General > General Technical Chat
How can governments ensure all companies get equal access to China?
floobydust:
china is exposing (exploiting?) flaws in democracy and capitalism. I don't see any corrective mechanism to deal with the 'race to the bottom' driven by the 'race to the top' for profit.
OP expects the government to do something, but we all know this can never happen - you need zero qualifications to become a politician- no education or credentials so they are generally inept morons. There is no understanding of long term planning for economic prosperity for a nation, plus it's a revolving door with a new party coming in every few years changing the priorities. Government can't right the ship. In this sense, the CCP with their initiatives, are superior to the West.
The covid-19 crisis is showing how weak and fragile corporations have become in providing all their profits to shareholders. They have nothing in reserve and cry for bailouts.
The covid-19 crisis is showing how weak and fragile consumers have become with their high debt load, and Mc Jobs. They have no savings either to weather such a crisis.
I can't see a solution to stop the erosion of the West.
SilverSolder:
--- Quote from: nctnico on April 26, 2020, 06:06:11 pm ---
--- Quote from: floobydust on April 26, 2020, 06:02:50 pm ---I don't agree with your view, because MBA "profit" does not equal economic prosperity. On a macro-scale, manufacturing creates more jobs, more skilled workers,
than just warehouses selling imported shit. china does manufacturing, Walmart does reselling.
--- End quote ---
And what use is there for skilled workers in an automated factory? No matter how you look at it: most of the profit is made at the sales side. The place for skilled workers is at the sales side working in R&D; not on the factory floor.
--- End quote ---
You could argue that the split between manufacturer, distributor, and retailer is something the customer doesn't see - and it doesn't matter to him/her what the split is, what matters is the final price.
Often the distribution chains are very protective of their turf, working hard to prevent competition from springing up (e.g. forbidding "grey imports" in an attempt to keep prices as high as possible on products that they have the exclusive rights to sell). We don't really live in a free market economy, when you look under the covers.
SilverSolder:
--- Quote from: Simon on April 26, 2020, 04:37:45 pm ---Indeed, what do we do in the UK except run warehouses to shift shit and call centers to sell shit? we don't create wealth, we just move around the wealth created by others, my own employer buys in things we used to make ourselves but due to a rush to the bottom we cannot compete with china or even another EU country - you know one of these countries that was supposed to be of similar economic standards to us. The current Covid-19 situation is highlighting just how far down the sewer this country is with nothing of it's own to offer. I recently came across an innovate grant form. Offering £25'000-£50'000 to anyone that could propose and develop something to help with the current situation. Yes that is the state of affairs, we are mid pandemic and we are not just ramping up manufacturing and supply, we are offering people money to design things to make the things we should of had. While ventilators was ruled out and so were vaccines (£50k is nothing for those) PPE was on the list. Yea, the UK needs to think of a novel way to make PPE, otherwise a code for - for god sake can someone start making this stuff, we know that we don't normally do this in this country but for fuck sake please can someone just make this shit, we really need it now and we can't compete with the whole world.
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I have been surprised at the lack of interest from local entrepeneurs to start making masks in large quantities. I do see a lot of cottage industry going on, but nothing "serious". We are all running in circles waiting to get an order in to a Chinese supplier. It really is as if we have forgotten how to do basic things...
SilverSolder:
--- Quote from: coppice on April 26, 2020, 04:38:30 pm ---
--- Quote from: SilverSolder on April 26, 2020, 04:04:12 pm ---
It helps to see the issue more clearly if you think of the planet as a whole, rather than individual countries.
For example, inside the UK, nobody has ever said it was a problem that production of knives in Sheffield prevented the production of knives in Birmingham. It seemed logical enough to everyone that if they were really skilled at making knives in Sheffield then, by all means, have at it - meanwhile, we'll make bicycles in Birmingham.
This is the logic behind the economic principle of "comparative advantage". Sheffield sells knives to the Brummies, who sell bicycles back to Sheffield.
The same thing between different countries.
The real problem happens if - for example - a city goes into decay (Detroit), or - a whole country goes into decay. If not enough people are doing or making something worthwhile, something that someone else wants... that's when the trade balance starts to implode.
Interestingly, both sides are worse off than before one of the partners imploded. The Brummies now have to do without knives, or they have to do without bikes in Sheffield...
--- End quote ---
This is a rather poor comparison. Britain had no problem with knife (actually cutting tools in general) production being concentrated in Sheffield, because numerous companies in Sheffield mastered the technology and competed with each other. If Sheffield had only one monopoly supplier it would have been a big issue, as a lack of competition is very destructive for everyone but the monopolist. From outside Britain, a concentration of cutting tool technology in Sheffield didn't look good at all. To those outsiders the numerous companies in Sheffield looked much like one, because far too often they tended to face Britain Inc, rather than the individual companies. The various Sheffield companies could act in their collective interest, or the British government could coax/force them to act in the national interest. So, most advanced economies of the time worked hard to match the quality of products from Sheffield, and eventually some left Shefflield behind. With several sources of good cutting tools the remaining advanced economies had sufficiently diverse sources for tools not to worry too much.
The situation now with China is much like this, apart from my last point above. China has numerous companies in each segment, competing with each other. This is often on a province by province basis, so you don't always see the same level of localisation of a technology as with a place like Sheffield. The rest of the world sometimes see these individual Chinese companies competing for their business, but the Chinese national interest is also an important driver. What this wasn't doing until this spring was making other countries seriously consider competing with China. We will have to wait to see if the current rhetoric actually leads to real change, and more diverse sources.
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Yes, the point is exactly what you said - a region ends up as a "center of excellence" where the locals simply know their stuff so well (and have all the supply chains and other resources lined up) that it becomes a very tall order to compete with them in any meaningful way.
China has now ended up as a "center of excellence" for manufacturing many things - they are competing on a broad front. However, we still do stuff in the West that they don't touch. When was the last time you saw a Chinese movie?
Seems to me that engineering is something China is very good at, and our role in the West, as engineers, often ends up being a kind of interface between our own culture and China, to get products adapted to work the way we like them. That isn't a bad thing per se, of course.
What we really need is a set of niches that we can be very strong in ourselves, so we have something to trade...
SilverSolder:
--- Quote from: SiliconWizard on April 26, 2020, 06:27:08 pm ---
--- Quote from: SilverSolder on April 26, 2020, 02:04:25 pm ---
Most people have a fixed amount of disposable income each month.
That has to mean that if we raise prices by means of tariffs or other methods, people only have one option: buy less stuff each month.
It is not immediately clear to me how this benefits anybody.
--- End quote ---
This is of course a very simplified economic "model" here. Things are just a tiny bit more complex.
There's a fine line between regulating economy and making it worse for everyone. But without any form of regulation, you're almost certain the system ends up going bonkers.
Tariffs are one way of regulating worldwide economy, and disposing of them altogether is probably not a good idea.
One thing (among many others) you're overlooking in this little "analysis" is that you're assuming that tariffs (and other means) make no difference to the economy, except higher prices for the consumer. This of course can't be true - if not excessive, it can actually improve things, and people would have more money to spend. Prices alone mean nothing if you don't link them to the standard of living of a given population.
The mere idea that lower prices for goods would lead to people getting richer somehow is completely silly. Doesn't work this way - or it's only very temporary. If you keep dragging prices down, everyone ends up poorer in the end. When you don't actively regulate economy, it just ends up regulating itself. And if everything gets cheaper, wages will mechanically drop too, eventually.
If you think we can just keep getting cheap goods from China (for instance) forever without it impacting our wealth negatively, IMHO you're largely deluded. At best, it would just end up making money have less value, without changing anything much to the overall standard of living. At worst, it would end up making us all poorer because it's just not sustainable as such.
--- End quote ---
You haven't really disagreed with the central thesis, that tariffs reduce your spending power?
Of course I understand and agree with you that the purpose of the tariffs often is to nudge people into altering their behaviour, encouraging them to buy something else instead. But whatever the intention of a tariff is, it doesn't alter the fact that your disposable income doesn't go as far as it did without that tariff in place. No?
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