Competition who?

stoney

In the States, we often talk about the rise of Asia and the fierce global competition. Lots of pretty charts and elaborate explanations and passionate discussions.

I talked to average Joes recently from Asia. Surprisingly none of them thought much about the world competition or long term trend or power shifting or gold or stuffs like that. They live paycheck to paycheck. They just wanna satisfy their ever demanding bosses. Work work work. They don't know how good they are in their profession. There's just no freaking time. They just have to excel just to survive in their companies. What do they do during break time? Drink drink drink. No wonder why their countries as a whole are doing better. They are like race horses wearing "blinker hoods".

If a forerunner looks back too much, he will have no time to run, right?

svart

As I mentioned in the other thread, they do well because we give them all of our jobs. I work for a corporation that has overseas design and manufacturing. Those guys in China and Taiwan are good people, don't get me wrong. They are nice, hardworking people. Their culture is one of work work work, but it's because they are deathly afraid of losing their jobs. They aren't shy about firing people who under-perform(and by under-perform I mean someone who won't do nights/weekends/holidays/18hr days/etc). Why should they be? They have billions of people who want their jobs and much like here in the USA, they have extremely large numbers of highly educated people, due to the college myth, and not enough jobs for them all. So once a person lands a "good" job(which can take years to get), they do everything they must to keep that job. I respect them for it, it's a much harder life than in a lot of other countries and we don't really hear about the personal side of it much.

On the other end though, we've given them this opportunity by sending them a large portion of our jobs in the name of saving money and generating more profits. That's money that is never really seen by the working class here in the USA, in fact, it's taken away more and more as more people lose their jobs and no new jobs are created while corporations make record profits year after year.

Fortunately for us, the market is shifting slowly. 10 years ago you could get 5 PhD educated Chinese engineers for 1 bachelors degreed engineer here. 5 years ago you could get 3PhDs there for 1 bachelors here. Now it's roughly 2 masters there for 1 bachelor here. The chinese are demanding better pay and more rights and those same corporations are giving it to them. Because of this, and a lot of patent infrigements and things of that nature, a growing number of manufacturers are slowing bringing back jobs to the USA because our workers who have been jobless for years now, are willing to take much less pay to do the same jobs. It's almost laughable that we sent the jobs to China for cheap labor but now China is demanding too much money and WE are now the cheap labor.

Vitaliy_Kiselev

You are both talking about capitalism. In it most "advanced" form - globalization.
This is goal of every goverment to keep average Joe to work, work, work and not allow him ot think, think, think about rich ruling class who steal, steal, steal.
Globalization helps big with reaching this goal.

>Because of this, and a lot of patent infrigements and things of that nature, a growing number of manufacturers are slowing bringing back jobs to the USA because our workers who have been jobless for years now, are willing to take much less pay to do the same jobs.

Looking at statistics I do not see foundation for this words.
Manufacturing is not improving in USA, job cuts continue.
And I do not see reasons to improve. As wages had not been main reason for production transfer to China.
Only three things keep US afloat - big average income (so you can consume more of various diversified goods), copyright and patent systems. Remove any of three foundations and whole building will collapse (it will also collapse anyway, but later :-) )

stoney

Not so sure about taking less money in the States. Average hourly rate has been steadily increasing. What we are experiencing is less total working hours. Yuan appreciation is making US goods relatively cheaper than before. Exporting more goods and services is the only way to get out of this sh!thole. But we have a long way to go. It could take decades. In terms of workmanship quality... China is improving fast... justifying higher cost of Chinese goods. In absolute term, the labor cost in China is still a lot cheaper than here.

By the time we reach a steady equilibrium, if we ever reach to the point, sure our hourly rate could be lower than China's... and that sounds horrid.

lenuisible

I think this guy explained well the problems of globalization :

http://www.personal-view.com/talks/discussion/135/a-fascinating-and-prophetic-interview-in1994-about-global-free-market

countries maintain a illusionary growth by destroying their societies, which costs much more at the end then what it offers.

I'm just wondering what other system could replace this one. Communism seemed a nice alternative, but I don't think it was well implemented in the past ...

JMF

Being from post-communist country I surely don't think communism or socialism was well implemented...and also not really a nice alternative.

This fear from China in US reminds me similar one from 80s/90s from Japan, when many Americans were asking how it's possible, that the poor Japan who was heavily supported by US is now owning half of US companies. Well few years passed and Japan is not really in the game anymore.

Vitaliy_Kiselev

>Well few years passed and Japan is not really in the game anymore.

It is not so simple as you think.
Try to search reasons why long long depression in Japan happened.
US pressed Japan and got required results (because Japan is not fully independent country still).
They are pressing China how, good thing is that almost without any result :-).

stoney

Japan... rapid economy growth... sucking all hot monies... super duper asset bubble... then boom!!! Crash down into Earth. Decades long deflation because they flew so high. A long way to fall. Still falling!!! Looking back... Japan was destined to fail.

That was the first sign that something was fundamentally wrong in the market & globalization. Then collapse of soviet union and berlin wall. everyone joined in the other side. going extremity... super capitalism.

Vitaliy_Kiselev

>Looking back... Japan was destined to fail.

You are wrong here.
As I said, you need research topic before jumping to fast conclusions.
Japan had been forced by US to change exchange rate of their currency (you can find plenty of materials about this) and this started whole chain reaction.

lisergicsyn

>Japan had been forced by US to change exchange rate of their currency (you can find plenty of materials about this) and this started whole chain reaction.

the interesting fact is that they can't do the same with China except trying to fuel its intestine flames of dissent. And they know how to do that very very well...

stoney

It might have been a catalyst like the recent subprime crisis leading to overall credit market crisis. But I won't say Japan failed because they had let Yen appreciate rapidly. They failed because they let the hot foreign monies take over the country. When a country is flooding w/ lots of monies (theirs and foreigners), they have to appreciate their own currencies to tame inflation. But it's almost impossible task... it's like a kid playing with fire.

stoney

Japan's stuff... then was then. Now is now.

Appreciation of Yuan, no matter how slow it is, gives more buying power to China, and they can suck up more commodities. That makes things a lot more complex. Yeap China is smarter than Japan. If China buys most commodities in the world by the time Yuan is ready to get fuked, it's already too late. They will PWN us.

JMF

You're right about that exchange rate Vitaliy, but it wasn't the reason Japanese economy crashed. The reason was the economic bubble in real estate and stock market they created in late 80s. So it was purely Japanese's fault.

Personally I don't think China is smarter than Japan. They don't really know what they are doing and their mix of capitalism and socialism is going to crash. The bad think is, that all of us will feel it, when it'll happen. Japan with its huge economic growth was still able to keep the middle class the strongest. There's nothing like middle class in China, there are just super rich people living in big cities and super poor people in rural areas who are selling their kids for food. This unbalance is not possible to keep for long.

Vitaliy_Kiselev

>It might have been a catalyst like the recent subprime crisis leading to overall credit market crisis. But I won't say Japan failed because they had let Yen appreciate rapidly

http://english.peopledaily.com.cn/200309/25/eng20030925_124911.shtml

You can also search other articles about 1985 "Plaza Agreement" and related things.

Main thing here is to understand that Japan and Germany still are not fully independent countries.
For example. Most of Japan operated large businesses and banks want to move big amounts of money from US (stock, bonds, etc) to Japan to cure problems that they are having. But they can't. They are not allowed to do so. Because such move in current situation could be the last straw.

P.S. Other interesting article (especially considering a date) - http://gem.sciences-po.fr/content/publications/pdf/Meyer_China_Currency042008.pdf

stoney

Thanks for the links. I got your points. We are pretty much talking same thing. Stronger Yen attracted international hot monies leading to asset bubble, and it's taking decades to deflate the value where Yen has become carry trade currency. Whenever there's a crisis causing BOJ to panic, there's a joke: Mrs. Watanabe coming back to home. Japan dont want their Yen coming back to Japan. Unwinding of Yen carry trade can do lots of damage on world stock markets. Then BOJ intervenes currency market and prints lots and lots of Yen. Yen is fuked up currency. But I think it's mostly Japan's fault. Not all countries with strong currency followed Japan.

Of course China will have crazy asset bubble, too. They can't stop the hot monies getting into their system. But we are living in different world. Limited resources. Growth will be limited. Population will be limited. Eventually those countries holding more commodities will win. If China buys most of commodities in the world aided by rising Yuan value, they will win regardless of future deflation, inflation, stagflation, or whatever.

Vitaliy_Kiselev

>Stronger Yen attracted international hot monies leading to asset bubble, and it's taking decades to deflate the value where Yen has become carry trade currency. But I think it's mostly Japan's fault. Not all countries with strong currency followed Japan.

Things happened not as you described.
First - yen exchange rate rise. Next - problems arise in real sector (very export dependent). Next - problems in economics that appeared from real sector. Next - start of asset bubbless as only known cure to problems, and it helped, until bubble bursted (same in US and EU). Next - start of QE1. Next - start of QE2, etc They couldn't get result because Japan is integrated country with some parts of independency taken out (you couldn't make large interventions without special US approval, you also not allowed to scare carry traders as it'll hurt US and EU a lot, and carry traders are indeed damaging real economic).

>Of course China will have crazy asset bubble, too

I do not agree on this also. First, western media like to talk about bubble in China, but as far as I know native Chinese do not agree. Prices in CHina rise because people want more homes then it is possible to make.

No such thing as "asset bubble" exists in command economic. As you could provide this homes for free. And nothing happenes. You already have asset, so money printing also won't be big problem.

stoney

Let's agree to disagree :)

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