[namdnay]

Without a very strong (and therefore expensive) social security net, “Letting people work for whatever wage they can achieve” is slavery. See 19th century Britain

Germany still has a strong industrial base, without a race to the bottom and with strong unions. So it is possible :)

[inglor_cz]

"Germany still has a strong industrial base, without a race to the bottom and with strong unions. So it is possible :)"

A lot, and I mean a LOT, of German industrial base is now located abroad, in Poland, Czechia, Slovakia, Hungary, Romania. These countries are rather close, but because they belonged to the Soviet Bloc, their economic development was retarded so much that local wages are 20-30 % of wages in Bavaria, but the workforce is qualified and the infrastructure adequate. This is a historic anomaly you do not have in the U.S.

Come here (I am in Czechia) and look around, the countryside around cities is absolutely dotted with German-owned factories that mostly produce parts. Those parts are then moved by trucks to Germany where the final product is assembled - and so the miracle of higher "work productivity" in BRD is created. Of course you have nominally higher productivity if you finalize products.

This is, by the way, how Viktor Orbán gets his political way. Hungary is absolutely vital part of German industrial base and German industry gets premium conditions on the ground. So for all the shouting about values and rule of law, German CDU/CSU and Orbán always find a way to coexist.

And as for race to the bottom, look to former East Germany. There, people want German wages from German bosses. They do not get them, most of the industry moved abroad where cheaper workforce is. Former GDR is an economic periphery where anti-system parties command majority of the vote.

[cloudinshape]

You have to square the circle.

Wages in the US are artificially high because of the dollar's position, but the US needs to either a) match the wages of the countries producing similar stuff or b) increase productivity and value to the levels of countries like Germany.

Since b) requires decades in factories, supply chains, trade agreements and most importantly training in actually producing things which means science and engineering, exactly the occupations an increasingly large portion of the US population has been taught to abhor, it is very unlikely to happen. The US has spent the last decades destroying all those things, so the only real option is to sadly let wages fall to levels markets are willing to pay for. It will bring a lot of suffering but is the consequence of decades of mismanagement and complacency, and it is unavoidable so it will either happen by will or by force. And we know it won't happen by will.

Of course there is always c) keep forcing the rest of the world to pay for the US standard of living while they themselves live beneath their means, but that is the actual problem now so how much longer can it last?

[8note]

There is also d) the owners take smaller profits

[CountSessine]

The average operating margin for the S&P 500 is 10.53% (although that may have been 2018). And economists are worried that even that is high - traditional manufacturers like Ford typically manage operating margins of ~5%. Workers are already getting 95%. And then everything after that like R&D, marketing, and capital amortization has to come out of that 5%. And then finally a bit is left over for earnings for the owners. You’re mistaking wealth for income. Surely the workers could use more wealth, but what we’re discussing is the price of goods and this is operating revenue and income. And workers already get the lions share of this.

If you’re going to make US manufactured goods cost competitive with foreign goods, much of it has to come out of that 95% operating revenue that is operating expenses, most of which will be employee wages. There’s no way around this.

[hannasanarion]

workers are not getting 95%. Corporate profit and revenue is at an all time high, but wages are down since the 1980s. All that corporate growth goes into price fixing schemes and mergers to establish monopoly, and "consulting fees" to suspiciously named LLCs in the Caymans.

[CountSessine]

Read some 10-Qs for some big companies sometime. You might be surprised. Like I said - S&P 500 average operating margin was 10.53% a couple of years ago. And that’s crazy high - probably because of pharma stocks and the US’ dysfunctional generic drug regulation.

[sudosysgen]

This isn't a correct way of looking at it. You're assuming that the sum total of profit generated is in that one manufacturer. It isn't the case. You have subcontractors that also make an additional ten percent, then materials coming from a supplier that takes another ten percent, which comes from raw material suppliers that make yet another 10%, and then you're going to have consultants in R&D and marketing that might make even more than 10%, and so on. So it really can end up quite a bit higher than that.

[CountSessine]

Possibly - although if your suppliers have operating margins that are as wide as yours, or wider, it might actually make sense to just buy them and take those earnings for yourself. I wonder how many of Ford's suppliers have an operating margin as wide as Ford's 5%?

[cloudinshape]

I know these discussions always end up in worker vs owner debates, but what I'm talking here is about the nation.

Factories will need to adjust their prices, now you take that as you will, and if one is naive one can think it means executives will take a pay cut while workers do not, but in the end it mean less wealth for everyone, less money for taxes, less money for shareholders, less money for executives, and of course less money for workers. That is less wealth for the nation.

So yes, owners will take smaller profits, along with everyone else.

[southeastern]

>keep forcing the rest of the world to pay for the US standard of living while they themselves live beneath their means, but that is the actual problem now so how much longer can it last

Our entire society is built on this, though. Silicon Valley wouldn't exist if electronics couldn't be produced for comparatively cheaper overseas. You bring up an interesting moral point, but if you're serious about that there's a lot of reckoning society will have to deal with. It's not just going to affect minimum wage lol. It'll affect wages across the board. You're really talking about totally reforming the economy

[tomcam]

> Silicon Valley wouldn't exist if electronics couldn't be produced for comparatively cheaper overseas

Silicon Valley literally exists because it was an electronics manufacturing center.

[CountSessine]

When someone is beating you, the least you can do is copy them. We could start by copying German worker councils (unions) - but no one in management or labour here wants that. Labour hates company unions and still dreams of building labour monopolies like they had in the 60’s and that’s exactly what worker councils were designed to prevent. And managers want to be able to bust unions which isn’t legally allowed with worker councils.

So I guess not?

[stjohnswarts]

In the traditional sense, it is not the same as slavery, not by a long shot. I do agree with unions becoming prominent again. Not everything has to be a bargain basement priced items. I personally try to hit something in the middle, and often look for an American made version (or European) it can be extremely hard though, and impossible for 99% of electronics.

[RhodoYolo]

Do you think the 19th century is a good anecdote for what would happen nowadays? Setting minimum wage seems to create this standard that may do more harm than good. Increasing the 'standard' harms the 'middle-class' and this 'standard' may set the wages lower than entitled per job.

[birdyrooster]

Wealth inequality is a problem you can’t fix by reducing the income of the poor.

[cloudinshape]

Which is exactly the problem: wealth inequality can't be solved by fixing wages.

Asian or "factory" countries (not necessarily from Asia but for illustration) have an "artificially" held minimum wage, which indirectly subsidizes the US minimum wage. This is happening to all wages not just minimum wages mind you, so the market needs rebalancing. Wages need rebalancing, taxes need rebalancing, but most wages, including the minimum wage need to come down (in real terms not necessarily in fiat terms).

[RhodoYolo]

I never said that or really proposed a solution, simply stated a problem as i saw it - Which makes sense why i got downvoted. I don't really know the answer with minimum wage but i tend to lean more 'darwinistic' in my philisophies. I wish there was more inherent economic incentive, where everyones salary was more closely tied to their contribution and efforts but I guess thats too much to ask for in this world where non performers and non-productive members of society are given this 'unalienable right' to live off the products of society just for being human.

[nemothekid]

>I wish there was more inherent economic incentive, where everyones salary was more closely tied to their contribution and efforts but I guess thats too much to ask for in this world where non performers and non-productive members of society are given this 'unalienable right' to live off the products of society just for being human.

It's hard to parse what you are asking for - what more economic incentive would you imagine there to be; I think the problem with this line of thinking is that you are taking a far too simplistic model of the world where our problems are caused by people being "lazy". I think the world you are wishing for existed - it's probably the hunter/gatherer model; any more sophisticated organization of civilization requires some level of socialization. I think your "darwinistic" approach is a flawed philosophy upon which it build a nation or a global superpower.

It's interesting because the article posits, and makes a very good case for, systemic issues that has caused the erosion of manufacturing base - however politically we are unable to move beyond simply understood talking points such as "minimum wage".

[bawolff]

As a general rule, yes, i think all things being equal, history tends to repeat itself.

Of course, all things aren't always equal, but if you're going to argue its going to be different this time around, i think there is some onus to argue why the present would be different from the past.

[hourislate]

>Germany still has a strong industrial base

It's because they build the machines to build the product the Chinese manufacture. The Germans have forced themselves to be at the top of the Manufacturing Food Chain (engineering, etc) while letting the Chinese/Rest of the world build the crap we buy.

I don't think we could get there manufacturing the "Trinkets" the Chinese mostly manufacture, that is a a race to the bottom where either automation or cheap labor win.

[incrudible]

Your impression of China manufacturing "mostly Trinkets" is decades out of date.

Chinese manufacturing is now at a very high level, to the point where many western brands have effectively become "fabless", leveraging the fact that Chinese brands still struggle with poor reputation even domestically. In this symbiotic relationship, the fact that Germany is literally "the land of virtue" in Chinese might play a role.

Chinese labor has now too become relatively expensive, its economy is moving to become a service economy, and manufacturing gets outsourced from China to even cheaper countries.

[hakfoo]

What I always wondered: are German products that much better, or is it a meme?

The thought that comes to mind is when American railways tried to import German locomotives in the 1960s. They were appealing because they offered higher horsepower ratings than anything domestic, but they required too much babying and maintenance to keep healthy and were quickly scrapped. I hear strikingly similar things from people buying German cars today-- everything tends to be expensive to keep running after the warranty expires.

I wonder if American manufacturing needs to develop its own meme. I'd suggest the old line about GM products-- they'll run poorly for a lot longer competing products run at all. That could be a compelling argument when you're selling to a manufacturing sector that's rolling out in low-development countries with unstable infrastructure, poor environmental conditions, and low-training staff.

That gives us a niche we can target and use as a base to re-bootstrap ourselves into competitiveness. We need to be decidedly better than bottom-bit Chinese (etc.) tooling, which is probably still within our abilities, and if we overdeliver there, we can begin to position American-made as a premium choice.

[count]

A large part of the expense on the cars is import tariffs and shipping/freight expense. Upkeep on a German car in Germany is substantially less expensive.

[geitir]

All I know is I've been in an Audi and the center console had so much unnecessary stuff going on. It's a stereotype for a reason German stuff is performant and precise but over engineered

[tachyonbeam]

Tesla is trying to do exactly what you describe. Build "the machine that builds the machine", as Elon Musk would say.

I agree with you that trying to compete on low-cost, low-margin is a race to the bottom. We could conceivably bring manufacturing of iPhones back to America. I would also imagine that manufacturing of silicon is largely automated, so the US could try to build the best fabs.

[te_chris]

Tesla has done some reverse Chinese equity investment swap thing and is now at least somewhat a Chinese company building manufacturing capacity and innovation in EVs. Musk is a lot of things, and one thing is clear: he’s an opportunist more than a US economic nationalist. He will not be the saviour of American industry.

[kamaal]

>>one thing is clear: he’s an opportunist more than a US economic nationalist. He will not be the saviour of American industry.

Reading this as a non-American. Isn't 'opportunity' the whole reason behind immigration?

If your country relies on continuous supply of heroes and not sound systems and policies, no one single person can save you.

[te_chris]

Hey I’m a non American too, and Musk himself is South African, which is kind of my point.

[tachyonbeam]

Please clarify what you mean by "Chinese equity investment swap thing".

[te_chris]

https://seekingalpha.com/article/4339781-teslas-transformati...

[andrekandre]

> he’s an opportunist more than a US economic nationalist

its called being a capitalist; anyone leaving money (capital) on the table by favoring thier home country will get squashed by those who dont...

[roenxi]

The number of powerful economic nationalists in US history can be counted - if the US is lucky - on one hand.

Assuming that the goal is saving the American industry (whatever that means) - if the plan is 'good people will save it' then failure is already baked in. That plan never works. The plan should be 'whoever saves it will become fabulously and disgustingly wealthy' - then greedy opportunists will save it for you and people can go protest about how greedy they are.

Relying on good people to act is dicey. Relying on greedy people to act is a safe path.