China's advantage is, and always will be, that the costs of labor in US are bloated by a huge amount of overhead for every working resident
In 2023, the BLS reported that benefits alone accounted for about 31% of total compensation, with wages and salaries comprising the remaining 69%. [1] This 31% includes direct costs like health insurance, retirement contributions, and paid leave.
Now in addition, consider employer-paid expenses that are not benefits or employee compensation: FICA, FUTA, SUID, SDI, FMLA, etc. That depends on your geography, but it can be up to 25-40% additional costs [2]
The all-in cost is at least 35% or more in additional spend [3]
In addition, none of the above capture indirect costs of compliance/overhead, with varied state and federal schemes.
As you can see, we are at a range of ~35-50% of additional costs for each new hire
Now, importantly, try to imagine the effect of this bloat at a national level: Every US business is effectively carrying deadweight of additional ~35-50% costs on its pricing decisions to its customers. Why? Because the bloat is embedded into every domestic input, like raw materials, services, utilities, you name it. This cost spike may impact a few foreign industries dependent on US inputs, but it certainly explodes over US shores, spiking prices of the inputs that most US producers depend for their final goods and services. Now think of what happens to domestic costs of doing business and operating a physical business in US.
So when your cost of production have additional ~35-50% overhead because of all sort of market-distorting mechanisms, blaming china for "cheap labor" is a convenient scapegoat, when in reality the blame should be on US policy of making our jobs artificially expensive.... to fund the state bloat.
Some of it is China’s willingness to make big capital investments. My wife was shocked at the low price of beech mushrooms at Ren’s Market and I found out these are grown in a huge factory in China where they are very proud that they only have to handle the mushrooms with a forklift. Contrast that to those white button Agricus mushrooms each of which is cut out from the mycelium individually with a knife.
When you look at solar panels and lithium batteries their biggest advantage is that they invest in large scale heavily automated factories. For really labor intensive and low value things like those dog beds Chinese labor is already too expensive and production is going to places like Bangladesh.
We have plenty of capital here. Far more than China.
The problem is the capital cannot be put to good use here. Either because (1) there's too much uncertainty around project progress (think oil pipelines stuck for decades in permitting limbo), or (2) the ROI doesn't work when you pay insanely high bloated compliance costs of hiring US staff.
Even our sky high productivity cannot overcome the large lard deadweight each of us has to carry, on behalf of the elite class
I remember a time when every product sold around the world carried the "MADE IN USA" brand. It included random trinkets.
That would come back quickly, if we all decided we had enough of antiwork laws, enough with all the deadweight, and focused on building instead of regulating.
OK. In that case lets not use "bloat", and instead just call it the biggest subsidy for the middle and upper classes, coming from the backs of the unemployed, lower class
Guess who's uninsured? Its not the META employee with fertility benefits.
Satire is whomever cannot see why Trump would be voted by the working class: whomever thinks the status quo was to the benefit of the lower, blue collar class... while the middle and upper class ride their (untouchable) govt benefits (SSN) to a secure retirement because the elite class has a secure bureaucratic job (while the lower classes struggle to find 1 part time job).
Meanwhile, the chinese eat the lunch of the working class who see their jobs being exported abroad, because no employer wants to pay for subsidies/retirement/salaries of an elite bureaucratic deadweight class (that makes the rules for themselves, and forgets the neediest).
The chinese eat the lunch of the working and neediest americans, who see their jobs being exported abroad, because of a huge, elite bureaucratic deadweight DC class that was paid to allow regulatory capture, while enjoying sucking US treasure that funded their benefits and retirement.
That same deadweight class in power right now, pushing this narrative that the meager benefits we have are still too high for what we're worth. As they begin the next phase of destroying and looting our country - Make America Poor Again.
Your narrative completely missed all of the monetary inflation that was created to keep prices from going down due to cheaper manufacturing. That was the wealth received from offshoring, having been centralized as monetary creation. But rather than this wealth being spent on deliberate goals to mitigate the economic damage of that offshoring (individual and industrial), a rallying cry of fake "fiscal responsibility" prevented most such public spending. So the new money was instead simply given away to banks to bid up to the asset bubble, ultimately putting that centralized wealth into private hands of asset holders while pricing wage earners out of the asset markets.
That was the political con of the past thirty+ years. Now that it has run its course, the game shifts to the next con - which seems to be turning America into some kind of impoverished authoritarian work camp where we appreciate being able to do unskilled factory work that China no longer wants to do. Acknowledging the last con gets the rubes to buy right into it. Finally some validation, what a breath of fresh air! Oh, and don't you know the real problem right now is actually them "illegals" ? Definitely not these elites, nope. This current bunch is totally different than that last bunch. See how they don't even respect those laws or norms the previous elites respected? So refreshingly different!
An elite that actively wants to let go of his own government sinecure, power and status (from reduction in team size, the ever-important status power signal at bigcorps) , is very different from an elite that wants to grow his team and status
That's a weird framing making for a very odd conclusion, given that he is expanding the powers of the government, claiming those powers vest directly in him, and increasing the number of enforcers of that power. It's like the CEO of a company eliminating the R&D department, cutting everyone else's pay, and bulking up on security guards to perform random searches looking for pretexts to fire more people. From my perspective, the bureaucracy was an ever growing amount of administrative overhead, but it was at least moderating authoritarian power and keeping the worst impulses of autocracy at bay.
I do agree they are not the same - reverting to autocracy is throwing the towel in on the American experiment. Previous elites in power at least had the decency to view their looting as a symbiotic parasitic relationship. What is the same is the dynamic of distracting the rubes with feel-good populist outrage while shamelessly robbing them blind.
The Netherlands has a social welfare system and it's economy is not collapsing.
However the Dutch government doesn't have an ideological fascination with factories. It has a more rational approach to make money with things that the Netherlands is actually good at.
I think what compounds it is that in the US dead weight States still have political power- when realistically all the bets should be on California,Texas and New York and the rest of the country should be grateful.
Perhaps the answer is a combination of a significant UBI (paid for by general federal spending, I could think of many worse reasons to accrue national debt) coupled with a much lower minimum wage? Incentivize companies not to treat labor as a cost sink, while still ensuring that people have enough capital to cover their cost of living. I'd wager productivity would also go up (and mental depression would go down) if things weren't quite as dire as they currently are.
In China it is naturally cheap, they have humongous super advanced vertical and horizontal supply chains at their doorstep.
Need plentiful, cheap three phase electricity? - check. Need some obscure part at scale and immediately?- check. Need advanced engineering? - check. etc. etc.
It's at the point where for many industries the risk/reward just do not make any sense at all (it'll just be loss making no matter how you spin it, government supports etc).
The chinese gov't also funds those things - but just not via taxes collected from people's incomes. They collect "profit" off foreign exports, debase the local currency to pay for it.
> taxing individuals directly begets the familiar resentment
but on the other hand, taxing individuals means those individuals should have some say over what taxation gets spent on (in theory), where as an authoritarian regime can simply ignore the populous.
I still think taxing individuals are better, despite it being slower and less agile at adapting.
Well, when you explain it like that, of course I have to agree.
Maybe 20 years ago I had the very clever original idea ( /s ) of allowing tax payers some autonomy over how to allocate at least some of their taxes. Like maybe I could earmark 5% of what I pay towards public school lunchs and restoring habitat for wild salmon.
I'm sure it's a terrible idea. Any more, I just want some experts to survey known tax regimes, summarize their pros and cons. Somehow ground this evergreen slap fight so we're not stuck rehashing what color to paint the bikeshed.
China's advantage is, and always will be, that the costs of labor in US are bloated by a huge amount of overhead for every working resident
In 2023, the BLS reported that benefits alone accounted for about 31% of total compensation, with wages and salaries comprising the remaining 69%. [1] This 31% includes direct costs like health insurance, retirement contributions, and paid leave.
Now in addition, consider employer-paid expenses that are not benefits or employee compensation: FICA, FUTA, SUID, SDI, FMLA, etc. That depends on your geography, but it can be up to 25-40% additional costs [2]
The all-in cost is at least 35% or more in additional spend [3]
In addition, none of the above capture indirect costs of compliance/overhead, with varied state and federal schemes.
As you can see, we are at a range of ~35-50% of additional costs for each new hire
Now, importantly, try to imagine the effect of this bloat at a national level: Every US business is effectively carrying deadweight of additional ~35-50% costs on its pricing decisions to its customers. Why? Because the bloat is embedded into every domestic input, like raw materials, services, utilities, you name it. This cost spike may impact a few foreign industries dependent on US inputs, but it certainly explodes over US shores, spiking prices of the inputs that most US producers depend for their final goods and services. Now think of what happens to domestic costs of doing business and operating a physical business in US.
So when your cost of production have additional ~35-50% overhead because of all sort of market-distorting mechanisms, blaming china for "cheap labor" is a convenient scapegoat, when in reality the blame should be on US policy of making our jobs artificially expensive.... to fund the state bloat.
[1] https://www.bluedotcorp.com/blog/2023-trend-the-rising-price...
[2] https://www.sba.gov/blog/how-much-does-employee-cost-you
[3] https://www.footholdamerica.com/blog/what-is-the-real-cost-o...