Tough to compete with $0.88 per hour..

[gaijindabe]

Despite the advantages provided by the North American Free Trade Agreement, the Made in China label “has become the incarnation of the single greatest perceived threat to Mexico’s economic prosperity – and a symbol of the pitfalls of globalization,” wrote the authors of a recent McKinsey & Co. study. For decades, Mexico had used it proximity to U.S. markets to attract investment in its assembly-for-export maquiladora plants along the country’s northern border. But wages in Mexico have risen to levels far above those in China. Even Mexican officials have publicly complained that their manufacturers’ proximity to the U.S. no longer automatically makes up for that cost differential. For Mexico, it was an abrupt fall. Bilateral U.S.-Mexico trade jumped 189 percent to $235.4 billion in the first decade after NAFTA was enacted. From 2001 through 2004, U.S. exports to Mexico fell at an average annual rate of 4.4 percent, from $101.3 billion to $97.4 billion. During the same period, U.S. imports of goods and services from Mexico grew at an annual rate of only 0.6 percent. The U.S. International Trade Commission calculated that the average effective labor cost in China’s coastal region in 2002 was 88 cents per hour – including benefits – compared with $2.45 per hour in Mexico. Mexico has forged 11 free-trade pacts with 33 trading partners, including a bilateral pact with Japan. Mexico also needs to make long-overdue administrative and legal reforms, many critics say. Mexico’s telecommunications network remains inadequate. And Mexico’s ground, air, and sea transportation all need substantial upgrades – especially outside the northern border region – if Mexico is going to take full advantage of its proximity to the United States. (The Journal of Commerce, 2/21/2005.)

[id10t]

And WalMart is in the top 10 for "China's international trading partners" - above and beyond *many* countries.

[RallyJon]

Wages are going up rapidly in China, as is the reluctance of workers to toil like slaves. You can't buy a car on 88 cents an hour in China or anywhere else. Some people have an insulting view of the Chinese as little worker automatons. They aspire to be middle class and are working to get there--not to be factory fodder for generations.

It took 100 years for America to go from hardworking cheap factory labor to overcivilized bourgeoisie. It took Germany and Japan just 30 years. The maturation of China will be even faster.

And as they raise their standard of living, what consumer brands do they aspire to? American brands of course. It's myopic to look at China from only one side. The development of China is the best thing that could ever happen to the U.S. economy.

[legion]

I certainly hope you are right RallyJon. It's no secret that China is a sore spot for many Americans today. I would love to see a trade surplus with China. Too bad it seems that our current policy seems to be to give them military technology in exchange for cheap trinkets.

[gaijindabe]

Germany, Japan, the US and China started from four different places with four different histories. Bringing 1 billion people to Japan's living standard circa 1976 is going to take some doing..

I certainly do not have an insulting view of the Chinese, but rather have copied and posted this to point out the difficulties in competing with them. I agree with the article that Mexico needs legal reforms and communication and transportation up-grades to compete more effectively.. They are not going to do it with wages and geography.

[legion]

I worry that the Chinese government will act to keep wages artificially low. (In a sense making the general populace slaves.)

I know, it's silly. It's not like China has a history of oppressing its own people.

[widebody911]

Originally posted by RallyJon
And as they raise their standard of living, what consumer brands do they aspire to? American brands of course. It's myopic to look at China from only one side. The development of China is the best thing that could ever happen to the U.S. economy.

Um, yeah, but remind me again where all of the "American brand" stuff is made? So if the 'American brand' stuff is made in China, and sold in China, then where's the up-side for the US economy? Maybe the guys who own the "American brands" will make some green, and some marketeers, but that's about it. Nobody on the US side in retail sales, transportation, manufacturing, etc makes one thin dime on something made in China and sold in China. Case in point: chains like McDonalds and Hooters exist in China now. Who on the US-side sees the money from those ops? Some execs and maybe some product development/marketing folx. From there, you're relying on 'trickle' down to benefit the rest of the US economy, and we already know that story.

Eventually, the Chinese will figure out this marketing thing, and will be able to mimic the entire "American brand" product cycle in-country, completely shutting out the US-side of it completely.

[RallyJon]

Just look at history, Thom. I remember as a little kid those evil Japanese flooding our shores with their cheap goods, putting hardworking 'mericans out of work, leading to doom-and-gloom soapboxers predicting the demise of America.

I won't have an economics debate with someone who uses the term "trickle-down" but it really does all work out in the end.

[gaijindabe]

Uggg, the Japanese economy of the 15 year recession.. Germans aint doing much better..

[widebody911]

Originally posted by RallyJon
Just look at history, Thom. I remember as a little kid those evil Japanese flooding our shores with their cheap goods, putting hardworking 'mericans out of work, leading to doom-and-gloom soapboxers predicting the demise of America.
So when did all those manufacturing jobs come back? I must have missed it.
I won't have an economics debate with someone who uses the term "trickle-down" but it really does all work out in the end.
With enough fiber and, and if you build enough Starbucks and McDonald's to hire the guys who used to assemble and sell and transport the widgets now made in China.
And heresy you speak; Trickle-down is the cornerstone, nay the very foundation of Conservative economic theory and policy.

[350HP930]

Originally posted by widebody911
Um, yeah, but remind me again where all of the "American brand" stuff is made? So if the 'American brand' stuff is made in China, and sold in China, then where's the up-side for the US economy?

Damn, you beat me to it.

From his posts I can see that Rally Jon has bought the 'free trade' propaganda hook line and sinker. I long for the days when people used to be concerned about making the US a better place than the rest of the world instead of selling it out for a buck. Some people don't seem to mind when its not their job thats being outsourced.

Current trade agreements like NAFTA and china's MFN are nothing more than economic treason that only benefits multinational corporations and a very small segment of the US population.

I often wonder how bad things will have to get before people wise up to whats going on and demand rational trade policies with other nations.

Unfortunately those who promote the selling out of our nation get away with it due the general ignorance of the populace concerning the economy and trade.

The classification of a opressive gulag nation like china as a 'most favored nation' says it all.

[RoninLB]

Originally posted by gaijindabe

For Mexico, it was an abrupt fall.

Mexico also needs to make long-overdue administrative and legal reforms, many critics say.

Hi Bill..
100yr old partial politics screwed Mexico. They had plenty of time to buff up their act. The economic reality few never sparked a dynamitic system. The routine is about 10yrs for cheap wages to develop into full wage higher standards of living. They never developed a competitive businessman cluture because of administrative and legal bs. Their only competitive edge was cheap labor. I imagine a better sys will need more time.

Who knows what'll happen in China. Cheap labor has a multiplier effect that gets reflected in US company net worth.. I don't think much of China's bussiness culture 'cause most are a boderline success. The recent pc issue of China buying a whole US co will be interesting to watch. A pc is only a world commodity and some will try to hault it on a US security issue. If the US allows it it might cause complications with China's leaders on how to deal with internal world class businessmen and their followers. Otherwise China is only the current holder of the booby prize.. meaning US out sourcing to cheap blue collar labor has little economic effect to us on the big picture. Although out sourcing white collar labor is a big time concern.

Did McKinsey mention that Mexico's leaders screwed up ?

[RallyJon]

Edit--Ahh nevermind. Carry on with the usual...

[Superman]

Okay, they we'll call it "supply-side" economics. A rose by any other name.....

How many legs does a dog have if you call his tail a leg?

Ans: Almost no one gets this. The answer is four. Calling his tail a leg does not make it a leg.

We can call it whatever you like, but it's tax cuts and more money for the already-rich industrial barons who happen to also be in political power. And we try to sell it to the proletariat as being in their best interest also. It appears to be still working (the ruse, that is), but that's not going to last forever. And when this House of Cards falls, a certain American political party is going to look pretty silly.

In the meantime, China is going to help push that date forward for us. Their impact on our economy is going to sting. If Wal-Mart is expanding faster in other countries than the US, then there is a reason.

[john70t]

Everyone but the truely insane Communist would agree that there needs to be some sort of an economic stratification in any society to make it function, but the disagreement is on the percentages and ranges.
The U.S. has long ignored infrstructure and people development for short term profits and eventually there will be a time to pay for it. In ten years the left will be blaming W and the right will be blaming Clinton, but Haliburton CEOs will still be playing golf.

[gaijindabe]

"The U.S. has long ignored infrstructure and people development for short term profits"

We need a Great Leap Forward. Yeah, thats the ticket. Lots of struggling masses and all that goes with it. Mind if we raise your taxes and take your P-car to pay for it??

[john70t]

Sorry but there's no mo' money for education, health care or mass transit with sensible zoning, all been turned into carbon in some desert.
Don't worry, as soon as the deficit hits and combines with a generation of stupid 80's breadearners and the boomers needs we'll have those "struggling masses". Solent green baby haha.

btw-what's "dabe" mean?, couldn't find it in the romangi dictionary.

[widebody911]

Originally posted by gaijindabe
We need a War in the Middle East. Yeah, thats the ticket. Lots of death and destruction and all that goes with it. Mind if we raise your taxes and take your P-car to pay for it??