Chip Production Moving to China

Insight ^ | Dec. 31, 2002 | Christopher Whalen

[DoughtyOne]

Yep!

[Willie Green]

If I'm reading the thing correctly, the US exports much less than it used to.

Nah, that's not quite right.
The green line is exports as a % of GDP, so we're actually exporting more than we used to. (reflecting overall increased trade activity.) But the red line (imports) has increased even more dramaticly, and the difference between the two (the deficit -- blue line) is what is putting us down the crapper.

[garbanzo]

The real wealth generation engine of capitalism is manufacturing.

Not at all true. The real weath generation mechanism of capitalism is the ability of free people to use their minds to better the world through free trade and voluntary action. One hundred years ago people believed that the end was nigh because we were losing all our farms to industry.

We haven't starved.

[DoughtyOne]

I think most of us spent our formative years in service sector jobs. McDonalds, Burger King, KFC, clothing stores and the like. Our adult jobs ventured out into manufacturing, research and development, and other jobs that paid more than service sector jobs did.

Now job should be beneath us. The question is, do we as adults want to spend our time working for $15 to $20 dollar an hour full-time jobs with benefits, or $8 to $12 dollar part time jobs without benefits?

[Fitzcarraldo]

Why is this always said with a sneer as if service work is somehow beneath the dignity of us?

Service work = selling hamburgers and changing the bedsheet of foreign master.

[garbanzo]

It depends on what the service is - like any job some services pay more than others depending the amount of skill needed.

[DoughtyOne]

And what happens when that foreign concern sells the T-Bills? Does this mean they can spend the cash on aircraft carriers from Russia? Does it mean they can purchase or finance the creation of missiles? Does it mean they can become expansionist easier since they can finance the expeditions? Does it mean they can more readily execute R&D into military equipment they can spread to their satellite states? Might this be the reason we've seen Pakistan, North Korea and others either developing and deploying nuclear weapons or on the verge of doing so?

[hove]

"The real weath generation mechanism of capitalism is the ability of free people to use their minds to better the world through free trade and voluntary action.

That sounds nice. But it is obvious you have a globalist perspective here. I am for free people and free trade. And for that matter, bettering the world. However, I am for America first! And when manufacturing is moved to China, good paying American jobs are lost....and some Chinese person's standard of living has improved. A globalist...like yourself...says that's a good thing. I worry about the American folks who lost their job.....and the new wealth that went with it.

[DoughtyOne]

For the most part, manufacturing and farming was an internal affair until recent decades. I personally view internal and external trade to be quite different, in their implications.

Manufacturing was the engine of growth. Why? Whoever had the R&D and the best manufacturing sold product to others. The R&D couldn't progress rapidly unless the manufacturing it supported developed the funds to execute it.

In the 1970s and 80s, large pharmaceutical houses used their funds to execute different policies. Those that spent a larger share of their profits to attract the best R&D brains, are today placing products on the shelves of pharmacies that see their parent organizations highly profitable. Those that didn't have little to offer today, to keep the income stream coming.

Even in certain service sector jobs, creativity equals higher income. The most profitable food services have an active R&D department. If our manufacturing leaves the US, we're in a world of hurt in many important areas.

[hove]

"We are transistioning to a service economy. Why is this always said with a sneer as if service work is somehow beneath the dignity of us?"

This is not about class distinction. The fact is that service jobs tend to be low paying. Service jobs are filling the void left by higher paying manufacturing jobs. What does a checker at Walmart make...$8 dollars/hr? What did a mill worker make...$25 dollars/hr.? Which one would give a young father the better opportunity to house and feed his family??

[Mulder]

One hundred years ago people believed that the end was nigh because we were losing all our farms to industry.

One hundred years ago, the federal government wasn't confiscating half your income in order to:

1) make it more difficult for local businesses to operate, and
2) send it overseas to our competitors.

One hundred years ago, a bunch of globalist, NWO psychopathic freaks weren't running our government.

[NMC EXP]

In 1971 the US trade balance went negative and has gotten steadily worse since then. We are told by the "free traders" that moving manufacturing offshore will result in lower prices which will offset the loss of high paying jobs.

It hasn't.

The following data is from:

U.S. Department of Labor
Bureau of Labor Statistics

Consumer Price Index

All Urban Consumers - (CPI-U)
U.S. city average
All items

1982-84=100

1930 = 17
1940 = 14
1950 = 24
1960 = 30
1970 = 39
1980 = 82
1990 = 124
2000 = 167

1971 marks the beginning of the "free trade" era. The CPI has gone up since then at a nearly exponential rate (sorry I can't provide a graph of the data).

Free trade is not free.

Regards

J.R.

[garbanzo]

Regardless of the label, the point is that this is a case where the solution is vastly worse than the disease. It really is sad that some people are losing their jobs. But it would be even more sad if even more people lost their jobs because of the resulting trade wars coming from protectionism.

[garbanzo]

Manufacturing was the engine of growth.

I think that was true in the past - just as agriculture was before it. But now everybody can manufacture everything - there's not a lot of money in it anymore - just a lot of overcapacity. It was a lot better (at least for us) when most of the world's industrial power was devastated by 2 world wars. Now we have to compete with the rest of the world.

[Willie Green]

And what happens when that foreign concern sells the T-Bills? Does this mean they can spend the cash on aircraft carriers from Russia? Does it mean they can purchase or finance the creation of missiles?

Well they don't necessarily have to buy T-bills, and they're certainly free to spend or exchange it with whomever they want for whatever they want. But it's still basicly our paper IOUs that they're using and sooner or later those IOUs would have to come back to us for redemption. Now one of the things that happens with so many IOUs floating around out there is that "the full faith and credit of the United States" eventually becomes worth less. For us, that is bad because everything we buy as consumers (imported) will wind up costing more. For them, it is good because everything we sell to them will seem cheaper. Good for exports, I suppose, but (in the extreme) what if we're no longer making anything? I suppose maybe we could sell them OUR aircraft carriers to redeem those IOUs. Or we can sell them Alaska along with the Alaskan oil.

Granted, I'm exagerating (I hope) to illustrate the example. But it still boils down to the same old globalist mantra of Americans becoming more "competitive" means we have to work harder and harder for lesser and lesser until we reach some kind of equilibrium with the developing nations.

[DoughtyOne]

Hey, hey, hey, HEY!

Let's try to avoid truth here. LOL Nice one.

[The Duke]

I'm hoping to expand my business down into Argentina this year, and am spending much of my time these days learning Spanish. At the same time I'm casting my eyes about here in the US for a more rural setting for my family. Argentina is troubled, however the citizens do have the right to own guns and they may be starting to recover even as the rest of the world crumbles.

I'm hedging my bets, because there are plenty of once-civilized corners of the world that are now bombed out hell holes (remember the Sarajevo Olympics in '84? It was a beautiful city that reminded me of my home town in Tennessee. Most recently it was depicted in the movie Behind Enemy Lines as "just another Beiruit".)

[lmr]

What a bunch of pessimists... I happen to think the Capitalist Engine of the World (The United States) is tugging along as it always has, and as it always will. We have something that places elsewhere do not have, and that it is a great INDEPENDENT spirit. If we ever fall into the DEPENDENCE hole as a nation, then we will be demoted to appeasing third-world-nations, but the last time I checked, We were not on that track. We have the worlds greatest manipulators, negiotiators, speculators, inovators, politicians and business people, they won't ever quit. No one else has this great tradition. I consider myself to have this passed down to me, For I am a giant capitalist pig! Long live Capitalism and the U.S.A., There is no such thing as too much capitalism!

[DoughtyOne]

As I understand it, Costa Rica has a community of retired US citizens that is well accepted. I'm not in a position to leave the country, but I might be able to pick up and relocate to an area that had water and some fertile land for growing my own. I don't think it's going to be long before living in a populated area is going to be problematic. We're toying with the importation of food from other nations. Those nations will be able to produce it cheaper than ours will. Wait until a food cartel decides to cut off the flow. Good luck.

[American Preservative]

.