US and China to have manufacturing costs parity by 2015?

Paul Raven @ 09-05-2011

I’m going to offer this with a large pinch of salt, given that it’s a press release from a consulting firm, but the boldness of the claim is pretty impressive [via NextBigFuture]:

Within the next five years, the United States is expected to experience a manufacturing renaissance as the wage gap with China shrinks and certain U.S. states become some of the cheapest locations for manufacturing in the developed world, according to a new analysis by The Boston Consulting Group (BCG).


After adjustments are made to account for American workers’ relatively higher productivity, wage rates in Chinese cities such as Shanghai and Tianjin are expected to be about only 30 percent cheaper than rates in low-cost U.S. states. And since wage rates account for 20 to 30 percent of a product’s total cost, manufacturing in China will be only 10 to 15 percent cheaper than in the U.S.—even before inventory and shipping costs are considered. After those costs are factored in, the total cost advantage will drop to single digits or be erased entirely, Sirkin said.

Products that require less labor and are churned out in modest volumes, such as household appliances and construction equipment, are most likely to shift to U.S. production. Goods that are labor-intensive and produced in high volumes, such as textiles, apparel, and TVs, will likely continue to be made overseas.

Talk about a mixed bag of news. The prospect of working-class jobs returning to American shores must be something of a relief, but implicit in that return is the socioeconomic status of those “certain U.S. states” (and I think we can all guess which ones) as equivalent with China, the great economic enemy and exemplar of all things unAmerican. And it puts the lie to the notion of the unity of the US, too; sure, the top 1% of the country is rolling in money, but the bottom layer of the population pyramid is competing with China for the chance to make tchotchkes. Kinda puts the whole “USA! USA!” chanting from last week into perspective, doesn’t it? If this is a victory condition, I’d hate to be losing the game. (Note use of sarcasm as a way to blunt the pain; things over here on Airstrip One are looking grimmer by the day, too.)

Also implicit in the consultant’s outlook there is that the methodology of manufacture will remain essentially the same. Four years doesn’t look like a long time, but things move fast these days, and the 3D printing and fabbing industry is edging closer and closer to the point where it becomes a big grenade in the labour punchbowl. Still, I guess someone’s gonna have to make the 3d printers… up until the point where they can reliably self-replicate, anyway. (Shorter version: economics of mass production looking pretty screwed in the long term with respect to job creation. Profitability looking much better, but the 0.01% of the population who’ll benefit from it don’t need me to tell them that, I expect.)

Credit where credit’s due

Paul Raven @ 28-02-2011

Or maybe not; very much depends on how you see causality in action in geopolitics, really. But enough with the preamble. I can’t seem to locate where I first said it (though I’m pretty sure it was on Twitter, around the time the Egyptian revolution was really hotting up), but I remember someone joking about how a Middle Eastern country had managed to achieve regime change almost in spite of the best status quo reinforcement efforts of the West, and me responding that – if the revolutions turned out to be even remotely successful – the very meddlers who caused the whole damn mess would start claiming the revolution as the hard-won victory that they’d always been aiming for in the first place.

So, here’s Thomas Barnett on the “opportunities” of the Libyan crisis.

To me, this is an ideal sort of SysAdmin intervention opportunity: keep it small and proportional and elevate in response to events. Big point:  not pre-emptive but responsive.  You want to ride with globalization’s natural tide as much as possible, letting the “new map” tell you where to apply pressure next, thus making local demand your primary guide.

Naturally, the fearful and paranoid will see the usual Western plot to grab oilfields, but denying the bottom-up nature on this one reduces them to sheer lying.

Don’t think anyone’s denying the “bottom-up nature”, Mister Barnett, but framing a violent popular uprising in an oil-rich country as an “opportunity” is rather to invite the very criticism you claim to be paranoid, despite the historical precedents, no? Where you see an “ideal sysadmin opportunity”, a lot of other people can see a country shaking off the legacy of decades of sloppy sysadmin work… and looking at the state of the prospective sysadmin’s own hardware at the moment, I’m not sure it acts as a great curriculum vitae for someone looking to tell other people how to run a safe and secure server, do you? But wait for it…

Me? I see a beautiful, globalization-driven process at work here. Let it roll!  Because I like our longer-term odds versus those of the Iranians, al-Qaeda and the Wahhabist Saudis.  Then again, victory was never in doubt–just timing and cost.

Bingo! That didn’t take long, did it? Political shamanism: if I wait long enough, the sun will rise just like I the gods promised it would! Now, where’s my private cave and mammoth-skin blanket, eh? Plenty more insightful prolepsis where that came from, but you’re gonna need to keep me sweet if you want the benefits thereof…

(For the record, I’m on the same page as Barnett when it comes to seeing the globalisation process as an inevitability driven by a huge number of complex interacting factors, and as – over the long term, at least – a net good for the entire human species. Where we disagree is at the point where each step in the globalisation process becomes a crack into which the prybar of American influence should be poked; if the last ten years haven’t shown you that the cost of meddling with other people’s countries isn’t far too high to justify the rewards – not just for your own people, but the people whose countries you decide to reorder – then I doubt anything I can say will convince you to the contrary.)

The Privatisation of America

Paul Raven @ 02-03-2010

Key West conch republic bumper stickerJohn Robb has just re-posted USA Inc.“, a speculative future-history essay he wrote back in 2007, meant to be read as if “written from the perspective of a think tank that’s operating in support of the status quo economic elites in 2025.” He saw the recession coming, predicted an increasing entrenchment of US forces in unwinnable open-source guerrilla conflicts, and riffed on these themes to predict a future where massive government debt leads to the privatisation of… well, pretty much everything. [image by szlea]

Roads, waterworks, military bases, schools, parks, and much more were quickly sold at appropriate prices. Attempts by government’s to retain ownership and rent them as multi-year leases were initially successful, but as the crisis deepened the market cooled to these schemes. Within a year of the start of what is incorrectly but popularly termed “The Great Theft,” outright sales of assets to global investment funds, corporations and individuals were by far more common. The speed of this transfer in ownership has been unmatched by any example prior or since. By 2015, less than three years after the panic began, upwards of 60% of all public assets from the national to the local levels were formally in private hands.

Note that Robb says this is not a future he desires or advocates, but that it seems nonetheless more plausible as events develop; for extra chewiness, compare and contrast with Tim Maly’s “The Free Freeways” Futurismic essay about the seccession of the US highway system.

I think I can safely predict that a lot of you will say Robb’s USA Inc. could never happen, and those of you who are American citizens would be better qualified to make that judgemnet than I… but I’d be very interested to hear your reasoning. Is Robb’s style of doomsaying just a symptom of the inherently self-critical character of American politics, and hence an indication that the problems he’s flagging up are already being grappled with at a subliminal level?

Or is the feeling that it couldn’t happen merely a form of knee-jerk wishful thinking and denial – “too big to fail” scaled up to a whole nation?

Americaland: writing the US from beyond its borders

Paul Raven @ 05-02-2010

America!People can be very quick to make jokes about the lack of knowledge some Americans have about the countries beyond their borders, but the opposite can also be true. Damien Walter recalls a discussion he had with Neil Gaiman at last year’s Clarion writer’s workshop about “Americaland” – the bundle of cultural shorthands and cliches that go to make up the fictional USA where British (and other) writers tend to set their stories:

Americaland is real place for British writers, it is built from thousands of fragments of American TV, films, music, comics and other cultural artefacts. It’s a place filled with 1950’s dinners and long desolate highways among other things. And its just as imaginary as a Britain filled with red telephone boxes and bowler hatted business men.

(One draw of Americaland is the British tendency towards naffness…IE…any story that seems fascinating and dark in Americaland becomes utterly naff if you transplant it to the UK. Batman in Gotham = Dark Knight. Batman in Birmingham = mentalist in tights. If you are British and want to write Batman, or any other American archetype, then welcome to Americaland.)

[Batman in Birmingham… I’d buy that comic, personally. DC should give the franchise to Grant Morrison for a few years… “Mentalist in Tights” = Best Tagline Ever.]

Americaland is as much a fantasy world as Middle Earth or Dune. Some of the most fascinating fantasy worlds are the ones that overlap our reality so closely that the reader can almost accept them as real. Perhaps that’s why Americaland, with all its inaccuracies and cliches, can be such a compelling place to set stories in. Whenever I turn my hand to any story of the horrific or dark fantasy variety, I find Americaland creeping in from the edges. However hard I try to root these stories in the Britain I know, American locations and characters crop up again and again. When I turned to my imagination for material this weekend, it gave me a man and woman meeting in a diner and going on a road trip. It’s a story that can only take place in Americaland. So do I accept where my imagination is taking me, for all its flaws, or rail against it and force myself to write in British settings?

It’s a good question – should you only write what you know? And if not, how would you recommend a non-native get a feel for the real USA without the expense of a pair of plane tickets and a few months of travelling? [image by dno1967]

And to our American readers: what are the most egregious Americaland cliches you see in the writing of non-American authors, and how should they be corrected?

North Dakota vs Minnesota: interstate economic warfare

Paul Raven @ 07-01-2010

To a nominal Brit like myself, reading about the American governmental system is a constant stream of surprises. It’s one thing to understand that a country comprised of fifty-odd states (which are themselves the size of some sovereign countries) will have baked a certain degree of local independence into its legislature, but entirely another to read about the ways that such an arrangement can manifest itself. Case in point: North Dakota is suing Minnesota over its newly-introduced carbon taxation laws, which (so North Dakota claims) “unfairly discourage coal-powered electricity sales in favor of renewably powered electricity”. [via BoingBoing]

I’m seeing this legislation described as the first real-world example of a carbon tariff, which suggests that such measures are going to have a rocky reception when they become more widespread… but that was a given, I suppose. What’s rreally interesting as an outsider is the way this case highlights the increasingly fragmentary nature of the United States; I have no idea how it looks from within, but from this side of the pond, some form of religio-econo-political schism splitting the US into geographically-defined factions (remember the Jesusland map?) doesn’t seem like a massive leap of the imagination.

But that’s massively uninformed armchair punditry on my part, so it’s over to Futurismic‘s American readership: to a citizen of the United States, does it feel like the Union is becoming increasingly strained by hyperpolarised political ideologies and economic difficulties? Or are we just seeing something that has always been there? (Feel free to sound off on political issues, but keep it friendly, please.)

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