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  • #16
    Re: Americans Supporting Communism

    Originally posted by DuckButter View Post

    Two pints here, the standards for India are the same, the quality is the same, the price is a small fraction of ours because they cut out middlemen, they have no insurance because healthcare is affordable, they also don't cater to the constant flow of frivolous lawsuits like the American legal system does
    I doubt very much the standard in India is the same as in N america, their universities graduate doctors of widely different standards, some top rate and some that would never be allowed to work in N America...plus their entire cost of living is much less than in n america...going overseas for healthcare is a risky venture...

    China and Canada have the same complaints that you'd expect from a government run system, you wind up waiting too long or the red tape is often ridiculous.
    what similar complaints are those?...Canada's problems stem from conservative governments deliberately sabotaging the healthcare system with underfunding because of political ideology, red tape does not exist for the patient...despite the sabotage canadians still have longer life expectancy than americans by over two years...and wait times are political smoke screen emergency procedures are prioritized, need a hip or nose job you can wait your turn, need emergency heart or cancer surgery you're in immediately...
    Consider this, Foxconn provides a single component for the I-phone, using workers at $0.31 per hour.

    Turning that into $20 per hour means roughly 60X more cost in producing that single component.

    Multiply 60X times every component to an I-phone, then factor every product you own that's made off shores (everything, basically).

    Can you see the problem now?
    yup and that's what the people of the third world have faced for decades, how can they afford american made products on .31 per hour...if everyone on the planet had wage equality there would be more trade both ways...life would be more expensive for the 1st world and more tolerable for the 3rd world...

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    • #17
      Re: Americans Supporting Communism

      Originally posted by mrs. westcoast View Post
      this is turning into a book...

      time to start downloading it to my kindle
      I apologize for my part in this saga. I'm retired, it's too cold to stay outside and my wife won't let me have a girlfriend, so I spend way too much time on the Ridgid Forum. I'll let this thread RIP.

      Comment


      • #18
        Re: Americans Supporting Communism

        Frank, it suddenly occurs to me that the answer to your concerns over what has happened to capitalism in America could maybe be answered from a segment in Michael Moore's "Capitalism: A love story".

        I'm not the biggest Moore fan, and largely felt his movie was sensationalist and unrealistic (outlawing capitalism?).

        But, he did open my eyes with one segment, the 2006 Citigroup Plutonomy conference, where several hundred of the wealthiest people in the world gathered to openly discuss how they'd overthrown Democracy, and further elaborate on how they can best utilize this.

        Rather than focusing on the failures of Capitalism, it might be a better idea to focus on our government's failure to uphold the Constitution, which expressly prohibits bribery.

        If massive monopolous corporations weren't able to pay off our government to create laws to favor their profits over our best interests, we wouldn't be having this conversation.

        The Supreme court recently ruled to allow unlimited spending to promote individual politicians, this opens the door for XOM to get any law it wants by threatening to stop funding political campaigns, or do their bidding, or any other corporation.

        Coincidentally, the ruling includes Supreme court justices, they're also allowed to take "contributions".

        I'm happy to tell you it isn't Capitalism that you're angry with, it's fascism.

        Or, as Mussolini once called it before it was later referred to as Fascism - "Corporatism".

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        • #19
          Re: Americans Supporting Communism

          Originally posted by DuckButter View Post
          Consider this, Foxconn provides a single component for the I-phone, using workers at $0.31 per hour.

          Turning that into $20 per hour means roughly 60X more cost in producing that single component.

          Multiply 60X times every component to an I-phone, then factor every product you own that's made off shores (everything, basically).

          Can you see the problem now?
          This argument is often cited but has a serious flaw, and leads to wrong conclusions.

          The cost of the component is not proportional to the labor cost. In fact, for virtually all modern mass produced goods, cost is strongly dominated by raw material cost, huge overheads such as factory cost, energy expense, equipment depreciation, etc. Machines and robots handle the vast majority of the actual labor content that goes into most mass produces items such as the i-phone - not laborers. Yes of course there are laborers involved, but cost of these folks relative to the total cost of the product represent a very small part of the total cost. Modern production, especially of electronics, is necessarily very highly automated... even in China... simply because even at 31 cents an hour, manual labor cannot come close to being competitive with machines. This would be true even if humans could do the work... which they can't. Those machines, manufactured typically in the developed countries (US, Japan, Germany, France) are very pricey and expensive to buy, operate and maintain. Labor cost is a factor, to be sure... but it is not the dominant factor and it is most definitely NOT making the manufacturing advantage of manufacturing in China anywhere even close to 60x.

          There are advantages to manufacturing in China. US makers that outsource avoid paying FICA, medicare, and various benefits which are substantial. Overhead cost do tend to be lower in third world geos compared to the US. Energy costs (very significant for modern production facilities) are cheaper. There is relatively little regulatory burden on Foxconn's operations, etc.

          Some tooling costs such as plastic injection molds or diecast tooling for zinc or aluminum parts are very labor intensive and tend to run about 1/3 to 1/2 the cost of US, Canadian or European made tooling. However, still, in most cases where a tool is considered critical or requires very high accuracy... the tooling is very often not made in China. They are getting better though. But tooling of this type are non-recurring costs and when amortized over large production volumes, are typically not a huge part of the production cost no matter where the tooling is made. It is more of a cost factor of course for low production volumes, but in those cases it makes much less sense - or none at all - to outsource to China.

          On the other hand, the actual total Chinese cost - everything, not just labor - is marked up - Foxconn, Flextronics, etc are in this to make a profit. And they aren't giving it away. Particularly at Foxconn they DO NOT price based on cost... they price based on being a little lower than the alternative. Market pricing. Just like we would do here in the United States.

          US companies offshoring at the level of an Apple or other large producer also spend a huge amount of money on travel, have to maintain significant additional staff to manage the Chinese operation, maintain a quality control presence... and have to deal with the Chinese government as well as US technology export rules.

          US workers are generally better trained, more highly educated, have in general more skills including computer skills and as a result are more productive than their offshore counterparts. It costs a US company huge money to get an offshore manufacturer up and producing goods ready for sale - this isn't free - and accomplishing it in China is not cheap.

          There's more, but you get the drift.

          The actual cost advantage is nothing close to 60x. All in all, at the bottom line it is more like 10-20%. Which is enough to make it compelling if you are in the competitive business world, but not so overwhelming that the US couldn't compete with a few small changes to the ground rules.

          We absolutely DO NOT have to get US workers to do the same job for 31 cents!! We only have to be able to provide BETTER VALUE. This can not be done by going head to head with workers that make 31 cents. Fortunately it's not necessary... and moreover, would be the absolute WRONG WAY TO PROCEED, guaranteeing disaster! Labor costs are not the dominant factor where total production costs reside. Focusing on labor costs is focusing on the WRONG THING. It is almost like picking fly specks out of the pepper.

          The way to provide more value is to redefine and streamline the total end to end product manufacturing process, starting with engineering. Every step of the process has huge room for massive improvement, including fully automated integration with subsequent steps in the process. This is not minor tweaking... this is a massive effort and will take a country with the resources of the United States to succeed at... resources like money, the largest and best pool of academic and research talent in the world, an unparalleled education system, a tremendous legacy of existing system engineering expertise, etc. This is where the United States can turn the tables and start to kick butt once again. To this day, we are the ONLY country on the planet that has the combined technical and financial resources to pull this off.

          A pipe dream? No it's not. The Chinese and others are already looking at such things. They have the VISION, but they don't have the toolbox. Yet.

          We have the toolbox, but not the vision. Unfortunately, our position is eroding every year. We use flawed arguments to convince ourselves that we can't compete with 31 cent labor. It's nuts. The most technically advanced, best educated, best financed and most productive nation on earth is twittering away, standing still, while our relatively unskilled, uneducated competitors are working furiously to reel us in and pass us by.

          It's a defeatist attitude and guarantees that we will eventually be working for 31 cents an hour. I for one don't want to go down without a fight.
          Last edited by Andy_M; 12-03-2010, 03:42 PM.

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          • #20
            Re: Americans Supporting Communism

            Andy, trust me, labor rates at 60X will effect the cost to end users and consumers.

            I am not making an argument regarding material costs, any plumber like myself who installs boilers or water heaters can attest to whether copper and steel prices are high or low on a given day (I actually do what airlines do and hedge copper and steel prices to offset inflation to help keep my prices down for customers, make money myself), there's no debate on material costs here.

            On a more localized scale, a large outfit that pays their employee's $2 more per hour than other locals will also have to charge more.

            Maybe not in full proportion, but it is absolutely a physical impossibility to expect I-phones to be fabricated at that much of a labor cost differential without a substantial effect on price.

            We need to do a balancing act, take a look at all relevant variables, from executive salaries comparative to the median, why American workers wage requirements are so much higher, and what tax incentives or government policies can change that to grow new industries to placate the losses in foreign trade while yielding a real ROI this country, unlike cutting taxes to megacorporations for sending jobs to China, there's just no ROI for those tax cuts beyond a less expensive I-phone.

            And, to be clear, I applaud the effort to look at ways to promote "made in America", maybe my thinking is probably a little more gloomy than it should be.

            Last edited by DuckButter; 12-03-2010, 03:45 PM.

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            • #21
              Re: Americans Supporting Communism

              Yup, I agree that lower labor rates are an advantage for Chinese production. It would be naive to suggest otherwise. But the impact is 10 to 20%, not 6000%. Again, I speak from experience... in fact, experience with Foxconn. One number leads one to want to give up and order a Berlitz course in Mandarin.... the other says, "Hey, maybe we're not done yet!"

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              • #22
                Re: Americans Supporting Communism

                To this day, we are the ONLY country on the planet that has the combined technical and financial resources to pull this off.
                But we allow people to come here and learn how we do it (and we even educate and then pay them to learn how we do it), and take that knowledge home with them to compete against us all without honoring copyright or patents or paying royalties (which helps keep their production costs down) and dump those products onto world markets where our goods would like to compete but can't because they are undercut by counterfeit or copycat products from china and elsewhere.
                "When we build let us think we build forever. Let it not be for present delight nor for present use alone. Let it be such work that our descendants will thank us for, and let us think, as we lay stone upon stone, that a time is to come when these stones will be held sacred because our hands have touched them, and that men will say, as they look upon the labor and wrought substance of them, "See! This our fathers did for us."
                John Ruskin (1819 - 1900)

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                • #23
                  Re: Americans Supporting Communism

                  Originally posted by Andy_M View Post
                  Yup, I agree that lower labor rates are an advantage for Chinese production. It would be naive to suggest otherwise. But the impact is 10 to 20%, not 6000%. Again, I speak from experience... in fact, experience with Foxconn. One number leads one to want to give up and order a Berlitz course in Mandarin.... the other says, "Hey, maybe we're not done yet!"
                  Let me take a gander, that 10-20% is the differential in final consumer cost difference vs American made.

                  I'll say the remainder is passed on to executive salaries through markup differential.

                  If that's not it, I'm hard pressed to understand how a 6000% labor cost differential only equates to a 10-20% cost differential, even including shipping.

                  Otherwise, a factory worker who'd have made $20 an hour could theoretically take a $2 to $4 hit to his hourly rate, but at least have a job to speak of while allowing the CEO to continue subsisting on his "meager" eight figures.

                  If I'm missing something, I'll take the ego hit happily, things aren't as gloom and doom as I figured, but I just can't see the math there.

                  Comment


                  • #24
                    Re: Americans Supporting Communism

                    Originally posted by Bob D. View Post
                    But we allow people to come here and learn how we do it (and we even educate and then pay them to learn how we do it), and take that knowledge home with them to compete against us all without honoring copyright or patents or paying royalties (which helps keep their production costs down) and dump those products onto world markets where our goods would like to compete but can't because they are undercut by counterfeit or copycat products from china and elsewhere.
                    Extremely good point.

                    Comment


                    • #25
                      Re: Americans Supporting Communism

                      Originally posted by Bob D. View Post
                      But we allow people to come here and learn how we do it (and we even educate and then pay them to learn how we do it), and take that knowledge home with them to compete against us all without honoring copyright or patents or paying royalties (which helps keep their production costs down) and dump those products onto world markets where our goods would like to compete but can't because they are undercut by counterfeit or copycat products from china and elsewhere.
                      Absolutely right. We do that, and have been doing it for a long time. In addition to allowing foreign students access to the Universities that were built with subsidies from, or in some cases completely by, public money, we also participate in technology transfer deals -- where foreign concerns agree to order some large dollar value worth of US stuff, but part of the deal is that the US company has to teach them the details of the design. You can see where that is going. Oddly enough, the US State Department, which is responsible for granting export licenses, has granted approval to export some of this technology that they really shouldn't IMO. I have a real hard time with the United States sending state-of-the-art microprocessors and other miniature electronics tech to ANY foreign country, let alone Red China. Do we really think that they are not all over those designs? It's totally nuts... but goes to show the influence that money has.

                      Your comments on patents etc. go to the general notion of IP - intellectual property. In the technology business, IP is the holy grail. Companies go to great lengths to develop IP, and protect it as patents, trade secrets and the like. Many will sue domestic competitors at the drop of a hat over their IP, or over someone hiring someone that might take some know-how with them. But then we send it to China to be manufactured. Go figure.

                      On the other hand, anyone can read the same books Americans can read. And our competition is doing that. I agree completely that some common sense needs to be applied.... why help the competition? But, technology moves very fast. You have to constantly keep the pressure on to stay ahead. China et al are highly motivated to be the world leaders. Many Americans, however, have decided that we can't compete, China will soon overtake the US economy, there is not hope, the world is ending, yadda yadda yadda. Very few are calling for a revitalization (or better still, a reinvention) of US industry. The result is, China and India are keeping the pressure on themselves. We aren't... we seem to have no interest in competing. Well, that's a problem, and it will lead to our certain demise. The good news is that more and more people are starting to realize that the game is on, and the stakes are high. We better start playing.

                      Comment


                      • #26
                        Re: Americans Supporting Communism

                        Originally posted by DuckButter View Post
                        If I'm missing something, I'll take the ego hit happily, things aren't as gloom and doom as I figured, but I just can't see the math there.
                        Duck, look at a typical mass produced electronic gizmo. It's mostly made by machines. The actual labor content on a typical $200 gizmo is much less than an hour, but let's call it an hour. You know this is true, you've seen how this stuff is made. It's all snap together stuff, the actual works are electronic and most of it nowadays has at most only a few wires and most of the time no wires - it's all on the printed ciruit board, which comes off the pick and place machine, goes to the router, from there to the automated test station, then on to assembly where workers snap the few parts together in a matter of minutes... then to automated final test, if they even bother with that.

                        Now if it sells for $200, then it's being manufactured for half of that, roughly $100. Now, Chinese labor at 31 cents... let's just call it free. In the US, that hour of labor would cost $20. So, the cost of the thing, just considering the labor hit, would grow to $120. That's a 20% increase.

                        But that isn't even accurate. Fact is, the difficulty in dealing with China, costs associated with startup, higher training costs, higher QA costs, transportation, lower worker productivity etc does a pretty good job of eating up that 20%. It is very difficult to bring a product into production in China.

                        So why bother with China? Simple. Look at all the costs you, as a business, don't have. You don't need to own or lease the land, the factory, the HR department. There are no unlawful discharge lawsuits. You don't have to worry about OSHA, the EPA, or provide Obamacare. You don't have to give benefits, there are no unions making life tough, and you don't have payroll taxes... heck, you don't even have to payroll those people. Your company gets smaller. A smaller company is cheaper to run. You don't pay overtime, you don't need as many employment lawyers and if someone sexually harasses someone in the factory, it's a Chinese problem and they probably don't care anyway.

                        It's about total costs, not labor costs. And a lot of the Chinese advantage in total cost is because they don't have a level playing field.

                        Another part of the equation is, well, frankly they make junk. Junk is cheaper than good stuff. Porter Cable, Delta or Milwaukee imports are not the same as the stuff they used to make here. USA bearings don't whine, and USA bolts don't snap off. USA stuff, back when we actually made stuff, was repairable and you could easily get parts. It was not plastic light duty crap that broke if you dropped it. I have Milwaukee, Sioux and other USA tools that I've had since the sixties. Some were used every day in my engine machine shop. Rode hard and put away wet, so to speak. I can't think of any Chinese stuff that's more than a couple of years old. I make a real effort to avoid Chinese-made anymore... I try to buy used USA made when I need something. Now this is a sore point with many I know, and I don't want to debate it... it's all personal opinion anyway. Anyone that thinks Chinese products are good quality relative to Western stuff... well, okay, you are entitled to that opinion.
                        Last edited by Andy_M; 12-03-2010, 09:26 PM.

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                        • #27
                          Re: Americans Supporting Communism

                          Andy, it's funny how human nature causes us to see things from our own perspective, my perspective was in terms of a plumber, which is substantially more labor intensive relative to material costs.

                          It hadn't occurred to me to factor the less labor intensive nature of a line produced electronic widget, vs the way a plumber would see a price.

                          Thank you for taking the time to break that down and get me past my "Ginko" moment.

                          Everything you just posted, as I said before, makes me feel less gloomy, but my nature compels me to point out that China also has the advantage of lower Mat'l costs as well with their mining industry.

                          A couple of interesting things I might add to your comments about China.

                          - The Chinese government bends over backwards to accommodate Foreign corporations, in one case that I know, they actually erected a college nearby to allow the corporation to further educate it's employee's, all on the government's tab.

                          In America, there would be outrage over "pork projects" by the opposing political parry seeking to gain points in negative campaigning if this were done at the governments expense.

                          - A few weeks ago in interview, Chinese PM Wen Jiabao was asked how he felt about the U.S. complaining about currency, trade imbalances, or threating to put tariff's on Chinese exports.

                          He copped a mild smirk and said that almost 50% of China's exports are American companies, it's actually pretty funny in a cynical way.

                          With all the political histrionics over scapegoating China for our trade imbalances, it's actually largely US corporations We'd be hitting with tariffs, which means it's also largely US corporations our finest minds in Washington are indirectly stating as the cause of our trade imbalances with China....the same shell game conjobs that are fighting tooth and nail to keep taxes low for these corporations because it "creates jobs", unwittingly threatening to put tariffs on their imports back to America.

                          As I said to Frank above, it's not China's Communism we should be worried about, it's America's burgeoning corporate Fascism, "Neoceons" as Reaganomics co-founder as Paul Criag Roberts calls them in the article I linked above.

                          I'm pretty sure you understand when I say the similarities to the Weimar Republic are getting very scary lately.

                          Comment


                          • #28
                            Re: Americans Supporting Communism

                            Andy, another thing, I agree with Bob on the way America seems to have the idea we have the monopoly on knowledge or ingenuity.

                            We may still have the edge, but thinking we always will is a disaster waiting to happen, especially with the recent boom in emerging market, educated middle class workers.

                            We should be planning the future under this premise. not based on the past where the American industrial revolution carried us for so many years.

                            Comment


                            • #29
                              Re: Americans Supporting Communism

                              Originally posted by DuckButter View Post
                              Andy, it's funny how human nature causes us to see things from our own perspective, my perspective was in terms of a plumber, which is substantially more labor intensive relative to material costs.

                              It hadn't occurred to me to factor the less labor intensive nature of a line produced electronic widget, vs the way a plumber would see a price.

                              Thank you for taking the time to break that down and get me past my "Ginko" moment.

                              Everything you just posted, as I said before, makes me feel less gloomy, but my nature compels me to point out that China also has the advantage of lower Mat'l costs as well with their mining industry.

                              A couple of interesting things I might add to your comments about China.

                              - The Chinese government bends over backwards to accommodate Foreign corporations, in one case that I know, they actually erected a college nearby to allow the corporation to further educate it's employee's, all on the government's tab.

                              In America, there would be outrage over "pork projects" by the opposing political parry seeking to gain points in negative campaigning if this were done at the governments expense.

                              - A few weeks ago in interview, Chinese PM Wen Jiabao was asked how he felt about the U.S. complaining about currency, trade imbalances, or threating to put tariff's on Chinese exports.

                              He copped a mild smirk and said that almost 50% of China's exports are American companies, it's actually pretty funny in a cynical way.

                              With all the political histrionics over scapegoating China for our trade imbalances, it's actually largely US corporations We'd be hitting with tariffs, which means it's also largely US corporations our finest minds in Washington are indirectly stating as the cause of our trade imbalances with China....the same shell game conjobs that are fighting tooth and nail to keep taxes low for these corporations because it "creates jobs", unwittingly threatening to put tariffs on their imports back to America.

                              As I said to Frank above, it's not China's Communism we should be worried about, it's America's burgeoning corporate Fascism, "Neoceons" as Reaganomics co-founder as Paul Criag Roberts calls them in the article I linked above.

                              I'm pretty sure you understand when I say the similarities to the Weimar Republic are getting very scary lately.
                              Duck, doesn't seem this thread will die any time soon so I'll weigh in a bit longer. I disagree that china's communism is not a cause for worry. America, our government and economy is not made richer by "American" companies producing goods in communist china.

                              What exactly is American about a company that employs people in other countries, aside from selling to the American consumer? I would not place blame for our loss of jobs on communist china, it makes perfect sense from a corporate perspective to get the cheapest labor and not have to deal with the EPA and OSHA. While all that is a no brainer, so is the fact that our society cannot sustain itself much longer with the continued loss of American wealth in the form of consumer dollars.

                              The bottom line is really quite simple, wipe the smirk off the chinese pm's face and enact some strong protectionist laws or prepare for a economic disaster. IF and when such a disaster occurs, I wonder if those slave labor, affordable electronics will be more valuable than food? It amazes me how Americans who bask in freedom paid for with blood can praise a communist government for making some smart business moves. Do you think the chinese government bends over backwards to provide a clean environment to their people? Do they bend over backwards to ensure human rights and freedoms?
                              Please broaden your scope before you continue to fault America and praise communism, perhaps your perspective would change if you were looking through the eyes of a citizen of that fine country?

                              Comment


                              • #30
                                Re: Americans Supporting Communism

                                Frank, I think you missed the premise of my mentioning Wen Jiabao's point.

                                If we tax or put tariff's on Chinese imports, half of those fee's are going directly to American corporations, almost half of Chinese exports are American corporations, that's not a communist problem, that's a corporatist problem in America, allowing corporations to take whatever they want or hire wherever they without taxes, all for the right price to the right politicians.

                                My last note wasn't to say Communism isn't something to worry about nor embrace, but to say that we need to be more concerned with American Corporatism, another term for Fascism, where our life, laws, safety and posterity revolve around what the minority wealthy deem is best, this was the ideology of Mussolini.

                                This is also why I mentioned Citigroups 2006 Plutonomy confernce, several hundred of the worlds wealthiest individuals are apparently convinced Fascism, or as they call it, "Plutonomy" is already the dominant power, they've overpowered Democracy, and from what I can see over the past two years it looks like they were right.

                                In case you hadn't noticed, every piece of legislation from Washington is written and paid for by corporations, from Healthcare (no cost cutting or competition, but requiring all Americans to buy insurance, nice), FINREGS, Defense and energy.....the whole list of sectors.

                                We fight wars, not solely for Democracy, but to provide Haliburton, Blackwater or Boeing a few new contracts.

                                We drill in the Gulf of Mexico rather than onshore for our own natural gas, for the profits of BP, Exxon or Valero.

                                The government eliminated Glass-Steagall, not for the wealth creation or free market it was sold to the public as, but to enable Citigroup, Goldman Sachs and the oother big banks the ability to defraud the entire country, and the world.

                                Finally, we focus on foreign trade and globalixation, not for the benefits to the middle class as corporate executives pitch us, but for the benefit of corporate bonus packages.

                                We need to worry about the problem we have right here at home, a corporate takeover of Democracy, then we can obsess over Communism when the real problem is dealt with, if it ever is.

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