Americans need to get over their view of “Asia” as being about making shoes. When I was working in engineering in the early aughts, we mocked the Chinese as being able only to copy American technology. Today, China is competitive with or ahead of America in key technology areas, including nuclear power, AI, EVs, and batteries.
We need to anticipate a future where China is equal to America on a per capita basis, but four times bigger. Is that a world where “Designed by Apple in California, Made in China” still makes sense? What will be America’s competitive edge in that scenario?
What seems most likely to me in the future is that the US will find itself in the same position the UK is in now. Dominating finance and services won’t mean anything when both the IP and the physical products are being produced somewhere else.
> US will find itself in the same position the UK is in now
The thing is .. there's a point here, but it's not at all tied in with physical products. People are obsessed with one side of the ledger while refusing to see the other. Most of the stuff the UK is struggling with (transport, healthcare, energy) are "state capacity" issues. Things where the state is unavoidably involved and having better, more decisive leadership and not getting bogged down in consultations, would make a big difference.
The UK stepped on its own rake because it was obsessed with tiny, already vanished industries like fishing. Fishing is less profitable for the whole UK than Warhammer. It's not actually where we want to be. While real UK manufacture successes (cars, aircraft, satellites, generators, all sorts of high-tech stuff) get completely ignored. Or bogged down in extra export red tape thanks to Brexit.
To improve reality, we have to start from reality, not whatever vision of the past propaganda "news" channels are blathering about.
> Fishing is less profitable for the whole UK than Warhammer.
This sounded completely insane to me. I tried to look up numbers and found that Games Workshop brings in > 0.5 billion in revenue (!!), compared to all of UKs fisheries at 1 billion-ish (profit margins are, as you'd expect, pretty favorable for the plastic figurines that they don' even paint for you).
It's also worth considering that certain industries (fisheries and agriculture for instance) are subsidised. It's in our national interest to maintain production capacity, so profits are the least of our concerns. Both the UK and the EU's agricultural sectors are heavily subsidised mainly for this reason. It's cheaper to import than to produce locally, especially with our environmental standards and targets, but we need to keep producing. More so in the current geopolitical climate.
And whilst nobody wants to risk being starved to submission, it's also equally important to promote more profitable sectors, and tax accordingly, so that we can support our more strategic sectors. I wouldn't say we're doing a good job at that for what its worth.
+1, exactly. Focusing too much in the money makes you forget about the power. At a national leadership level, there isn't much power in having a local Warhammer industry, fishing is much more strategic.
In broad terms, this is related to the error the USA made. Manufacturing in China was a very profitable deal for the USA. A lot of companies view labour first and foremost as expense, wealth as as the goal, and power in wealth— so it's not surprising as a whole the industry opted to "contract out" labour across the globe.
A lot of power lays in labour though. Money doesn't produce, invent, move, feed, etc— money is only good if someone will take it at the amounts you have it to do that specific labour you need for you.
This is a bit harsh: the USA didn't devalue labor in general, just manufacturing. They hired software engineers from all over the world, along with a lot of higher value engineering and product development jobs. The error the USA made was in pushing the workforce up the value chain faster than everyone could handle, and a lot of Americans got left behind.
China is moving up the value chain also, they are being forced to by their demographics, and they are investing heavily in the change ATM (just like they started investing heavily in green energy 10 years ago) so I don't think they will make the same mistake as the Americans are making right now.
SE will one day realize they are as screwed as the average worker and unionize in some way. The endless money pits are not for every SE, even today the majority does not work for the creme-de-creme of well paying companies. While specialists and smooth talkers might profit from the current model, as always is the case, most won't.
Unions are a bad solution to the problem of companies not vaulting their employees. Unfortunately, without altruism by the corporations or governments action, they are also the only effective solution.
I'd prefer we look to other countries that have solved the problem in other ways, such as including representatives of the employees in the board.
Also, we need to remember that corporations exist at the mercy of the state, having received a special dispensation (corporate charter) to exist. Those companies that are not a net benefit to society have no right to exist and ought to be dissolved.
Then when they unionize, all the software jobs will head to cheaper locales. Unless of course you’re suggesting that the U.S. use tariffs on labor to prevent that?
It's extortion. Sometimes the extorting party can act on its threats, sometimes they can't.
In regards to the auto industry, I'm not sure what you mean by "look where auto manufacturing investment in the US is". Most auto manufacturing jobs are still in the rust belt [1]. Most EV Production investment is in the rust belt [2].
If the goal is to have high paying jobs in the US, then yes the government should put penalties in place to encourage that. US cost of living (housing, real estate taxes, health care costs, college costs, etc) is way higher than many countries, especially those where jobs are being offshored to, especially India, so salaries have to be higher here.
So, do we let US companies invest US consumer derived revenue in the Indian economy, just to boost profits a bit, or do we protect good jobs at home instead, and have a virtuous circle where US profits get plowed back into the US economy?
Sure but when it comes to tech US currently (supposedly) has very high labor costs and weak labor laws. All other countries with a tiny number of exceptions have low to very low labor costs and more regulation.
I only see a push for AI to produce more developers. How could AI, as we know it today, even replace developers?
More developers isn't at odds with the previous comment. That is how you can more easily push the jobs to low cost areas! When 张三 in rural China is given his first computer he can jump right into being a programmer too. Thus you can give him the job instead of a high priced developer in America.
I want to build a thing. Before AI it would take 1 year and a team of five developers. Now with ai, it's gonna take you 6 months and 3 developers. Those two developers didn't get jobs because of AI.
You haven't even put developers out of job as you must remember that I also wanted to build a thing, but couldn't because you had all the available developers tied up. Now there are two freed up who can come work for me. There is no end to all the software we want to write.
That is the hope! Only time will tell if this tech is deflationary or inflationary though. You also want to build a thing, but do you have funding for it? in this economy?
> Only time will tell if this tech is deflationary or inflationary though.
Or both. That would be my bet. The industry in general will see a decline. The massive growth in developer numbers will place enormous supply-side pressure. But certain experts who remain supply constrained along with increasing demand for those special services amid the explosion of new software being written will make a killing.
I work for a US org that also hires internationally, including Europeans like me. It does location-based pay, so we're much cheaper than especially my Silicon Valley colleagues, yet somehow, we keep hiring there more than we are in Europe.
A lot of our “value chain” is bullshit. If and when China becomes twice as big an economy as the US, much of our “edge” in marketing, finance, and services isn’t going to mean squat. E.g. how much “GDP” will evaporate overnight when American universities no longer have the cachet that comes along with being the best universities in America?
No it isn't, productivity has to increase, that's why we constantly get rid of jobs that do not provide much value. People want more money, and the only way we get there is with more productivity (doing jobs that make more money).
> If and when China becomes twice as big an economy as the US, much of our “edge” in marketing, finance, and services isn’t going to mean squat.
China gets to 2X our GDP by doing what we basically did in the 90s, so you are definitely right! They will have their own marketing, financing and services. The only difference is that they won't need to outsource manufacturing to China (well, they are outsourcing it a bit now, but also investing tons in automation).
> E.g. how much “GDP” will evaporate overnight when American universities no longer have the cachet that comes along with being the best universities in America?
I don't know what you are ranting about, but I get the feeling that if I did know what you were saying here I would probably agree with you.
> No it isn't, productivity has to increase, that's why we constantly get rid of jobs that do not provide much value.
Our measures of “value” are wrong.
> I don't know what you are ranting about
My point is that a lot of what we think of as “higher value” activities are actually derivative of and downstream of our industrial supremacy. As China takes up that mantle, the higher value activities will go along with it. E.g., how long do we expect the US to do the cutting edge nuclear power and weapons research when China is the one building all the nuclear power plants?
I mean look at the path dependency that led to Silicon Valley. Why did the software revolution happen in the same place we were building the microchips?
We basically agree then: as China takes up higher value activities, they won't need those activities from the US anymore. Also, France is the cutting edge designer of nuclear power plants these days.
> Why did the software revolution happen in the same place we were building the microchips?
Hardware people becoming software people was extremely common back then, and still is today (EEs can make more coding than using their degree directly). Now we have the opposite problem (we don't have enough hardware people because software sucked all the oxygen out of the room) and China has less of it (although increasingly...they are repeating history as well). If anything, this just backs up my point in how higher value activities de-emphasize manufacturing (even super high end manufacturing as in semiconductors).
You can replace perceived value with actual value if you don't agree with the value judgement calls that were made, which is entirely reasonable.
"we don't have enough hardware people because software sucked all the oxygen out of the room"
How much is this exacerbated by the lack of domestic hardware manufacturing in the US for the hardware people? Seems like software boom starting in the late 1990's happened as China came online for hardware outsourcing. Not suggesting a causal relationship there, just complementary effects.
The same thing happens in China. If you want a good job, software will pay way more than hardware. Heck, you even see people from Taiwan doing software jobs in China because they at more than the hardware jobs in Taiwan that they could get.
That’s the biggest thing I took away from the whole Boeing corporate disaster
You need to maintain at least a minimum amount of internal competency in almost all areas
If you completely give away a capability to other countries (in this case, fishing knowledge and labour) it is much harder to bring back than just coughing up the money
Those sectors you let die might not matter right now, but they might matter later. And you might have to scale up fast.
We buy local brands of shoes that are in inr 300-2000 range and that solves like 70% of the shoes market in India. From shoes to skippers to formal shoes to ladies heels and such.
Then you gave INr 3000-8000 that are considered really really expensive.
Convert that to usd and you will see how much premium is being charged.
Perhaps. But does a subsidized industry retain competence, or retain incompetence? After all, if you're making a profit no matter what, what incentive is there to do well?
Many of the EU farming and fishing subsidies are to NOT produce anything.
That often depends on the structure of the subsidy.
"We will pay you 5 euros per kg of fish sold in supermarkets to consumers" is different from "We will pay you 500,000 euros a year to keep fishing".
There is a very reasonable argument in fisheries starting at least a century ago (and locally long before that), that we're looking at a partially renewable good - that it would be easy to cause an unsustainable population collapse with unrestricted harvesting, and so you should try and intervene in the market to sustain fish populations and stabilize harvests. Subsidies intended to do this are distinct from subsidies intended to keep fishermen employed fishing.
See also How Tech Loses Out over at Companies, Countries and Continents https://berthub.eu/articles/posts/how-tech-loses-out/, where the author asks, "In any organization, in any company, in any group, any country and even any continent, what level of technical capability, do we need to retain?"
Once you've outsourced everything except the management work, the organization forgets how to do the thing they're supposed to be managing.
> If you completely give away a capability to other countries (in this case, fishing knowledge and labour) it is much harder to bring back than just coughing up the money
I feel like money is overwhelmingly how we denominate value, effort, and agency in our society. Almost every time somebody says "You can't just throw money at the problem", they are arguing that we shouldn't even try that, contrary to all established reasoning about how society works.
There are diminishing returns to funding, but the people who use this expression are typically at a tiny fraction of where we would expect to hit them.
If you want to have a fishing industry because fish are your idealized heritage, then choose to subsidize it heavily either to continue to exist, and/or to expand it into waters and economies of scale where you can still fish profitably. Like the Japanese and the Chinese do, respectively.
You need to pay money to people who will put in effort and agency. You can't just throw money at random people and expect something useful to happen. Sometimes, the people who will make things happen if you throw money to them don't exist. Sometimes, you have to turn people into those people (which also costs money).
Money is something you give people so they can eat and stay warm while they do the thing you want. They still have to be doing the thing you want. Sometimes there's enough reputation and legal threats on the line that you can assume the person will do the thing just based on the fact they're taking money from you and not freaking out. Companies do things this way a lot - individuals not as much.
The abstraction is not the territory, and the idea that money denominates value is an abstraction... often we define "value" as "that for which money is exchanged", making the abstraction tautological, at no gain. This is often done by people who want to think the thing they're spending a lot of money on is very valuable, or want to make you think the thing you're spending a lot of money on is very valuable.
Also, continuing overfishing is a terrible long-term strategy. Sure, we will have the boats, fishermen and infrastructure around fishing, but that's of no help if the fish are gone.
You missed the "you can fix it with money though, and our friends are just the people to give the money to" step that comes after each problem statement.
Agreed, and the same goes for most strategic sectors: energy, agriculture, animal husbandry, semiconductors, communications, space, the infrastructure to support all these, education, etc.
It's only ~100 years since seafood was the primary protein source of most coastal regions. The rampant mismanagement of fish/shellfish stocks that put an end to that has had knock-on effects across our entire food supply, that continue to influence agricultural policy to this day
Which amid everything, maybe it is time to focus again on our own programming languages and OSes like in the cold war and export regulation days, it will suck for a while, but apparently it is how everything is going.
I'm kinda surprised people aren't just buying a 3D printer. I print stuff all the time. I'm not into this kind of game but if I were I wouldn't pay that much for a piece of plastic I can print at home for 3 bucks.
My group is 3D printing most of our stuff for beer and pretzels games. But official tournaments have a rule where your miniatures have to be official products.
Note that a standard printer won't be anywhere near as nice quality as official models. You need a resin printer for that, which requires ventilation, some basic PPE, and additional labor to clean and cure the prints correctly. Not something you want to do with small children or pets in the house.
We resin print most of our models. We use FDM for blocky things like tanks and buildings, though. And some complex or very large models can't be printed (although we sometimes use alternatives for those).
Warhammer is an unusually expensive game, too. Other games like One Page Rules will sell you STLs to self-print, or charge very reasonable prices for pro-printed minis. You can buy a 2-player starter kit for OPR for about the same money as one WH40K unit.
Yes I know, resin printing is not great, I don't like it myself either. But FDM printing has gotten a lot better, especially with the bambulab material switcher where you can use water-dissolvable support material.
But cool to hear you're printing them. I can imagine they don't want to allow it at official tournament to protect the golden goose :)
Even with the 0.2mm nozzle? With that you can go pretty detailed because the maximum it can do with that is 0.1mm (how they pull that off with a 0.2mm nozzle I don't know, but all their nozzles do half the nozzle size in layer height).
Of course it's not the resolution of a good laser resin printer but resin is also much more expensive and it's a PITA to work with as discussed here.
Works fine for a tank, but something like Imperial Guardsman, Sisters of Battle or a Necron Tomb Blade all have features that are too small for FDM. Look up the "Celestine the Living Saint" model - the entire sculpt is small enough to fit inside your hand.
The extra cost of resin is negligible at this scale, it's mostly the safety requirements and extra labor that makes it harder.
Ahhh yes ok I didn't realise that. I'm not into this kind of game at all but a friend who was into it showed me his big flying tanks so I thought they were all that big.
Additionally: If you want to _mass_ mass produce these things, an injection molding setup is going to be your goal. You can sort of hack one together for plastic molding using a pneumatic/hydraulic cylinder and some mold plates that are either cast metal (lost-PLA, lost-wax), cured plaster, or CNC'd. The stuff that will give you five million units a day costs as much as a house, but there is a middle ground that is competitive with FDM on quality but significantly faster for more like $300-$3000.
The limitation with injection molding is typically the cost and complexity of having mold plates made when you don't have a demand for all that many units.
Resin is also slow (probably slower per mm^3 than FDM depending on nozzle size), but speed doesn't really matter IMO. But yeah with a high detail 0.2mm nozzle (0.1mm extrusions size) it does tend to get pretty slow. Layer lines are a factor of orientation a lot (you want to have steep angles, not very shallow ones).
I have several printers and I ususually have something "in the oven" while I WFH (my job is not related to 3D printing sadly)
One advantage of resin is that it takes a fixed amount of time per layer no matter the size of the layer. FDM time obviously increases linearly depending on the amount of material to deposit. So a resin printer will take the same amount of time to produce a single figure or as many figures will fit into its print area.
I just Googled for "resin printer at home". There are loads of Reddit discussions and YouTube videos about it. Yes, precautions and a careful setup are required, but "isn't safe" does not look true anymore.
A lot of those people on Reddit and YouTube are doing dangerous things like handling liquid resin without gloves or eye protection, or not ventilating/filtering resin fumes that cause cancer. There are horror stories of people who splashed a bit of resin in their eye and went blind.
It's no more dangerous than a craft like woodworking or spray painting when you follow very basic safety protocols, but the safety culture is near nonexistent in the community.
It's possible, you have to put in some effort. Active ventilation to outside, working with PPE on, washing in isopropyl alcohol, curing with UV light. At least that is what I would do in smaller apartments.
I live in northern county and can vent my 3d printers exhaust to the outside. Friend of mine from CPH did the same with his resin printer.
And if you actively went it outside carpet and close proximity should ok ok'ish health wise. It's just effort and noise that a lot of people don't like to put in.
> That rules out most apartments in countries like the USA and UK
Yes I've always wondered why they love carpets so much. When I lived in such an apartment it was terrible. Always dirty and dusty. I'd much rather have a plastic, wooden or tile floor (the latter not ideal due to breakage though).
But you can ventilate, especially if you blow the air outside through an active blower.
And finally, makerspaces are a great way to do these things anyway. A community that can support and help you when you run into issues, friendly people around to borrow equiment and materials from, and they're usually pretty cheap if you don't get a fixed desks.
Hmm it depends on your sensitivity also. I know some people at our makerspace who have serious allergies to the stuff, even a minor trace and their skin gets all red.
Not everyone is as careful with the stuff so that doesn't really help.
I don't find Lego especially expensive. And Lego is way more difficult to manufacture, has very exacting functional requirements and extremely good QA.
I bought a Warhammer set during Covid and was amazed at the detail, compared to the 1990s stuff I had as a kid.
I can't say what's more difficult to manufacture - millions of identical bricks that snap together, or a huge range of different, detailed designs which fit snugly together but don't lock.
Proportionate to the size of each company and the amount of toys they produce, I'll bet there's significantly more variety in Warhammer.
Just from a quick search, within a year Games Workshop offer about 3000 different model kits, each of which will contain ~1-4 unique moulded sprues. There seem to be at least 50 new kits each year, possibly 100, otherwise what's available rotates around the older kits.
Lego have produced about 15,000 different sets since 1950, and a huge number of the parts are shared between sets. (That's the whole point of the toy, no?)
Yeah I tried to look up the number of different Lego partszbut it gets hard to define what a Lego part is. And are we counting different colours, different designs printed on them, etc. Somewhere between 5k and 60k.
Also you have to take in account that Lego frequently stops certain parts and also that they more and more create complex parts and comparatively less "classic" bricks.
Which is an issue because it makes the sets way more difficult to reuse than 30 years ago. Go figure what to build with a random ninjago set except the official model. But that’s another ~~rant~~story.
Lego is pure IP (both from LEGO itself, and then e.g. Disney or whoever is behind the theme of a given set). If you get sets designed in China and made at the same factories that make Lego bricks, they're like 1/3 the cost. If you get sets designed in not-China but obviously ripped off ("Star World" sets that are 1:1 copies of Star Wars legos), also in the same factories, it's like 1/10 the cost.
The manufacturing isn't easy, sure, but it's more or less a solved problem and not at all reflected in the cost.
So when GP says priced like Lego, they just mean that - priced based on something completely different from the cost of materials, manufacturing, etc.
False. Lego is some of the most precise injection molding in the world. The tolerances are insane and they nail them every time. Compare with offbrand building blocks and you'll feel the difference.
Micromolding is very hard, and Lego is the best at it.
10-20 years ago, sure. Nowadays you can get basically the same product from LEGO compatible competitors for way cheaper. Dunno how many modern sets of the variety of competitor stuff you've assembled recently, there's huge variance. Some of it definitely has crap QC. Some of it is really, really good now. My wife put together some knockoff 8000+ piece set the other year and the pieces were basically flawless.
Where I've seen the difference is in the quality of the instructions (which matters) and the packaging (which arguably doesn't). The bricks themselves are, as you say, basically flawless.
Exactly. I bought 3 or 4 China Lego clones to try and the parts were slightly different in size and in color. Some blocks way too big, so building was not good experience. For original Lego you don’t need sanding paper on the table.
> If you get sets designed in China and made at the same factories that make Lego bricks, they're like 1/3 the cost.
Lego does not outsource brick making. They tried it out back in 2005 with Flextronics in Hungary and got a painful lesson. Lego runs all their factories themselves now.
Lego may run the factories, but the factory will run extra and sell the excess off books. Maybe less so nowadays that (1) they can charge a 20-30% premium over US Lego prices in China, and (2) competitor off-brand Lego have caught up in quality
I don't think the official Lego China factory products get sold to the US, only Asia?
Right and I'm talking about the one in China (that opened like 10 years ago), selling stuff to people in China (and presumably elsewhere in Asia).
Nowadays it's kinda irrelevant to the greater point anyways, because some of the knock off factories make parts that are just as good. (Some knock off factories push out terrible QC)
Not only that, they are actively expanding their manufacturing because their revenue is limited by supply. Their factories are running 24/7 and some products are still consistently out of stock.
There are lots of JKR-adjacent industries that employ working class people.
The Harry Potter World theme park in London has over two million visitors annually. That tourism must be more economically significant than fishing for cod.
But still, the money that's going straight into working class people's pockets is probably better for the UK in the long run. Don't worry, it will get taxed over and over and over and over again as they pay each other for things.
Velocity is one of those critically important concepts that often gets left out of these discussions because it's hard to understand if you haven't formally studied economics because it's all about second order effects. But it's a big part of understanding why, historically speaking, maximizing corporate profits doesn't seem to correlate all that well with overall prosperity trends.
There are quite a lot of people who make money from Harry Potter apart from JKR. People running cinemas, bookshops, making the movies, running the studio tour and so on.
And the more of that that happens, the better for the economy overall. The less of that that happens - implying more of it ends up in JKR's proverbial dragon hoard, not doing much good beyond being an impressive pile of wealth for the dragon to sleep on top of - the less good for the economy overall.
When rich people get large amounts of money they don’t hoard it like they did in Roman times.
That money either goes into the stock market or to a bank. If it’s in the stock market that money is being used in investments that further economic growth. The portion of the leftover money that’s in the bank is then lent out by the bank to others in the forms of loans and so on for purchasing houses, starting business and so on.
The idea that the pile of wealth is simply hoarded to be slept on is out of date and not representative of modern economics.
Also, as for JK Rowling specifically, she had donated a significant amount of her wealth to charity.
A lot of that "economic growth" is stuff like flooding the US with opioids, burning mountains of gas and coal to produce crypto scams, and chaining people to the office 60+ hours a week to produce reports justifying their "impact".
The nominal gdp is my father's time was lower and yet he could buy a house and support a family of four on a single salary as an immigrant in his early 20s.
The problem with investment dollars is that they're typically "spent" (invested) only when they can extract more wealth than they create. You invest $10,000 now so you can have $15,000 later. Where did that $5,000 come from? Well, someone gave it to you in exchange for that $10,000.
In other words, they're effectively rent-seeking dollars. The whole hope of investment is that you get more money without doing any labor yourself.
And if you invest and they're lost? Well, now it's not even rent-seeking. It's just burning money.
This isn't to say that there's no benefit from that money being available. The issue is that the real value that investment creates isn't really the money going back to the investor. It's the value of the labor and products generated by whatever the money fronted costs for. The actual value is still generated by the labor. The investor does help start the ball rolling, but is still a leech.
Once we get to shareholders, things don't really improve. Shareholders are also only interested in dividends. They want dividends at the cost of the company. At the cost of the product. At the cost of the customer. There's no responsibility to society or to the customer in the face of a shareholder.
Shareholders are like employees that don't do any work but still want a paycheck. "Oh, but they're owners," is kind of a poor excuse when these owners do no work. Stock is like buying a box of Crackerjack and letting your brother take the whistle and sticker.
> Also, as for JK Rowling specifically, she had donated a significant amount of her wealth to charity.
Which she does because donations offset the taxes she owes. She's no Dolly Parton.
> The actual value is still generated by the labor.
The labour _needed_ the money. In other words, the labour doesn't want to take on capital risk (aka, the output turning worthless, or something like that).
Investors aren't leeching, they are taking risks - risks that the labourers dont want to take (otherwise, they would've been the one fronting the cost, rather than expecting to get paid for labour!).
The old idea of capital being leeches only happens when your capital comes from lords who granted you ownership (of the land).
> Which she does because donations offset the taxes she owes.
How would that work? You can only write off the amount you actually donate. Paying 100% to save 40% (or whatever your tax rate is) seems very counterproductive if the goal is to actually save money.
The home took someone money to build, the land cost money to buy (from the previous owners) - thru the long chain of title ownership that would stem from the conquerors of this land (who ultimately took the land from either natives, or whoever that previously owned it by force).
The previous owners who now got paid by you will use this money for other investments. It is not slept on. Your house is also providing utility (of being a shelter).
You just stopped thinking about the money as soon as it left your bank when you buy the house, and thus you feel that the value of the house is merely being "slept on", when in actual fact, this transaction that is your house is a small cog in a very large system.
your largest investment is your home cause you live in strange times when over the last decade the price of housing has ballooned like a big bubble that it is now. if you lived your “core” years in say 50’s to ‘80’s the house would neither be your largest investment nor your primary source of wealth (guessing you are affluent “white collar”…)
I look at my tiny townhouse that my Dad could built in 6 weekends with his buddies and zillow needing seven digits to display the price and very well thinking “what a fucking real estate bubble we live in currently.”
I don't think this is true. Housing has basically been around 50% of total wealth for the past 50 years or so. Check out Pikettys capital in the 21st century for far more details.
there is a clear point at which one might start thinking about real estate as investment (and it sure looks bubbly). if you bought a house as an investments some decades ago it is not much of an investment and basically a loss inflation-adjusted, no?
While I can’t speak to which one of you is correct I think it’s worth pointing out that 50 years ago only pushes into 5 of the 30 years that they referred to. I can’t imagine it would’ve jumped to 50% overnight in that change but I still thought it was worth mentioning.
I do wonder how much of fishery money ends up in the working class pockets. I assume the surviving companies survived because they have economy of scale, meaning most of the profits goes to corporate. If somebody has the numbers, I'd like to know.
Quoting Wikipedia's source, Forbes estimated her donations were $120 million to date in 2012. However, she co-founded her own charity in 2005, of which she is the president, and I suspect most of it has been donated in that direction.
Personally, I'm always dubious of the rich and famous genuinely finding unmet cases for charitable organisations. Especially when they've made a fortune outsourcing being morally dubious to others - she can save children because others are paying her to be allowed to sell low quality merchandise almost certainly made in exploitative conditions.
She's not alone, there's many more e.g. Messi donating lots to children's cause through his own charitable organisation after gladly being a global ambassador for unhealthy snacks targeted at children.
Rowling made a lot of her money from books, which would mostly be printed by adults in the country they are published in. Also films, filmed in the UK.
That's a long way from advertising unhealthy snacks.
Lego isn't made in dubious conditions, so for toys she's already above average.
I'm not into Warhammer, but out of curiosity, how did they check that? Scrape a sample off each figurine and run it through a mass spectrometer or something?
Official paint was never a requirement AFAIK. Parent comment has probably confused the Battle Ready rule, which basically says the model and base must be completely painted with multiple colors and shading, but doesn't care about what brands of paints you use.
A game that is not on a computer... So they don't even calculate damage or move distance for you. And you have to buy each figurine and paint it yourself...
And people are spending all their money on this? That's why we're not mining asteroids right now?
I feel like people could just use AR glasses for this and spend nothing but their time.
You approaching this the wrong way. What you are listing as disadvantages is, for the most part, the USP.
For example, if you are in the target group, you buy it exactly because it does not uses AR glasses; If you are proficient, you are sleepwalking the damage/distance/all other calculations within seconds in your head, you don’t even have to take a single look at any rule book. The biggest selling point, however is: there are others sitting in front of you, it can be very competitive, you can see the reaction, like in chess.
> And you have to buy each figurine and paint it yourself...
This is a _feature_ for the target audience. There's a sizable chunk of the playerbase who enjoy painting more than the game. I even have friends who paint these miniatures professionally as their side gig.
> And people are spending all their money on this?
No. Most people are playing at home on a budget, similar to other board games. A very tiny fraction of the playerbase plays competitively and have larger collections.
> I feel like people could just use AR glasses for this and spend nothing but their time.
You can play this game in Tabletop Simulator, which supports VR. It's _far_ less fun than playing in person with real objects. TTS is mostly used to test strategies before committing to buying the required miniatures.
As sibling comment mentions, the damage calculation is rather simplistic, and it's an exciting moment around the table when you roll a fistful of dice, kind of like gambling. I'm not even that proficient of a player and I can calculate a 17 dice roll attack while sleep deprived at 3AM, no computer needed.
The UK ain't alone in that either. California's agricultural sector is one of the largest in the world (let alone in the US) in terms of revenue and output, in many cases providing most/all of national and even global supplies of various fruits, vegetables, and nuts. Virtually all American almonds and broccoli, 90% or more of American dates and avocados, top producer of peaches and dairy products, the list goes on.
And yet, California's entire agricultural sector only totals to $50 billion in annual revenue. There are multiple tech and entertainment companies in California that individually surpass that, in some cases (like Apple and Amazon) by an order of magnitude.
This is so key to understand because it illuminates how not every job is equal in raw value.
You cannot have a drying rack manufacturer in the US that pays a bunch of workers $35/hr. There simply is not enough value in drying racks to achieve this.
This is what is lost on the populist crowd. They compare themselves to high value workers (i.e. workers that produce a lot of raw economic value per hour), and then want to legislate that low value work pays on the same order.
To put that into simple terms, they want to make it so that producing a single $20 bill per hours pays them $30 an hour. No matter what, that isn't going to work out well.
Value isn't static, of course. Take the food that was brought up earlier. Food saw a real increase in value by around 30% from 2019 to 2024. A couple of destructive weather events, fertilizer scarcity, and war in the Ukrainian breadbasket shook people enough to think that maybe they shouldn't take food quite so for granted.
Drying racks aren't considered terribly valuable today, but if you lock up manufacturing to a single country and impose a number of other restrictions, sentiment can change quickly. The latest episode of Ted Lasso might not seem so important anymore.
The free traders also need to accept the reality that the UK’s decline started long before Brexit and disputes about fishing. In terms of per capita GDP, the UK lost its edge over the rest of Europe in the 1970s, and then simply never recovered from the 2008 global financial collapse. Without the empire, the UK’s “competitive advantage” in financial and legal services wasn’t worth shit.
I strongly suspect the US cannot maintain its outsized per capita wealth, on the back of the reserve dollar, in a world where China has an economy twice the size. Just as the UK couldn’t when the US economy overtook the British empire and the dollar replaced the pound as the reserve currency.
The question, instead, is how we’ll be able to adapt to that new reality. And I suspect we’d rather be Germany in that future than the UK.
The US appears to be trying to end the reserve dollars. Something that surprisingly few people have mentioned recently is that having the biggest trade deficit is the same thing as being the global reserve currency. Because they're the same thing, ending one of them also ends the other.
There does seem to be some sort of cycle in play: first a slave-driver-type economy creates a whole lot of wealth, then people get human rights, then they stop being driven like slaves and coast off the accumulated power, but forget the basic principles of wealth creation in the process (see also "good times create weak men" etc) and just spend all their resources arguing about who gets the wealth that is there instead of creating more. And I'm not saying that in an individualist framework - the reason individuals can't do it is a problem with the whole society, not with those individuals.
Ultimately you get out of this trap by making work sustainable and trying to level the playing field.
Almost nobody is spending resources in the US. And that's half of the problem. It's spent elsewhere, therefore labor stagnates or falls, only leaving low tier jobs to work. No factories locks out advancement reducing morale and draining the best that could have their kids advance.
In the US, you had skyrocketing prices on basics like healthcare and housing too, way more than elsewhere. UK has a lot of this problem too.
That together ultimately causes a reduction in teaching and educational standard, which further shrinks the high end advantage.
Short version: economy and people hollowed out in the middle is unsustainable.
> Ultimately you get out of this trap by making work sustainable and trying to level the playing field.
And you can't make work sustainable and level the playing field when you have free trade with developing countries.
People cite Ricardo like gospel, but the math of free trade treats every safety net, worker safety protection, etc., as a loss of "comparative advantage." You know how Texas takes jobs from California by having lower standards, lower wages, etc.? That's what happens when you have free trade with third world countries. It's a race to the bottom.
> Something that surprisingly few people have mentioned recently is that having the biggest trade deficit is the same thing as being the global reserve currency.
Can you explain this a little more? Why does having a trade deficit make your currency more valuable? My naive assumption is it would put more dollars in other countries, so they don't need them as much, making dollars less valuable.
Other counties need dollars to settle their international trade (particularly oil but practically a lot more), and to hold in reserve. The dollar is actually the only currency that's been printed enough to serve this purpose alongside its other benefits. This demand for dollars makes the US less attractive to import from as the price of the dollar is driven up by this extra demand.
US is the alpha consumer. If you can sell in the US, you won. You want to sell in the US. You get dollars for what you sell in the US and since everyone else also wants to sell in the US, you trade with everybody using dollars. Also, your government goes batshit crazy statistically more often than the US, so your currency risk is smaller if you're settling trade in dollars.
"Why does having a trade deficit make your currency more valuable?"
Its the other way around, having the reserve currency drives demand for it and therefore imports are cheap and budgetary deficits are free (since interest rates are low).
You get free stuff and free debt, but over time your industry collapses
German engineering etc was famously rather good before the war too. The Ruhr valley is part of the reason for this: energy sources (coal) and minerals (iron, copper, etc) very close together. It was the ideal setting for an industrial awakening.
Also, even after the marshall plan, Germany kept its existing advantages in industry in large part simply by actually encouraging them to exist. The UK has no industrial policy and actively shed most industries in the 1980s, relying instead on direct investment and deliberately not growing domestic companies.
It wasn't a criticism of Germany at all, just that I think alot happened there that was special politically with the east and west, support for reunified Germany was massive, it's just therefore a bit hard to say what would of happened if after the war it was lumped with huge debt and ignored.
Not being allowed a real military, protected by US resources instead, means a huge amount of investment freed up for the civilian sector (similar to Japan/Italy to some extent)
The special case was that big chunks of Germany ended up under the control of capitalists. The pattern in Germany, Japan and even Korea is that in the post-war era the US understood how to build up a country's economy and their policy formula was effective.
The observation is depressingly simple - competent economic management leads to great results. Typically that involves investing a bunch into developing industrial capability. Listen to people like Ed Deming. Let people build things. The US isn't doing that, we haven't seen any new industrial capability out of them in decades. Silicon Valley is the closest thing they have in the modern era and it is mostly services.
If you ask where the wealth is supposed to come from in the Chinese economy there are a lot of obvious answers - it could be energy innovations from the nuclear or renewable sectors. It could be manufacturing innovation as they work on improving their factories. Maybe they're going to come up with hot new products out of Shenzhen. They're big players in the AI revolution and working to build up domestic semiconductor capabilities. Maybe they're just going to wait for other people to come up with good ideas and copy them with speed and scale on their side.
The US has a much less obvious story. Biotech could be an amazing path, but they've left the ring for a lot of the more promising industrial options. And holding the health industry up as being the way to a bright future seems a bit weird. Maybe they succeed in building a services economy that impresses people; that'd be a cool first.
Trump has zero to do with previous level of US hegemony. He represents what large part of Americans are - for internal reasons that have nothing to do with geopolitics.
Americans might not know their number is up explicitly, but they can smell it. The days of US hegemony are numbered. In one way or another, people get it. Why else would they want to Make America Great Again? It is an inherent recognition of decline.
Yes and no. The MAGA revolution is internally carried by the lower class not associated with and uninterested in geopolitics. In fact they believe in exceptionalism and don't understand why they feel exploited and don't know who is doing it. However it would not be possible politically if not tolerated by the upper class who is smelling decline (of their wealth), because competition has moved into their part of the value chain, so they do two things. One, they now support protectionism to shield from competition. Two, they wish to exploit the lower class harder, so they point them outwards to avoid a physical revolution or an amicable redistribution.
If you want to explain MAGA you have to understand it's a convenient alignment of the upper class and the lower class for different reasons.
I am deeply curious to see how people on the left will digest Trump if he doesn't get reined in by congress/wealthy people. I think a lot of them are going to be caught flatfooted if he gets his way with taxes (no income tax under $150k, no tax on tips), and if he gets his way with global trade restructuring (on shoring of blue collar work).
Trump is currently causing an earthquake on behalf of the middle-lower class. Maybe blue tinted glasses prevent them from seeing it, but right now he is definitely doing the opposite of "entrenching the power of billionaires and the elite".
Unfortunately, I believe that this is a severe miscalculation on Trumps part, as the "kill the billionaires" class seems to be much more fueled by anger than by rational understanding.
So much of the US government has been focused on maintaining the global hegemony, US citizens wellbeing was sacrificed.
Trump was elected in reaction to rising global hegemony, or at least the effort put to maintain it, not the end of it.
To say US hegemony is numbered doesn’t make much sense. The US economy has only pulled headed further from any Western rival, and China’s economy is stumbling to the point it’s questionable if it can grow enough before it’s population starts shrinking. Russia has been stagnant since the 1990’s.
If anything, US ability to project power is greater now than any time in the past.
> If anything, US ability to project power is greater now than any time in the past.
Absolutely not. It caved to Russia in the first place, it is weak against Russia. It WANTS to project power, but while doing so, it is showing itself crumbling into itself.
The US unwillingness to project power is a direct result of its current leadership. The US capability to project military force is, for better or for worse, pretty extreme in the global context. The ability to support a protracted conflict would depend on the support of the population, but it’s unwise to think that the current administration is a reflection of potential. When the court jester carries the sword, it’s a blunt and careless rod, but that same sword in the hands of a master is an instrument of lethal precision.
> Trump has zero to do with previous level of US hegemony.
> He represents what large part of Americans are - for internal reasons that have nothing to do with geopolitics.
No, it's all about geopolitics. Perhaps the most thorough analysis of the 2024 election concluded that Trump won 18-25 year old men (white + non-white). Trump did better among younger men than men 75+. Trump also won young white women. (See: https://www.nytimes.com/2025/03/18/opinion/ezra-klein-podcas...)
Whatever preconception you have about what motivates Trump voters, you're incorrect. MAGA is about the impending loss of America's stature due to immigration and free trade. It's all about geopolitics.
So the knee-jerk reaction is to knock it all down and speed up things while making literally every human in the world hate you?
Thats dumb to be polite but not surprising when considering where it comes from. Republicans simply can't admit their candidate is incompetent pos, superior ego thing or something. The incompetent part is what matters in this specific discussion, way worse than first term which was tampered by more reasonable people delegating actual tasks.
It was about inflation, prices, hate toward trans and immigration. That is judging based on pre-election topics. They did not cared about geopolitics.
> Whatever preconception you have about what motivates Trump voters
By a large, based on what they themselves say and write, they wanted to cause harm to their perceived enemies and have fun watching it. That is primary reason for why conservative and republican voters vote.
There are two parts to the fishing thing. From a pure economic perspective, fishing is insignificant. But within living memory obtaining food was a national security issue for the UK (during world war II). In a world in which states look not to grow their economy, but to harm others - and guess what, that's where we just arrived - not all industries can be considered purely on their revenue. Man cannot live on warhammer alone.
We need to distinguish between paying over the odds to keep industries which are essential to have in an antagonistic scenario, from loss-aversion and nostalgia for industries which don't provide as much employment as they used to.
However, if we got a free trade agreement with the US would the inverse be true, EU companies are better off moving to the UK due to brexit? What about just a FTA with all commonwealth countries (why haven't we done this??)?
Trump is unpredictable. He made a new free trade agreement with Canada and Mexico in his previous term, but has put tariffs on some Canadian goods this time round. That isn't going to reassure investors.
A FTA with the USA would come at a significant price — the UK would be pressured to accept low-quality American agricultural produce, and lower many other standards from their current European level. If it does this, that reduces the global value of British exports.
there was much ado about chlorinated chicken a few days ago. apparently the US washes chicken carcasses with chlorine to disinfect them, whereas that's illegal in the EU, which has more stringent farm cleanliness standards instead. I think there's similar issues with an arsenic compound (seriously!) being fed to chicken as some sort of antibiotic.
iirc Trump did say he wanted EU to accept our livestock to reduce the trade deficit, leading Lutnick to memorably proclaim "They hate our beef because our beef is beautiful and theirs is weak!"
"Chlorinated chicken" has been a discussion topic in Britain since before Brexit, when some politicians were saying it would be easy to get a deal with the USA to replace trade with the EU.
It's not something that will be forgotten easily. British people on all sides were against reducing food standards.
IMO I think we'll end up with "a uk body setting new GMO standards" being cover to allow US GMO stuff in. Then maybe hormone beef and similar, but not chicken. Quota-less fish, tariff free trucks/cars (like that's going to make a difference) and some other minor tweaks.
Yes, and we'll see what next week brings sigh. For all any of us know we're going to wake up in the morning and the EU has a 125% tariff too. I'm not even sure Mr orange himself knows what happens in 90 days when these temporary reliefs expire.
90 days? We don't know what is going to happen tomorrow or more to the point if you put goods on a boat to the USA you have no way to predict what the tariff will be when they arrive. If you are selling a product that relies on imported parts you can not know your cost of goods until they clear customs.
We are literally in the process of moving some of our operations to LATM to avoid this uncertainty.
How can anybody trust the US ever again? Trump completely ignored an existing free trade agreement with Canada and Mexico that he himself signed.
You have to assume that the US is sane a maximum of four years in a row and in four years another Trump 2.0 will again be completely ignoring all their agreements.
In my opinion, the US cannot be trusted with any treaties ever again the way they currently are.
Because free trade is typically a good thing that lifts everyone? It's also not "FTA with the UK" it's FTA between everyone, we just happen to be a member. We may be quite low down the list for say Canada as a trading partner and that's fine?
> Is there any fishing going on in the Black Sea at the moment? (genuine question)
yes, while fishing vessels fairly rarely broadcast AIS, there's plenty of turkish, bulgarian, and even three russian fishing vessels broadcasting AIS in the black sea right now. No ukrainian vessels that I can see, but again, AIS is fairly rare for fishing boats anyway.
Of course. There are three NATO nations and Georgia on the Black Sea, and there is no war in their waters. The Black Sea is not very productive fish-wise, but this is another topic.
Yes, but not a lot since the fish is very scarce and it supplies a small part of the local consumption. Romanian vessels used to fish in oceans. I presume Russian vessels, too.
> […] are "state capacity" issues. Things where the state is unavoidably involved and having better, more decisive leadership and not getting bogged down in consultations, would make a big difference.
See "America needs a bigger, better bureaucracy":
> I believe that the U.S. suffers from a distinct lack of state capacity. We’ve outsourced many of our core government functions to nonprofits and consultants, resulting in cost bloat and the waste of taxpayer money. We’ve farmed out environmental regulation to the courts and to private citizens, resulting in paralysis for industry and infrastructure alike. And we’ve left ourselves critically vulnerable to threats like pandemics and — most importantly — war.
[…]
> If government spending isn’t going to pay government workers, it must be going to pay people who work in the private sector — nonprofits, for-profit contractors, consultants, and so on. In other words, state capacity is being outsourced. But this graph doesn’t actually capture the full scope of the decline, because it doesn’t include outsourcing via unfunded mandates — things that the government could do, but instead simply orders the private sector to do, without providing the funding.
> If government spending isn’t going to pay government workers, it must be going to pay people who work in the private sector — nonprofits, for-profit contractors, consultants, and so on. In other words, state capacity is being outsourced.
The money is going to social security payments. Social security went from <1% of federal spending at its outset to more than 20% of federal spending today. Medicare and other assistance programs are a similar story. Most of the money from these programs goes to paying benefits rather than administrative costs, which is generally regarded as a good thing. But they're also what together now constitute the majority of federal spending.
Meanwhile there is another reason why the number of government workers has gone down: Computers were invented. Things that used to be done by hand are now done by machine, and then you don't need as many clerks and bookkeepers to manually process paper records. This is also generally regarded as a good thing.
The points it makes about unfunded mandates and NIMBYs holding everything up with meritless lawsuits are valid, but the "ministerial review" it proposes is the existing permitting process. The problem is we have unfunded mandates and NIMBY lawsuits on top of that, which could simply be deleted and replaced with nothing.
This really seems like the fundamental misunderstanding:
> And guess who’s responsible for monitoring Medicare spending? Bureaucrats. So that’s at least a 2300% return on investment in bureaucracy!
If you only look at the most efficient thing a bureaucrat could be doing, look how efficient bureaucrats are!
Meanwhile the government is still paying thousands of people to process paper records because although computers were invented many decades ago, only parts of the government have discovered them and there are still many things you have to do by bringing physical documents to government offices to be processed in person even when those things have no legitimate reason not to be a government website.
What we need is not to have more bureaucrats, but rather to finish computerizing the things that have no reason not to be so the existing government employees can do the high value stuff instead of wasting time shuffling paper that should have been bits.
> Meanwhile there is another reason why the number of government workers has gone down:
Uh...excluding the very recent cuts this year under Trump; the number of civilians in the US Federal work force has gone up fairly steadily. [0]
We had 23.592 million civilian employees in Jan 2025. 21.779M in Jan 2021, after being largely stagnant overall the previous 10 years. That's a net change in excess of 1.8M employees under Biden.
I do find it interesting that it appears that employee count was flat, or even down under Obama, but until COVID, there was a steady increase under Trump v1.
> the number of civilians in the US Federal work force has gone up fairly steadily.
The graph you provided is not Federal government, it’s all US government which includes state & city, and other types of government employees. It should be expected this grows with population size, and to get a sense of whether it’s really shrinking or growing, you should divide by population. But in any case, this chart doesn’t backup your claim that Federal government is growing.
The link to the Federal government was just underneath that graph: https://fred.stlouisfed.org/series/CES9091000001. US Federal government absolute size peaked in 1991 and has gone down slightly since then. If you divide this one by population, the decline would be a bit stronger and more obvious. The ~10 year spikes are census workers. Notice we can see the peak in 1991 with or without the census spikes.
> Most of the stuff the UK is struggling with (transport, healthcare, energy) are "state capacity" issues.
Oh, boy, let me tell you, the 'State capacity' of the United States, when it comes to doing things that aren't making war on its own, or other people, was both rotten to begin with, and won't survive another four years of this regime.
Dysfunctional as the UK is, it's government is not stuck at a triple point of learned helpelessness, intentional sabotage and paralysis (the US is currently, among other things, doing its best to bring cured diseases back), and a deeply negative-sum culture.
I've heard that the United States was a magical land of milk and honey in this respect, back when 'competent bureaucracy' wasn't a swear word in it, but I understand that ended ~45 years ago. (With a few surviving holdouts, like the Fed)
> The UK stepped on its own rake because it was obsessed with tiny, already vanished industries like fishing
This isn't just a UK issue:
"Fishing is a relatively minor economic activity within the EU. It contributes generally less than 1 per cent to gross national product."[0]
and if you look beyond fishing, agricultural policy as a whole is - not sure how to put this politely - not easy to understand:
"The CAP is often explained as the result of a political compromise between France and Germany: German industry would have access to the French market; in exchange, Germany would help pay for France's farmers [..] The CAP has always been a difficult area of EU policy to reform [..]"[1]
For another "not just the UK" example france has managed to persuade the EU not to buy british weapons out of the extra defence fund unless the UK give France some of it's fishing rights. Can you imagine being Poland and not getting the best anti-tank weaponry, or the best missiles because you want the french to have more fishing rights?
Pretty sure you could engineer France leaving the EU by just tweaking fishing quotas, farming subsidy, naming on sparkling wine or removing (as you mention) strasbourg. They will start a riot and then when you don't give in, they'll be gone.
I'm not saying it's what happened to the UK, but we asked for what we needed, got turned down and then left.
I think it was a ban on European migrants from sending benefits and particularly child benefit (some money you get from the state if you have kids) back to thier home country or something like that.
I remember Poland stopped us from getting it (supposedly).
The french didn't want us to exempt from financial regulation that was primarily targeted at the euro even though we use the pound.
Various nonsense, that people at the time felt strongly about (keeping the pound, not giving benefits and a council house to people as soon as they arrived, or some such exaggeration)
I don't get why the EU can't be just a big common market with free competition, open borders. Why do we even need lots of institutions, bureaucracy, directives on top of directives and quotas for farming and fishing?
> While real UK manufacture successes (cars, aircraft, satellites, generators, all sorts of high-tech stuff) get completely ignored
Here is my take on this:
For those things, you probably need a lot of technical training and/or advanced degrees.
For fishing you just need to be more or less healthy and be able to follow instructions.
Most people are more or less healthy and are able to follow instructions. A small subset of those has advanced technical training and/or advanced degrees.
Therefore, fishing becomes important because a lot more people can do it, and those people vote.
> Fishing is less profitable for the whole UK than Warhammer.
There are 3x as many fishermen in the UK than employees of Games Workshop, and much more again if you count the number of related fishery jobs.
At the end of the day, politicians and voters alike respond more to employment than nominal monetary figures. A broader employment base is generally better for social and political stability than explicit wealth redistribution (e.g. tax + entitlements). The latter is what economic theory tends to emphasize--i.e. equivocate incomes based on state wealth redistribution schemes--but such economic theory is how we got Trump, Brexit, and a host of other ills. Economics hasn't figured out, yet, how to price the constituent inputs that produce political and economic stability. GDP, Gini, per capita income, employment rate, etc metrics are gross approximations that work well until they don't (though they're still better than rhetoric and handwaving). But to be fair, social and political theorists haven't solved that problem, either; at least, not with a rigorous quantification model.
Sorry, but I don't think this is the reason. There were vastly more people in financial services calling for us NOT to have brexit than fishermen asking for it, even in number of people. I honestly don't think this was a numbers of people affected vs "% of GDP" affected issue. Not at all.
What good did it do for us? At the time everyone was running around rubbishing and laughing at the "outrageous" claims of 10% GDP loss, and where are we now?
> What good did it do for us? At the time everyone was running around rubbishing and laughing at the "outrageous" claims of 10% GDP loss, and where are we now?
Impossible to say, as it was swamped by the pandemic. My guess as to the fatalities due to Brexit is also untestable as a result.
true, impossible to come up with a scientific answer, but you could compare with european countries who also went through a similar covid response and start to see a bit of a trend leap out.
For what it's worth I'm not sure if the number is actually 10%, but I'd hazard that it's more than 5/6.
It's not actually about the fishermen, it's about the whole rural communities.
Just like farming, it's everyone living out there. How the fishers and farmers are being treated is how those communities at large feel like they're being treated. And they always feel like they're being shafted, even though that's just progress and other industries got shafted much worse in the past.
So for every 1 fisherman, there are 20 other votes. And they all generally vote conservative, those are blue strongholds (blue over here is conservative, red labour).
For every 1 Games Workshop employee, there's no other votes. Even spouses will be fairly uninvested in how the government is treating toy exports.
But on the other part of your comment, there's been no 10% GDP loss. Note, I voted remain, and would vote to rejoin in a heartbeat.
But we're roughly at the same position today in the world as we were in 2016, compared to other countries. Sitting about 6/7th in the world. Everyone's suffered since covid, everyone's struggling with growth. There's been no big drop in GDP. So it was actually scaremongering. It feels like there's a conspiracy of economists who lie, heavily influence markets, but their lies don't match reality. It's ideological propaganda for free-market capitalism, rather than fact.
There's tons of people in email jobs who are just clamouring to get up at 6am and gut fish! /s
Something not really addressed in all of this is that a lot of the people whinging about British jobs and so on, especially in high-Brexit areas, are actually themselves retirees.
Now, they're often living in economically depressed areas. I've seen Blackpool and Lowestoft (the sad little marker of the UK's easterly point, right next to a gas terminal). But you can't give them their jobs back, because they're not working any more. It's nostalgia.
I'm going to keep hammering the question of "why should people move from lucrative, comfortable email jobs to harder, less lucrative factory jobs, or, god help them, fishing?"
The UK is actually at ""full employment"" (NAIRU): https://obr.uk/box/the-equilibrium-unemployment-rate/ - that is, economists believe it cannot go lower without causing inflation, as shortages mean you can't hire people without having to offer more wages to poach them from other jobs.
(Another conundrum: people want higher wages without higher prices. How are you going to do the arithmetic on that?)
The fishing industry is especially weird because you can't make it more productive and decades of legislation have been spent desperately trying to make it less productive so there are still some fish left. I like fresh fish but there's a very real limit as to how much we can have.
I wonder how deeply connected all this politics of nostalgia is to the fact that birth rates have been declining for decades and populations are older.
Given the older population and the country’s history as a bygone empire I bet nostalgia is thicker in England than the US, but US side there sure is a lot of it.
A lot of MAGA is about making the country the way it was when boomers were kids (50s, 60s) to prime age adults (80s to early 90s).
There’s even a hint of genX nostalgia too. A while back I was hearing some IDW type railing about how “woke” killed comedy and it hit me that there’s a strong undercurrent of nostalgia for the 90s when comedy and pop culture were all about being an edgelord. The fact that edgelording is "out" is blamed on "woke" and they lament that "comedy is dead" etc. I'm not sure how much "woke" has to do with it. I think... well... edgelording is just out.
Change reminds people of their mortality and it always generates a backlash. You’re not young anymore.
> The UK stepped on its own rake because it was obsessed with tiny, already vanished industries like fishing.
[US-wise] Coal and cereal grain agriculture automation have also seen ~98% drops in employment while raising production levels. The industry doesn't have to disappear monetarily for the jobs to be gone.
> we have to start from reality, not whatever vision of the past propaganda "news" channels are blathering about
Ha ha ha. I was this naive once. This just isn't our reality. You would have to have a functioning education system AND a population with adequate emotional regulation. Do we even have the pieces anymore?
It feels like the US is going to step on its own rake however. Instead of Fishing, it’s manufacturing. Largely a dead industry that has proven to struggle to stay profitable without extremely cheap back breaking laborers or huge regulatory cuts that we’re just not going to be able to sustain, putting both employees and customers at risk.
>Most of the stuff the UK is struggling with (transport, healthcare, energy) are "state capacity" issues.
None of those are state capacity issues.
Those are "State is pointing a gun at anyone who would fix them" issues.
Friendly reminder that 95%+ of the UK railway system was built by private for profit companies, with state involvement being primarily limited to not preventing it from happening.
All of these issues are 100% self inflicted by the state getting in the way.
All that needs to happen for them to fix themselves is to stop actively preventing private individuals from fixing them.
Those railways were built early on in urbanisation.
Do you honestly think private enterprise could raise the financial and political capital to build a new regional rail line through a major city like London or Manchester?
None of the original railways was possible without Acts of Parliament for compulsory purchase.
Conversely, full privatization of the railways with no restrictions would instantly result in all the rails within 50 miles of London being replaced with lucrative housing.
Except since no parliament can bind a future parliament it won't be worth the paper it's written on.
The loudest voices calling for a scrap are exactly the people you DON'T want deciding what human rights you'll be "allowed".
And incitement to violence is, and always should be, unprotected speech - your silly "two tier kier" is informing me greatly that you're on the "they locked them up for hurty words!" bandwagon.
Weird, the bill of rights act of 1689 is still in force.
It’s literally the policy of this country to sentence white men to harsher custodial sentences with more chance of a custodial sentence than any other group, simply for the crime of being a white man. Are these the sorts of people you think should decide our rights?
If the government would do what people have been voting for for decades and end mass immigration and take real action on this ridiculous and purposeful misuse of the human rights act, then nobody would want to redact it.
It is not the "policy of this country" you need to actually read how things work, what bodies have what power, and who is doing what.
The sentencing council is an independant body, they are not the government, and the government has said "no, that's not right" so they're passing a bill to stop the new guidelines coming into effect: https://www.gov.uk/government/news/government-to-introduce-l...
It's the policy of this country, it doesn't matter who sets it.
It doesn't matter if it's set by parliament. It doens't matter if it's set by an independent body. The fact is that you will receive a harsher sentence for being a white male than you will if you belong to any other group. That is the policy. The Conservative government thought that was the right thing to do.
Apparently the new government 'will' introduce a bill to stop this, but they haven't yet. So it's still the policy.
Meanwhile it's legal and popular to discriminate against white men and women on the basis of being white - the government, police and military regularly put out jobs only for none whites. But if I were to put out a role only for whites, that's against the law. This discrimination extends to our top universities where it's becoming much more difficult (relative to population %) to obtain a spot as a white student.
That's why people think this country is now a two tier system, and they're right. Opportunities are being taken from those who have earned them and given to those who have not. Meritocracy and equality under the law is already long gone.
Again, you're just regurgitating what Reform talking heads are saying.
You probably didn't even realise that the sentencing guidelines were put on hold on the 31st of March.
Got any proof that the fall in white admission to university is down to discrimination, and not the relative poorer showing of the native population compared to first and second generation immigrants who put a higher premium on doing well at school?
Also can you respond with some of the "non whites only" job postings?
Between 2019 and 2023 28.8% [0] of students admitted to Oxford were of ethnic minority background. Cambridge admitted 34% [1] ethnic minority students in 2023. That means you're roughly twice as likely to be admitted to a top university as a minority student.
It's possible that some percentage of this is because of better academic achievement, though in that case it's confusing that Oxbridge are looking to remove exams due to underperformance of students of ethnic minority background in tests [2] - which would support my view that it is easier to study at these institutions if you aren't white. but it's also possible that the education system is systematically 'letting down' white boys, which is a view supported by an education committee report (and countless others) in 2021. [3]
- 31 white pilots were let go / held back / paid off so that the RAF could prioritise diversity hires [4], [5].
- Police roles only open to BME candidates [6] - there are countless other examples of this, various government departments have used 'positive action' racism clauses in the same way.
You're just regurgitating what Labour talking heads are saying. You probably didn't even realise that it's legal to be racist against white people. Perhaps you should read more of the news, so you can understand what's really going on.
On [2] you conveniently left out the key quote: "minority groups and poorer students." why are you against helping out disadantaged people whatever their stripes?
On [3] it was found to be unlawful so your assertion that "It's legal to be racist against white people" careers headlong into reality that no, it's not.
As for the west yorkshire story, do you not want the police to be representative of the area they serve? There are far more white men than there are as a proportion of the local population.
As of time of writing this comment, I believe both are at 10%? Of course that could change at any time.
> enshrine freedom of speech in law
ECHR already does this. I presume there's some other weird definition of free speech going on here like unrestricted use of the N-word on TV or something.
Personally I don't 'agree' with brexit, but it's the reality that we're in. In typical british fashion we're trying to stay friends with the EU, even though they basically hate us, while also trying to do trade with the rest of the world. Predictably we can't really do much of 2 without 1 becoming a problem (and vice versa). However 1 is currently our biggest trading partner (as a bloc, US as a country) so what have we done? Sat in the middle not doing anything radical hoping we can be best friends with everyone.
So would we be able to get the exact same deal we had? We are under the impression the answer is no, as whenever we try and negotiate away stuff that's in neither of our interests it gets rejected.
Take this Eitas Visa for example, this is literally just sowing resentment towards the EU in the UK. It benefits nobody and is totally insane, it's just making people hate the EU. Same with not being able to use the digital passport machines at airports.. why?? We're a pretty secure country, we have digital passports. Brexit happens and now every time I go to Europe, which is a lot I've got a 50/50 chance of waiting 3 hours at the border for someone to stamp my passport while the digital gates have no queue. That means I now have to arrive 3 hours early every time just in case. If I bring a tool for work I need to spend weeks of paperwork on something called a carnet so I end up buying there and throwing out.
At the moment we're trying to give security backing for Ukraine and you're asking us to give up our fishing rights for the honour of helping secure Europe.
I get it, actions have consequences, but the thing is that only a minority voted for Brexit, most of us didn't. Each year you're disenfranchising a new generation of would be Europeans with this path. To me it's all dreadfully regrettable, the whole things a mess.
It's impossible for us to 'come to our senses' while we get treated like this in my view.
I am aware. Of course, if you require a visa from us then it becomes politically impossible NOT to require a visa from you in return. We were very clear that we didn't want it at all.
Re the fish;
>But in an interview with POLITICO, the minister said EU member governments were unlikely to sign off on a security deal with the U.K. unless negotiations are also resolved on other “sensitive” issues, including access to British waters for European fishing fleets. A deal on fish would also help in “building trust” between London and Brussels, she added.(1)
It's just a combination of low turn out and a 52/48 marginal split, it does not mean we have a failure of democracy, that's a bit of a stretch.
>At the moment we're trying to give security backing for Ukraine and you're asking us to give up our fishing rights for the honour of helping secure Europe.
You are not trying to secure Europe, you are trying to sell something to Europe. We would rather build capacity to make whatever you want to sell us ourselfs.
I agree we should work closely together, more so after US started dancing naked around burning brides. But everyone is looking into how to secure themselfs, without depending on 3rd party, and from EU's perspective UK is on the outside (even if not as crazy as US has become).
You'd rather build capacity because you think you're likely to be at war with us one day or we'd stop defending Europe? That would be the only reason to say that surely? If so I simply don't know what to say to that.
So then you won't be wanting our troops there for peace-keeping, something only ourselves and France have even offered. Nor any of our finance, we can stop giving billions a year to Ukraine as the EU want to take over?
Seriously it's ridiculously isolationist to be thinking like this. Not working with us just because we left your club is beyond mad.
1.those are not the only options, far from it. If EU buys from 3rd party, that party gets to dictate what we can do with those weapons. How long have EU countries been asking US to allow them to transfer F-16, longer ranged artillery, missiles, MBT,... to Ukraine?
Also, lets remember that UK has prevented shipping vaccine manufactured there to 3rd countries, even when some other country paid for it already. EU did not do that.
2. Thank you for confirming our fears. We decide not to buy something for you and now you go full crybaby and deny Ukrain help. Yes, you guys sound like totally dependable.
3. It's not isolationist and we do want (or should want to) cooperate with you, but Eu has just learnt what happens if you outsource your own defense and US elects idiot for the 2nd time.
And lets not forget that you have political party on the rise, (Reform UK), that seems to be a bit too friendly with Trump, Farage supposedly received money from RT (russ sponsored Tv) in 2022.
One of your previous PMs (Boris Johnson) had appointed Russian oligarch as Lord and is said to have ditched his own security to party with Russian intelligence officers while he was in office.
So, if eu and russia come to blows, whos side will UK be on? Depends on what party is in government.
That's nonsense, but even if we take as true for a moment;
The argument here is they don't want to buy our weapons because we might decide to stop selling to them. Do you really see that as even vaguely likely in a war against Russia?
We want to make our own weapons because depending on someone else can be more costly.
But some parties in UK do have worrying ties to Russia (reform uk and conservatives). I mean who would have thought that Republicans in US would be 3rd best allies of Putin, right after China and North Korea
This is the problem - brexit meant something different to everyone who voted for it ... and the reality was never going to match up because we have binding agreements like the GFA which meant Northern Ireland was always going to have to be treated differently than mainland UK.
Well, only if you think the IRA/Sinn Fein should set UK foreign policy. We could have implemented an (EU-requested) north/south border in Ireland. Or not implemented one at all.
The signatories to the GFA include the US as well - if you want to rip up the GFA to install a hard border you have to own the second order effects of that.
Or decide that Brexit was never going to work the way those who peddled it said it would.
I don't think we will be making much of anything in the UK until energy prices come down, which is unlikely to happen with little new nuclear coming on stream and fracking new North Sea oil being banned.
The good news is though that if EG steel manufacturing moves to China and starts using cheap coal fired energy and selling back to the UK, it helps the UK meet its Net Zero targets.
The total volume of money flowing through fishing related business is much larger than through warhammer related.
Fishing distributed about 1 billion in household income in the uk.
Fishing supports about 12.000 direct jobs plus 5.000 in related industries in the UK.
Warhammer has about 3000 employees GLOBALLY. Trickle down is not really present here.
Businesses that do not distribute wealth in the general population are much less relevant than those that do. Taxes are nice but businesses are good at avoiding them ( especially via Ireland ), whereas income tax is the major supporter of our states.
You aren't comparing the same things here - if only counting Warhammer employees, then you shouldn't you only count actual fishermen (c6500 people)?
For example, what about the people who work in Warhammer adjacent companies (plastics production, importing and labelling to name just a few, but also freelancers in publishing, illustration and design ) who would not appear in the 3000 Warhammer employees, but who earn the majority of their livelihood from Warhammer.
For a period my brother dated someone from the family that supplied grey plastic to Games Workshop - they probably had over 100 permanent employees, and were a 'small' regional company.
I could not find numbers for warhammer related industries in the uk. Probably because they are to low. Warhammer has a large profit per piece sold, at least compared to fishing.
US citizens often fail to realise that earnings of an industry are almost irrelevant, it is how much said industry distributes into society that matters, both for people and the state.
Classical industries like mining and steel distribute a significant percentage of their revenue.
Digital businesses does not, neither does warhammer.
The interesting point is, that in the end the value of the money digital good as as well as plastic toys are measured in is based on physically realised wealth: Without physical businesses, the money warhammer is evaluated on would be ethereal.
Be careful extrapolating based on China's current population and demographics. Too much of our armchair assessments of China's velocity is based on their meteoric rise on the backs of a historically large working-age population—a population that is now rapidly aging out of the workforce with nothing to replace it thanks to the one child policy. The US's demographics aren't stellar, but they're a lot better off than most of the developed world.
It remains to be seen how different 2010's China—with 90% of the population being under 60—is from 2050's China—with only 69% of the population being under 60.
India has a bigger population but they haven't risen anywhere near the way China has.
China's rise was due to smart planning and investment in their people and infrastructure. The country went from peasant farmers to the manufacturing hub of the world in a generation. Now they're in the process of becoming a major hub of knowledge workers while keeping a strong manufacturing backbone.
And one thing I rarely see mentioned is that the Chinese government keeps its currency artificially devalued in order to sell their products cheaply and undercut competition. Looking at their economy purely on a GDP basis really underestimates how big their economy is. GDP by PPP is more accurate. If China ever decides to stop loosely pegging its currency and let the value naturally rise, their GDP will very likely swell, since GDP is measured in US dollars.
You completely disregarded the central thesis of the comment you responded to.
The one child policy means there are no people to do the manufacturing in China in the future. The population pyramid is inverted. You can't do manufacturing without lots and lots of people. Or at least you'll get out competed by your neighbours who have lots of labor.
India's birth rate is also massively dropping. In a few decades, India will reach their peak population.
China invested heavily in machinery and automation many decades ago. They'll be fairly fine.
I visited India a few months ago. Loved it. But I saw construction being done with donkeys hauling dirt and people shoveling the loads onto the donkey's cart with tiny hand shovels. Scaling up from that to the degree of manufacturing powerhouses like China have is not going to be easy.
China investing in machinery and automation means they are moving up the production chain into more expensive and more profitable manufacturing.
It also means they no longer do the cheap high volume manufacturing, which will go elsewhere where the cheap labor is.
This is how it goes. Manufacturing keeps migrating to cheap labor. China is running out of cheap labor and volume manufacturing will find it in East Asia and India and Africa instead, because these places will still have lots and lots of young people while those in China have aged out.
'India imports most of its energy'. So what's happened to the extremely abundant 'free energy' available from the sum in India. They have the expertise, they could make the funding available. What is missing in their thought processes or is there something wrong with the premise?
I am genuinely curious about what would happen if China allowed their currency (RMB/CNY) to float. The most obvious thing I can see that would put tremendous downward pressure on the currency would be capital flight from China to more politically predictable/safe places. Currently, normies are limited to 50K USD per year. (Of course, there is a large grey market to move more money.)
India's population pyramid is about where China's was in 2000. Their bulge of working age people is just barely hitting the workforce, so it's way too early to say what the outcome will be by 2045 when they've ridden the wave the way China did.
The one-child policy didn't play as large a role as people in the West think. Chinese fertility rates had already fallen drastically before that policy.
(It was also not as absolute as people in the West think. There were exceptions for rural China and minorities.)
It’s a little more nuanced than that. Western demographics are largely propped up by immigration, which brings with it its own sociopolitical challenges. What you gain in demographics, you might lose in social cohesion and political stability.
It's a lot more nuanced than that. China's internal diversity is much higher than Westerners typically understand, and their social cohesion and political stability are less well maintained than their external-facing image would lead you to believe.
No, they're not. The Chinese have never been especially unified until very recently and they're internally quite diverse on all the key measures of ethnicity: their languages are mutually unintelligible, their religious belief systems span the entire breadth of world religions plus a wide spectrum of home grown ones, and their value systems are very different.
One China is a convenient fiction invented by an authoritarian regime, not a day to day reality on the ground.
Westerners buy into it through some combination of propaganda (coming from the Chinese state and our own, both of which benefit from an exaggerated sense of Chinese unity) and our inability to distinguish the various ethnic groups because we're overly fixated on skin color as the primary physical marker of ethnicity.
I can't help but feel that this can be said for any country anywhere. Compare New Englanders to Southerners in the US. They are totally different, but they are still wayyy more similar than Southerners are to Cantonese.
It's easy to track differences between people around you, in your country, and very hard to track difference between people in other countries. This creates an illusion of "We are very different, and they are all the same".
ser, do I need to pull up a map of Europe or India at any time in history? "One country" is a recent historical phenomenon.
by the standard of most large landmasses, China was, in fact, far more cohesive and united - compared to the hundreds of local lords and kings with their tiny little fiefs in, say, India
You're shifting the goalposts from "they're ethnically the same people with a shared culture" to "by the standards of large landmasses China was more cohesive and united than India".
Comparing Chinese unity favorably to India is damning with faint praise, and doesn't do anything at all to help your original argument that China has better "social cohesion and political stability" than Western countries by virtue of having less immigration.
We're not comparing the social cohesion of landmasses, we're comparing the social cohesion of states, and India is a particularly disjointed example to use.
China is over 90% ethnically Han Chinese. Compared to the US it is practically a homogeneous country. The language diversity is greater in China, but the racial/ethnic diversity is lesser. China is more comparable to Europe than the US.
You're conflating racial and ethnic diversity in ways that are distinctly western or even really US-centric. Europe is extremely ethnically diverse, as is China, they just don't use skin color as the primary ethnic marker the way that is commonly (and still incorrectly) done in the US.
The 90% Han Chinese number isn't especially useful because it's comparable to the way that most of Europe has historically identified itself as the successor of Rome. That they all identify as Han doesn't make Han a truly useful grouping for judging diversity when they all have different ideas of what "Han" means.
>You're conflating racial and ethnic diversity in ways that are distinctly western or even really US-centric.
Not at all, these are pretty universally agreed upon by global sociologist.
>Europe is extremely ethnically diverse, as is China
Indeed, Europe is extremely diverse, much more so than China.
>they just don't use skin color as the primary ethnic marker the way that is commonly (and still incorrectly) done in the US.
Neither does the US. Skin color is not a primary ethnic marker. No one versed in sociology in the US considers a Black American ethnically similar to an Eritrean. Nor do they consider a Ukrainian ethnically similar to a White American.
>The 90% Han Chinese number isn't especially useful because it's comparable to the way that most of Europe has historically identified itself as the successor of Rome.
It is extremely useful because the subgroups specifically make these claims: "Modern Han Chinese subgroups, such as the Cantonese, the Hakka, the Henghua, the Hainanese, the Hoklo peoples, the Gan, the Xiang, the Wu-speaking peoples, all claim Han Chinese ancestry pointing to official histories and their own genealogical records to support such claims."
Germanic people do not make the claim to be of Roman or Mediterranean ethnicity nor origin. The languages are vastly more varied in Europe versus China, where 70%+ speak Mandarin.
Additionally, Han Chinese are much closer genetically than Europeans. Italians, Brits, and Estonians have much more varied genetics compared to Han Chinese.
> What will be America’s competitive edge in that scenario?
Comparative advantage means countries benefit from specializing in producing goods or services where they have the lowest relative opportunity cost - not necessarily where they're the best overall. Even if China focuses on technology (and this is far from decided), America can still thrive by specializing in other areas where its relative efficiency or unique capabilities are better.
Examples: Germany specializes in high-precision manufacturing, India does well with software development, IT services, and medicines, Australia exports minerals, natural resources, and agricultural products, etc. Everybody brings something to the table. The world economy cannot possibly get worse by adding 1B people doing top-level work.
> Ricardo's theory implies that comparative advantage rather than absolute advantage is responsible for much of international trade.
India does well on software development partly on a volume basis. Their top end developers often want to move abroad for career development and earning potential. I would not be surprised if potus put tariffs on H1Bs
Trump is on the record extensively as being very pro H1B (probably spurned on by Musk, Zuck, and Pichai). Because many of these workers can be overworked without complaint for lower compensation than American workers.
It's about protecting blue collar workers. H1Bs damage the "coastal elite". Illegal immigrants are the threat to blue collar workers, and look at his stance on them.
It's impossible to not see that Trump is trying to bring back the 1950's rust belt all American factory family.
The US was going down the "let dominate IP/technology" angle for awhile, but we only accomplished it with imported labor (look at any SWE shop). China is obviously developing the talent to do the same, and they are rapidly automating manufacture work as they approach a demographic cliff. They are basically making all the right investments for the future while we try to go back to the 1950s. It is extremely frustrating.
I think Japan would have pushed through their real estate bubble if they just able to focus on automation like they were in the 80s and 90s. But the rise of cheap labor and great logistics in China ironically did those efforts in (or maybe it came too early?) and the Japanese economy fell behind for two decades.
it really seems like there's a push to de-skill Americans. like Bessent's remark that the laid-off civil servants could become factory workers as we bring back domestic manufacturing, and the recent corporate push towards vibe coding and integrating AI everywhere, and the purge of seasonal and unskilled migrant workers while keeping the H1B program.
it almost seems like we're trying to clear immigrants out of the chicken plants to make room for laid-off graphic designers.
Bessent et al’s plan isn’t even internally coherent.
Yeah, Americans are going to go back to working in factories. But not for low wages, because errr ummm actually it’ll be robots doing the work! So where will Americans be working? Errr ummm well… in the factories! (??)
Yeah and another thing I’ve noticed is the current administration has won on negativity and victimhood. It’s damaged Americas confidence and super power branding tremendously .
It seems to be the new image of America as some kind of wounded animal who is acting aggressively to protect itself from China. It might not be the case but perception is important and in my opinion it’s changing fast and in the wrong direction.
It’s almost like Americans are now begging for low tier jobs or something.
I've been hearing internet rumours of theories that for a lot of people all of this has something to do with fragile masculinity, a desire for dominance, sexual insecurity, something like that. I don't really understand it fully, but it's something like they want to bring back old sexual hierachies so they can be at the top of them. Machoism. They want to bring the manly jobs back and give them to white people. The reason they hate black people is they have some insecurity about being sexually out-competed by black men. The reason they hate gay and trans people is that nontraditional sexuality devalues the whole traditional sexual hierarchy. The reason they want to crash the economy so there won't be as many jobs available and women will have to depend on men for money which will make it easier for them to get women - some of them have actually said this out loud! And so on.
It's just one of many possible theories, but it's consistent with itself and the evidence...
It's for sure some of that, here is also a good podcast that covers this and how a lot of these issues start in childhood and how you can avoid it. It's for parents but it's interesting when thinking about why adults act the way they do.
This. Anyone who doesn’t believe it — please go spend some time in Shenzhen, Shanghai, or similar cities, like I did. I just got back from China.
I’ve been (also lived and worked) to the U.S. many times, and I can confidently say that China’s tier-1 cities are on another level when it comes to development and QoL (and not only T1 cities, I was in smaller regions in the north too).
It’s also incredibly clean, super safe, and the infrastructure is breathtaking.
Yup, Chinese Tier 1 cities (Beijing, Shanghai, Guangzhou, and Shenzhen) are probably 20 years ahead of their Western counterparts (in terms of crime, or lack thereof, public transportation, convenience, cleanliness, etc).
That's been my current dream trip for a little. I think it woukd be so cool to ride the trains around the country and see what it's really like there. Learning the language is hard though
I recently visited China and even the people you'd expect to speak English (front desk at Western branded hotel, airline check-in, etc) either spoke zero English or really struggled. My shitty Mandarin got a workout.
No need to wait at no window.
After you activate Alipay, just click on "Transport" and create a metro card for Beijing. Scan code on enter, scan on exit, pay the sweet low fare automatically.
One app, 30+ cities.
I took a year of Mandarin as an undergrad, speaking is doable, reading and writing is hard, but Google Translate & Co. would make that less daunting now.
> What will be America’s competitive edge in that scenario?
A few months ago, I'd have said soft-power and goodwill built over decades with the rest of the western world, which roughly equals China in population size. Instead, I agree that the US is staring down a "managed decline" like the UK, but hopefully not as steep.
…what does this have to do with shoes? A “managed decline?” Brother, the problem with the UK economy is Brexit. That was put in by a plebiscite. It’s not saying much, but at every level, including in the manufacture of shoes, the government has the greatest power to create or destroy wealth.
Austerity measures predate Brexit by quite a bit as a result of deliberate choices by a conservative government. Brexit accelerated pre-existing downtrends.
Many parallels may be drawn: austerity vs DOGE in gutting government services, the deluded nativist/isolationist core of Brexit vs the tariffing the entire world, xenophobia, and most obviously a nostalgia of past-greatness that doesn't quite fit the present circumstances.
> Americans need to get over their view of “Asia” as being about making shoes
I’m not sure if you’re just speaking on what you experience or because of this post but the OP is a clothing guy so it makes sense he will look at it from a clothing (including shoes) perspective.
I agree though, if Americans truly do see Asia as just the cheap clothing factory continent they’re sorely mistaken. All you have to do is to just look at TSMC (Taiwan Semiconductor Manufacturing Company) and realize that if you were impacting just that company alone you would get a slap in the face as a country, all (~70%) the major chips come from there.
I am aware the US is developing a Semiconductor factory in their own country but it is not done yet and it will not go as tiny in nms as TSMC already is.
I see what you are getting at but I have to disagree with alot of what you are saying.
> the US will find itself in the same position the UK is in now
The US and UK are totally different animals at the height of their "empire". The UK currently has little land and alot of it is devoid of minerals(sans coal). They achieved most of their might subjecting other countries and extracting resources from their colonies. Once the colonies and the rest of the world objected the British empire began to crumble as the colonies broke off from the UK.
Contrast that with the US which if it were to jettison its "colonies" (Puerto Rico, Samoa etc) you would see very little drop in GDP. The US has vast swaths of land which is excellent for farming, energy extraction and contains valuable minerals. It has widespread and diverse populations with wildly different ecologies and climates. In addition to a huge amount of resources it has a kings ransom of some of the best universities in the world(stanford, harvard, MIT, etc) and a highly educated society with living standards just below some small asian and european countries. The US also has a peerless military (we need hypersonic weapons however) and many aircraft carriers and nukes as well as world renown special forces groups. And lastly of the top largest 100 companies in the world, 65% are US based and this despite the US only having 4.2% of the worlds population, looking at GDP per country is almost comical as the US has 30T compared to the next largest economy China(19.5T), 3rd place is Germany at 4.9T.
USA has three advantages that no place else in the world has. First we have the biggest oil deposit in the history of mankind with the Permian basin. Second we have more inland waterways in the Mississippi River system than the whole rest of the world combined and third this abuts the best farmland on the planet.
I would say that the USA also has an advantage of open immigration for intellectuals to keep our universities strong but the anti-intellectual Trump administration is destroying this advantage as fast as it can!
The greatest advantage that we ever had was to lead the free world in ideals. A friend of mine was telling me yesterday that every child in India when they reach the age of six wants to go to Harvard and settle in the USA. They want to stand up for freedom and for democracy and for putting down all the evil dictators in the world. We are losing this image very very quickly it could be gone in a matter of months!
Don't brag about our aircraft carriers it would take us 25 years to build 11 more. We are nowhere in ship building we destroyed our domestic shipbuilding in the 1980s when we reoriented it for military shipbuilding and then the Berlin Wall fell down and we drastically cut the military shipbuilding budget and that caused our shipbuilding to go to almost zero overnight (3 heavy ships per year nationwide whereas China's largest ship builder does THIRTY!).
The USA has also been greatly advantaged by being host to the world's reserve currency (also known as having a massive trade deficit). It has been able to buy, buy, buy without needing to sell in kind; essentially getting stuff for free.
But it wants to throw that out the window now too, for some reason. Crazy.
True, and now I believe China has kept their industrial might while also pursuing higher technology. So they have the mine and the steel plant and the car factory. I recall Musk commenting that through human history, it’s more normal for China to be the most advanced nation on the planet, not the USA. Still, brutal place to live and work. Ultimately you have to offer people a chance at happiness, or else internal failures tend to sabotage all external signs of success.
US wont end up in the situation that UK finds itself in because the land it occupies is some of the most productive land on earth and at a similar scale as china. The incredible wealth of america, is that its a land mass that in the old world would be supporting 500m-1.5b people, but is divided only amount 350m.
The city at the center of the Missouri and Mississippi if it were in europe would be a major civilization. In the US its saint louis. The US, CA, and AU have an option few countries do -- at any point they want nominal gdp growth all they have to do is open the door.
I agree with you though that china's incredibly impressive.
Out of those three, Australia's economy is proportionally the most reliant on natural resources. Its mining sector alone is a bit over 10% of overall GDP.
Something like 35% of China's population works in the agriculture sector, many of whom are poor with little or no land holdings living in small villages. Is there a word for that kind of person?
That number has been falling since 2012 and was around 22% as of 2023 (ignoring the hand-wavy conflation of the entire agriculture sector and stereotypical rural farmers)
Peasant has a more specific meaning than this. More importantly, it has been used as a pejorative for a very long time now and that is clearly the intent the vice president had in mind.
> Would you call a midwest farmer in the US a “peasant” or just a farmer?
All peasants are farmers, but not all farmers are poor.
So, no, not as a group. Midwest farmers, on balance, are going to be some of the richest people you can find in the country (mostly because of their land wealth, which Chinese farmers don't have). There are likely to be individual farmers in the midwest who you would call peasants, though.
Chinese farmers, on the other hand, are likely to be very poor. Some individual farmers in China are rich, but as far as the group goes... It is not as bad as it once was, but as that group they still lag well behind the typical urban dweller. As that group they are peasants.
While it is true that Vance did not literally refer to all Chinese people as peasants, I do worry that such rhetoric will stoke the flames of racially motivated anti-Asian/anti-Chinese attacks.
I don't want to discuss whether he is genuinely racist; I think that's besides the point. Words can have a lot of impact, especially when uttered by a public figure in such a powerful position. I don't think it's unreasonable to expect the Vice President of the United States to carefully weigh the consequences of his words before speaking.
> I don't think it's unreasonable to expect the Vice President of the United States to carefully weigh the consequences of his words before speaking.
He did carefully weigh the consequences of his words. He deliberately chose the most inflammatory and insulting of possible words. Knowingly and intentionally.
Definition: Peasant: 1. A member of the class constituted by small farmers and tenants, sharecroppers, and laborers on the land where they form the main labor force in agriculture. 2. A country person; a rustic. 3. An uncouth, crude, or ill-bred person; a boor.
You unsurprisingly choose the third option. Uncouth, crude and or ill-bred people are probably not especially productive in their working life.
We do know that in China, rural people flock to the cities (where they have diminished welfare provisions and 'rural' status, do the work and are then expected to return to their homes in the country.
So then the actual bona fide peasants are the ones owning the T-bills? I thought holding USD reserves was national policy, with strict currency controls and whatnot. So my basic reading of that quote puts it closer to a dog whistle blanket characterization, and your promotion of the equivocation is quite disingenuous.
The reality is that most USians and EUians still have some 1990 view of what Asia and China is. Or they cope with some 'freedom' or 'slave labor' anecdotes.
My comment on another thread about how China is now a developed country was downvoted by some HNer who swallowed some Guardian anecdote: https://news.ycombinator.com/item?id=43627315
Exponential growth is a hard concept to internalize.
> We need to anticipate a future where China is equal to America on a per capita basis, but four times bigger. Is that a world where “Designed by Apple in California, Made in China” still makes sense? What will be America’s competitive edge in that scenario?
The likely answer lies in the fact that this would mean China & America are both high-income countries. There are likely to be other countries looking to be "the next China" to ascend the income ladder. As is now, rich countries will outsource work to those poorer countries.
Agree! I wish Americans would travel more and escape their media bubble. China is incredible. I was in Chonqing and then Shenzhen recently, and live in Beijing. Truly it's very divorced from what western people have grown to expect.
The most shocking thing for Americans when TikTok was shutdown for half a day was when they switched to the Chinese version of the app and they saw the truth -- that the middle class in China is living a higher quality of life than they are.
Agreed. Some people saw it as quality of life, some people saw it as prosperity, etc. However you want to define it, the point is the same... many people were shocked that the Chinese middle class had more than they did.
Businesses in a country that is a complete economic power house from plastic spoons to particle colliders and supercomputers are not going to outsource their finance to an overseas has-been.
They have their own straight-C-plus high schoolers they can train in finance.
Hasn't that point already been reached given the US could not sustain itself in any reasonable way without Chinese labor and knowledge?
There seem to be a lot of companies in the S&P500 that would dry out without access to Chinese workers and goods. Just take cloud providers. Where is their gear sourced from? Is there any realistic chance to provide that from within the US? Given the current state that would become necessary but seems highly unlikely to be achievable.
Brexit worked out fairly badly for rich folks. I'm not sure how well it worked for the folks who were voting for it, but it's possible "take the rich folks down a few notches" even if it lowers the median income, if you yourself don't earn the median income, is still seen as worth it.
> We need to anticipate a future where China is equal to America on a per capita basis, but four times bigger.
Is it even possible in terms of resources? there are limits to growth and it may not be feasible for 1.5 billions people to consume and pollute as much as an average American.
Also are the US willing to lose their supremacy peacefully?
To match the US GDP per capita would require China growing at 10%/yr for 35 years (while the US grows at 3-4% per year).
Thats 35 years of phenomenal growth, with no recessions, no “slow” years of only 5% growth (like the past 3 years). Assume an average of 7% growth (and US 3%) and now it takes 50 years to match the US per capita GDP.
This is why GDP growth of 5% is regarded as “bad” in China. They need double that.
And China needs to do this all the while having massive debt overhang, a world moving away from free trade (which their economy is highly dependent on) and a shrinking and rapidly aging population (by 2050 it will be 1 worker per retiree).
I don’t have a crystal ball, so who knows, but suffice to say if things stay relatively the same it’s going to be 2060-2070 before China is as rich as the US on a per capita basis.
It seems apparent that the answer is yes though. The US likes the idea of wars more then fighting them: the guy who talks about the greatest military on the planet is also not subject to the draft and never tried to join.
In so much as generalizing a nation can still leave large exceptions, wars of conquest are useless to America: it hates running occupations, and it's own citizens are not going to move abroad in sufficient numbers to provide a labor force to utilize the conquests.
Further, any hit it might want to take at the other powers would be either not cost effective (against Russia) or would harm them very badly in short and medium term (China or moves regarding Taiwan.)
Moving against EU would not get them anything and the same bit as regarding China applies.
Truth is, war is an expense. You need to count on a serious long term benefit to wage it.
> we mocked the Chinese as being able only to copy American technology
As you state they haven't been "only" copying for a while and my problem with people keep repeating this "logic" (mea culpa) is precisely what's at stake right now: designing and "creating" is critical, but I'd argue that civilization is not made my design or one-off (or limited) editions. Civilization is the ability to innovate in mass production, in doing so, consistently in lower and lower costs. China excels (and will continue to excel) while they continue to appreciate this. The "service sector" world stopped caring about this.
China got to where it is by taking loooots of inspiration from American tech. And it's not their fault US doesn't like the Chinese gov yet won't stop using their facilities to manufacture because they are cheaper..
If you made it to the end of the thread, the author (a menswear/garment industry expert) explained that he was responding to comments along the lines of 'Nike pays $2 to make shoes in Asia and sells them at $150, earning a $148 profit, we should bring some of that money to American workers'. I did not get the impression that the writer was characterizing Asian industry in general, he just happens to be knowledgeable about this particular industry.
I have been having similar discussions over the last week with people about synthesizers/pro audio gear (a topic I happen to be expert on), and the market dynamics are roughly the same. The goods themselves have a much smaller market and a much higher median cost than shoes, obviously. But components, assembly, and a significant amount of technical (PCB) design originates in China.
> When I was working in engineering in the early aughts, we mocked the Chinese as being able only to copy American technology. Today, China is competitive with or ahead of America in key technology areas, including nuclear power, AI, EVs, and batteries.
I wrote this not long after (10y ago) and I think this view is still unpopular now as it was then (for reasons beyond me):
I fully expect Baidu and other tech giants on the Chinese shores to try and push the boundaries of technology. Silicon Valley (and the US) in general has always been the hot-bed of innovation. But with enormous increase in wealth in China (and to an extent in India), I can see these companies being more and more ambitious. Not long ago Andrew Ng of Coursera and Stanford AI Lab fame joined Baidu to further their rival to the 'Google Brain' project.
Xiaomi has long been positioning itself as a company with design chops of Apple, engineering chops of Google, and e-commerce chops of Amazon, all rolled into one-- and I can see where they are coming from. If they manage to pull it off, I guess that's when we'd start seeing the proverbial "Death of Silicon Valley" as in, it loosing its strange monopoly and strangle hold on tech world in terms of both talent and innovation.
> What will be America’s competitive edge in that scenario?
I'm sure that the US still has many edges over China in high-end technology. I remember I read a research article back in 2012/2013 which listed all fields that China were lagging behind, including pharma, computer chips and some other stuffs. It's a fairly long list. I'm sure China managed to catch up in some of the fields but I doubt all of them.
That section is talking about risk — saying that they're now producing a lot more research around novel engines than the US. It's not saying that their own engines are ahead yet, just that risk is high given current progress.
(and they are now producing their own engines, as seen on their new fighters, though they aren't believed to be ahead yet.)
They do lead in many areas now. They have a lot of engineers, hands-on manufacturing heft at scale (inc. a lot of internal competition), and a government that has been pumping and subsidising physical industries for many years.
China can’t produce it own jet engines from scratch. The engine on the jet fighters are made on Western tooling machine and have components imported from the West or Russia.
Will China eventually catch up? Absolutely.
But I’d temper any fear of China pulling ahead in research when they can’t even put today’s technology into full production.
I'm sure China managed to catch up in some of the fields but I doubt all of them.
And if you could guarantee that they'll never catch up in the others, we'd all feel a bit better about the permanency of American superiority.
Absent that guarantee, we need to bench test those scenarios and be prepared with plans that best serve American interests should those scenarios come to fruition.
"We need to anticipate a future where China is equal to America on a per capita basis, but four times bigger"
Four times bigger absolutely will not happen; China's demographic disaster is already baked into the cake. Forecasts suggest China's total population will be around 1.5x the USA by 2100, but the average age / working age population will be in the USA's favour.
I'll never forget having to SSH into Bejing servers because nobody on that side could fix a problem... (working at a Chinese heavy company for a bit)...
I walked away realizing they are still copying the tech (IP theft, etc), but don't understand it nearly as well. The main thing that changed was the time-gaps, and by bypassing safety and other regs/norms, they just get to market first, but with a subpar product, usually with major issues.
I'm not nearly as afraid of this version of the future having experienced that, but of course, that was from a limited perspective.
That said, the sheer amount of $ being pumped into infrastructure of all types in China is a sight to behold, and also woke me up to how much our own government and big business entrenchment is suppressing American ingenuity.
Okay… what does this have to do with tariffs or shoes though?
> …China equal to America on a per capital basis
Hmm, what number do you mean will be equal? Income per capita? If the Chinese system paid Americans the same as the American system does, why would Nike operate its sweatshops there? Kind of tautological, no?
Not where it matters. China has a much larger under-employed population base than the US has. They still have a few hundred million peasant farmers whose children can and are getting educated and moving to the city. Their pool of labour is growing while the US's is stagnant.
Not that it needs to grow -- over the last decade or so China's factory employment has been relatively constant while output has surged dramatically. Their factories are rapidly automating.
The US labor pool is far from stagnant thanks to immigration, though Trump is trying to screw that up as well.
And those children will be burdened with caring for their elderly parents, often alone, continuing to keep internal consumption low. They are automating and moving up the supply chain, but have a long, long way to go as a nation.
We don't need "peasant farmers" to educate, we need AIs to program!8-))
The race between manual labor and machine labor is heating up anew. We don't yet have humanoid robots but they're on the design table, so it may be time to fasten your seat belt.
> We don't yet have humanoid robots but they're on the design table, so it may be time to fasten your seat belt.
Right ... so about that, here's Morgan Stanley's report on humanoid robots from a couple months ago:
Investors will notice that 73% of the companies confirmed to be involved in humanoids and 77% of integrators are based out of Asia (56%/45% out of China, respectively). A common refrain we hear from investors is the lack of Western firms to add to their humanoid portfolio outside of TSLA and NVDA. In our view, this is important information in and of itself as it represents the reality of the current humanoid ecosystem which we expect may need to change materially over time (see the West's current experience with EVs which has significant supply chain overlap with humanoids). Our research suggests China continues to show the most impressive progress in humanoid robotics where startups are benefitting from established supply chains, local adoption opportunities, and strong degrees of national government support.
This 100x. This is the time to go all in and truly shake everything from the ground up. If the US moves at least 25% to the continent, it could solve lots of issues by developing manufacturing for critical products in-house and nearshoring the rest to LATAM, helping reduce illegal immigration considerably. Win-win for the whole continent.
It will be more expensive for the consumer who will have been busy paying the tariff sales tax to get to that point. There's a reason businesses moved industry overseas.
The first effects of their population decline will be felt around 2050 by UN estimations. What do you think they’ll be doing for the next 30 years?
Considering they already ship more robots than the rest of the world combined, I don't think that will be a huge problem.
No their population decline is felt already, they don't have enough people to fill the factories right now and too many highly educated people. This is mostly about people in non stem related fields and non elite universities. If you're a young chinese with a so-so degree you're basically fucked. The UN estimations are fully off for all countries in the world (look at the actual fertility rates published by countries). If you look at UN you'll see like 1.7 fertility rate for colombia, in reality it's 1.0. All countries are kinda demographically fucked, the US is the one that's doing the best. They have been forging their demographic numbers for years already as well. I'm not saying it looks rosy for the US but it's not great for china either unless you believe in some kinda rapid rise in robotisation in the next 10 years.
Because women are obligated to work 40 hours every week just to stay afloat. Unless you find a way for young educated family to live a decent life on a single husband's income, the trend will continue.
US, Canada, Europe are demographically cooked too, but they (partially) solve this problem with immigration, that is not an option for China and the rest of Asia.
I think so too prior to the Trump tarrifs. Now their influence abroad is picking up steam again, with former WW2 enemies now becoming trade allies. I think this has reinvigorated their opportunity.
The partners didn’t want to establish strong trade ties because of national animus between their peoples stemming from WW2 and regional security concerns, not because China is an unreliable trading partner. From what I’ve read, China is actually a very reliable trading partner and generally asks a lot less of countries than the US does. Obviously that’s how they attempt to gain influence and leverage in US spheres of influence longer term to make larger asks, but most politicians only think of short term consequences.
Power of the purchasing power was a luxury of the US being the most desirable source of stability, creating a high demand for US securities and money. If trust in the US goes down, then so does purchasing power.
there will always be states-hostages to the US Navy and US Air Force that will be forced to purchase USD, for example Gulf States that basically pay ransom in term of keeping the petrodollar and investing in USD.
The moment oil producing gulf states decide to stop buying USD bonds, they will receive "democracy".
The whole intent to fight Iran is not only to protect Israel, but also to choke off China's major oil supplier. If Iran folds into US control, it will be easier to choke China in terms of energy supplies
> China will surpass USA from a GDP Point of view in 2035.
Don't be so sure, this has become much less clear. For example, in this article: "The Centre for Economics and Business Research, which in 2020 predicted that China would overtake the U.S. by 2028, revised the crossover point two years later, to 2036. This month, the British consultancy said it will not happen in the next 15 years."
I'm in germany and i'm pissed. I will not go on holiday in USA and thinking proactivly how to boycot USA.
And i'm not even a company. A company wants stability, predictability and not chaos every 4 years. And this president is in office for only a few month.
Whatever strategy companys currently try to do is either sitting it out or starting to adjust. The adjustments might not just go back when USA is more stable again.
They have been projected to pass the USA in GDP for a long time now. We'll see if it happens. Their demographic trends are not favorable, but the US seems to be testing out how many self-sustained wounds its economy can survive.
Competitive edge is new innovation and I don’t see that changing anytime soon. The rules and culture favor it in the US, more so than anywhere else on earth.
China didn’t invent the iPhone or chat gpt. But they excel at optimizing.
Also in places where Chinese electric cars are not being blocked they are really taking off. In 20 years for billions of people the most common car will be a Chinese one.
China is able to build nuclear reactors while the US is floundering.
The Chinese may well be the first to produce electricity from fusion.
People come back from Shenzhen now to the US and say that the US now feels less advanced.
The US certainly leads in some areas. But not longer all areas and things are moving toward China.
The other thing to look at is the number of high impact papers in Materials Science, Chemistry, Engineering, Comp Sci and Physics and look at where they are being written. Check the image from The Economist in the article below :
It's great for the world that China now has hundreds of millions of people who are able to have much better lives and tens of millions who are making great contributions to the world.
China has done what the US did in copying Europe 150 years ago. The US copied Europe and then went further. China is now doing that.
If fusion is successfully done in China rather than the US it will still be great for people in the US. The US can copy it.
The only thing is that the US's dominance is ending.
This is old old China you are describing… The new China is not merely optimizing but both innovating and making superior… For people that have the priviledge to visit China, the first thing you’d notice is that they are on another level from America, in every possible way. Going to Beijing and then going to any city is America is like going to NYC and then going to Toledo
"Asia" is not about making shoes, but any company will manufacture where it makes the best economical sense. Currently if that's somewhere in Asia, so be it. It doesn't take anything away from Asian countries if they can offer lower labor rates. Some Asian countries are so big and has such staggering class differences that they might be able to continue offering cheap labor while being competitive in technology, because the people involved in both areas live in totally different ecosystems.
> We need to anticipate a future where China is equal to America on a per capita basis, but four times bigger. Is that a world where “Designed by Apple in California, Made in China” still makes sense? What will be America’s competitive edge in that scenario?
I'm genuinely asking this out of curiosity and a bit of naivety — are there as many international students pursuing advanced degrees in China as there are in the U.S.? I don't know the answer and would love to hear from folks who do.
Do they not just steal our IP and then industrialize it better than us, partly because of their current demographics (which are rapidly changing), partly because of lax environmental standards, and partly because they need economic growth to support their oppressive regime?
> Americans need to get over their view of “Asia” as being about making shoes.
I blame Peter Zeihan for this kind of thinking. His views are immensely popular in the very powerful and influential circles. And he constantly derides China's capabilities. Since 2014 he's been saying it's going to collapse any day now. He still says it.
Zeihan is a case of believing the message because the messenger is so articulate and charming. He's a tremendously interesting narrative builder (in the vein of Taleb's narrative fallacy). I've been tracking his predictions for a few years now. I want him to be right. Unfortunately, he's seldom right.
He also seems to be veering into fabulism. He's recently said in multiple interviews that there's a clothing factory in North Carolina that is so automated that only 2 "guys" are needed to run it. Raw cotton comes in at one end, and finished clothing comes out at the other (hence Chinese labor is not needed to stitch clothes, hence China is going to collapse any day now).
Why do I believe this is fabulism? He never names this company. And the story has evolved. In earlier interviews he used to say that cloth comes out at the other end. But in a couple of recent interviews he's said finished clothing comes out at the other end.
Vietnam is the next China, they're still behind but catching up fast.
Malaysia is handicapped by the resource curse (lots of oil) dysfunctional government and race politics that serve to drive out everybody who is not ethnically Malay.
Vietnam was one of the fastest growing countries in the world but from a low base. They were following a similar trajectory to China but about 20 years behind. Not sure how the tariffs will affect things.
I was in Malaysia ~10 years ago. I saw a lot of weird things for sure, but I also saw a modern capital city that could easily shadow over many European cities today in terms of life quality, fancyness and nearly any metric.
Indeed. The primary reason to go to China is not that it is lowest cost (but of course lower cost than US) but rather that they have the skills and infrastructure for it.
>We need to anticipate a future where China is equal to America on a per capita basis,
This is a nice way to put it.
Anticipate a world within your life time where China is the dominant economic, technological, military and cultural super power.
Anticipate jealousy, anticipate fear, but know that as Americans who have been top dog for decades there is nothing wrong with not being the best.
Additionally anticipate a changing world view less focused on the view that freedom and democracy as the only possible way to lead and anticipate that despite the fact that China is a communist country and centrally controlled they don't want conflict and they don't want total war.
China and the US are not perfect. The US needs to accept this fact and it needs to accept that another is about to take it's place as the top dog.
My impression is that Chinese culture has very little appeal elsewhere (at least in the West). They can't seem to be able to (or care to) package it in an appealing way. Sure, they're being catered to in films and video games but I see very little organic interest in Chinese culture, especially compared to Japanese or Korean culture.
It's changing though. Wu Kong Black myth and even the top grossing film of last year was chinese animation. See the comments under the trailer: https://www.youtube.com/watch?v=gsiAYjyiIBM. The film was apparently incredible.
The core culture of China is actually foundational to much of Asia. The stuff you see coming out of Japan and Korea is surface level aesthetics built on top of this foundation. You're probably thinking Nintendo, KPop and anime.
Once China makes the aesthetics just as good as other parts of Asia I can see China becoming a cultural power house. Even the mythology surrounding China historically in terms of say one thing like Wuxia is better than anything out of Korea, Japan or the west in my opinion.
Really in the end people are more attracted to the aesthetic presentation of everything. Japan does this really well while China has always been unskilled, crude and rough on the edges. But this is changing at a nearly breakneck pace.
Oh, I think they're already up there with the aesthetics, I just don't find the content appealing. I watched (on Netflix) some Chinese attempt at a Downton Abbey a few years ago, and the production value was through the roof, absolutely insane. But the actual writing was pretty vapid and it's still drenched in propaganda.
I've had similar experience with film. Just compare the stuff coming out of Hong Kong today with what came out during the 80's and 90's.
Comedy is another thing I don't see go on export any time soon...
I actually don’t get what happened with Hong Kong. Stuff was good then it went bad. But in general it’s expected that stuff will be bad. Generally writing and story telling is the hardest to improve while production and special effects are easier.
The great story telling from China comes from its mythology and I feel China hasn’t yet found a method to depict this on screen without being too cheesy, fakeish or over the top.
I think this is why animation and video games work here temporarily. China will eventually get its act together.
If they're selling on historical and folklore how much is that really pushing culture? Is Modern China the same culture as pre-revolution China? Friends, Seinfeld, Sex and the City had actual influence on people on a portrayal of modern New York. What's the equivalent show that has worldwide audiences interested in modern Chinese life.
None. There’s no equivalent Chinese show. Just like how a while back there was no equivalent industry. It will get there. Follow the trendlines of all the industries and if it matches what happened with the entire manufacturing industry, solar industry, and various other industries it will eventually surpass the US. Right now it’s quickly becoming on par with a lot of stuff in the west. Eventually it will surpass the west.
But you also have to note there’s a shit ton of propaganda against China. I’m not even sure where it comes from given that we have freedom of press. you likely have no interest in the good stuff coming out of China likely because you don’t even know about it.
Think of it like this. You probably don’t think of BYD at all. Most Americans don’t. But to the rest of the world it’s a superior car to Tesla. And cheaper. It’s like Americans have some propaganda veil pulled over their eyes and I have no idea where it’s from. This absence of consideration of BYD is very similar to what Americans think of China. It’s just a very inaccurate perspective and full of holes.
Also a side note. Nobody inside China or Asia really gives a shit about Seinfeld, Sex and the city or friends. I love Seinfeld and friends but that's because I'm American. Outside of this culture those shows are just garbage. You need to look at the things with true world wide appeal across all cultures. Something like Avengers End game, which was an international phenomenon. (I know there's a lot of snobbish types who don't like it and I can understand why as it's not very sophisticated and it is a little too popular)
Anyway, China has yet to have something like Avengers End game. Or Star wars even. But out of all the countries in the world, it has the most chance of producing something on par with what America has done.
I wasn't making a point about blockbusters though. Star Wars would fail my criteria as well. It's not about money it's about influence. The stuff you listed is the antithesis of that, watered down for a global audience. I'm talking about the "I want to visit CityX" because I saw what it's like and that's my vibe.
It's not a matter of growing the industry because it's already orders of magnitude bigger then what it costs to accomplish.
No one in Asia wants to visit nyc because of friends, sienfeld or sex and the city. These shows to them are mostly raw garbage. The reason is because these shows are culturally focused. Its catered exclusively to the type of American humor and values that most people in Asia do not give two shits about.
They want to visit Hollywood because they want to see the technology that built these blockbusters because internationally everyone understands heroism, sacrifice and special effects. Additionally these movies aren’t watered down. The writing and the effects have gone through years of development to get to that point. It just doesn’t cater to your sensibilities. The term is snobbish.
The writing for Seinfeld and friends and sex and the city took years to get where they are. These aren’t inborn cultural talents. You can easily compare stories from past American movies to see how cheesy and stupid they are. It takes development for stories to come to where they are today and it’s a back and forth between the audience and writers. As writers write more stories audience members learn and become more sophisticated and twists and humor that worked in the past become cliche. Why do you think you’re too snobbish to appreciate something like avengers? You think someone in the 50s wouldn’t appreciate it? Fuck honestly if the whole mcu up till end game came out in the 50s that whole thing would win a Nobel peace prize.
China is 100% going through this learning process right now. The audiences sophistication and the writers as a result are growing at a breakneck pace. I think movies from China that might appeal to who you are is crouching tiger hidden dragon or Hero as these movies share the more universally appreciated parts of Chinese culture and since that is what you’re interested in, I recommend them to you.
You've completely missed the point. Crouching tiger/Hero are not modern chinese culture. I haven't even seen the shows I mentioned, but I also know if I mention New York overseas, that is what people think of it. They are known around the world. It's not about quality, it's not about blockbusters, it's about the raw influence of "what is New York". Are you suggesting that overseas, the lesson we should take on Chinese culture from Chinese media is that China is infested by demons, has no electricity and is a feudal system??
>but I also know if I mention New York overseas, that is what people think of it
They know of it for different reasons. It has nothing to do with the shows.
>It's not about quality, it's not about blockbusters,
Blockbusters are a form of quality. Just not your form form of quality. You prefer sex and the city.
> Are you suggesting that overseas, the lesson we should take on Chinese culture from Chinese media is that China is infested by demons, has no electricity and is a feudal system??
People know about NYC because it's just a famous city. It has nothing to do with some shows that nobody in Asia watches. I'm also not talking about any of China's cities as marketed by media. I'm talking about the idea of China itself.
The idea that America is a powerful country and that NYC is a great city is slowly dying. Dying because the reality of it is dying as well. It's a slow death one that may never finish in your lifetime but there's no denying that we see a lot of decline.
Cultural exports are how NYC became famous, has a city ever became famous without culture? I can't say anything about the quality of Sex and the City since like I said before I've never watched it. I have had it brought it up to me overseas, people like you that have watched it. I can think of a dozen countries that have made iconic scenes in media to spread their culture. I can't name a single scene of modern Chinese living. To the west, pre-revolution and post-revolution China are completely different. All your neighbors have managed to push their modern culture. US culture is on downtrend because they've stopped seeking common ground with their peers, they will deserve what's coming to them.
I also had the same thinking, when somehow my mother started watching Chinese TV shows. She first started with kdramas on Netflix, tried to watch a few Japense and didn't liked... then moved to Chinese dramas. And it seems, it's getting really popular here in Brazil. All anecdotical, but I know a few people that watch besides her.
Tencent has a streaming focused on international market called WeTV, there's also IQIYI. There's Viki too, that is from Rakuten - that is Japanese, but there's a ton of Chinese content there (which she also watches).
My nephew even learned a few words of mandarin (and Korean too) because she keep watching that all day.
Kdramas are really popular here, and don't think it's as popular as the US, my guess it's just the soap opera consumption Latin America was always huge, so it makes Asian dramas more palatable, as they are more soap opera style.
Now for music yeah, don't think Chinese music is that popular or will ever be compared to kpop.
Depends. Do you go out to protest and talk about social issues on the regular? If not and you live a normal life like most people, then you're generally not effected by this.
I always laugh a bit at comments like this. Trump is pompous and certainly admires authoritarians, but you Americans have no idea what a real authoritarian tyrant looks like.
If it happens, the US will have nobody to blame other than itself. Industry is what generates wealth. The USA deindustrialized itself when it moved all of its manufacturing overseas for the sake of greater profits. It gave away its intellectual property on a silver platter so that things could be made cheaply. Other countries are only too happy to take advantage of american greed.
Point is: The best and brightest go where they think their life will be most fulfilling. Up to last year that was California for tech and New York for culture.
By all accounts, you do not get rich in china by work. I work with the most talented Chinese scientists and none of them expects to be wealthy at home, the best hope to be what would be middle class in the US.
Unless they manage to get to the US they return, because they would not be safe from harassment anywhere else.
Scientists in most fields, sure, but that's the case anywhere. If you happen to be an AI expert though, pay at top Chinese companies is very competitive with Silicon Valley.
Also, the structural inequalities of Chinese society dwarf the West, meaning that the Chinese middle class gets a lot more bang for their buck: ridiculously cheap delivery services, taxis, and other services.
>What seems most likely to me in the future is that the US will find itself in the same position the UK is in now.
Not quite. USA is big enough to be able to be self sufficient if they keep mexico and Canada tightly bound via NAFTA or military might. UK have no option but to trade. UK was rarely able to feed and fuel itself after the industrial revolution.
..Any country can solve it, just incentivise families. Simple things like ensuring young people have access to affordable housing and daycare. If I was at the start of my career ladder in a major urban area now, having a family would be close to the bottom of my priority list. Its not rocket science.
> .Any country can solve it, just incentivise families.
In the US, parenting time is up 20-fold, from a few hours per week to 24/7 adulting.
Companion to that is that free-range land has shrunk from many sq/mi to a few sq/yds. Car culture and trespassing culture has eliminated the irreplaceable environments where adult-free, peer time nurtured mental health and abilities.
As near as I can tell, parenting and childhood is irreparably broken in the US.
We certainly seem incapable of recalling what sustainable parenting once looked like.
On rare occasion someone will recall that kids once roamed all over. Maybe that gets connected to less mental health issues. Either way it's all forgotten moments later.
From before written history until a few generations ago, kids spent hours/day in adult-free, peer time making mistakes in everything from social interaction to physically risky play - and learning from those mistakes.
Today kids live entirely in adult curated, adult populated boxes. I'm not inclined to blame ipads for that.
> Any country can solve it, just incentivise families
The point of OP and what people don't get is that it's far easier to shift policies to brace for tough situations when you have a uniparty system and you're willing to make sacrifices. No 4 year administration is in any way incentivised to enact policies that only become effective after the next election. Note that I'm not saying that undemocratic systems are the solution.
Unless they are friends or family regulations will never allow. But you are right there is an abundance of old lonely people who would do this for nothing and it would benefit everyone.
No credible source says 1.7, the source that says this must be based on some kinda UN projection of 2010. Real TFR is probably around 1.0, in some parts of china it's below 0.7 (in the northeast it's around this number, in Macao it's 0.4). A lot of other countries are completely fucked as well and google pushes up UN projections from years ago (Like colombia UN projects the fertility rate to be higher in 2100 than it is according to the official numbers right now).
Don't worry, Republicans are hard at work making the USA a pariah state and turning away the educated migrants who've been behind most of the innovation and research of past decades.
The US has benefited quite a bit by being a magnet for some of the most educated and driven people from around the world. This is not a controversial take.
Now, legal resident noncitizens are being deported for having political views that oppose the ruling executive party. This is not normal in the US.
Immigration is a double edge sword. Sure, it brings highly educated people on the top end, but also less educated at the bottom curve.
and on balance it changes demographics dramatically, that also shapes US policy in the future. It will be harder for USA to continue to be bloody warmongering machine with Military industrial complex dictating the policy and bombing countries and blowing up civilians around the world.
That's not necessarily a good thing. Do the New Americans want the same things as the pre-existing ones? Are they as capable? Not just "in a few generations" but here and now? Are they even likely to be as capable "in a few generations"?
If the statistics aren't very wrong, it doesn't seem like a solution.
by all statistics, it is Americans that make the life in the USA insufferable: corrupt politicians, oligarchs, lobbyists, party leaders, and criminals (the ones that sell drugs and shoot people).
go to any county/state jail and try to find a single H-1B visa holder there... its all home grown foundational Americans, raised on McDonalds and Coke
I think it's pretty clear what Trump's long-term solution is with unobtainable economic goals on China and strategic outreach to Russia — He wants to turn that 4x into 1x via hot war before the Xi's 2027 military goals are reached.
> Yeah, it's real easy when you employ an army of nation-state hackers
No it's not, even if it were true. Is it really that hard to admit that the Chinese people are industrious, smart, ambitious and have extremely high education level? And that the state has directed the development of the country wisely in the past 40 years?
This sounds like official Chinese propaganda. This was truer at some point, but things have started turning bad for China with the advent of Xi Jinping. 20-25 years ago, the country was hopeful, developing fast, opening up. Foreigners started moving there, seeing it as a new land of opportunity. Much of that is gone. The economy is in bad shape, youth unemployment is massive, the country is a dictatorship, nobody wants to move there (and China doesn't want you to anyway). I'll quote the Economist: "When Mr Xi took over in 2012, China was changing fast. The middle class was growing, private firms were booming and citizens were connecting on social media. A different leader might have seen these as opportunities. Mr Xi saw only threats."
Go to any top-N American University, pick a random STEM faculty and count the number of Chinese (nationality) post-grads, post-docs and faculty. Alternatively, look at the trajectory of science publications coming out of Chinese universities vs the US. Underestimating China's brain-trust is doing oneself a disservice.
I don't need to be convinced that China has lots of bright, hard-working individuals. I just want to point out that China faces immense challenges and that we should see beyond, and push back against, the propaganda. There is a massive asymmetry between China and democratic nations in this regards.
This is a fair assessment. However, I think there is propaganda or self-delusion in the west that leads some people to believe that free markets and/or democracy are preconditions for any number of desirable outcomes like creativity, economic success, product innovation, etc. That may have empirically been true against the Eastern Bloc/Soviet Union during the cold war, but is not obvious to me regarding China today. AFAICT, China has produced companies that can go to to toe with the best in the west - occasionally winning outright[1]. We can argue whether that's because of subsidies, espionage, innovation or fundamental research
Why spend a decade researching something when you can just hack into American companies and steal their R&D about the same topic and then build from that? Saves a ton of time.
It's a pretty great strategy (for them) and works well.
About 20 years ago it was well-known that the cheap Cisco stuff on eBay was authentic in that there were say, two shifts worth of running the production line for Cisco and a partial shift for unofficial production sold outside of Cisco authorized channels and with no profit going to Cisco.
I actually think this kind of supports the point you're responding to. HN used to have a battle cry about startups where "the idea doesn't matter, it's all in the execution" (mostly because we're tech-ies, and not those business folks coming up with the silly ideas).
Well, to some extent that's the case with manufacturing. You're bemoaning the loss of IP, which is catastrophic when that's all you have and your wealth is built on a gentleman's game of words and paper.
China, meanwhile, has built out factories, a knowledgeable workforce, and an extensive supply network. Back to startup terminology, there's a "network effect" in manufacturing of all the little parts that make up bigger things. You can drive around town and try out different parts, and make an invention here or there and improve things incrementally. There used to be a thriving ecosystem around the big U.S. domestic car manufacturers, not just for the cars themselves, but all the thousands of parts that go into them.
In other words, like many older hackers who grew up in the "information just wants to be free, man" world that spawned open source, the dig that China is "stealing IP" doesn't really hit me that hard. I'm impressed that they've gone to the next step of actually using it to make physical stuff, and I wish we did that more.
> Yeah, it's real easy when you employ an army of nation-state hackers to break into and steal R&D and tech from US Fortune 500 and aerospace companies to then use it internally and give to private industry in China.
All of this is old, tired news. They're leading in many areas now, so at least in the fields where they lead and innovate, they couldn’t have "stolen" anything.
>The kind of spying China is accused of can yield valuable information and give the country's businesses a much-needed boost. Westinghouse spent a significant amount of money designing the special pipes that are the defining feature of its AP1000 pressurized water reactor. Stealing those plans means that a Chinese nuclear plant builder might be able to skip costly research and development.
>In 2016, the U.S. Justice Department charged China General Nuclear Power Group (CGN) with stealing nuclear secrets from the United States.[36][37] The Guardian reported: "According to the US Department of Justice, the FBI has discovered evidence that China General Nuclear Power (CGN) has been engaged in a conspiracy to steal US nuclear secrets stretching back almost two decades. Both CGN and one of the corporation’s senior advisers, Szuhsiung Ho, have been charged with conspiring to help the Chinese government develop nuclear material in a manner that is in clear breach of US law."[38]
Just two instances of many.
They play the long con and have pretty much stolen from every industry to further their own.
You do understand that Chinese Companies can easily just hire people from abroad?
You also do know how many companies moved their knowledge to China on purpose right?
The knowledge on how to build things, is learnable even if you don't just 'hack' everything.
And there is a lot of signaling happening, that china has surpassed American and European companies in R&D. CATL for example.
Whatever China did or still does, its a land with 1.4 Billion people vs. 340 Million.
Also we achieved, around the globe, a level of expertise around so many topics, that we do not talk about huge differences. If an engine from china is a few % less efficient than the high techv ersion from germany, but the labor cost is fundamental different, than you just loos.
And the prices are significant different. So significant, that if USA doesn't change, it will not be able to compete.
Even a 104% tarif does not change the competitivness of China in a lot of areas.
All of this is only a problem in capitalism btw. and with the upcoming robot revolution, the 'richness' of manufacturing will never again go to the workers ever. This time is over. We need to figure this out
Espionage and fundamental research are not mutually exclusive. The latter reduces the need for the former, and China is doing more of the latter now than it did before.
Infringement is good for the economy. Even our nations have progressed at a time when none of that was enforced, and are only strolling since then (or, as you may aptly say, rent-seeking).
PS: For those of us in software who wonder whether an economy without IP could exist, entire software industries exist without copyright protection, one trick for example is to provide the service behind the cloud, so customers never have access to the source code; meanwhile OSS, which is based on preventing restrictions on sharing, is the eighth wonder of the world, which has proven that IP is unnecessary to software.
Who in America is China copying with their high speed rail? Who are they copying with their drone displays? What about their skylines that more closely resemble our sci-fi films than anything we've actually built?
The truth is, China is already the most advanced country in the world and if we ever manage to modernize our infrastructure and manufacturing, we will be copying them.
Trust me I would love for China and India to start innovating and advancing the human race but taking the idea of a train and making it faster is just an iteration on a previous technology.
Darn right. Lots of smart, hard working, innovative people in China. And every single one of them would get on plane tonight if they could get a visa to live in US or UK (and a few other countries). So, which countries offer a better future for our children?
China could not only be ‘equal’ but ‘better’ than the USA - we should get used to the idea. China has an average IQ of 104 out of 1.4 billion people, while the USA has an IQ of 97. In purely statistical terms, this means that the USA has around 700,000 people with an IQ >= 140. China has 11,480,000 people with this IQ. This human capital will make the difference.
None of this is meaningful. IQ as national population-level statistic is folkloric. China may well have a human capital advantage over the US; that's what you'd expect from a country with over 3x as many people. But it has nothing to do with biological differences between Americans and Chinese people.
It's especially related in this context, which is engineering success. IQ is directly related to academic achievement in STEM, which is directly related to engineering career success.
Well we're not talking about career success, we were talking about comparisons of nation states. Having an IQ advantage there might prove marginally more helpful, but it's not really that important. I'd argue physical size and strength of a people are even more important than IQ when we're looking at across the board averages. Plus you have things like, idk, access to raw materials, geographic advantages, cultural advantages or disadvantages, systemic advantages or disadvantages including strong or weak institutions, training programs, etc. In fact, if you wanted to do a comparison between America and China you'd really have a lot better things to look at to show China as better than IQ.
With respect to "career success" you can have 50 million people in your country with IQs >140 and there's still a limited market to sell to. There are diminishing returns on capacity - you can have business analysts or call center folks with the IQ of Einstein and they'll be limited by the systems they are placed in.
The other side of this is that just because you are smart doesn't mean you are capable of doing well in the real world. Recall how there are a lot of "dumb rich people" and "smart poor people".
China has a millenia-long history of organizing a very large amount of people fairly well. They basically invented bureaucracy. Not everything is better in China of course, but don't forget about that aspect.
Yep, the Chinese basically invented the State and bureaucracy as we know it. In fact it was so good (despite its faults) that when China was invaded by outside forces and occupied, those forces themselves adopted the Chinese state to administer their new holdings.
I'm not being critical of China here though, I'm just being critical of the original discussion point. Quantity has a quality of its own, but it has trade-offs.
due to immigration, USA draws talent from global population of 8.2 billion, so the top limit of people with IQ>140 that can live in USA should be drawn from 8.2 billion, not 340 mln
So does every other immigration based country. Why do you think most talented people wouldn't choose a easier way and live somewhere with a higher living standard and less racism and hate?
yes, donny woke up the ancient racist anti-immigration, the blood & soil type crowd, but the economic benefits of immigration are still there (albeit with higher risks and higher hurdles).
I suspect this will simply make labor more expensive on top end of the talent curve
> Today, China is competitive with or ahead of America in key technology areas, including nuclear power, AI, EVs, and batteries.
I can’t tell if you’re brainwashed by propaganda or just spreading propaganda.
China is great at making things flashy. But the quality things like EVs is low. The battery quality is not good. The promise of long range cars is often 30% of the promise. Cars leaking. Rusting like American made cars.
Korea, despite developing MRI, still has a large amount of farmers, that do not get paid a living wage: No one really knows, because its a souce of shame.
"AI Overview
It's difficult to provide a precise number of Asian countries where farmers don't earn a living wage without specific, up-to-date data and a clear definition of "living wage." However, many Asian countries face challenges in ensuring farmers receive sufficient income to cover basic needs."
I will assure you, from being an eyewitness, its worse.
> But if we bump the cost of freight, insurance, and customs from $5 to, say, $28, then they wholesale the shoes to Footlocker for about $75. And if Footlocker purchases Nike shoes for $75, then they retail them for $150. Everyone needs to fixed percentages to avoid losses.
I don't understand this paragraph. If Footlocker was okay with $50 profit/shoe, why do they need to claim $75 profit/shoe in their costs per shoe go up? The costs of handling the shoes, retail space, advertising, and labor are all fixed.
In theory, you're right, however it ignores some key points;
-Some of their costs are in fact linear based on the cost of the item.
Inventory cost doubles, perhaps now they have to take out higher interest debt to finance that. Things like insurance would also at least double.
Transaction fees (like card fees at about ~2%) and other parts (like returns risk) also increase linearly.
-Reduced sales due to increased prices.
If an item is less affordable people buy less of them. Theft will also go up. If trainers were $100 a week ago and are now $200 - you will sell less, they will be stolen more.
All in you actually do need more than the fixed $50 of margin if the wholesale cost of the item changes from $50 to $100 - it may actually be that $100 is the correct number, or even too little - sales volume would concern me the most, particularly on this 'luxury' item.
I think it depends a lot. I remember working in retail for a summer and saw some of the prices. If you wanted to buy an alarm clock, that was 100% markup, but if you wanted to buy the Garmin GPS then it was 15% markup.
I would think that specialised and expensive shoes have less markup than cheaper and more common shoes. But if the cheaper and more common shoes become 50% more expensive then there aren’t really any cheap shoes left to feed the bottom line…
IMO for the Garmin vs alarm clock example, it's less about costs and more about power & branding.
The retailer & the wholesalers involved all have a reasonable idea about what people will pay for the products in question. The portion of that final consumer price that stays with the retailer is just the result of negotiation.
The retailer can likely buy decent alarm clocks from anyone, so alarm clock makers & wholesalers have no pricing power and the retailer can demand high margins.
But the retailer can only get Garmin from Garmin. If Garmin has done a good job promoting the brand, such that the retailer feels they have no choice but to stock it, they will have to suck it up and accept low margins.
Sure, but that has nothing to do with costs and everything to do with what the market will bear (while still recovering costs).
People will go and shop around for the best price on a $300 item, but for a $10 item they'll buy whatever's infront of them, so long as it's not clearly outrageous.
> Inventory cost doubles, perhaps now they have to take out higher interest debt to finance that.
I'm pretty sure Footlocker doesn't borrow money to pay Nike up front for inventory. Nike is smart enough to know that there's zero chance their shoes will be sold if they sit in a warehouse, so Nike might as well ship them to retailers and get paid gradually as the shoes are sold to consumers.
The general point is that additional cash is tied up in shoes which cannot do something else. Who bears the burden of the loss of that additional cash changes over time (Nike to Footlocker to consumers) but the burden is bourn.
(And that's before you count the impact of the inevitable reduction in unit sales. There're various kinds of overhead that don't scale linearly units sold, or that have a long lag before scaling, or have a significantly-sized step function in the scaling.)
BTW, where did the cash go? Oh yeah, into the hands of the US federal government. We have a word for that: tax.
Presuming that theft rates will increase also if the item is more costly and affordable to less[edit*] people. Also if inventory is damaged in the warehouse or on the sales floor, lost or unsold then those cost scale with the cost of the item.
It's a great question, and the answer is that you're missing the change in demand.
Let's say Foot Locker tries to keep the same absolute profit $50 and retails the shoes for $125 instead of the previous $100.
Now demand goes down, because more people will skip a new pair of sneakers. So Foot Locker's absolute profit goes down.
But they still have the same fixed retail space, advertising, and labor as you said.
So to try to keep their profitability, they need to increase the price more, which reduces demand even more, but it settles somewhere higher. And the place it settles (where total absolute profit is maximized) tends to be around the same 100% markup as before.
It doesn't need to be exactly the same, but as a general rule of thumb, these things do tend to work in proportional terms rather than absolute terms. And we're fortunate they do, because when manufacturing costs fall, that means absolute profit per unit can fall as well (while percentage remains the same), because it's made up for by more people buying.
There is also the fact that with each USD you can buy less and less as a private person.
So to have the same quality of life, you expect higher returns.
Which mean that you will choose to invest into companies that offers a better return, and for that, these companies will have raise their prices, which in turn, spirals into additional price raises.
That's not the fundamental cause, though. Companies can't just raise prices to achieve whatever return they want, because once you go above the profit-maximizing price, the fall in demand outweighs additional revenue per item, and once you go above competitor's prices, demand similarly falls.
Yes investors look for maximal returns, but those are limited. Fundamentally the ceiling is set by demand and by your competitor's prices.
Because the market recognized value add is the capital investment and returns, including the credit basis on which inventories flow. These people are operating on a per $ basis, not a per shoe basis. If the margins % lower then the capital will flow to something else more profitable and then prices rise until the margins are relatively flat across similar productive investments.
The market cares about dollar returned vs dollar invested. If some piece in the middle of the chain goes up and end customer prices go up as well, that doesn’t directly affect investors at all.
The way it could and likely will affect investors is if people start buying fewer shoes, but that is a different process than what you are describing.
If I’m off base can you help me understand what you are saying?
Take this to the logic absurdity, you have a car you previously sold for $2 for $1 COGS. Tomorrow COGS is $1M for the car. Could you sell it for $1M+1? No you would lose your ass because your line of credit and investments would not be able to be supported by the returns, in fact if this is your only option you would probably stop making cars altogether and invest in another business and sell your assembly line, eventually enough car companies would go out of business until the supply curve met a high enough % profit to normalize with performance of other businesses.
Now this analogy has a LOT of problems but the point is it directly affects investors, even if the interpolations inbetween are imperfect.
So basically the money a business uses to produce the next tranche of goods (so to speak) normally comes not from income from sales of the last tranche, but rather from external funding sources such as loans or capital injection from investors?
Is that really so common as to be universal and affect investor behavior like you suggest? Like for certain types of business, and especially for early stage businesses, I do expect this to be the case. But does it apply to the market broadly? Scary if so, since it seems like a destabilizing force.
It's going to vary business to business, but if you have to spend money now to make money later, there's always going to be some preference to make sure that if the % return later is too small the money gets reallocated to something that can offer better returns.
Whereas a business that can figure out how to be paid significantly before it delivers can run on much slimmer margins.
It tends to affect larger companies even more because their cash flow is heavily buffered by lines of credit on both sides, their vendors and clients. Their customers might pay them on net 30 or even net 90 but many costs - like salaries for the people to service those contracts - need to be paid on shorter time horizons.
If you can make $5k/year by investing $100k into shoe-selling, then those profits have to rise at the same rate as base costs, otherwise, people will just invest into eggplant-selling, instead.
Another perspective is that Footlocker would sell you those $25 Nikes for $300 if they could-- but if they tried, someone else would get active in the retail business and invest into a slightly less profitable operation (with lower margins) to eat into their market share.
But if the costs for everyone rise, raising the prices proportionally (instead of by fixed amount) makes total sense because it is not really gonna cost you market share (only decrease total market volume depending on consumer price sensitivity).
Note: We just observed those exact dynamics with Covid/Ukraine driven price increases, where retailers and other middlemen actually came out really good instead of sacrificing their margins to keep consumer costs down.
You can only raise prices so much before people look for alternatives to what you’re selling or do without. What we’re going to see with tariffs isn’t just price increases. We’re going to see some price increases, some reduction in selection, some stores closing, and some layoffs.
But profit for the investor is based on what they put in and get out, no? Profit calculated against the company’s cost seems like an implementation detail for the investor.
Surely you can see that putting in $75 to make $150 for a $75 profit is significantly different than putting in $10075 to make $10150 for the same $75 profit, yes?
I hope you can see how spending $75 to make $150 revenue and $75 in profit is a much better position than spending $50 to make $100 in revenue and $50 in profit, if you are limited to how many transactions you can make in a day by physical infrastructure.
I think it's understandable for the store to charge more for their shoes, and for the stores to make more than $50/profit per shoe to cover higher capital investment and increased risk of loss, but I don't understand the logical leap where the store now can make 50% more profit per shoe.
From an investment perspective, $50 -> $100 is exactly the same as $75 -> $150. The difference in the number of transactions that actually occurred is trivial. I see the point you’re making but I don’t agree that it matters until the transaction value shrinks to the point where you’re selling things in huge batches (e.g a 5 cent part you sell for 10 cents, but you sell them by the 1000s)
The market cares about dollar returned vs dollar-x-time invested. A shoe sits on a shelf until it is sold. If it costs 1.5 times as much to stock a store with shoes, then you need to earn 1.5 times as much money after the same time-delay.
Think in the extreme. $1 billion can probably earn more in a saving account than as a shoe that generates $50 profit after 2 weeks.
Selling shoes that you purchase wholesale for $75 has costs that go beyond selling shoes that you purchase wholesale for $50. There's the cost of money to buy the inventory, the cost of holding the inventory (and insuring it), the cost of shrinkage, the risk of being unable to sell some of that inventory. Most of those costs scale with the wholesale cost of the product being sold, although not necessarily fully linearly. As a result, a top line $50 margin on a $75 product gains you less than a $50 margin on a $50 product -- in a world with cheap capital. If you're restricted to holding $N of inventory due to cost of capital, this becomes even worse -- not only are your bottom line margins going down as much as 15%, but you're able to do it on only two thirds as much inventory, which (depending on turnover rates, etc) can drive you even lower.
Inventory costs money not just due to the cost of storage, but also because it’s bought on credit. The higher the price, the more money needs to be borrowed. The longer it takes to sell it, the more interest needs to be paid.
(If it's not bought on credit, there is still opportunity cost, since that money could have been used for something else.)
I don’t think this is quite a sufficient explanation. If I were an investor / owner of a distributor or retailer, I think I would observe that these businesses don’t scale arbitrarily and I would care about returns as a function of cost of goods sold, operating expense, and of cost of customer acquisition. In this context, cost of goods sold will include actual wholesale cost as well as associated costs that scale along with it: insurance, shrinkage, samples, etc. Cost of customer acquisition will not scale as strongly with wholesale cost — one would need to advertise a bit more to convince people to buy a more expensive shoe, but this should be less than linear. And operating expenses (retail square footage, warehouse space, cashiers, shipping and handling) are almost independent of the cost of the pair of shoes.
All that being said, tariffs drive up the cost of living, which drives up wages, which makes everything more expensive.
In addition to the points others are making, there is also the increased cost of inventory that doesn't sell. The flipside to the high markups from retailers is the high discounts you get on last season's fashion. This is the "fixed percentage to avoid losses"
My local produce store was complaing about this. The prices increased about 20 fold. What was once a small loss due to spoilage now became significant.
But the cost of buying and holding inventory goes up. If a store has 10k shoes in inventory @ $50/each, they are carrying $500,000 in inventory. If the shoes now cost $75, they need $250k more for inventory. Capital for inventory isn't free.
The need for inventory decreases at the same rate as the sales throughout, e.g. if it takes twice as long to sell a pair of shoes than you only need to hold half as many.
Because it's mostly wrong. Luxury goods like Nike's, iPhones, et.al. are priced to maximize revenue. If those started growing on trees for free it wouldn't appreciably change the price. They'd just bank the extra as profit.
An aside: the actual functional Nikes aren't luxury items, just really good shoes. My wife’s a foot surgeon and she won’t run in anything else because they fit her perfectly.
I've never found Nikes that work for me, but Brooks seem custom made for me personally, so that's what I get. They're about the same price as my wife’s Nikes.
I agree fully. Having comfortable shoes with reasonable lifespans isn't a luxury.
If you spend more money and get a proportional increase in quality, that's not luxury. A luxury good occurs when the marginal increase in quality cannot be justified by the increase in price. For example, you could buy a quartz Casio for $25 that's more accurate than a $10,000 mechanical Rolex. Both tell you the same time.
There's cost based pricing and there's price based costing.
Food and clothing, anything with complex supply chains tend to be cost based pricing. As a rule of thumb, it's x3, maybe x4 for a well-branded item like Nike or Calvin Klein. Most innovations are on supply chain. E-commerce was such a big thing because it could cut out one middle man and lead to 30% price cuts or profit margins, and yet all these online shops ended up appearing in malls anyway.
Software is price based costing because there's no fancy supply chain. iPhones may be somewhere in the middle, hardware tends to have the worst of both worlds - high fixed costs and lots of middle men.
A McDonald's may have franchises and may own some restaurants internally, but they don't want to lose money, so they may base it on the lower profit margins - it makes no sense for a burger in one spot to be $4 and a burger in the franchise to be $5; both need to be $5.
Generally luxury brand do use more expensive parts, whether or not those parts add to the quality. And they do have higher profit margins. But the retailers, distributors, etc still take a 30% cut or so. And in the end, Louis Vuitton is still probably making lower margins than Plants vs Zombies.
The truly luxury Nikes, the ones that cost way more than $100 - $150 are not priced to maximize revenue, however. The evidence is their pricing on secondary markets, which often price them at multiples of the retail price.
The difference between selling every shoe at $150 and selling less than every shoe at $300 (or whatever the secondary market is charging) probably gets tossed around in pricing meetings.
Plus, higher secondary market prices drive demand for the less desirable shoes as everyone can't afford to spend a week's wages on a pair of shoes but can stretch their budget for the still-kind-of-cool models. I'd go so far as to say the secondary market prices drive more demand for the lesser models as the cool kids want to be seen wearing what the rich cool kids are wearing.
I'm sure they spend a lot of time discussing what price they can charge without people openly revolting against their 'predatory pricing' strategies.
Short answer is return on investment. If I get $50 on a $75 investment when I used to get it on a $50 investment, my ROI goes down. My investors are now mad. They sell their stakes and buy into a company with a better ROI. My stock price goes down and now I'm mad.
> I don't understand this paragraph. If Footlocker was okay with $50 profit/shoe, why do they need to claim $75 profit/shoe in their costs per shoe go up? The costs of handling the shoes, retail space, advertising, and labor are all fixed.
Some extra costs are real and linear to their "factory" price (returns, insurance, stolen stuff, less people buying less shoes, so they need higher margins to survive, etc.).
On the other hand... they can raise their prices today by $whatever_tarrif_trump_mentioned, and blame trump for the price hike and pocket the extra profit.
I seem to remember from many years ago in retail that you should double charges every step of the way, so if you are paying 20 dollars for a t-shirt you should be charging at least 40 for it, as a sort of rule of thumb.
Margin as a % is a key metric, more so than margin as a $. It's not always sensical but it's dominant in the business/investment community.
For example, you may announce to public markets that your profit has increased $10M despite margins eroding from 50% to 30%. You will likely be punished in terms of stock price. This is because you sold a lot more or trimmed some expenses (which is short-term good) but you are also now more risky because if sales decrease you will more easily run into trouble breaking even/covering operating costs (which is long-term bad).
more expensive shoes will lead to longer lead times to sell inventory, due to downward slope of the Demand curve (less demand for more expensive shoes).
If you sell $75 shoes, you can sell 1000 units/mo, but if your shoes are $100 you can only sell 700/mo and it will take 1.5 months to sell 1000 units.
This effectively increases fixed overheads per pair of shoes and decreases net margin per pair, given constant demand
>why do they need to claim $75 profit/shoe in their costs per shoe go up?
A lot of the costs come from bidding against other retailers for employees and retail space. If you don't make as much as the rival retailer they'll outbid you.
You can sometimes get around that by buying direct from the internet.
Margin isn't profit. It's gross, before all your business expenses. If it's anything like the second example, they only see a few dollars out of that $50 as corporate profit.
Not at the bottom of the supply chain. As a farmer, we get told what the price is. Our only lever is to opt out of selling if we don't like the price. Which is ultimately the same as the consumer opting out of buying.
This isn't what it says in the thread. It's saying Nike and retailers need to maintain their markup rate on their unit cost.
> And if Footlocker purchases Nike shoes for $75, then they retail them for $150. Everyone needs to fixed percentages to avoid losses.
The problem with your breakdown is you're mixing unit costs and net profit in a way that doesn't work. For example, say after increasing the price in accordance with your summary, the volume of sales halved (just to pick an easy number). Then the $17 marked as "Footlocker expenses" increases, likely to around $34, and Footlocker's profit becomes -$10. The absolute expenses haven't changed. They're still paying the same amount for their employees and storefronts. But with half as many shoes sold, the expense per shoe is doubled.
It's not just sales volume that affects the $17. Other costs like credit card fees or shrink scale with the unit cost as well.
Just to say the obvious, they are also going to sell fewer/cheaper shoes according to the demand elasticity since the consumer price is 32% higher. Despite Nike making slightly more on a per-shoe basis, they are probably going to make less overall.
I wouldn't assume that they wouldn't segment products. Nike already offers more expensive lines with higher margins to offset less profitable ones. Why should we expect them to pass on direct costs to customers?
The blog also doesn't acknowledge the externalities of shipping. Having a "Nike USA" brand that becomes their premium domestic flagship won't incur the same logistical expenses or tariffs. I may be biased because I'm from a debtor colony that understood there's no way free people can compete with slave labor, but the distaste for compensating workers is largely a classist taboo.
People are theorycrafting ways to lose, but I would only expect that from a company that was trying to signal their disdain for current trade policy, not actually run their business.
The piece to add there is that all this money is getting paid by the consumer. The overseas piece doesn't change, same number of US dollars going to the other country. The $24 increase in cost is paid by the US consumer.
That's what I don't get. It's always phrased as the US somehow making all this money when in reality it's Americans that are paying for it. Among other reasons to be able to afford tax cuts in the future. Sure this will hurt other economies but primarily right now it seems to hurt the American economy and people the most.
It's just a sales tax. I don't know why people opposing tariffs never talk about them in this manner because sales taxes are something people innately understand if they have spent any time in the US and "tariffs" clearly aren't as well understood.
It's worse than a sales tax. Tariffs have a few market-distorting effects that a sales tax doesn't.
* Domestic consumers and companies are incentivized to potentially go for the 2nd best product. This over time can impact productivity as the tooling will decline over time as inferior solutions are bought.
* Reduced competition. We've seen this with the 25% "chicken tax" on pickup trucks. Arguably one culprit in US automakers falling behind is that they had a protected market around pickup trucks where it was hard to impossible for foreign competition to keep them on their toes. So US automakers retreated more and more into this safe haven.
* Destruction of economies of scale: If everyone wants the entire supply chain to be replicated in their country, we obviously loose economies of scale and thus efficiency. This sounds like it would be small but having multiple Shenzhen's is just not viable and we'll have to deal with higher prices and less product choice.
* Galapagos island syndrome: Over time separation of markets can lead to incompatible technologies which amplifies all other points.
Agreed, complex policies open the door for unintended consequences and have higher enforcement cost. If you do a sales tax or VAT it should be flat. If anyone thinks that it will be regressive or put poor people at a disadvantage, the answer IMO is UBI, even a small one can make up for sales tax on food while avoiding the deadweight loss from nonsense like that Jaffa cake nonsense.
> sales taxes are something people innately understand if they have spent any time in the US
The way they are done in the US is maddening. You go to the counter and find the price is higher than the tag price by some random amount. It seems to vary wherever you go and depend on what you buy.
There's actually a really good argument in favour of that -- and in favour of paying income tax not as a direct tax (withheld from wages) but with a delay.
It makes the taxes visible and painful and they will therefore (potentially) not rise as fast or as much.
It also puts more tax burden on the less wealthy. Sales tax is regressive; income tax is progressive.
But yes, that’s exactly why the American right makes taxation so cumbersome and horrible: to make people think that taxes are bad, as there’s this assumption you can have civilization without paying for it.
I think that's an argument, but not necessarily a good one
Need to balance transparency in pricing vs. visibility of taxes. I don't think sales taxes are actually all that visible most of the time- it's not like the cashier is telling you "and your taxes are $X." But it does make it much harder to detect if the store is charging you more than list price.
>And if a US shoemaker wanted to undercut the import, a Made in USA shoe that sells for $100:
Somewhere in there you have to also figure in the cost of the fact that shoe factories and the suppliers of the goods to make shoes also don't exist in the US and will cost millions, and years, to get setup.
Every country has optimized their own economy so it's incredibly cheap for us to import shoes, or it was. Now it is not, so sure we could try to make some cheap shoes here. But now we have to make cheap shoes, grow cheap citrus veggies, make cheap computer chips, make cheap needles etc etc.
How much capacity do you think the US has to manufacture these things? and what about the supplies?
You can buy made in USA sneakers like New Balance 990 series. Generally all the materials except the sole are US sourced. Retails for $200 a pair. What kind of sneakers do you buy?
Running a manufacturing business in the US is more expensive. Consumers largely won't pay more, it's a limited market. The machinery for molding soles only makes economical sense at a large scale.
They’ll pay more if the imported shoe costs the same or more.
The US does massive amounts of injection molding. I just signed off on my molds to be cut and run this month, how much experience do you actually have with this I wonder?
I've always wondered why the supply chain has exponential price increase at each step. The example given (guessed at) is the factory produces the shoe for $12.5 and sells it to Nike for $25. Nike then sells it to Footlocker for $50 and they then sell to a customer for $100. Everyone expects to mark up their costs by about 100 percent. Why is that the case? Even if we say the markup isn't 100 percent, why is it a percentage of cost at all? If the shoe factory can make $12 then why can't Nike and Footlocker both make $12 and retail the shoe for $50?
I'm not saying things should be different, just wondering why it is the way it is. If Footlocker was also selling some cheapo shoe for $50 presumably they do the same amount of work to bring that to the store. Are they only paying $25 for those? Why does it cost half for them to handle a cheaper shoe?
On thing you have to consider is the scale at which these shoes are sold at each step. From the factory they're processed and shipped in giant containers. The overhead of handling each shoe is fairly small at that stage.
When it comes to the retailer, there's a huge increase in the amount of work and overhead for each shoe sold. And the labor cost for that work is much higher than on the Asian side of the supply chain. That's also where you get potential waste from returns and discarded inventory and such. The retailer also have their own marketing costs.
I don't find it strange at all that the retailer expects a 100% markup.
Real estate is insanely expensive - you have to sell a lot of shoes with your "100% markup" to make rent.
The flip side however - e-commerce with its totally different cost structure and same traditional RRP as brick and mortar retail - should be - a gift from above for retailers.
In some cases, in e-commerce your trading rent for shipping expenses. It helps you scale quicker as you have wider reach but the variable cost of shipping and taking returns can go sideways.
The good thing about rent is it’s relatively fixed so it’s possible to gain leverage with volume. That is also a risk if volume shrinks, etc.
It's more of a work backwards thing. The price is set by demand, what the market will bear, etc. Then for well established supply chain / commodity goods overhead tends to rise to meet COGS. The reason is that there exists profit taking at every level of "overhead" but when the cost of revenue exceeds the cost of goods it becomes a marker of inefficiency. In the same way when manufacturers recognize that their cost are less than the retailers overhead to generate sales they see room to raise costs so markets trend to 50/50.
But consider Footlocker sells a lot of other shoes for much less than Nikes. Those shoes don't cost any less to manufacturer and depending on the brand are just as well established so the 50/50 ratio still applies. It's just that at each level the overhead adjusts to meet the ratio over time.
For fringe brands the retailers markup can be huge 10x or more.
The numbers at each step is only considering the marginal cost. There are various overheads that are fixed, some described in the article. And of the day the actual profit at each step isn’t necessarily very high.
> chain has exponential price increase at each step.
The amount of risk increases at each step.
That $24 in "discounts." Almost certainly some amount of that is "shrinkage." Storefronts are expensive in more ways than one.
You could take your monthly rent and costs and then divide by size of a product times the average hold time before sale. Each item has to pay this price plus whatever you want in profit to "earn" it's place in your store. That time multiplier gets worse at each step with an extra kick in the behind if you took those items on credit.
The manufacturer holds the product for almost no time. The retailer may hold it for months.
because businesses have overheads? and customers have brand preferences that stop (or limit the success of) Footlocker just selling generic models without Nike's involvement?
Footlocker probably doesn't have much of a margin, the price they charge is due more to high labor and real estate costs in the US which are being passed on.
The thread was kind of hand wavy over the "$24* discount" for Footlocker? From the linked article...
>Footlocker’s purchase price (read footnote #3) for every sale of $100 shows up as $66 in their financial reports, and not $50. In plain terms, Footlocker sells its merchandise for a 24% discount on the average.
So $100 was never the sale price, just some made up, hoped for number that only appears on the shoe box, and not on anyone's financial statements. Really this should be Footlocker makes $6 on selling a $66 sneaker, for a margin of ~9%.
BTW, both Footlocker and Dick's have gross margins ~30% but Dick's has an operating margin around 12% while FL is 1-2%. Clearly FL is an inferior retailer.
And the linked article does cover Nike selling directly...
>And what happens if brands skip the retailers and operate their own stores? adidas and Nike already have their own shops, but direct-to-customer retail comes with its set of challenges. Brands will incur costs otherwise absent in the wholesale business model; spends like leasing+manpower+operational costs, store set-up and periodic re-modelling cost, the entire risk of inventory, and costs associated with warehousing and distribution. That’s only at the store level, there will be additional off-site resources needed in the back-end to support retail operations. The brands will make some extra margin selling out of their own stores, but the best case scenario will be an additional 10%, which is slightly above what a highly evolved retailer like Footlocker makes annually after taxes.
I would argue that a great deal of selling today is direct, no stores involved at all.
>So $100 was never the sale price, just some made up, hoped for number that only appears on the shoe box, and not on anyone's financial statements. Really this should be Footlocker makes $6 on selling a $66 sneaker, for a margin of ~9%.
yes. but any arguments you see in favour of onshoring manufacturing would use undiscounted list prices, so it makes sense to start from that place.
Well, Since I am close to a Shoe Palace, I just walked in and talked to the sales man. He likes selling New Balance, and the price ranges from $34 to $167, and the $167 is a discount of 33%. I talked to him long enough that the assistant manager came over, and both of the really were ashamed at shoes made in Vietnam, and Cambodia, they got it, and I told them that
You can, but most people go to a shoe store and check out different brands. Most people that end up buying Nikes aren't the people that only buy Nike and know what they want without trying on a few pairs.
Like unless you just know you specifically want some Nike shoe you aren't likely to visit Nike.com to buy shoes.
> BTW, both Footlocker and Dick's have gross margins ~30% but Dick's has an operating margin around 12% while FL is 1-2%. Clearly FL is an inferior retailer.
ELI5: What is the difference between gross margin and operating margin? Is operating margin the same as profit margin?
Maybe easiest to explain from a software perspective.
So if you build a SaaS app, your company will incur a number of costs. You need to pay AWS for hosting, your support team, your sales team, your annual team retreat to Mexico, etc.
When you start measuring your profitability you then will separately measure the profitability of your product vs. your business.
The profitability of the product is your gross margin - essentially your revenue minus your cost of goods sold (COGS). Not all of your business expenses fall into here - only the costs that directly relate to supporting the product.
So…
- Your annual team retreat won’t hit your gross margin: this cost isn’t essential to supporting the product
- Your AWS costs will hit your gross margin (if you turned off AWS tomorrow, your product stops working)
- Your Slack bill does not hit gross margin
- Your product & engineering team normally doesn’t hit gross margin, but DevOps does (because DevOps is seen as essential to supporting the product while R&D is not)
Now in reality it does get a bit more messy. Businesses might allocate a % of engineering costs to GM to account for essential maintenance and bugfixes.
So the way to look at it is: what costs are essential to the continued delivery of the product and what are nice-to-have?
And then operating margin essentially considers all of the non capital costs. It’s a more comprehensive view of all the businesses revenue and costs.
For a smaller business it’s very normal for operating margin to be razor thin or even negative. Because just one or two engineers could cost more than your entire revenue.
But this entire concept is why software companies have historically been able to be unprofitable for so long. A business that’s losing a ton of money every month might only be losing that money because it’s investing very heavily in R&D. Or maybe it just moved into a new
As you scale the relative impact of a lot of those costs will go down significantly - e.g. your engineering team cost will stop being 300% of your revenue and will start being 20% (you don’t hire engineers linearly with growth).
So the theory is that if you can find a software that has:
- a big market
- great gross margin
Then with just some upfront cash investment you can provide the business enough runway to grow the revenue to the point where the impact of some of these expenses becomes very small. At a certain scale, a product with 50%+ gross margin will be producing so much cash that it can pay for the rest of your operational expenses without further investment.
This also doesn't make sense because buying shoes from Nike.com costs roughly the same as Footlocker. Is Nike taking that 50% cut in this case? Article definitely hand waves away a ton of the complexity around tariffs and global trade.
My favorite line is: "Asian manufacturing in Asia produces US jobs. You go to Footlocker to buy a pair of $100 shoes because you can afford them. This creates jobs for the Footlocker employees".
It feels like people have completely flipped their views on offshoring manufacturing in the last 6 months. If you go back 10 years ago we were barraged with stories about Foxconn, corporations exploiting workers in developing nations, and scenes of abandoned manufacturing cities like Detroit. The popular view was that we needed to build our manufacturing base back up and that using developing nations to pump out cheap disposable goods was bad for everyone except giant corporations.
Now we are getting told that corporations offshoring all their labor to developing nations is good, and that the USA should not do manufacturing. This article even asserts that we will lose jobs if we produce things domestically.
I don't agree with the ham-fisted bullying approach Trump is using, but I do agree with the philosophical underpinning. Offshoring all our manufacturing is not a good long term strategy and will slowly erode the value of labor and our economy.
I work in marketing for a large number of e-commerce brands across a variety of verticals, including shoes. Brand direct on Nikes website is bugged, but is absolutely dwarfed by sales in brick and mortar retail stores. Think about target/walmart/dicks/big5/etc and then think about just Nike.
The problem i have with this article is they use a "Hypothetical shoe" that retails for $100, but then directly quote a $220 shoe for the "American Made" side. Then use this as the entire justification for the price disperity. People absolutely pay $220 for "Chinese made" shoes too. It's all about branding...
Rockwell is price competitive with both kuka and fanuc. If you want to talk about 'Difference in manufacturing cost', why don't we start there?
Derek writes a lot of great fashion threads but he is a dyed-in-the-wool partisan and it comes through any time he touches on things remotely political. This doesn't mean he's wrong and it isn't even necessarily a bad thing, but it's important to keep that in mind and just remember that when he says something political he likely arrived at that political opinion first and is picking examples/hypotheticals to support it, and not vice versa.
I worked in the retail; it is the shittiest job I ever had. I was given an abnormal schedule: two days closing, one day opening, one mid shift (and I should work either Saturday or Sunday). The churn is really high: people leave even if they find a better yet shitty job. Which jobs do you want to create in US? Retail jobs or manufacturing jobs?
Given the manufacturing is currently being done by people making much less than US minimum wage, I’d have to say retail!
People forget why manufacturing was moved out of the US. Manufacturing jobs sucked major ass. Then they sucked less ass, when unions started gaining power. Then the companies saw their employees had prosperity, said “fuck you”, and left.
We’ve crippled unions to such an absurd degree that the reality is that, if manufacturing came back, the quality of life for average Americans would go down significantly. It’s not 1955 - you’re out of your goddamn mind if you think a factory worker can maintain the quality of life now, let alone afford a suburban home on one income like in the past.
Because of tarrifs, demand for local manufacturing increases and manufacturing wages will be greater than they are currently abroad due to newly constrained supply.
Okay, then we'll have unions then. I don't see what the issue is here. I have heard this reasoning several times, even in person, it seems to misunderstand the action of protectionism in the first place.
You can't have an industrial economy if workers don't have any leverage to demand sufficient wages or if unions have so much power that they bring the balance of labor negotiations to unprofitability.
I don't think manufacturing jobs suck ass. They probably aren't great for your physical health, but it is better for society spiritually in the long term to have the majority of society focused on producing something real rather than just having an endless network of fake jobs as a means of wealth distribution.
The factory worker of today can't afford anything because they are competing with third world wageslaves to outsource manufacturing to our geopolitical rivals.
> Okay, then we'll have unions then. I don't see what the issue is here.
America wont have unions nor consumer protections. For that matter, it wont investigate crypto scams either and will accept industrial pollutions to save factory owners money. Meaning, workforce will be less healthy due to impact on air they themselves are breathing.
There is no planned change to create protections for low level employees, but there are many changes allowing owners to do whatever. Once competition ranks up, they will be forced to pollute and mistreat workers or go out of business.
>it is better for society spiritually in the long term to have the majority of society focused on producing something real rather than just having an endless network of fake jobs as a means of wealth distribution.
OK, you want to sacrifice health of some for "spiritual benefit" of others. But those jobs will be as fake as healthier jobs those people have now.
>America wont have unions nor consumer protections.
Why not? I would vote for it.
IDK how consumer protections fits into this, but avoiding crypto scams is pretty easy, just don't invest in crypto if you don't know what you're doing. It's only on the utility/monopoly scale that the government needs to be involved in consumer protections. Net Neutrality is a great example of the dems having the right idea.
I think democrats would have a decent chance of winning elections if they abandoned idpol stuff.
>There is no planned change to create protections for low level employees, but there are many changes allowing owners to do whatever. Once competition ranks up, they will be forced to pollute and mistreat workers or go out of business.
Okay, then we'll change regulation to better suit this. The purpose of protectionism is to reduce this competition.
>OK, you want to sacrifice health of some for "spiritual benefit" of others. But those jobs will be as fake as healthier jobs those people have now.
I don't think so. The end purpose of industrial jobs is to produce something real. The purpose of most jobs today is to do literally nothing while acting as a wealth distribution mechanism: our country basically makes money by selling our currency to be used by other nations as the global reserve currency.
David Graeber has a good book about this called "Bullshit Jobs" if you are interested in this theory.
Unions crippled themselves. Government employees unions destroyed the US government by getting the politicians in their pocket so much that no union member can be fired or held accountable in any way, and that led directly to Doge. Corporate unions were so abusive that companies were forced to move overseas, losing American jobs.
Each worker can negotiate easily on their own behalf or simply work elsewhere. Unions are unnecessary and always end up corrupt and wasteful.
> no union member can be fired or held accountable in any way, and that led directly to Doge. Corporate unions were so abusive that companies were forced to move overseas, losing American jobs.
This is a complete re-writing of history.
Unions were not "abusive". Typical union negotiations pushed for safe(r) working environments and reasonable wages.
Companies moved overseas not because they were abused (Jesus Christ). They moved because there's lots of parts of the world where you have access to psuedo-slave labor.
I don't want to be a slave. My fellow Americans don't want to be slaves, either.
> Each worker can negotiate easily on their own behalf or simply work elsewhere.
This is delusional.
Let me put this bluntly. If you're not even willingly to acknowledge the obvious asymmetry in leverage during labor negotiations, then your opinion on unions is worthless. You're not an honest party, or maybe you have trouble coming to terms with reality. Unfortunately, that means your opinion is better suited for the loony bin, and not any serious discussions.
As an aside, there are lots of great arguments to make against unions. Do that instead.
I support unions, banding together as employees to negotiate with an employer sounds fine.
I disagree with forcing employees to join a union who do not want to. I disagree with forcing a business to negotiate with a union that does not want to.
Manufacturing jobs in Asia (e.g. making shoes) have much higher churn than retail jobs in Asia. That shit is hard work, but well paid by local standards.
Manufacturing also requires young people. You can't work in a factory in your 40s. The west is demographically ill-suited for those jobs.
I agree with sibling post saying both but with a note.
(Most)Shitty job conditions can only exist if there is an abundance of labor; why can fast food joints get away with irregular scheduling? If the supply of labor is tight, jobs have to add bonuses to keep workers.
Why is health insurance tied to jobs in the US? Because during WWII, the government set limits on wages so companies started adding insurance and other items to attract workers.
During the GFC, what did companies do after cutting workers? Start cutting benefits, the workers couldn't walk since no one was hiring.
> Even the “father of the 401(k),” Ted Benna, tells The Journal with some regret that he “helped open the door for Wall Street to make even more money than they were already making.”
>Other experts agree: On its blog, the Economic Policy Institute recently declared 401(k)s “a poor substitute” for the defined benefit pension plans many workers primarily relied on, which provide a fixed payout for employees at retirement, and which have now become increasingly rare. Nowadays, “just 13% of all private-sector workers have a traditional pension, compared with 38% in 1979,” reports The Journal.
This is a false dichotomy. Creating manufacturing jobs doesn’t mean there are no retail jobs. We should have both. Different people have different preferences. Even the same person at different times in different situations. Why limit ourselves to one option?
Sorta related: Those Crocs/clogs shoes have been extremely popular for a few years now. ... I've always wondered how much it costs to make that type of shoes (Crocs/clogs) - it can't cost more than $1 to make most of them; they're just injection-molded, right?
You can buy Croc knockoffs at the "Dollar Store" yet Crocs still exists. Why? Is it purely first-mover advantage/brand or is there an engineering edge?
The material used by genuine Crocs seems to last much longer. My brother bought some knock-offs at the same time that I picked up a new pair. He wore through the soles in about two years while mine are still kicking after almost 8 years of near-daily use.
You can get the genuine ones for $18 to $35 on ebay depending on the color, so while I'm sure you can save some on clones it's not worth it for the durability and comfort.
There are _some_ differences in quality, but I think they're pretty minor.
I recently visited the Philippines and a friend bought some knockoff Crocs at a market. The little rivet thing holding the strap to the shoe had the logo printed right on the exposed plastic, and after a few days, the logo was mostly scratched off. But my wife's Crocs that she bought a decade ago still look fine because there's some sort of sealant on top of the logo.
Is that worth an 800% markup? Probably not. But the knockoffs do cut some corners that the genuine articles don't.
I don't know about Crocs but brazilian flip-flops "Havaianas" never lost market share even though it feels so trivial to clone it.
The only two modes of failure of this sandal is "drying up" after a couple years and broken thong straps (yes, 3rd parties sell those as replacements..)
I guess they make sure they have cheap offerings and are always investing in design and marketing so no one can enter this market..
I had a pair of knockoffs that were passable for limited purposes but certainly didn't pass muster as my primary shoe. I thought that the style just wasn't my thing. Then I got a pair of real Crocs and they very quickly became my go to for most purposes.
I don't know enough about shoes to explain why, but the difference in comfort level was huge.
Lets say a nike shoe costs $120 or so today(searching air jordans in google lists a huge number of shoes at that price point), in my mind this is quite cheap as I wanted a pair of Air Jordans in 1990 and they were the same price, $120 for kids shoes roughly 35 years ago. Adjusted for inflation thats roughly $303 USD in 2025 dollars. So basically through outsourcing manufacturing to China and supply chain efficiencies Nike has brought down their product price by roughly 1/3.
Another thing to think about is the insane amount of money offered to athletes in sponsorship deals, I believe Jordan was one of the first athletes to command big money from a company(they made a movie about it a few years ago). This cost paying hundreds of athletes millions a year is a huge cost on Nikes bottom line.
In addition to the sponsorships some athletes have profit sharing (Jordan for sure) so a percentage of sales go to said athlete. Throw in marketing and you have another huge cost.
Would I rather see manufacturing jobs come back to the US and Nike curtail sponsorship money and profit sharing, hell yes. This is easy money to get back and would bring tens of thousands of jobs back to this country, if people were snapping up air jordans for the equivalent of $300 a pair back in the 90's they will do the same in this day and age. And if don't want to cut back sponsorship money, just raise the shoe prices, things are really really cheap compared to what they cost 30 years ago and Nike would still make a hefty profit.
Fun fact - I always buy new balance shoes that are made in usa, they sell both outsourced and domestic production and would rather have my money go to a US worker. At the very least I hope to see other companies do this so I have a choice, most give no choice and force consumers to buy Chinese made products.
I mean Nike didn't work to lower the price, the demand for Jordans is just different and most people buying Jordans today also bought them in the 90s and are comfortable at $120. If Nike could move them at $300 they would. Jordans remain popular but the reasoning is partially their price points, they don't at all have the power they did in the 90s when every kid wanted "to be like Mike".
>The second thing we see is that Asian manufacturing in Asia produces US jobs. You go to Footlocker to buy a pair of $100 shoes because you can afford them. This creates jobs for the Footlocker employees, Nike designers, marketing teams, and other US people throughout this chain.
In all fairness, most of those jobs would still exist if manufacturing was brought onshore. The fact that they were manufactured in Asia makes no difference here, except for perhaps the longshoremen that was included in "other US people."
The author’s point is that the lower cost of goods coming from Asia results in increased demand, which then generates more jobs in the post-manufacturing part of the chain.
That completely discounts the strategic value of self-sufficiency. I mean, why not outsource ALL manufacturing and agriculture if someone else can do it cheaper? Surely that wouldn't come back to bite us, right?
Explain the strategic value like I'm 5? I see people reference this idea all the time, but I'm unconvinced it's actually valuable enough to be worth it given all the other downsides. I don't actually believe it's a positive value proposition.
I see the argument for things of military significance. The common one is electronic components. But PCBs manufacturing is easy to spinup quickly. Which leave the critical components like IC where the ones we'd actually need are still exclusively overseas. The TSMC factory being built wont produce the newest generation chips.
Same for agriculture, if we're totally self sufficient, what happens when a blight takes out a staple crop or two? You can't just spin up food production or global food trade the way you can with manufacturing.
Meanwhile, having robust global trade is just a less lethal version of MAD, here being mutually assured economic destruction. It's much harder for other nations to turn on you when you both depend on each other for comfort, convience, or survival. Look at how the US is being seen by the international community. The reputation we had as a strong ally and worthwhile partner has been badly damaged. Why would other nations want to help us now? How are we stronger alone, instead of having their eager support?
There are two people, one grows all his own food, and makes all of the tools he needs. He doesn't need anybody. The other works with his neighbors, they share food, he kinda knows how to sharpen an ax, but he uses the ones made by the guy down the street, who's basically a professional blacksmith, even though he introduces himself as a gardener.
which one of those guys appears stronger? Who's more likely to survive something bad happening? who do you think is more likely to win in a fight? (yes their neighbors will come to help) which one would you rather be?
>Look at how the US is being seen by the international community. The reputation we had as a strong ally and worthwhile partner has been badly damaged. Why would other nations want to help us now? How are we stronger alone, instead of having their eager support?
As a Canadian, you just made the argument for strategic value for us. The economic damage caused at the whims of a single person in control of our supposed closest ally is exactly why. The argument for economic "MAD" assumes one country wont be self destructive enough to cut its leg off to spite everyone else and "win" in a way that leaves it worse off.
Right, I think a single point of failure is the problem. Both domestic, or abroad. If you want strength and resilience, you need to have more than a single source for whatever you might need. It's a mistake for both of us to trust a single country to act rationally indefinitely. The problem for me is currently we're both using the same country this time.
Imagine if China decided to invade Taiwan like they've been threatening to do for a while. They would instantly cut off all exports to the US, because that's the smart thing to do. They would probably blockade Japan and other countries as well to keep them from exporting to the US, because that's the smart thing to do. Now since our supply chains were greatly disrupted (remember COVID?) we can only go to war with the equipment we have and will struggle to produce any more equipment in a short period of time. No more uniforms, no more tanks, no more drones, no more missiles, no more artillery shells, no more medicine, etc, because all the materials for those things are largely sourced from Asia, which would now under a blockade.
> we can only go to war with the equipment we have and will struggle to produce any more equipment in a short period of time. No more uniforms, no more tanks, no more drones, no more missiles, no more artillery shells, no more medicine, etc, because all the materials for those things are largely sourced from Asia, which would now under a blockade.
So if instead all of these weren't sourced from exclusively Asia, and were sourced from many different countries, including domestically, there wouldn't be a problem?
Also, is your assertion really that US military would be at a near term disadvantage, if exports from Asia stopped? That's a wild take.
> They would probably blockade Japan and other countries as well to keep them from exporting to the US, because that's the smart thing to do
You're the first person to try to convince me that it would be smart for China to start a world war with the US and it's allies over Taiwan.
Needless to say, I disagree that it would be smart, I disagree that china would be willing and likely to do it, and disagree they could do it if they actually tried.
Well needless to say all this has been realized about 2000 years ago and there are legions of smart people ensuring that it isn't a problem. Heck I used to ride the light rail in Sunnyvale past an old fab that had notices on the doors saying it was owned by the US Navy.
I think the point being made is that under Trump's plan (repatriate production) China is MORE likely to invade Taiwan than before. Under the current situation China is LESS likely to invade Taiwan BECAUSE they rely on selling stuff to the USA. Once that reliance is gone, there are less negative consequences for China if they choose to invade Taiwan.
China could also use the US’ dependence on it as leverage to discourage them from intervening in Taiwan. We just saw this play out with Russia’s invasion of Ukraine. We routinely see Turkey threaten the EU with migrants over the bloc’s reliance on Turkey. We also saw Azerbaijan make a move for Artsakh knowing the EU needed their gas following the invasion of Ukraine. I believe China would prefer being able to extort the US rather than face the possibility of fighting an unbowed US.
Wasn't it that they installed sympathetic politicians, which then led to the UK willingly turning over control (despite the local protests). Calling that a takeover seems misleading to me.
Ahh somewhat willingly, the lease to the land expired. So seemingly no choice was given.
> Imagine if China decided to invade Taiwan like they've been threatening to do for a while. They would instantly cut off all exports to the US, because that's the smart thing to do.
I think what you're getting at is that China would have more leverage over the US if they attacked (attempted to invade) Taiwan, which they could use to make it more difficult for the US to protect Taiwan.
In that case they could do things like block some or all exports to the US until we, say, stopped escorting cargo ships in and out of Taiwan. But the notion they would "instantly cut off all exports to the US" is nonsense. There's no reason that's somehow a no-brainer post invasion.
>In that case they could do things like block some or all exports to the US until we, say, stopped escorting cargo ships in and out of Taiwan. But the notion they would "instantly cut off all exports to the US" is nonsense. There's no reason that's somehow a no-brainer post invasion.
You think they would supply their enemy? Biden said he would protect Taiwan pretty emphatically. I assume Trump would be advised of the same.
Domestic production that is perceived to benefit national sovereignty is protected.
See: farming, energy, and defense spending/subsidies.
There is no point in history where any nation, anywhere, has needed to be self-sufficient in the production of Nike Air Maxes.
That being said, my sneakers, New Balance 990v6s, were made in the US-- probably Maine. They're $200.
The shoes I typically wear for work, Red Wing Iron Rangers or Work Chukkas, were made in the US-- probably Minnesota. They're $350 and $290 respectively.
I don't know if increased volume will decrease the prices by much, they're only higher than premium imports by a little bit.
> I don't know if increased volume will decrease the prices by much, they're only higher than premium imports by a little bit.
I don't think its reasonable to expect lower prices for domestic production at all, because the demand for domestic products is only going up (from people that used to buy Vietnamese Nikes).
Personally I think the whole tariff experiment is predictably going to fail, because "increased self sufficiency" does not buy you anything, and at some point people are just gonna push back politically if the cost increases get too bad.
I've had it explained to me that now that manufacturers won't sell to China because of retaliatory tariffs, they're more product to sell domestically which would push down prices. Less demand due to tariffs from China = lower prices.
I also think the argument is bad in general, because more/similar exports than imports would only really hold for the countries least affected by the new tariffs, anyway.
Are you intentionally being obtuse and thinking I was only talking about sneakers? Obviously I’m talking about trying to keep a wide range of vital goods manufactured within the US. Food, weapons, chip fabs, electrical components, pharmaceuticals, medical supplies, etc. are all things we should try to have robust domestic production of.
Self sufficiency is just not a credible argument here.
This is about consumer footwear, not agriculture (nor all of manufacturing).
The US (and most other nations that can afford to) is perfectly used to throwing ~$20 billion at the sector to keep local agriculture operational.
We did not do this for literally every industry in the past because we had (and have) neither the idle workforce to do this, nor does the local population want to do the work (even for slightly uncompetitive wages), nor do consumers want to pay for the difference.
My personal prediction is that people will realize this pretty soon with the consequences of the Trump tariffs manifesting and the whole thing will be rolled back and scaled down, with pretty much nothing to show for it.
The shoes aren't even needed. Growing up in Scotland (not poor) in the 1970s I had one pair of shoes. When they wore out my mother would buy me a new pair. Today in the US I have so many pairs of shoes I don't really have space to store them and sometimes end up buying a new pair of shows I already own because I can't keep track of what's in the closet.
Btw the one thing that will be left to show is a wider realization that it's a bad idea to elect a crazy person.
I'm sure it's comforting to assume that all politicians are equally corrupt and equally insane and so your vote doesn't actually matter one way or the other but Kamala Harris wouldn't be acting like this, nor would Biden. Hell, not even other Republicans.
I know you're asking "why not outsource ALL manufacturing and agriculture if someone else can do it cheaper" in jest, or as a rhetorical device, but basically every single economist on earth will say "Yes, we should do that, that's a good thing"
Yes, the goal is for everyone to be doing the thing they can do most cheaply and then trading with everyone else. Karl Marx and Ludwig von Mises would agree on this point. The idea that the Westphalian state should get in the middle of this is the aberation. The only reason national security is a consideration is because of the nations. I don't care if my shoes are made in Asia, though I suspect they wouldn't be if we paid Asian shoemakers an honest, globally-clearing wage.
Self-sufficiency is irrelevant to the discussion above. If prices go up, Americans can buy less, and the number of non-manufacturing jobs at these companies will go down.
> shoes won't be so disposable and professions for cobblers and the like will be in higher demand.
It doesn't necessarily follow that more expensive shoes will be easier to repair. It's more likely that shoes will simultaneously become more expensive for the consumer AND lower quality and therefore even less amenable to repair.
We buy and waste a lot of stuff. Fast fashion is pretty insane. Look in the closets of your friends who are constantly clothes shopping and it's a ton of shit that never gets worn and eventually "donated" (5% makes it to thrift store shelves, but most of it gets burned or sent to Africa .. and then burned).
Reversing the transmission of western consumerism is not an easy change. Few people are willing to pay an extra $50 for a more durable good that lasts. Long term thinking isn't easy for most, and many can't even afford to think that way.
But the tariffs are really a tax, a federal sales tax on the consumer. Biden tried to put in "unrealized gains tax" (which is really Federal property tax). So both presidents are trying to use executive power and double speak to get their people to support new taxes that are ultimately horrible for every American.
Is that better? We need at least one cobbler sure, but if shoes are so scarce that we need to repair them like some communist country, are we better off?
The reason you’re buying Nike and not GLRMNTXH brand knockoffs
manufactured in the same factory and half the cost is because of stuff the US employees are doing.
> In all fairness, most of those jobs would still exist if manufacturing was brought onshore.
Yes, if you waved a magic wand.
But considering bringing manufacturing onshore to replace Asian manufacturing will take at best years if not decades, no, those jobs will not still exist.
If those shoes cost $200 because of higher labor costs, then a lot less people are buying them. They will buy worse imports at $180. The consumer loses.
"I encourage you to note assume that every Asian worker is a slave."
I do NOTE, that I was on Korea for 18 months, and saw over 20 factories, and knew a few people that worked there. They were making 1/10 of the minimum wage in America at the time, $0.75 vs $7.50, Today they are making $6.94, so I would assume that They are making few shoes in Korea.
"While it's difficult to pinpoint exactly which country pays the absolute least for shoe manufacturing, countries like Vietnam and Cambodia are known for having lower labor costs and are major footwear exporters, making them likely to be at the lower end of the wage scale for shoe production."
In Cambodia, they pay $208 per month, which is assuming a 160 hour work month, which I guarantee is the bare minimum which gives them $1.30 in wages per hour.
"In Vietnam, shoe manufacturing workers typically earn wages that are significantly below a living wage, though some companies affiliated with the Fair Labor Association (FLA) pay double the minimum wage."
In Vietnam they pay $68/ month, which is $0.42 and 1/2 cents an hour.
The premise of the article, and the statistics they use are all based on preported manufactures claims, not the reality that exists in that country.
Vietnam does not pay $68/month. Where did you get your made up numbers?
Source: brother works in a Nike factory in Vietnam; am acquaintances with the manager of an Adidas factory in Vietnam; and know that the legal minimum wage in Vietnam -- which is definitely enforced on foreign factories -- is far above $68/month.
My brother at the Nike factory makes almost 10x that assembling women's shoes.
Someone working part time at a convience store makes 3-4x your claimed number.
Why? The article starts from the point where Nike pays $25 per shoe boarded into a container on a boat, where that number covers all expenses until that point. Yes, this includes the shoe workers' wages, but it also has the factory construction and maintenance, manufacturing equipment, the inputs that go into the shoe, transport to get the shoes packed into a container and to the port, etc etc.
Because $25 per "pair" of shoes is absurd. That's Nike "juking" the stats to make it look like they pay far more than they do per pair of shoes. For one thing, as a consumer you can buy individually shoes that are at least as good of quality as any Nike Shoe for anywhere from $8-$12 delivered. So the idea that Nike, in bulk, is running factories that are known to be questionable and paying $25 per shoe is "pure fantasy". Just based on known labor rates and material costs it's safe to say $4 on the high end if you factor in a bunch of operational and brand based overhead.
The $25 number comes from Steve Bence, Nike's Program Director in Footwear Sourcing and Manufacturing. I would also take that number with a grain of salt, but another cited source, Sole Review, an independent sneaker review site, estimates that manufacturing a shoe that's $100 at retail shoe costs $22.
So those are the article's sources. What are yours?
I'm also curious about your claim about $8-12 shoes that are equivalent in quality, because while you can, indeed, buy very cheap shoes on Aliexpress etc, the quality or lack thereof is usually commensurate.
I can't believe Nike spends 25 dollars on the actual making of the shoes, it just doesn't add up.
Nike sneakers regularly sell to consumers for ~25 dollars, in brick-and-mortar stores, in countries that have 20% VAT.
Naturally Nike wants to claim their shoes are as valuable as possible, and they can perhaps somewhat truthfully claim 25 dollars by including the cost of R&D, sponsorships and marketing etc in the cost of making the shoes.
Then they can spread the total cost of Nike operations creatively over models that sell 1 million units and others that sell only 50 000 units.
If shoes cost 5 dollars to make but you feel you need to pay Serena and Tiger 20 bucks per shoe to sell them, suddenly they "cost" 25 to "make".
They're not saying the incremental cost of making a single shoe is $25. They're saying that, after everything is accounted for, it costs Nike approx $25 to get a $100 retail shoe onto a boat in China.
And yes, Nike has cheaper shoes too, but per article, if it's retailing for $50, it probably costs $12 tops to make.
>In Cambodia, they pay $208 per month, which is assuming a 160 hour work month, which I guarantee is the bare minimum which gives them $1.30 in wages per hour.
That means nothing without knowing what other jobs pay and what the overall cost of living is. It honestly feels a little dishonest to convert things to USD without either putting it in perspective to the rest of their costs or adjusting it to a value that reflects the spending power of that amount of money. Does $1.30 buy them one hamburger or would it buy them 10+?
It’s like people excited about the new datacenter being built in their town, think of all the jobs that will bring they cry. Nobody realizes it takes 6 people to run a datacenter.
Bringing “manufacturing back to the US” is a fool’s errand. The future of manufacturing is automation, not jobs.
> Bringing “manufacturing back to the US” is a fool’s errand. The future of manufacturing is automation, not jobs.
That’s probably correct. But the current trajectory means that China will have the robot-operated factories, not the US. What do you anticipate the US will do to obtain goods from those Chinese factories? Especially when AI stands poised to obsolete a lot of the white collar jobs where the US still retains a competitive edge?
You can’t treat the reserve dollar as something that will perpetually defy physics. The pound used to be the world’s reserve currency not too long ago. There’s no reason for the world to continue flocking to dollars when other economies surpass the US.
'The dollar might be weakened in the future so we must immediately blow it and our entire deeply thought out, researched, and supported policy since the 1940s up to now with no plan all based on a book the President read and hope things work out better than what might have happened sometime in the future (but that there were no signs was happening soon)'.
The dollar will be weakened in the future. Is there any doubt about it? We cannot continue operating in this post-war regime when the conditions for the post-war regime have been dismantled.
I have rarely ever aligned with this president, but it is clear that we need to bring manufacturing home if we are going to have any future.
> China will have the robot-operated factories, not the US. What do you anticipate the US will do to obtain goods from those Chinese factories?
Why not let the market take care of it? It's cheaper to buy things from China then make them yourself. When that changes, production will naturally move to the next best place. I don't see the issue.
Because no economic theory proposes that the efficient outcome is one where the US retains its sovereignty and independence. Nations seek to create bubbles of local maximums, not in maximizing the economic efficiency of the world as a whole. A world where american kids have to learn chinese and fight to immigrate to China may well be an economically efficient outcome from the point of view of the markets. But American policy should fight very hard against that outcome.
Because China doesn't share the same goals, desires, or policies we do. They will have the power and cards to dictate world policy if you roll over and let them dominate. Realpolitik matters here. You either dominate the future (or at least stay competitive) or you become a vassal state.
Even then the quality wouldn't be up to par. Since we've collectively agreed we don't need to have due process anymore, I guess I can look forward to making shoes will I'm being indefinitely detained.
But even that is impossible in the near-to-medium term.
The US just doesn't have the supply chain that China does. You need to be able to source the materials, and they have, effectively, entire cities dedicated almost wholly to producing those "intermediate" raw materials—eg, things like the grommets for the shoelaces, the big sheets of faux leather that can be cut to the right size & shape to make the body, etc. They also have the industrial capacity to do the molding for the soles, and produce the laces, at scale.
None of that exists here—in some cases not in the scale required, but in most cases not at all.
With across-the-board tariffs, the only way to fully avoid them is to start from the raw materials on up—mine and purify the minerals, raise the animals for their leather, pump and refine the oil for the plastics, harvest the trees for their rubber (are we still getting rubber that way...?). All here in the US.
Some of those raw materials likely don't even exist on our land in sufficient quantities to supply all our industrial needs, even setting aside how much time, money, and manpower it would take to set up the mines (and ranches, and oil fields, and rubber farms), the several stages of refining, and all the different ways the materials need to be shaped or alloyed or combined or extruded or or or...
And where is the money to fund all that going to come from? Clearly not the federal government (unless, I suppose, you posit that it's one or more of Musk's companies doing all this—I suppose that could be one of the aims here; just give Musk a monopoly over literally everything we make...). Every domestic company is going to be cutting back six ways from Sunday, because every product is going to cost massively more, so even the people still making as much money as they were last year are going to be buying less. And many people will be making less, either because of those same cutbacks (through layoff or hour/wage reduction), or because they were part of the federal agencies getting wantonly gutted for no good purpose, or among the companies that did business with them and now have lost a major customer.
Bringing manufacturing onshore for any significant percentage of our consumer or industrial goods is barely even a pipe dream. It's pure cloud-cuckoo-land fantasy.
Welcome, this is where we're going to be for foreseeable future.
Prison made inferior Nikes will end up costing 500$ a pair. Not that anyone is going to have money to buy them.
As you mentioned we'd probably need to still source from other countries. The bigger issue here is the USD may lose its reserve currency status.
The rest of the world might just trade in Euros and Yuan. Inflation will truly take off then.
I think you underestimate them. They'll just buy shoes from another country, import them in secret, repackage them, and sell them as American made Nike. They could easily strong-arm Nike to make a deal to go along with this. They'll do a "tour" of the "factory" that makes nothing, and MAGA will eat it up. They'll show us doubters all how wrong we were to doubt the carnival-barking-clown savior of America. And then he'll get a third term out of it.
> They'll just buy shoes from another country, import them in secret, repackage them, and sell them as American made Nike.
Who will?
The Trump administration? Why would they be selling counterfeit Nike shoes?
Nike themselves? Why would they buy shoes from someone else? And if you mean they'd just keep manufacturing them elsewhere...they'd still have to pay the tariffs when they hit customs, so they'd still be $$$$. Unless you're proposing that Nike is going to start an industrial-scale smuggling operation...? Or that the Trump administration is going to provide some kind of sooper sekrit tariff waiver just for them, so they can pretend to be selling Made in the USA Nikes? And that's only talking about Nike. What about all the other manufacturers of consumer—and industrial—goods?
None of that passes the smell test. Nike's not going to take a loss to pretend their foreign-manufactured shoes, which now cost them much more, are actually being cheaply made in the USA just to prop up Trump. And Trump is, to all appearances, 100% all-in on these tariffs: he would rather have them and utterly wreck the US (and global) economy than have things cost the same because no one is actually paying the tariffs just to "prove" that his bonkers excuse for an ideology actually works.
No; if Trump gets a third term, it will be, purely and simply, because he has managed to utterly destroy the machinery of democracy so that a free and fair election in the US is a wistful memory.
To add to your point, for tariffs to even work, they _have_ to be permanent. There can't be any room for negotiation in them.
If an investor wants to build a factory to produce shoes (a process that can take years), they need to be sure that the tariffs won't just go away next year.
Of course! That would save them even more money! Prisoners make $0.33 to $0.45. I saw a McDonald's sign during an uprising that said "Prison Labor = Slavery"
I saw a video today on Instagram (from Tiktok), AI generated of course, where rows and rows of people sit at sewing machines sewing shirts, but instead of the typical Asians one commonly expects to see, they're all overweight American-looking people...
Yeah. And people need to stop thinking that things that they can label as funny or whatever else is not propaganda. Everything with an agenda is propaganda.
“Wholesome Biden & Obama memes” are probably propaganda. And videos about “fat Americans” being marched into factories sounds like something the Chinese could make.
Forcing China to become more independent of exports to the US also means China will care less about being in the good graces of the US. It cuts both ways.
This outcome is probably the end result for either scenario. The degree to which China is dependent on the US has been steadily decreasing. There's no law of nature that says the US will keep winning and have its advantages forever.
It's only in a somewhat unique situation if people the US is willing and able to stomach a large-scale war, and people believe that to be so, and that belief has also dropped dramatically.
Yes. You should point out that >50% of ships are built by China, and 30% are built by Korea, and United States is not even on the list... Do we even make ships? Maybe a few military wessels.
One could easily have the impression that despite this, China has never really given a rat's ass about being in the good graces of the US, and that when they do relent it is often the case that they do not do so in good faith at all. If they comply with ethics and human rights, it's to the absolute minimum of that and in an underhanded way designed to undermine, but often not even that and they're just cheating and good at hiding it.
In other words, not much would be lost except the devious lip service.
It depends on what you're looking at. They've avoided a confrontation with Taiwan, for example. How long that will last if/when they no longer consider open conflict with the US to be a major consideration is anyones guess.
You always depend on someones good graces. What difference does it make if they are an american you are dependent on or a chinese person? Still a human at the end of the day. Its the political leaders that want you to say that an apple and an apple are different species. It doesn’t reflect the reality that we are all equivocal humans on earth. The sooner we get out of our nation state well of stability as a species, the sooner we advance technologically to the next level as a species.
It's not the choice of an american or chinese person but an american or chinese economy you're dependent on. An american or chinese country, an american or chinese government. The difference is that the chinese support eugenics, are throwing people in ethnic reeduction camps, operate an authoritarian system with extensive mass surveillance, and have plans to conquer taiwan (and the world). People are not equal because cultures are not equal. You might as well be dependent on the USSR or Nazi Germany, after all they're just people!
The sooner we get out of our nation state well of stability as a species? I don't know what dopey star trek fantasy land you are living in, but we are sooner going to destroy the world than join hands and all sing kumbaya. Especially if we allow some autocratic regimes to come to power.
Tesla's factories have a ton of automation, but the factory here in Austin employs 22K+ people. Automation will no doubt increase, but that just means the value humans provide is higher level and managing, maintaining, and redesigning the assembly lines as market demands and product categories shift. Datacenters are nothing like factories.
Meanwhile, if it ever gets to the point that automation has truly replaced humans, why not have the machines here at home? There's no good argument against it and plenty of arguments for it.
Indeed, US manufacturing has a higher output now than before outsourcing took off. But it employs far fewer people per inflation adjusted dollar of output. Because the manufacturing that stayed was largely the manufacturing that was so cost-effective to automate that not even third world labor could compete.
Just to add to your point: what stayed was either cost-effective to automate or had so much value added that the labour component is quite low (like jet engines).
I'm not even sure why most people want to bring manufacturing back to the US. If this was a video game with a tech tree, becoming a mostly service and consumer economy would be the final winning position. Bombing our economy to go backwards to being a manufacturing economy is only attractive if you want to turn the middle class back into serfs.
> I'm not even sure why most people want to bring manufacturing back to the US.
I am not sure why they think it left. The US manufactures far more today than it ever did in the past. The people were largely relieved by robots, granted.
> becoming a mostly service and consumer economy would be the final winning position.
Service isn't always fun. A lot of people don't like selling Big Macs. They are under the impression that if they could have a manufacturing job, they would enjoy work more. That is what drives it.
What they don't realize is that they could already have a manufacturing job. Manufacturers struggle to hire. But the problem there is that, per BLS, 70% of manufacturing happens in rural areas – whereas most people never look for work outside of the city they live in. Thus they conclude that manufacturing doesn't exist. Out of sight, out of mind.
Still, the value chain is what drives innovation. We should cheer efforts to clothe and feed ourselves that don’t rely on near slave labour sweatshops.
I agree and if people want an example of this that isn't about a "what if ..." future, they need only look at Detroit. While we still manufacture cars in the US, the auto industry will continue to automate any jobs that they can.
Isn't that an even more compelling reason to do it, since unemployment is already low? It means more vertical integration, more domestic investment and productive capital.
i think a lot of people are fixating on the market.
I will share a metaphor you can spread.
I run a mile every morning not because it is the most calorie
efficient way to get around, nor because it is the most monetarily productive use of my time, but because it keeps my legs strong and me healthy.
It's a good metaphor, but I guess the idea here is that a middle-aged sedentary person has suddenly decided, for his own good, to only eat what he can catch and kill with his bare hands.
My history is not that good, but I have a fondness for the guilded age. Lets look back for wisdom.
Consider a case that was not unique, the growth of iron production in the great lakes area between 1855 and 1865.
In 1855 it was 1000 tons of iron ore. By 1860 it was over 100,000. By 1865 it was a few times greater than that.
Now consider even a single year in there where production is increasing by thousands to tens of thousands of tons. Good business. (The machines used to load and unload those boats and the change in boat designs is awesome by the way. Worth looking up.)
That was early. With much worse technology, and much less capital.
There were crazier deltas in production increase in the 1890's and across the guilded age.
The US natural resources are gigantic. There are 330 million people living there. It has more resources than ever before in history.
Steel and plastic are currently produced in the hundreds of millions of tons per year in the US. That is hardly a middle aged man who cant do a pushup.
With a proper 10 year boom, US production could be exponentially increasing year over year. If it and its people choose it.
A lot of people in the US seem to be envisioning this. It is a really non-abstract vision even for americans of... modest intelligence.
It may be the case that providing the world with banking and facebook, and silicon plans, though possibly much more lucrative than physical production, is just too abstract for the average american to identify with as a positive.
Or it may be the case that physical production is more lucrative than software service export, but that the US government has mismanaged the market constraints in the physical domain and so it just appears to not be the case.
I am not sure which is true. What I do know is that for the average person, the idea of making stuff and trading it is simple to understand, and people like it. Even people who do not make anything identify with this goal. Maybe instead of iron and steel it will be nvidias chips this time around.
I think Americans dont like being the social media export country. Its just not a good future vision you can identify with.
Human society has been optimizing for the wrong thing since 20,000BC.
To that end, the future I want doesn't focus so much on money, but on needs. Letting a market dictate "needs" is clearly not working for the betterment of humanity a whole. While it helps with progress, I believe there is an upper limit when human behavior is brought into the equation.
You're letting the perfect be the enemy of the good. Realistically, you're not going to change society to give people "money and purpose" without a job. Fixating on an unrealistic goal takes focus away from more realistic ones.
I mean, for a least a century people have been proposing using productivity improvements to increase leisure time and distribute goods more equally. And in that time work demands have increased (e.g. going from one full-time worker in a typical household to two).
I don't understand your comment. People don't need money, people need food to eat, houses to live in, and so on. And the thing about all this food and houses is that Jesus doesn't produce them, other people produce them.
And since producing all this is not such an easy task, the people who produce the food and build the houses want something in return. That's what we call jobs.
So when you say that jobs is not needed - you mean that there is no need to live in houses or that there is no need to give the people who build the houses anything in return?
Something like a grant from the government to work on your project of interest with no expectation that it be commercially successful. You want to be an artist the government gives you a grant to support yourself while contributing to the cultural lexicon. Scarecity is manufactured today for profit and not real; nobody needs to work at a 7/11 but they are essentially trapped into those sorts of jobs because they are profitable for those business owners vs a good use of creativity or labor for our species.
Now before you get all hung up how this isn’t possible. There is precedent. The government would do just this during the great depression, sponsoring artists knowing it is more valuable to have artists in the population than to lose that talent pool and benefits to culture over cold cruel economics.
Why on Earth would taxpayers give their hard earned money to other people to work on their "projects of interest"?
Scarcity is very real, I'm not sure why you would feel otherwise. Fortunately, we have largely eliminated scarcity of the necessities of life due to economic policies that are as far from your suggestions as possible, but that doesn't mean that they are produced at no cost or that scarcity in general does not exist.
And you don't need to go back 100 years for precedent. We basically paid people to sit at home during covid, and I didn't see some sort of renaissance as a result. Why would this be any different?
>Why on Earth would taxpayers give their hard earned money to other people to work on their "projects of interest"?
I don't know, but if suddenly someone really has a problem with the fact that the government is still not taking enough money from them to finance various unpromising projects, I am happy to take on the government's work and free of charge get any amount of money from them to implement the widest range of interesting projects.
Maybe it is more meaningful for people to be creative than it is to staff yet another sheetz on the side of the road because truckers tend to piss and need smokes at that intersection. But who knows maybe you are right and it is better we take on jobs at a local gas station if we have such a wonderful opportunity like that in front of us. So much innovation is produced as we know from people who have the opportunity to work 60 hour weeks on minimum wages between two jobs that won't schedule them full time and incur any potential added worker benefits from having a full time vs part time laborer. You are right.
I hate to break it to you, but people working as gas station cashiers as adults aren't going to produce much innovation no matter what. They work those jobs because they need resources to survive and they can't make more money elsewhere.
Like I said, the people you're talking about just had a significant period of time where they were effectively paid to stay home and had ample time to pursue their personal interests, yet no meaningful innovation was produced by that cohort that I'm aware of. What am I missing?
> Why on Earth would taxpayers give their hard earned money to other people to work on their "projects of interest"?
I think the implication here is that such a society is not built on markets or even money, but rather by individuals working together to foster a collective community that meets everyone’s needs.
Yes, communism. The more advanced we become technologically the more sense it makes. We’re largely at a point where most jobs are made up - created to give people something to do because if we don’t then they die.
We’ve pushed consumerism to the absolute max. Now, most goods are pretty much worthless. But we have to buy them, or we die. That’s how markets works. We work, and we consume, or else.
That made sense when the work we were doing was beneficial and the stuff we’re consuming was needed. We’re past that now. Most people are working to produce something dumb, or worse, evil. New addictions, new poisons, new bombs, and new problems to be solved by new software.
If you look around and think most jobs are made up, most goods are worthless, and you have no choice but to make discretionary purchases, I don't know what to tell you.
Communism makes no sense until we reach a post-scarcity economy, which will never happen.
I regularly pay in excess of $100 for my shoes and would be a bit suspect of the longevity shoes that didn't cost significantly more than that. I wonder how these costs break out when thinking more about "being shod" than "buying shoes." I have ~$200 shoes that last me over 2500 miles (about a year of walking for me). I doubt a pair of Nikes could manage that but I haven't tried. On long trails, sneakers are usually worn out and trashed after 500 miles. Yes, different terrain but it's not just the soles that give out. Eventually, all soles wear out but the uppers are still good. I've had a cobbler repair some shoes and it's felt very worth the cost.
I upgraded to Red Wings and Adidas Sambas. I'm astounded by the durability of both. Shoes used to be something I changed every season. It was indeed worth the cost.
Sambas for walking or running or sports? I've had good luck with Ecco shoes with Vibram soles for walking but my favorites were discontinued. Luckily, I bought a bunch of extras. As I've gotten older I've learned that if you find some shoe or clothing you really like, buy backups. So many great products are discontinued at some point.
Interesting article but fails to mention about Nike big pivot to DTC around covid times. So will likely be taking home a lot more than 9% (or _were_ up til last year)
There was an interview with the local marketing managers for Coca Cola and Pepsi when I was a kid. I vaguely remember it (and also the idea was somewhat foreign to me since the world had just started opening for eastern Europe and it was the first time many of us heard the names such as Coca Cola, McDonald's, etc). The one thing that stood out was the Pepsi manager raging about campaigns, failed products and whatnot. The Coca Cola manager calmy looked at him and said: "Sir... Look at our product... Who in their right mind would pay for a rusty-colored liquid as a beverage? Absolutely no one. It's all about the advertisement".
Same story here - would you buy a pair of shoes from anyone, seeing the horrible conditions they work in, sleep deprivation and poverty if you knew they'd still get close to nothing? Probably not. You see a fancy store (or website these days), you see a product you like and you're invited to open up your wallet for a fancy pair of shoes. Deep down you still know they came from the people working in horrible conditions but, you know, out of sight, out of mind. And thus, you are willing to pay the extra price.
Interesting article and substantively correct about the direct impact of tariffs. But is using a bit of a straw-man as a hook. It is very easy to buy decent quality sneakers for $2 wholesale, and Nike do sell a lot of $150 sneakers.
No one assumes that they are just taking that as profit; it is mostly spent on advertising (sports sponsorships etc.) supporting retail etc. Fundamentally, they can and will choose to change the percentage they spend on raw materials and complex manufacturing techniques if that is what the marketplace demands.
I recently bought shoes while in Thailand on lazada $1.5 with shipping. Of course the quality was terrible and all, but I just don’t get it how they could cost less than $1. My guess is labor camps.
Just the other day, I got a pair of shoes at Walmart for TREE FITTY.
The most comfortable pair of shoes I own are also from Walmart and they cost less than twenty bucks.
How do my $3.50 shoes from Walmart fit into this picture that justifies why Nikes are $100?
This article fails the smell test. Or maybe it’s Nike’s business model that is failing the smell test, I’m unsure.
Also, anybody commenting who claims they “need” a pair of Nikes for their special feet should try being desperately unemployed and borderline homeless for a while.
This derekguy guy always has the best posts clothing related afaik.
Also
> Again, it's a popular misconception that all overseas production is sweatshops. Production can be done ethically abroad and still be relatively cheap because the cost of living is not the same everywhere. I encourage you to note assume that every Asian worker is a slave
No not necessarily slave slaves but I do assume they’re wage slaves, at least the line workers, the higher ups will be compensated a bit better I’m sure.
First, adding $26 tariff at the port doesn't just add $26 to the final price. Everything here works off of percentages. In this simple model, we say Nike has a landed cost of $25, sells it to Footlocker for $50, and they retail at $100
Not sure I agree that everything works on percentages. Shipping has a fixed cost, etc.
All around the "developed world", the shop/retailer/supermarket/distribution part of the price of a product is around 50%. Whatever the product or its price.
I'm wondering if part of our issue with crazy inflated prices despite low margin for industry and manufacturing actors is not because of this abused margin for retailers. That have also a huge power as it is difficult to negotiate when you depend on your product to be buyable in the market.
To me, that explain a big difference with asian world, where you notice, even for asian shops in western countries that prices are still quite cheap.
Something parallel to that that I have noticed is that decades ago we were used to buy from small individual shops, but now a few retailers and chains have almost a monopoly on the market.
I see the same pattern for movie theaters. They used to be independent mostly with affordable prices. Now 2 or 3 big chains bought them all, and it is very rare to still encounter independent movie theater. And once they got a good monopoly, ticket prices skyrocketed to insane levels.
If you look at the retailer margin on an individual product, it looks pretty big. But if you look at their overall financial report, their overall margins aren't anywhere close to that.
There's a lot of cost to running a retailer. If it was so easy to avoid the costs and the margins, you'd see more brands going direct to consumer exclusively, but most brands do a little direct to consumer and most of their sales through retailers.
Movie theater economics basically suck and have gotten worse over time. The projectors are very expensive, the pricing to show a film is bad, so ticket and consession prices go up and people stop showing up. Big chains have more negotiating power for film terms and equipment, which can help them survive. Sometimes the independents band together for group purchases, but I think that doesn't always happen.
While retail gross margins are not atypically on the order of 100% (less for more expensive goods, much more for cheaper ones) actual net margins are typically single digits. It costs money to retail goods.
> retailer part of the price of a product is around 50%
Not according to the article. The retail price is $100 for a shoe they buy from the manufacturer for $50, but $24 of that $100 is "discounts". Therefore the average price sold at is $76, making the retail part of the price 1/3.
> I see the same pattern for movie theaters. They used to be independent mostly with affordable prices.
Movie theaters used to be extremely integrated with the movie studios. You had to go to a Paramount movie theater to see a Paramount movie. Antitrust laws broke that up until just recently Sony bought Alamo Drafthouse.
But that said, there's still a lot of different brands of movie theaters around me. On top of the normal Cinemark and AMC there's also Alamo Drafthouse, Studio Movie Grill, B&B, Angelika, and several other single-location theaters.
You’re essentially just claiming price gouging without saying as much because otherwise the economies of scale would not exist (which anyone with any knowledge of how the economy works knows does in fact exist). “Smaller number of larger players with greater buying leverage as well as lower marginal costs leads to higher prices for consumers” is just using a lot of words to say “evil corporations are price gouging”, which is not true.
For some reason there's no reply-link to your post, but this is the first time in a very long time I've even read a twitter thread because of how much more pleasant it was at threadreaderapp!
Very interesting analysis/breakdown of the various layers of costs as well!
While the hypothetical shoes from Asia retail for $100 and US made shoes are $220ish, in real life the Asian made shoes cost $190 and the US made shoes cost $220. It’s insane how much a little bit of fabric and foam gets marked up as it works through the value chain.
This shows how non-automated retail is. on the production line, workers assemble the crosses in 5 minutes. And when selling, the courier will spend 15 minutes looking for your house to give it to you. It is reason why production is 1/4 of the price
Clearly shoes and textiles in general are extremely difficult to automate, but you only have to build one shoe building robot, and copy it. Why hasn’t this been done? Expecting a “too hard” answer honestly, but is it really?
Manufacturing machines are hard to invent, and harder to keep running right, and even harder to network together into an effective factory. You need skilled operators, technicians, and engineers to design and run a factory.
You also need to put down a big whack of capital upfront and will see a return years down the line, hopefully.
With low enough wages, it could easily be financially better to rent a big building in the third world and staff it with actual people.
This makes a good argument against centralized production and knowledge. It would economically be much more reasonable if any good could be produced anywhere at any time. Smaller production facilities for localized sourcing. Would IMHO also be much more in line with a free market. Everyone would be free to source goods in any country or location of their choice. Coupled with open knowledge this could be a truly free market.
But will never happen because currently free market means one business is free to dominate and control a market.
You're asking for decentralization. There's a reason you often get centralization in industries: higher productivity due to network effects and/or economies of scale. Even within China this is true, as some areas are particularly known for manufacturing (or specific types of manufacturing).
Spreading things out sound good until you realize it's doubled your costs or halved your productivity.
But I think we're missing an important point here: moving production to low cost environments just moves costs from business costs into external costs, putting them on society.
As for productivity, I think that's an issue that could be addressed but people generally avoid the answer to the why question.
> moving production to low cost environments just moves costs from business costs into external costs
[Citation needed]
Of course that can happen, but it's hardly guaranteed. If a company in the US moves a call center to a lower cost city, that's hardly foisting externalities onto anybody.
> people generally avoid the answer to the why question.
Typically when people say cryptic things like that it's because they hold some unhinged opinion, eg "Yes, schools in urban centers perform worse but nobody wants to answer the real 'why' question. Personally I think the black community...devolves into racist rant held up by racist 'science'".
So OP, you want to defend your honor by making transparent what you intentionally left opaque here?
It will never happen because of economies of scale.
What type of intervention of the free market do you approve of as an alternative that would incentivize local production over economies of scale? It essentially comes down to tarrifs and protectionism.
Free market means voluntarism. You say that consumers ought to have the freedom to source goods anywhere, but the only way to preserve this "freedom" is to either force producers to operate in unprofitable conditions (which is not stable-state) or force consumers to pay a premium for those goods.
If a product becomes unstable due to increased competition it's not exactly been stable before. Also the whole premium is quite off. You got good items for fair prices before factories started producing bread. Often at higher quality. I'm old enough to remember. Honestly seems like the current market is only working because of regulation and protections of all kinds. That to me is a clear sign of volatility.
It sounds like you're advocating for a centrally planned market that allocates resources according to a grand, rational vision. A free market will by definition be messy, sometimes inefficient, adhoc, and defy any notion of a grand vision. You have to trust the free market to produce the best results in the long run, and to be the most responsive to change (opportunity).
Not really. The opposite. The current market is centralized a lot more than people want to see or admit. I had trust in the free market for a long time but it has not really materialized the best results. As can be seen by the current state of affairs. Everyone fighting over who gets to have money and production is not freedom, it's a war without guns.
Just to make this clear, a truly free market would be desirable but I don't see it materialize on this world.
Considering I talked about a truly free market, central planning then seems to be a weird reaction. Why would that be related? It's not like I suggested a Chinese system, I advocated for one which is free from monopoly and focusses on local production and diversity for sourcing goods.
I hope the elites of US are not thinking about moving shoe-making back to the US because it doesn't make sense.
I'm sure (I hope, actually) that some policymakers, or some researchers, have done some conclusive researches about -- give X years into the future, and let's see we do not want to disrupt the current social-economic reality too much (no revolution, no major wealth re-distribution, no world wars, etc.), which industries can we bring back, and into which state, and sell its products into which countries, realistically.
The opinions of "elites" simply don't matter. There's only one guy who matters when it comes to policy now. And he's not known for his thinking abilities
No, he doesn't have advisors. He has a cabinet of sycophants who parrot his every flip-flop. His "advisors" have made it clear several times now that they have no idea what the plans are until they're announced on Truth social.
Depends what you mean by "elite". Obviously a ton of people disagree with him. I'm just saying, that doesn't matter. There's not a single Republican in government that's willing to publicly contradict Trump on anything.
It doesn't make financial sense when the tax policy of the US is to tax domestic companies that produce things but not foreign companies that produce things and benefit from selling them in the US market.
We don't need to do research to decide what makes "sense". The market will figure out what makes financial sense themselves. The only thing we need to know is what the tax rate for foreign producers should be so that domestic companies are not the only ones shouldering the federal tax burden.
I think the one thing I am not seeing much discussion on is, will the end consumer pay for these $150 sneakers or will they simply switch to lower cost alternative brands?
fun fact: sneakers are already $150. went shoe shopping at a "sketchers warehouse" and found a pair that fit well and noped them back on the shelf when I checked the price.
Unless you're getting goretex or leather (and even then, shoes are small), there's not really anything in a shoe besides a bit of rubber, some EVA foam, and probably some plastic mesh. The materials cost is very low.
The assumption in the modelling is that sales will decline proportional to the price increase. IOW, they'll sell 2/3 as many shoes at 150% of the price.
Probably not a great model, but it's simple and a reasonable guess. Remember all the competitors will have price increases too.
I wish the discussion included the margins the fashion industry makes. In the labor sector, 10%-20% margin is respectable. But in the fashion and consumer goods sector at least 30% margins are expected. 80% margins are normal
for “luxury” goods, which I’m sure is the bracket Nike falls into. I wish margins were included in the thread. It’s only true that everything increases in cost if you also have to keep the same margins.
OP will be talking about gross profit not net, and also totally ignoring the substantial overhead investments in brand marketing, customer service, stores, etc, that luxury goods brands have to make.
Relatively easy stuff like shoes can be made in a bunch of countries and that production will just move to whoever has the best tariff deal at the end of all of this.
More interesting will be stuff like electronic components. Most of the cheap versions are all made in China. More expensive versions can be sourced in Japan, Taiwan and Korea (likely to do tariff deals). I think we might be looking at the end of very cheap electronics for awhile.
"Retailers mark up the shoes 100% to recoup various costs and generate a profit."
Whenever I enter any physical store it always boggles my mind how insanely inefficient the whole endeavor is for all involved. But that retail basically swallows half of the price is just unbelievable.
Classic leather dress shoes can last decades and can be resoled many times.
But most people don't consider them comfortable. More the opposite.
But no, the foam and rubber modern "comfortable" shoes are made of are not repairable. Fundamentally, the foam or other sole material simply breaks down. The rubber wears away. And the woven and plastic materials the upper are made of fray, lose padding, and otherwise break down as well.
I've used shoe goo to get more life out of shoes. It's marketed as an adhesive, but you can apply it to the bottom of the sole to rebuild thickness to the tread. A single tube could be used for dozens of repairs. After that for me, usually the textiles in the upper fray from the inside out, and I just ignore it until it becomes externally visible or uncomfortable.
I don't think more extensive repairs are economical, and you are better off wearing shoes you like until they disintegrate. There is a bit of mythology about buying expensive boots and repairing them in the hope that it's more economical, but it's really not: https://mastodon.social/@danluu/111068432320682422
Comfortable is of course subjective, but my current go to for "fancy" shoes is Meermin. For about the price of a pair of higher end Nike or Adidas shoes that are just foam glued to fabric, you can get a pair of "traditionally made" Goodyear welted leather shoes. Meermin, for example, still does some manufacturing steps in China. As far as I know they sew together the leather pieces in China and then ship them to Spain for lasting / final assembly / polishing.
It goes to show how the big athletic shoe companies are taking the piss. Of course they have middlemen and retailers and whatnot who need to take their cut, but if I can buy a pair of nice leather shoes, made from leather from UK/French/Italian tanneries, with about a million steps done by a human, for the same price as some glued together foam and fabric...something is wrong.
I have 4 pairs of Allen Edmonds shoes. The oldest pair is 6 or 7 years old. With some light care (conditioning / polishing) they've held up very well. To address another comment about comfort: They're quite uncomfortable at first. Over time the leather (and cork insoles) mold to your foot. Making them comfortable.
These are leather dress shoes though. As far as I know, this doesn't exist in the athletic shoe world. Considering the materials used in athletic shoes, I don't know how a "repairable" athletic shoe could exist without some serious re-engineering.
I have very wide feet, so much so that I've seriously considered manufacturing my own shoes (possibly with a 3D printer). Shoe makers and repair shops do exist but they are becoming quite rare.
My understanding is that a good quality repairable shoe is about $500 or about 5x the price of the $100 shoe we're talking about. Repairing it is labor intensive and adds even more to that cost. So, I can buy at least 5 pairs of $100 shoes for the price of a good quality and repairable shoe and that doesn't consider the repair costs.
I've had a couple of leather shoes (goodyear welted oxfords) repaired, and the last pair cost me around $100 to get re-soled. It was a local cobbler that has a very, very small shop.
I mean if you pay $300 and up for a pair of shoes, it could make sense. If you pay $100 for a pair, you might as well just purchase a new pair. In my case I re-sole the shoes because my shoes fit me well, and they're more on the high-end and thus I've paid a bit for them at the time of purchase. Makes sense for me to re-sole a pair of $1k shoes, rather than purchase a new pair.
To get the prices down, you'd need a lot more cobblers though. And there just aren't many going to trade school for that. It is very much a "artisanal" craft today, akin to tailoring.
What are the challenges that prevent humanity from further automating clothes production? We don’t weave fabrics by hand anymore, but we still sew pieces of it together by hand. Why is that?
Because weaving is simpler and more repetitive than sewing. Sewing is both a pretty precise job and also lots of different movements, angles and very few straight lines. All of these make it less efficient to automate.
If you're interested in the history: it took quite long after during the industrialization to invent a working sewing machine. There are quite a few interesting Youtube videos for example on the history and workings of the sewing machine.
Because cars are a high $ item vs. shoes. A business's overheads don't scale linearly with item price, so it's possible for a car mfg to achieve a similar net profit margin to a shoe mfg but with substantially lower gross profit margins.
Now they’ll just have to make shoes for $11 or new balance will have to come back to North American manufacturing and make shoes for $40 wholesale
Shipping , customs , duty , port fees , transportation , packaging that can survive across the ocean should all be things that make the product unrealistic to make outside North America, not to mention environmental tariffs that should be applied to products made in Asia.
Damn! I tried to answer the question without looking at the thread and arrived at a unit cost of 28 % of the retail price, after deducting reasonable guesses at VAT, store margin, shipping, etc. Fairly close to the quoted 25 %.
Fermi estimation is awesome and if you're one of today's lucky 10,000 who haven't heard of it, this is your day!
The specific (fictitious) example they gave was $100 -> $150 due to a ~$23 tariff.
> But if we bump the cost of freight, insurance, and customs from $5 to, say, $28, then they wholesale the shoes to Footlocker for about $75. And if Footlocker purchases Nike shoes for $75, then they retail them for $150. Everyone needs to fixed percentages to avoid losses.
The point being that many parts of the supply chain don't operate on fixed costs and instead percentages.
> The point being that many parts of the supply chain don't operate on fixed costs and instead percentages.
That's how it was working in most wealthy countries, where tariffs were generally low or very low.
I don't see why it must continue to work that way in the USA with 50% or 100% or more tariffs. If Footlocker wish to charge double the post-tariff price, that leaves room for a competitor to change double the pre-tariff price.
(Or double the pre-tariff plus a tiny bit, to account for the increased cost of insurance, theft etc.)
That is great for those who can afford $200+ shoes, not so much for those who're already struggling to make ends meet. Sure, in principle, they will save more long term. But it'll take time for those savings to realize, and they need shoes now (to wear them to work, for one).
For me this glosses over on why would see the same 100% markup on the customs duties as they rise. A 100% at a low tariff rate is just pricing in the increased paperwork and accounting, but at a super-high tarrif rate this become pretty unjustifiable. Why is not more likely customs becomes mostly a passthrough cost?
It is a passthrough cost because of the business models. In this example the importer (Nike) is paying the cost, and then retailers are buying the product from them at a price that includes the tariff. The retailers don't care why the shoe is $75 or $50. A retailer is concerned that there are customers willing to pay a price which enables them to make a profit. For most retail businesses that price needs to be about 2x cost of goods.
Until you get to extremely high-end goods this multiplier system works fairly well to accommodate the various costs the business has. It is an assumption that there are many business costs that scale linearly with sale price. In reality not all do, but there are many: insurance, return costs, loss, and customer service expectations all scale with dollar values.
Edit: if we switched from an import tariff to a foreign goods sales tax we could avoid this particular problem.
Because tariffs are calculated based on the value of the good at the time of import, while sales-taxes would be calculated at the end.
The article explains the tariff scenario. In the tax scenario, Nike can operate like in the pre-tariff world, while the retailer would have to charge the tax.
But the consumer is still the one who can either afford the shoe or not. He doesn't care who is collecting the tax or where in the pipeline it is assessed.
When in the supply-chain you are creating the "taxation" matters to the final cost, assuming 1) the gross margins remain the same and 2) the costs scale linearly.
Consider a fictional supply-chain with three players A, B, C. Assume that B and C have 50% gross margins.
In a no-tax world, if A sells the product to B for 10$, then B to C for 20$, C will sell it retail for 40$. (A:10$ -> B:20$ -> C:40$)
Now imagine a 100% tariff scenario for the transaction between A and B. Now, A sells the product to B for 20$ (10$ + 100% tariff), then B to C for 40$, C will sell it retail for 80$. (A:20$ -> B:40$ -> C:80$). This nets the government 10$
In a third scenario, imagine a world where this 10$ is not charged as a tariff but as a sales tax. A sells to B for 10$, B to C for 20$, and C to the customers at 50$ (40$ + 10$ freedom tax).
By changing where in the supply chain the tax is levied, we arrive at a lower retail price for the same tax income. This is a natural consequence of the above two assumptions, especially the idea that costs scale linearly. If maximum income from the taxation of imported goods is your goal, this is the way to go. Whether this would have the desired effect of discouraging imports is another matter.
I think in your scenario that B and C would drop their margin percentage because the tax does not represent anything that will increase their costs in handling the product. E.g. B would sell to C for $30 and C would sell retail for $50, making the same profit in dollar terms. If they don't, a competitor will, because a consumer will prefer the $50 price to the $80 price.
You're suggesting businesses B and C would just absorb the tariff cost by reducing their margin percentage to keep the same dollar profit. However, as Cerium noted earlier, many business costs do tend to scale with the price of goods, making this difficult without impacting profitability.
For financial costs, higher inventory value due to tariffs increases the cost of capital (interest on loans/tied-up funds), insurance premiums, and potentially transaction fees.
For operations costs (handling and labor), increases due to indirect effects: As the price of the average consumer basket increases due to tariffs, the average citizen either demands and receives higher wages or has to reduce spending; this means that the per-item variable cost of processing goes up, either because the wages of those employees increased (higher wages) or because the sales volume decreases (reduced spending).
Of course this does not mean that every business will have exactly this outcome. And absolute size of these effects is also dependent on the actual demand elasticity.
I think the shoe graphic after the $75 cost is disingenuous to be still shown as $100 base instead of $150 base. This would show that this basic "100% markup" is just scalping. Expenses and overhead would not double so it's just more in the profit bucket.
> First, adding $26 tariff at the port doesn't just add $26 to the final price. Everything here works off of percentages.
This doesn't have to be the case though, right? It seems very weird that when you jack up tariffs, some middleman in America is seeing their profit jump.
It is better to distribute or sell shoes than to make them. It is even better to finance/own the making of shoes or even better - the selling/distribution of them. That is Economy 101, originally known as Das Kapital. The people who read those rules wrong call themselves marxists and insist on everyone producing a lot of the same standard shoes, and selling them to people at cost, $25. The people who read those rules right try to find how and where to make a factory, distribution center or retail store, or at least where to get a share of it :)
i've seen certain groups defend war (really cannot imagine this) and now i'm hearing from the same group i'm a part of, well it's okay to off-shore all this because the president doesn't like offshoring? for years fashion forums have bemoaned the offshoring of american clothing. if the president said he supported communism, would certain groups suddenly become free market capitalists?
have people always been like this? was this 'anything but agree' position common back in the 70s and 80s? is this an american thing or christian society thing?
Trump's tarifs are indeed absolutely idiotic, but so are all those people claiming that free trade is entirely positive and ignore all the problems that arise from the West being unable to run industries anymore.
I still don’t understand what’s the goal of this shitstorm alienating allies and destroying the economy with crazy uncertainty.
But fake money will not save the country from ww3.
A superpower needs to have an independent manufacturing base to be taken seriously, nukes deterrent is eroding.
Do you not realize that one country learns how to make useful things like blouses, computers, phones, shoes, and the other country only knows how to make fake money?
What happens when the country that makes everything else realizes they can also make up fake money just as easily as anyone else?
Why do you keep saying "fake money"? China can use that fake money to buy real things from anyone in the world.
It's improbable that Trump has Klinefelters because people with Klinefelters tend to be infertile. It's more likely that he got forged results from a shady clinic.
Countries with excess USD buy T-bills because it beats holding it in a bank account, and converting it to CNY would be bad for exports. But some other countries also put it to more creative uses like sovereign PE funds.
XXY was not on his card. It was YXX. Some idiot on a rumor mill website speculated it was due to this that he must have the disease.
It’s debunked. Further he would be an incredible case study given his stature and appearance. For calling MAGA people dummies, it appears you can’t even read.
Article has absolutely nothing to do with the actual cost of shoes. Just the simple cost of model of manufacture -> distributor -> retailer. Nothingburger.
They will be more expensive to make in the US and will likely sell less shoes as a result. This will be the case for most things that are cheaper to make overseas. Or with things that are difficult to grow here at scale.
No, you said they were loss leaders, which means Nike loses money on them.
Now you're saying they're not, that Nike makes massive, massive profits on them.
Sorry if I'm not seeing your "subtlety" here. But instead of blaming me for misunderstanding you, it's fine to just say whoops, that you were mistaken about the term you used, or meant something else. We all have brain farts sometimes ;)
Also, the article itself gives actual numbers. You don't need to make up your own here, which are not correct.
https://threadreaderapp.com/thread/1909741170953273353.html
Americans need to get over their view of “Asia” as being about making shoes. When I was working in engineering in the early aughts, we mocked the Chinese as being able only to copy American technology. Today, China is competitive with or ahead of America in key technology areas, including nuclear power, AI, EVs, and batteries.
We need to anticipate a future where China is equal to America on a per capita basis, but four times bigger. Is that a world where “Designed by Apple in California, Made in China” still makes sense? What will be America’s competitive edge in that scenario?
What seems most likely to me in the future is that the US will find itself in the same position the UK is in now. Dominating finance and services won’t mean anything when both the IP and the physical products are being produced somewhere else.
> US will find itself in the same position the UK is in now
The thing is .. there's a point here, but it's not at all tied in with physical products. People are obsessed with one side of the ledger while refusing to see the other. Most of the stuff the UK is struggling with (transport, healthcare, energy) are "state capacity" issues. Things where the state is unavoidably involved and having better, more decisive leadership and not getting bogged down in consultations, would make a big difference.
The UK stepped on its own rake because it was obsessed with tiny, already vanished industries like fishing. Fishing is less profitable for the whole UK than Warhammer. It's not actually where we want to be. While real UK manufacture successes (cars, aircraft, satellites, generators, all sorts of high-tech stuff) get completely ignored. Or bogged down in extra export red tape thanks to Brexit.
To improve reality, we have to start from reality, not whatever vision of the past propaganda "news" channels are blathering about.
> Fishing is less profitable for the whole UK than Warhammer.
This sounded completely insane to me. I tried to look up numbers and found that Games Workshop brings in > 0.5 billion in revenue (!!), compared to all of UKs fisheries at 1 billion-ish (profit margins are, as you'd expect, pretty favorable for the plastic figurines that they don' even paint for you).
Thanks for this interesting fact.
It's also worth considering that certain industries (fisheries and agriculture for instance) are subsidised. It's in our national interest to maintain production capacity, so profits are the least of our concerns. Both the UK and the EU's agricultural sectors are heavily subsidised mainly for this reason. It's cheaper to import than to produce locally, especially with our environmental standards and targets, but we need to keep producing. More so in the current geopolitical climate.
And whilst nobody wants to risk being starved to submission, it's also equally important to promote more profitable sectors, and tax accordingly, so that we can support our more strategic sectors. I wouldn't say we're doing a good job at that for what its worth.
+1, exactly. Focusing too much in the money makes you forget about the power. At a national leadership level, there isn't much power in having a local Warhammer industry, fishing is much more strategic.
In broad terms, this is related to the error the USA made. Manufacturing in China was a very profitable deal for the USA. A lot of companies view labour first and foremost as expense, wealth as as the goal, and power in wealth— so it's not surprising as a whole the industry opted to "contract out" labour across the globe.
A lot of power lays in labour though. Money doesn't produce, invent, move, feed, etc— money is only good if someone will take it at the amounts you have it to do that specific labour you need for you.
This is a bit harsh: the USA didn't devalue labor in general, just manufacturing. They hired software engineers from all over the world, along with a lot of higher value engineering and product development jobs. The error the USA made was in pushing the workforce up the value chain faster than everyone could handle, and a lot of Americans got left behind.
China is moving up the value chain also, they are being forced to by their demographics, and they are investing heavily in the change ATM (just like they started investing heavily in green energy 10 years ago) so I don't think they will make the same mistake as the Americans are making right now.
Did they hire those software engineers along with their unions?
Not quite. It's all about labor and getting rid of the class that used to (and could have) threatened the elites.
SE will one day realize they are as screwed as the average worker and unionize in some way. The endless money pits are not for every SE, even today the majority does not work for the creme-de-creme of well paying companies. While specialists and smooth talkers might profit from the current model, as always is the case, most won't.
Unions are a bad solution to the problem of companies not vaulting their employees. Unfortunately, without altruism by the corporations or governments action, they are also the only effective solution.
I'd prefer we look to other countries that have solved the problem in other ways, such as including representatives of the employees in the board.
Also, we need to remember that corporations exist at the mercy of the state, having received a special dispensation (corporate charter) to exist. Those companies that are not a net benefit to society have no right to exist and ought to be dissolved.
Then when they unionize, all the software jobs will head to cheaper locales. Unless of course you’re suggesting that the U.S. use tariffs on labor to prevent that?
“If you unionize, all the jobs will leave” is the oldest refrain in the book for those opposed to united labor.
So maybe it is wisdom? It's not like it isn't true. Look where auto manufacturing investment in the US is. Southern non-union states.
It's extortion. Sometimes the extorting party can act on its threats, sometimes they can't.
In regards to the auto industry, I'm not sure what you mean by "look where auto manufacturing investment in the US is". Most auto manufacturing jobs are still in the rust belt [1]. Most EV Production investment is in the rust belt [2].
[1]: https://engaging-data.com/auto-manufacturing-state/
[2]: https://www.assemblymag.com/articles/98988-ten-us-states-dom...
If the goal is to have high paying jobs in the US, then yes the government should put penalties in place to encourage that. US cost of living (housing, real estate taxes, health care costs, college costs, etc) is way higher than many countries, especially those where jobs are being offshored to, especially India, so salaries have to be higher here.
So, do we let US companies invest US consumer derived revenue in the Indian economy, just to boost profits a bit, or do we protect good jobs at home instead, and have a virtuous circle where US profits get plowed back into the US economy?
Most other countries have much stronger unions and labour laws.
Sure but when it comes to tech US currently (supposedly) has very high labor costs and weak labor laws. All other countries with a tiny number of exceptions have low to very low labor costs and more regulation.
If US has both it might shift the scale a bit.
> Then [...] all the software jobs will head to cheaper locales
Dude, how have you completed missed the ongoing push for AI to replace developers?
I only see a push for AI to produce more developers. How could AI, as we know it today, even replace developers?
More developers isn't at odds with the previous comment. That is how you can more easily push the jobs to low cost areas! When 张三 in rural China is given his first computer he can jump right into being a programmer too. Thus you can give him the job instead of a high priced developer in America.
I want to build a thing. Before AI it would take 1 year and a team of five developers. Now with ai, it's gonna take you 6 months and 3 developers. Those two developers didn't get jobs because of AI.
You haven't replaced developers with that.
You haven't even put developers out of job as you must remember that I also wanted to build a thing, but couldn't because you had all the available developers tied up. Now there are two freed up who can come work for me. There is no end to all the software we want to write.
That is the hope! Only time will tell if this tech is deflationary or inflationary though. You also want to build a thing, but do you have funding for it? in this economy?
> Only time will tell if this tech is deflationary or inflationary though.
Or both. That would be my bet. The industry in general will see a decline. The massive growth in developer numbers will place enormous supply-side pressure. But certain experts who remain supply constrained along with increasing demand for those special services amid the explosion of new software being written will make a killing.
I work for a US org that also hires internationally, including Europeans like me. It does location-based pay, so we're much cheaper than especially my Silicon Valley colleagues, yet somehow, we keep hiring there more than we are in Europe.
A lot of our “value chain” is bullshit. If and when China becomes twice as big an economy as the US, much of our “edge” in marketing, finance, and services isn’t going to mean squat. E.g. how much “GDP” will evaporate overnight when American universities no longer have the cachet that comes along with being the best universities in America?
> A lot of our “value chain” is bullshit.
No it isn't, productivity has to increase, that's why we constantly get rid of jobs that do not provide much value. People want more money, and the only way we get there is with more productivity (doing jobs that make more money).
> If and when China becomes twice as big an economy as the US, much of our “edge” in marketing, finance, and services isn’t going to mean squat.
China gets to 2X our GDP by doing what we basically did in the 90s, so you are definitely right! They will have their own marketing, financing and services. The only difference is that they won't need to outsource manufacturing to China (well, they are outsourcing it a bit now, but also investing tons in automation).
> E.g. how much “GDP” will evaporate overnight when American universities no longer have the cachet that comes along with being the best universities in America?
I don't know what you are ranting about, but I get the feeling that if I did know what you were saying here I would probably agree with you.
> No it isn't, productivity has to increase, that's why we constantly get rid of jobs that do not provide much value.
Our measures of “value” are wrong.
> I don't know what you are ranting about
My point is that a lot of what we think of as “higher value” activities are actually derivative of and downstream of our industrial supremacy. As China takes up that mantle, the higher value activities will go along with it. E.g., how long do we expect the US to do the cutting edge nuclear power and weapons research when China is the one building all the nuclear power plants?
I mean look at the path dependency that led to Silicon Valley. Why did the software revolution happen in the same place we were building the microchips?
We basically agree then: as China takes up higher value activities, they won't need those activities from the US anymore. Also, France is the cutting edge designer of nuclear power plants these days.
> Why did the software revolution happen in the same place we were building the microchips?
Hardware people becoming software people was extremely common back then, and still is today (EEs can make more coding than using their degree directly). Now we have the opposite problem (we don't have enough hardware people because software sucked all the oxygen out of the room) and China has less of it (although increasingly...they are repeating history as well). If anything, this just backs up my point in how higher value activities de-emphasize manufacturing (even super high end manufacturing as in semiconductors).
You can replace perceived value with actual value if you don't agree with the value judgement calls that were made, which is entirely reasonable.
"we don't have enough hardware people because software sucked all the oxygen out of the room"
How much is this exacerbated by the lack of domestic hardware manufacturing in the US for the hardware people? Seems like software boom starting in the late 1990's happened as China came online for hardware outsourcing. Not suggesting a causal relationship there, just complementary effects.
The same thing happens in China. If you want a good job, software will pay way more than hardware. Heck, you even see people from Taiwan doing software jobs in China because they at more than the hardware jobs in Taiwan that they could get.
Productivity since 2000 had only increased by some 30%, which can not account for structural changes in job market.
That’s the biggest thing I took away from the whole Boeing corporate disaster
You need to maintain at least a minimum amount of internal competency in almost all areas
If you completely give away a capability to other countries (in this case, fishing knowledge and labour) it is much harder to bring back than just coughing up the money
Those sectors you let die might not matter right now, but they might matter later. And you might have to scale up fast.
We buy local brands of shoes that are in inr 300-2000 range and that solves like 70% of the shoes market in India. From shoes to skippers to formal shoes to ladies heels and such. Then you gave INr 3000-8000 that are considered really really expensive.
Convert that to usd and you will see how much premium is being charged.
Perhaps. But does a subsidized industry retain competence, or retain incompetence? After all, if you're making a profit no matter what, what incentive is there to do well?
Many of the EU farming and fishing subsidies are to NOT produce anything.
That often depends on the structure of the subsidy.
"We will pay you 5 euros per kg of fish sold in supermarkets to consumers" is different from "We will pay you 500,000 euros a year to keep fishing".
There is a very reasonable argument in fisheries starting at least a century ago (and locally long before that), that we're looking at a partially renewable good - that it would be easy to cause an unsustainable population collapse with unrestricted harvesting, and so you should try and intervene in the market to sustain fish populations and stabilize harvests. Subsidies intended to do this are distinct from subsidies intended to keep fishermen employed fishing.
> You need to maintain at least a minimum amount of internal competency in almost all areas
This is exactly what Dr. L. J. Hart-Smith wrote in "Out-Sourced Profits – The Cornerstone of Successful Subcontracting", a paper from 2001 https://techrights.org/wp-content/uploads/2022/06/2014130646...
See also How Tech Loses Out over at Companies, Countries and Continents https://berthub.eu/articles/posts/how-tech-loses-out/, where the author asks, "In any organization, in any company, in any group, any country and even any continent, what level of technical capability, do we need to retain?"
Once you've outsourced everything except the management work, the organization forgets how to do the thing they're supposed to be managing.
> If you completely give away a capability to other countries (in this case, fishing knowledge and labour) it is much harder to bring back than just coughing up the money
I feel like money is overwhelmingly how we denominate value, effort, and agency in our society. Almost every time somebody says "You can't just throw money at the problem", they are arguing that we shouldn't even try that, contrary to all established reasoning about how society works.
There are diminishing returns to funding, but the people who use this expression are typically at a tiny fraction of where we would expect to hit them.
If you want to have a fishing industry because fish are your idealized heritage, then choose to subsidize it heavily either to continue to exist, and/or to expand it into waters and economies of scale where you can still fish profitably. Like the Japanese and the Chinese do, respectively.
You need to pay money to people who will put in effort and agency. You can't just throw money at random people and expect something useful to happen. Sometimes, the people who will make things happen if you throw money to them don't exist. Sometimes, you have to turn people into those people (which also costs money).
Money is something you give people so they can eat and stay warm while they do the thing you want. They still have to be doing the thing you want. Sometimes there's enough reputation and legal threats on the line that you can assume the person will do the thing just based on the fact they're taking money from you and not freaking out. Companies do things this way a lot - individuals not as much.
The abstraction is not the territory, and the idea that money denominates value is an abstraction... often we define "value" as "that for which money is exchanged", making the abstraction tautological, at no gain. This is often done by people who want to think the thing they're spending a lot of money on is very valuable, or want to make you think the thing you're spending a lot of money on is very valuable.
While not disagreeing with you, I don't think we've done a great job of maintaining fisheries.
Also, continuing overfishing is a terrible long-term strategy. Sure, we will have the boats, fishermen and infrastructure around fishing, but that's of no help if the fish are gone.
Politics isn't about good long-term planning - it's about accountability sinks.
This decade: "We're not the ones trying to steal your fishing jobs!"
Next decade: "It's not our fault there aren't fish!"
You missed the "you can fix it with money though, and our friends are just the people to give the money to" step that comes after each problem statement.
Agreed, and the same goes for most strategic sectors: energy, agriculture, animal husbandry, semiconductors, communications, space, the infrastructure to support all these, education, etc.
Whilst I appreciate that there are national and security interests to consider, I'd still say fish aren't one of them.
I think a lack of seafood would have less of an impact to the general population than say, lack of satellite navigation or communication technology.
It's only ~100 years since seafood was the primary protein source of most coastal regions. The rampant mismanagement of fish/shellfish stocks that put an end to that has had knock-on effects across our entire food supply, that continue to influence agricultural policy to this day
Which amid everything, maybe it is time to focus again on our own programming languages and OSes like in the cold war and export regulation days, it will suck for a while, but apparently it is how everything is going.
So wait, you have high environmental standards, so you import instead of producing locally. Wouldn't that implicitly give you lower standards at home?
> Games Workshop brings in > 0.5 billion in revenue (!!)
I had no idea that Warhammer was such a huge industry - they must sell almost 600 sets a quarter.
This is either a joke that flies over my head or there are a few zeroes missing. Which is it?
The joke is that Warhammer sets are expensive.
I'm kinda surprised people aren't just buying a 3D printer. I print stuff all the time. I'm not into this kind of game but if I were I wouldn't pay that much for a piece of plastic I can print at home for 3 bucks.
My group is 3D printing most of our stuff for beer and pretzels games. But official tournaments have a rule where your miniatures have to be official products.
Note that a standard printer won't be anywhere near as nice quality as official models. You need a resin printer for that, which requires ventilation, some basic PPE, and additional labor to clean and cure the prints correctly. Not something you want to do with small children or pets in the house.
We resin print most of our models. We use FDM for blocky things like tanks and buildings, though. And some complex or very large models can't be printed (although we sometimes use alternatives for those).
Warhammer is an unusually expensive game, too. Other games like One Page Rules will sell you STLs to self-print, or charge very reasonable prices for pro-printed minis. You can buy a 2-player starter kit for OPR for about the same money as one WH40K unit.
Yes I know, resin printing is not great, I don't like it myself either. But FDM printing has gotten a lot better, especially with the bambulab material switcher where you can use water-dissolvable support material.
But cool to hear you're printing them. I can imagine they don't want to allow it at official tournament to protect the golden goose :)
Yeah, we have a couple of Bambus, but the detail on these miniatures is physically smaller than the extruder. So print resolution holds us back a bit.
Even with the 0.2mm nozzle? With that you can go pretty detailed because the maximum it can do with that is 0.1mm (how they pull that off with a 0.2mm nozzle I don't know, but all their nozzles do half the nozzle size in layer height).
Of course it's not the resolution of a good laser resin printer but resin is also much more expensive and it's a PITA to work with as discussed here.
Works fine for a tank, but something like Imperial Guardsman, Sisters of Battle or a Necron Tomb Blade all have features that are too small for FDM. Look up the "Celestine the Living Saint" model - the entire sculpt is small enough to fit inside your hand.
The extra cost of resin is negligible at this scale, it's mostly the safety requirements and extra labor that makes it harder.
Ahhh yes ok I didn't realise that. I'm not into this kind of game at all but a friend who was into it showed me his big flying tanks so I thought they were all that big.
Resin prints are production quality, but a messy/toxic process.
We need a resin printer tuned for mass production of tiny pieces, just like belt FDM printers are tuned for mass production.
FDM prints are either slow or have obvious layer lines or both. If you're painting it maybe that doesn't matter.
Additionally: If you want to _mass_ mass produce these things, an injection molding setup is going to be your goal. You can sort of hack one together for plastic molding using a pneumatic/hydraulic cylinder and some mold plates that are either cast metal (lost-PLA, lost-wax), cured plaster, or CNC'd. The stuff that will give you five million units a day costs as much as a house, but there is a middle ground that is competitive with FDM on quality but significantly faster for more like $300-$3000.
The limitation with injection molding is typically the cost and complexity of having mold plates made when you don't have a demand for all that many units.
Resin is also slow (probably slower per mm^3 than FDM depending on nozzle size), but speed doesn't really matter IMO. But yeah with a high detail 0.2mm nozzle (0.1mm extrusions size) it does tend to get pretty slow. Layer lines are a factor of orientation a lot (you want to have steep angles, not very shallow ones).
I have several printers and I ususually have something "in the oven" while I WFH (my job is not related to 3D printing sadly)
One advantage of resin is that it takes a fixed amount of time per layer no matter the size of the layer. FDM time obviously increases linearly depending on the amount of material to deposit. So a resin printer will take the same amount of time to produce a single figure or as many figures will fit into its print area.
My friend did this with a pretty large amount of success. You can find prefabs online and even designs for mini warhammer models to save space/mats.
I've FDM printed models for friends, and the quality isn't there. It's not good enough to spend the time carefully painting it.
It's fine as a token for the game, but people enjoy the painting etc too.
A resin printer isn't safe for use in an apartment, otherwise that would probably be more common.
I just Googled for "resin printer at home". There are loads of Reddit discussions and YouTube videos about it. Yes, precautions and a careful setup are required, but "isn't safe" does not look true anymore.
A lot of those people on Reddit and YouTube are doing dangerous things like handling liquid resin without gloves or eye protection, or not ventilating/filtering resin fumes that cause cancer. There are horror stories of people who splashed a bit of resin in their eye and went blind.
It's no more dangerous than a craft like woodworking or spray painting when you follow very basic safety protocols, but the safety culture is near nonexistent in the community.
It's possible, you have to put in some effort. Active ventilation to outside, working with PPE on, washing in isopropyl alcohol, curing with UV light. At least that is what I would do in smaller apartments.
* Avoid placing a 3D printer over carpeted areas
That rules out most apartments in countries like the USA and UK.
* Do not locate dedicated work/personal spaces in close proximity to the printers if odors are a concern
That rules out all small apartments, where there isn't a room that can be dedicated to the printer.
* 3D Printers and uncured, open resin vats should be stored and operated in a well ventilated area or with local exhaust
That rules out all apartments in northern countries (like here in Denmark) with lots of insulation
https://radtech.org/safe-handling-of-3d-printing-resins/
I live in northern county and can vent my 3d printers exhaust to the outside. Friend of mine from CPH did the same with his resin printer.
And if you actively went it outside carpet and close proximity should ok ok'ish health wise. It's just effort and noise that a lot of people don't like to put in.
> That rules out most apartments in countries like the USA and UK
Yes I've always wondered why they love carpets so much. When I lived in such an apartment it was terrible. Always dirty and dusty. I'd much rather have a plastic, wooden or tile floor (the latter not ideal due to breakage though).
But you can ventilate, especially if you blow the air outside through an active blower.
And finally, makerspaces are a great way to do these things anyway. A community that can support and help you when you run into issues, friendly people around to borrow equiment and materials from, and they're usually pretty cheap if you don't get a fixed desks.
Hmm it depends on your sensitivity also. I know some people at our makerspace who have serious allergies to the stuff, even a minor trace and their skin gets all red.
Not everyone is as careful with the stuff so that doesn't really help.
Resin is nasty stuff
A single Warhammer plastic miniature around the size of a child's toy car, unassembled and unpainted, can cost around $30.
It's a very expensive hobby. My kids are not allowed to look at the models in the window in case they get any ideas.
It's priced in a similar way to Lego.
I don't find Lego especially expensive. And Lego is way more difficult to manufacture, has very exacting functional requirements and extremely good QA.
I bought a Warhammer set during Covid and was amazed at the detail, compared to the 1990s stuff I had as a kid.
I can't say what's more difficult to manufacture - millions of identical bricks that snap together, or a huge range of different, detailed designs which fit snugly together but don't lock.
Just the first thing on the home page: https://www.warhammer.com/en-GB/shop/Deathlords-Mortarchs-Ma...
> millions of identical bricks
Clearly you are not aware of the extraordinary range of Lego pieces.
Proportionate to the size of each company and the amount of toys they produce, I'll bet there's significantly more variety in Warhammer.
Just from a quick search, within a year Games Workshop offer about 3000 different model kits, each of which will contain ~1-4 unique moulded sprues. There seem to be at least 50 new kits each year, possibly 100, otherwise what's available rotates around the older kits.
Lego have produced about 15,000 different sets since 1950, and a huge number of the parts are shared between sets. (That's the whole point of the toy, no?)
Yeah I tried to look up the number of different Lego partszbut it gets hard to define what a Lego part is. And are we counting different colours, different designs printed on them, etc. Somewhere between 5k and 60k.
Also you have to take in account that Lego frequently stops certain parts and also that they more and more create complex parts and comparatively less "classic" bricks.
Which is an issue because it makes the sets way more difficult to reuse than 30 years ago. Go figure what to build with a random ninjago set except the official model. But that’s another ~~rant~~story.
I don’t know a great deal about injection moulding but I’d assume GW kits are more detailed than lego, having seen some sprues.
The stuff they’re putting out these days is really quite good.
Lego is pure IP (both from LEGO itself, and then e.g. Disney or whoever is behind the theme of a given set). If you get sets designed in China and made at the same factories that make Lego bricks, they're like 1/3 the cost. If you get sets designed in not-China but obviously ripped off ("Star World" sets that are 1:1 copies of Star Wars legos), also in the same factories, it's like 1/10 the cost.
The manufacturing isn't easy, sure, but it's more or less a solved problem and not at all reflected in the cost.
So when GP says priced like Lego, they just mean that - priced based on something completely different from the cost of materials, manufacturing, etc.
False. Lego is some of the most precise injection molding in the world. The tolerances are insane and they nail them every time. Compare with offbrand building blocks and you'll feel the difference.
Micromolding is very hard, and Lego is the best at it.
10-20 years ago, sure. Nowadays you can get basically the same product from LEGO compatible competitors for way cheaper. Dunno how many modern sets of the variety of competitor stuff you've assembled recently, there's huge variance. Some of it definitely has crap QC. Some of it is really, really good now. My wife put together some knockoff 8000+ piece set the other year and the pieces were basically flawless.
Where I've seen the difference is in the quality of the instructions (which matters) and the packaging (which arguably doesn't). The bricks themselves are, as you say, basically flawless.
Exactly. I bought 3 or 4 China Lego clones to try and the parts were slightly different in size and in color. Some blocks way too big, so building was not good experience. For original Lego you don’t need sanding paper on the table.
> If you get sets designed in China and made at the same factories that make Lego bricks, they're like 1/3 the cost.
Lego does not outsource brick making. They tried it out back in 2005 with Flextronics in Hungary and got a painful lesson. Lego runs all their factories themselves now.
Lego may run the factories, but the factory will run extra and sell the excess off books. Maybe less so nowadays that (1) they can charge a 20-30% premium over US Lego prices in China, and (2) competitor off-brand Lego have caught up in quality
I don't think the official Lego China factory products get sold to the US, only Asia?
they own their factories. Contrary to what you're thinking, they actually only have 3-4 factories across the world.
Right and I'm talking about the one in China (that opened like 10 years ago), selling stuff to people in China (and presumably elsewhere in Asia).
Nowadays it's kinda irrelevant to the greater point anyways, because some of the knock off factories make parts that are just as good. (Some knock off factories push out terrible QC)
Yeah, and way much too! I wanted this so bad for my kid but it’s breathtakingly expensive (while still being quite an underwhelming set).
https://www.lego.com/nl-nl/product/lego-education-spike-prim...
Look up the price of a single small unpainted figure. You'll be shocked.
Warhammer is expensive
I've read, that now GW have more than 50% of revenue from licensing IP, not selling books & plastic.
Licensing is about 10%, nowhere near 50.
https://assets.ctfassets.net/ost7hseic9hc/1alE9DriNd0GJq1SYK...
Oh, thank you, I should not trust videobloggers when it is possible to check primary documentation.
Other interesting bit, they now have recurring revenue from 207k subs
What’s even more astounding is that most of Games Workshop’s manufacturing remains in the UK.
Not only that, they are actively expanding their manufacturing because their revenue is limited by supply. Their factories are running 24/7 and some products are still consistently out of stock.
There's a problem with just directly comparing them - because JKR probably brings in more revenue to the UK than fishing, with Potter copyrights.
But most of that revenue goes to JKR, whereas most of the fishing revenue may end up in "working class" people's pockets.
There are lots of JKR-adjacent industries that employ working class people.
The Harry Potter World theme park in London has over two million visitors annually. That tourism must be more economically significant than fishing for cod.
The comparison was with Warhammer, not Rowling.
Warhammer requires designers, moulding experts, warehouse staff and so on.
Games Workshop is a public company, in case you want to look up their accounts for the comparison.
> But most of that revenue goes to JKR, whereas most of the fishing revenue may end up in "working class" people's pockets.
I am sure JKR has to pay taxes still, which goes back to the government.
But still, the money that's going straight into working class people's pockets is probably better for the UK in the long run. Don't worry, it will get taxed over and over and over and over again as they pay each other for things.
Velocity is one of those critically important concepts that often gets left out of these discussions because it's hard to understand if you haven't formally studied economics because it's all about second order effects. But it's a big part of understanding why, historically speaking, maximizing corporate profits doesn't seem to correlate all that well with overall prosperity trends.
There are quite a lot of people who make money from Harry Potter apart from JKR. People running cinemas, bookshops, making the movies, running the studio tour and so on.
Right.
And the more of that that happens, the better for the economy overall. The less of that that happens - implying more of it ends up in JKR's proverbial dragon hoard, not doing much good beyond being an impressive pile of wealth for the dragon to sleep on top of - the less good for the economy overall.
I don’t think your comment is accurate.
When rich people get large amounts of money they don’t hoard it like they did in Roman times.
That money either goes into the stock market or to a bank. If it’s in the stock market that money is being used in investments that further economic growth. The portion of the leftover money that’s in the bank is then lent out by the bank to others in the forms of loans and so on for purchasing houses, starting business and so on.
The idea that the pile of wealth is simply hoarded to be slept on is out of date and not representative of modern economics.
Also, as for JK Rowling specifically, she had donated a significant amount of her wealth to charity.
A lot of that "economic growth" is stuff like flooding the US with opioids, burning mountains of gas and coal to produce crypto scams, and chaining people to the office 60+ hours a week to produce reports justifying their "impact".
The nominal gdp is my father's time was lower and yet he could buy a house and support a family of four on a single salary as an immigrant in his early 20s.
The problem with investment dollars is that they're typically "spent" (invested) only when they can extract more wealth than they create. You invest $10,000 now so you can have $15,000 later. Where did that $5,000 come from? Well, someone gave it to you in exchange for that $10,000.
In other words, they're effectively rent-seeking dollars. The whole hope of investment is that you get more money without doing any labor yourself.
And if you invest and they're lost? Well, now it's not even rent-seeking. It's just burning money.
This isn't to say that there's no benefit from that money being available. The issue is that the real value that investment creates isn't really the money going back to the investor. It's the value of the labor and products generated by whatever the money fronted costs for. The actual value is still generated by the labor. The investor does help start the ball rolling, but is still a leech.
Once we get to shareholders, things don't really improve. Shareholders are also only interested in dividends. They want dividends at the cost of the company. At the cost of the product. At the cost of the customer. There's no responsibility to society or to the customer in the face of a shareholder.
Shareholders are like employees that don't do any work but still want a paycheck. "Oh, but they're owners," is kind of a poor excuse when these owners do no work. Stock is like buying a box of Crackerjack and letting your brother take the whistle and sticker.
> Also, as for JK Rowling specifically, she had donated a significant amount of her wealth to charity.
Which she does because donations offset the taxes she owes. She's no Dolly Parton.
> The actual value is still generated by the labor.
The labour _needed_ the money. In other words, the labour doesn't want to take on capital risk (aka, the output turning worthless, or something like that).
Investors aren't leeching, they are taking risks - risks that the labourers dont want to take (otherwise, they would've been the one fronting the cost, rather than expecting to get paid for labour!).
The old idea of capital being leeches only happens when your capital comes from lords who granted you ownership (of the land).
> Which she does because donations offset the taxes she owes.
How would that work? You can only write off the amount you actually donate. Paying 100% to save 40% (or whatever your tax rate is) seems very counterproductive if the goal is to actually save money.
My largest investment is my home. I’m not sure there’s any other way to think of my home as anything other than “a pile of wealth… to be slept on.”
Am I missing something about modern economics?
> Am I missing something about modern economics?
yes you have.
The home took someone money to build, the land cost money to buy (from the previous owners) - thru the long chain of title ownership that would stem from the conquerors of this land (who ultimately took the land from either natives, or whoever that previously owned it by force).
The previous owners who now got paid by you will use this money for other investments. It is not slept on. Your house is also providing utility (of being a shelter).
You just stopped thinking about the money as soon as it left your bank when you buy the house, and thus you feel that the value of the house is merely being "slept on", when in actual fact, this transaction that is your house is a small cog in a very large system.
You are missing the wealth required to invest and put in the bank, such that your house is an afterthought.
your largest investment is your home cause you live in strange times when over the last decade the price of housing has ballooned like a big bubble that it is now. if you lived your “core” years in say 50’s to ‘80’s the house would neither be your largest investment nor your primary source of wealth (guessing you are affluent “white collar”…)
I look at my tiny townhouse that my Dad could built in 6 weekends with his buddies and zillow needing seven digits to display the price and very well thinking “what a fucking real estate bubble we live in currently.”
I don't think this is true. Housing has basically been around 50% of total wealth for the past 50 years or so. Check out Pikettys capital in the 21st century for far more details.
https://observationsandnotes.blogspot.com/2011/06/us-housing...
there is a clear point at which one might start thinking about real estate as investment (and it sure looks bubbly). if you bought a house as an investments some decades ago it is not much of an investment and basically a loss inflation-adjusted, no?
While I can’t speak to which one of you is correct I think it’s worth pointing out that 50 years ago only pushes into 5 of the 30 years that they referred to. I can’t imagine it would’ve jumped to 50% overnight in that change but I still thought it was worth mentioning.
> When rich people get large amounts of money they don’t hoard it like they did in Roman times.
> The idea that the pile of wealth is simply hoarded to be slept on is out of date
I don't see what you're arguing against. If they did that, what would the problem be?
> I am sure JKR has to pay taxes still, which goes back to the government.
Does JKR personally own the copyrights, or have they been sub-licensed to a corporation in (e.g.) Ireland?
With the levels of money involved, highly likely its all wrapped in legal fuckery.
https://www.newsweek.com/jk-rowling-making-money-hogwarts-le...
And apparently she really does pay all her taxes (£47m last year, roughly $60m)
I do wonder how much of fishery money ends up in the working class pockets. I assume the surviving companies survived because they have economy of scale, meaning most of the profits goes to corporate. If somebody has the numbers, I'd like to know.
JKR's net worth is less than a billion, which means she's probably not raking in over a billion annually.
Isn't this because she gives so much to charity?
Quoting Wikipedia's source, Forbes estimated her donations were $120 million to date in 2012. However, she co-founded her own charity in 2005, of which she is the president, and I suspect most of it has been donated in that direction.
Personally, I'm always dubious of the rich and famous genuinely finding unmet cases for charitable organisations. Especially when they've made a fortune outsourcing being morally dubious to others - she can save children because others are paying her to be allowed to sell low quality merchandise almost certainly made in exploitative conditions.
She's not alone, there's many more e.g. Messi donating lots to children's cause through his own charitable organisation after gladly being a global ambassador for unhealthy snacks targeted at children.
Rowling made a lot of her money from books, which would mostly be printed by adults in the country they are published in. Also films, filmed in the UK.
That's a long way from advertising unhealthy snacks.
Lego isn't made in dubious conditions, so for toys she's already above average.
During feudalism the rich donated a far larger percent of their assets. The trend has been that the rich donate a smaller percent since then
Are you counting tithes as donations?
Tithe/charity/donations/taxes. It's fungible from a socio economic perspective.
> But most of that revenue goes to JKR, whereas most of the fishing revenue may end up in "working class" people's pockets.
What an amazing argument to tax the rich!
“Working class” fishermen sold their rights years ago. same as “working class” farmers who sell a field for a couple of million quid
> … that they don' even paint for you
Of course. That way they can sell you the official paints.
Fortunately, it seems they’ve dropped that you’re required to use the official paints if you want to enter a sanctioned tournament.
I'm not into Warhammer, but out of curiosity, how did they check that? Scrape a sample off each figurine and run it through a mass spectrometer or something?
Official paint was never a requirement AFAIK. Parent comment has probably confused the Battle Ready rule, which basically says the model and base must be completely painted with multiple colors and shading, but doesn't care about what brands of paints you use.
And then you try to eat figurines, and find out they're not as digestable
A game that is not on a computer... So they don't even calculate damage or move distance for you. And you have to buy each figurine and paint it yourself...
And people are spending all their money on this? That's why we're not mining asteroids right now?
I feel like people could just use AR glasses for this and spend nothing but their time.
You approaching this the wrong way. What you are listing as disadvantages is, for the most part, the USP.
For example, if you are in the target group, you buy it exactly because it does not uses AR glasses; If you are proficient, you are sleepwalking the damage/distance/all other calculations within seconds in your head, you don’t even have to take a single look at any rule book. The biggest selling point, however is: there are others sitting in front of you, it can be very competitive, you can see the reaction, like in chess.
> And you have to buy each figurine and paint it yourself...
This is a _feature_ for the target audience. There's a sizable chunk of the playerbase who enjoy painting more than the game. I even have friends who paint these miniatures professionally as their side gig.
> And people are spending all their money on this?
No. Most people are playing at home on a budget, similar to other board games. A very tiny fraction of the playerbase plays competitively and have larger collections.
> I feel like people could just use AR glasses for this and spend nothing but their time.
You can play this game in Tabletop Simulator, which supports VR. It's _far_ less fun than playing in person with real objects. TTS is mostly used to test strategies before committing to buying the required miniatures.
As sibling comment mentions, the damage calculation is rather simplistic, and it's an exciting moment around the table when you roll a fistful of dice, kind of like gambling. I'm not even that proficient of a player and I can calculate a 17 dice roll attack while sleep deprived at 3AM, no computer needed.
The UK ain't alone in that either. California's agricultural sector is one of the largest in the world (let alone in the US) in terms of revenue and output, in many cases providing most/all of national and even global supplies of various fruits, vegetables, and nuts. Virtually all American almonds and broccoli, 90% or more of American dates and avocados, top producer of peaches and dairy products, the list goes on.
And yet, California's entire agricultural sector only totals to $50 billion in annual revenue. There are multiple tech and entertainment companies in California that individually surpass that, in some cases (like Apple and Amazon) by an order of magnitude.
Nitpick, but while Amazon does have offices in California, it's headquartered in Washington State.
This is so key to understand because it illuminates how not every job is equal in raw value.
You cannot have a drying rack manufacturer in the US that pays a bunch of workers $35/hr. There simply is not enough value in drying racks to achieve this.
This is what is lost on the populist crowd. They compare themselves to high value workers (i.e. workers that produce a lot of raw economic value per hour), and then want to legislate that low value work pays on the same order.
To put that into simple terms, they want to make it so that producing a single $20 bill per hours pays them $30 an hour. No matter what, that isn't going to work out well.
Value isn't static, of course. Take the food that was brought up earlier. Food saw a real increase in value by around 30% from 2019 to 2024. A couple of destructive weather events, fertilizer scarcity, and war in the Ukrainian breadbasket shook people enough to think that maybe they shouldn't take food quite so for granted.
Drying racks aren't considered terribly valuable today, but if you lock up manufacturing to a single country and impose a number of other restrictions, sentiment can change quickly. The latest episode of Ted Lasso might not seem so important anymore.
The free traders also need to accept the reality that the UK’s decline started long before Brexit and disputes about fishing. In terms of per capita GDP, the UK lost its edge over the rest of Europe in the 1970s, and then simply never recovered from the 2008 global financial collapse. Without the empire, the UK’s “competitive advantage” in financial and legal services wasn’t worth shit.
I strongly suspect the US cannot maintain its outsized per capita wealth, on the back of the reserve dollar, in a world where China has an economy twice the size. Just as the UK couldn’t when the US economy overtook the British empire and the dollar replaced the pound as the reserve currency.
The question, instead, is how we’ll be able to adapt to that new reality. And I suspect we’d rather be Germany in that future than the UK.
The US appears to be trying to end the reserve dollars. Something that surprisingly few people have mentioned recently is that having the biggest trade deficit is the same thing as being the global reserve currency. Because they're the same thing, ending one of them also ends the other.
There does seem to be some sort of cycle in play: first a slave-driver-type economy creates a whole lot of wealth, then people get human rights, then they stop being driven like slaves and coast off the accumulated power, but forget the basic principles of wealth creation in the process (see also "good times create weak men" etc) and just spend all their resources arguing about who gets the wealth that is there instead of creating more. And I'm not saying that in an individualist framework - the reason individuals can't do it is a problem with the whole society, not with those individuals.
Ultimately you get out of this trap by making work sustainable and trying to level the playing field.
Almost nobody is spending resources in the US. And that's half of the problem. It's spent elsewhere, therefore labor stagnates or falls, only leaving low tier jobs to work. No factories locks out advancement reducing morale and draining the best that could have their kids advance.
In the US, you had skyrocketing prices on basics like healthcare and housing too, way more than elsewhere. UK has a lot of this problem too.
That together ultimately causes a reduction in teaching and educational standard, which further shrinks the high end advantage.
Short version: economy and people hollowed out in the middle is unsustainable.
> Ultimately you get out of this trap by making work sustainable and trying to level the playing field.
And you can't make work sustainable and level the playing field when you have free trade with developing countries.
People cite Ricardo like gospel, but the math of free trade treats every safety net, worker safety protection, etc., as a loss of "comparative advantage." You know how Texas takes jobs from California by having lower standards, lower wages, etc.? That's what happens when you have free trade with third world countries. It's a race to the bottom.
> Something that surprisingly few people have mentioned recently is that having the biggest trade deficit is the same thing as being the global reserve currency.
Can you explain this a little more? Why does having a trade deficit make your currency more valuable? My naive assumption is it would put more dollars in other countries, so they don't need them as much, making dollars less valuable.
Other counties need dollars to settle their international trade (particularly oil but practically a lot more), and to hold in reserve. The dollar is actually the only currency that's been printed enough to serve this purpose alongside its other benefits. This demand for dollars makes the US less attractive to import from as the price of the dollar is driven up by this extra demand.
Having the global reserve currency is another way of saying other countries have a lot of your currency.
Having a huge trade deficit is another way of saying you've sent a lot of your currency to other countries and haven't received it back yet.
I'm sure you can see how those are the same thing.
US is the alpha consumer. If you can sell in the US, you won. You want to sell in the US. You get dollars for what you sell in the US and since everyone else also wants to sell in the US, you trade with everybody using dollars. Also, your government goes batshit crazy statistically more often than the US, so your currency risk is smaller if you're settling trade in dollars.
"Why does having a trade deficit make your currency more valuable?"
Its the other way around, having the reserve currency drives demand for it and therefore imports are cheap and budgetary deficits are free (since interest rates are low).
You get free stuff and free debt, but over time your industry collapses
Your currency being valuable increase imports!
I think Germany is a bit of a special case due to what happened after the war, I think a more objective comparison might be say France.
German engineering etc was famously rather good before the war too. The Ruhr valley is part of the reason for this: energy sources (coal) and minerals (iron, copper, etc) very close together. It was the ideal setting for an industrial awakening.
Also, even after the marshall plan, Germany kept its existing advantages in industry in large part simply by actually encouraging them to exist. The UK has no industrial policy and actively shed most industries in the 1980s, relying instead on direct investment and deliberately not growing domestic companies.
It wasn't a criticism of Germany at all, just that I think alot happened there that was special politically with the east and west, support for reunified Germany was massive, it's just therefore a bit hard to say what would of happened if after the war it was lumped with huge debt and ignored.
Not being allowed a real military, protected by US resources instead, means a huge amount of investment freed up for the civilian sector (similar to Japan/Italy to some extent)
The special case was that big chunks of Germany ended up under the control of capitalists. The pattern in Germany, Japan and even Korea is that in the post-war era the US understood how to build up a country's economy and their policy formula was effective.
The observation is depressingly simple - competent economic management leads to great results. Typically that involves investing a bunch into developing industrial capability. Listen to people like Ed Deming. Let people build things. The US isn't doing that, we haven't seen any new industrial capability out of them in decades. Silicon Valley is the closest thing they have in the modern era and it is mostly services.
If you ask where the wealth is supposed to come from in the Chinese economy there are a lot of obvious answers - it could be energy innovations from the nuclear or renewable sectors. It could be manufacturing innovation as they work on improving their factories. Maybe they're going to come up with hot new products out of Shenzhen. They're big players in the AI revolution and working to build up domestic semiconductor capabilities. Maybe they're just going to wait for other people to come up with good ideas and copy them with speed and scale on their side.
The US has a much less obvious story. Biotech could be an amazing path, but they've left the ring for a lot of the more promising industrial options. And holding the health industry up as being the way to a bright future seems a bit weird. Maybe they succeed in building a services economy that impresses people; that'd be a cool first.
Yeah this is arguably the tail wagging the dog - Trump is a reaction to the end of US hegemony, not the cause
Trump has zero to do with previous level of US hegemony. He represents what large part of Americans are - for internal reasons that have nothing to do with geopolitics.
Americans might not know their number is up explicitly, but they can smell it. The days of US hegemony are numbered. In one way or another, people get it. Why else would they want to Make America Great Again? It is an inherent recognition of decline.
Yes and no. The MAGA revolution is internally carried by the lower class not associated with and uninterested in geopolitics. In fact they believe in exceptionalism and don't understand why they feel exploited and don't know who is doing it. However it would not be possible politically if not tolerated by the upper class who is smelling decline (of their wealth), because competition has moved into their part of the value chain, so they do two things. One, they now support protectionism to shield from competition. Two, they wish to exploit the lower class harder, so they point them outwards to avoid a physical revolution or an amicable redistribution.
If you want to explain MAGA you have to understand it's a convenient alignment of the upper class and the lower class for different reasons.
I am deeply curious to see how people on the left will digest Trump if he doesn't get reined in by congress/wealthy people. I think a lot of them are going to be caught flatfooted if he gets his way with taxes (no income tax under $150k, no tax on tips), and if he gets his way with global trade restructuring (on shoring of blue collar work).
Trump is currently causing an earthquake on behalf of the middle-lower class. Maybe blue tinted glasses prevent them from seeing it, but right now he is definitely doing the opposite of "entrenching the power of billionaires and the elite".
Unfortunately, I believe that this is a severe miscalculation on Trumps part, as the "kill the billionaires" class seems to be much more fueled by anger than by rational understanding.
I’d say it’s the opposite.
So much of the US government has been focused on maintaining the global hegemony, US citizens wellbeing was sacrificed.
Trump was elected in reaction to rising global hegemony, or at least the effort put to maintain it, not the end of it.
To say US hegemony is numbered doesn’t make much sense. The US economy has only pulled headed further from any Western rival, and China’s economy is stumbling to the point it’s questionable if it can grow enough before it’s population starts shrinking. Russia has been stagnant since the 1990’s.
If anything, US ability to project power is greater now than any time in the past.
> If anything, US ability to project power is greater now than any time in the past.
Absolutely not. It caved to Russia in the first place, it is weak against Russia. It WANTS to project power, but while doing so, it is showing itself crumbling into itself.
The US unwillingness to project power is a direct result of its current leadership. The US capability to project military force is, for better or for worse, pretty extreme in the global context. The ability to support a protracted conflict would depend on the support of the population, but it’s unwise to think that the current administration is a reflection of potential. When the court jester carries the sword, it’s a blunt and careless rod, but that same sword in the hands of a master is an instrument of lethal precision.
The sword remains unchanged.
> Trump has zero to do with previous level of US hegemony.
> He represents what large part of Americans are - for internal reasons that have nothing to do with geopolitics.
No, it's all about geopolitics. Perhaps the most thorough analysis of the 2024 election concluded that Trump won 18-25 year old men (white + non-white). Trump did better among younger men than men 75+. Trump also won young white women. (See: https://www.nytimes.com/2025/03/18/opinion/ezra-klein-podcas...)
Whatever preconception you have about what motivates Trump voters, you're incorrect. MAGA is about the impending loss of America's stature due to immigration and free trade. It's all about geopolitics.
So the knee-jerk reaction is to knock it all down and speed up things while making literally every human in the world hate you?
Thats dumb to be polite but not surprising when considering where it comes from. Republicans simply can't admit their candidate is incompetent pos, superior ego thing or something. The incompetent part is what matters in this specific discussion, way worse than first term which was tampered by more reasonable people delegating actual tasks.
It was about inflation, prices, hate toward trans and immigration. That is judging based on pre-election topics. They did not cared about geopolitics.
> Whatever preconception you have about what motivates Trump voters
By a large, based on what they themselves say and write, they wanted to cause harm to their perceived enemies and have fun watching it. That is primary reason for why conservative and republican voters vote.
> impending loss of America's stature
Impending cause of loss of stature.
The (relatively) uninformed US population is 100% an intentional domestic outcome of US geopolitics.
"Make America Great Again" - the geopolitics are literally right there on the label!
There are two parts to the fishing thing. From a pure economic perspective, fishing is insignificant. But within living memory obtaining food was a national security issue for the UK (during world war II). In a world in which states look not to grow their economy, but to harm others - and guess what, that's where we just arrived - not all industries can be considered purely on their revenue. Man cannot live on warhammer alone.
We need to distinguish between paying over the odds to keep industries which are essential to have in an antagonistic scenario, from loss-aversion and nostalgia for industries which don't provide as much employment as they used to.
A precision injection moulding factory can (I assume) relatively quickly start producing other plastic parts for military use.
Post-Brexit, there's now increased incentive for Games Workshop to build their next factory in the EU.
(Games Workshop is one company, but this applies to every manufacturing company in the UK.)
Brexit is mad, driven by nostalgia etc.
However, if we got a free trade agreement with the US would the inverse be true, EU companies are better off moving to the UK due to brexit? What about just a FTA with all commonwealth countries (why haven't we done this??)?
Trump is unpredictable. He made a new free trade agreement with Canada and Mexico in his previous term, but has put tariffs on some Canadian goods this time round. That isn't going to reassure investors.
A FTA with the USA would come at a significant price — the UK would be pressured to accept low-quality American agricultural produce, and lower many other standards from their current European level. If it does this, that reduces the global value of British exports.
Hard to say that's the exact compromise he'd want, as you say he's unpredictable.
there was much ado about chlorinated chicken a few days ago. apparently the US washes chicken carcasses with chlorine to disinfect them, whereas that's illegal in the EU, which has more stringent farm cleanliness standards instead. I think there's similar issues with an arsenic compound (seriously!) being fed to chicken as some sort of antibiotic.
iirc Trump did say he wanted EU to accept our livestock to reduce the trade deficit, leading Lutnick to memorably proclaim "They hate our beef because our beef is beautiful and theirs is weak!"
"Chlorinated chicken" has been a discussion topic in Britain since before Brexit, when some politicians were saying it would be easy to get a deal with the USA to replace trade with the EU.
It's not something that will be forgotten easily. British people on all sides were against reducing food standards.
IMO I think we'll end up with "a uk body setting new GMO standards" being cover to allow US GMO stuff in. Then maybe hormone beef and similar, but not chicken. Quota-less fish, tariff free trucks/cars (like that's going to make a difference) and some other minor tweaks.
No. Because there wasn't any significant trade barriers to the EU from the US up till last week.
And then today all the tarrifs are suspended (down to 10%) so it's hardly like there's a reliable advantage there.
Yes, and we'll see what next week brings sigh. For all any of us know we're going to wake up in the morning and the EU has a 125% tariff too. I'm not even sure Mr orange himself knows what happens in 90 days when these temporary reliefs expire.
90 days? We don't know what is going to happen tomorrow or more to the point if you put goods on a boat to the USA you have no way to predict what the tariff will be when they arrive. If you are selling a product that relies on imported parts you can not know your cost of goods until they clear customs.
We are literally in the process of moving some of our operations to LATM to avoid this uncertainty.
How can anybody trust the US ever again? Trump completely ignored an existing free trade agreement with Canada and Mexico that he himself signed.
You have to assume that the US is sane a maximum of four years in a row and in four years another Trump 2.0 will again be completely ignoring all their agreements.
In my opinion, the US cannot be trusted with any treaties ever again the way they currently are.
Why does everyone assume the commonwealth wants and FTA with us?
Because free trade is typically a good thing that lifts everyone? It's also not "FTA with the UK" it's FTA between everyone, we just happen to be a member. We may be quite low down the list for say Canada as a trading partner and that's fine?
Fair. I'm not a fan of Brexit and I think it's been both driven and implemented more listening to nostalgia than strategy.
If you can make the mold.
How much of a fish industry will remain when the North Sea is a battleground?
Is there any fishing going on in the Black Sea at the moment? (genuine question)
> Is there any fishing going on in the Black Sea at the moment? (genuine question)
yes, while fishing vessels fairly rarely broadcast AIS, there's plenty of turkish, bulgarian, and even three russian fishing vessels broadcasting AIS in the black sea right now. No ukrainian vessels that I can see, but again, AIS is fairly rare for fishing boats anyway.
Of course. There are three NATO nations and Georgia on the Black Sea, and there is no war in their waters. The Black Sea is not very productive fish-wise, but this is another topic.
>Is there any fishing going on in the Black Sea
Yes, but not a lot since the fish is very scarce and it supplies a small part of the local consumption. Romanian vessels used to fish in oceans. I presume Russian vessels, too.
> […] are "state capacity" issues. Things where the state is unavoidably involved and having better, more decisive leadership and not getting bogged down in consultations, would make a big difference.
See "America needs a bigger, better bureaucracy":
> I believe that the U.S. suffers from a distinct lack of state capacity. We’ve outsourced many of our core government functions to nonprofits and consultants, resulting in cost bloat and the waste of taxpayer money. We’ve farmed out environmental regulation to the courts and to private citizens, resulting in paralysis for industry and infrastructure alike. And we’ve left ourselves critically vulnerable to threats like pandemics and — most importantly — war.
[…]
> If government spending isn’t going to pay government workers, it must be going to pay people who work in the private sector — nonprofits, for-profit contractors, consultants, and so on. In other words, state capacity is being outsourced. But this graph doesn’t actually capture the full scope of the decline, because it doesn’t include outsourcing via unfunded mandates — things that the government could do, but instead simply orders the private sector to do, without providing the funding.
* https://www.noahpinion.blog/p/america-needs-a-bigger-better-...
Mentions the paper "State Capacity: What Is It, How We Lost It, And How to Get It Back" (22pp, so short):
* https://www.niskanencenter.org/wp-content/uploads/2021/11/br...
And the book Bring Back the Bureaucrats: Why More Federal Workers Will Lead to Better (and Smaller!) Government:
* https://www.rutgersuniversitypress.org/templeton-press/bring...
That article seems confused, e.g.:
> If government spending isn’t going to pay government workers, it must be going to pay people who work in the private sector — nonprofits, for-profit contractors, consultants, and so on. In other words, state capacity is being outsourced.
The money is going to social security payments. Social security went from <1% of federal spending at its outset to more than 20% of federal spending today. Medicare and other assistance programs are a similar story. Most of the money from these programs goes to paying benefits rather than administrative costs, which is generally regarded as a good thing. But they're also what together now constitute the majority of federal spending.
Meanwhile there is another reason why the number of government workers has gone down: Computers were invented. Things that used to be done by hand are now done by machine, and then you don't need as many clerks and bookkeepers to manually process paper records. This is also generally regarded as a good thing.
The points it makes about unfunded mandates and NIMBYs holding everything up with meritless lawsuits are valid, but the "ministerial review" it proposes is the existing permitting process. The problem is we have unfunded mandates and NIMBY lawsuits on top of that, which could simply be deleted and replaced with nothing.
This really seems like the fundamental misunderstanding:
> And guess who’s responsible for monitoring Medicare spending? Bureaucrats. So that’s at least a 2300% return on investment in bureaucracy!
If you only look at the most efficient thing a bureaucrat could be doing, look how efficient bureaucrats are!
Meanwhile the government is still paying thousands of people to process paper records because although computers were invented many decades ago, only parts of the government have discovered them and there are still many things you have to do by bringing physical documents to government offices to be processed in person even when those things have no legitimate reason not to be a government website.
What we need is not to have more bureaucrats, but rather to finish computerizing the things that have no reason not to be so the existing government employees can do the high value stuff instead of wasting time shuffling paper that should have been bits.
> Meanwhile there is another reason why the number of government workers has gone down:
Uh...excluding the very recent cuts this year under Trump; the number of civilians in the US Federal work force has gone up fairly steadily. [0]
We had 23.592 million civilian employees in Jan 2025. 21.779M in Jan 2021, after being largely stagnant overall the previous 10 years. That's a net change in excess of 1.8M employees under Biden.
I do find it interesting that it appears that employee count was flat, or even down under Obama, but until COVID, there was a steady increase under Trump v1.
[0] https://fred.stlouisfed.org/series/USGOVT
> the number of civilians in the US Federal work force has gone up fairly steadily.
The graph you provided is not Federal government, it’s all US government which includes state & city, and other types of government employees. It should be expected this grows with population size, and to get a sense of whether it’s really shrinking or growing, you should divide by population. But in any case, this chart doesn’t backup your claim that Federal government is growing.
The link to the Federal government was just underneath that graph: https://fred.stlouisfed.org/series/CES9091000001. US Federal government absolute size peaked in 1991 and has gone down slightly since then. If you divide this one by population, the decline would be a bit stronger and more obvious. The ~10 year spikes are census workers. Notice we can see the peak in 1991 with or without the census spikes.
And beside government institutions there are lots of institutions at state and city level.
Institutions at the state and city level are called “government”, and those are included in the data parent linked to.
> Most of the stuff the UK is struggling with (transport, healthcare, energy) are "state capacity" issues.
Oh, boy, let me tell you, the 'State capacity' of the United States, when it comes to doing things that aren't making war on its own, or other people, was both rotten to begin with, and won't survive another four years of this regime.
Dysfunctional as the UK is, it's government is not stuck at a triple point of learned helpelessness, intentional sabotage and paralysis (the US is currently, among other things, doing its best to bring cured diseases back), and a deeply negative-sum culture.
I've heard that the United States was a magical land of milk and honey in this respect, back when 'competent bureaucracy' wasn't a swear word in it, but I understand that ended ~45 years ago. (With a few surviving holdouts, like the Fed)
All this talk of state capacity and global trade puts me in mind of Europa Universalis
> The UK stepped on its own rake because it was obsessed with tiny, already vanished industries like fishing
This isn't just a UK issue:
"Fishing is a relatively minor economic activity within the EU. It contributes generally less than 1 per cent to gross national product."[0]
and if you look beyond fishing, agricultural policy as a whole is - not sure how to put this politely - not easy to understand:
"The CAP is often explained as the result of a political compromise between France and Germany: German industry would have access to the French market; in exchange, Germany would help pay for France's farmers [..] The CAP has always been a difficult area of EU policy to reform [..]"[1]
[0] https://en.wikipedia.org/wiki/Common_Fisheries_Policy [1] https://en.wikipedia.org/wiki/Common_Agricultural_Policy
For another "not just the UK" example france has managed to persuade the EU not to buy british weapons out of the extra defence fund unless the UK give France some of it's fishing rights. Can you imagine being Poland and not getting the best anti-tank weaponry, or the best missiles because you want the french to have more fishing rights?
Completely barking mad.
https://www.politico.eu/article/uk-rejects-eu-plan-tie-defen...
> Completely barking mad
Well, we'll see that and raise you the European Parliament in Strasbourg.
The EU could get rid of this idiocy overnight, except - well - France.
(I have nothing against the French, I've visited France dozens of times and have many friends there.)
"Once a month the European Parliament moves from Brussels to Strasbourg at a cost of £150m a year as lorries transport paperwork."[0]
"Top EU official brands Strasbourg shuttle 'insane'"[1]
"EU parliament’s €114m-a-year move to Strasbourg ‘a waste of money’, but will it ever be scrapped?"[2]
[0] https://news.sky.com/story/meps-on-the-move-madness-of-stras...
[1] https://www.theguardian.com/world/2006/sep/05/eu.politics
[2] https://www.euronews.com/2019/05/20/eu-parliament-s-114m-a-y...
Pretty sure you could engineer France leaving the EU by just tweaking fishing quotas, farming subsidy, naming on sparkling wine or removing (as you mention) strasbourg. They will start a riot and then when you don't give in, they'll be gone.
I'm not saying it's what happened to the UK, but we asked for what we needed, got turned down and then left.
What did the UK ask of the EU before Brexit?
All I remember was Cameron asking to expel jobless immigrants, which confused the EU as Britain was already allowed to do that.
I think it was a ban on European migrants from sending benefits and particularly child benefit (some money you get from the state if you have kids) back to thier home country or something like that.
I remember Poland stopped us from getting it (supposedly).
The french didn't want us to exempt from financial regulation that was primarily targeted at the euro even though we use the pound.
Various nonsense, that people at the time felt strongly about (keeping the pound, not giving benefits and a council house to people as soon as they arrived, or some such exaggeration)
> They will start a riot and then when you don't give in, they'll be gone
If you haven't already done so, read up on TARGET2[0], things could get somewhat spicy if a Eurozone country were to leave the EU.
[0] https://data.ecb.europa.eu/publications/ecbeurosystem-policy...
I don't get why the EU can't be just a big common market with free competition, open borders. Why do we even need lots of institutions, bureaucracy, directives on top of directives and quotas for farming and fishing?
The UK is no longer in the EU.
> While real UK manufacture successes (cars, aircraft, satellites, generators, all sorts of high-tech stuff) get completely ignored
Here is my take on this:
For those things, you probably need a lot of technical training and/or advanced degrees.
For fishing you just need to be more or less healthy and be able to follow instructions.
Most people are more or less healthy and are able to follow instructions. A small subset of those has advanced technical training and/or advanced degrees.
Therefore, fishing becomes important because a lot more people can do it, and those people vote.
> Fishing is less profitable for the whole UK than Warhammer.
There are 3x as many fishermen in the UK than employees of Games Workshop, and much more again if you count the number of related fishery jobs.
At the end of the day, politicians and voters alike respond more to employment than nominal monetary figures. A broader employment base is generally better for social and political stability than explicit wealth redistribution (e.g. tax + entitlements). The latter is what economic theory tends to emphasize--i.e. equivocate incomes based on state wealth redistribution schemes--but such economic theory is how we got Trump, Brexit, and a host of other ills. Economics hasn't figured out, yet, how to price the constituent inputs that produce political and economic stability. GDP, Gini, per capita income, employment rate, etc metrics are gross approximations that work well until they don't (though they're still better than rhetoric and handwaving). But to be fair, social and political theorists haven't solved that problem, either; at least, not with a rigorous quantification model.
"A broader employment base is generally better for social and political stability than explicit wealth redistribution"
. This is what stops revolutions and civil wars.
Sorry, but I don't think this is the reason. There were vastly more people in financial services calling for us NOT to have brexit than fishermen asking for it, even in number of people. I honestly don't think this was a numbers of people affected vs "% of GDP" affected issue. Not at all.
What good did it do for us? At the time everyone was running around rubbishing and laughing at the "outrageous" claims of 10% GDP loss, and where are we now?
> What good did it do for us? At the time everyone was running around rubbishing and laughing at the "outrageous" claims of 10% GDP loss, and where are we now?
Impossible to say, as it was swamped by the pandemic. My guess as to the fatalities due to Brexit is also untestable as a result.
true, impossible to come up with a scientific answer, but you could compare with european countries who also went through a similar covid response and start to see a bit of a trend leap out.
For what it's worth I'm not sure if the number is actually 10%, but I'd hazard that it's more than 5/6.
It's not actually about the fishermen, it's about the whole rural communities.
Just like farming, it's everyone living out there. How the fishers and farmers are being treated is how those communities at large feel like they're being treated. And they always feel like they're being shafted, even though that's just progress and other industries got shafted much worse in the past.
So for every 1 fisherman, there are 20 other votes. And they all generally vote conservative, those are blue strongholds (blue over here is conservative, red labour).
For every 1 Games Workshop employee, there's no other votes. Even spouses will be fairly uninvested in how the government is treating toy exports.
But on the other part of your comment, there's been no 10% GDP loss. Note, I voted remain, and would vote to rejoin in a heartbeat.
But we're roughly at the same position today in the world as we were in 2016, compared to other countries. Sitting about 6/7th in the world. Everyone's suffered since covid, everyone's struggling with growth. There's been no big drop in GDP. So it was actually scaremongering. It feels like there's a conspiracy of economists who lie, heavily influence markets, but their lies don't match reality. It's ideological propaganda for free-market capitalism, rather than fact.
There's tons of people in email jobs who are just clamouring to get up at 6am and gut fish! /s
Something not really addressed in all of this is that a lot of the people whinging about British jobs and so on, especially in high-Brexit areas, are actually themselves retirees.
https://www.bbc.co.uk/news/magazine-36619342 "Of the 30 areas with the most elderly people, 27 voted leave".
Now, they're often living in economically depressed areas. I've seen Blackpool and Lowestoft (the sad little marker of the UK's easterly point, right next to a gas terminal). But you can't give them their jobs back, because they're not working any more. It's nostalgia.
I'm going to keep hammering the question of "why should people move from lucrative, comfortable email jobs to harder, less lucrative factory jobs, or, god help them, fishing?"
The UK is actually at ""full employment"" (NAIRU): https://obr.uk/box/the-equilibrium-unemployment-rate/ - that is, economists believe it cannot go lower without causing inflation, as shortages mean you can't hire people without having to offer more wages to poach them from other jobs.
(Another conundrum: people want higher wages without higher prices. How are you going to do the arithmetic on that?)
Can't really eat plastic figures. And you maybe only ate frozen fish in your life but fresh fish is great.
It's way more profitable for me to work than to sleep but I still sleep.
The fishing industry is especially weird because you can't make it more productive and decades of legislation have been spent desperately trying to make it less productive so there are still some fish left. I like fresh fish but there's a very real limit as to how much we can have.
It’s not rational at all. It’s nostalgia.
I wonder how deeply connected all this politics of nostalgia is to the fact that birth rates have been declining for decades and populations are older.
Given the older population and the country’s history as a bygone empire I bet nostalgia is thicker in England than the US, but US side there sure is a lot of it.
A lot of MAGA is about making the country the way it was when boomers were kids (50s, 60s) to prime age adults (80s to early 90s).
There’s even a hint of genX nostalgia too. A while back I was hearing some IDW type railing about how “woke” killed comedy and it hit me that there’s a strong undercurrent of nostalgia for the 90s when comedy and pop culture were all about being an edgelord. The fact that edgelording is "out" is blamed on "woke" and they lament that "comedy is dead" etc. I'm not sure how much "woke" has to do with it. I think... well... edgelording is just out.
Change reminds people of their mortality and it always generates a backlash. You’re not young anymore.
There's some excellent non-edgy comedy out there, such as and
Yes but how many people are employed and well paid by warhammer? How many were employed and paid by fishing?
Dollars don’t vote, people do!
> The UK stepped on its own rake because it was obsessed with tiny, already vanished industries like fishing.
[US-wise] Coal and cereal grain agriculture automation have also seen ~98% drops in employment while raising production levels. The industry doesn't have to disappear monetarily for the jobs to be gone.
> we have to start from reality, not whatever vision of the past propaganda "news" channels are blathering about
Ha ha ha. I was this naive once. This just isn't our reality. You would have to have a functioning education system AND a population with adequate emotional regulation. Do we even have the pieces anymore?
Agree, UK did not have a smart and capable leaders and elites for a very long time.
The elite/ruling class need to be replaced with the more capable and smarter ones
Oh they are very smart an capable. They just don't work in your favour.
Fishing employs tens of thousands of people and feeds an entire nation.
Warhammer employs hundreds, enriches a half dozen and addicts a millions.
I'd rather keep the fishermen
It feels like the US is going to step on its own rake however. Instead of Fishing, it’s manufacturing. Largely a dead industry that has proven to struggle to stay profitable without extremely cheap back breaking laborers or huge regulatory cuts that we’re just not going to be able to sustain, putting both employees and customers at risk.
>Most of the stuff the UK is struggling with (transport, healthcare, energy) are "state capacity" issues.
None of those are state capacity issues.
Those are "State is pointing a gun at anyone who would fix them" issues.
Friendly reminder that 95%+ of the UK railway system was built by private for profit companies, with state involvement being primarily limited to not preventing it from happening.
All of these issues are 100% self inflicted by the state getting in the way.
All that needs to happen for them to fix themselves is to stop actively preventing private individuals from fixing them.
Those railways were built early on in urbanisation.
Do you honestly think private enterprise could raise the financial and political capital to build a new regional rail line through a major city like London or Manchester?
None of the original railways was possible without Acts of Parliament for compulsory purchase.
Conversely, full privatization of the railways with no restrictions would instantly result in all the rails within 50 miles of London being replaced with lucrative housing.
Railways and electricity are run by private companies in the UK.
They've had 30 years to make it work, and have failed.
They've "made it work", just the companies "work" is transferring funds to the shareholders/owners.
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Freedom of Expression is part of the Human Rights Act 1998.
It's not the Labour party that's campaigning to repeal this act.
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Except since no parliament can bind a future parliament it won't be worth the paper it's written on.
The loudest voices calling for a scrap are exactly the people you DON'T want deciding what human rights you'll be "allowed".
And incitement to violence is, and always should be, unprotected speech - your silly "two tier kier" is informing me greatly that you're on the "they locked them up for hurty words!" bandwagon.
Weird, the bill of rights act of 1689 is still in force.
It’s literally the policy of this country to sentence white men to harsher custodial sentences with more chance of a custodial sentence than any other group, simply for the crime of being a white man. Are these the sorts of people you think should decide our rights?
If the government would do what people have been voting for for decades and end mass immigration and take real action on this ridiculous and purposeful misuse of the human rights act, then nobody would want to redact it.
But they won’t.
It is not the "policy of this country" you need to actually read how things work, what bodies have what power, and who is doing what.
The sentencing council is an independant body, they are not the government, and the government has said "no, that's not right" so they're passing a bill to stop the new guidelines coming into effect: https://www.gov.uk/government/news/government-to-introduce-l...
It's the policy of this country, it doesn't matter who sets it.
It doesn't matter if it's set by parliament. It doens't matter if it's set by an independent body. The fact is that you will receive a harsher sentence for being a white male than you will if you belong to any other group. That is the policy. The Conservative government thought that was the right thing to do.
Apparently the new government 'will' introduce a bill to stop this, but they haven't yet. So it's still the policy.
Meanwhile it's legal and popular to discriminate against white men and women on the basis of being white - the government, police and military regularly put out jobs only for none whites. But if I were to put out a role only for whites, that's against the law. This discrimination extends to our top universities where it's becoming much more difficult (relative to population %) to obtain a spot as a white student.
That's why people think this country is now a two tier system, and they're right. Opportunities are being taken from those who have earned them and given to those who have not. Meritocracy and equality under the law is already long gone.
Again, you're just regurgitating what Reform talking heads are saying.
You probably didn't even realise that the sentencing guidelines were put on hold on the 31st of March.
Got any proof that the fall in white admission to university is down to discrimination, and not the relative poorer showing of the native population compared to first and second generation immigrants who put a higher premium on doing well at school?
Also can you respond with some of the "non whites only" job postings?
Between 2019 and 2023 28.8% [0] of students admitted to Oxford were of ethnic minority background. Cambridge admitted 34% [1] ethnic minority students in 2023. That means you're roughly twice as likely to be admitted to a top university as a minority student.
It's possible that some percentage of this is because of better academic achievement, though in that case it's confusing that Oxbridge are looking to remove exams due to underperformance of students of ethnic minority background in tests [2] - which would support my view that it is easier to study at these institutions if you aren't white. but it's also possible that the education system is systematically 'letting down' white boys, which is a view supported by an education committee report (and countless others) in 2021. [3]
- 31 white pilots were let go / held back / paid off so that the RAF could prioritise diversity hires [4], [5].
- Police roles only open to BME candidates [6] - there are countless other examples of this, various government departments have used 'positive action' racism clauses in the same way.
You're just regurgitating what Labour talking heads are saying. You probably didn't even realise that it's legal to be racist against white people. Perhaps you should read more of the news, so you can understand what's really going on.
[0] https://www.ox.ac.uk/about/facts-and-figures/admissions-stat...
[1] https://www.undergraduate.study.cam.ac.uk/sites/default/file...
[2] https://www.yahoo.com/news/oxford-cambridge-move-away-tradit...
[3] https://committees.parliament.uk/committee/203/education-com...
[4] https://www.bbc.co.uk/news/uk-66060490
[5] https://news.sky.com/story/raf-recruiters-were-advised-again...
[6] https://www.telegraph.co.uk/news/2025/04/09/west-yorkshire-p...
On [2] you conveniently left out the key quote: "minority groups and poorer students." why are you against helping out disadantaged people whatever their stripes?
On [3] it was found to be unlawful so your assertion that "It's legal to be racist against white people" careers headlong into reality that no, it's not.
As for the west yorkshire story, do you not want the police to be representative of the area they serve? There are far more white men than there are as a proportion of the local population.
It feels like you're grasping at straws here.
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> brexit means we've halved our US tarrif rate
As of time of writing this comment, I believe both are at 10%? Of course that could change at any time.
> enshrine freedom of speech in law
ECHR already does this. I presume there's some other weird definition of free speech going on here like unrestricted use of the N-word on TV or something.
Do you think Brexit has helped the UK?
I think it could have been a great help to the UK.
If we'd of done what, out of interest?
Personally I don't 'agree' with brexit, but it's the reality that we're in. In typical british fashion we're trying to stay friends with the EU, even though they basically hate us, while also trying to do trade with the rest of the world. Predictably we can't really do much of 2 without 1 becoming a problem (and vice versa). However 1 is currently our biggest trading partner (as a bloc, US as a country) so what have we done? Sat in the middle not doing anything radical hoping we can be best friends with everyone.
We don't hate the UK. We are just waiting (impatiently) for you to come to your senses.
So would we be able to get the exact same deal we had? We are under the impression the answer is no, as whenever we try and negotiate away stuff that's in neither of our interests it gets rejected.
Take this Eitas Visa for example, this is literally just sowing resentment towards the EU in the UK. It benefits nobody and is totally insane, it's just making people hate the EU. Same with not being able to use the digital passport machines at airports.. why?? We're a pretty secure country, we have digital passports. Brexit happens and now every time I go to Europe, which is a lot I've got a 50/50 chance of waiting 3 hours at the border for someone to stamp my passport while the digital gates have no queue. That means I now have to arrive 3 hours early every time just in case. If I bring a tool for work I need to spend weeks of paperwork on something called a carnet so I end up buying there and throwing out.
At the moment we're trying to give security backing for Ukraine and you're asking us to give up our fishing rights for the honour of helping secure Europe.
I get it, actions have consequences, but the thing is that only a minority voted for Brexit, most of us didn't. Each year you're disenfranchising a new generation of would be Europeans with this path. To me it's all dreadfully regrettable, the whole things a mess.
It's impossible for us to 'come to our senses' while we get treated like this in my view.
You are perhaps unaware that since last week, Britain has required EU citizens to go through an e-visa process.
The offer from the EU for a youth exchange program was rejected by the UK.
The fish thing looks like anti-EU nonsense. The anonymous source "hinted", whereas the people speaking on the record denied it.
Starmer ruled out joining the customs union, so blame him for the tool import paperwork.
> but the thing is that only a minority voted for Brexit,
So with such a failure of democracy, it's no wonder that the EU would require changes to the voting system (for example) before Britain can rejoin.
The EU doesn't want a half-in half-out Britain. It had that for decades.
I am aware. Of course, if you require a visa from us then it becomes politically impossible NOT to require a visa from you in return. We were very clear that we didn't want it at all.
Re the fish;
>But in an interview with POLITICO, the minister said EU member governments were unlikely to sign off on a security deal with the U.K. unless negotiations are also resolved on other “sensitive” issues, including access to British waters for European fishing fleets. A deal on fish would also help in “building trust” between London and Brussels, she added.(1)
It's just a combination of low turn out and a 52/48 marginal split, it does not mean we have a failure of democracy, that's a bit of a stretch.
(1) https://www.politico.eu/article/uk-eu-defense-pact-really-do...
>At the moment we're trying to give security backing for Ukraine and you're asking us to give up our fishing rights for the honour of helping secure Europe.
You are not trying to secure Europe, you are trying to sell something to Europe. We would rather build capacity to make whatever you want to sell us ourselfs.
I agree we should work closely together, more so after US started dancing naked around burning brides. But everyone is looking into how to secure themselfs, without depending on 3rd party, and from EU's perspective UK is on the outside (even if not as crazy as US has become).
You'd rather build capacity because you think you're likely to be at war with us one day or we'd stop defending Europe? That would be the only reason to say that surely? If so I simply don't know what to say to that.
So then you won't be wanting our troops there for peace-keeping, something only ourselves and France have even offered. Nor any of our finance, we can stop giving billions a year to Ukraine as the EU want to take over?
Seriously it's ridiculously isolationist to be thinking like this. Not working with us just because we left your club is beyond mad.
1.those are not the only options, far from it. If EU buys from 3rd party, that party gets to dictate what we can do with those weapons. How long have EU countries been asking US to allow them to transfer F-16, longer ranged artillery, missiles, MBT,... to Ukraine? Also, lets remember that UK has prevented shipping vaccine manufactured there to 3rd countries, even when some other country paid for it already. EU did not do that.
2. Thank you for confirming our fears. We decide not to buy something for you and now you go full crybaby and deny Ukrain help. Yes, you guys sound like totally dependable.
3. It's not isolationist and we do want (or should want to) cooperate with you, but Eu has just learnt what happens if you outsource your own defense and US elects idiot for the 2nd time. And lets not forget that you have political party on the rise, (Reform UK), that seems to be a bit too friendly with Trump, Farage supposedly received money from RT (russ sponsored Tv) in 2022. One of your previous PMs (Boris Johnson) had appointed Russian oligarch as Lord and is said to have ditched his own security to party with Russian intelligence officers while he was in office. So, if eu and russia come to blows, whos side will UK be on? Depends on what party is in government.
Historical record does not bode well for UK defending anyone when not directly threatened.
It took serious damage to imports and an invasion for them to move during the last World War.
That's nonsense, but even if we take as true for a moment;
The argument here is they don't want to buy our weapons because we might decide to stop selling to them. Do you really see that as even vaguely likely in a war against Russia?
We want to make our own weapons because depending on someone else can be more costly. But some parties in UK do have worrying ties to Russia (reform uk and conservatives). I mean who would have thought that Republicans in US would be 3rd best allies of Putin, right after China and North Korea
Yes, a small majority agreed.
But that isn’t what I asked.
This is the problem - brexit meant something different to everyone who voted for it ... and the reality was never going to match up because we have binding agreements like the GFA which meant Northern Ireland was always going to have to be treated differently than mainland UK.
Well, only if you think the IRA/Sinn Fein should set UK foreign policy. We could have implemented an (EU-requested) north/south border in Ireland. Or not implemented one at all.
The signatories to the GFA include the US as well - if you want to rip up the GFA to install a hard border you have to own the second order effects of that.
Or decide that Brexit was never going to work the way those who peddled it said it would.
this is not a hypothetical, brexit happened...
I don't think we will be making much of anything in the UK until energy prices come down, which is unlikely to happen with little new nuclear coming on stream and fracking new North Sea oil being banned.
The good news is though that if EG steel manufacturing moves to China and starts using cheap coal fired energy and selling back to the UK, it helps the UK meet its Net Zero targets.
The total volume of money flowing through fishing related business is much larger than through warhammer related.
Fishing distributed about 1 billion in household income in the uk.
Fishing supports about 12.000 direct jobs plus 5.000 in related industries in the UK.
Warhammer has about 3000 employees GLOBALLY. Trickle down is not really present here.
Businesses that do not distribute wealth in the general population are much less relevant than those that do. Taxes are nice but businesses are good at avoiding them ( especially via Ireland ), whereas income tax is the major supporter of our states.
You aren't comparing the same things here - if only counting Warhammer employees, then you shouldn't you only count actual fishermen (c6500 people)?
For example, what about the people who work in Warhammer adjacent companies (plastics production, importing and labelling to name just a few, but also freelancers in publishing, illustration and design ) who would not appear in the 3000 Warhammer employees, but who earn the majority of their livelihood from Warhammer.
For a period my brother dated someone from the family that supplied grey plastic to Games Workshop - they probably had over 100 permanent employees, and were a 'small' regional company.
I could not find numbers for warhammer related industries in the uk. Probably because they are to low. Warhammer has a large profit per piece sold, at least compared to fishing.
US citizens often fail to realise that earnings of an industry are almost irrelevant, it is how much said industry distributes into society that matters, both for people and the state.
Classical industries like mining and steel distribute a significant percentage of their revenue.
Digital businesses does not, neither does warhammer.
The interesting point is, that in the end the value of the money digital good as as well as plastic toys are measured in is based on physically realised wealth: Without physical businesses, the money warhammer is evaluated on would be ethereal.
Be careful extrapolating based on China's current population and demographics. Too much of our armchair assessments of China's velocity is based on their meteoric rise on the backs of a historically large working-age population—a population that is now rapidly aging out of the workforce with nothing to replace it thanks to the one child policy. The US's demographics aren't stellar, but they're a lot better off than most of the developed world.
It remains to be seen how different 2010's China—with 90% of the population being under 60—is from 2050's China—with only 69% of the population being under 60.
https://www.populationpyramid.net/china/2050/
India has a bigger population but they haven't risen anywhere near the way China has.
China's rise was due to smart planning and investment in their people and infrastructure. The country went from peasant farmers to the manufacturing hub of the world in a generation. Now they're in the process of becoming a major hub of knowledge workers while keeping a strong manufacturing backbone.
And one thing I rarely see mentioned is that the Chinese government keeps its currency artificially devalued in order to sell their products cheaply and undercut competition. Looking at their economy purely on a GDP basis really underestimates how big their economy is. GDP by PPP is more accurate. If China ever decides to stop loosely pegging its currency and let the value naturally rise, their GDP will very likely swell, since GDP is measured in US dollars.
You completely disregarded the central thesis of the comment you responded to.
The one child policy means there are no people to do the manufacturing in China in the future. The population pyramid is inverted. You can't do manufacturing without lots and lots of people. Or at least you'll get out competed by your neighbours who have lots of labor.
India's birth rate is also massively dropping. In a few decades, India will reach their peak population.
China invested heavily in machinery and automation many decades ago. They'll be fairly fine.
I visited India a few months ago. Loved it. But I saw construction being done with donkeys hauling dirt and people shoveling the loads onto the donkey's cart with tiny hand shovels. Scaling up from that to the degree of manufacturing powerhouses like China have is not going to be easy.
China investing in machinery and automation means they are moving up the production chain into more expensive and more profitable manufacturing.
It also means they no longer do the cheap high volume manufacturing, which will go elsewhere where the cheap labor is.
This is how it goes. Manufacturing keeps migrating to cheap labor. China is running out of cheap labor and volume manufacturing will find it in East Asia and India and Africa instead, because these places will still have lots and lots of young people while those in China have aged out.
India has no energy. It imports most of its energy. While China has lots of coal and burns it to provide energy for its industries.
'India imports most of its energy'. So what's happened to the extremely abundant 'free energy' available from the sum in India. They have the expertise, they could make the funding available. What is missing in their thought processes or is there something wrong with the premise?
> So what's happened to the extremely abundant 'free energy' available from the sum in India
Where did you get this from? I am Indian and this is the first time I'm hearing of it.
I am genuinely curious about what would happen if China allowed their currency (RMB/CNY) to float. The most obvious thing I can see that would put tremendous downward pressure on the currency would be capital flight from China to more politically predictable/safe places. Currently, normies are limited to 50K USD per year. (Of course, there is a large grey market to move more money.)
India's population pyramid is about where China's was in 2000. Their bulge of working age people is just barely hitting the workforce, so it's way too early to say what the outcome will be by 2045 when they've ridden the wave the way China did.
The one-child policy didn't play as large a role as people in the West think. Chinese fertility rates had already fallen drastically before that policy.
(It was also not as absolute as people in the West think. There were exceptions for rural China and minorities.)
It’s a little more nuanced than that. Western demographics are largely propped up by immigration, which brings with it its own sociopolitical challenges. What you gain in demographics, you might lose in social cohesion and political stability.
It's a lot more nuanced than that. China's internal diversity is much higher than Westerners typically understand, and their social cohesion and political stability are less well maintained than their external-facing image would lead you to believe.
Yeah, but that’s not the same level of diversity as an atheist Frenchman and a muslim Algerian and a Christian Ivorian.
The Sichuanese might not get along with the Cantonese, but they’re ethnically the same people with a shared culture
No, they're not. The Chinese have never been especially unified until very recently and they're internally quite diverse on all the key measures of ethnicity: their languages are mutually unintelligible, their religious belief systems span the entire breadth of world religions plus a wide spectrum of home grown ones, and their value systems are very different.
One China is a convenient fiction invented by an authoritarian regime, not a day to day reality on the ground.
Westerners buy into it through some combination of propaganda (coming from the Chinese state and our own, both of which benefit from an exaggerated sense of Chinese unity) and our inability to distinguish the various ethnic groups because we're overly fixated on skin color as the primary physical marker of ethnicity.
I can't help but feel that this can be said for any country anywhere. Compare New Englanders to Southerners in the US. They are totally different, but they are still wayyy more similar than Southerners are to Cantonese.
It's easy to track differences between people around you, in your country, and very hard to track difference between people in other countries. This creates an illusion of "We are very different, and they are all the same".
ser, do I need to pull up a map of Europe or India at any time in history? "One country" is a recent historical phenomenon.
by the standard of most large landmasses, China was, in fact, far more cohesive and united - compared to the hundreds of local lords and kings with their tiny little fiefs in, say, India
You're shifting the goalposts from "they're ethnically the same people with a shared culture" to "by the standards of large landmasses China was more cohesive and united than India".
Comparing Chinese unity favorably to India is damning with faint praise, and doesn't do anything at all to help your original argument that China has better "social cohesion and political stability" than Western countries by virtue of having less immigration.
We're not comparing the social cohesion of landmasses, we're comparing the social cohesion of states, and India is a particularly disjointed example to use.
China is over 90% ethnically Han Chinese. Compared to the US it is practically a homogeneous country. The language diversity is greater in China, but the racial/ethnic diversity is lesser. China is more comparable to Europe than the US.
You're conflating racial and ethnic diversity in ways that are distinctly western or even really US-centric. Europe is extremely ethnically diverse, as is China, they just don't use skin color as the primary ethnic marker the way that is commonly (and still incorrectly) done in the US.
The 90% Han Chinese number isn't especially useful because it's comparable to the way that most of Europe has historically identified itself as the successor of Rome. That they all identify as Han doesn't make Han a truly useful grouping for judging diversity when they all have different ideas of what "Han" means.
>You're conflating racial and ethnic diversity in ways that are distinctly western or even really US-centric.
Not at all, these are pretty universally agreed upon by global sociologist.
>Europe is extremely ethnically diverse, as is China
Indeed, Europe is extremely diverse, much more so than China.
>they just don't use skin color as the primary ethnic marker the way that is commonly (and still incorrectly) done in the US.
Neither does the US. Skin color is not a primary ethnic marker. No one versed in sociology in the US considers a Black American ethnically similar to an Eritrean. Nor do they consider a Ukrainian ethnically similar to a White American.
>The 90% Han Chinese number isn't especially useful because it's comparable to the way that most of Europe has historically identified itself as the successor of Rome.
It is extremely useful because the subgroups specifically make these claims: "Modern Han Chinese subgroups, such as the Cantonese, the Hakka, the Henghua, the Hainanese, the Hoklo peoples, the Gan, the Xiang, the Wu-speaking peoples, all claim Han Chinese ancestry pointing to official histories and their own genealogical records to support such claims."
Germanic people do not make the claim to be of Roman or Mediterranean ethnicity nor origin. The languages are vastly more varied in Europe versus China, where 70%+ speak Mandarin.
Additionally, Han Chinese are much closer genetically than Europeans. Italians, Brits, and Estonians have much more varied genetics compared to Han Chinese.
China installed more industrial robots than the rest of the world combined.
https://ifr.org/downloads/press2018/2024-SEP-24_IFR_press_re...
https://ifr.org/ifr-press-releases/news/global-robotics-race...
> What will be America’s competitive edge in that scenario?
Comparative advantage means countries benefit from specializing in producing goods or services where they have the lowest relative opportunity cost - not necessarily where they're the best overall. Even if China focuses on technology (and this is far from decided), America can still thrive by specializing in other areas where its relative efficiency or unique capabilities are better.
Examples: Germany specializes in high-precision manufacturing, India does well with software development, IT services, and medicines, Australia exports minerals, natural resources, and agricultural products, etc. Everybody brings something to the table. The world economy cannot possibly get worse by adding 1B people doing top-level work.
> Ricardo's theory implies that comparative advantage rather than absolute advantage is responsible for much of international trade.
https://en.wikipedia.org/wiki/Comparative_advantage
BTW these would have been great ECON 101 discussions to have before the election.
India does well on software development partly on a volume basis. Their top end developers often want to move abroad for career development and earning potential. I would not be surprised if potus put tariffs on H1Bs
Trump is on the record extensively as being very pro H1B (probably spurned on by Musk, Zuck, and Pichai). Because many of these workers can be overworked without complaint for lower compensation than American workers.
It's never been about protecting Americans...
It's about protecting blue collar workers. H1Bs damage the "coastal elite". Illegal immigrants are the threat to blue collar workers, and look at his stance on them.
It's impossible to not see that Trump is trying to bring back the 1950's rust belt all American factory family.
Wouldn't this just be income tax?
There could be a charge to the visa sponsor based on the salary of the worker
The US was going down the "let dominate IP/technology" angle for awhile, but we only accomplished it with imported labor (look at any SWE shop). China is obviously developing the talent to do the same, and they are rapidly automating manufacture work as they approach a demographic cliff. They are basically making all the right investments for the future while we try to go back to the 1950s. It is extremely frustrating.
They're doing the right thing just about everywhere. Except real estate. One wrong move and it's 90s Japan all over again.
I think Japan would have pushed through their real estate bubble if they just able to focus on automation like they were in the 80s and 90s. But the rise of cheap labor and great logistics in China ironically did those efforts in (or maybe it came too early?) and the Japanese economy fell behind for two decades.
Back to coal mines.
it really seems like there's a push to de-skill Americans. like Bessent's remark that the laid-off civil servants could become factory workers as we bring back domestic manufacturing, and the recent corporate push towards vibe coding and integrating AI everywhere, and the purge of seasonal and unskilled migrant workers while keeping the H1B program.
it almost seems like we're trying to clear immigrants out of the chicken plants to make room for laid-off graphic designers.
Bessent et al’s plan isn’t even internally coherent.
Yeah, Americans are going to go back to working in factories. But not for low wages, because errr ummm actually it’ll be robots doing the work! So where will Americans be working? Errr ummm well… in the factories! (??)
Yeah and another thing I’ve noticed is the current administration has won on negativity and victimhood. It’s damaged Americas confidence and super power branding tremendously .
It seems to be the new image of America as some kind of wounded animal who is acting aggressively to protect itself from China. It might not be the case but perception is important and in my opinion it’s changing fast and in the wrong direction.
It’s almost like Americans are now begging for low tier jobs or something.
I've been hearing internet rumours of theories that for a lot of people all of this has something to do with fragile masculinity, a desire for dominance, sexual insecurity, something like that. I don't really understand it fully, but it's something like they want to bring back old sexual hierachies so they can be at the top of them. Machoism. They want to bring the manly jobs back and give them to white people. The reason they hate black people is they have some insecurity about being sexually out-competed by black men. The reason they hate gay and trans people is that nontraditional sexuality devalues the whole traditional sexual hierarchy. The reason they want to crash the economy so there won't be as many jobs available and women will have to depend on men for money which will make it easier for them to get women - some of them have actually said this out loud! And so on.
It's just one of many possible theories, but it's consistent with itself and the evidence...
Not sure where exactly I've seen the idea. It might have been: https://www.youtube.com/watch?v=Bn6b8GRAXgo or its source material: https://www.youtube.com/watch?v=ID8Xq3chNi4
It's for sure some of that, here is also a good podcast that covers this and how a lot of these issues start in childhood and how you can avoid it. It's for parents but it's interesting when thinking about why adults act the way they do.
https://www.youtube.com/watch?v=euqaDgWEj6k
This. Anyone who doesn’t believe it — please go spend some time in Shenzhen, Shanghai, or similar cities, like I did. I just got back from China. I’ve been (also lived and worked) to the U.S. many times, and I can confidently say that China’s tier-1 cities are on another level when it comes to development and QoL (and not only T1 cities, I was in smaller regions in the north too). It’s also incredibly clean, super safe, and the infrastructure is breathtaking.
Yup, Chinese Tier 1 cities (Beijing, Shanghai, Guangzhou, and Shenzhen) are probably 20 years ahead of their Western counterparts (in terms of crime, or lack thereof, public transportation, convenience, cleanliness, etc).
Cousin was in China last month. Left Shanghai for a meeting in Beijing in the morning. Was back in Shanghai by night
All via train. In cities that are 1300km apart.
That's been my current dream trip for a little. I think it woukd be so cool to ride the trains around the country and see what it's really like there. Learning the language is hard though
English is the second language of most young and middle-aged Chinese, so you should be fine at least in tier-s cities.
I recently visited China and even the people you'd expect to speak English (front desk at Western branded hotel, airline check-in, etc) either spoke zero English or really struggled. My shitty Mandarin got a workout.
Remember to carry your passport at all times, as you'll need it to buy a train ticket.
Even a simple metro ticket.
You can also smile at the CCTV cameras, which are in groups every 100m or so within cities.
> You can also smile at the CCTV cameras, which are in groups every 100m or so within cities.
1/100th the amount of smiling at the CCTV cameras compared to the UK then.
Train tickets sure, for the high speed rail, but metro? Not in Shanghai at least
Metro ticket machines in Beijing won't sell a ticket until you've scanned an identity card.
Tourists must wait at the ticket window. Foreigners aren't usually asked to show the passport unless they look Chinese.
No need to wait at no window. After you activate Alipay, just click on "Transport" and create a metro card for Beijing. Scan code on enter, scan on exit, pay the sweet low fare automatically. One app, 30+ cities.
"Activating Alipay" requires using an identity card or passport.
You don't have to wait at the ticket window though. Privacy? Maybe not. But convenience? At every corner.
I took a year of Mandarin as an undergrad, speaking is doable, reading and writing is hard, but Google Translate & Co. would make that less daunting now.
I thought speaking would be hardest with the tone changes. I took one online class, was overwhelming
I felt like it started making sense after a month or so, but even though I got up to ~1500 characters at the end of the year, reading was never easy.
> What will be America’s competitive edge in that scenario?
A few months ago, I'd have said soft-power and goodwill built over decades with the rest of the western world, which roughly equals China in population size. Instead, I agree that the US is staring down a "managed decline" like the UK, but hopefully not as steep.
…what does this have to do with shoes? A “managed decline?” Brother, the problem with the UK economy is Brexit. That was put in by a plebiscite. It’s not saying much, but at every level, including in the manufacture of shoes, the government has the greatest power to create or destroy wealth.
Austerity measures predate Brexit by quite a bit as a result of deliberate choices by a conservative government. Brexit accelerated pre-existing downtrends.
Many parallels may be drawn: austerity vs DOGE in gutting government services, the deluded nativist/isolationist core of Brexit vs the tariffing the entire world, xenophobia, and most obviously a nostalgia of past-greatness that doesn't quite fit the present circumstances.
> Americans need to get over their view of “Asia” as being about making shoes
I’m not sure if you’re just speaking on what you experience or because of this post but the OP is a clothing guy so it makes sense he will look at it from a clothing (including shoes) perspective.
I agree though, if Americans truly do see Asia as just the cheap clothing factory continent they’re sorely mistaken. All you have to do is to just look at TSMC (Taiwan Semiconductor Manufacturing Company) and realize that if you were impacting just that company alone you would get a slap in the face as a country, all (~70%) the major chips come from there.
I am aware the US is developing a Semiconductor factory in their own country but it is not done yet and it will not go as tiny in nms as TSMC already is.
I see what you are getting at but I have to disagree with alot of what you are saying.
> the US will find itself in the same position the UK is in now
The US and UK are totally different animals at the height of their "empire". The UK currently has little land and alot of it is devoid of minerals(sans coal). They achieved most of their might subjecting other countries and extracting resources from their colonies. Once the colonies and the rest of the world objected the British empire began to crumble as the colonies broke off from the UK.
Contrast that with the US which if it were to jettison its "colonies" (Puerto Rico, Samoa etc) you would see very little drop in GDP. The US has vast swaths of land which is excellent for farming, energy extraction and contains valuable minerals. It has widespread and diverse populations with wildly different ecologies and climates. In addition to a huge amount of resources it has a kings ransom of some of the best universities in the world(stanford, harvard, MIT, etc) and a highly educated society with living standards just below some small asian and european countries. The US also has a peerless military (we need hypersonic weapons however) and many aircraft carriers and nukes as well as world renown special forces groups. And lastly of the top largest 100 companies in the world, 65% are US based and this despite the US only having 4.2% of the worlds population, looking at GDP per country is almost comical as the US has 30T compared to the next largest economy China(19.5T), 3rd place is Germany at 4.9T.
USA has three advantages that no place else in the world has. First we have the biggest oil deposit in the history of mankind with the Permian basin. Second we have more inland waterways in the Mississippi River system than the whole rest of the world combined and third this abuts the best farmland on the planet.
I would say that the USA also has an advantage of open immigration for intellectuals to keep our universities strong but the anti-intellectual Trump administration is destroying this advantage as fast as it can!
The greatest advantage that we ever had was to lead the free world in ideals. A friend of mine was telling me yesterday that every child in India when they reach the age of six wants to go to Harvard and settle in the USA. They want to stand up for freedom and for democracy and for putting down all the evil dictators in the world. We are losing this image very very quickly it could be gone in a matter of months!
Don't brag about our aircraft carriers it would take us 25 years to build 11 more. We are nowhere in ship building we destroyed our domestic shipbuilding in the 1980s when we reoriented it for military shipbuilding and then the Berlin Wall fell down and we drastically cut the military shipbuilding budget and that caused our shipbuilding to go to almost zero overnight (3 heavy ships per year nationwide whereas China's largest ship builder does THIRTY!).
The USA has also been greatly advantaged by being host to the world's reserve currency (also known as having a massive trade deficit). It has been able to buy, buy, buy without needing to sell in kind; essentially getting stuff for free.
But it wants to throw that out the window now too, for some reason. Crazy.
> When I was working in engineering in the early aughts, we mocked the Chinese as being able only to copy American technology
Perhaps you should have considered that like in Art, the first step to proficiency in anything really is mimicry.
True, and now I believe China has kept their industrial might while also pursuing higher technology. So they have the mine and the steel plant and the car factory. I recall Musk commenting that through human history, it’s more normal for China to be the most advanced nation on the planet, not the USA. Still, brutal place to live and work. Ultimately you have to offer people a chance at happiness, or else internal failures tend to sabotage all external signs of success.
US wont end up in the situation that UK finds itself in because the land it occupies is some of the most productive land on earth and at a similar scale as china. The incredible wealth of america, is that its a land mass that in the old world would be supporting 500m-1.5b people, but is divided only amount 350m.
The city at the center of the Missouri and Mississippi if it were in europe would be a major civilization. In the US its saint louis. The US, CA, and AU have an option few countries do -- at any point they want nominal gdp growth all they have to do is open the door.
I agree with you though that china's incredibly impressive.
I'm not super knowledgeable about AU, but my gut impression is that it doesn't have much in the way of natural advantages.
Yes, it's lowpop, but that's about it.
Somewhat similar for CA, but CA is a lot better off than AU.
Out of those three, Australia's economy is proportionally the most reliant on natural resources. Its mining sector alone is a bit over 10% of overall GDP.
Yeah but those don't exactly sustain a large, high HDI population.
They bring money and wreck the environment, which gets less pushback in Australia because very few live in the mining areas.
> Americans need to get over their view of “Asia” as being about making shoes.
The vast majority of us were over that decades ago. Please catch up for the sake of all humanity.
Yesterday your vice president referred to the Chinese as "peasants".
Something like 35% of China's population works in the agriculture sector, many of whom are poor with little or no land holdings living in small villages. Is there a word for that kind of person?
That number has been falling since 2012 and was around 22% as of 2023 (ignoring the hand-wavy conflation of the entire agriculture sector and stereotypical rural farmers)
https://tradingeconomics.com/china/employment-in-agriculture...
You could just as easily massage statistics to call the US a nation of gig workers or something, but neither is productive or informative.
Peasant has a more specific meaning than this. More importantly, it has been used as a pejorative for a very long time now and that is clearly the intent the vice president had in mind.
Would you call a midwest farmer in the US a “peasant” or just a farmer?
Let’s not pretend that peasants and farmers represent the same thing
> Would you call a midwest farmer in the US a “peasant” or just a farmer?
All peasants are farmers, but not all farmers are poor.
So, no, not as a group. Midwest farmers, on balance, are going to be some of the richest people you can find in the country (mostly because of their land wealth, which Chinese farmers don't have). There are likely to be individual farmers in the midwest who you would call peasants, though.
Chinese farmers, on the other hand, are likely to be very poor. Some individual farmers in China are rich, but as far as the group goes... It is not as bad as it once was, but as that group they still lag well behind the typical urban dweller. As that group they are peasants.
Fair, but he's not exactly a shining beacon of the best we have to offer.
Half your voting population deemed him to be fit enough to represent them
yea all voting population voted. ironic comment talking about intelligence.
the non voters didn't think he was bad enough of a representative to vote against him then. Equally complicit
oh you are a mind reader now ? great
Unfortunately in a democracy the best we have to offer isn't what we actually offer.
all part of the negotiations :)
I think the current US government is missing the negotiation part of the word negotiation.
No, he said “"We borrow money from Chinese peasants to buy the things those Chinese peasants make”
He did not refer to all Chinese as peasants. China would like you think that though.
While it is true that Vance did not literally refer to all Chinese people as peasants, I do worry that such rhetoric will stoke the flames of racially motivated anti-Asian/anti-Chinese attacks.
I don't want to discuss whether he is genuinely racist; I think that's besides the point. Words can have a lot of impact, especially when uttered by a public figure in such a powerful position. I don't think it's unreasonable to expect the Vice President of the United States to carefully weigh the consequences of his words before speaking.
> I don't think it's unreasonable to expect the Vice President of the United States to carefully weigh the consequences of his words before speaking.
He did carefully weigh the consequences of his words. He deliberately chose the most inflammatory and insulting of possible words. Knowingly and intentionally.
It was an unnecessary slight by the vice president of the United States. Vance is a provocateur, and I'm not sure he's an intelligent one.
Definition: Peasant: 1. A member of the class constituted by small farmers and tenants, sharecroppers, and laborers on the land where they form the main labor force in agriculture. 2. A country person; a rustic. 3. An uncouth, crude, or ill-bred person; a boor.
You unsurprisingly choose the third option. Uncouth, crude and or ill-bred people are probably not especially productive in their working life.
We do know that in China, rural people flock to the cities (where they have diminished welfare provisions and 'rural' status, do the work and are then expected to return to their homes in the country.
Vance does not get the benefit of the doubt.
So then the actual bona fide peasants are the ones owning the T-bills? I thought holding USD reserves was national policy, with strict currency controls and whatnot. So my basic reading of that quote puts it closer to a dog whistle blanket characterization, and your promotion of the equivocation is quite disingenuous.
The reality is that most USians and EUians still have some 1990 view of what Asia and China is. Or they cope with some 'freedom' or 'slave labor' anecdotes.
My comment on another thread about how China is now a developed country was downvoted by some HNer who swallowed some Guardian anecdote: https://news.ycombinator.com/item?id=43627315
Exponential growth is a hard concept to internalize.
Developed country covers a huge swath of living standard.
China has a development level similar to Thailand, which while not undeveloped, is far from the living standards in the US or Western Europe.
HN frowns upon griping about downvotes, and encourages a discussion around why someone's point or rebuttal might be wrong. Just sayin'...
> We need to anticipate a future where China is equal to America on a per capita basis, but four times bigger. Is that a world where “Designed by Apple in California, Made in China” still makes sense? What will be America’s competitive edge in that scenario?
The likely answer lies in the fact that this would mean China & America are both high-income countries. There are likely to be other countries looking to be "the next China" to ascend the income ladder. As is now, rich countries will outsource work to those poorer countries.
This doesn't have to be zero sum.
Average American would be shocked to see a city like Shenzhen. It's like living in the future.
Agree! I wish Americans would travel more and escape their media bubble. China is incredible. I was in Chonqing and then Shenzhen recently, and live in Beijing. Truly it's very divorced from what western people have grown to expect.
The most shocking thing for Americans when TikTok was shutdown for half a day was when they switched to the Chinese version of the app and they saw the truth -- that the middle class in China is living a higher quality of life than they are.
I didn’t see that at all, but I also don’t consider flashy technology to define quality of life.
Agreed. Some people saw it as quality of life, some people saw it as prosperity, etc. However you want to define it, the point is the same... many people were shocked that the Chinese middle class had more than they did.
[dead]
Businesses in a country that is a complete economic power house from plastic spoons to particle colliders and supercomputers are not going to outsource their finance to an overseas has-been.
They have their own straight-C-plus high schoolers they can train in finance.
Maybe it will come full circle and the US will commit IP theft to catch up to the dominant Chinese companies.
Then they’d just be back to where they started in the early 19th century, stealing Britain’s IP to become an industrial power.
https://www.history.com/articles/industrial-revolution-spies...
See e.g. Youtube Shorts and Instagram Reels
All for it.
We should be doing that right now.
Hasn't that point already been reached given the US could not sustain itself in any reasonable way without Chinese labor and knowledge?
There seem to be a lot of companies in the S&P500 that would dry out without access to Chinese workers and goods. Just take cloud providers. Where is their gear sourced from? Is there any realistic chance to provide that from within the US? Given the current state that would become necessary but seems highly unlikely to be achievable.
The average Brit is now poorer than the average Pole. Dominating finance hasn't worked out well for the citizens of the UK.
Dominating finance + Brexit.
Brexit worked out fairly badly for rich folks. I'm not sure how well it worked for the folks who were voting for it, but it's possible "take the rich folks down a few notches" even if it lowers the median income, if you yourself don't earn the median income, is still seen as worth it.
> We need to anticipate a future where China is equal to America on a per capita basis, but four times bigger.
Is it even possible in terms of resources? there are limits to growth and it may not be feasible for 1.5 billions people to consume and pollute as much as an average American.
Also are the US willing to lose their supremacy peacefully?
That future is far, far off.
China’s per capita GDP is 1/7th that of the US.
To match the US GDP per capita would require China growing at 10%/yr for 35 years (while the US grows at 3-4% per year).
Thats 35 years of phenomenal growth, with no recessions, no “slow” years of only 5% growth (like the past 3 years). Assume an average of 7% growth (and US 3%) and now it takes 50 years to match the US per capita GDP.
This is why GDP growth of 5% is regarded as “bad” in China. They need double that.
And China needs to do this all the while having massive debt overhang, a world moving away from free trade (which their economy is highly dependent on) and a shrinking and rapidly aging population (by 2050 it will be 1 worker per retiree).
I don’t have a crystal ball, so who knows, but suffice to say if things stay relatively the same it’s going to be 2060-2070 before China is as rich as the US on a per capita basis.
https://en.wikipedia.org/wiki/Pollution_in_China
It seems apparent that the answer is yes though. The US likes the idea of wars more then fighting them: the guy who talks about the greatest military on the planet is also not subject to the draft and never tried to join.
In so much as generalizing a nation can still leave large exceptions, wars of conquest are useless to America: it hates running occupations, and it's own citizens are not going to move abroad in sufficient numbers to provide a labor force to utilize the conquests.
Further, any hit it might want to take at the other powers would be either not cost effective (against Russia) or would harm them very badly in short and medium term (China or moves regarding Taiwan.)
Moving against EU would not get them anything and the same bit as regarding China applies.
Truth is, war is an expense. You need to count on a serious long term benefit to wage it.
> we mocked the Chinese as being able only to copy American technology
As you state they haven't been "only" copying for a while and my problem with people keep repeating this "logic" (mea culpa) is precisely what's at stake right now: designing and "creating" is critical, but I'd argue that civilization is not made my design or one-off (or limited) editions. Civilization is the ability to innovate in mass production, in doing so, consistently in lower and lower costs. China excels (and will continue to excel) while they continue to appreciate this. The "service sector" world stopped caring about this.
China got to where it is by taking loooots of inspiration from American tech. And it's not their fault US doesn't like the Chinese gov yet won't stop using their facilities to manufacture because they are cheaper..
If you made it to the end of the thread, the author (a menswear/garment industry expert) explained that he was responding to comments along the lines of 'Nike pays $2 to make shoes in Asia and sells them at $150, earning a $148 profit, we should bring some of that money to American workers'. I did not get the impression that the writer was characterizing Asian industry in general, he just happens to be knowledgeable about this particular industry.
I have been having similar discussions over the last week with people about synthesizers/pro audio gear (a topic I happen to be expert on), and the market dynamics are roughly the same. The goods themselves have a much smaller market and a much higher median cost than shoes, obviously. But components, assembly, and a significant amount of technical (PCB) design originates in China.
> When I was working in engineering in the early aughts, we mocked the Chinese as being able only to copy American technology. Today, China is competitive with or ahead of America in key technology areas, including nuclear power, AI, EVs, and batteries.
I wrote this not long after (10y ago) and I think this view is still unpopular now as it was then (for reasons beyond me):
https://news.ycombinator.com/item?id=9421471> for reasons beyond me
It might help to understand that the resistance you have faced is probably driven by deep-seated biases and stubbornness.
Silicon Valley has stifled its own innovation by making too much use of regulatory capture and IP laws.
> What will be America’s competitive edge in that scenario?
I'm sure that the US still has many edges over China in high-end technology. I remember I read a research article back in 2012/2013 which listed all fields that China were lagging behind, including pharma, computer chips and some other stuffs. It's a fairly long list. I'm sure China managed to catch up in some of the fields but I doubt all of them.
China used to be lagging behind in all areas. Now it is not.
The US pre-WW1 was an isolationist nation with few I'd any exports, not the global manufacturing powerhouse it became afterwards.
Things change and always change.
There's a Australian study tracker, and I think things got way closer now...
https://www.aspi.org.au/report/aspis-two-decade-critical-tec...
That doesn’t pass the sniff test.
China leads in 57 of 64 technologies but the US leads in only 7?
It ranks China far ahead of the US on aircraft engines, of which, China can’t even produce its own right now. What?
That section is talking about risk — saying that they're now producing a lot more research around novel engines than the US. It's not saying that their own engines are ahead yet, just that risk is high given current progress.
(and they are now producing their own engines, as seen on their new fighters, though they aren't believed to be ahead yet.)
They do lead in many areas now. They have a lot of engineers, hands-on manufacturing heft at scale (inc. a lot of internal competition), and a government that has been pumping and subsidising physical industries for many years.
China can’t produce it own jet engines from scratch. The engine on the jet fighters are made on Western tooling machine and have components imported from the West or Russia.
Will China eventually catch up? Absolutely.
But I’d temper any fear of China pulling ahead in research when they can’t even put today’s technology into full production.
I'm sure China managed to catch up in some of the fields but I doubt all of them.
And if you could guarantee that they'll never catch up in the others, we'd all feel a bit better about the permanency of American superiority.
Absent that guarantee, we need to bench test those scenarios and be prepared with plans that best serve American interests should those scenarios come to fruition.
american has superiority in like number of incarcerated people per capita and infant mortality - that’s about it :)
Consumer debt too.
I read “Rich Dad Poor Dad” and apparently debt is a great thing… My “poor” Dad just never thought me this
Even if you believe this, the way you do it is incentive manufacturing in the US not 200% tariffs. It takes time to build up domestic manufacturing.
"We need to anticipate a future where China is equal to America on a per capita basis, but four times bigger"
Four times bigger absolutely will not happen; China's demographic disaster is already baked into the cake. Forecasts suggest China's total population will be around 1.5x the USA by 2100, but the average age / working age population will be in the USA's favour.
You actually talked about a point that I think most people forget. One thing is Japan or Korea being super good in tech.
Another thing is when you basically have 10 Japan or 20 South Korea, which is what China is with the 1bi population.
Which means not that they will have a lot of consumers, but way more competitive companies in general (if they continue growing as is).
I'll never forget having to SSH into Bejing servers because nobody on that side could fix a problem... (working at a Chinese heavy company for a bit)...
I walked away realizing they are still copying the tech (IP theft, etc), but don't understand it nearly as well. The main thing that changed was the time-gaps, and by bypassing safety and other regs/norms, they just get to market first, but with a subpar product, usually with major issues.
I'm not nearly as afraid of this version of the future having experienced that, but of course, that was from a limited perspective.
That said, the sheer amount of $ being pumped into infrastructure of all types in China is a sight to behold, and also woke me up to how much our own government and big business entrenchment is suppressing American ingenuity.
Europeans can tell the same story about Americans.
Okay… what does this have to do with tariffs or shoes though?
> …China equal to America on a per capital basis
Hmm, what number do you mean will be equal? Income per capita? If the Chinese system paid Americans the same as the American system does, why would Nike operate its sweatshops there? Kind of tautological, no?
Their population is declining, and they are a long way away from parity with the west on a per-capita basis. I think China missed their opportunity.
Also, the UK hasn't dominated finance for a century and has never been dominant in services, so it doesn't seem like an apt comparison.
> Their population is declining
Not where it matters. China has a much larger under-employed population base than the US has. They still have a few hundred million peasant farmers whose children can and are getting educated and moving to the city. Their pool of labour is growing while the US's is stagnant.
Not that it needs to grow -- over the last decade or so China's factory employment has been relatively constant while output has surged dramatically. Their factories are rapidly automating.
The US labor pool is far from stagnant thanks to immigration, though Trump is trying to screw that up as well.
And those children will be burdened with caring for their elderly parents, often alone, continuing to keep internal consumption low. They are automating and moving up the supply chain, but have a long, long way to go as a nation.
We don't need "peasant farmers" to educate, we need AIs to program!8-))
The race between manual labor and machine labor is heating up anew. We don't yet have humanoid robots but they're on the design table, so it may be time to fasten your seat belt.
> We don't yet have humanoid robots but they're on the design table, so it may be time to fasten your seat belt.
Right ... so about that, here's Morgan Stanley's report on humanoid robots from a couple months ago:
Investors will notice that 73% of the companies confirmed to be involved in humanoids and 77% of integrators are based out of Asia (56%/45% out of China, respectively). A common refrain we hear from investors is the lack of Western firms to add to their humanoid portfolio outside of TSLA and NVDA. In our view, this is important information in and of itself as it represents the reality of the current humanoid ecosystem which we expect may need to change materially over time (see the West's current experience with EVs which has significant supply chain overlap with humanoids). Our research suggests China continues to show the most impressive progress in humanoid robotics where startups are benefitting from established supply chains, local adoption opportunities, and strong degrees of national government support.
https://advisor.morganstanley.com/john.howard/documents/fiel...
Educating a few hundred million former peasant farmers is how you get things invented.
You might as well start from educating peasant farmers even at that.
This 100x. This is the time to go all in and truly shake everything from the ground up. If the US moves at least 25% to the continent, it could solve lots of issues by developing manufacturing for critical products in-house and nearshoring the rest to LATAM, helping reduce illegal immigration considerably. Win-win for the whole continent.
It will be more expensive for the consumer who will have been busy paying the tariff sales tax to get to that point. There's a reason businesses moved industry overseas.
The UK may not have dominated finance for a while but we had headlines like:
"London Beats New York as the World’s Leading Financial Center in the Latest Ranking"
in 2015 before the glory that is Brexit.
https://www.bloomberg.com/news/articles/2015-09-28/london-be...
We can afford to be lazy, the chinese have their own problems.
Word for that, hubris
The first effects of their population decline will be felt around 2050 by UN estimations. What do you think they’ll be doing for the next 30 years? Considering they already ship more robots than the rest of the world combined, I don't think that will be a huge problem.
No their population decline is felt already, they don't have enough people to fill the factories right now and too many highly educated people. This is mostly about people in non stem related fields and non elite universities. If you're a young chinese with a so-so degree you're basically fucked. The UN estimations are fully off for all countries in the world (look at the actual fertility rates published by countries). If you look at UN you'll see like 1.7 fertility rate for colombia, in reality it's 1.0. All countries are kinda demographically fucked, the US is the one that's doing the best. They have been forging their demographic numbers for years already as well. I'm not saying it looks rosy for the US but it's not great for china either unless you believe in some kinda rapid rise in robotisation in the next 10 years.
> Their population is declining, ...
This can not be overstated. China is on the verge of the largest population collapse in human history.
By 2080 China's population will drop by 600 million. If that trend continues, by 2150 China's population will drop to 280 million.
Other asian countries such as South Korea and Japan are on a similar trajectory.
Why would that trend continue for 100 years? No reason to believe that.
Because women are obligated to work 40 hours every week just to stay afloat. Unless you find a way for young educated family to live a decent life on a single husband's income, the trend will continue.
And that wont happen to the US?
What is "that" that "won't happen"?
US, Canada, Europe are demographically cooked too, but they (partially) solve this problem with immigration, that is not an option for China and the rest of Asia.
You think there will be zero policy changes in China over the next 125 years?
What's your point?
> I think China missed their opportunity.
I think so too prior to the Trump tarrifs. Now their influence abroad is picking up steam again, with former WW2 enemies now becoming trade allies. I think this has reinvigorated their opportunity.
China hasn't changed, as their new "partners" will be reminded of soon enough.
I suspect they will squander the opportunity the US unforced error has provided, but we'll see.
The partners didn’t want to establish strong trade ties because of national animus between their peoples stemming from WW2 and regional security concerns, not because China is an unreliable trading partner. From what I’ve read, China is actually a very reliable trading partner and generally asks a lot less of countries than the US does. Obviously that’s how they attempt to gain influence and leverage in US spheres of influence longer term to make larger asks, but most politicians only think of short term consequences.
And national animus can change significantly over time. Just look at where US and Vietnam are (or were, prior to tariffs).
Lesson I learned doing business with PRC over the decades: if you're not family, then you are an enemy. If you're not Han, then you're not human...
But look at per capita per purchasing power
Power of the purchasing power was a luxury of the US being the most desirable source of stability, creating a high demand for US securities and money. If trust in the US goes down, then so does purchasing power.
there will always be states-hostages to the US Navy and US Air Force that will be forced to purchase USD, for example Gulf States that basically pay ransom in term of keeping the petrodollar and investing in USD.
The moment oil producing gulf states decide to stop buying USD bonds, they will receive "democracy".
The whole intent to fight Iran is not only to protect Israel, but also to choke off China's major oil supplier. If Iran folds into US control, it will be easier to choke China in terms of energy supplies
Per capita purchasing power will decrease rapidly in the US if USD stops being the world's preferred reserve currency.
China's per capita purchasing power will increase rapidly if RMB becomes the world's preferred reserve currency.
Trump seems to be doing everything to speed up the former and as a result is also speeding up the latter.
'declining' on which level?
China will surpass USA from a GDP Point of view in 2035.
China surpassed Germany as industry machines export in 2018.
> China will surpass USA from a GDP Point of view in 2035.
Don't be so sure, this has become much less clear. For example, in this article: "The Centre for Economics and Business Research, which in 2020 predicted that China would overtake the U.S. by 2028, revised the crossover point two years later, to 2036. This month, the British consultancy said it will not happen in the next 15 years."
https://www.newsweek.com/2025/01/31/china-us-compete-biggest...
That was before the US decided to shoot itself in the face with economic policy.
Yes, but this will likely hurt China as well. You can't assume only the US will be hurt by this.
Right now USA is alianating everyone.
I'm in germany and i'm pissed. I will not go on holiday in USA and thinking proactivly how to boycot USA.
And i'm not even a company. A company wants stability, predictability and not chaos every 4 years. And this president is in office for only a few month.
Whatever strategy companys currently try to do is either sitting it out or starting to adjust. The adjustments might not just go back when USA is more stable again.
I don't. I'm saying all prior bets are off, though I do think US is going to be in the center of the nexus of pain, even if China is also hurt.
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Their population is declining in absolute terms.
They have been projected to pass the USA in GDP for a long time now. We'll see if it happens. Their demographic trends are not favorable, but the US seems to be testing out how many self-sustained wounds its economy can survive.
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China routinely inflates and lies about their GDP
https://bigdatachina.csis.org/measurement-muddle-chinas-gdp-...
Competitive edge is new innovation and I don’t see that changing anytime soon. The rules and culture favor it in the US, more so than anywhere else on earth.
China didn’t invent the iPhone or chat gpt. But they excel at optimizing.
DJI is the premier drone company in the world.
Also in places where Chinese electric cars are not being blocked they are really taking off. In 20 years for billions of people the most common car will be a Chinese one.
China is able to build nuclear reactors while the US is floundering.
The Chinese may well be the first to produce electricity from fusion.
People come back from Shenzhen now to the US and say that the US now feels less advanced.
The US certainly leads in some areas. But not longer all areas and things are moving toward China.
Those things are all optimizing…
Fusion would be something totally new.
The other thing to look at is the number of high impact papers in Materials Science, Chemistry, Engineering, Comp Sci and Physics and look at where they are being written. Check the image from The Economist in the article below :
https://asiatimes.com/2025/03/behold-chinas-innovative-golde...
It's great for the world that China now has hundreds of millions of people who are able to have much better lives and tens of millions who are making great contributions to the world.
China has done what the US did in copying Europe 150 years ago. The US copied Europe and then went further. China is now doing that.
If fusion is successfully done in China rather than the US it will still be great for people in the US. The US can copy it.
The only thing is that the US's dominance is ending.
Fusion hasn't been invented yet.
If following the pattern it will also be invented in the West and optimized in China.
So was the iPhone just a optimized phone and ChatGPT just a optimized AIML client
EV's, Drones, Nuclear power.
Once again optimizing on technologies invented in the west.
This is old old China you are describing… The new China is not merely optimizing but both innovating and making superior… For people that have the priviledge to visit China, the first thing you’d notice is that they are on another level from America, in every possible way. Going to Beijing and then going to any city is America is like going to NYC and then going to Toledo
"Asia" is not about making shoes, but any company will manufacture where it makes the best economical sense. Currently if that's somewhere in Asia, so be it. It doesn't take anything away from Asian countries if they can offer lower labor rates. Some Asian countries are so big and has such staggering class differences that they might be able to continue offering cheap labor while being competitive in technology, because the people involved in both areas live in totally different ecosystems.
These analyses always assume no margin compression which is wrong.
You might be right. The USA seems to be indulging in its own Brexit moment ... and looks where that got the UK (...irrelevance).
Designing the most stylish bevel radius on edges.
> We need to anticipate a future where China is equal to America on a per capita basis, but four times bigger. Is that a world where “Designed by Apple in California, Made in China” still makes sense? What will be America’s competitive edge in that scenario?
Military
I'm genuinely asking this out of curiosity and a bit of naivety — are there as many international students pursuing advanced degrees in China as there are in the U.S.? I don't know the answer and would love to hear from folks who do.
Do they not just steal our IP and then industrialize it better than us, partly because of their current demographics (which are rapidly changing), partly because of lax environmental standards, and partly because they need economic growth to support their oppressive regime?
> Americans need to get over their view of “Asia” as being about making shoes.
I blame Peter Zeihan for this kind of thinking. His views are immensely popular in the very powerful and influential circles. And he constantly derides China's capabilities. Since 2014 he's been saying it's going to collapse any day now. He still says it.
There are rank-and-file members of the western intelligence community that watch/read Zeihan just so they know what their own leadership is ingesting.
Zeihan is a case of believing the message because the messenger is so articulate and charming. He's a tremendously interesting narrative builder (in the vein of Taleb's narrative fallacy). I've been tracking his predictions for a few years now. I want him to be right. Unfortunately, he's seldom right.
He also seems to be veering into fabulism. He's recently said in multiple interviews that there's a clothing factory in North Carolina that is so automated that only 2 "guys" are needed to run it. Raw cotton comes in at one end, and finished clothing comes out at the other (hence Chinese labor is not needed to stitch clothes, hence China is going to collapse any day now).
Why do I believe this is fabulism? He never names this company. And the story has evolved. In earlier interviews he used to say that cloth comes out at the other end. But in a couple of recent interviews he's said finished clothing comes out at the other end.
As does Gordon Chang "The Coming Collapse of China" (2001)
> we mocked the Chinese as being able only to copy American technology.
Thing I disliked most about the movie Blackberry (and I liked the movie!): The Blackberry lost to a phone that could only have been made in China.
> We need to anticipate a future where China is equal to America
I'm a US American living in Asia. I can't tell you with 100% certainty that in terms of technological progress, China is far far ahead of the US.
Can’t or can?
Can. Autocorrect.
Any experience or thoughts on Vietnam and Malaysia? Are they also moving ahead?
Vietnam is the next China, they're still behind but catching up fast.
Malaysia is handicapped by the resource curse (lots of oil) dysfunctional government and race politics that serve to drive out everybody who is not ethnically Malay.
Vietnam was one of the fastest growing countries in the world but from a low base. They were following a similar trajectory to China but about 20 years behind. Not sure how the tariffs will affect things.
I was in Malaysia ~10 years ago. I saw a lot of weird things for sure, but I also saw a modern capital city that could easily shadow over many European cities today in terms of life quality, fancyness and nearly any metric.
I didn't see any shoe manufacturers :)
What were some weird things you saw in the urban areas or suburban areas?
Indeed. The primary reason to go to China is not that it is lowest cost (but of course lower cost than US) but rather that they have the skills and infrastructure for it.
We still have much more raw materials, farm land and forests than the UK, and likely more of everything, even percapita.
>> future where China is equal to America on a per capita basis, but four times bigger
That is an environmental apocalypse best avoided as early as possible.
>We need to anticipate a future where China is equal to America on a per capita basis,
This is a nice way to put it.
Anticipate a world within your life time where China is the dominant economic, technological, military and cultural super power.
Anticipate jealousy, anticipate fear, but know that as Americans who have been top dog for decades there is nothing wrong with not being the best.
Additionally anticipate a changing world view less focused on the view that freedom and democracy as the only possible way to lead and anticipate that despite the fact that China is a communist country and centrally controlled they don't want conflict and they don't want total war.
China and the US are not perfect. The US needs to accept this fact and it needs to accept that another is about to take it's place as the top dog.
> cultural super power
My impression is that Chinese culture has very little appeal elsewhere (at least in the West). They can't seem to be able to (or care to) package it in an appealing way. Sure, they're being catered to in films and video games but I see very little organic interest in Chinese culture, especially compared to Japanese or Korean culture.
It's true.
It's changing though. Wu Kong Black myth and even the top grossing film of last year was chinese animation. See the comments under the trailer: https://www.youtube.com/watch?v=gsiAYjyiIBM. The film was apparently incredible.
The core culture of China is actually foundational to much of Asia. The stuff you see coming out of Japan and Korea is surface level aesthetics built on top of this foundation. You're probably thinking Nintendo, KPop and anime.
Once China makes the aesthetics just as good as other parts of Asia I can see China becoming a cultural power house. Even the mythology surrounding China historically in terms of say one thing like Wuxia is better than anything out of Korea, Japan or the west in my opinion.
Really in the end people are more attracted to the aesthetic presentation of everything. Japan does this really well while China has always been unskilled, crude and rough on the edges. But this is changing at a nearly breakneck pace.
Oh, I think they're already up there with the aesthetics, I just don't find the content appealing. I watched (on Netflix) some Chinese attempt at a Downton Abbey a few years ago, and the production value was through the roof, absolutely insane. But the actual writing was pretty vapid and it's still drenched in propaganda.
I've had similar experience with film. Just compare the stuff coming out of Hong Kong today with what came out during the 80's and 90's.
Comedy is another thing I don't see go on export any time soon...
The writing will improve too.
I actually don’t get what happened with Hong Kong. Stuff was good then it went bad. But in general it’s expected that stuff will be bad. Generally writing and story telling is the hardest to improve while production and special effects are easier.
The great story telling from China comes from its mythology and I feel China hasn’t yet found a method to depict this on screen without being too cheesy, fakeish or over the top.
I think this is why animation and video games work here temporarily. China will eventually get its act together.
If they're selling on historical and folklore how much is that really pushing culture? Is Modern China the same culture as pre-revolution China? Friends, Seinfeld, Sex and the City had actual influence on people on a portrayal of modern New York. What's the equivalent show that has worldwide audiences interested in modern Chinese life.
None. There’s no equivalent Chinese show. Just like how a while back there was no equivalent industry. It will get there. Follow the trendlines of all the industries and if it matches what happened with the entire manufacturing industry, solar industry, and various other industries it will eventually surpass the US. Right now it’s quickly becoming on par with a lot of stuff in the west. Eventually it will surpass the west.
But you also have to note there’s a shit ton of propaganda against China. I’m not even sure where it comes from given that we have freedom of press. you likely have no interest in the good stuff coming out of China likely because you don’t even know about it.
Think of it like this. You probably don’t think of BYD at all. Most Americans don’t. But to the rest of the world it’s a superior car to Tesla. And cheaper. It’s like Americans have some propaganda veil pulled over their eyes and I have no idea where it’s from. This absence of consideration of BYD is very similar to what Americans think of China. It’s just a very inaccurate perspective and full of holes.
Also a side note. Nobody inside China or Asia really gives a shit about Seinfeld, Sex and the city or friends. I love Seinfeld and friends but that's because I'm American. Outside of this culture those shows are just garbage. You need to look at the things with true world wide appeal across all cultures. Something like Avengers End game, which was an international phenomenon. (I know there's a lot of snobbish types who don't like it and I can understand why as it's not very sophisticated and it is a little too popular)
Anyway, China has yet to have something like Avengers End game. Or Star wars even. But out of all the countries in the world, it has the most chance of producing something on par with what America has done.
I wasn't making a point about blockbusters though. Star Wars would fail my criteria as well. It's not about money it's about influence. The stuff you listed is the antithesis of that, watered down for a global audience. I'm talking about the "I want to visit CityX" because I saw what it's like and that's my vibe.
It's not a matter of growing the industry because it's already orders of magnitude bigger then what it costs to accomplish.
No one in Asia wants to visit nyc because of friends, sienfeld or sex and the city. These shows to them are mostly raw garbage. The reason is because these shows are culturally focused. Its catered exclusively to the type of American humor and values that most people in Asia do not give two shits about.
They want to visit Hollywood because they want to see the technology that built these blockbusters because internationally everyone understands heroism, sacrifice and special effects. Additionally these movies aren’t watered down. The writing and the effects have gone through years of development to get to that point. It just doesn’t cater to your sensibilities. The term is snobbish.
The writing for Seinfeld and friends and sex and the city took years to get where they are. These aren’t inborn cultural talents. You can easily compare stories from past American movies to see how cheesy and stupid they are. It takes development for stories to come to where they are today and it’s a back and forth between the audience and writers. As writers write more stories audience members learn and become more sophisticated and twists and humor that worked in the past become cliche. Why do you think you’re too snobbish to appreciate something like avengers? You think someone in the 50s wouldn’t appreciate it? Fuck honestly if the whole mcu up till end game came out in the 50s that whole thing would win a Nobel peace prize.
China is 100% going through this learning process right now. The audiences sophistication and the writers as a result are growing at a breakneck pace. I think movies from China that might appeal to who you are is crouching tiger hidden dragon or Hero as these movies share the more universally appreciated parts of Chinese culture and since that is what you’re interested in, I recommend them to you.
You've completely missed the point. Crouching tiger/Hero are not modern chinese culture. I haven't even seen the shows I mentioned, but I also know if I mention New York overseas, that is what people think of it. They are known around the world. It's not about quality, it's not about blockbusters, it's about the raw influence of "what is New York". Are you suggesting that overseas, the lesson we should take on Chinese culture from Chinese media is that China is infested by demons, has no electricity and is a feudal system??
>but I also know if I mention New York overseas, that is what people think of it
They know of it for different reasons. It has nothing to do with the shows.
>It's not about quality, it's not about blockbusters,
Blockbusters are a form of quality. Just not your form form of quality. You prefer sex and the city.
> Are you suggesting that overseas, the lesson we should take on Chinese culture from Chinese media is that China is infested by demons, has no electricity and is a feudal system??
People know about NYC because it's just a famous city. It has nothing to do with some shows that nobody in Asia watches. I'm also not talking about any of China's cities as marketed by media. I'm talking about the idea of China itself.
The idea that America is a powerful country and that NYC is a great city is slowly dying. Dying because the reality of it is dying as well. It's a slow death one that may never finish in your lifetime but there's no denying that we see a lot of decline.
Cultural exports are how NYC became famous, has a city ever became famous without culture? I can't say anything about the quality of Sex and the City since like I said before I've never watched it. I have had it brought it up to me overseas, people like you that have watched it. I can think of a dozen countries that have made iconic scenes in media to spread their culture. I can't name a single scene of modern Chinese living. To the west, pre-revolution and post-revolution China are completely different. All your neighbors have managed to push their modern culture. US culture is on downtrend because they've stopped seeking common ground with their peers, they will deserve what's coming to them.
I also had the same thinking, when somehow my mother started watching Chinese TV shows. She first started with kdramas on Netflix, tried to watch a few Japense and didn't liked... then moved to Chinese dramas. And it seems, it's getting really popular here in Brazil. All anecdotical, but I know a few people that watch besides her.
Tencent has a streaming focused on international market called WeTV, there's also IQIYI. There's Viki too, that is from Rakuten - that is Japanese, but there's a ton of Chinese content there (which she also watches).
My nephew even learned a few words of mandarin (and Korean too) because she keep watching that all day.
Kdramas are really popular here, and don't think it's as popular as the US, my guess it's just the soap opera consumption Latin America was always huge, so it makes Asian dramas more palatable, as they are more soap opera style.
Now for music yeah, don't think Chinese music is that popular or will ever be compared to kpop.
China is not communist in anything but name. They are an authoritarian capitalist country with social policies.
Agreed. Authoritarian is what westerners don't like. They see it as an evil.
I see it as one side of a coin. The yin to a yang.
It is seemingly great to achieve societal progress and modern living conditions, but the individuality and freedom of the individual suffers.
Depends. Do you go out to protest and talk about social issues on the regular? If not and you live a normal life like most people, then you're generally not effected by this.
> Authoritarian is what westerners don't like. They see it as an evil.
Sadly, the recent election shows otherwise for a lot of Americans.
I always laugh a bit at comments like this. Trump is pompous and certainly admires authoritarians, but you Americans have no idea what a real authoritarian tyrant looks like.
It's weird that you want to compete, but ok, here's your gold in the suffering Olympics.
> where China is equal to America on a per capita basis,
China is super far away from that and its demography is a time bomb that will get there first
If it happens, the US will have nobody to blame other than itself. Industry is what generates wealth. The USA deindustrialized itself when it moved all of its manufacturing overseas for the sake of greater profits. It gave away its intellectual property on a silver platter so that things could be made cheaply. Other countries are only too happy to take advantage of american greed.
Nope. Well maybe, if trumpism continues.
Point is: The best and brightest go where they think their life will be most fulfilling. Up to last year that was California for tech and New York for culture.
Even the Chinese think china is oppressive. https://en.wikipedia.org/wiki/Tang_ping#:~:text=Tang%20ping%...
It's not the best and the brightest who are lying flat, but those who lost the rat race.
All things considered, most Chinese would prefer to stay in China, and if you're rich there you've got it made.
By all accounts, you do not get rich in china by work. I work with the most talented Chinese scientists and none of them expects to be wealthy at home, the best hope to be what would be middle class in the US.
Unless they manage to get to the US they return, because they would not be safe from harassment anywhere else.
Scientists in most fields, sure, but that's the case anywhere. If you happen to be an AI expert though, pay at top Chinese companies is very competitive with Silicon Valley.
Also, the structural inequalities of Chinese society dwarf the West, meaning that the Chinese middle class gets a lot more bang for their buck: ridiculously cheap delivery services, taxis, and other services.
Sure, but no Chinese person I know has forgotten that their government literally walled in people during Covid.
>What seems most likely to me in the future is that the US will find itself in the same position the UK is in now.
Not quite. USA is big enough to be able to be self sufficient if they keep mexico and Canada tightly bound via NAFTA or military might. UK have no option but to trade. UK was rarely able to feed and fuel itself after the industrial revolution.
America is not going to get there and stay there by being stupid.
That assumes that China’s population doesn’t collapse, which mathematically seems quite likely (and it’s already declining).
Except that that future of a big powerful China doesn't exist. Their birth-rate is 1.
Game-over.
China will probably be the only country that solves this.
..Any country can solve it, just incentivise families. Simple things like ensuring young people have access to affordable housing and daycare. If I was at the start of my career ladder in a major urban area now, having a family would be close to the bottom of my priority list. Its not rocket science.
This isn't true and has been tried in the Nordic countries.
This is an outstanding article on the subject: https://www.newyorker.com/magazine/2025/03/03/the-population...
> .Any country can solve it, just incentivise families.
In the US, parenting time is up 20-fold, from a few hours per week to 24/7 adulting.
Companion to that is that free-range land has shrunk from many sq/mi to a few sq/yds. Car culture and trespassing culture has eliminated the irreplaceable environments where adult-free, peer time nurtured mental health and abilities.
As near as I can tell, parenting and childhood is irreparably broken in the US.
We certainly seem incapable of recalling what sustainable parenting once looked like.
On rare occasion someone will recall that kids once roamed all over. Maybe that gets connected to less mental health issues. Either way it's all forgotten moments later.
I agree it's broken, just in the other direction. Just stick an ipad in front of the kid and ignore it for hours
From before written history until a few generations ago, kids spent hours/day in adult-free, peer time making mistakes in everything from social interaction to physically risky play - and learning from those mistakes.
Today kids live entirely in adult curated, adult populated boxes. I'm not inclined to blame ipads for that.
> Any country can solve it, just incentivise families
The point of OP and what people don't get is that it's far easier to shift policies to brace for tough situations when you have a uniparty system and you're willing to make sacrifices. No 4 year administration is in any way incentivised to enact policies that only become effective after the next election. Note that I'm not saying that undemocratic systems are the solution.
Daycare is some weird shit with such abundance of [lonely] old people.
Unless they are friends or family regulations will never allow. But you are right there is an abundance of old lonely people who would do this for nothing and it would benefit everyone.
> Any country can solve it
Most wealthy countries have already solved it: immigration.
Considering their moves in Africa, I wouldn't be surprised if they bring the slave trade back.
The USA is also below replacement levels.
US birthrate is 1.6, really bad, but by far less disasterous and permanent as China's 1.
I Googled: china fertility rate 2024
A couple of reliable sources say: 1.7 births per woman
Where did you get 1?
No credible source says 1.7, the source that says this must be based on some kinda UN projection of 2010. Real TFR is probably around 1.0, in some parts of china it's below 0.7 (in the northeast it's around this number, in Macao it's 0.4). A lot of other countries are completely fucked as well and google pushes up UN projections from years ago (Like colombia UN projects the fertility rate to be higher in 2100 than it is according to the official numbers right now).
Not with immigration.
Don't worry, Republicans are hard at work making the USA a pariah state and turning away the educated migrants who've been behind most of the innovation and research of past decades.
What, non-migrant Americans are not up to it?
The US has benefited quite a bit by being a magnet for some of the most educated and driven people from around the world. This is not a controversial take.
Now, legal resident noncitizens are being deported for having political views that oppose the ruling executive party. This is not normal in the US.
Immigration is a double edge sword. Sure, it brings highly educated people on the top end, but also less educated at the bottom curve.
and on balance it changes demographics dramatically, that also shapes US policy in the future. It will be harder for USA to continue to be bloody warmongering machine with Military industrial complex dictating the policy and bombing countries and blowing up civilians around the world.
That's not necessarily a good thing. Do the New Americans want the same things as the pre-existing ones? Are they as capable? Not just "in a few generations" but here and now? Are they even likely to be as capable "in a few generations"?
If the statistics aren't very wrong, it doesn't seem like a solution.
Indian Americans make the most money in America, I’m sure immigrants can be capable
“Making the most money” isn’t the same as building a society people want to live in
by all statistics, it is Americans that make the life in the USA insufferable: corrupt politicians, oligarchs, lobbyists, party leaders, and criminals (the ones that sell drugs and shoot people).
go to any county/state jail and try to find a single H-1B visa holder there... its all home grown foundational Americans, raised on McDonalds and Coke
Immigration isn’t risk free
You get your birth rates up, but you also risk alienating your native born population and electing far right morons into office
Jury’s out on whether a tfr of 1.0 of native born people is better than a tfr of 1.4 with immigrants
Immigration will take a nosedive under Trump.
Correct.
Correct. USA will become like UK. Trump is trying to basically change the situation but he is pissing against the wind.
I think it's pretty clear what Trump's long-term solution is with unobtainable economic goals on China and strategic outreach to Russia — He wants to turn that 4x into 1x via hot war before the Xi's 2027 military goals are reached.
I’m no Trump fan but I think it’s a bit of an exaggeration to say he wants to genocide a billion Chinese people…
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> Yeah, it's real easy when you employ an army of nation-state hackers
No it's not, even if it were true. Is it really that hard to admit that the Chinese people are industrious, smart, ambitious and have extremely high education level? And that the state has directed the development of the country wisely in the past 40 years?
This sounds like official Chinese propaganda. This was truer at some point, but things have started turning bad for China with the advent of Xi Jinping. 20-25 years ago, the country was hopeful, developing fast, opening up. Foreigners started moving there, seeing it as a new land of opportunity. Much of that is gone. The economy is in bad shape, youth unemployment is massive, the country is a dictatorship, nobody wants to move there (and China doesn't want you to anyway). I'll quote the Economist: "When Mr Xi took over in 2012, China was changing fast. The middle class was growing, private firms were booming and citizens were connecting on social media. A different leader might have seen these as opportunities. Mr Xi saw only threats."
> This sounds like official Chinese propaganda
Go to any top-N American University, pick a random STEM faculty and count the number of Chinese (nationality) post-grads, post-docs and faculty. Alternatively, look at the trajectory of science publications coming out of Chinese universities vs the US. Underestimating China's brain-trust is doing oneself a disservice.
and on the flipside, the Chinese government routinely uses this same route for espionage and theft of American academia and STEM research.
https://en.wikipedia.org/wiki/Chinese_espionage_in_the_Unite...
I don't need to be convinced that China has lots of bright, hard-working individuals. I just want to point out that China faces immense challenges and that we should see beyond, and push back against, the propaganda. There is a massive asymmetry between China and democratic nations in this regards.
This is a fair assessment. However, I think there is propaganda or self-delusion in the west that leads some people to believe that free markets and/or democracy are preconditions for any number of desirable outcomes like creativity, economic success, product innovation, etc. That may have empirically been true against the Eastern Bloc/Soviet Union during the cold war, but is not obvious to me regarding China today. AFAICT, China has produced companies that can go to to toe with the best in the west - occasionally winning outright[1]. We can argue whether that's because of subsidies, espionage, innovation or fundamental research
1. DJI, CATL, BYD, ByteDance, HighFlyer/DeepSeek
Future might tell. But while it's tempting, I wouldn't bet against democracy and freedom just yet.
Unfortunately, it is true.
Why spend a decade researching something when you can just hack into American companies and steal their R&D about the same topic and then build from that? Saves a ton of time.
It's a pretty great strategy (for them) and works well.
About 20 years ago it was well-known that the cheap Cisco stuff on eBay was authentic in that there were say, two shifts worth of running the production line for Cisco and a partial shift for unofficial production sold outside of Cisco authorized channels and with no profit going to Cisco.
Isn't that basically the AliExpress business model?
I actually think this kind of supports the point you're responding to. HN used to have a battle cry about startups where "the idea doesn't matter, it's all in the execution" (mostly because we're tech-ies, and not those business folks coming up with the silly ideas).
Well, to some extent that's the case with manufacturing. You're bemoaning the loss of IP, which is catastrophic when that's all you have and your wealth is built on a gentleman's game of words and paper.
China, meanwhile, has built out factories, a knowledgeable workforce, and an extensive supply network. Back to startup terminology, there's a "network effect" in manufacturing of all the little parts that make up bigger things. You can drive around town and try out different parts, and make an invention here or there and improve things incrementally. There used to be a thriving ecosystem around the big U.S. domestic car manufacturers, not just for the cars themselves, but all the thousands of parts that go into them.
In other words, like many older hackers who grew up in the "information just wants to be free, man" world that spawned open source, the dig that China is "stealing IP" doesn't really hit me that hard. I'm impressed that they've gone to the next step of actually using it to make physical stuff, and I wish we did that more.
> Yeah, it's real easy when you employ an army of nation-state hackers to break into and steal R&D and tech from US Fortune 500 and aerospace companies to then use it internally and give to private industry in China.
All of this is old, tired news. They're leading in many areas now, so at least in the fields where they lead and innovate, they couldn’t have "stolen" anything.
If you would like to get more up to date:
1. "China has become a scientific superpower"
https://www.economist.com/science-and-technology/2024/06/12/...
2. "China Is Rapidly Becoming a Leading Innovator in Advanced Industries"
https://itif.org/publications/2024/09/16/china-is-rapidly-be...
3. "How Innovative Is China in Nuclear Power?"
https://itif.org/publications/2024/06/17/how-innovative-is-c...
Imagine that, Chinese hackers breaking into energy companies and stealing blueprints to nuclear power plants (2014).
https://money.cnn.com/2014/05/19/technology/security/china-h...
>The kind of spying China is accused of can yield valuable information and give the country's businesses a much-needed boost. Westinghouse spent a significant amount of money designing the special pipes that are the defining feature of its AP1000 pressurized water reactor. Stealing those plans means that a Chinese nuclear plant builder might be able to skip costly research and development.
https://en.wikipedia.org/wiki/Chinese_espionage_in_the_Unite...
>In 2016, the U.S. Justice Department charged China General Nuclear Power Group (CGN) with stealing nuclear secrets from the United States.[36][37] The Guardian reported: "According to the US Department of Justice, the FBI has discovered evidence that China General Nuclear Power (CGN) has been engaged in a conspiracy to steal US nuclear secrets stretching back almost two decades. Both CGN and one of the corporation’s senior advisers, Szuhsiung Ho, have been charged with conspiring to help the Chinese government develop nuclear material in a manner that is in clear breach of US law."[38]
Just two instances of many.
They play the long con and have pretty much stolen from every industry to further their own.
Do you really think that the US doesn't engage in industrial espionage too?
Certainly it does, but not nearly to the same degree (anymore).
You do understand that Chinese Companies can easily just hire people from abroad?
You also do know how many companies moved their knowledge to China on purpose right?
The knowledge on how to build things, is learnable even if you don't just 'hack' everything.
And there is a lot of signaling happening, that china has surpassed American and European companies in R&D. CATL for example.
Whatever China did or still does, its a land with 1.4 Billion people vs. 340 Million.
Also we achieved, around the globe, a level of expertise around so many topics, that we do not talk about huge differences. If an engine from china is a few % less efficient than the high techv ersion from germany, but the labor cost is fundamental different, than you just loos.
And the prices are significant different. So significant, that if USA doesn't change, it will not be able to compete.
Even a 104% tarif does not change the competitivness of China in a lot of areas.
All of this is only a problem in capitalism btw. and with the upcoming robot revolution, the 'richness' of manufacturing will never again go to the workers ever. This time is over. We need to figure this out
You do understand that Chinese government can (and does) easily just instruct their nation-state hackers to steal from abroad?
They have been caught doing this for decades.
Espionage and fundamental research are not mutually exclusive. The latter reduces the need for the former, and China is doing more of the latter now than it did before.
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Infringement is good for the economy. Even our nations have progressed at a time when none of that was enforced, and are only strolling since then (or, as you may aptly say, rent-seeking).
PS: For those of us in software who wonder whether an economy without IP could exist, entire software industries exist without copyright protection, one trick for example is to provide the service behind the cloud, so customers never have access to the source code; meanwhile OSS, which is based on preventing restrictions on sharing, is the eighth wonder of the world, which has proven that IP is unnecessary to software.
The question you're actually asking is:
When will China start innovating instead of copying?
Who in America is China copying with their high speed rail? Who are they copying with their drone displays? What about their skylines that more closely resemble our sci-fi films than anything we've actually built?
The truth is, China is already the most advanced country in the world and if we ever manage to modernize our infrastructure and manufacturing, we will be copying them.
Those examples are optimizations.
Trust me I would love for China and India to start innovating and advancing the human race but taking the idea of a train and making it faster is just an iteration on a previous technology.
Darn right. Lots of smart, hard working, innovative people in China. And every single one of them would get on plane tonight if they could get a visa to live in US or UK (and a few other countries). So, which countries offer a better future for our children?
I'm from Poland, and I'm quite sure that 15 years ago you could say the very same thing here. Not anymore. Things change.
China could not only be ‘equal’ but ‘better’ than the USA - we should get used to the idea. China has an average IQ of 104 out of 1.4 billion people, while the USA has an IQ of 97. In purely statistical terms, this means that the USA has around 700,000 people with an IQ >= 140. China has 11,480,000 people with this IQ. This human capital will make the difference.
None of this is meaningful. IQ as national population-level statistic is folkloric. China may well have a human capital advantage over the US; that's what you'd expect from a country with over 3x as many people. But it has nothing to do with biological differences between Americans and Chinese people.
Nobody mentionned biology. It is policy and culture.
In the USA it is less fashionable and more frowned upon every year to show intelligent traits. And it has been the case for the last 20 years.
Maybe; I have no opinion about that. But China's human capital advantage in the coming century seems pretty clear just from the numbers.
IQ isn't much of a proxy for anything, especially in this context.
It's especially related in this context, which is engineering success. IQ is directly related to academic achievement in STEM, which is directly related to engineering career success.
Well we're not talking about career success, we were talking about comparisons of nation states. Having an IQ advantage there might prove marginally more helpful, but it's not really that important. I'd argue physical size and strength of a people are even more important than IQ when we're looking at across the board averages. Plus you have things like, idk, access to raw materials, geographic advantages, cultural advantages or disadvantages, systemic advantages or disadvantages including strong or weak institutions, training programs, etc. In fact, if you wanted to do a comparison between America and China you'd really have a lot better things to look at to show China as better than IQ.
With respect to "career success" you can have 50 million people in your country with IQs >140 and there's still a limited market to sell to. There are diminishing returns on capacity - you can have business analysts or call center folks with the IQ of Einstein and they'll be limited by the systems they are placed in.
The other side of this is that just because you are smart doesn't mean you are capable of doing well in the real world. Recall how there are a lot of "dumb rich people" and "smart poor people".
China has a millenia-long history of organizing a very large amount of people fairly well. They basically invented bureaucracy. Not everything is better in China of course, but don't forget about that aspect.
Yep, the Chinese basically invented the State and bureaucracy as we know it. In fact it was so good (despite its faults) that when China was invaded by outside forces and occupied, those forces themselves adopted the Chinese state to administer their new holdings.
I'm not being critical of China here though, I'm just being critical of the original discussion point. Quantity has a quality of its own, but it has trade-offs.
Performance IQ and verbal IQ create the compound IQ figure.
due to immigration, USA draws talent from global population of 8.2 billion, so the top limit of people with IQ>140 that can live in USA should be drawn from 8.2 billion, not 340 mln
So does every other immigration based country. Why do you think most talented people wouldn't choose a easier way and live somewhere with a higher living standard and less racism and hate?
Not anymore it shouldn't.
why? has any immigration law been changed?
The orange dude is kind of putting people off.
yes, donny woke up the ancient racist anti-immigration, the blood & soil type crowd, but the economic benefits of immigration are still there (albeit with higher risks and higher hurdles).
I suspect this will simply make labor more expensive on top end of the talent curve
Worse: the law has become irrelevant
Revoking visas and deporting University students and professors.
There are a lot of sleeper or new accounts in this discussion. I’m afraid there’s a bunch of astroturfing.
Oh, hackernews, how you’ve fallen :(
Average IQ is probably the most bullshit metric to compare two countries. Literally anything else would be better.
this has to be one of the most illogical hedges
> Today, China is competitive with or ahead of America in key technology areas, including nuclear power, AI, EVs, and batteries.
I can’t tell if you’re brainwashed by propaganda or just spreading propaganda.
China is great at making things flashy. But the quality things like EVs is low. The battery quality is not good. The promise of long range cars is often 30% of the promise. Cars leaking. Rusting like American made cars.
Yet it took only 2 years and you see WAY more Chinese cars for example here in Switzerland than American ones (which was 95% Tesla anyway)
The quality they export is higher than the quality they have in China. Thankfully there are standards that must be met for exported cars.
Korea, despite developing MRI, still has a large amount of farmers, that do not get paid a living wage: No one really knows, because its a souce of shame.
"AI Overview
It's difficult to provide a precise number of Asian countries where farmers don't earn a living wage without specific, up-to-date data and a clear definition of "living wage." However, many Asian countries face challenges in ensuring farmers receive sufficient income to cover basic needs."
I will assure you, from being an eyewitness, its worse.
> But if we bump the cost of freight, insurance, and customs from $5 to, say, $28, then they wholesale the shoes to Footlocker for about $75. And if Footlocker purchases Nike shoes for $75, then they retail them for $150. Everyone needs to fixed percentages to avoid losses.
I don't understand this paragraph. If Footlocker was okay with $50 profit/shoe, why do they need to claim $75 profit/shoe in their costs per shoe go up? The costs of handling the shoes, retail space, advertising, and labor are all fixed.
In theory, you're right, however it ignores some key points;
-Some of their costs are in fact linear based on the cost of the item.
Inventory cost doubles, perhaps now they have to take out higher interest debt to finance that. Things like insurance would also at least double.
Transaction fees (like card fees at about ~2%) and other parts (like returns risk) also increase linearly.
-Reduced sales due to increased prices.
If an item is less affordable people buy less of them. Theft will also go up. If trainers were $100 a week ago and are now $200 - you will sell less, they will be stolen more.
All in you actually do need more than the fixed $50 of margin if the wholesale cost of the item changes from $50 to $100 - it may actually be that $100 is the correct number, or even too little - sales volume would concern me the most, particularly on this 'luxury' item.
I think it depends a lot. I remember working in retail for a summer and saw some of the prices. If you wanted to buy an alarm clock, that was 100% markup, but if you wanted to buy the Garmin GPS then it was 15% markup.
I would think that specialised and expensive shoes have less markup than cheaper and more common shoes. But if the cheaper and more common shoes become 50% more expensive then there aren’t really any cheap shoes left to feed the bottom line…
IMO for the Garmin vs alarm clock example, it's less about costs and more about power & branding.
The retailer & the wholesalers involved all have a reasonable idea about what people will pay for the products in question. The portion of that final consumer price that stays with the retailer is just the result of negotiation.
The retailer can likely buy decent alarm clocks from anyone, so alarm clock makers & wholesalers have no pricing power and the retailer can demand high margins.
But the retailer can only get Garmin from Garmin. If Garmin has done a good job promoting the brand, such that the retailer feels they have no choice but to stock it, they will have to suck it up and accept low margins.
Sure, but that has nothing to do with costs and everything to do with what the market will bear (while still recovering costs).
People will go and shop around for the best price on a $300 item, but for a $10 item they'll buy whatever's infront of them, so long as it's not clearly outrageous.
Additionally, their risk increases.
If the shoes don't sell, their losses can get much larger.
They need the potential to make more profit to offset this this potential for larger losses.
It's kind of like asking why Sears needs to make $200 in profit selling a refrigerator but only $2 selling a t-shirt.
Because that's just how it works...
Which is why Derek [correctly] points out that everything is percentages, not fixed dollar amounts.
> Inventory cost doubles, perhaps now they have to take out higher interest debt to finance that.
I'm pretty sure Footlocker doesn't borrow money to pay Nike up front for inventory. Nike is smart enough to know that there's zero chance their shoes will be sold if they sit in a warehouse, so Nike might as well ship them to retailers and get paid gradually as the shoes are sold to consumers.
That's just a for-instance.
The general point is that additional cash is tied up in shoes which cannot do something else. Who bears the burden of the loss of that additional cash changes over time (Nike to Footlocker to consumers) but the burden is bourn.
(And that's before you count the impact of the inevitable reduction in unit sales. There're various kinds of overhead that don't scale linearly units sold, or that have a long lag before scaling, or have a significantly-sized step function in the scaling.)
BTW, where did the cash go? Oh yeah, into the hands of the US federal government. We have a word for that: tax.
Presuming that theft rates will increase also if the item is more costly and affordable to less[edit*] people. Also if inventory is damaged in the warehouse or on the sales floor, lost or unsold then those cost scale with the cost of the item.
To less people? I think I touched on that but yes.
All of that would typically be tied together as inventory cost (aside from theft, though some people do).
Lots of fascinating things in retail. Around half of all theft will be from your own employees, for example.
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It's a great question, and the answer is that you're missing the change in demand.
Let's say Foot Locker tries to keep the same absolute profit $50 and retails the shoes for $125 instead of the previous $100.
Now demand goes down, because more people will skip a new pair of sneakers. So Foot Locker's absolute profit goes down.
But they still have the same fixed retail space, advertising, and labor as you said.
So to try to keep their profitability, they need to increase the price more, which reduces demand even more, but it settles somewhere higher. And the place it settles (where total absolute profit is maximized) tends to be around the same 100% markup as before.
It doesn't need to be exactly the same, but as a general rule of thumb, these things do tend to work in proportional terms rather than absolute terms. And we're fortunate they do, because when manufacturing costs fall, that means absolute profit per unit can fall as well (while percentage remains the same), because it's made up for by more people buying.
There is also the fact that with each USD you can buy less and less as a private person.
So to have the same quality of life, you expect higher returns.
Which mean that you will choose to invest into companies that offers a better return, and for that, these companies will have raise their prices, which in turn, spirals into additional price raises.
That's not the fundamental cause, though. Companies can't just raise prices to achieve whatever return they want, because once you go above the profit-maximizing price, the fall in demand outweighs additional revenue per item, and once you go above competitor's prices, demand similarly falls.
Yes investors look for maximal returns, but those are limited. Fundamentally the ceiling is set by demand and by your competitor's prices.
Because the market recognized value add is the capital investment and returns, including the credit basis on which inventories flow. These people are operating on a per $ basis, not a per shoe basis. If the margins % lower then the capital will flow to something else more profitable and then prices rise until the margins are relatively flat across similar productive investments.
That doesn’t really make sense to me.
The market cares about dollar returned vs dollar invested. If some piece in the middle of the chain goes up and end customer prices go up as well, that doesn’t directly affect investors at all.
The way it could and likely will affect investors is if people start buying fewer shoes, but that is a different process than what you are describing.
If I’m off base can you help me understand what you are saying?
Take this to the logic absurdity, you have a car you previously sold for $2 for $1 COGS. Tomorrow COGS is $1M for the car. Could you sell it for $1M+1? No you would lose your ass because your line of credit and investments would not be able to be supported by the returns, in fact if this is your only option you would probably stop making cars altogether and invest in another business and sell your assembly line, eventually enough car companies would go out of business until the supply curve met a high enough % profit to normalize with performance of other businesses.
Now this analogy has a LOT of problems but the point is it directly affects investors, even if the interpolations inbetween are imperfect.
Okay I think I understand, thanks for explaining.
So basically the money a business uses to produce the next tranche of goods (so to speak) normally comes not from income from sales of the last tranche, but rather from external funding sources such as loans or capital injection from investors?
Is that really so common as to be universal and affect investor behavior like you suggest? Like for certain types of business, and especially for early stage businesses, I do expect this to be the case. But does it apply to the market broadly? Scary if so, since it seems like a destabilizing force.
It's going to vary business to business, but if you have to spend money now to make money later, there's always going to be some preference to make sure that if the % return later is too small the money gets reallocated to something that can offer better returns.
Whereas a business that can figure out how to be paid significantly before it delivers can run on much slimmer margins.
It tends to affect larger companies even more because their cash flow is heavily buffered by lines of credit on both sides, their vendors and clients. Their customers might pay them on net 30 or even net 90 but many costs - like salaries for the people to service those contracts - need to be paid on shorter time horizons.
But you might not sell the COGS for $2M, you might do just fine with $1.5M.
If you can make $5k/year by investing $100k into shoe-selling, then those profits have to rise at the same rate as base costs, otherwise, people will just invest into eggplant-selling, instead.
Another perspective is that Footlocker would sell you those $25 Nikes for $300 if they could-- but if they tried, someone else would get active in the retail business and invest into a slightly less profitable operation (with lower margins) to eat into their market share.
But if the costs for everyone rise, raising the prices proportionally (instead of by fixed amount) makes total sense because it is not really gonna cost you market share (only decrease total market volume depending on consumer price sensitivity).
Note: We just observed those exact dynamics with Covid/Ukraine driven price increases, where retailers and other middlemen actually came out really good instead of sacrificing their margins to keep consumer costs down.
You can only raise prices so much before people look for alternatives to what you’re selling or do without. What we’re going to see with tariffs isn’t just price increases. We’re going to see some price increases, some reduction in selection, some stores closing, and some layoffs.
But profit for the investor is based on what they put in and get out, no? Profit calculated against the company’s cost seems like an implementation detail for the investor.
Surely you can see that putting in $75 to make $150 for a $75 profit is significantly different than putting in $10075 to make $10150 for the same $75 profit, yes?
Sure, I can see the difference.
I hope you can see how spending $75 to make $150 revenue and $75 in profit is a much better position than spending $50 to make $100 in revenue and $50 in profit, if you are limited to how many transactions you can make in a day by physical infrastructure.
I think it's understandable for the store to charge more for their shoes, and for the stores to make more than $50/profit per shoe to cover higher capital investment and increased risk of loss, but I don't understand the logical leap where the store now can make 50% more profit per shoe.
From an investment perspective, $50 -> $100 is exactly the same as $75 -> $150. The difference in the number of transactions that actually occurred is trivial. I see the point you’re making but I don’t agree that it matters until the transaction value shrinks to the point where you’re selling things in huge batches (e.g a 5 cent part you sell for 10 cents, but you sell them by the 1000s)
"putting in" is doing a lot of work.
A shoe doesn't sit for a year waiting to be sold.
It turns over quickly.
Capital is capital. Just because you don’t need it for very long doesn’t make it free.
The market cares about dollar returned vs dollar-x-time invested. A shoe sits on a shelf until it is sold. If it costs 1.5 times as much to stock a store with shoes, then you need to earn 1.5 times as much money after the same time-delay.
Think in the extreme. $1 billion can probably earn more in a saving account than as a shoe that generates $50 profit after 2 weeks.
Selling shoes that you purchase wholesale for $75 has costs that go beyond selling shoes that you purchase wholesale for $50. There's the cost of money to buy the inventory, the cost of holding the inventory (and insuring it), the cost of shrinkage, the risk of being unable to sell some of that inventory. Most of those costs scale with the wholesale cost of the product being sold, although not necessarily fully linearly. As a result, a top line $50 margin on a $75 product gains you less than a $50 margin on a $50 product -- in a world with cheap capital. If you're restricted to holding $N of inventory due to cost of capital, this becomes even worse -- not only are your bottom line margins going down as much as 15%, but you're able to do it on only two thirds as much inventory, which (depending on turnover rates, etc) can drive you even lower.
Inventory costs money not just due to the cost of storage, but also because it’s bought on credit. The higher the price, the more money needs to be borrowed. The longer it takes to sell it, the more interest needs to be paid.
(If it's not bought on credit, there is still opportunity cost, since that money could have been used for something else.)
Gains and losses are measured in % not in quantity because a dollar (or ant currency) has no fixed value.
Sorry: I intended to reply to the grandparent.
I don’t think this is quite a sufficient explanation. If I were an investor / owner of a distributor or retailer, I think I would observe that these businesses don’t scale arbitrarily and I would care about returns as a function of cost of goods sold, operating expense, and of cost of customer acquisition. In this context, cost of goods sold will include actual wholesale cost as well as associated costs that scale along with it: insurance, shrinkage, samples, etc. Cost of customer acquisition will not scale as strongly with wholesale cost — one would need to advertise a bit more to convince people to buy a more expensive shoe, but this should be less than linear. And operating expenses (retail square footage, warehouse space, cashiers, shipping and handling) are almost independent of the cost of the pair of shoes.
All that being said, tariffs drive up the cost of living, which drives up wages, which makes everything more expensive.
In addition to the points others are making, there is also the increased cost of inventory that doesn't sell. The flipside to the high markups from retailers is the high discounts you get on last season's fashion. This is the "fixed percentage to avoid losses"
My local produce store was complaing about this. The prices increased about 20 fold. What was once a small loss due to spoilage now became significant.
But the cost of buying and holding inventory goes up. If a store has 10k shoes in inventory @ $50/each, they are carrying $500,000 in inventory. If the shoes now cost $75, they need $250k more for inventory. Capital for inventory isn't free.
The need for inventory decreases at the same rate as the sales throughout, e.g. if it takes twice as long to sell a pair of shoes than you only need to hold half as many.
Because it's mostly wrong. Luxury goods like Nike's, iPhones, et.al. are priced to maximize revenue. If those started growing on trees for free it wouldn't appreciably change the price. They'd just bank the extra as profit.
An aside: the actual functional Nikes aren't luxury items, just really good shoes. My wife’s a foot surgeon and she won’t run in anything else because they fit her perfectly.
I've never found Nikes that work for me, but Brooks seem custom made for me personally, so that's what I get. They're about the same price as my wife’s Nikes.
I agree fully. Having comfortable shoes with reasonable lifespans isn't a luxury.
If you spend more money and get a proportional increase in quality, that's not luxury. A luxury good occurs when the marginal increase in quality cannot be justified by the increase in price. For example, you could buy a quartz Casio for $25 that's more accurate than a $10,000 mechanical Rolex. Both tell you the same time.
There's cost based pricing and there's price based costing.
Food and clothing, anything with complex supply chains tend to be cost based pricing. As a rule of thumb, it's x3, maybe x4 for a well-branded item like Nike or Calvin Klein. Most innovations are on supply chain. E-commerce was such a big thing because it could cut out one middle man and lead to 30% price cuts or profit margins, and yet all these online shops ended up appearing in malls anyway.
Software is price based costing because there's no fancy supply chain. iPhones may be somewhere in the middle, hardware tends to have the worst of both worlds - high fixed costs and lots of middle men.
A McDonald's may have franchises and may own some restaurants internally, but they don't want to lose money, so they may base it on the lower profit margins - it makes no sense for a burger in one spot to be $4 and a burger in the franchise to be $5; both need to be $5.
Generally luxury brand do use more expensive parts, whether or not those parts add to the quality. And they do have higher profit margins. But the retailers, distributors, etc still take a 30% cut or so. And in the end, Louis Vuitton is still probably making lower margins than Plants vs Zombies.
The truly luxury Nikes, the ones that cost way more than $100 - $150 are not priced to maximize revenue, however. The evidence is their pricing on secondary markets, which often price them at multiples of the retail price.
The difference between selling every shoe at $150 and selling less than every shoe at $300 (or whatever the secondary market is charging) probably gets tossed around in pricing meetings.
Plus, higher secondary market prices drive demand for the less desirable shoes as everyone can't afford to spend a week's wages on a pair of shoes but can stretch their budget for the still-kind-of-cool models. I'd go so far as to say the secondary market prices drive more demand for the lesser models as the cool kids want to be seen wearing what the rich cool kids are wearing.
I'm sure they spend a lot of time discussing what price they can charge without people openly revolting against their 'predatory pricing' strategies.
Every product is priced to maximize profit (not revenue).
Apple sells lots of phones at different price points. So there is some price sensitivity via a vis value for money or competitive pressure.
Short answer is return on investment. If I get $50 on a $75 investment when I used to get it on a $50 investment, my ROI goes down. My investors are now mad. They sell their stakes and buy into a company with a better ROI. My stock price goes down and now I'm mad.
There was a very good exploration of this in the context of boardgames here: https://stonemaiergames.com/the-math-of-tariffs/
> I don't understand this paragraph. If Footlocker was okay with $50 profit/shoe, why do they need to claim $75 profit/shoe in their costs per shoe go up? The costs of handling the shoes, retail space, advertising, and labor are all fixed.
Some extra costs are real and linear to their "factory" price (returns, insurance, stolen stuff, less people buying less shoes, so they need higher margins to survive, etc.).
On the other hand... they can raise their prices today by $whatever_tarrif_trump_mentioned, and blame trump for the price hike and pocket the extra profit.
I seem to remember from many years ago in retail that you should double charges every step of the way, so if you are paying 20 dollars for a t-shirt you should be charging at least 40 for it, as a sort of rule of thumb.
Margin as a % is a key metric, more so than margin as a $. It's not always sensical but it's dominant in the business/investment community.
For example, you may announce to public markets that your profit has increased $10M despite margins eroding from 50% to 30%. You will likely be punished in terms of stock price. This is because you sold a lot more or trimmed some expenses (which is short-term good) but you are also now more risky because if sales decrease you will more easily run into trouble breaking even/covering operating costs (which is long-term bad).
more expensive shoes will lead to longer lead times to sell inventory, due to downward slope of the Demand curve (less demand for more expensive shoes).
If you sell $75 shoes, you can sell 1000 units/mo, but if your shoes are $100 you can only sell 700/mo and it will take 1.5 months to sell 1000 units.
This effectively increases fixed overheads per pair of shoes and decreases net margin per pair, given constant demand
>why do they need to claim $75 profit/shoe in their costs per shoe go up?
A lot of the costs come from bidding against other retailers for employees and retail space. If you don't make as much as the rival retailer they'll outbid you.
You can sometimes get around that by buying direct from the internet.
Margin isn't profit. It's gross, before all your business expenses. If it's anything like the second example, they only see a few dollars out of that $50 as corporate profit.
They'll sell fewer $150 shoes than $100 shoes?
For every week, the shoe does not sell The price goes down 10%. So very quickly you lose your margin.
Every single person in the supply chain has a lever they can pull to change price, except the end consumer
Not at the bottom of the supply chain. As a farmer, we get told what the price is. Our only lever is to opt out of selling if we don't like the price. Which is ultimately the same as the consumer opting out of buying.
> except the end consumer
You can usually change what you buy.
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That’s actually the opposite. The consumer is the one dictating prices and preferences.
Isn't that pretty intuitive? Imagine if they had to spend one million dollars in order to make $50 profit.
Trying to summarize the summary for myself
From a $100 shoe that sells for $76:
- $24 goes overseas (22 cost, 2 freight)
- $8 goes to the US gov't (3 import, 2 Nike tax, 3 Footlocker tax)
- $33 goes to US employees or businesses (5 Nike marketing, 11 Nike expenses, 17 Footlocker expenses)
- $5 goes to Nike (11% return)
- $6 goes to Footlocker (8% return)
But now with 100% tariffs, it's a $100 shoe that sells for $100 (or a $132 shoe that sells for $100) and:
- $24 goes overseas (22 cost, 2 freight)
- $29 goes to the US gov't (22 import, 3 Nike tax, 4 Footlocker tax)
- $33 goes to US employees or businesses (5 Nike marketing, 11 Nike expenses, 17 Footlocker expenses)
- $7 goes to Nike (11% return, 7.15 exactly)
- $7 goes to Footlocker (8% return, 7.45 exactly)
And if a US shoemaker wanted to undercut the import, a Made in USA shoe that sells for $100:
- $7+ goes to the US gov't (? shoemaker tax, 3 Nike tax, 4 Footlocker tax)
- $79 goes to US employees or businesses (46 to shoemaker, 5 Nike marketing, 11 Nike expenses, 17 Footlocker expenses)
- $7 goes to Nike (11% return, 7.15 exactly)
- $7 goes to Footlocker (8% return, 7.45 exactly)
This isn't what it says in the thread. It's saying Nike and retailers need to maintain their markup rate on their unit cost.
> And if Footlocker purchases Nike shoes for $75, then they retail them for $150. Everyone needs to fixed percentages to avoid losses.
The problem with your breakdown is you're mixing unit costs and net profit in a way that doesn't work. For example, say after increasing the price in accordance with your summary, the volume of sales halved (just to pick an easy number). Then the $17 marked as "Footlocker expenses" increases, likely to around $34, and Footlocker's profit becomes -$10. The absolute expenses haven't changed. They're still paying the same amount for their employees and storefronts. But with half as many shoes sold, the expense per shoe is doubled.
It's not just sales volume that affects the $17. Other costs like credit card fees or shrink scale with the unit cost as well.
Just to say the obvious, they are also going to sell fewer/cheaper shoes according to the demand elasticity since the consumer price is 32% higher. Despite Nike making slightly more on a per-shoe basis, they are probably going to make less overall.
I wouldn't assume that they wouldn't segment products. Nike already offers more expensive lines with higher margins to offset less profitable ones. Why should we expect them to pass on direct costs to customers?
The blog also doesn't acknowledge the externalities of shipping. Having a "Nike USA" brand that becomes their premium domestic flagship won't incur the same logistical expenses or tariffs. I may be biased because I'm from a debtor colony that understood there's no way free people can compete with slave labor, but the distaste for compensating workers is largely a classist taboo.
People are theorycrafting ways to lose, but I would only expect that from a company that was trying to signal their disdain for current trade policy, not actually run their business.
The piece to add there is that all this money is getting paid by the consumer. The overseas piece doesn't change, same number of US dollars going to the other country. The $24 increase in cost is paid by the US consumer.
That's what I don't get. It's always phrased as the US somehow making all this money when in reality it's Americans that are paying for it. Among other reasons to be able to afford tax cuts in the future. Sure this will hurt other economies but primarily right now it seems to hurt the American economy and people the most.
It's just a sales tax. I don't know why people opposing tariffs never talk about them in this manner because sales taxes are something people innately understand if they have spent any time in the US and "tariffs" clearly aren't as well understood.
It's worse than a sales tax. Tariffs have a few market-distorting effects that a sales tax doesn't.
* Domestic consumers and companies are incentivized to potentially go for the 2nd best product. This over time can impact productivity as the tooling will decline over time as inferior solutions are bought.
* Reduced competition. We've seen this with the 25% "chicken tax" on pickup trucks. Arguably one culprit in US automakers falling behind is that they had a protected market around pickup trucks where it was hard to impossible for foreign competition to keep them on their toes. So US automakers retreated more and more into this safe haven.
* Destruction of economies of scale: If everyone wants the entire supply chain to be replicated in their country, we obviously loose economies of scale and thus efficiency. This sounds like it would be small but having multiple Shenzhen's is just not viable and we'll have to deal with higher prices and less product choice.
* Galapagos island syndrome: Over time separation of markets can lead to incompatible technologies which amplifies all other points.
> Tariffs have a few market-distorting effects that a sales tax doesn't.
There are still stupid edge cases. The cake-versus-biscuit saga in the UK comes to mind.
https://en.m.wikipedia.org/wiki/Jaffa_Cakes
Just double checking, you are saying reduced competition and scale economics are "stupid edge cases"?
I’m saying that using a courtroom to decide the definition of a biscuit indicates a problem with sales tax legislation.
Flat rate sales tax has its problems, but avoiding Jaffa cake situations is entirely desirable.
Agreed, complex policies open the door for unintended consequences and have higher enforcement cost. If you do a sales tax or VAT it should be flat. If anyone thinks that it will be regressive or put poor people at a disadvantage, the answer IMO is UBI, even a small one can make up for sales tax on food while avoiding the deadweight loss from nonsense like that Jaffa cake nonsense.
> sales taxes are something people innately understand if they have spent any time in the US
The way they are done in the US is maddening. You go to the counter and find the price is higher than the tag price by some random amount. It seems to vary wherever you go and depend on what you buy.
A tariff might actually be better.
There's actually a really good argument in favour of that -- and in favour of paying income tax not as a direct tax (withheld from wages) but with a delay.
It makes the taxes visible and painful and they will therefore (potentially) not rise as fast or as much.
It also puts more tax burden on the less wealthy. Sales tax is regressive; income tax is progressive.
But yes, that’s exactly why the American right makes taxation so cumbersome and horrible: to make people think that taxes are bad, as there’s this assumption you can have civilization without paying for it.
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I think that's an argument, but not necessarily a good one
Need to balance transparency in pricing vs. visibility of taxes. I don't think sales taxes are actually all that visible most of the time- it's not like the cashier is telling you "and your taxes are $X." But it does make it much harder to detect if the store is charging you more than list price.
Yes that's right. The manufacturing cost in the US would have to be $46 or less to undercut the import. So ignoring tax changes, something like...
A Made in USA shoe that sells for $100:
- $7+ goes to the US gov't (? shoemaker tax, 3 Nike tax, 4 Footlocker tax)
- $79 goes to US employees or businesses (46 to shoemaker, 5 Nike marketing, 11 Nike expenses, 17 Footlocker expenses)
- $7 goes to Nike (11% return, 7.15 exactly)
- $7 goes to Footlocker (8% return, 7.45 exactly)
>And if a US shoemaker wanted to undercut the import, a Made in USA shoe that sells for $100:
Somewhere in there you have to also figure in the cost of the fact that shoe factories and the suppliers of the goods to make shoes also don't exist in the US and will cost millions, and years, to get setup.
Is there a reason, be-it special buildings, tools, skills that shoes can not be made in the US to avoid the tariffs?
If Nike shoes exceed the cost of domestically produced shoes, isn’t that… like… kind of the point?
Every country has optimized their own economy so it's incredibly cheap for us to import shoes, or it was. Now it is not, so sure we could try to make some cheap shoes here. But now we have to make cheap shoes, grow cheap citrus veggies, make cheap computer chips, make cheap needles etc etc.
How much capacity do you think the US has to manufacture these things? and what about the supplies?
You can buy made in USA sneakers like New Balance 990 series. Generally all the materials except the sole are US sourced. Retails for $200 a pair. What kind of sneakers do you buy?
Running a manufacturing business in the US is more expensive. Consumers largely won't pay more, it's a limited market. The machinery for molding soles only makes economical sense at a large scale.
They’ll pay more if the imported shoe costs the same or more.
The US does massive amounts of injection molding. I just signed off on my molds to be cut and run this month, how much experience do you actually have with this I wonder?
I've always wondered why the supply chain has exponential price increase at each step. The example given (guessed at) is the factory produces the shoe for $12.5 and sells it to Nike for $25. Nike then sells it to Footlocker for $50 and they then sell to a customer for $100. Everyone expects to mark up their costs by about 100 percent. Why is that the case? Even if we say the markup isn't 100 percent, why is it a percentage of cost at all? If the shoe factory can make $12 then why can't Nike and Footlocker both make $12 and retail the shoe for $50?
I'm not saying things should be different, just wondering why it is the way it is. If Footlocker was also selling some cheapo shoe for $50 presumably they do the same amount of work to bring that to the store. Are they only paying $25 for those? Why does it cost half for them to handle a cheaper shoe?
On thing you have to consider is the scale at which these shoes are sold at each step. From the factory they're processed and shipped in giant containers. The overhead of handling each shoe is fairly small at that stage.
When it comes to the retailer, there's a huge increase in the amount of work and overhead for each shoe sold. And the labor cost for that work is much higher than on the Asian side of the supply chain. That's also where you get potential waste from returns and discarded inventory and such. The retailer also have their own marketing costs.
I don't find it strange at all that the retailer expects a 100% markup.
Real estate is insanely expensive - you have to sell a lot of shoes with your "100% markup" to make rent.
The flip side however - e-commerce with its totally different cost structure and same traditional RRP as brick and mortar retail - should be - a gift from above for retailers.
In some cases, in e-commerce your trading rent for shipping expenses. It helps you scale quicker as you have wider reach but the variable cost of shipping and taking returns can go sideways.
The good thing about rent is it’s relatively fixed so it’s possible to gain leverage with volume. That is also a risk if volume shrinks, etc.
It's more of a work backwards thing. The price is set by demand, what the market will bear, etc. Then for well established supply chain / commodity goods overhead tends to rise to meet COGS. The reason is that there exists profit taking at every level of "overhead" but when the cost of revenue exceeds the cost of goods it becomes a marker of inefficiency. In the same way when manufacturers recognize that their cost are less than the retailers overhead to generate sales they see room to raise costs so markets trend to 50/50.
But consider Footlocker sells a lot of other shoes for much less than Nikes. Those shoes don't cost any less to manufacturer and depending on the brand are just as well established so the 50/50 ratio still applies. It's just that at each level the overhead adjusts to meet the ratio over time.
For fringe brands the retailers markup can be huge 10x or more.
> when the cost of revenue exceeds the cost of goods it becomes a marker of inefficiency
Welcome to Europe
The numbers at each step is only considering the marginal cost. There are various overheads that are fixed, some described in the article. And of the day the actual profit at each step isn’t necessarily very high.
> chain has exponential price increase at each step.
The amount of risk increases at each step.
That $24 in "discounts." Almost certainly some amount of that is "shrinkage." Storefronts are expensive in more ways than one.
You could take your monthly rent and costs and then divide by size of a product times the average hold time before sale. Each item has to pay this price plus whatever you want in profit to "earn" it's place in your store. That time multiplier gets worse at each step with an extra kick in the behind if you took those items on credit.
The manufacturer holds the product for almost no time. The retailer may hold it for months.
because businesses have overheads? and customers have brand preferences that stop (or limit the success of) Footlocker just selling generic models without Nike's involvement?
Nike's margin is brand.
Footlocker probably doesn't have much of a margin, the price they charge is due more to high labor and real estate costs in the US which are being passed on.
Because then one unit of thing is theoretically one standard deviation from being profitable. So you can have a break even price.
Can you clarify that? It sounds like there may be theory behind it, or are you trolling?
Isn’t this simply taking advantage of what the market is willing to pay?
Reminded me of the folk-comedy duo Flight of the Concords' song "Issues (Think about it)”:
> They're turning kids into slaves just to make cheaper sneakers.
> But what's the real cost?
> 'Cause the sneakers don't seem that much cheaper.
> Why are we still paying so much for sneakers
> When you got them made by little slave kids
> What are your overheads?
https://youtu.be/GimzSBVQUDo
The thread was kind of hand wavy over the "$24* discount" for Footlocker? From the linked article...
>Footlocker’s purchase price (read footnote #3) for every sale of $100 shows up as $66 in their financial reports, and not $50. In plain terms, Footlocker sells its merchandise for a 24% discount on the average.
So $100 was never the sale price, just some made up, hoped for number that only appears on the shoe box, and not on anyone's financial statements. Really this should be Footlocker makes $6 on selling a $66 sneaker, for a margin of ~9%.
BTW, both Footlocker and Dick's have gross margins ~30% but Dick's has an operating margin around 12% while FL is 1-2%. Clearly FL is an inferior retailer.
And the linked article does cover Nike selling directly...
>And what happens if brands skip the retailers and operate their own stores? adidas and Nike already have their own shops, but direct-to-customer retail comes with its set of challenges. Brands will incur costs otherwise absent in the wholesale business model; spends like leasing+manpower+operational costs, store set-up and periodic re-modelling cost, the entire risk of inventory, and costs associated with warehousing and distribution. That’s only at the store level, there will be additional off-site resources needed in the back-end to support retail operations. The brands will make some extra margin selling out of their own stores, but the best case scenario will be an additional 10%, which is slightly above what a highly evolved retailer like Footlocker makes annually after taxes.
I would argue that a great deal of selling today is direct, no stores involved at all.
>So $100 was never the sale price, just some made up, hoped for number that only appears on the shoe box, and not on anyone's financial statements. Really this should be Footlocker makes $6 on selling a $66 sneaker, for a margin of ~9%.
yes. but any arguments you see in favour of onshoring manufacturing would use undiscounted list prices, so it makes sense to start from that place.
Well, Since I am close to a Shoe Palace, I just walked in and talked to the sales man. He likes selling New Balance, and the price ranges from $34 to $167, and the $167 is a discount of 33%. I talked to him long enough that the assistant manager came over, and both of the really were ashamed at shoes made in Vietnam, and Cambodia, they got it, and I told them that
https://allamerican.org/investigation/new-balance/
“ I would argue that a great deal of selling today is direct, no stores involved at all.”
That assumption burnt the previous Nike CEO post COVID.
Yep, direct from the manufacturer— no. Direct from the retailer without touching a physical store— yes.
You can buy shoes directly from Nike here in Australia. Is that not the same in the states?
You can, but most people go to a shoe store and check out different brands. Most people that end up buying Nikes aren't the people that only buy Nike and know what they want without trying on a few pairs.
Like unless you just know you specifically want some Nike shoe you aren't likely to visit Nike.com to buy shoes.
Maybe easiest to explain from a software perspective.
So if you build a SaaS app, your company will incur a number of costs. You need to pay AWS for hosting, your support team, your sales team, your annual team retreat to Mexico, etc.
When you start measuring your profitability you then will separately measure the profitability of your product vs. your business.
The profitability of the product is your gross margin - essentially your revenue minus your cost of goods sold (COGS). Not all of your business expenses fall into here - only the costs that directly relate to supporting the product.
So… - Your annual team retreat won’t hit your gross margin: this cost isn’t essential to supporting the product - Your AWS costs will hit your gross margin (if you turned off AWS tomorrow, your product stops working) - Your Slack bill does not hit gross margin - Your product & engineering team normally doesn’t hit gross margin, but DevOps does (because DevOps is seen as essential to supporting the product while R&D is not)
Now in reality it does get a bit more messy. Businesses might allocate a % of engineering costs to GM to account for essential maintenance and bugfixes.
So the way to look at it is: what costs are essential to the continued delivery of the product and what are nice-to-have?
And then operating margin essentially considers all of the non capital costs. It’s a more comprehensive view of all the businesses revenue and costs.
For a smaller business it’s very normal for operating margin to be razor thin or even negative. Because just one or two engineers could cost more than your entire revenue.
But this entire concept is why software companies have historically been able to be unprofitable for so long. A business that’s losing a ton of money every month might only be losing that money because it’s investing very heavily in R&D. Or maybe it just moved into a new
As you scale the relative impact of a lot of those costs will go down significantly - e.g. your engineering team cost will stop being 300% of your revenue and will start being 20% (you don’t hire engineers linearly with growth).
So the theory is that if you can find a software that has: - a big market - great gross margin
Then with just some upfront cash investment you can provide the business enough runway to grow the revenue to the point where the impact of some of these expenses becomes very small. At a certain scale, a product with 50%+ gross margin will be producing so much cash that it can pay for the rest of your operational expenses without further investment.
I agree, isn't most selling online nowadays?
This also doesn't make sense because buying shoes from Nike.com costs roughly the same as Footlocker. Is Nike taking that 50% cut in this case? Article definitely hand waves away a ton of the complexity around tariffs and global trade.
My favorite line is: "Asian manufacturing in Asia produces US jobs. You go to Footlocker to buy a pair of $100 shoes because you can afford them. This creates jobs for the Footlocker employees".
It feels like people have completely flipped their views on offshoring manufacturing in the last 6 months. If you go back 10 years ago we were barraged with stories about Foxconn, corporations exploiting workers in developing nations, and scenes of abandoned manufacturing cities like Detroit. The popular view was that we needed to build our manufacturing base back up and that using developing nations to pump out cheap disposable goods was bad for everyone except giant corporations.
Now we are getting told that corporations offshoring all their labor to developing nations is good, and that the USA should not do manufacturing. This article even asserts that we will lose jobs if we produce things domestically.
I don't agree with the ham-fisted bullying approach Trump is using, but I do agree with the philosophical underpinning. Offshoring all our manufacturing is not a good long term strategy and will slowly erode the value of labor and our economy.
The quoted article from the thread is from 2016, so yeah more selling is online and direct from the manufacturers.
Nike Sales DTC versus Total
I work in marketing for a large number of e-commerce brands across a variety of verticals, including shoes. Brand direct on Nikes website is bugged, but is absolutely dwarfed by sales in brick and mortar retail stores. Think about target/walmart/dicks/big5/etc and then think about just Nike.
45% of Nike's sales in 2024 were DTC, see chart above.
The problem i have with this article is they use a "Hypothetical shoe" that retails for $100, but then directly quote a $220 shoe for the "American Made" side. Then use this as the entire justification for the price disperity. People absolutely pay $220 for "Chinese made" shoes too. It's all about branding...
Rockwell is price competitive with both kuka and fanuc. If you want to talk about 'Difference in manufacturing cost', why don't we start there?
Derek writes a lot of great fashion threads but he is a dyed-in-the-wool partisan and it comes through any time he touches on things remotely political. This doesn't mean he's wrong and it isn't even necessarily a bad thing, but it's important to keep that in mind and just remember that when he says something political he likely arrived at that political opinion first and is picking examples/hypotheticals to support it, and not vice versa.
I worked in the retail; it is the shittiest job I ever had. I was given an abnormal schedule: two days closing, one day opening, one mid shift (and I should work either Saturday or Sunday). The churn is really high: people leave even if they find a better yet shitty job. Which jobs do you want to create in US? Retail jobs or manufacturing jobs?
Given the manufacturing is currently being done by people making much less than US minimum wage, I’d have to say retail!
People forget why manufacturing was moved out of the US. Manufacturing jobs sucked major ass. Then they sucked less ass, when unions started gaining power. Then the companies saw their employees had prosperity, said “fuck you”, and left.
We’ve crippled unions to such an absurd degree that the reality is that, if manufacturing came back, the quality of life for average Americans would go down significantly. It’s not 1955 - you’re out of your goddamn mind if you think a factory worker can maintain the quality of life now, let alone afford a suburban home on one income like in the past.
Because of tarrifs, demand for local manufacturing increases and manufacturing wages will be greater than they are currently abroad due to newly constrained supply.
Okay, then we'll have unions then. I don't see what the issue is here. I have heard this reasoning several times, even in person, it seems to misunderstand the action of protectionism in the first place.
You can't have an industrial economy if workers don't have any leverage to demand sufficient wages or if unions have so much power that they bring the balance of labor negotiations to unprofitability.
I don't think manufacturing jobs suck ass. They probably aren't great for your physical health, but it is better for society spiritually in the long term to have the majority of society focused on producing something real rather than just having an endless network of fake jobs as a means of wealth distribution.
The factory worker of today can't afford anything because they are competing with third world wageslaves to outsource manufacturing to our geopolitical rivals.
> Okay, then we'll have unions then. I don't see what the issue is here.
America wont have unions nor consumer protections. For that matter, it wont investigate crypto scams either and will accept industrial pollutions to save factory owners money. Meaning, workforce will be less healthy due to impact on air they themselves are breathing.
There is no planned change to create protections for low level employees, but there are many changes allowing owners to do whatever. Once competition ranks up, they will be forced to pollute and mistreat workers or go out of business.
>it is better for society spiritually in the long term to have the majority of society focused on producing something real rather than just having an endless network of fake jobs as a means of wealth distribution.
OK, you want to sacrifice health of some for "spiritual benefit" of others. But those jobs will be as fake as healthier jobs those people have now.
>America wont have unions nor consumer protections.
Why not? I would vote for it.
IDK how consumer protections fits into this, but avoiding crypto scams is pretty easy, just don't invest in crypto if you don't know what you're doing. It's only on the utility/monopoly scale that the government needs to be involved in consumer protections. Net Neutrality is a great example of the dems having the right idea.
I think democrats would have a decent chance of winning elections if they abandoned idpol stuff.
>There is no planned change to create protections for low level employees, but there are many changes allowing owners to do whatever. Once competition ranks up, they will be forced to pollute and mistreat workers or go out of business.
Okay, then we'll change regulation to better suit this. The purpose of protectionism is to reduce this competition.
>OK, you want to sacrifice health of some for "spiritual benefit" of others. But those jobs will be as fake as healthier jobs those people have now.
I don't think so. The end purpose of industrial jobs is to produce something real. The purpose of most jobs today is to do literally nothing while acting as a wealth distribution mechanism: our country basically makes money by selling our currency to be used by other nations as the global reserve currency.
David Graeber has a good book about this called "Bullshit Jobs" if you are interested in this theory.
Unions crippled themselves. Government employees unions destroyed the US government by getting the politicians in their pocket so much that no union member can be fired or held accountable in any way, and that led directly to Doge. Corporate unions were so abusive that companies were forced to move overseas, losing American jobs.
Each worker can negotiate easily on their own behalf or simply work elsewhere. Unions are unnecessary and always end up corrupt and wasteful.
> no union member can be fired or held accountable in any way, and that led directly to Doge. Corporate unions were so abusive that companies were forced to move overseas, losing American jobs.
This is a complete re-writing of history.
Unions were not "abusive". Typical union negotiations pushed for safe(r) working environments and reasonable wages.
Companies moved overseas not because they were abused (Jesus Christ). They moved because there's lots of parts of the world where you have access to psuedo-slave labor.
I don't want to be a slave. My fellow Americans don't want to be slaves, either.
> Each worker can negotiate easily on their own behalf or simply work elsewhere.
This is delusional.
Let me put this bluntly. If you're not even willingly to acknowledge the obvious asymmetry in leverage during labor negotiations, then your opinion on unions is worthless. You're not an honest party, or maybe you have trouble coming to terms with reality. Unfortunately, that means your opinion is better suited for the loony bin, and not any serious discussions.
As an aside, there are lots of great arguments to make against unions. Do that instead.
I support unions, banding together as employees to negotiate with an employer sounds fine.
I disagree with forcing employees to join a union who do not want to. I disagree with forcing a business to negotiate with a union that does not want to.
Manufacturing jobs in Asia (e.g. making shoes) have much higher churn than retail jobs in Asia. That shit is hard work, but well paid by local standards.
Manufacturing also requires young people. You can't work in a factory in your 40s. The west is demographically ill-suited for those jobs.
I agree with sibling post saying both but with a note.
(Most)Shitty job conditions can only exist if there is an abundance of labor; why can fast food joints get away with irregular scheduling? If the supply of labor is tight, jobs have to add bonuses to keep workers.
Why is health insurance tied to jobs in the US? Because during WWII, the government set limits on wages so companies started adding insurance and other items to attract workers.
During the GFC, what did companies do after cutting workers? Start cutting benefits, the workers couldn't walk since no one was hiring.
Look at pensions, they went away in the 80's. If you google why they went away, the answer is 401k became availible, however: https://en.wikipedia.org/wiki/Early_1980s_recession
> Even the “father of the 401(k),” Ted Benna, tells The Journal with some regret that he “helped open the door for Wall Street to make even more money than they were already making.” >Other experts agree: On its blog, the Economic Policy Institute recently declared 401(k)s “a poor substitute” for the defined benefit pension plans many workers primarily relied on, which provide a fixed payout for employees at retirement, and which have now become increasingly rare. Nowadays, “just 13% of all private-sector workers have a traditional pension, compared with 38% in 1979,” reports The Journal.
https://www.cnbc.com/2017/01/04/a-brief-history-of-the-401k-...
https://time.com/archive/6686654/a-brief-history-of-the-401k...
This is a false dichotomy. Creating manufacturing jobs doesn’t mean there are no retail jobs. We should have both. Different people have different preferences. Even the same person at different times in different situations. Why limit ourselves to one option?
Both!
Sorta related: Those Crocs/clogs shoes have been extremely popular for a few years now. ... I've always wondered how much it costs to make that type of shoes (Crocs/clogs) - it can't cost more than $1 to make most of them; they're just injection-molded, right?
You can buy Croc knockoffs at the "Dollar Store" yet Crocs still exists. Why? Is it purely first-mover advantage/brand or is there an engineering edge?
The material used by genuine Crocs seems to last much longer. My brother bought some knock-offs at the same time that I picked up a new pair. He wore through the soles in about two years while mine are still kicking after almost 8 years of near-daily use.
You can get the genuine ones for $18 to $35 on ebay depending on the color, so while I'm sure you can save some on clones it's not worth it for the durability and comfort.
There are _some_ differences in quality, but I think they're pretty minor.
I recently visited the Philippines and a friend bought some knockoff Crocs at a market. The little rivet thing holding the strap to the shoe had the logo printed right on the exposed plastic, and after a few days, the logo was mostly scratched off. But my wife's Crocs that she bought a decade ago still look fine because there's some sort of sealant on top of the logo.
Is that worth an 800% markup? Probably not. But the knockoffs do cut some corners that the genuine articles don't.
Do Crocs bought today match up to those old ones?
I don't know about Crocs but brazilian flip-flops "Havaianas" never lost market share even though it feels so trivial to clone it.
The only two modes of failure of this sandal is "drying up" after a couple years and broken thong straps (yes, 3rd parties sell those as replacements..)
I guess they make sure they have cheap offerings and are always investing in design and marketing so no one can enter this market..
I had a pair of knockoffs that were passable for limited purposes but certainly didn't pass muster as my primary shoe. I thought that the style just wasn't my thing. Then I got a pair of real Crocs and they very quickly became my go to for most purposes.
I don't know enough about shoes to explain why, but the difference in comfort level was huge.
i have them. knockoff crocs suck. why ?
knockoff crocs suck. i have them. why ?
A few things to unpack here:
Lets say a nike shoe costs $120 or so today(searching air jordans in google lists a huge number of shoes at that price point), in my mind this is quite cheap as I wanted a pair of Air Jordans in 1990 and they were the same price, $120 for kids shoes roughly 35 years ago. Adjusted for inflation thats roughly $303 USD in 2025 dollars. So basically through outsourcing manufacturing to China and supply chain efficiencies Nike has brought down their product price by roughly 1/3.
Another thing to think about is the insane amount of money offered to athletes in sponsorship deals, I believe Jordan was one of the first athletes to command big money from a company(they made a movie about it a few years ago). This cost paying hundreds of athletes millions a year is a huge cost on Nikes bottom line.
In addition to the sponsorships some athletes have profit sharing (Jordan for sure) so a percentage of sales go to said athlete. Throw in marketing and you have another huge cost.
Would I rather see manufacturing jobs come back to the US and Nike curtail sponsorship money and profit sharing, hell yes. This is easy money to get back and would bring tens of thousands of jobs back to this country, if people were snapping up air jordans for the equivalent of $300 a pair back in the 90's they will do the same in this day and age. And if don't want to cut back sponsorship money, just raise the shoe prices, things are really really cheap compared to what they cost 30 years ago and Nike would still make a hefty profit.
Fun fact - I always buy new balance shoes that are made in usa, they sell both outsourced and domestic production and would rather have my money go to a US worker. At the very least I hope to see other companies do this so I have a choice, most give no choice and force consumers to buy Chinese made products.
I mean Nike didn't work to lower the price, the demand for Jordans is just different and most people buying Jordans today also bought them in the 90s and are comfortable at $120. If Nike could move them at $300 they would. Jordans remain popular but the reasoning is partially their price points, they don't at all have the power they did in the 90s when every kid wanted "to be like Mike".
>The second thing we see is that Asian manufacturing in Asia produces US jobs. You go to Footlocker to buy a pair of $100 shoes because you can afford them. This creates jobs for the Footlocker employees, Nike designers, marketing teams, and other US people throughout this chain.
In all fairness, most of those jobs would still exist if manufacturing was brought onshore. The fact that they were manufactured in Asia makes no difference here, except for perhaps the longshoremen that was included in "other US people."
The author’s point is that the lower cost of goods coming from Asia results in increased demand, which then generates more jobs in the post-manufacturing part of the chain.
That completely discounts the strategic value of self-sufficiency. I mean, why not outsource ALL manufacturing and agriculture if someone else can do it cheaper? Surely that wouldn't come back to bite us, right?
Explain the strategic value like I'm 5? I see people reference this idea all the time, but I'm unconvinced it's actually valuable enough to be worth it given all the other downsides. I don't actually believe it's a positive value proposition.
I see the argument for things of military significance. The common one is electronic components. But PCBs manufacturing is easy to spinup quickly. Which leave the critical components like IC where the ones we'd actually need are still exclusively overseas. The TSMC factory being built wont produce the newest generation chips.
Same for agriculture, if we're totally self sufficient, what happens when a blight takes out a staple crop or two? You can't just spin up food production or global food trade the way you can with manufacturing.
Meanwhile, having robust global trade is just a less lethal version of MAD, here being mutually assured economic destruction. It's much harder for other nations to turn on you when you both depend on each other for comfort, convience, or survival. Look at how the US is being seen by the international community. The reputation we had as a strong ally and worthwhile partner has been badly damaged. Why would other nations want to help us now? How are we stronger alone, instead of having their eager support?
There are two people, one grows all his own food, and makes all of the tools he needs. He doesn't need anybody. The other works with his neighbors, they share food, he kinda knows how to sharpen an ax, but he uses the ones made by the guy down the street, who's basically a professional blacksmith, even though he introduces himself as a gardener.
which one of those guys appears stronger? Who's more likely to survive something bad happening? who do you think is more likely to win in a fight? (yes their neighbors will come to help) which one would you rather be?
>Look at how the US is being seen by the international community. The reputation we had as a strong ally and worthwhile partner has been badly damaged. Why would other nations want to help us now? How are we stronger alone, instead of having their eager support?
As a Canadian, you just made the argument for strategic value for us. The economic damage caused at the whims of a single person in control of our supposed closest ally is exactly why. The argument for economic "MAD" assumes one country wont be self destructive enough to cut its leg off to spite everyone else and "win" in a way that leaves it worse off.
Right, I think a single point of failure is the problem. Both domestic, or abroad. If you want strength and resilience, you need to have more than a single source for whatever you might need. It's a mistake for both of us to trust a single country to act rationally indefinitely. The problem for me is currently we're both using the same country this time.
Imagine if China decided to invade Taiwan like they've been threatening to do for a while. They would instantly cut off all exports to the US, because that's the smart thing to do. They would probably blockade Japan and other countries as well to keep them from exporting to the US, because that's the smart thing to do. Now since our supply chains were greatly disrupted (remember COVID?) we can only go to war with the equipment we have and will struggle to produce any more equipment in a short period of time. No more uniforms, no more tanks, no more drones, no more missiles, no more artillery shells, no more medicine, etc, because all the materials for those things are largely sourced from Asia, which would now under a blockade.
> we can only go to war with the equipment we have and will struggle to produce any more equipment in a short period of time. No more uniforms, no more tanks, no more drones, no more missiles, no more artillery shells, no more medicine, etc, because all the materials for those things are largely sourced from Asia, which would now under a blockade.
So if instead all of these weren't sourced from exclusively Asia, and were sourced from many different countries, including domestically, there wouldn't be a problem?
Also, is your assertion really that US military would be at a near term disadvantage, if exports from Asia stopped? That's a wild take.
> They would probably blockade Japan and other countries as well to keep them from exporting to the US, because that's the smart thing to do
You're the first person to try to convince me that it would be smart for China to start a world war with the US and it's allies over Taiwan.
Needless to say, I disagree that it would be smart, I disagree that china would be willing and likely to do it, and disagree they could do it if they actually tried.
Well needless to say all this has been realized about 2000 years ago and there are legions of smart people ensuring that it isn't a problem. Heck I used to ride the light rail in Sunnyvale past an old fab that had notices on the doors saying it was owned by the US Navy.
I thought those smart people were the ones saying our military supply chain is dependent on China.
I think the point being made is that under Trump's plan (repatriate production) China is MORE likely to invade Taiwan than before. Under the current situation China is LESS likely to invade Taiwan BECAUSE they rely on selling stuff to the USA. Once that reliance is gone, there are less negative consequences for China if they choose to invade Taiwan.
China could also use the US’ dependence on it as leverage to discourage them from intervening in Taiwan. We just saw this play out with Russia’s invasion of Ukraine. We routinely see Turkey threaten the EU with migrants over the bloc’s reliance on Turkey. We also saw Azerbaijan make a move for Artsakh knowing the EU needed their gas following the invasion of Ukraine. I believe China would prefer being able to extort the US rather than face the possibility of fighting an unbowed US.
>Under the current situation China is LESS likely to invade Taiwan BECAUSE they rely on selling stuff to the USA.
I mean the took over Hong Kong already. I think that is wishful thinking.
Wasn't it that they installed sympathetic politicians, which then led to the UK willingly turning over control (despite the local protests). Calling that a takeover seems misleading to me.
Ahh somewhat willingly, the lease to the land expired. So seemingly no choice was given.
They broke the agreement for the handover by about 25 years.
https://en.wikipedia.org/wiki/One_country,_two_systems
> Imagine if China decided to invade Taiwan like they've been threatening to do for a while. They would instantly cut off all exports to the US, because that's the smart thing to do.
I think what you're getting at is that China would have more leverage over the US if they attacked (attempted to invade) Taiwan, which they could use to make it more difficult for the US to protect Taiwan.
In that case they could do things like block some or all exports to the US until we, say, stopped escorting cargo ships in and out of Taiwan. But the notion they would "instantly cut off all exports to the US" is nonsense. There's no reason that's somehow a no-brainer post invasion.
>In that case they could do things like block some or all exports to the US until we, say, stopped escorting cargo ships in and out of Taiwan. But the notion they would "instantly cut off all exports to the US" is nonsense. There's no reason that's somehow a no-brainer post invasion.
You think they would supply their enemy? Biden said he would protect Taiwan pretty emphatically. I assume Trump would be advised of the same.
Domestic production that is perceived to benefit national sovereignty is protected.
See: farming, energy, and defense spending/subsidies.
There is no point in history where any nation, anywhere, has needed to be self-sufficient in the production of Nike Air Maxes.
That being said, my sneakers, New Balance 990v6s, were made in the US-- probably Maine. They're $200.
The shoes I typically wear for work, Red Wing Iron Rangers or Work Chukkas, were made in the US-- probably Minnesota. They're $350 and $290 respectively.
I don't know if increased volume will decrease the prices by much, they're only higher than premium imports by a little bit.
There is domestic production already here.
> I don't know if increased volume will decrease the prices by much, they're only higher than premium imports by a little bit.
I don't think its reasonable to expect lower prices for domestic production at all, because the demand for domestic products is only going up (from people that used to buy Vietnamese Nikes).
Personally I think the whole tariff experiment is predictably going to fail, because "increased self sufficiency" does not buy you anything, and at some point people are just gonna push back politically if the cost increases get too bad.
I've had it explained to me that now that manufacturers won't sell to China because of retaliatory tariffs, they're more product to sell domestically which would push down prices. Less demand due to tariffs from China = lower prices.
Maybe there are some products that this argument works for, but certainly not footwear I'm sure.
The US exports ~1 billion worth of shoes per year, and imports ~25 billion (mainly from Vietnam and China), according to https://www.usitc.gov/research_and_analysis/tradeshifts/2023...
I also think the argument is bad in general, because more/similar exports than imports would only really hold for the countries least affected by the new tariffs, anyway.
Are cheap sneakers a strategic asset now?
Are you intentionally being obtuse and thinking I was only talking about sneakers? Obviously I’m talking about trying to keep a wide range of vital goods manufactured within the US. Food, weapons, chip fabs, electrical components, pharmaceuticals, medical supplies, etc. are all things we should try to have robust domestic production of.
Learning piano makes me better at music. Learning the violin is then easier.
Self sufficiency is just not a credible argument here.
This is about consumer footwear, not agriculture (nor all of manufacturing).
The US (and most other nations that can afford to) is perfectly used to throwing ~$20 billion at the sector to keep local agriculture operational.
We did not do this for literally every industry in the past because we had (and have) neither the idle workforce to do this, nor does the local population want to do the work (even for slightly uncompetitive wages), nor do consumers want to pay for the difference.
My personal prediction is that people will realize this pretty soon with the consequences of the Trump tariffs manifesting and the whole thing will be rolled back and scaled down, with pretty much nothing to show for it.
The shoes aren't even needed. Growing up in Scotland (not poor) in the 1970s I had one pair of shoes. When they wore out my mother would buy me a new pair. Today in the US I have so many pairs of shoes I don't really have space to store them and sometimes end up buying a new pair of shows I already own because I can't keep track of what's in the closet.
Btw the one thing that will be left to show is a wider realization that it's a bad idea to elect a crazy person.
dborehamsays "Btw the one thing that will be left to show is a wider realization that it's a bad idea to elect a crazy person."
Regret to inform that all of them are crazy.
>Regret to inform that all of them are crazy.
I'm sure it's comforting to assume that all politicians are equally corrupt and equally insane and so your vote doesn't actually matter one way or the other but Kamala Harris wouldn't be acting like this, nor would Biden. Hell, not even other Republicans.
I know you're asking "why not outsource ALL manufacturing and agriculture if someone else can do it cheaper" in jest, or as a rhetorical device, but basically every single economist on earth will say "Yes, we should do that, that's a good thing"
We don't have the labor pool for self-sufficiency unless we want to drastically scale back how we live.
Yes, the goal is for everyone to be doing the thing they can do most cheaply and then trading with everyone else. Karl Marx and Ludwig von Mises would agree on this point. The idea that the Westphalian state should get in the middle of this is the aberation. The only reason national security is a consideration is because of the nations. I don't care if my shoes are made in Asia, though I suspect they wouldn't be if we paid Asian shoemakers an honest, globally-clearing wage.
Self-sufficiency is irrelevant to the discussion above. If prices go up, Americans can buy less, and the number of non-manufacturing jobs at these companies will go down.
I see your point. I suppose a counterpoint is now shoes won't be so disposable and professions for cobblers and the like will be in higher demand.
> shoes won't be so disposable and professions for cobblers and the like will be in higher demand.
It doesn't necessarily follow that more expensive shoes will be easier to repair. It's more likely that shoes will simultaneously become more expensive for the consumer AND lower quality and therefore even less amenable to repair.
Unless they dramatically change the design and manufacturing of those shoes, they won't be less disposable - just more expensive.
We buy and waste a lot of stuff. Fast fashion is pretty insane. Look in the closets of your friends who are constantly clothes shopping and it's a ton of shit that never gets worn and eventually "donated" (5% makes it to thrift store shelves, but most of it gets burned or sent to Africa .. and then burned).
Reversing the transmission of western consumerism is not an easy change. Few people are willing to pay an extra $50 for a more durable good that lasts. Long term thinking isn't easy for most, and many can't even afford to think that way.
But the tariffs are really a tax, a federal sales tax on the consumer. Biden tried to put in "unrealized gains tax" (which is really Federal property tax). So both presidents are trying to use executive power and double speak to get their people to support new taxes that are ultimately horrible for every American.
Trump Derangement Syndrome runs both directions.
Is that better? We need at least one cobbler sure, but if shoes are so scarce that we need to repair them like some communist country, are we better off?
The reason you’re buying Nike and not GLRMNTXH brand knockoffs manufactured in the same factory and half the cost is because of stuff the US employees are doing.
> In all fairness, most of those jobs would still exist if manufacturing was brought onshore.
Yes, if you waved a magic wand.
But considering bringing manufacturing onshore to replace Asian manufacturing will take at best years if not decades, no, those jobs will not still exist.
Incorrect. The price of manufacturing, because of the cost of living differences, would result in a far more expensive product.
Free-trade brings into being products that previously would not have existed (Nike trainers for the masses).
If those shoes cost $200 because of higher labor costs, then a lot less people are buying them. They will buy worse imports at $180. The consumer loses.
The point is - there isn't a market for $400 crappy basketball shoes.
There is a market for $120 ones...
"I encourage you to note assume that every Asian worker is a slave." I do NOTE, that I was on Korea for 18 months, and saw over 20 factories, and knew a few people that worked there. They were making 1/10 of the minimum wage in America at the time, $0.75 vs $7.50, Today they are making $6.94, so I would assume that They are making few shoes in Korea.
"While it's difficult to pinpoint exactly which country pays the absolute least for shoe manufacturing, countries like Vietnam and Cambodia are known for having lower labor costs and are major footwear exporters, making them likely to be at the lower end of the wage scale for shoe production."
In Cambodia, they pay $208 per month, which is assuming a 160 hour work month, which I guarantee is the bare minimum which gives them $1.30 in wages per hour.
"In Vietnam, shoe manufacturing workers typically earn wages that are significantly below a living wage, though some companies affiliated with the Fair Labor Association (FLA) pay double the minimum wage."
In Vietnam they pay $68/ month, which is $0.42 and 1/2 cents an hour.
The premise of the article, and the statistics they use are all based on preported manufactures claims, not the reality that exists in that country.
I would dismiss this article as pure fantasy.
Vietnam does not pay $68/month. Where did you get your made up numbers?
Source: brother works in a Nike factory in Vietnam; am acquaintances with the manager of an Adidas factory in Vietnam; and know that the legal minimum wage in Vietnam -- which is definitely enforced on foreign factories -- is far above $68/month.
My brother at the Nike factory makes almost 10x that assembling women's shoes.
Someone working part time at a convience store makes 3-4x your claimed number.
> I would dismiss this article as pure fantasy.
Why? The article starts from the point where Nike pays $25 per shoe boarded into a container on a boat, where that number covers all expenses until that point. Yes, this includes the shoe workers' wages, but it also has the factory construction and maintenance, manufacturing equipment, the inputs that go into the shoe, transport to get the shoes packed into a container and to the port, etc etc.
Because $25 per "pair" of shoes is absurd. That's Nike "juking" the stats to make it look like they pay far more than they do per pair of shoes. For one thing, as a consumer you can buy individually shoes that are at least as good of quality as any Nike Shoe for anywhere from $8-$12 delivered. So the idea that Nike, in bulk, is running factories that are known to be questionable and paying $25 per shoe is "pure fantasy". Just based on known labor rates and material costs it's safe to say $4 on the high end if you factor in a bunch of operational and brand based overhead.
The $25 number comes from Steve Bence, Nike's Program Director in Footwear Sourcing and Manufacturing. I would also take that number with a grain of salt, but another cited source, Sole Review, an independent sneaker review site, estimates that manufacturing a shoe that's $100 at retail shoe costs $22.
So those are the article's sources. What are yours?
I'm also curious about your claim about $8-12 shoes that are equivalent in quality, because while you can, indeed, buy very cheap shoes on Aliexpress etc, the quality or lack thereof is usually commensurate.
I can't believe Nike spends 25 dollars on the actual making of the shoes, it just doesn't add up.
Nike sneakers regularly sell to consumers for ~25 dollars, in brick-and-mortar stores, in countries that have 20% VAT.
Naturally Nike wants to claim their shoes are as valuable as possible, and they can perhaps somewhat truthfully claim 25 dollars by including the cost of R&D, sponsorships and marketing etc in the cost of making the shoes.
Then they can spread the total cost of Nike operations creatively over models that sell 1 million units and others that sell only 50 000 units.
If shoes cost 5 dollars to make but you feel you need to pay Serena and Tiger 20 bucks per shoe to sell them, suddenly they "cost" 25 to "make".
They're not saying the incremental cost of making a single shoe is $25. They're saying that, after everything is accounted for, it costs Nike approx $25 to get a $100 retail shoe onto a boat in China.
And yes, Nike has cheaper shoes too, but per article, if it's retailing for $50, it probably costs $12 tops to make.
It is pure fantasy.
Pray tell, if they aren’t slaves, are they free to leave, and where to? What an asshole.
>In Cambodia, they pay $208 per month, which is assuming a 160 hour work month, which I guarantee is the bare minimum which gives them $1.30 in wages per hour.
That means nothing without knowing what other jobs pay and what the overall cost of living is. It honestly feels a little dishonest to convert things to USD without either putting it in perspective to the rest of their costs or adjusting it to a value that reflects the spending power of that amount of money. Does $1.30 buy them one hamburger or would it buy them 10+?
I mean, unless you think it's forced labor it's better than the alternative
“I encourage you to not assume that every Asian worker is a slave."
That’s a hell of a dodge. The problem isn’t that these workers are mistreated, it’s that you’re a racist.
It’s like people excited about the new datacenter being built in their town, think of all the jobs that will bring they cry. Nobody realizes it takes 6 people to run a datacenter.
Bringing “manufacturing back to the US” is a fool’s errand. The future of manufacturing is automation, not jobs.
> Bringing “manufacturing back to the US” is a fool’s errand. The future of manufacturing is automation, not jobs.
That’s probably correct. But the current trajectory means that China will have the robot-operated factories, not the US. What do you anticipate the US will do to obtain goods from those Chinese factories? Especially when AI stands poised to obsolete a lot of the white collar jobs where the US still retains a competitive edge?
You can’t treat the reserve dollar as something that will perpetually defy physics. The pound used to be the world’s reserve currency not too long ago. There’s no reason for the world to continue flocking to dollars when other economies surpass the US.
'The dollar might be weakened in the future so we must immediately blow it and our entire deeply thought out, researched, and supported policy since the 1940s up to now with no plan all based on a book the President read and hope things work out better than what might have happened sometime in the future (but that there were no signs was happening soon)'.
The dollar will be weakened in the future. Is there any doubt about it? We cannot continue operating in this post-war regime when the conditions for the post-war regime have been dismantled.
I have rarely ever aligned with this president, but it is clear that we need to bring manufacturing home if we are going to have any future.
It's almost like the Biden CHIPS act was designed to do that in a non-stupid way.
I mean I approved of the CHIPS act at the time, but did it result in anything? It was also limited to the semiconductor industry.
https://fred.stlouisfed.org/series/PRMFGCON
> China will have the robot-operated factories, not the US. What do you anticipate the US will do to obtain goods from those Chinese factories?
Why not let the market take care of it? It's cheaper to buy things from China then make them yourself. When that changes, production will naturally move to the next best place. I don't see the issue.
Because no economic theory proposes that the efficient outcome is one where the US retains its sovereignty and independence. Nations seek to create bubbles of local maximums, not in maximizing the economic efficiency of the world as a whole. A world where american kids have to learn chinese and fight to immigrate to China may well be an economically efficient outcome from the point of view of the markets. But American policy should fight very hard against that outcome.
Because China doesn't share the same goals, desires, or policies we do. They will have the power and cards to dictate world policy if you roll over and let them dominate. Realpolitik matters here. You either dominate the future (or at least stay competitive) or you become a vassal state.
Because I don't want the chinese to control the world.
They'll start forcing us to make Nikes in prison.
Even then the quality wouldn't be up to par. Since we've collectively agreed we don't need to have due process anymore, I guess I can look forward to making shoes will I'm being indefinitely detained.
But even that is impossible in the near-to-medium term.
The US just doesn't have the supply chain that China does. You need to be able to source the materials, and they have, effectively, entire cities dedicated almost wholly to producing those "intermediate" raw materials—eg, things like the grommets for the shoelaces, the big sheets of faux leather that can be cut to the right size & shape to make the body, etc. They also have the industrial capacity to do the molding for the soles, and produce the laces, at scale.
None of that exists here—in some cases not in the scale required, but in most cases not at all.
With across-the-board tariffs, the only way to fully avoid them is to start from the raw materials on up—mine and purify the minerals, raise the animals for their leather, pump and refine the oil for the plastics, harvest the trees for their rubber (are we still getting rubber that way...?). All here in the US.
Some of those raw materials likely don't even exist on our land in sufficient quantities to supply all our industrial needs, even setting aside how much time, money, and manpower it would take to set up the mines (and ranches, and oil fields, and rubber farms), the several stages of refining, and all the different ways the materials need to be shaped or alloyed or combined or extruded or or or...
And where is the money to fund all that going to come from? Clearly not the federal government (unless, I suppose, you posit that it's one or more of Musk's companies doing all this—I suppose that could be one of the aims here; just give Musk a monopoly over literally everything we make...). Every domestic company is going to be cutting back six ways from Sunday, because every product is going to cost massively more, so even the people still making as much money as they were last year are going to be buying less. And many people will be making less, either because of those same cutbacks (through layoff or hour/wage reduction), or because they were part of the federal agencies getting wantonly gutted for no good purpose, or among the companies that did business with them and now have lost a major customer.
Bringing manufacturing onshore for any significant percentage of our consumer or industrial goods is barely even a pipe dream. It's pure cloud-cuckoo-land fantasy.
>cloud-cuckoo-land
Welcome, this is where we're going to be for foreseeable future. Prison made inferior Nikes will end up costing 500$ a pair. Not that anyone is going to have money to buy them.
As you mentioned we'd probably need to still source from other countries. The bigger issue here is the USD may lose its reserve currency status.
The rest of the world might just trade in Euros and Yuan. Inflation will truly take off then.
I think you underestimate them. They'll just buy shoes from another country, import them in secret, repackage them, and sell them as American made Nike. They could easily strong-arm Nike to make a deal to go along with this. They'll do a "tour" of the "factory" that makes nothing, and MAGA will eat it up. They'll show us doubters all how wrong we were to doubt the carnival-barking-clown savior of America. And then he'll get a third term out of it.
> They'll just buy shoes from another country, import them in secret, repackage them, and sell them as American made Nike.
Who will?
The Trump administration? Why would they be selling counterfeit Nike shoes?
Nike themselves? Why would they buy shoes from someone else? And if you mean they'd just keep manufacturing them elsewhere...they'd still have to pay the tariffs when they hit customs, so they'd still be $$$$. Unless you're proposing that Nike is going to start an industrial-scale smuggling operation...? Or that the Trump administration is going to provide some kind of sooper sekrit tariff waiver just for them, so they can pretend to be selling Made in the USA Nikes? And that's only talking about Nike. What about all the other manufacturers of consumer—and industrial—goods?
None of that passes the smell test. Nike's not going to take a loss to pretend their foreign-manufactured shoes, which now cost them much more, are actually being cheaply made in the USA just to prop up Trump. And Trump is, to all appearances, 100% all-in on these tariffs: he would rather have them and utterly wreck the US (and global) economy than have things cost the same because no one is actually paying the tariffs just to "prove" that his bonkers excuse for an ideology actually works.
No; if Trump gets a third term, it will be, purely and simply, because he has managed to utterly destroy the machinery of democracy so that a free and fair election in the US is a wistful memory.
To add to your point, for tariffs to even work, they _have_ to be permanent. There can't be any room for negotiation in them.
If an investor wants to build a factory to produce shoes (a process that can take years), they need to be sure that the tariffs won't just go away next year.
Trump's tariffs are anything but this.
Of course! That would save them even more money! Prisoners make $0.33 to $0.45. I saw a McDonald's sign during an uprising that said "Prison Labor = Slavery"
I saw a video today on Instagram (from Tiktok), AI generated of course, where rows and rows of people sit at sewing machines sewing shirts, but instead of the typical Asians one commonly expects to see, they're all overweight American-looking people...
https://x.com/damengchen/status/1909288019750011006?t=kO7hvU...
Sometimes the darkest humor is the most accurate.
Apparently China propaganda making fun of the US.
I'd say this is more satire than propaganda.
Political satire usually is propaganda.
Not always and I'm not sure if usually, but in this particular case it's both.
Yeah. And people need to stop thinking that things that they can label as funny or whatever else is not propaganda. Everything with an agenda is propaganda.
“Wholesome Biden & Obama memes” are probably propaganda. And videos about “fat Americans” being marched into factories sounds like something the Chinese could make.
I think you're missing that the bigger value is having the manufacturing on your home soil instead of depending on being in the good graces of China.
Forcing China to become more independent of exports to the US also means China will care less about being in the good graces of the US. It cuts both ways.
This outcome is probably the end result for either scenario. The degree to which China is dependent on the US has been steadily decreasing. There's no law of nature that says the US will keep winning and have its advantages forever.
Except for the whole military superpower thing. The US is actually in a somewhat unique situation compared to other countries.
Unique for now. It’s changing.
The moment is threatened Canada , Denmark sovereignty and EU/NATO, countries are planning for life without US
It's only in a somewhat unique situation if people the US is willing and able to stomach a large-scale war, and people believe that to be so, and that belief has also dropped dramatically.
See the threads on the state of US shipbuilding.
Yes. You should point out that >50% of ships are built by China, and 30% are built by Korea, and United States is not even on the list... Do we even make ships? Maybe a few military wessels.
One could easily have the impression that despite this, China has never really given a rat's ass about being in the good graces of the US, and that when they do relent it is often the case that they do not do so in good faith at all. If they comply with ethics and human rights, it's to the absolute minimum of that and in an underhanded way designed to undermine, but often not even that and they're just cheating and good at hiding it.
In other words, not much would be lost except the devious lip service.
It depends on what you're looking at. They've avoided a confrontation with Taiwan, for example. How long that will last if/when they no longer consider open conflict with the US to be a major consideration is anyones guess.
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You always depend on someones good graces. What difference does it make if they are an american you are dependent on or a chinese person? Still a human at the end of the day. Its the political leaders that want you to say that an apple and an apple are different species. It doesn’t reflect the reality that we are all equivocal humans on earth. The sooner we get out of our nation state well of stability as a species, the sooner we advance technologically to the next level as a species.
It's not the choice of an american or chinese person but an american or chinese economy you're dependent on. An american or chinese country, an american or chinese government. The difference is that the chinese support eugenics, are throwing people in ethnic reeduction camps, operate an authoritarian system with extensive mass surveillance, and have plans to conquer taiwan (and the world). People are not equal because cultures are not equal. You might as well be dependent on the USSR or Nazi Germany, after all they're just people!
The sooner we get out of our nation state well of stability as a species? I don't know what dopey star trek fantasy land you are living in, but we are sooner going to destroy the world than join hands and all sing kumbaya. Especially if we allow some autocratic regimes to come to power.
Strategic shoe manufacturing?
everything
If US doesn’t need X, X will try hard to avoid US (who’s bullying everyone right now).
Eventually US will be in isolation.
That goes against like 50 years of global trade policies but ok...
Tesla's factories have a ton of automation, but the factory here in Austin employs 22K+ people. Automation will no doubt increase, but that just means the value humans provide is higher level and managing, maintaining, and redesigning the assembly lines as market demands and product categories shift. Datacenters are nothing like factories.
Meanwhile, if it ever gets to the point that automation has truly replaced humans, why not have the machines here at home? There's no good argument against it and plenty of arguments for it.
> There's no good argument against it
"I don't need 1000 pairs of shoes"
Indeed, US manufacturing has a higher output now than before outsourcing took off. But it employs far fewer people per inflation adjusted dollar of output. Because the manufacturing that stayed was largely the manufacturing that was so cost-effective to automate that not even third world labor could compete.
Just to add to your point: what stayed was either cost-effective to automate or had so much value added that the labour component is quite low (like jet engines).
Better than the three towns in my area that all gave away land, tax breaks, county paid power infrastructure to… coin miners.
All three districts fell for “thousands of tech jobs”… turned out to be a couple dozen of people they brought in.
What's comical is the US commerce secretary literally says this out loud:
https://www.youtube.com/watch?v=nsyyGHuPR88
I'm not even sure why most people want to bring manufacturing back to the US. If this was a video game with a tech tree, becoming a mostly service and consumer economy would be the final winning position. Bombing our economy to go backwards to being a manufacturing economy is only attractive if you want to turn the middle class back into serfs.
> I'm not even sure why most people want to bring manufacturing back to the US.
I am not sure why they think it left. The US manufactures far more today than it ever did in the past. The people were largely relieved by robots, granted.
> becoming a mostly service and consumer economy would be the final winning position.
Service isn't always fun. A lot of people don't like selling Big Macs. They are under the impression that if they could have a manufacturing job, they would enjoy work more. That is what drives it.
What they don't realize is that they could already have a manufacturing job. Manufacturers struggle to hire. But the problem there is that, per BLS, 70% of manufacturing happens in rural areas – whereas most people never look for work outside of the city they live in. Thus they conclude that manufacturing doesn't exist. Out of sight, out of mind.
Still, the value chain is what drives innovation. We should cheer efforts to clothe and feed ourselves that don’t rely on near slave labour sweatshops.
I agree and if people want an example of this that isn't about a "what if ..." future, they need only look at Detroit. While we still manufacture cars in the US, the auto industry will continue to automate any jobs that they can.
The real jobs are in building the datacenter and the people involved with the software that runs on the datacenters computers
Isn't that an even more compelling reason to do it, since unemployment is already low? It means more vertical integration, more domestic investment and productive capital.
i think a lot of people are fixating on the market.
I will share a metaphor you can spread.
I run a mile every morning not because it is the most calorie efficient way to get around, nor because it is the most monetarily productive use of my time, but because it keeps my legs strong and me healthy.
It's a good metaphor, but I guess the idea here is that a middle-aged sedentary person has suddenly decided, for his own good, to only eat what he can catch and kill with his bare hands.
My history is not that good, but I have a fondness for the guilded age. Lets look back for wisdom.
Consider a case that was not unique, the growth of iron production in the great lakes area between 1855 and 1865.
In 1855 it was 1000 tons of iron ore. By 1860 it was over 100,000. By 1865 it was a few times greater than that.
Now consider even a single year in there where production is increasing by thousands to tens of thousands of tons. Good business. (The machines used to load and unload those boats and the change in boat designs is awesome by the way. Worth looking up.)
That was early. With much worse technology, and much less capital.
There were crazier deltas in production increase in the 1890's and across the guilded age.
The US natural resources are gigantic. There are 330 million people living there. It has more resources than ever before in history.
Steel and plastic are currently produced in the hundreds of millions of tons per year in the US. That is hardly a middle aged man who cant do a pushup.
With a proper 10 year boom, US production could be exponentially increasing year over year. If it and its people choose it.
A lot of people in the US seem to be envisioning this. It is a really non-abstract vision even for americans of... modest intelligence.
It may be the case that providing the world with banking and facebook, and silicon plans, though possibly much more lucrative than physical production, is just too abstract for the average american to identify with as a positive.
Or it may be the case that physical production is more lucrative than software service export, but that the US government has mismanaged the market constraints in the physical domain and so it just appears to not be the case.
I am not sure which is true. What I do know is that for the average person, the idea of making stuff and trading it is simple to understand, and people like it. Even people who do not make anything identify with this goal. Maybe instead of iron and steel it will be nvidias chips this time around.
I think Americans dont like being the social media export country. Its just not a good future vision you can identify with.
i don't understand the obsession with jobs anyway
people don't want a job, they want money and purpose
most jobs barely deliver either
Human society has been optimizing for the wrong thing since 20,000BC.
To that end, the future I want doesn't focus so much on money, but on needs. Letting a market dictate "needs" is clearly not working for the betterment of humanity a whole. While it helps with progress, I believe there is an upper limit when human behavior is brought into the equation.
Market economies have gotten us to the point where true needs are made available to all in the developed world.
That's because money lets people efficiently deploy resources where they feel it is needed.
What makes you say it's "clearly not working", other than comparing developed nations to a non-existent utopia?
exactly, the market doesn't deliver human flourishing
Compared to what?
> i don't understand the obsession with jobs anyway
> people don't want a job, they want money and purpose
And society will not give them any of that without a job.
There, now you should understand "the obsession with jobs."
> most jobs barely deliver either
And no job delivers even less.
>And society will not give them any of that without a job.
Unless you are an aristocrat. Them your "job" was to fleece the peasants, and somehow "society" accepted this for thousands of years.
Managers, still accepted job but now anyone an join.
then we should change society
that is my point
Appreciate the fresh thinking.
Until the 90s, that's the trajectory we were on. For life to constantly get better whilst human servitude is lessened over time.
We should be getting ever shorter work weeks and earlier retirement ages. It's the entire point of technology.
> then we should change society
> that is my point
You're letting the perfect be the enemy of the good. Realistically, you're not going to change society to give people "money and purpose" without a job. Fixating on an unrealistic goal takes focus away from more realistic ones.
I mean, for a least a century people have been proposing using productivity improvements to increase leisure time and distribute goods more equally. And in that time work demands have increased (e.g. going from one full-time worker in a typical household to two).
Up until 1970s or so, productivity gains translated to increases in worker pay, so it certainly doesn't have to be like it is now.
I don't understand your comment. People don't need money, people need food to eat, houses to live in, and so on. And the thing about all this food and houses is that Jesus doesn't produce them, other people produce them.
And since producing all this is not such an easy task, the people who produce the food and build the houses want something in return. That's what we call jobs.
So when you say that jobs is not needed - you mean that there is no need to live in houses or that there is no need to give the people who build the houses anything in return?
Can you propose something better that provides money and purpose?
Keep in mind that most people are unwilling and unable to sustainably maintain self-employment.
Something like a grant from the government to work on your project of interest with no expectation that it be commercially successful. You want to be an artist the government gives you a grant to support yourself while contributing to the cultural lexicon. Scarecity is manufactured today for profit and not real; nobody needs to work at a 7/11 but they are essentially trapped into those sorts of jobs because they are profitable for those business owners vs a good use of creativity or labor for our species.
Now before you get all hung up how this isn’t possible. There is precedent. The government would do just this during the great depression, sponsoring artists knowing it is more valuable to have artists in the population than to lose that talent pool and benefits to culture over cold cruel economics.
Why on Earth would taxpayers give their hard earned money to other people to work on their "projects of interest"?
Scarcity is very real, I'm not sure why you would feel otherwise. Fortunately, we have largely eliminated scarcity of the necessities of life due to economic policies that are as far from your suggestions as possible, but that doesn't mean that they are produced at no cost or that scarcity in general does not exist.
And you don't need to go back 100 years for precedent. We basically paid people to sit at home during covid, and I didn't see some sort of renaissance as a result. Why would this be any different?
>Why on Earth would taxpayers give their hard earned money to other people to work on their "projects of interest"?
I don't know, but if suddenly someone really has a problem with the fact that the government is still not taking enough money from them to finance various unpromising projects, I am happy to take on the government's work and free of charge get any amount of money from them to implement the widest range of interesting projects.
Maybe it is more meaningful for people to be creative than it is to staff yet another sheetz on the side of the road because truckers tend to piss and need smokes at that intersection. But who knows maybe you are right and it is better we take on jobs at a local gas station if we have such a wonderful opportunity like that in front of us. So much innovation is produced as we know from people who have the opportunity to work 60 hour weeks on minimum wages between two jobs that won't schedule them full time and incur any potential added worker benefits from having a full time vs part time laborer. You are right.
I hate to break it to you, but people working as gas station cashiers as adults aren't going to produce much innovation no matter what. They work those jobs because they need resources to survive and they can't make more money elsewhere.
Like I said, the people you're talking about just had a significant period of time where they were effectively paid to stay home and had ample time to pursue their personal interests, yet no meaningful innovation was produced by that cohort that I'm aware of. What am I missing?
meaningful for who?
> Why on Earth would taxpayers give their hard earned money to other people to work on their "projects of interest"?
I think the implication here is that such a society is not built on markets or even money, but rather by individuals working together to foster a collective community that meets everyone’s needs.
Yes, communism. The more advanced we become technologically the more sense it makes. We’re largely at a point where most jobs are made up - created to give people something to do because if we don’t then they die.
We’ve pushed consumerism to the absolute max. Now, most goods are pretty much worthless. But we have to buy them, or we die. That’s how markets works. We work, and we consume, or else.
That made sense when the work we were doing was beneficial and the stuff we’re consuming was needed. We’re past that now. Most people are working to produce something dumb, or worse, evil. New addictions, new poisons, new bombs, and new problems to be solved by new software.
If you look around and think most jobs are made up, most goods are worthless, and you have no choice but to make discretionary purchases, I don't know what to tell you.
Communism makes no sense until we reach a post-scarcity economy, which will never happen.
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so your idea is basically to mooch off of people who do have productive jobs, by proxy of the government?
there is no such thing as an art-based economy
"self-employment" seems like a bit of a joke, like `self-flagellation
money to survive, purpose to thrive
you don't need a 'job', and particularly a 'job' who's only purpose is to make profit for someone else
we really need to rethink society
You need money to buy food, shelter, etc. to survive.
How do you get money when you are unable to do so without an entity (e.g. a company) providing direction and resources?
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I regularly pay in excess of $100 for my shoes and would be a bit suspect of the longevity shoes that didn't cost significantly more than that. I wonder how these costs break out when thinking more about "being shod" than "buying shoes." I have ~$200 shoes that last me over 2500 miles (about a year of walking for me). I doubt a pair of Nikes could manage that but I haven't tried. On long trails, sneakers are usually worn out and trashed after 500 miles. Yes, different terrain but it's not just the soles that give out. Eventually, all soles wear out but the uppers are still good. I've had a cobbler repair some shoes and it's felt very worth the cost.
I upgraded to Red Wings and Adidas Sambas. I'm astounded by the durability of both. Shoes used to be something I changed every season. It was indeed worth the cost.
Sambas for walking or running or sports? I've had good luck with Ecco shoes with Vibram soles for walking but my favorites were discontinued. Luckily, I bought a bunch of extras. As I've gotten older I've learned that if you find some shoe or clothing you really like, buy backups. So many great products are discontinued at some point.
As everyday shoes. I like how they look, they're decently comfortable, and they lasted through the summer plus a hike or two without issues.
Agreed about backups. I already miss that Uniqlo shirt that apparently isn't sold in Europe.
Interesting article but fails to mention about Nike big pivot to DTC around covid times. So will likely be taking home a lot more than 9% (or _were_ up til last year)
what is DTC?
Direct To Consumer. Selling directly to their customers on Nike.com disintermediating Foot Locker or another distributor/retailer network.
probably direct to consumer, website sales and the like.
Yes, direct to consumer
I was going to link the excellent solereview article but it looks like that's exactly what the post is about.
I used to be able to buy good running shoes on clearance every year at $30-$50
Even through 2020-2021 or so
But not anymore, now even on "clearance" they almost never drop below $100 and never ever to $50
There was an interview with the local marketing managers for Coca Cola and Pepsi when I was a kid. I vaguely remember it (and also the idea was somewhat foreign to me since the world had just started opening for eastern Europe and it was the first time many of us heard the names such as Coca Cola, McDonald's, etc). The one thing that stood out was the Pepsi manager raging about campaigns, failed products and whatnot. The Coca Cola manager calmy looked at him and said: "Sir... Look at our product... Who in their right mind would pay for a rusty-colored liquid as a beverage? Absolutely no one. It's all about the advertisement".
Same story here - would you buy a pair of shoes from anyone, seeing the horrible conditions they work in, sleep deprivation and poverty if you knew they'd still get close to nothing? Probably not. You see a fancy store (or website these days), you see a product you like and you're invited to open up your wallet for a fancy pair of shoes. Deep down you still know they came from the people working in horrible conditions but, you know, out of sight, out of mind. And thus, you are willing to pay the extra price.
Interesting article and substantively correct about the direct impact of tariffs. But is using a bit of a straw-man as a hook. It is very easy to buy decent quality sneakers for $2 wholesale, and Nike do sell a lot of $150 sneakers. No one assumes that they are just taking that as profit; it is mostly spent on advertising (sports sponsorships etc.) supporting retail etc. Fundamentally, they can and will choose to change the percentage they spend on raw materials and complex manufacturing techniques if that is what the marketplace demands.
I recently bought shoes while in Thailand on lazada $1.5 with shipping. Of course the quality was terrible and all, but I just don’t get it how they could cost less than $1. My guess is labor camps.
Just the other day, I got a pair of shoes at Walmart for TREE FITTY.
The most comfortable pair of shoes I own are also from Walmart and they cost less than twenty bucks.
How do my $3.50 shoes from Walmart fit into this picture that justifies why Nikes are $100?
This article fails the smell test. Or maybe it’s Nike’s business model that is failing the smell test, I’m unsure.
Also, anybody commenting who claims they “need” a pair of Nikes for their special feet should try being desperately unemployed and borderline homeless for a while.
You don’t “need” anything.
This derekguy guy always has the best posts clothing related afaik.
Also > Again, it's a popular misconception that all overseas production is sweatshops. Production can be done ethically abroad and still be relatively cheap because the cost of living is not the same everywhere. I encourage you to note assume that every Asian worker is a slave
No not necessarily slave slaves but I do assume they’re wage slaves, at least the line workers, the higher ups will be compensated a bit better I’m sure.
>From this model, you can see a few things.
First, adding $26 tariff at the port doesn't just add $26 to the final price. Everything here works off of percentages. In this simple model, we say Nike has a landed cost of $25, sells it to Footlocker for $50, and they retail at $100
Not sure I agree that everything works on percentages. Shipping has a fixed cost, etc.
All around the "developed world", the shop/retailer/supermarket/distribution part of the price of a product is around 50%. Whatever the product or its price.
I'm wondering if part of our issue with crazy inflated prices despite low margin for industry and manufacturing actors is not because of this abused margin for retailers. That have also a huge power as it is difficult to negotiate when you depend on your product to be buyable in the market.
To me, that explain a big difference with asian world, where you notice, even for asian shops in western countries that prices are still quite cheap.
Something parallel to that that I have noticed is that decades ago we were used to buy from small individual shops, but now a few retailers and chains have almost a monopoly on the market.
I see the same pattern for movie theaters. They used to be independent mostly with affordable prices. Now 2 or 3 big chains bought them all, and it is very rare to still encounter independent movie theater. And once they got a good monopoly, ticket prices skyrocketed to insane levels.
If you look at the retailer margin on an individual product, it looks pretty big. But if you look at their overall financial report, their overall margins aren't anywhere close to that.
There's a lot of cost to running a retailer. If it was so easy to avoid the costs and the margins, you'd see more brands going direct to consumer exclusively, but most brands do a little direct to consumer and most of their sales through retailers.
Movie theater economics basically suck and have gotten worse over time. The projectors are very expensive, the pricing to show a film is bad, so ticket and consession prices go up and people stop showing up. Big chains have more negotiating power for film terms and equipment, which can help them survive. Sometimes the independents band together for group purchases, but I think that doesn't always happen.
While retail gross margins are not atypically on the order of 100% (less for more expensive goods, much more for cheaper ones) actual net margins are typically single digits. It costs money to retail goods.
> retailer part of the price of a product is around 50%
Not according to the article. The retail price is $100 for a shoe they buy from the manufacturer for $50, but $24 of that $100 is "discounts". Therefore the average price sold at is $76, making the retail part of the price 1/3.
> I see the same pattern for movie theaters. They used to be independent mostly with affordable prices.
Movie theaters used to be extremely integrated with the movie studios. You had to go to a Paramount movie theater to see a Paramount movie. Antitrust laws broke that up until just recently Sony bought Alamo Drafthouse.
But that said, there's still a lot of different brands of movie theaters around me. On top of the normal Cinemark and AMC there's also Alamo Drafthouse, Studio Movie Grill, B&B, Angelika, and several other single-location theaters.
You’re essentially just claiming price gouging without saying as much because otherwise the economies of scale would not exist (which anyone with any knowledge of how the economy works knows does in fact exist). “Smaller number of larger players with greater buying leverage as well as lower marginal costs leads to higher prices for consumers” is just using a lot of words to say “evil corporations are price gouging”, which is not true.
Isn't what you're describing the effect of hedge funds moving into everything in order to "maximize returns"?
A lot of that retailer margin goes into (a) wages, i.e. the jobs that everyone is supposedly trying to create, and (b) rent.
I think part of the bet of tariffs is that people will be less likely to go to physical stores moving forard anyways
Things have been moving in that direction since at least 2008:
https://en.wikipedia.org/wiki/Retail_apocalypse
I would argue earlier as malls stopped being built by 2007....
https://en.wikipedia.org/wiki/Dead_mall
The old adage that distributors mark up 100%, and then retailers another 100%, rings true here
Nike is the distributor in this case
Thanks for that threadreaderapp link neonate!
For some reason there's no reply-link to your post, but this is the first time in a very long time I've even read a twitter thread because of how much more pleasant it was at threadreaderapp!
Very interesting analysis/breakdown of the various layers of costs as well!
While the hypothetical shoes from Asia retail for $100 and US made shoes are $220ish, in real life the Asian made shoes cost $190 and the US made shoes cost $220. It’s insane how much a little bit of fabric and foam gets marked up as it works through the value chain.
This shows how non-automated retail is. on the production line, workers assemble the crosses in 5 minutes. And when selling, the courier will spend 15 minutes looking for your house to give it to you. It is reason why production is 1/4 of the price
Assuming it's not a new material, the cost of shoes are more like $3-$5, not $22.
Clearly shoes and textiles in general are extremely difficult to automate, but you only have to build one shoe building robot, and copy it. Why hasn’t this been done? Expecting a “too hard” answer honestly, but is it really?
Manufacturing machines are hard to invent, and harder to keep running right, and even harder to network together into an effective factory. You need skilled operators, technicians, and engineers to design and run a factory.
You also need to put down a big whack of capital upfront and will see a return years down the line, hopefully.
With low enough wages, it could easily be financially better to rent a big building in the third world and staff it with actual people.
This makes a good argument against centralized production and knowledge. It would economically be much more reasonable if any good could be produced anywhere at any time. Smaller production facilities for localized sourcing. Would IMHO also be much more in line with a free market. Everyone would be free to source goods in any country or location of their choice. Coupled with open knowledge this could be a truly free market.
But will never happen because currently free market means one business is free to dominate and control a market.
You're asking for decentralization. There's a reason you often get centralization in industries: higher productivity due to network effects and/or economies of scale. Even within China this is true, as some areas are particularly known for manufacturing (or specific types of manufacturing).
Spreading things out sound good until you realize it's doubled your costs or halved your productivity.
But I think we're missing an important point here: moving production to low cost environments just moves costs from business costs into external costs, putting them on society.
As for productivity, I think that's an issue that could be addressed but people generally avoid the answer to the why question.
> moving production to low cost environments just moves costs from business costs into external costs
[Citation needed]
Of course that can happen, but it's hardly guaranteed. If a company in the US moves a call center to a lower cost city, that's hardly foisting externalities onto anybody.
> people generally avoid the answer to the why question.
What does that even mean? What "why" question?
Typically when people say cryptic things like that it's because they hold some unhinged opinion, eg "Yes, schools in urban centers perform worse but nobody wants to answer the real 'why' question. Personally I think the black community...devolves into racist rant held up by racist 'science'".
So OP, you want to defend your honor by making transparent what you intentionally left opaque here?
>If a company in the US moves a call center to a lower cost city, that's hardly foisting externalities onto anybody.
Sure it does. That new small city then needs to upgrade their infrastructure to support that business.
It will never happen because of economies of scale.
What type of intervention of the free market do you approve of as an alternative that would incentivize local production over economies of scale? It essentially comes down to tarrifs and protectionism.
Free market means voluntarism. You say that consumers ought to have the freedom to source goods anywhere, but the only way to preserve this "freedom" is to either force producers to operate in unprofitable conditions (which is not stable-state) or force consumers to pay a premium for those goods.
If a product becomes unstable due to increased competition it's not exactly been stable before. Also the whole premium is quite off. You got good items for fair prices before factories started producing bread. Often at higher quality. I'm old enough to remember. Honestly seems like the current market is only working because of regulation and protections of all kinds. That to me is a clear sign of volatility.
what
It sounds like you're advocating for a centrally planned market that allocates resources according to a grand, rational vision. A free market will by definition be messy, sometimes inefficient, adhoc, and defy any notion of a grand vision. You have to trust the free market to produce the best results in the long run, and to be the most responsive to change (opportunity).
The “free market” cannot exist. It’s impossible.
All you can ever do is trade manipulation. By who and to what agenda.
Not really. The opposite. The current market is centralized a lot more than people want to see or admit. I had trust in the free market for a long time but it has not really materialized the best results. As can be seen by the current state of affairs. Everyone fighting over who gets to have money and production is not freedom, it's a war without guns.
Just to make this clear, a truly free market would be desirable but I don't see it materialize on this world.
> The current market is centralized a lot more than people want to see or admit.
You completely misread their comment. They said central planning, as in, a command economy.
Considering I talked about a truly free market, central planning then seems to be a weird reaction. Why would that be related? It's not like I suggested a Chinese system, I advocated for one which is free from monopoly and focusses on local production and diversity for sourcing goods.
A truly free market? But free from monopolies and adhering to <insert constraints>?
Kind of sounds like a regulation and not a truly free market.
Finally someone might get that the concept of a free market is a fairy tale
I hope the elites of US are not thinking about moving shoe-making back to the US because it doesn't make sense.
I'm sure (I hope, actually) that some policymakers, or some researchers, have done some conclusive researches about -- give X years into the future, and let's see we do not want to disrupt the current social-economic reality too much (no revolution, no major wealth re-distribution, no world wars, etc.), which industries can we bring back, and into which state, and sell its products into which countries, realistically.
The opinions of "elites" simply don't matter. There's only one guy who matters when it comes to policy now. And he's not known for his thinking abilities
You don't actually think he's making these decisions himself do you? He has advisors for these things.
No, he doesn't have advisors. He has a cabinet of sycophants who parrot his every flip-flop. His "advisors" have made it clear several times now that they have no idea what the plans are until they're announced on Truth social.
Yes, his advisor, ChatGPT, account name donjr3@yahoo.com.
If the elites don't disagree with him I'd say they probably "in average" agree with him. Trump is just one man.
Depends what you mean by "elite". Obviously a ton of people disagree with him. I'm just saying, that doesn't matter. There's not a single Republican in government that's willing to publicly contradict Trump on anything.
It doesn't make financial sense when the tax policy of the US is to tax domestic companies that produce things but not foreign companies that produce things and benefit from selling them in the US market.
We don't need to do research to decide what makes "sense". The market will figure out what makes financial sense themselves. The only thing we need to know is what the tax rate for foreign producers should be so that domestic companies are not the only ones shouldering the federal tax burden.
I think the one thing I am not seeing much discussion on is, will the end consumer pay for these $150 sneakers or will they simply switch to lower cost alternative brands?
fun fact: sneakers are already $150. went shoe shopping at a "sketchers warehouse" and found a pair that fit well and noped them back on the shelf when I checked the price.
My sneakers have been $200* for the past 5 years but then they're made in the USA. It's time to buy a new pair.
* - I have a large foot and believe I'm paying primarily for the materials in my shoes, which easily weigh twice what my friends' shoe do!
Unless you're getting goretex or leather (and even then, shoes are small), there's not really anything in a shoe besides a bit of rubber, some EVA foam, and probably some plastic mesh. The materials cost is very low.
yes, I know we already have $150 sneakers, but you can get sneakers for $30 at Costco still.
The assumption in the modelling is that sales will decline proportional to the price increase. IOW, they'll sell 2/3 as many shoes at 150% of the price.
Probably not a great model, but it's simple and a reasonable guess. Remember all the competitors will have price increases too.
I wish the discussion included the margins the fashion industry makes. In the labor sector, 10%-20% margin is respectable. But in the fashion and consumer goods sector at least 30% margins are expected. 80% margins are normal for “luxury” goods, which I’m sure is the bracket Nike falls into. I wish margins were included in the thread. It’s only true that everything increases in cost if you also have to keep the same margins.
There are profit margins in the thread. They’re a lot lower than what you described.
OP will be talking about gross profit not net, and also totally ignoring the substantial overhead investments in brand marketing, customer service, stores, etc, that luxury goods brands have to make.
Relatively easy stuff like shoes can be made in a bunch of countries and that production will just move to whoever has the best tariff deal at the end of all of this.
More interesting will be stuff like electronic components. Most of the cheap versions are all made in China. More expensive versions can be sourced in Japan, Taiwan and Korea (likely to do tariff deals). I think we might be looking at the end of very cheap electronics for awhile.
"Retailers mark up the shoes 100% to recoup various costs and generate a profit."
Whenever I enter any physical store it always boggles my mind how insanely inefficient the whole endeavor is for all involved. But that retail basically swallows half of the price is just unbelievable.
Are comfortable and repairable shoes possible and sensible from an economic point of view? Any recommendations?
Classic leather dress shoes can last decades and can be resoled many times.
But most people don't consider them comfortable. More the opposite.
But no, the foam and rubber modern "comfortable" shoes are made of are not repairable. Fundamentally, the foam or other sole material simply breaks down. The rubber wears away. And the woven and plastic materials the upper are made of fray, lose padding, and otherwise break down as well.
I've used shoe goo to get more life out of shoes. It's marketed as an adhesive, but you can apply it to the bottom of the sole to rebuild thickness to the tread. A single tube could be used for dozens of repairs. After that for me, usually the textiles in the upper fray from the inside out, and I just ignore it until it becomes externally visible or uncomfortable.
I don't think more extensive repairs are economical, and you are better off wearing shoes you like until they disintegrate. There is a bit of mythology about buying expensive boots and repairing them in the hope that it's more economical, but it's really not: https://mastodon.social/@danluu/111068432320682422
Comfortable is of course subjective, but my current go to for "fancy" shoes is Meermin. For about the price of a pair of higher end Nike or Adidas shoes that are just foam glued to fabric, you can get a pair of "traditionally made" Goodyear welted leather shoes. Meermin, for example, still does some manufacturing steps in China. As far as I know they sew together the leather pieces in China and then ship them to Spain for lasting / final assembly / polishing.
It goes to show how the big athletic shoe companies are taking the piss. Of course they have middlemen and retailers and whatnot who need to take their cut, but if I can buy a pair of nice leather shoes, made from leather from UK/French/Italian tanneries, with about a million steps done by a human, for the same price as some glued together foam and fabric...something is wrong.
I have 4 pairs of Allen Edmonds shoes. The oldest pair is 6 or 7 years old. With some light care (conditioning / polishing) they've held up very well. To address another comment about comfort: They're quite uncomfortable at first. Over time the leather (and cork insoles) mold to your foot. Making them comfortable.
These are leather dress shoes though. As far as I know, this doesn't exist in the athletic shoe world. Considering the materials used in athletic shoes, I don't know how a "repairable" athletic shoe could exist without some serious re-engineering.
I don't think they are right now.
I have very wide feet, so much so that I've seriously considered manufacturing my own shoes (possibly with a 3D printer). Shoe makers and repair shops do exist but they are becoming quite rare.
My understanding is that a good quality repairable shoe is about $500 or about 5x the price of the $100 shoe we're talking about. Repairing it is labor intensive and adds even more to that cost. So, I can buy at least 5 pairs of $100 shoes for the price of a good quality and repairable shoe and that doesn't consider the repair costs.
I've had a couple of leather shoes (goodyear welted oxfords) repaired, and the last pair cost me around $100 to get re-soled. It was a local cobbler that has a very, very small shop.
I mean if you pay $300 and up for a pair of shoes, it could make sense. If you pay $100 for a pair, you might as well just purchase a new pair. In my case I re-sole the shoes because my shoes fit me well, and they're more on the high-end and thus I've paid a bit for them at the time of purchase. Makes sense for me to re-sole a pair of $1k shoes, rather than purchase a new pair.
To get the prices down, you'd need a lot more cobblers though. And there just aren't many going to trade school for that. It is very much a "artisanal" craft today, akin to tailoring.
Once I was in the US and bought a pair of New Balance that were made in USA. I had the exact same model made in Vietnam or Indonesia.
The Asian made shoe of the same model out lasted the US shoe by a couple years. The US made started falling apart less than a year in.
What are the challenges that prevent humanity from further automating clothes production? We don’t weave fabrics by hand anymore, but we still sew pieces of it together by hand. Why is that?
Because weaving is simpler and more repetitive than sewing. Sewing is both a pretty precise job and also lots of different movements, angles and very few straight lines. All of these make it less efficient to automate.
If you're interested in the history: it took quite long after during the industrialization to invent a working sewing machine. There are quite a few interesting Youtube videos for example on the history and workings of the sewing machine.
"Everyone needs a fixed percentage to make money"
I get they WANT to, and it's what a shoe retail strives for, but this isn't accurate.
Cars for example aren't 100% marked up. That would be insanity.
Shoe dealerships don't sell used shoes and have service/parts departments where they make most of their money
Because cars are a high $ item vs. shoes. A business's overheads don't scale linearly with item price, so it's possible for a car mfg to achieve a similar net profit margin to a shoe mfg but with substantially lower gross profit margins.
Now they’ll just have to make shoes for $11 or new balance will have to come back to North American manufacturing and make shoes for $40 wholesale
Shipping , customs , duty , port fees , transportation , packaging that can survive across the ocean should all be things that make the product unrealistic to make outside North America, not to mention environmental tariffs that should be applied to products made in Asia.
Damn! I tried to answer the question without looking at the thread and arrived at a unit cost of 28 % of the retail price, after deducting reasonable guesses at VAT, store margin, shipping, etc. Fairly close to the quoted 25 %.
Fermi estimation is awesome and if you're one of today's lucky 10,000 who haven't heard of it, this is your day!
So, 100$ Nike shoes will soon be 125$.
The specific (fictitious) example they gave was $100 -> $150 due to a ~$23 tariff.
> But if we bump the cost of freight, insurance, and customs from $5 to, say, $28, then they wholesale the shoes to Footlocker for about $75. And if Footlocker purchases Nike shoes for $75, then they retail them for $150. Everyone needs to fixed percentages to avoid losses.
The point being that many parts of the supply chain don't operate on fixed costs and instead percentages.
> The point being that many parts of the supply chain don't operate on fixed costs and instead percentages.
That's how it was working in most wealthy countries, where tariffs were generally low or very low.
I don't see why it must continue to work that way in the USA with 50% or 100% or more tariffs. If Footlocker wish to charge double the post-tariff price, that leaves room for a competitor to change double the pre-tariff price.
(Or double the pre-tariff plus a tiny bit, to account for the increased cost of insurance, theft etc.)
Still $25 when they hit the burlington or ross in 6 months then back to $75 when people resell those ross shoes on ebay.
What about the $25 shoes at Walmart?
I prefer leather shoes that last five years or more, and will happily spend $200+ for them.
That is great for those who can afford $200+ shoes, not so much for those who're already struggling to make ends meet. Sure, in principle, they will save more long term. But it'll take time for those savings to realize, and they need shoes now (to wear them to work, for one).
How is this relevant to the article?
For me this glosses over on why would see the same 100% markup on the customs duties as they rise. A 100% at a low tariff rate is just pricing in the increased paperwork and accounting, but at a super-high tarrif rate this become pretty unjustifiable. Why is not more likely customs becomes mostly a passthrough cost?
It is a passthrough cost because of the business models. In this example the importer (Nike) is paying the cost, and then retailers are buying the product from them at a price that includes the tariff. The retailers don't care why the shoe is $75 or $50. A retailer is concerned that there are customers willing to pay a price which enables them to make a profit. For most retail businesses that price needs to be about 2x cost of goods.
Until you get to extremely high-end goods this multiplier system works fairly well to accommodate the various costs the business has. It is an assumption that there are many business costs that scale linearly with sale price. In reality not all do, but there are many: insurance, return costs, loss, and customer service expectations all scale with dollar values.
Edit: if we switched from an import tariff to a foreign goods sales tax we could avoid this particular problem.
> if we switched from an import tariff to a foreign goods sales tax we could avoid this particular problem.
How are these materially different in terms of what the end consumer pays?
Because tariffs are calculated based on the value of the good at the time of import, while sales-taxes would be calculated at the end.
The article explains the tariff scenario. In the tax scenario, Nike can operate like in the pre-tariff world, while the retailer would have to charge the tax.
But the consumer is still the one who can either afford the shoe or not. He doesn't care who is collecting the tax or where in the pipeline it is assessed.
When in the supply-chain you are creating the "taxation" matters to the final cost, assuming 1) the gross margins remain the same and 2) the costs scale linearly.
Consider a fictional supply-chain with three players A, B, C. Assume that B and C have 50% gross margins.
In a no-tax world, if A sells the product to B for 10$, then B to C for 20$, C will sell it retail for 40$. (A:10$ -> B:20$ -> C:40$)
Now imagine a 100% tariff scenario for the transaction between A and B. Now, A sells the product to B for 20$ (10$ + 100% tariff), then B to C for 40$, C will sell it retail for 80$. (A:20$ -> B:40$ -> C:80$). This nets the government 10$
In a third scenario, imagine a world where this 10$ is not charged as a tariff but as a sales tax. A sells to B for 10$, B to C for 20$, and C to the customers at 50$ (40$ + 10$ freedom tax).
By changing where in the supply chain the tax is levied, we arrive at a lower retail price for the same tax income. This is a natural consequence of the above two assumptions, especially the idea that costs scale linearly. If maximum income from the taxation of imported goods is your goal, this is the way to go. Whether this would have the desired effect of discouraging imports is another matter.
I think in your scenario that B and C would drop their margin percentage because the tax does not represent anything that will increase their costs in handling the product. E.g. B would sell to C for $30 and C would sell retail for $50, making the same profit in dollar terms. If they don't, a competitor will, because a consumer will prefer the $50 price to the $80 price.
You're suggesting businesses B and C would just absorb the tariff cost by reducing their margin percentage to keep the same dollar profit. However, as Cerium noted earlier, many business costs do tend to scale with the price of goods, making this difficult without impacting profitability.
For financial costs, higher inventory value due to tariffs increases the cost of capital (interest on loans/tied-up funds), insurance premiums, and potentially transaction fees.
For operations costs (handling and labor), increases due to indirect effects: As the price of the average consumer basket increases due to tariffs, the average citizen either demands and receives higher wages or has to reduce spending; this means that the per-item variable cost of processing goes up, either because the wages of those employees increased (higher wages) or because the sales volume decreases (reduced spending).
Of course this does not mean that every business will have exactly this outcome. And absolute size of these effects is also dependent on the actual demand elasticity.
I think the shoe graphic after the $75 cost is disingenuous to be still shown as $100 base instead of $150 base. This would show that this basic "100% markup" is just scalping. Expenses and overhead would not double so it's just more in the profit bucket.
If your inventory now costs you $25 more per unit, your carrying costs are higher.
> First, adding $26 tariff at the port doesn't just add $26 to the final price. Everything here works off of percentages.
This doesn't have to be the case though, right? It seems very weird that when you jack up tariffs, some middleman in America is seeing their profit jump.
For me it just proves how ineffective big companies are…
And how much of a sucker consumers who care about the social clout of brands are
cost != value and value != price. and consider alternative cost - highly trained workforce making shoes is a waste of resources.
It is better to distribute or sell shoes than to make them. It is even better to finance/own the making of shoes or even better - the selling/distribution of them. That is Economy 101, originally known as Das Kapital. The people who read those rules wrong call themselves marxists and insist on everyone producing a lot of the same standard shoes, and selling them to people at cost, $25. The people who read those rules right try to find how and where to make a factory, distribution center or retail store, or at least where to get a share of it :)
my guess, less than $5
This is closer to correct than the article's claims. You can buy sneakers for $3 on Alibaba, as an individual: https://www.alibaba.com/product-detail/Cheap-New-Trendy-Leat...
Or $0.80 if you make a big order of 100k.
Depends how small the child’s fingers are.
good luck getting the average person to even get past the 2nd slide with basic calculations lol. he's preaching to the choir.
i've seen certain groups defend war (really cannot imagine this) and now i'm hearing from the same group i'm a part of, well it's okay to off-shore all this because the president doesn't like offshoring? for years fashion forums have bemoaned the offshoring of american clothing. if the president said he supported communism, would certain groups suddenly become free market capitalists?
have people always been like this? was this 'anything but agree' position common back in the 70s and 80s? is this an american thing or christian society thing?
Trump's tarifs are indeed absolutely idiotic, but so are all those people claiming that free trade is entirely positive and ignore all the problems that arise from the West being unable to run industries anymore.
According to https://news.ycombinator.com/item?id=41283368 we should be linking to the primary source.
Q: Is there a specific reason* that this thread links to threadreaderapp?
* other than politics, which we try Really Hard not to bring into HN...
One great reason is that you need an account on X to read the thread. I deleted my account many months ago, along with many, many other people.
I've just opened https://x.com/dieworkwear in a private browsing window and - from here at least - I don't appear to need an account.
From what I can tell you need an x account to read replies, so I can only see the first tiny bit of the thread without an unroller. (For this thread: https://x.com/dieworkwear/status/1909741170953273353)
Thank you.
afaik you still need an account to read more than the first post in a thread, and many of us don't have twitter accounts any longer
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I still don’t understand what’s the goal of this shitstorm alienating allies and destroying the economy with crazy uncertainty.
But fake money will not save the country from ww3. A superpower needs to have an independent manufacturing base to be taken seriously, nukes deterrent is eroding.
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Do you not realize that one country learns how to make useful things like blouses, computers, phones, shoes, and the other country only knows how to make fake money?
What happens when the country that makes everything else realizes they can also make up fake money just as easily as anyone else?
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Why do you keep saying "fake money"? China can use that fake money to buy real things from anyone in the world.
It's improbable that Trump has Klinefelters because people with Klinefelters tend to be infertile. It's more likely that he got forged results from a shady clinic.
Countries with excess USD buy T-bills because it beats holding it in a bank account, and converting it to CNY would be bad for exports. But some other countries also put it to more creative uses like sovereign PE funds.
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XXY was not on his card. It was YXX. Some idiot on a rumor mill website speculated it was due to this that he must have the disease.
It’s debunked. Further he would be an incredible case study given his stature and appearance. For calling MAGA people dummies, it appears you can’t even read.
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> I give you this fake money in exchange for actual real things. And then you loan me money back. That is how the trade deficit works.
You’re presenting this analogy as if it’s describing a situation that is good rather than a four alarm fire, and you’re calling other people stupid?
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> As the US has switched to a post-industrial economy, a lot of the wage growth has been in knowledge intensive services—medicine, law, engineering.
I.e. bullshit jobs.
Hey! There's no need to make fun of my job!
I mean only one of those is a bullshit job.
Article has absolutely nothing to do with the actual cost of shoes. Just the simple cost of model of manufacture -> distributor -> retailer. Nothingburger.
bottom line there's very actual margin for the companies to play with on tariffs.
Best to avoid the tariffs then? Is there a reason that Nike can not make shoes in the US?
They will be more expensive to make in the US and will likely sell less shoes as a result. This will be the case for most things that are cheaper to make overseas. Or with things that are difficult to grow here at scale.
Nike doesn't sell shoes. Those are a loss leader. They sell you brand and lifestyle bullshit at a very high markup.
"In fiscal 2024, footwear accounted for 68 percent of Nike's total revenues." https://www.statista.com/statistics/412760/nike-global-reven...
Revenue doesn't really show they are not loss leaders. Profit would be more useful.
That's a bold claim. Do you have a source for that?
subtlety is lost. I am saying they aren't selling you $200+ shoes. They are selling you a shoe that maybe costs them $10 and $190+ of "brand".
So how are they loss leaders? I understood the comment as "Nike makes a loss on shoes and actual profits come from the other branded stuff they sell".
No, you said they were loss leaders, which means Nike loses money on them.
Now you're saying they're not, that Nike makes massive, massive profits on them.
Sorry if I'm not seeing your "subtlety" here. But instead of blaming me for misunderstanding you, it's fine to just say whoops, that you were mistaken about the term you used, or meant something else. We all have brain farts sometimes ;)
Also, the article itself gives actual numbers. You don't need to make up your own here, which are not correct.
I would also say Nike WANTS to be a lifestyle brand, but in public perception they haven't been able to move out of an athletic shoe brand.
"I encourage you to note assume that every Asian worker is a slave. " The tone of this sentence, I dont know, a bit disturbing.