How much do you think it costs to make a pair of Nike shoes in Asia?

Americans need to get over their view of “Asia” as being about making shoes. When I was working in engineering in the early aughts, we mocked the Chinese as being able only to copy American technology. Today, China is competitive with or ahead of America in key technology areas, including nuclear power, AI, EVs, and batteries.

We need to anticipate a future where China is equal to America on a per capita basis, but four times bigger. Is that a world where “Designed by Apple in California, Made in China” still makes sense? What will be America’s competitive edge in that scenario?

What seems most likely to me in the future is that the US will find itself in the same position the UK is in now. Dominating finance and services won’t mean anything when both the IP and the physical products are being produced somewhere else.

> US will find itself in the same position the UK is in now

The thing is .. there's a point here, but it's not at all tied in with physical products. People are obsessed with one side of the ledger while refusing to see the other. Most of the stuff the UK is struggling with (transport, healthcare, energy) are "state capacity" issues. Things where the state is unavoidably involved and having better, more decisive leadership and not getting bogged down in consultations, would make a big difference.

The UK stepped on its own rake because it was obsessed with tiny, already vanished industries like fishing. Fishing is less profitable for the whole UK than Warhammer. It's not actually where we want to be. While real UK manufacture successes (cars, aircraft, satellites, generators, all sorts of high-tech stuff) get completely ignored. Or bogged down in extra export red tape thanks to Brexit.

To improve reality, we have to start from reality, not whatever vision of the past propaganda "news" channels are blathering about.

> Fishing is less profitable for the whole UK than Warhammer.

This sounded completely insane to me. I tried to look up numbers and found that Games Workshop brings in > 0.5 billion in revenue (!!), compared to all of UKs fisheries at 1 billion-ish (profit margins are, as you'd expect, pretty favorable for the plastic figurines that they don' even paint for you).

Thanks for this interesting fact.

It's also worth considering that certain industries (fisheries and agriculture for instance) are subsidised. It's in our national interest to maintain production capacity, so profits are the least of our concerns. Both the UK and the EU's agricultural sectors are heavily subsidised mainly for this reason. It's cheaper to import than to produce locally, especially with our environmental standards and targets, but we need to keep producing. More so in the current geopolitical climate.

And whilst nobody wants to risk being starved to submission, it's also equally important to promote more profitable sectors, and tax accordingly, so that we can support our more strategic sectors. I wouldn't say we're doing a good job at that for what its worth.

+1, exactly. Focusing too much in the money makes you forget about the power. At a national leadership level, there isn't much power in having a local Warhammer industry, fishing is much more strategic.

In broad terms, this is related to the error the USA made. Manufacturing in China was a very profitable deal for the USA. A lot of companies view labour first and foremost as expense, wealth as as the goal, and power in wealth— so it's not surprising as a whole the industry opted to "contract out" labour across the globe.

A lot of power lays in labour though. Money doesn't produce, invent, move, feed, etc— money is only good if someone will take it at the amounts you have it to do that specific labour you need for you.

This is a bit harsh: the USA didn't devalue labor in general, just manufacturing. They hired software engineers from all over the world, along with a lot of higher value engineering and product development jobs. The error the USA made was in pushing the workforce up the value chain faster than everyone could handle, and a lot of Americans got left behind.

China is moving up the value chain also, they are being forced to by their demographics, and they are investing heavily in the change ATM (just like they started investing heavily in green energy 10 years ago) so I don't think they will make the same mistake as the Americans are making right now.

A lot of our “value chain” is bullshit. If and when China becomes twice as big an economy as the US, much of our “edge” in marketing, finance, and services isn’t going to mean squat. E.g. how much “GDP” will evaporate overnight when American universities no longer have the cachet that comes along with being the best universities in America?

> A lot of our “value chain” is bullshit.

No it isn't, productivity has to increase, that's why we constantly get rid of jobs that do not provide much value. People want more money, and the only way we get there is with more productivity (doing jobs that make more money).

> If and when China becomes twice as big an economy as the US, much of our “edge” in marketing, finance, and services isn’t going to mean squat.

China gets to 2X our GDP by doing what we basically did in the 90s, so you are definitely right! They will have their own marketing, financing and services. The only difference is that they won't need to outsource manufacturing to China (well, they are outsourcing it a bit now, but also investing tons in automation).

> E.g. how much “GDP” will evaporate overnight when American universities no longer have the cachet that comes along with being the best universities in America?

I don't know what you are ranting about, but I get the feeling that if I did know what you were saying here I would probably agree with you.

> No it isn't, productivity has to increase, that's why we constantly get rid of jobs that do not provide much value.

Our measures of “value” are wrong.

> I don't know what you are ranting about

My point is that a lot of what we think of as “higher value” activities are actually derivative of and downstream of our industrial supremacy. As China takes up that mantle, the higher value activities will go along with it. E.g., how long do we expect the US to do the cutting edge nuclear power and weapons research when China is the one building all the nuclear power plants?

I mean look at the path dependency that led to Silicon Valley. Why did the software revolution happen in the same place we were building the microchips?

We basically agree then: as China takes up higher value activities, they won't need those activities from the US anymore. Also, France is the cutting edge designer of nuclear power plants these days.

> Why did the software revolution happen in the same place we were building the microchips?

Hardware people becoming software people was extremely common back then, and still is today (EEs can make more coding than using their degree directly). Now we have the opposite problem (we don't have enough hardware people because software sucked all the oxygen out of the room) and China has less of it (although increasingly...they are repeating history as well). If anything, this just backs up my point in how higher value activities de-emphasize manufacturing (even super high end manufacturing as in semiconductors).

You can replace perceived value with actual value if you don't agree with the value judgement calls that were made, which is entirely reasonable.