Have not started a new thread in a long while, so thought I would go with a clickbaity title.

There is a massive shift in geo politics occurring and no one seems to be talking about it that much, or at least other issues are ahead in the narrative bandwith.

Basically since China decided to shut down its economy and wreck supply chains, off shoring your production on the other side of the planet does not look so appealing, also the fact that China is setting it self up as a geo political enemy of the worlds biggest consumer and friend of Putin does not help its business case.

In short whilst certain conditions might be specific to China, a general perception /greater understanding of vulnerabilities in having large logistical production tails from producer to consumer has taken hold in the business community.

Thus whilst producing more locally might incur greater costs, the benefits accrued via these costs are more apparent, as production is inherently more secure.

This has all sorts of ramifications, one of which, and another thing not talked about much, is how this process will be an engine of inflation going forward, but potentially a check to the inflation shock we are currently experiencing now due to supply chain breakdowns. No more cheap goods from China, but no more supply chain shocks.

If production is to become more localised to its intended consumers, will this hand back some power to the State who is the political representative of those consumers? Will it enable Unions to be more forceful in their demands given the jobs they are seeking to protect cant simply be shipped abroad.

Reshoring or friendshoring (putting your production in a country you can rely on) will have big implications going forward imo.

I listened to a podcast that was identifying the main factors impacting US inflation currently and two of them (and not the only two) are two Trump policies coming home to roost as they predictably would.

- Tarriffs and Trumps trade war with China and others making cost of goods more expensive
- The war on flex style migrant workers (legal and illegal) who typically would flood in and meet the spiking demand for workers whenever industry needed it, especially at the lowest paying jobs, which means that we now have a shortage of workers at critical times, increasing worker leverage and their ability to sit out or demand more


NOt to make this thread a Trump thread as that is not the intent, but just posting those two elements as an end to GLobalization, if societies all become more focused on policies of keeping all production at 'home', while reducing the number of people that can come in to a country is just simply going to experience spiking inflation.

Freer Trade, immigration, etc have always been two of the biggest tools in dealing with that.

the UK leaving Brexit, was always going to have to deal with inflation, amongst other factors as a result.

Local production means local jobs.

This all sounds like a communist plot.

If our masters can't skim off the top they may all go live in a gulch.

They will still skim off the top LDO, there is a possibility, maybe even the tiniest ray of hope, that we may be moving to a new settlement, which means slightly better terms for joe blow.

If China keeps up its zero covid policy and they get any more major outbreaks think it will break the camels back and there could be a big exodus out of China.

Obviously you can get cheap Labour other places, but they dont have the logistics of China, and fool me once shame on you etc.

Capital might realise it has to throw a dog a bone.

Though to be fair they would be taking that bone back from the Chinese who have seen average wages sky rocket.

I'm going to have to read up on this topic a bit as I think it's very interesting.

Hallowing out the American middle class while relying on the for consumption never seemed like a viable long term strategy to me.

And I was never impressed with the shoddy Chinese goods we got to enjoy for cheap. Seemed like someone was gaming the system. lol

Good to see there may be a lean towards common sense economic policies, if only for a while.

So than we should be glad that Biden ended all of Trump's tariffs? Oh Wait

Please when everything you consume pretty much comes from China and production gets shut down you have no supply. Blaming inflation on Trump please.

Covid is the main culprit and as for gas prices well when you rely on other countries for supply and the supply you have some of it gets shipped out.

Free Trade is the sole reason for the collapse of the middle class

There have been several negative results of globalization. These companies that made all this money exploiting chinese workers could easily use their profits and return jobs to america at a cost of higher wages. It took some time but now we're also seeing the spread of disease via globalization, Covid and now monekypox. IDk maybe it's too late.

Interestingly Amazon and Walmart seem to be doing the opposite of what these other companies were doing aka setting up infrastructure in USA. You can order from them super fast now.

I did not want to make this a Trump issue specifically and was trying to speak to the policies and YES if Biden maintains them, the impact will continue and that is on him. I have no issue saying that. I also specifically said those were not the ONLY issues so you mentioning more issues is in agreement with me.

You claim to not be a Trump guy but boy do you ever coming screaming in with the whatbout's whenever someone points out a legit issue.


Look put Trump and Biden aside (I bet you cannot) and just look at those two policies and can you lozen admit that both two issues would be inflationary or not?

As i understood it, the long term vision of Freer world Trade was that in an increasingly Global Economy with Capital free flowing you could not maintain restrictive Nationalistic type policies on Trade or Worker protections.

If you did, you would see your goods eventually become over prices and uncompetitive and fail, as you forced the lowest paying jobs to stay in America at much higher pay scales. If for instance China can build a widget at 1/5th the cost, that it can be built in America, then they can utilize that extra available money to improve quality beyond what US companies could afford to do, and soon you would have US citizens paying way more for an inferior product.

And increasingly the US would have to lock out better goods to keep US citizens from wanting them. That would then lead to the US being less efficient over all and a decline in the economy as the lower cost one, with more profits grew. You trap the US in that bubble.

The flip side was to allow the lower end stuff to go China and elsewhere but bring it back for the higher paying jobs here. At first that would shift more production and jobs to China but long term as the Chinese middle class grew, China would not be able to supply even their own needs, let alone export much. So that would mean a shift back to the US and others of many of those jobs but now at higher pay rates. Win/Win.

A few things happened along that road though.

China was reaching up and competing in the higher end jobs (no fair!!!)
And AI was changing the production dynamic. Perhaps China would be able to supply their own growing MC and the world goods with an increasingly shrinking HUMAN manufacturing footprint and a bunch of automated facilities. Perhaps there would be no Part 2 with the 'shift back' of jobs and wealth and it would just stay out in a huge Chinese Manufacturing sector the West built.


I would like to say it was those two things Trump and Co were reacting to and trying to rebalance but I think they would have been fine with that. What bothered them was the Military Complex saying CHina was a legit threat to vie for Super Power supremacy and if not stopped soon, then it may be impossible to stop, ever.

Nope I do not believe that at all. I think the tariffs could have a place but it depends what you do with those Tariffs. If you use them for companies to manufacturer more items in North America that can be a good thing

Imagine if you slapped a 100% Tariff on Apple Products made in China ? AS well offered that money to Apple if the manufacturer their phones in North America?

I am not following you at all.

Are you saying 'good things' cancel out inflation?

I am not judging good or bad here and just saying those two things contribute to inflation and I think that is self evident. The GOODs and Human Labour will both now cost more in both those scenarios and thus that is an inflationary pressure.

Short term inflationary and bad economic outcomes

Medium/long term it's highly anti-inflationary and economic outcomes will go through the roof

The reason is that the main benediciary is automation and it wont be long until the benefits from automation vastly outweigh everythign else.

Of course there wont be any jobs but ho hum.

Nope

Hi Jiggs

I counter with

Yes!

LOL
Sure that' was the pitch.

what actually happened was the monopolistic cabals priced out the better goods and the consumer was left paying 80% of the prices for goods that were maybe 20% of what they would have been had reasonable trade restrictions been in place. ie not doing business with counties that do things like use slave labor and poison the water of their own citizens.

Globalization ends up being a long term lose, lose as the competitive market forces that tend to make capitalism somewhat beneficial to society as a whole (even if that benefit isn't equally distributed) are gone.

It's no different then when Walmart prices out the mom and pops.
Sure you can but a t shirt for a dollar but it's only worth a nickle.
The t shirt you have to pay ten dollars for was worth about 7. The profit margin is more but the overall effect on the economy for the average joe is much worse.

What you say can be true while it can also be true that Japan can enter the US auto market, with absolutely the lowest priced junker cars, called Toyota and Honda. They can enjoy being able to price the junk so low while maintaining profits, due to much lower costs overall and they can then steadily improve their products over time such that it surpasses the US products and now can enjoy a premium price and outsell the domestics.

If the US was to have instead gone full isolationist and block out all foreign vehicle, they would still sell globally and surpass the US product in both quality and value, meaning US citizens comparatively would be paying increasing more, for less. That is exactly how it does work, most times in a closed market.

Isolation policies such as Trump was pushing can and will create a short term boon (all Trump cares about) in the same way the Corporate Raiders, pushing companies to shut down R&D and do Stock buy Backs does the same. They however gut long term value and sustainability.

At some point American citizens would travel and see the quality and value of those 'blocked' vehicles far surpassed US ones and realize their mistake as the rest of the world stops buying any US vehicles.

lozen I still want a reply to my last question to you.

Do you still maintain Trump moves re greatly reducing migrant workers access to the US market (both legal and illegal) and his tariffs would have no spill over inflationary effect during this time frame now when Biden is in charge?

I am not looking for a 'whatabout' rebuttal where you suggest other things are worse and just want to see if you can acknowledge 'any' Trump policy culpability whatsoever as your reflex always seems to be jump in and absolve Trump of any thing resembling blame, even when its mild.

I agree. Japan was able to out compete America for a while in certain markets.

I would also have agreed if you brought up electronics and markets where China does produce goods of reasonable quality.

But all in all I think everyone knew exactly what was going to happen wrt China and even Mexico. The US was going to give it's wealth to developing countries with no return to the average American.
The windfall would go to the global investor class who would then buy even more power and creeps like Gates would be positioning themselves to control the world's foods supply.

Global basically means unfettered in that context.

i don't believe that last point actually.

I think there was a genuine belief that these various brown people (Mexico and China) would never raise above being comparatively cheap labour.

That they just were not smart enough to be able to ever lead and that US masters would always be at the top of the food chain.

I believe the belief re China was that they would always dominate the 'commodity' space as SUPPLIERS to US corps, but never really impact were the head offices would be and who would make the biggest profits. They realized the MC in America might suffer but the gains by corporations and their owners would more than make up for it.

Also I do believe that there was a belief/assessment that once CHina's middle class did grow to a certain level, there would be no way China's own manufacturing would be able to satisfy their own demand for goods, let alone still be exporting all over the world. So that was going to really then open up again a much bigger and evolved to US and other manufacturers and their products (cars, etc).

I think automation and AI have since greatly impacted that belief as you can do so much more now without needing to adding bodies. But that was core to the original premise, as I always heard it discussed.

.

That may have been a reasonable assumption.

But I can't imagine the investors looking at the untapped Chinese labor markets really cared.

Cheap labor and a wealth market to sell it in is what they wanted. And it's what they got.

And they also got to put those pesky wage slaves back in their place by telling them they had to work for the same wages as Chinese peasants.

Not what I would call an example of why capitalism is the best system in the works...Merca. But certainly an example of what capitalism is.

It was based on a true fact that America and the West enjoyed accretive growth when all economies grew. That Canada and the US both enjoyed more accretive wealth as both succeeded. That ultimate increasing the size of the consumer market long term with a stable middle class, was best for not just the MC but the owners of companies who provide services to them.

China building a MC was looked at as the next wave of global growth that everyone would capitalize off eventually, but again, the threat of AI and Automation meant perhaps the swing back in gains might never come.