Solution to America's future

[Retroit]

Originally Posted by Mircea

It has nothing to do with currency manipulation and more to do with foreign policy.

BRIC develops foreign countries, the US does not. That is why BRIC is successful and why they will continue to be successful and why the will ultimately dominate the US.

Unless the US alters its foreign policy and starts developing countries and dumping foreign aid money into those countries and allow US corporations to be taxed in those countries, the US will end up on the bottom.

The US has been doing that. Much of the wealth that is generated in those developing countries ends up in the hands of the dictators. If you think Brazil, Russia, India or China is going to be more benevolent to miners in third world countries, I don't know what to say but .

That is the primary problem. Most of the capital and resources in this country are wasted on things like 4,400 sq ft McMansions and on frivolous services.

And most of the capital generate in foreign countries is because Americans are buying those things. Yet they are "successful", in your opinion, and America is "losing".

However, nothing in Economics says a country has to have manufacturing.

With few exceptions of countries that rely on mining, agriculture, or trading, yes they do need manufacturing. Certainly for a country as large as the US, manufacturing is essential to maintaining our standard of living.

Economics simply says you do whatever you do best.

True in a theoretical sense. However, the world is not a level playing field. Not all countries abide by the same laws, have the same standard of living, etc. Adam Smith was correct, but he was talking about a limited marketplace where the playing field was equal.

If exporting potatoes nets more money than manufacturing and exporting bicycles, then you shut down the bicycle plants and start growing more potatoes for export. Sure, the bicycle manufacturers will whine, but that's the way it goes. If they what to stay in business, then they will have to re-invent themselves and produce bicycles for export that net as much or more than potatoes.

And if they can't compete with foreign manufacturers, then they do what the Irish did in 1840's, right?

Well, again, there are Economic Laws and those Laws can never be violated and attempting to do so eventually only results in misery.

But what if the Laws are different in other countries? If the Economic Law in America says you have to pay minimum wage, but the Economic Law in another country says you can pay a fraction of that minimum wage, then whose Economic Law do you follow?

If you cannot export those things for a profit, then you shut them down and find something you can export for a profit.

And what if there is nothing that can be exported more cheaply than other countries can export? ...and don't say "grow potatoes"!

You are all living in the past glory days and cannot bring yourselves forward to the present, and that is probably stalling and thwarting any necessary re-invention of your business models more than anything else.

"Those who ignore history are doomed to repeat it." What is happening with China overtaking the US is exactly what happened when the US overtook Great Britain. As you said earlier, there are Economic Laws that can never be violated. If one country is hell bent on Free Market and no Tariffs (GB in late 1800's & the US now) and another country has protective markets and very lax regulation and taxation (US in late 1800's and China now), the basic Laws of Economics will produce the same results.

The simple fact is that the world now operates on a Global Economy and the US is part of that Global Economy whether it wants to be or not, whether you like it or not, whether you think it's a good idea or not.

If you cannot bring yourself to the present and learn how to operate in a Global Economy, then you will fail, and fail miserably and your suffering will be legendary.

Whether you like it or not, whether you understand it or not, the simple fact remains that US manufacturers are no longer competing against other US manufacturers.

US manufacturers are now competing against all the world's manufacturers.

All very true, but the Global Economy is not homogeneous. If it is easier to operate in one country than another, guess where companies locate?

That is the new reality and you can do absolutely nothing to alter that reality, so get used to it.

So when China was a fully Communist non-Capitalistic country in 1978 and they had minimal exports to the US, there was nothing they could do to change that, so they should have stayed the way they were, right? And when the US was a backwater agricultural country after the Civil War and Great Britain was a primary manufacturer of US imports, we should have accepted that, right?

Oh yeah, sorry, we're supposed to ignore history.

The tired old mind-set of the past, when US manufacturers only had to compete against other US manufactures, the issue was Market Share. The goal of US manufacturers was to capture as much Market Share as possible, to increase sales, to increase revenues, to increase profits.

In the new reality of the here and now, Market Share is still the primary issue except Market Share is no longer limited to the US. Market Share is now the entire world.

And how is a country that pays its bicycle workers $20/hour going to gain market share in a country that pays its bicycle workers $2/day?

Ultimately what happens is those foreign competitors come to the US with their cash and they buy US companies through leveraged buy-outs and hostile take-overs and then they close the US companies and import their products.

And if they don't close the US companies, they slash the work force and then move the company to another State where they don't have to worry about union idiots and they pay lower wages.

That's not usually how it happens. Usually they just under-price their American counterpart until it goes out of business.

You lose no matter what, and all of the tariffs and all of the laws barring companies from moving to other countries isn't going to change the fact that you lose.

Assuming a country is not going to enforce their laws and taxes (tariffs), you are correct. But it has been proven that laws and taxes that are enforced can change outcomes. So the question becomes: what should those laws and taxes be?

And as an investor, if I cannot get satisfaction here in the US, because of your stupid tariffs, then I will pull my money out of US companies and invest it in the foreign competitors who are stomping the guts of US companies out with their profits.

You're a little late to the game. That's been going on for quite awhile without tariffs. Tariffs would actually discourage that from happening.

There is no way you can possibly win. You either adapt to the changes taking place, or you will end up as a 2nd World Country in about 20-25 years.

True. Stress on the word "adapt".

When BRIC starts developing sub-Saharan Africa, I don't know what you all are going to do, but I suspect there will be plenty of wailing and gnashing of teeth and wringing of hands and putting on sack-cloth and pulling out hair.

True, but it will not be Americans doing those things, but the people in sub-Sahara Africa, all the while their "leaders" are feasting at the banquet laid out by BRIC. Americans don't/won't care if black Africa is being exploited by BRIC. In fact, we'll be so proud of ourselves that we finally eliminated the last vestiges of Evil Capitalism from our sacred shores. As long as we get our entitlement checks from the government, all will be okay.

This ain't 1938 where you can threaten to invade Mexico because Cardenas expropriated the assets of US oil companies who refused to pay taxes (and who violated an order of the Mexican Supreme Court by refusing to pay comparable wages to managers, geologists, petro-chemical engineers and other university trained salaried workers).

And you don't think that a Sub-Saharan dictator will expropriate the investments of the BRIC in their countries when they realize it will be politically expedient to do so? I suppose the Middle East countries wouldn't have done that either (i.e. expropriate their oil production from the British)? In fact, the US did not invade Mexico, but they (and Great Britain) put such restrictions on their oil exports that Mexico wouldn't have recovered if not for the demand for oil from WWII. So, it was not exactly a wise move on Cardenas's part.

You ain't got that kind of clout, and you don't have the money.

And the sad thing is, what if US presidents had told US oil companies to **** and pay the just taxes owed?

Where would Mexico be today? Right behind you in terms of development and eagerly wanting to trade equally with you and you'd probably still have some manufacturing jobs because the Mexicans would be earning enough wages to buy the garbage you produce.

Yeah, just like NAFTA, right? Wait, I hear a giant sucking sound...

Your foreign policy over the last 100 years has really put you in the gutter and you might never climb out, I hope you all realize that.

I'd say the last 40 years have been the worst. Up until 1970 or so we had an acceptable trade balance. At that point, we should have begun instituting a tariff and/or other protectionist measures.

Why do you think BRIC is doing the exact opposite of what you did?

So let me get this straight. BRIC is brilliant for investing in Sub-Sahara Africa because the leaders there will never force expropriation, but America was foolish for investing in Sub-Sahara because we should have known that Cardenas would force expropriation? Am I understanding you correctly? Because surely you're not suggesting that a major country can simply think that it can exploit a Third World country without some repercussion.

[Retroit]

Dang, that was long!

I need a better hobby!

[user_id]

Originally Posted by Retroit

I disagree 180 degrees here also. Cheap labor, no regulation, and stealing OUR innovations is what has made Chinese a leading exporter.

No and it is precisely this sort of thinking that has lead to a decline in the US industry base. Americans believed they were "the best" and at one point they had one of the best industrial bases, but this attitude lead to complacency and as a result Americans failed to innovate after WW2...but the Asians did.

Note, its not just China that is a big export nation its Taiwan, Korea and Japan. The latter three all deal with very high tech exports and don't have cheap labor, low regulations, etc. Furthermore, there are other countries with cheaper labor, lower regulations, etc. Why isn't the manufacturing there? Clearly....that isn't the fundamental issue...

So long as Americans believe that manufacturing has left the US just because "cheap labor", because other countries are stealing our ideas, etc the longer it will take the US to strengthen its industrial base...

[user_id]

Originally Posted by Mircea

However, nothing in Economics says a country has to have manufacturing. Economics simply says you do whatever you do best.

And there is nothing in Economics that says the US cannot revert to a 3rd world nation.

Manufacturing and a strong industrial base is intimately tied to innovation, the US cannot remain a leader in technology while slowly destroying its industrial base.

[modeerf]

Originally Posted by user_id

Dude, c'mon, obviously I'm not just referring to plastic things. The point is that most manufacturing done in China is not particularly sophisticated as a result if it was brought back to the US it would all be automated.

This looks pretty sophisticated.
Foxconn to replace workers with 1 million robots in 3 years

Because Germany has manipulated the Euro-zone to their advantage? German success has come as the result of Spanish, Italian, etc suffering.

Americans revolutionized manufacturing, but that was over 100 years ago. While Americans stuck to their 100+ year old methods the Asians innovated and now are leaders in manufacturing.

That may be when it started, but up until the late 70's when Nixon / Kissinger sold us out to China exploiters. We were the kick ass producer of the world.

If the US was a larger manufacturing sector the answer is pretty simple, start innovating. But is this going to happen? Nope. Young entrepreneurs are focused on technology, creating stupid websites, etc.

If anything we need to produce what we consume, just based on security and self reliance. I don't need Salmon from China... The PNW / Alaska have really good runs.
World events (natural and man made), can take us back 100 yrs. real quick.
I'd like to have at least the ability to make our own processing equipment for food and fuel.

[bobtn]

Good posts, user id. While unions onerous labor demands increased job exporting and robotics, we suffer a second issue in America vs the world. Corp Execs here are incentivized to look only at the quarter in progress, so they take no risks that might alter this quarter..ever. In turn, they incentivize managers below the same way. Its a form of disasterous synergy.

That is why we seldom see American corps invent anything anymore, they simply build a new generation of something, or tweak it, with even less differentiation and investment. We're on a national path to disaster..think the 99ers have it hard..compared to them, your kids will be several rungs lower on the economic ladder.

[2018]

Originally Posted by modeerf

This looks pretty sophisticated.
Foxconn to replace workers with 1 million robots in 3 years

The robots will be used to do simple and routine work such as spraying, welding and assembling which are now mainly conducted by workers, said Gou at a workers' dance party Friday night.

[Retroit]

Originally Posted by user_id

No and it is precisely this sort of thinking that has lead to a decline in the US industry base. Americans believed they were "the best" and at one point they had one of the best industrial bases, but this attitude lead to complacency and as a result Americans failed to innovate after WW2...but the Asians did.

You honestly believe that all the products we import from Asia were invented there independently of the US and they didn't steal/borrow any of the engineering that was developed here over the course of history? If so, then I believe we invented paper, gunpowder, and noodles!

Note, its not just China that is a big export nation its Taiwan, Korea and Japan. The latter three all deal with very high tech exports and don't have cheap labor, low regulations, etc.

And where do you think they import a lot of the components that are placed in the products they ship here?

Furthermore, there are other countries with cheaper labor, lower regulations, etc. Why isn't the manufacturing there? Clearly....that isn't the fundamental issue...

Because the governments of most countries that have low wages and regulations are not serious about developing their industries. If they restricted their imports and fostered the development of industry, they could have similar success.

So long as Americans believe that manufacturing has left the US just because "cheap labor", because other countries are stealing our ideas, etc the longer it will take the US to strengthen its industrial base...

Well then, why don't you enlighten us on why foreign manufacturing is replacing domestic?

[user_id]

Originally Posted by modeerf

This looks pretty sophisticated.

Foxconn is a Taiwanese company and the use of robots really doesn't, in itself, make manufacturing sophisticated.

But China is moving up the manufacturing food chain.

Originally Posted by modeerf

That may be when it started, but up until the late 70's when Nixon / Kissinger sold us out to China exploiters. We were the kick ass producer of the world.

No we weren't, the Japanese, Koreans and Taiwanese were all developing production systems before the late 70's that would were out-pacing American production systems. At first just unsophisticated manufacturing went to these countries and the Americans stuck to their superiority complex, but they developed powerful production systems and a strong industrial base that eventually out-paced American industry.

I really think Americans superiority complex after WW2 and even today plays a big role in the decline of the American industrial base, when you think you are "the best" there is no reason to look and learn from others.

[user_id]

Originally Posted by Retroit

You honestly believe that all the products we import from Asia were invented there independently of the US and they didn't steal/borrow any of the engineering that was developed here over the course of history?

No, when did I ever suggest that Asians never "borrowed" (or whatever you want to call it) know-how from the US?

Asians learned all they could from the US, Europe, etc and that is partly why their industrial base eventually out-paced the US. At first Asian products were just cheap junk, essentially cheap knock-offs of American products. But they innovated, they improved their production systems and were able to achieve a level of efficiency and quality that American manufactures couldn't match.

Originally Posted by Retroit

And where do you think they import a lot of the components that are placed in the products they ship here?

They don't import a lot of the components, most of the components in high-tech devices are manufactured in Asia. Almost every component of a computer, smart-phone, iPod, etc is manufactured in Asia.

American companies are still very competitive in micro-processors, but even here the edge is slowly eroding.

Originally Posted by Retroit

Well then, why don't you enlighten us on why foreign manufacturing is replacing domestic?

Umm......I've already said it many times, Asian manufactures over the last few decades have made numerous sophisticated process innovations that have allowed it to out-pace American manufacturers.