An insourcing boom?

Jan 2009
5,841
50
#1
Interesting article from the Atlantic: http://www.theatlantic.com/magazine/archive/2012/12/the-insourcing-boom/309166/?single_page=true

tldr, from the article on what is contributing to this:
-Oil prices are three times what they were in 2000, making cargo-ship fuel much more expensive now than it was then.

-The natural-gas boom in the U.S. has dramatically lowered the cost for running something as energy-intensive as a factory here at home. (Natural gas now costs four times as much in Asia as it does in the U.S.)

-In dollars, wages in China are some five times what they were in 2000—and they are expected to keep rising 18 percent a year.

-American unions are changing their priorities. Appliance Park’s union was so fractious in the ’70s and ’80s that the place was known as “Strike City.” That same union agreed to a two-tier wage scale in 2005—and today, 70 percent of the jobs there are on the lower tier, which starts at just over $13.50 an hour, almost $8 less than what the starting wage used to be.

-U.S. labor productivity has continued its long march upward, meaning that labor costs have become a smaller and smaller proportion of the total cost of finished goods. You simply can’t save much money chasing wages anymore.
 
Oct 2012
3,830
625
Louisville, Ky
#3
Every year here (Louisville), Appliance Park and GE have a major job fair and hire thousands...between GE and Ford, we do seem to have a boom going on.
 
Jan 2009
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#4
I still say we should be trying to automate the economy.
Read the last bullet point- increased labor productivity is surely partly due to greater automation.

Automation is already happening as the price mechanism and capital allows it to. Doesn't bode well for the unemployment rate though.
 
Jul 2009
5,679
412
Opa Locka
#5
Read the last bullet point- increased labor productivity is surely partly due to greater automation.

Automation is already happening as the price mechanism and capital allows it to. Doesn't bode well for the unemployment rate though.
Human labor is obsolete. As automation drives down costs, the need for money will lessen allowing people to buy more with less money. In 50 years having a part time job or just being a handyman will be all that anyone needs to survive comfortably. The trick is to keep the education system up to date so people can get jobs as scientists and engineers.
 
Jan 2009
5,841
50
#6
Human labor is obsolete.
Not true. At least not yet. Ever been to a hospital (amongst many other places, but that just pops into my head)?

As automation drives down costs, the need for money will lessen allowing people to buy more with less money.
Money is a store of value and unit of exchange. Less or more money doesn't really have anything to do with automation. I think you mean the cost of products will be lower.

In 50 years having a part time job or just being a handyman will be all that anyone needs to survive comfortably.
It is really arguable. Give property rights, someone will own the factories, robots, etc. That leaves those who were working without a job and without property. What do they use to buy things? Automation generally favors capital holders than capital seekers.

The trick is to keep the education system up to date so people can get jobs as scientists and engineers.
Well that is quite a "trick". I am not sure you can get x billion+ people to all be scientists or engineers- not only will everyone not be able to make it through school, but you need further growth in innovation areas to employ those people. The transition is also very hard from the modern economy to that highly skilled one. There are a lot of upfront costs with education, etc.

And what happens when skilled jobs get replaced by AI and robots? Interesting conundrum.
 

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