Tariffs on electrical goods

[Cosmik]

Mostly agree with this, although I don't know if you can really call it globalisation when capital moves freely while labour does not (i.e. as long as borders are open to the outsourcing of production but closed to the movement of people).

That's very interesting. What is the significance of 'movement of people' rather than 'movement of services', if you see what I mean? If a US company remotely employs people in another country to design/program/manufacture their electronic products, they are blurring the boundaries between trading goods (a simple, possibly old-fashioned idea always thought of as a good thing..?) and actually moving people around the world. I currently don't see the significance of movement of people being fundamentally a 'Good Thing' as opposed to movement of people's labour - in this day and age.

Literal movement of people in trains, boats and planes (and you could easily put a positive or negative spin on that idea through a few choice metaphors) seems like a throwback to a time when remote working was impossible.

 

[andreasmaaan]

That's very interesting. What is the significance of 'movement of people' rather than 'movement of services', if you see what I mean? If a US company remotely employs people in another country to design/program/manufacture their electronic products, they are blurring the boundaries between trading goods (a simple, possibly old-fashioned idea always thought of as a good thing..?) and actually moving people around the world. I currently don't see the significance of movement of people being fundamentally a 'Good Thing' as opposed to movement of people's labour - in this day and age.

Literal movement of people in trains, boats and planes (and you could easily put a positive or negative spin on that idea through a few choice metaphors) seems like a throwback to a time when remote working was impossible.

Well we were talking about production, not services that can be provided remotely at no extra cost to either the employer or labourer. And production labour is entirely something that depends on the literal movement of people (or the movement of production to places where people are already there to provide labour).

The basic reason movement of people is significant in the context of discussions of globalisation is that when production labour is unable to move while capital and goods are, we have location-dependent imbalances in supply and demand.

 

[SIY]

Ricardo's law of comparative advantage keeps coming to mind...

 

[Cosmik]

...we have location-dependent imbalances in supply and demand.

Supply and demand of what..?

 

[andreasmaaan]

Supply and demand of what..?

Everything, but specifically labour and goods.

 

[Cosmik]

Everything, but specifically labour and goods.

But doesn't having a country's most enterprising young people leaving and heading to the boom areas result in the biggest location-dependent imbalance of supply and demand of all i.e. the total economic demise of their previous home?

Edit: Indeed, it is surely the exact opposite of what you said earlier. Free movement of people is guaranteed to produce the biggest location-dependent disparities of all. The 'four freedoms' (oh, how lovely that sounds) are designed to produce the biggest disparities between rich and poor possible. Maybe the EU will attempt to paper over this with a few grants for heritage museums in the affected countries, though..?

 

[andreasmaaan]

But doesn't having a country's most enterprising young people leaving and heading to the boom areas result in the biggest location-dependent imbalance of supply and demand of all i.e. the total economic demise of their previous home?

Hmm yeh, I should have been more careful with my use of the work "imbalance". Imbalances in supply and demand create trade and the movement of goods and labour in classical capitalist theory is efficient, i.e. this is good and increases productivity.

Where there is e.g. a lack of supply of labour in a certain location due to non-market forces (e.g. immigration laws), this is inefficient and reduces productivity.

BTW I'm no advocate for rapacious capitalism lol - I just wanted to point out that if you are a rapacious capitalist (not you specifically @Cosmik), you should be against immigration protectionism too.

 

[Cosmik]

Hmm yeh, I should have been more careful with my use of the work "imbalance". Imbalances in supply and demand create trade and the movement of goods and labour in classical capitalist theory is efficient, i.e. this is good and increases productivity.

Where there is e.g. a lack of supply of labour in a certain location due to non-market forces (e.g. immigration laws), this is inefficient and reduces productivity.

BTW I'm no advocate for rapacious capitalism lol - I just wanted to point out that if you are a rapacious capitalist (not you specifically @Cosmik), you should be against immigration protectionism too.

I am finding this conversation very educational! I think we have reached the point where we are seeing the EU for what it is. The four freedoms are not about charity. Being for or against the EU, or any of the four freedoms is not an indication of your virtue or lack thereof. How I wish this was understood by most of my compatriots - we could all get back to rubbing along together without trying to label everyone as a saint or a villain.

 

[andreasmaaan]

I am finding this conversation very educational! I think we have reached the point where we are seeing the EU for what it is. The four freedoms are not about charity. Being for or against the EU, or any of the four freedoms is not an indication of your virtue or lack thereof. How I wish this was understood by most of my compatriots - we could all get back to rubbing along together without trying to label everyone as a saint or a villain.

Exactly! The EU's origins as a trade organisation (specifically, the Coal and Steel Community) are telling.

I happen to like many of the side effects (open borders among them), but I'd never presume that in essence the EU is anything other than an elaborate and far-reaching (in terms of the heavy demands it makes on its signatories) free trade agreement, dressed up as an exercise in idealism.

 

[svart-hvitt]

Hmm yeh, I should have been more careful with my use of the work "imbalance". Imbalances in supply and demand create trade and the movement of goods and labour in classical capitalist theory is efficient, i.e. this is good and increases productivity.

Where there is e.g. a lack of supply of labour in a certain location due to non-market forces (e.g. immigration laws), this is inefficient and reduces productivity.

BTW I'm no advocate for rapacious capitalism lol - I just wanted to point out that if you are a rapacious capitalist (not you specifically @Cosmik), you should be against immigration protectionism too.

Why do you use the word «imbalance»? What is there to balance? Aluminium, gold, silver, stone, water or grain? If you can’t measure why use the word «balance»?

This is how the economist lures people into his tale. See?

 

[SIY]

I have a trade imbalance with the Mexican grocery around the corner.

 

[mi-fu]

Is outsourcing a Good Thing, then? Does the average American benefit from having Apple phones made in China? Does the average Chinese person benefit from this, too?

It depends on who you are are talking to. If it is not made-in-china, an iPhone probably will cost 30% or even 50% more. Mobile technologies (and to a large extent, the mobile information breakthrough we are now enjoying) will become unaffordable to many more Americans. Same as TVs, computers, many electronics, and of course, our beloved JBL 305. All of the surprisingly affordable price of technology all rely on the cheap labor in China (or other Asian countries).

Needless to say, we are going to pay probably far more than a double for plastic slippers, toothbrushes, or any other low-end products that American wages are too expensive to manufacture.

On the other hand, is this type of outsourcing good for China? To a large extent, yes. Surely, there are tons of sweatshops in China and not to mention the ultra high suicidal rate of Foxconn workers in China who take part in assembling iPhones, Xbox, and many others. But don't forget, no matter how miserable those working conditions (from our Western perspective) are, many Chinese workers still prefer working in those sweatshop factories than planting potatoes in villages. Why? Because it still makes more money. And that improves their lives.

 

[amirm]

Is outsourcing a Good Thing, then? Does the average American benefit from having Apple phones made in China? Does the average Chinese person benefit from this, too?

Global trade is good. It is win-win. China gets to put to use their low cost labor. And we get to higher income smart people to design gear that can invent other things like AI, etc. And of course enough profits to make Apple a trillion dollar company with more profits than they possibly know what to do with!

 

[svart-hvitt]

I have a trade imbalance with the Mexican grocery around the corner.

Your groceries leave a trail, money and goods are exchanged, which is nice for accounting and measuring a «balance».

My point was: How do you define the supply of labour and how do you define a balance of labour?

According to (some) economists, there is no such thing as unemployment; there’s just a certain amount of people prefering leisure to labour. See?

That’s why it’s dangerous to use economists’ language when talking economics.

 

[svart-hvitt]

Global trade is good. It is win-win. China gets to put to use their low cost labor. And we get to higher income smart people to design gear that can invent other things like AI, etc. And of course enough profits to make Apple a trillion dollar company with more profits than they possibly know what to do with!

@amirm , you are quoting economics 101 here. That may look fine. But your logic is simplistic and can be easily refuted. The «win-win» notion of yours is unintelligent. Win-win for whom? Even economists say that trade has its losers; their point is that the aggregate (global) welfare increases, so profits can be redistributed to make everyone better (or equal) off. In theory. Empirical data indicate that a few private hands in the West have profited, many more Westerners have lost and a very high number of people in emerging economies have profited on trade. So there is an aggregate (global) surplus through trade but the surplus hasn’t been divided in the way that many, maybe most, people in the West think is fair. They didn’t elect politicians to make a person unknown to them on the other side of the earth better off to offset their own redundancy in the «labour pool».

 

[Rod]

It depends on who you are are talking to. If it is not made-in-china, an iPhone probably will cost 30% or even 50% more. Mobile technologies (and to a large extent, the mobile information breakthrough we are now enjoying) will become unaffordable to many more Americans. Same as TVs, computers, many electronics, and of course, our beloved JBL 305. All of the surprisingly affordable price of technology all rely on the cheap labor in China (or other Asian countries).

Needless to say, we are going to pay probably far more than a double for plastic slippers, toothbrushes, or any other low-end products that American wages are too expensive to manufacture.

On the other hand, is this type of outsourcing good for China? To a large extent, yes. Surely, there are tons of sweatshops in China and not to mention the ultra high suicidal rate of Foxconn workers in China who take part in assembling iPhones, Xbox, and many others. But don't forget, no matter how miserable those working conditions (from our Western perspective) are, many Chinese workers still prefer working in those sweatshop factories than planting potatoes in villages. Why? Because it still makes more money. And that improves their lives.

"If it is not made-in-china, an iPhone probably will cost 30% or even 50% more"
Wouldn't that depend on how much people are willing to pay? Flagship phones are now approaching or exceeding a thousand dollars even when there made in Asia. That has exceeded my price point already as I refuse to pay that amount for a phone. Would profits be impacted instead? Doesn't seem to matter if made in China or elsewhere, until people stop spending so much on a brand the prices still go up and so do profits.

 

[RayDunzl]

Empirical data indicate that a few private hands in the West have profited

... and maybe a few Eastern hands, too.

 

[RayDunzl]

Flagship phones are now approaching or exceeding a thousand dollars

I have a Galaxy S5 and a Tab A 10.1"

From FreedomPop.

Less than $300 for the pair, and (minimal) free service as well - mobile network 200 minutes, 500 meg data (each). Since most of my use is via WiFi, no problem.

Maybe not cutting edge, but neither am I.

 

[svart-hvitt]

... and maybe a few Eastern hands, too.

Oh yeah. I will put them on the back of my envelope too

 

[mi-fu]

"If it is not made-in-china, an iPhone probably will cost 30% or even 50% more"
Wouldn't that depend on how much people are willing to pay? Flagship phones are now approaching or exceeding a thousand dollars even when there made in Asia. That has exceeded my price point already as I refuse to pay that amount for a phone. Would profits be impacted instead? Doesn't seem to matter if made in China or elsewhere, until people stop spending so much on a brand the prices still go up and so do profits.

Very true. If we take iPhone as our example, clearly there is a huge premium. That also explains the skyrocketing profit Apple is making every quarter in the past ten years. And just like Amir has mentioned, these billions of dollars of profit then allow Apple to attract more talents, make more R&D, and develop more advanced technologies, such as A.I. and auto-pilot etc. These eventually benefit the US as the global science / technology leader.

But the benefits of global manufacturing (as in the example of made-in-china products) do not go in a two-way street only between the US and China. It also has a global effect.

China is now manufacturing probably 95% (?) mobile phones in the world. Apart from well-known expensive brands like Apple or Samsung or the now emerging Chinese Huawei, some other unknown brands can be very, very cheap. The cost of a non-touch screen phone (with Whatsapp enabled) can be as low as 4 USD. Low-cost technologies like these are very important in the lives of developing countries, which lack landline infrastructures, and even in some cases, stable power supply. I can hardly imagine any Western developed country can make a 4 USD cellphone. But cheap technologies improve people's lives. Global manufacturing thus "democratizes" technology, and in a good way.

This, I think, is another example to demonstrate some positive aspects of global manufacturing.