises up to the first worlds standard of living. It also means that many in the first world sink down towards the third worlds standard of living.

It means that if you are an uneducated line worker in Detroit earning 25 an hour in a union protected job your compettition is no longer some guy in Flint earning 23 an hour but someone in Guangdong earning 50 cents an hour. You are finished. As some of the unions around this country might possibly be beginning to understand.

As a theory Globalisation works fine "in theory". But in practice requires that most illusive of conditions. A level playing field. That's not something that has ever existed, and nor will it in all likelyhood in the future

I think the damage to the US manufacturing base is already so far advanced I really don't see any way for it to recover under the current conditions. I was in Home Depot looking for a drill the other day. I wanted to try and buy an American made product. I spent about a quarter of an hour looking thru every product they had. Not a single one was made in the US. Not one! Didn't matter what the name was. Skill, Makita, Black and Decker, Bosch, Milwaukee, Rigid, Ryobi, etc. Every one of them without exception was made in China or Mexico, and there was only a couple of Mexican ones. It's pathetic.

I was prepared to pay more for an American product. There just wasn't one available. Bought a Ryobi in the end.

What Hatteras observed about the phantom economy in Florida is even more the case here in Arizona. Phoenix in particular. The last decade has essentially been based on the property pyramid scheme fueled by illegals, californians and idiots. No "meaningful" jobs rooted in reality. Just converting vast swaths of desert and farmland into matchstick subdivisions for snow-birds, californians and others living on money from the past.

- Peter.

[tompaah7503]

Originally Posted by Hatterasguy

From what I have seen thats the problem with this "service" economy thats been forming. Its based on nothing, we shuffle money around and sell burgers to eachother. When you make something, like a ship, or steel, or equipment, you create something. You create real wealth, wealth that you can build a country on.

Dead on. Real wealth is generated by humans refining products. This means agriculture, manufacturing, mining, building, etc.. A "service-based economy" is doomed to fail and it will do so very quick. It has baffled me a long time how politicians have said in this globalized economy that we (the western countries) now have a new, service based economy. Even a five year old kid can understand that if you have two people scrubbing each others backs, no money is made and thus they both will die because they can't afford buy food.

Originally Posted by Hatterasguy

My point is this, I think the globalization/outsourcing pendulum has swung a bit to far to fast.

Originally Posted by Hatterasguy

Thats exactly what I'm saying. It only benifits a small group of people, everyone else is going to get screwed.
We can't compete with their labor, but if we add some taxes or tariffs we can level the playing field a bit.

Funny you're reacting to this now. This is what GATT, EFTA, NAFTA, G8, G9, G12, general globalization, FTAA, EU and [add your acronym here] protesters have been rioting against the past 20 years.
Anyone could have foreseen this.. if you let the Chinese (or pick your favorite flame target) compete freely with your own market, you are going to end up with almost total loss of domestic competence, manufacturing capacity and infrastructure in the long run. And yes this is exactly what happened to the US and most of Europe. Steel mills? Gone. Auto plants? Gone. Furniture? Gone. Electric appliances? Toys? Household items? Tools? ALL GONE.
Whodathunkit..
The only ones supporting this past 20 years movement of free trade are the small group you mentions that profit from this: large scale capitalists, banks and politicians. They are the ones pocketing on this. Not me, not you and not Joe the plumber or whatever his name was. We got a grand party with cheap Chinese ***** and now our money has run out. Unfortunately with the aforementioned loss of everything that was worth something in our countries 50 years ago.

[Hatterasguy]

Yep, evertime I go past the old Corsair plant in Startford I'm reminded of this. Thats all thats left of the arsenal of democracy and the good jobs that came with it. Now its a rotting empty shell.

[kip Foss]

The point that has been missed is that companies don't set the demand and therefore the price. It is the consumer that determines on what, and therefore, where the money is spend. Americans have made the choice that they want cheap .......... Fill in the blank. In most cases quality doesn't really matter. Models are changing so quickly that a $200 plasma tv will be out of date long before it wears out, so consumers can afford to buy junk and then scrap it.

To supply this insatiable demand for cheap goods producers must go to where the labor is cheap, not necessarily efficient, but, cheap. It is the price of the end product that is important not the productivity of the individual worker. American workers are by far the most productive in the world. We are better that anyone in the EEU and Japan. The trouble is that we are very very expensive. About $1,500 of the price of every GM car is retiree's medical. This doesn't count retiree's pensions, or, worker's wages and benefits, just retiree's medical. With up front costs like these, and on going quality issues, even with our superior productivity, there is no way that US auto makers can be competitive.

The majority of the American consumers buy price first and quality second, if at all. Given that, Wal Mart will always out sell Niemon Marcus. I live is a small town in S. Tx. and have seen Wal Mart suck the retail life out of most of the towns in the area. Vibrant downtowns that used to be the hub of city life are now full of boarded up shop fronts. Aransas Pass had a Wal Mart move it 20 years ago. The first store was a mile or so from downtown. With in 5 years the downtown was nearly dead. Five years ago Wal Mart moved another 2 miles out of town. Now there is a Lowes, Walgreens, Pizza Hut, and hamburger joint in the area and nothing downtown. Where is the loyalty to the local shop owners? Where is the buy America ethos?