patrick.net � America Has Been Checkmated By China

patrick.net � America Has Been Checkmated By China

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When Manufacturing Jobs Move To China
Fri 5 Nov 2010, 13:06 0 Comment(s) Email article


Below is a book review about how manufacturing jobs go to China. It is inevitable that manufacturing jobs will go to the place where labor is cheap and there is a friendly environment for business. The American state of Pennsylvania lost its manufacturing base to China and other countries. They launched a very innovative program to retain laid off workers for jobs in the biotechnology and medical field. It has been a big success. More states and countries need to follow their example!



America Has Been Checkmated By China
By Patrick Thursday, 4 Nov 2010 8:49 pm | 983 views | 14 comments | email this | subscribe to this post

I just finished reading the book Poorly Made In China and have to say it was excellent.

Book cover

The author explains from personal experience how the the factory system in China offers very low prices to us not just because of the low cost of labor, but mostly because China wins in the long run by getting American and European product designs and manufacturing ability moved permanently to China.

So the Chinese have manufactured at or below their own costs for us, but in return, we have given away our competitive advantages, and they know this very well. It was their plan to begin with. Now that it’s too late, we see that nearly all our manufacturing is done over there, and we are dependent on them. They will raise prices, and we will have no choice but to pay. Our working class is doubly screwed: first, they lost their jobs, and soon they will have to pay more for basic manufactured goods as well.

The logic for US manufacturers used to seem clear: China would produce at lower cost, so they must move manufacturing to China or lose business. What they didn’t see was that once they had nothing more to offer in the way of knowledge and factory transfer to China, the game would be over and they and America would be the losers. It would actually be treasonous if it weren’t just sheer greed and stupidity on their part.

This has big implications for the housing market as well. Loss of jobs and inflation in consumer goods prices will mean contined deflation in US housing prices. There’s less income, and more of that will be spent on imports, leaving less for housing.
14 comments on "America Has Been Checkmated By China"
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ns2612


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Thursday, 4 Nov 2010 at 9:15 pm | top | quote | email this | flag

You are correct, but it’s not so much that China stole anything - after all anybody who wants to manufacture something just needs drive and a little capital. Oh, that’s the problem. We’re a bunch of lazy consumers, who think technology is an ipad. Perhaps technology (the real stuff that increases health and welfare) consists of things like water supplies, reliable clean energy, cities with reasonable transportation. Ah.. but we went for the car. Our entire civilization is built around cars. That’s why we have a 1 Trillion $ military + oil costs. No wonder we’re getting poorer. The stupider and lazier thing is just a bonus.


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jing_vt


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Thursday, 4 Nov 2010 at 9:28 pm | top | quote | email this | flag

Americans fall because they are too rich and Chinese are too poor. The only way Americans can be saved are, Remember the Poor, and give more free hands than charge higher labor fees.

The water at high runs down into the lower place. It is natural. Dont blame the lower place. Instead, be happy if the wealth from the riches flow down to the poor. Love others as yourselves. Then, you shall be blessed.

Jing


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Tenouncetrout


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Thursday, 4 Nov 2010 at 10:00 pm | top | quote | email this | flag

ns2612 says

We’re a bunch of lazy consumers, who think technology is an ipad. Perhaps technology (the real stuff that increases health and welfare) consists of things like water supplies, reliable clean energy, cities with reasonable transportation. Ah..

AH!!! You said it, we’re a bunch of lazy consumers, no we’re a bunch of Created Consumers.
I was there when the Jobs were going away. I don’t remember people waking up one morning and telling their boss to ship the jobs off over seas.
If you want to blame anything blame The corruption and greed in labor unions and employer based “Benefits” (Gawd I hate that word, just pay me what I ask for that’s the best Benefit.)
Now unions were a necessity in this country at a time, but some where between Hoffa disappearing, and Baseball canceled for a Season. Unions became a bunch of selfish money grubbing mongers, driving costs up along side and enabling CEO’s to benefit more by taking bigger salaries. While quality and quantity suffered.

The American craftsman is wearing a Name tag and has Biff, 10 years his junior supervisor riding his ass about the bathrooms being out of toilet paper. Oil is not the problem, having clean bathrooms and having the lowest prices in town, are more important than a Box of tools and Good man to use them.

You just have a Hard on for black gooey stuff.


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Nomograph


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Thursday, 4 Nov 2010 at 10:05 pm | top | quote | email this | flag

jing_vt says

The water at high runs down into the lower place. It is natural. Dont blame the lower place. Instead, be happy if the wealth from the riches flow down to the poor. Love others as yourselves. Then, you shall be blessed.

Words of wisdom.

Thanks, Jing.


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Tenouncetrout


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Thursday, 4 Nov 2010 at 10:11 pm | top | quote | email this | flag

Yeah Jing that was deep.


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don


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Calistoga, CA
Thursday, 4 Nov 2010 at 10:19 pm | top | quote | email this | flag

Kruschev, in front of the UN, was purported to have angrily shouted a threat to the USA as he beat the podium with his shoe, “We will bury you!”
Perhaps Hu Jintao of China doesn’t need to shout it. He and his countrymen are doing it.


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Nomograph


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Thursday, 4 Nov 2010 at 10:21 pm | top | quote | email this | flag

Patrick says

Now that it’s too late, we see that nearly all our manufacturing is done over there, and we are dependent on them.

Except that we’re not dependent on them. You seem to forget that the US is the largest manufacturing nation in the world. In an absolute sense we still outmanufacture China. In a per capita sense, we blow China out of the water. We could have Nike factories up and running in all 50 states almost immediately if we needed to.

The cost of Chinese manufacturing is increasing rapidly, and will continue to increase as their standard of living rises, wages increase, and fuel for shipping becomes more expensive. As in all industrializations, there will eventually be a labor movement and that will be the end of that.

Another issue is that innovation and intellectual property protection are not valued in Chinese culture. Chinese manufacturers prefer to imitate and produce low margin products with no intellectual property protection, rather than run the risk of failure that is inherent in innovation. Unless this changes, they will always be manufacturing low margin, public domain products while the high margin, novel goods will be made mostly in the West.

As Jing said, water flows downhill. What he didn’t say is that ultimately water always finds it’s level.


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Nomograph


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Thursday, 4 Nov 2010 at 10:22 pm | top | quote | email this | flag

Tenouncetrout says

Yeah Jing that was deep.

His English is better than yours, and you were born here. You should be embarrassed instead of insulting.


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native94027


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Thursday, 4 Nov 2010 at 11:46 pm | top | quote | email this | flag

jing_vt says

The water at high runs down into the lower place. It is natural. Dont blame the lower place. Instead, be happy if the wealth from the riches flow down to the poor. Love others as yourselves. Then, you shall be blessed.
Jing

Sod off. Don’t you have some Tibetan monks to execute or something?

Speaking of flowing water, I have been to China and seen your a couple of your more …um …colorful rivers. It didn’t look like it was “wealth” flowing down to the poor. Take a look here


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Tenouncetrout


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Thursday, 4 Nov 2010 at 11:49 pm | top | quote | email this | flag

Nomograph says

Tenouncetrout says

Yeah Jing that was deep.

His English is better than yours, and you were born here. You should be embarrassed instead of insulting.

What are you ragging on about now, Pudding pants?
Who insulted who, what did you miss AGAIN?


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Plays2win


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San Ramon, CA
Friday, 5 Nov 2010 at 12:03 am | top | quote | email this | flag

I think it’s time to re-introduce opium back into their general population just as the Portuguese and British did some years ago.


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PPete


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Friday, 5 Nov 2010 at 12:22 am | top | quote | email this | flag

Suddenly everything is going to be expensive to import from China. Just like OPEC oil was in the 1970’s.

Will we suddenly have a manufactured products shortage? Who knows…

But prices will go up much faster than wages. At which point we will learn how poor the American experience will be for several generations.

Maybe someone will buy my other ear so I can get more paint.


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carrieon


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Friday, 5 Nov 2010 at 2:45 am | top | quote | email this | flag

America became hopeless by dumping their tariffs on imports. China became rich by doing exactly the opposite.



Patrick thank you so much for sharing this excellent book.On one hand we have globalization where people will move to the cheapest place to manufacture to stay competitive. On the other hand China also steals trade secrets. We have to move to a post industrial economy here. Few people know of the vision of the state of Pennsylvania. When their manufacturing base collapsed they started a massive program to retrain people in bio tech and medical jobs. It worked! We need more of this!


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