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Dramatic Shifts In Manufacturing Costs Are Driving Companies To US, Mexico
hackingbear writes: According to a new Cost-Competitiveness Index, the nations often perceived as having low manufacturing costs — such as China, Brazil, Russia, and the Czech Republic — are no longer much cheaper than the U.S. In some cases, they are estimated to be even more expensive. Chinese manufacturing wages have nearly quintupled since 2004, while Mexican wages have risen by less than 50 percent in U.S. dollar terms, contrary to our long-standing misconception that their labors were being slaved. In the same period, the U.S. wage is essentially flat, whereas Mexican wages have risen only 67%. Not all countries are taking full advantage of their low-cost advantages, however. The report found that global competiveness in manufacturing is undermined in nations such as India and Indonesia by several factors, including logistics, the overall ease of doing business, and inflexible labor markets.
When it gets down to it — talking trade balances here — once we've brain-drained all our technology into other countries, once things have evened out, they're making cars in Bolivia and microwave ovens in Tadzhikistan and selling them here — once our edge in natural resources has been made irrelevant by giant Hong Kong ships and dirigibles that can ship North Dakota all the way to New Zealand for a nickel — once the Invisible Hand has taken away all those historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would consider to be prosperity — y'know what? There's only four things we do better than anyone else:
music
movies
microcode (software)
high-speed pizza delivery
.
Prisencolinensinainciusol. Ol Rait!
Good point, and I don't think they will benefit from lessons learned elsewhere. America has had to compensate for lack of a cheap labor force by implementing technology. It took a while, but regulations now protect the workers (and consumers).
China, on the other hand, has always had plenty of cheap labor. They have solved problems with brute force instead of applying technology.
As that culture changes for China, they will make the exact same mistakes the other industrialized countries have made. China's water and air conditions are miserable ... a condition that is reminiscent of the 1900s in the US.
It little behooves the best of us to comment on the rest of us.
Unfortunately, without the democratic framework that the US had in its own gilded age, I'm not sure there's an available set of tools for the populace to push into a progressive era, like the US had, where super corrupt elements of the government(like unelected senators) were run out, and labor was given some basic respect under law.
Wages only do so much for social stabilization. Some changes have to come into power structures.
I'm gonna disagree.
This is supposedly a sign that the race to the bottom is actually done. The bottom filled out and is rebounding, and "we" mostly resisted our worst political urges vis-a-vis protectionism and removing regulatory protections that exist for good reasons. An equilibrium has been reached, and all the sacrificing has been mostly of the short term kind.
I know posting anything that isn't a hyper-cynical prediction of doom-and-gloom isn't too popular on slashdot, but this happened with Japan in the early 90s, and it happened with the United States(to the British Empire) in the 1850s. This isn't an unprecedented development. Cheap labor isn't infinite and eventually labor starts to get positively valued again.
US wages are not flat. They're declining. Adjusted for inflation and the cost of living increases, your effective purchasing power is 1/3rd of that of your grandparents.
Your parents and grandparents were able to buy a house, two cards, and send 2 children to college on a single income. You can't. You can't even with you and your spouse working full time with decent jobs. Your children will need loans to go to college and you will need to fork out a lot of money for childcare while you both work. You should probably pay for private tutoring too, to make up for your lack of time with your children you spend working. (Parental involvement in education is key to educational success. THE number one factor. It's why lower income people stuck working 60+ hours a week with 3-5 part time jobs have children with bad educational outlooks)
Point is, you're getting screwed. The income gap between the wealthy and poor has increased exponentially in the last 30 years. And it's no accident. There are people working hard to make sure you and your children grow up stupid, in to a life of perpetual debt and poverty.
It wasn't always like that though. Blame globalism if you want; but in the post war years, DETROIT was the richest city in the United States. It did not get that way due to service industries and intellectual property creation. They took raw materials, and made cars. for profit. and did not pay slave wages. The rust belt was bedrock of the American middle class.
I do not buy the argument that manufacturers have to pay shit wages to stay competitive. I think that's an excuse to either inflate managerial / executive salaries; or cover up for failing to invest in increasing efficiency.
Or it's due to the rise of the MBA. Labor is simply an input, a cost to be minimized. There's knock-on effects to selling your workers out in order to slightly lower production costs -- and those goons didn't look at the bigger picture or what we'd lose -- a stable, well functioning, organized society (Look at Detroit/Flint/Gary in 2014)
(In before some libertarian blames government regulation for companies moving production offshore.)
I submitted my previous post to soon. You could dismiss one Congressman as not representative of the party.
So here is the official 2014 platform of the Republican Party of Texas.
Minimum Wage Repeal- We believe the Minimum Wage Law should be repealed.
Prevailing Wage Law- We urge Congress to repeal the Prevailing Wage Law and the Davis
Bacon Act.
Workers Compensation- We urge the Legislature to resist making workers’ compensation
mandatory for all Texas employers
http://www.texasgop.org/wp-content/uploads/2014/06/2014-Platform-Final.pdf
super corrupt elements of the government(like unelected senators) were run out
See I always saw that as a misunderstanding by the majority of people as to what Senators really are. The US Federal Senator's job before the 17th amendment was to represent the interests of the State they were appointed by not the people of the State. (We have the House of Representatives for that) So if your senators were corrupt then it meant that your State Legislator/Governor was corrupt. (A very distinct possibility i.e. Illinois) All we have done is taken the part of the Federal government that was supposed to be stable and turned it into the US House of Reps part II.
Also I contend that it is easier to buy a Senator now than it was before the 17th amendment. Now instead of buying off the majority of a State Legislator you would only have to buy off one man. Of course given supply and demand (There are more State Legislators than Senators.) the price of buying a Senator may be such that it isn't any different.