[Rancid]

Doesn't it imply Trump's protectionist tariffs and punitive international sanctions -- ?

Not only will there be the lump-sum expense of *relocation*, but I doubt the *margins* would be worth it these days -- how competitive, exactly, do you think U.S. labor *is* on the international labor market? Once repatriated how would such companies be internationally *competitive*, from U.S. soil?

ugh, I hate writing massive posts, but here it goes....

I think there are two (let's call them) threads that are being confounded in this statement. The first is mostly political/geopolitical maneuvering, the second has more to do with typical economics principals. I'll start with the second.

With respect to how competitive U.S. labor is relative to international labor? Depends on what type of manufacturing you are talking about. When it comes to higher margin, higher skilled, and higher tech manufacturing; U.S. labor is very competitive. This would be areas like (highest tech) chips, airplanes, cars, trucks, ships, food (Us has some of the highest high crop yields per acre in the world and is a huge food exporter). These are far more competitive in the US than many other places. When it comes to the low end manufacturing, say toys, or textiles, the bigger hurdle to reshoring that is actually capital expenses, not operating expenses (which includes cost of labor). Let's take China as the easy example. Their biggest advantage right now in say toy manufacturing (as an example), is the fact that they already have a large number of factories and export shipping capacity already built out. That is to say, their biggest capital expenses have already been made. The cost of making toys is really all in the operating costs (like wages, machine upkeep, energy costs, etc.).

The cost to operate a factory in the US isn't really that much more expensive than in say China. It's basically a myth that China is automatically always cheaper. The reason? Automation & energy. Most people understand automation, but many people don't realize energy in the US is dirt cheap (which helps narrow the operating expense gap with say China). China is a net importer of energy, the US is a net exporter and can be completely self-sufficient with respect to energy (issue is, Americans like cheap oil, so they'll important it, but in the worst case, the US can supply all it's own energy. China cannot.). There's a geopolitical component to energy too, but I'll address that further down. Thus, what really makes companies reluctant to reshore to the US (or really, to reshore/offshore to anywhere that is not China) is all the capital expenses that are involved. It's the building of factories and supporting infrastructure that's the problem. Not the costs (which includes labor costs) to sustain operations. That said, more and more companies are considering (and many have started) diversifying away from China or moving out of China completely (IIRC, Mattel the toy company has plans to get out of China 100% in like the next 10 years). The impetus for this shift that we are starting to see is driven by geopolitical risks being realized. Things like COVID showing everyone how fragile globalized supply chains are, things like zero COVID disrupting supply chains dependent on China, things like China's belligerence towards its neighbors and Taiwan, things like China's crack down on tech. All of this is making companies more and more willing to put in the capital expenses in other non-china regions of the world. In short, China isn't cheap, because there is a lot of liability when you have to do business in China.

Ok, so I've mentioned geopolitics, and I haven't mentioned Trump yet. So, how does Trump's "protectionism" come into the picture (I put that in quotes on purpose, keep reading)? Well, first, let's be clear and understand that this isn't just Trump. Biden/Democrats are also supporting this "protectionism". After all, Biden didn't lift all the tariffs, and he just recently put in more restrictions on exports of high tech to China (something Republicans also support). This Trump policy is one of the few policies Democrats are continuing from the Trump era (something people like @BlutoSays probably don't realize because they're too busy with their culture war shit). Once we understand that, then we can see these tariffs as geopolitical maneuvering and not really about some protectionist gambit to bring jobs back to the US. Since when have American corporations and the politicians they own given a fuck about the American worker? Anyway, the whole bringing jobs back stuff was simply domestic political gaming by Trump to fool MAGA morons for votes. Although the tarrifs at face value are very protectionist indeed, that was not the point. The point of these tariffs and other restrictions isn't to bring jobs back to the US. It is simply to hasten the economic isolation of China. It is to hasten the decoupling of the US economy from China. It is to improve national security by hastening de-globalization. Why does the US want de-globalization? It is not to bring jobs back to America. It is because China is the most dependent nation on the current globalized system (remember when I said China is a massive importer of energy while the US can self-sustain?). On top of all that, China also wants to shit on and change that system which has existed since the end of WWII. A system that has benefited them most. I think this is the US saying "Fine China, you can have your playground, but you can't enjoy the benefits of the system if you want it all your way". Doing this way, avoids direct confrontation between US-China. Of course, there's the complication of Taiwan though, but I can't write you a thesis here. This shit is far more complex than simply "protectionism".

BTW, didn't the leftist in the 90s hate globalization? I remember anarchists going out to protest when NAFTA was first being signed. I knew many anarchists, since I was deep in the punk rock scene back then (still love, listen, and play punk and hardcore with my guitars).

All of the above is not an endorsement of what the US is doing. However, it makes a lot of sense why things are playing out the way they are.

I guess what I'm saying is, if you think this is all about "protectionism" then you are thinking too small.

Aren't you tacitly approving the protectionist tariffs that were put in place by Trump?

The reason why it's such a 'thing' is because tariffs lead to *trade* wars (like Trump's disastrous U.S.-China trade war), which lead to *world* wars.

As I stated above, this has little to do with the traditional idea of protectionism. It's about much more than that.

I'm more like on the fence about them and the reason why has got nothing to do with protectionism. I'm actually not sure if they are a good idea or not. I'm in the camp that this decoupling from China will happen with or without tariffs. In which case, what's the point of tariffs? On the other hand, I would like to see the US not do business with shithole nations. Not just China, but also Saudi Arabia for example. I would also like to see the US stop meddling in the affairs of other nations. If these tarrifs help accelerate that process, maybe it's not such a bad idea. However, I doubt the US will ever stop doing business with shitholes, I doubt they will ever stop meddling in the affairs of other nations, so then on the other-other hand, I shouldn't support them because it probably won't lead to what I really want to see. At the moment. I'm just happy the US isn't invading another country and annexing it (like Russia is doing).


Anyway, why would a trade war lead to a hot war? I guess the only scenario I can see where that happens is if China invades Taiwan, and if the US decides to directly defend the island. However, I feel like that would happen with or without a trade war. I don't see how a trade war would make China want to take Taiwan (and no, they can't just magically assume successful control over TSMC, I've talked about that in other threads). If China is going to invade, it's going to happen no matter what. Outside of that, I don't see how this would lead to a hot war with China. China cannot project power very far from its shores believe it or not. This is why Russia losing Ukraine would help prevent a war between US-China. Putin's folly should be giving pause to the CCP about Taiwan.

[ckaihatsu]

On top of all that, China also wants to shit on and change that system which has existed since the end of WWII. A system that has benefited them most. I think this is the US saying "Fine China, you can have your playground, but you can't enjoy the benefits of the system if you want it all your way". Doing this way, avoids direct confrontation between US-China. Of course, there's the complication of Taiwan though, but I can't write you a thesis here. This shit is far more complex than simply "protectionism".

The U.S. has had *all kinds* of *sanctions* on China, though, right, *plus* the tariffs and all the shit-talking, etc.

The European energy tantrum / sinkhole has brought Russia and China together. Less 'Chinus' (as I call it), more BRICS.

BTW, didn't the leftist in the 90s hate globalization? I remember anarchists going out to protest when NAFTA was first being signed. I knew many anarchists, since I was deep in the punk rock scene back then (still love, listen, and play punk and hardcore with my guitars).

Yeah, well, it *was* excellent at the time -- my days of protest activity, continuously, and even some travel.

It was 'anti-globalization' in the way that 'anti-war' means no-war-for-*you*-plutocrats -- against the WTO, IMF, WB.

9-11 stopped all that in its tracks, unfortunately.

I like *post-punk* / modern rock / new wave. Not a musician, but an avid listener.

All of the above is not an endorsement of what the US is doing. However, it makes a lot of sense why things are playing out the way they are.

Okay, got it. Yeah.

As I stated above, this has little to do with the traditional idea of protectionism. It's about much more than that.

I'm more like on the fence about them and the reason why has got nothing to do with protectionism. I'm actually not sure if they are a good idea or not. I'm in the camp that this decoupling from China will happen with or without tariffs. In which case, what's the point of tariffs?

Overall the hazard here *is* protectionism, objectively / empirically -- tariffs are a sign of economic *weakness*, as when a fledging country is starting-up and needs to keep its domestic markets for domestic manufacture (and not swamped by foreign investment for imperialist super-profits).

On the other hand, I would like to see the US not do business with shithole nations. Not just China, but also Saudi Arabia for example. I would also like to see the US stop meddling in the affairs of other nations. If these tarrifs help accelerate that process, maybe it's not such a bad idea. However, I doubt the US will ever stop doing business with shitholes, I doubt they will ever stop meddling in the affairs of other nations, so then on the other-other hand, I shouldn't support them because it probably won't lead to what I really want to see. At the moment. I'm just happy the US isn't invading another country and annexing it (like Russia is doing).

What about Myanmar?

Anyway, why would a trade war lead to a hot war? I guess the only scenario I can see where that happens is if China invades Taiwan, and if the US decides to directly defend the island. However, I feel like that would happen with or without a trade war. I don't see how a trade war would make China want to take Taiwan (and no, they can't just magically assume successful control over TSMC, I've talked about that in other threads). If China is going to invade, it's going to happen no matter what. Outside of that, I don't see how this would lead to a hot war with China.

Okay -- yeah, I was just speaking *procedurally*, since those are the (expected) *dynamics*, of trade war --> hot war.

Kind of *stunning* how global premium microchip production is now super-specialized and concentrated into 'just' TSMC.

China cannot project power very far from its shores believe it or not. This is why Russia losing Ukraine would help prevent a war between US-China. Putin's folly should be giving pause to the CCP about Taiwan.

Nice propaganda. It's really not bad. All the best.

[Unthinking Majority]

ugh, I hate writing massive posts, but here it goes....

I think there are two (let's call them) threads that are being confounded in this statement. The first is mostly political/geopolitical maneuvering, the second has more to do with typical economics principals. I'll start with the second.

With respect to how competitive U.S. labor is relative to international labor? Depends on what type of manufacturing you are talking about. When it comes to higher margin, higher skilled, and higher tech manufacturing; U.S. labor is very competitive. This would be areas like (highest tech) chips, airplanes, cars, trucks, ships, food (Us has some of the highest high crop yields per acre in the world and is a huge food exporter). These are far more competitive in the US than many other places. When it comes to the low end manufacturing, say toys, or textiles, the bigger hurdle to reshoring that is actually capital expenses, not operating expenses (which includes cost of labor). Let's take China as the easy example. Their biggest advantage right now in say toy manufacturing (as an example), is the fact that they already have a large number of factories and export shipping capacity already built out. That is to say, their biggest capital expenses have already been made. The cost of making toys is really all in the operating costs (like wages, machine upkeep, energy costs, etc.).

The cost to operate a factory in the US isn't really that much more expensive than in say China. It's basically a myth that China is automatically always cheaper. The reason? Automation & energy. Most people understand automation, but many people don't realize energy in the US is dirt cheap (which helps narrow the operating expense gap with say China). China is a net importer of energy, the US is a net exporter and can be completely self-sufficient with respect to energy (issue is, Americans like cheap oil, so they'll important it, but in the worst case, the US can supply all it's own energy. China cannot.). There's a geopolitical component to energy too, but I'll address that further down. Thus, what really makes companies reluctant to reshore to the US (or really, to reshore/offshore to anywhere that is not China) is all the capital expenses that are involved. It's the building of factories and supporting infrastructure that's the problem. Not the costs (which includes labor costs) to sustain operations. That said, more and more companies are considering (and many have started) diversifying away from China or moving out of China completely (IIRC, Mattel the toy company has plans to get out of China 100% in like the next 10 years). The impetus for this shift that we are starting to see is driven by geopolitical risks being realized. Things like COVID showing everyone how fragile globalized supply chains are, things like zero COVID disrupting supply chains dependent on China, things like China's belligerence towards its neighbors and Taiwan, things like China's crack down on tech. All of this is making companies more and more willing to put in the capital expenses in other non-china regions of the world. In short, China isn't cheap, because there is a lot of liability when you have to do business in China.

Ok, so I've mentioned geopolitics, and I haven't mentioned Trump yet. So, how does Trump's "protectionism" come into the picture (I put that in quotes on purpose, keep reading)? Well, first, let's be clear and understand that this isn't just Trump. Biden/Democrats are also supporting this "protectionism". After all, Biden didn't lift all the tariffs, and he just recently put in more restrictions on exports of high tech to China (something Republicans also support). This Trump policy is one of the few policies Democrats are continuing from the Trump era (something people like @BlutoSays probably don't realize because they're too busy with their culture war shit). Once we understand that, then we can see these tariffs as geopolitical maneuvering and not really about some protectionist gambit to bring jobs back to the US. Since when have American corporations and the politicians they own given a fuck about the American worker? Anyway, the whole bringing jobs back stuff was simply domestic political gaming by Trump to fool MAGA morons for votes. Although the tarrifs at face value are very protectionist indeed, that was not the point. The point of these tariffs and other restrictions isn't to bring jobs back to the US. It is simply to hasten the economic isolation of China. It is to hasten the decoupling of the US economy from China. It is to improve national security by hastening de-globalization. Why does the US want de-globalization? It is not to bring jobs back to America. It is because China is the most dependent nation on the current globalized system (remember when I said China is a massive importer of energy while the US can self-sustain?). On top of all that, China also wants to shit on and change that system which has existed since the end of WWII. A system that has benefited them most. I think this is the US saying "Fine China, you can have your playground, but you can't enjoy the benefits of the system if you want it all your way". Doing this way, avoids direct confrontation between US-China. Of course, there's the complication of Taiwan though, but I can't write you a thesis here. This shit is far more complex than simply "protectionism".

BTW, didn't the leftist in the 90s hate globalization? I remember anarchists going out to protest when NAFTA was first being signed. I knew many anarchists, since I was deep in the punk rock scene back then (still love, listen, and play punk and hardcore with my guitars).

All of the above is not an endorsement of what the US is doing. However, it makes a lot of sense why things are playing out the way they are.

I guess what I'm saying is, if you think this is all about "protectionism" then you are thinking too small.




As I stated above, this has little to do with the traditional idea of protectionism. It's about much more than that.

I'm more like on the fence about them and the reason why has got nothing to do with protectionism. I'm actually not sure if they are a good idea or not. I'm in the camp that this decoupling from China will happen with or without tariffs. In which case, what's the point of tariffs? On the other hand, I would like to see the US not do business with shithole nations. Not just China, but also Saudi Arabia for example. I would also like to see the US stop meddling in the affairs of other nations. If these tarrifs help accelerate that process, maybe it's not such a bad idea. However, I doubt the US will ever stop doing business with shitholes, I doubt they will ever stop meddling in the affairs of other nations, so then on the other-other hand, I shouldn't support them because it probably won't lead to what I really want to see. At the moment. I'm just happy the US isn't invading another country and annexing it (like Russia is doing).


Anyway, why would a trade war lead to a hot war? I guess the only scenario I can see where that happens is if China invades Taiwan, and if the US decides to directly defend the island. However, I feel like that would happen with or without a trade war. I don't see how a trade war would make China want to take Taiwan (and no, they can't just magically assume successful control over TSMC, I've talked about that in other threads). If China is going to invade, it's going to happen no matter what. Outside of that, I don't see how this would lead to a hot war with China. China cannot project power very far from its shores believe it or not. This is why Russia losing Ukraine would help prevent a war between US-China. Putin's folly should be giving pause to the CCP about Taiwan.

It just seems difficult to win wars since the advent of populist resistance tools like the AK-47. China is smarter than this. A simple cost-benefit analysis. Doesn't mean they don't ever invade Taiwan. US shouldn't take a bullet over Taiwan, it should sabre-rattle and bluff, support/arm Taiwan, and in the meantime remove critical resources like chip manufacturing.

We need to remove any IT manufacturing from China, due to espionage and security concerns. All IT products that can connect to a network from any Chinese-linked companies should be banned in every Western nation. This is already at Cold War level: https://nationalpost.com/news/politics/ ... h-the-west

Countries are in a race to AI supremacy. There's nothing more important in the entire world, besides maybe energy. Also, when AI automation takes hold there will be no labour costs in manufacturing. Everything can be made domestically again, if chosen. Cheap energy will be the key to run it all at that point. The US should start making the transition now. Build factories in the US with these longterm goals in mind, import and hire migrants if they need to in the meantime, cut the minimum wage if they have to. The US has sold out the last 30 years. Everyone knew the national security risks of enriching China, but a lot of profits were made in China. They soon won't be needed.

[late]

The cost of doing business in China has been going up. Because of COVID, reliability is down.
A lot of business would be reshoring in any case. In fact, it's not all coming back here.

But a lot of it is, and while protectionism plays a role, my impression is that China is simply not what it used to be, the low cost, highly reliable alternative.

We're in a transition, and the big stuff likely hasn't happened yet.