You talk like you are such a miserable victim to pay less money for product with inferior quality. Does anyone put a gun on you to shop at Walmart? This is a free country and you are welcome to pay the premium for high-end brand names.
you are telling me that apple products will be better if made in us? i bought 6 apple products over the years, and none of them had any problems. not just apple either, all of the computers from lenovo that i bought haven't had any issues so far. i am not going to be twice or three times or more money for the same thing i can get from MIC. another thing is electric guitars. i bought a bunch of MIC guitars and they all play fine. sure, the parts are not the best, but american made gibson or fender guitars will cost 10x the money. i have never had a MIC guitar break while playing. sure, there are a bunch of ****ty quality products, but my overall experience has been very positive. and i am not willing to pay 10x for the same thing made here.
Labor costs are the source of the matter, not exchange rates. Labor is not as fungible as resources, like oil or gold. Saudi Arabia sells its oil to the highest bidder. The US sells its jobs to the lowest bidder. A country manipulating their exchange rate will change the value of resources, like oil, as well as the relative cost of imports vs exports of manufactured goods.
The problem is not where the products are made. The problem is our purchasers try to squeeze the last penny out of the profit of the manufacturers. It is well known Walmart is pretty good at doing that. They know what kind of products they will be bringing to America when they sign the contract. And I guess we also know what kind of products we are getting when going through the Walmart checkout counter.
First you write about labor costs. Then you write about its fungibility. Then you start talking about oil. Then you talk about selling jobs. Then you come back to exchange rates, which in the first sentence you said doesn't matter. WHAT IS YOUR POINT BUDDY?
Why are labor costs so low in China though? What if they had the same minimum wage, worker protection, etc in China as you do in the US? I'm not disputing your overall description. Just noting that it doesn't "happen to be". It is strategic.
i dont much about it. but if you have all your workers living in a factory working 70 hours a week thats a pretty big advantage to an american company. but overall, besides lower cost of living i dont know why its so disproportionate.
i think the baseline started low. if workers were making $1 a day 10 years ago, i don't think any company is going to start paying $10 a day. it's always going to be a process. from 1 to 3 to 5 to 7 to 10... we are seeing that right now. i heard some places the salary went up 100% in 10 years. people are not going to demand american salary over night. other than that, lower tax, no sales tax, cheap health care etc. food and housing are just as expensive, but people don't spend the money they don't have like we do here.
Part of the answer here is that their population size (5x the US population), their relative lack of wealth compared to their neighbors, and their agrarian roots. Imagine you are the head of a household, and instead of 2 children, you are feeding 10 children. Your neighbors have moved the furniture and belongings once in your house, instead to their own houses. It is 1945. There is no such thing as a tech job or a service job. What do you do?
There definitely is planning involved in mobilizing the labor market - which is part of the arbitrage process. Can't build factories in countries that won't protect American capital and investments. I could say that land, labor and capital in China are significantly low (price) on a per capita basis compared to the US. China has the world's largest exchange reserve - as a result of being such a large net exporter, but it is not any larger on a per capita basis than Japan's reserves. I would say the poor rural roots of China's population has right now the biggest impact on labor costs. Something similar happened in the US when people lost the family farm - they moved to the city and began working at the factory or office. Cheap, inexperienced incoming labor pushes out the more expensive experienced labor. It is like a microcosm of what happens with the US and China. If everything were the same in China as in the United States then I suppose there would be no difference between the two, correct? As an example, I heard on NPR yesterday, a British economist explaning why Ford automobile plants were closed in the U.K. and not elsewhere in Europe. He stated that labor costs had nothing to do with it, that it was based on surplus capital. Well, that's fine and all but why shutdown the U.K. plant? He then later stated that costs were a factor in shutting down the U.K. plant. It was a politicaly correct answer. How can labor costs not be a factor? The Chinese labor force is many times larger than the total American population, and many people are leaving poor rural life in favor of a quasi-nomadic urban industrial life. Labor is cheap in China. Changing the exchange rate is not going to make anyone in China richer. If labor is too expensive in China, then the jobs will follow the cheaper labor.
This school of thought may be deeply personal. Do you, as an individual, believe that America should be a prosperous nation with a thriving middle class? Or do you believe individuals should prioritize their personal wealth at the utmost, even if means impoverishing their own nation ? To equate the 2 countries is a folly. They have vastly different socio-economic backgrounds, not to mention cultural differences. At the end of WW2, China was poor nation. Not so, in the case of the US. Even today, the per capita income of a Chinese individual is 1/6 of that of an American. What you describe here is exactly what the Chinese have done for a very long time. Previously, when they pegged their currency, they effectively stated to the world that they were not interested in manipulating their exchange rates. And many Americans benefited from this (most glaringly, Mitt Romney of all people) because all things we purchased, whether it was labor or goods, was a fraction of the price. It was essentially a gift for all of us. What's next? A trade war, you were saying? Sure, I think Romney's camp would enjoy another war to distract us from all their ill-gotten gains, their years of tax evasion, and their desire to cheat and swindle from, most ironic of all, the honest people that actually work hard for a living.
I don't keep up with the Joneses. There is no reason we cannot get along. Unless people choose to live in denial, withholding reason from their actions, things should be fine. My trade war rhetoric was sarcastic. If the US out trades China it will be because companies will have established other labor markets - China's economy is simply too large for the United States to compete with even if labor costs were equal. This kind of business practice (arbitrage) is something many American companies do very well. And why shouldn't they, are people not better off?
True, there's no sensible reason why we can't be allies or partners on the world stage. It depends on who you ask. People in states with high unemployment may object to that characterization.
