china, China, CHINA

[aurelius]

That’s because of the consumerism that’s been pursued to grow the economy. This paid some dividends strategically for the DoD insofar that commercial equipment became far more powerful than mil spec stuff. However, the constant drive to put a personal electronic device in the hand of every person with designed obsolescence has become a curse upon us as well as the environment.

Consumerism has ruined us. We have no soul. No great cause. Just immediate self gratification and the unquenchable desire for more. I don't know how we as a nation regain a true sense of purpose and common cause.

I don't disagree with you, I'm just dubious about Americans' appetite to follow through on something like this. We love our cheap crap. I would think we'd really need tariffs or some other government action that makes other countries' goods competitive to really have an impact.

Agreed. Our politics demonstrates the innate selfishness and inability to make sacrifices of the general population. This will require policy from On High.

I see two positives that may lead to a favorable outcome:

1) Our Lord and Savior* Trump made a trade war with China popular among the people it will impact the most. Biden has continued it but needs to bring it to the forefront.
2) The supply chain issues have raised prices. If the US can start implementing many of these policies now, when supply chains restructure the higher pricing may not even be noticed.

But the Federal government will have to get Wall Street's dick out of its mouth.

*dumb question: How do you to the trade mark symbol?

[Hiphopapotamus]

I don't disagree with you, I'm just dubious about Americans' appetite to follow through on something like this. We love our cheap crap. I would think we'd really need tariffs or some other government action that makes other countries' goods competitive to really have an impact.

Agreed. Our politics demonstrates the innate selfishness and inability to make sacrifices of the general population. This will require policy from On High.

I see two positives that may lead to a favorable outcome:

1) Our Lord and Savior* Trump made a trade war with China popular among the people it will impact the most. Biden has continued it but needs to bring it to the forefront.
2) The supply chain issues have raised prices. If the US can start implementing many of these policies now, when supply chains restructure the higher pricing may not even be noticed.

But the Federal government will have to get Wall Street's dick out of its mouth.

*dumb question: How do you to the trade mark symbol?

Or finding a place to manufacture things more cheaply than China can, but that would be decades away. But we need a coherent strategy for dealing with both China and Russia as adversaries, and as you say hopefully that is something that can cross the aisle, at least as far as China is concerned.

I can't get the TM thing to work within the forum, but if you put parentheses around (tm) in Word you can copy/paste it into your comments™

[quikky]

*dumb question: How do you to the trade mark symbol?

Hold the Alt key, then type in 0153: ™

[Hardartery]

I don't disagree with you, I'm just dubious about Americans' appetite to follow through on something like this. We love our cheap crap. I would think we'd really need tariffs or some other government action that makes other countries' goods competitive to really have an impact.

Agreed. Our politics demonstrates the innate selfishness and inability to make sacrifices of the general population. This will require policy from On High.

I see two positives that may lead to a favorable outcome:

1) Our Lord and Savior* Trump made a trade war with China popular among the people it will impact the most. Biden has continued it but needs to bring it to the forefront.
2) The supply chain issues have raised prices. If the US can start implementing many of these policies now, when supply chains restructure the higher pricing may not even be noticed.

But the Federal government will have to get Wall Street's dick out of its mouth.

*dumb question: How do you to the trade mark symbol?

Or finding a place to manufacture things more cheaply than China can, but that would be decades away. But we need a coherent strategy for dealing with both China and Russia as adversaries, and as you say hopefully that is something that can cross the aisle, at least as far as China is concerned.

I can't get the TM thing to work within the forum, but if you put parentheses around (tm) in Word you can copy/paste it into your comments™

There already are places manufacturinf things cheaper than China, Chinese companies are already outsourcing to them to get around lockdowns and power outages and supply chain issues. They are places like Bangladesh and Thailand. The burgeoning Middle Class and rising standard of living have been pushing that change for several years now. Just like it alsways does with evewry couintry that spends time as the home of cheap manufacturing. Japan did it. Taiwan did it. I am sure a more exhaustive list would be fairly easy to assemble.

[mgil]

The USA was once the China for Europe.

[Hiphopapotamus]

I don't disagree with you, I'm just dubious about Americans' appetite to follow through on something like this. We love our cheap crap. I would think we'd really need tariffs or some other government action that makes other countries' goods competitive to really have an impact.

Agreed. Our politics demonstrates the innate selfishness and inability to make sacrifices of the general population. This will require policy from On High.

I see two positives that may lead to a favorable outcome:

1) Our Lord and Savior* Trump made a trade war with China popular among the people it will impact the most. Biden has continued it but needs to bring it to the forefront.
2) The supply chain issues have raised prices. If the US can start implementing many of these policies now, when supply chains restructure the higher pricing may not even be noticed.

But the Federal government will have to get Wall Street's dick out of its mouth.

*dumb question: How do you to the trade mark symbol?

Or finding a place to manufacture things more cheaply than China can, but that would be decades away. But we need a coherent strategy for dealing with both China and Russia as adversaries, and as you say hopefully that is something that can cross the aisle, at least as far as China is concerned.

I can't get the TM thing to work within the forum, but if you put parentheses around (tm) in Word you can copy/paste it into your comments™

There already are places manufacturinf things cheaper than China, Chinese companies are already outsourcing to them to get around lockdowns and power outages and supply chain issues. They are places like Bangladesh and Thailand. The burgeoning Middle Class and rising standard of living have been pushing that change for several years now. Just like it alsways does with evewry couintry that spends time as the home of cheap manufacturing. Japan did it. Taiwan did it. I am sure a more exhaustive list would be fairly easy to assemble.

I've heard Vietnam as well. Unfortunately, China is so damn big it's probably going to take a lot of countries to come on line to make a real impact but hopefully that ball is at least rolling now.

[dw]

The USA was once the China for Europe.

Hrm... is this really true?

My sense is that by the time shipping technology and European demand would have been great enough to make a supply chain relationship feasible the US real wages would not have been inferior to European wages (IOTW American labor wouldn't have been cheap enough for this to work).

I would guess it is true that until maybe the post Civil War era we were a net exporter of agricultural goods and a net importer of manufactured goods, but that's not really the same thing.

[SquatsALot]

Keep in mind that super complex, global supply chains, and lean/low inventories in warehouses domestically, have only been really possible in the past ~20 years or so due to the advent of enterprise software systems such as ERP and Supply/Demand forecasting tools.

[mgil]

The USA was once the China for Europe.

Hrm... is this really true?

My sense is that by the time shipping technology and European demand would have been great enough to make a supply chain relationship feasible the US real wages would not have been inferior to European wages (IOTW American labor wouldn't have been cheap enough for this to work).

I would guess it is true that until maybe the post Civil War era we were a net exporter of agricultural goods and a net importer of manufactured goods, but that's not really the same thing.

It’s all relative, right?

The USA was being used as the agrarian base to supply much of the raw materials needed for Europe because that’s where all of the labor was at.

[dw]

The USA was once the China for Europe.

Hrm... is this really true?

My sense is that by the time shipping technology and European demand would have been great enough to make a supply chain relationship feasible the US real wages would not have been inferior to European wages (IOTW American labor wouldn't have been cheap enough for this to work).

I would guess it is true that until maybe the post Civil War era we were a net exporter of agricultural goods and a net importer of manufactured goods, but that's not really the same thing.

It’s all relative, right?

The USA was being used as the agrarian base to supply much of the raw materials needed for Europe because that’s where all of the labor was at.

I see your point but I think the exportation of agricultural products doesn't necessarily imply a less advanced industrial economy. At least in a very spacious country like the US there's probably no real competition between the two sectors. They can both be profitable.

And in fact we export agricultural products to poorer but smaller countries than our own.

[Philbert]

For me, the most obvious solution to the high cost of relocating manufacturing to the US would be replacing taxes on labor with taxes on finished product. A 16% sales tax on everything to replace SS and Medicare taxes would raise the cost of foreign goods while reducing the cost of US manufacturing and would not involve a tariff. Probably there is some good reason this is not done, but I haven't heard of one yet.

[5hout]

For me, the most obvious solution to the high cost of relocating manufacturing to the US would be replacing taxes on labor with taxes on finished product. A 16% sales tax on everything to replace SS and Medicare taxes would raise the cost of foreign goods while reducing the cost of US manufacturing and would not involve a tariff. Probably there is some good reason this is not done, but I haven't heard of one yet.

This is basically a Value Added Tax (VAT), its a very regressive tax, has high administration costs and doesn't have the right levers. Plenty of places do this, so it's certainly workable, but I'd hard pass here. Regressive taxes are taxes that disproportionately hit the poor, VAT taxes are regressive in 2 different ways. 1st, poor people spend a higher proportion of their total income, so as a fraction of their total spending they are paying a high share on taxes compared to people investing/saving. 2nd, poor people (as a share of the economy) account for a huge chunk of consumer spending, by switching from income to VAT tax you lose the easy ability to tax poor people less and fund the gov off middle/upper class taxes and end up in a scenario where poor/middle class funds the government.

Our current system sure as heck doesn't do these things perfectly, but we can toy with things like credits/tax brackets to try and tune it so poor people get a bit more breathing room from taxes and we still have enough for government. Doing this under VAT means an incredibly convoluted system where you are either paying different amounts at point of sale depending on your income or submitting receipts for reimbursement.

The more exemptions/workarounds you introduce to try and lessen the effects of a VAT on the poor, the harder the system is to make it work and the greater fraud/admin overhead you have, plus you then end up really having to put the screws on the people doing the rest of the spending (i.e. the middle class).

Our tax system could be more progressive, and could be a lot simpler, but it does reflect about 100 years of trying to fine tune for an insane number of special circumstances. Some of them are dumb, but the broad strokes are generally good.

[Philbert]

For me, the most obvious solution to the high cost of relocating manufacturing to the US would be replacing taxes on labor with taxes on finished product. A 16% sales tax on everything to replace SS and Medicare taxes would raise the cost of foreign goods while reducing the cost of US manufacturing and would not involve a tariff. Probably there is some good reason this is not done, but I haven't heard of one yet.

This is basically a Value Added Tax (VAT), its a very regressive tax, has high administration costs and doesn't have the right levers. Plenty of places do this, so it's certainly workable, but I'd hard pass here. Regressive taxes are taxes that disproportionately hit the poor, VAT taxes are regressive in 2 different ways. 1st, poor people spend a higher proportion of their total income, so as a fraction of their total spending they are paying a high share on taxes compared to people investing/saving. 2nd, poor people (as a share of the economy) account for a huge chunk of consumer spending, by switching from income to VAT tax you lose the easy ability to tax poor people less and fund the gov off middle/upper class taxes and end up in a scenario where poor/middle class funds the government.

Our current system sure as heck doesn't do these things perfectly, but we can toy with things like credits/tax brackets to try and tune it so poor people get a bit more breathing room from taxes and we still have enough for government. Doing this under VAT means an incredibly convoluted system where you are either paying different amounts at point of sale depending on your income or submitting receipts for reimbursement.

The more exemptions/workarounds you introduce to try and lessen the effects of a VAT on the poor, the harder the system is to make it work and the greater fraud/admin overhead you have, plus you then end up really having to put the screws on the people doing the rest of the spending (i.e. the middle class).

Our tax system could be more progressive, and could be a lot simpler, but it does reflect about 100 years of trying to fine tune for an insane number of special circumstances. Some of them are dumb, but the broad strokes are generally good.

All good points, but is a VAT better or worse for poor people than a tariff? Genuinely asking because you appear to have given this some thought. Keep in mind also that the regressive nature of VAT is why I suggested using it to replace SS, which is already regressive, not the entire income tax. Also, as I understand it VAT is added at multiple points in the production process, which makes it more palatable but also more convoluted. I would propose adding it all in a chunk at the end point. Otherwise you have to tax imports directly, and one of the features of the idea is avoiding that.

[5hout]

All good points, but is a VAT better or worse for poor people than a tariff? Genuinely asking because you appear to have given this some thought. Keep in mind also that the regressive nature of VAT is why I suggested using it to replace SS, which is already regressive, not the entire income tax. Also, as I understand it VAT is added at multiple points in the production process, which makes it more palatable but also more convoluted. I would propose adding it all in a chunk at the end point. Otherwise you have to tax imports directly, and one of the features of the idea is avoiding that.

"Also, as I understand it VAT is added at multiple points in the production process, which makes it more palatable but also more convoluted." As far as I am aware (and lord knows I'm not a comparative tax expert) all places with VAT have some kind of input exemption process. You buy 20kg of flour for home use? Pay VAT at point of sale. You buy 20kg of flour for your commercial bakery? Either VAT exempt at POS or you get a VAT exclusion on the sale for the part of the purchase VAT that went into the product. Accounting nightmare afaik, but such is life. This is just a minor point, but putting it 1st b/c it is clearest part.

"All good points, but is a VAT better or worse for poor people than a tariff?" Not sure I have an answer other than it depends on the exact setup. I believe, but may be wrong, that it'd probably end up slightly worse (but you could probably tweak it around). Steps as I see it.

1. We institute a VAT tax set at a level with average consumer spending to bring in the same amount as currently brought in through SS taxes.
2. Prices on all consumer goods rise, but labor costs go down.
3. Some goods have high labor costs, others incredibly low labor costs (example: " In two centuries, the human labor to produce a kilogram of American wheat was reduced from 10 minutes to less than two seconds. This is how our modern world really works." from How the World Really Works: The Science Behind How We Got Here and Where We're Going (did not read book, saw quote going around)).**
4. Labor cost as a share of price of a good is progressive as all get out. Poor people goods have little to almost 0 labor cost (and if they have labor, it's off shored to the cheapest location and/or semi-automated). This is basically Ali Wong's joke about wanting the melon cut by a white guy named Noah, you've gotta be pretty far up the ladder before white people named Noah touch your goods.
5: So I think we've replaced a progressive tax with one that is, on balance, more regressive.
6: However, this would definitely create an incentive to on-shore some labor, especially labor where you want a slightly more educated/engaged work force*** that right now might be marginally viable. So this probably means stuff like pre-built cabinets going from being 50/50 on-shore/off-shore to 60/40 or 70/30. This creates more, probably decent, on-shore jobs. Probably does help to create some lower end on-shore jobs as well.
7: Raising prices of consumer goods will slightly reduce demand, and will shift demand more towards core required goods.

So basically, I'm not sure I can balance out all these factors, and it would super depend on the exact implementation (which industries get exemptions (cuz you know some will)) and such. I think it'd be neutral to slightly negative towards poor people as a whole, but probably a goodly portion of them would get better jobs out of it.

**A common misconception the media makes is that technology increase employment, or is employment neutral. This is a not strictly speaking true on a small scale. You bring in a robot that replaces 10 jobs at a store, 2 people get jobs as robot repair techs, 1 mining job is created, 1 robot building job is created. Everyone else is now out of work with no replacement. For them, this sucks, for society it's great. They are freed up to do other things, but the basic nature of this kind of technological improvement is that more people are always out of work (at 1st) after.
***Just based on the difficultly of translating, communicating and checking up on complicated tasks overseas. Certainly possible (how much high tech stuff is made there? A ton), but for small/medium businesses getting physical objects efficiently made overseas is often a huge hurdle. Custom/Semi-custom orders for example, massive lead time and you have to have some way of checking that they are customizing the correct way and it's not going to be "fuck we don't know what they want, just ship something" and you're fucked when you open the box 8 weeks later.

[mikeylikey]

This is basically a Value Added Tax (VAT), its a very regressive tax, has high administration costs and doesn't have the right levers. Plenty of places do this, so it's certainly workable, but I'd hard pass here. Regressive taxes are taxes that disproportionately hit the poor, VAT taxes are regressive in 2 different ways. 1st, poor people spend a higher proportion of their total income, so as a fraction of their total spending they are paying a high share on taxes compared to people investing/saving. 2nd, poor people (as a share of the economy) account for a huge chunk of consumer spending, by switching from income to VAT tax you lose the easy ability to tax poor people less and fund the gov off middle/upper class taxes and end up in a scenario where poor/middle class funds the government.

It is by no means true that the economic burden of a tax falls entirely or even mostly on the person who nominally 'pays' the tax.

Thought experiment. My state has a 7% sales tax. If a consumer wants to buy a $100 microwave, intuitively he pays $100 to WalMart and $7 tax to the state.

But suppose we repeal the sales tax and replace it with a 6.54% "retail revenue" tax, and prohibit retailers from advertising bifurcated prices; the price on the sticker is the price you pay. If everybody's marginal utility and cost structure doesn't otherwise change, then that $100 microwave is now going to cost $107. WalMart is going to pay $7 in tax. Viola: zero tax on poor people, we've shifted 100% of the burden to WalMart.


Of course this is obviously ridiculous. Even in the first scenario, the consumer gave the whole $107 to WalMart and WalMart remitted the "sales tax".

Which is not to say that sales taxes do not make consumers poorer. But so would a "retail revenue tax", and furthermore, so do things like corporate taxes and even income taxes on the employees of WalMart.

What is actually true is that when sales taxes go up, people have to pay more at the register, but this also reduces actual demand and puts downward pressure on prices. The true burden is shared. In reality, whether you are nominally taxing the consumer or the producer of a thing, economics ends up distributing the true cost of the tax in ways that defy simple explanation.

[5hout]

This is basically a Value Added Tax (VAT), its a very regressive tax, has high administration costs and doesn't have the right levers. Plenty of places do this, so it's certainly workable, but I'd hard pass here. Regressive taxes are taxes that disproportionately hit the poor, VAT taxes are regressive in 2 different ways. 1st, poor people spend a higher proportion of their total income, so as a fraction of their total spending they are paying a high share on taxes compared to people investing/saving. 2nd, poor people (as a share of the economy) account for a huge chunk of consumer spending, by switching from income to VAT tax you lose the easy ability to tax poor people less and fund the gov off middle/upper class taxes and end up in a scenario where poor/middle class funds the government.

It is by no means true that the economic burden of a tax falls entirely or even mostly on the person who nominally 'pays' the tax.

Thought experiment. My state has a 7% sales tax. If a consumer wants to buy a $100 microwave, intuitively he pays $100 to WalMart and $7 tax to the state.

But suppose we repeal the sales tax and replace it with a 6.54% "retail revenue" tax, and prohibit retailers from advertising bifurcated prices; the price on the sticker is the price you pay. If everybody's marginal utility and cost structure doesn't otherwise change, then that $100 microwave is now going to cost $107. WalMart is going to pay $7 in tax. Viola: zero tax on poor people, we've shifted 100% of the burden to WalMart.


Of course this is obviously ridiculous. Even in the first scenario, the consumer gave the whole $107 to WalMart and WalMart remitted the "sales tax".

Which is not to say that sales taxes do not make consumers poorer. But so would a "retail revenue tax", and furthermore, so do things like corporate taxes and even income taxes on the employees of WalMart.

What is actually true is that when sales taxes go up, people have to pay more at the register, but this also reduces actual demand and puts downward pressure on prices. The true burden is shared. In reality, whether you are nominally taxing the consumer or the producer of a thing, economics ends up distributing the true cost of the tax in ways that defy simple explanation.

I don't disagree, but I think all of my above stands as written. The question here is what effect will replacing 1.2 Trillion dollars of taxes on labor (FICA/SECA) with 1.2 Trillion dollars of new Federal taxes on consumer spending (a US VAT).

[Hiphopapotamus]

This is basically a Value Added Tax (VAT), its a very regressive tax, has high administration costs and doesn't have the right levers. Plenty of places do this, so it's certainly workable, but I'd hard pass here. Regressive taxes are taxes that disproportionately hit the poor, VAT taxes are regressive in 2 different ways. 1st, poor people spend a higher proportion of their total income, so as a fraction of their total spending they are paying a high share on taxes compared to people investing/saving. 2nd, poor people (as a share of the economy) account for a huge chunk of consumer spending, by switching from income to VAT tax you lose the easy ability to tax poor people less and fund the gov off middle/upper class taxes and end up in a scenario where poor/middle class funds the government.

It is by no means true that the economic burden of a tax falls entirely or even mostly on the person who nominally 'pays' the tax.

Thought experiment. My state has a 7% sales tax. If a consumer wants to buy a $100 microwave, intuitively he pays $100 to WalMart and $7 tax to the state.

But suppose we repeal the sales tax and replace it with a 6.54% "retail revenue" tax, and prohibit retailers from advertising bifurcated prices; the price on the sticker is the price you pay. If everybody's marginal utility and cost structure doesn't otherwise change, then that $100 microwave is now going to cost $107. WalMart is going to pay $7 in tax. Viola: zero tax on poor people, we've shifted 100% of the burden to WalMart.


Of course this is obviously ridiculous. Even in the first scenario, the consumer gave the whole $107 to WalMart and WalMart remitted the "sales tax".

Which is not to say that sales taxes do not make consumers poorer. But so would a "retail revenue tax", and furthermore, so do things like corporate taxes and even income taxes on the employees of WalMart.

What is actually true is that when sales taxes go up, people have to pay more at the register, but this also reduces actual demand and puts downward pressure on prices. The true burden is shared. In reality, whether you are nominally taxing the consumer or the producer of a thing, economics ends up distributing the true cost of the tax in ways that defy simple explanation.

I think this assumes perfect and equal price elasticity amongst all goods and services, no? Industry has a greater or a lesser ability to pass on the higher cost of a "retail revenue tax" depending on the item or service, and would therefore be eating a greater or a lesser share of such a tax.

[aurelius]

I see your point but I think the exportation of agricultural products doesn't necessarily imply a less advanced industrial economy. At least in a very spacious country like the US there's probably no real competition between the two sectors. They can both be profitable.

And in fact we export agricultural products to poorer but smaller countries than our own.

the plan of the Brit’s was to use the America’s for raw resources. We ship the Britts the raw cotton then buy the clothe from them. Colonialism and mercantilism at its finest.

The technology for textile mills were a state secret. It was illegal to leave Britain if one worked in a textile mill. Samuel Slater snuck out of England and built the first textile mill in the US which kickstarted the US industrial revolution in 1790.

*your post could be more general in nature. I like history though. A lot of people forget the US was an agricultural backwater until the Civil War where we showed our industrial might. That led to the great expansion westward, building of the railroads, and the proto-US. It took another war (WW2) for the Modern US to emerge.

[aurelius]

Appreciate the discussion that is happening and nothing really to add other than I think we have to get creative, pull a lot of levers, and if helping ‘poor’ people is a real concern (it is) then the US tax code should not penalize wage workers (income tax equality).

@mikeylikey mentions that there are industries that are marginal where the government could ‘tip’ the scales to promote production stateside. I think there are other industries that are critical from a policy standpoint (like computer chips) that the US must establish in territory we control. Even if we run industries at a loss.

[quikky]

CHIPS Act passed senate:

https://techcrunch.com/2022/07/27/senat ... roduction/