zugmann oltmannd: The last bastion of cheap labor will be Africa - and even there industrialization will eventually push up labor rates as the economy grows, just like in China. Once labor rates equalize, then the rising tide of economic activity raises all boats. To raise all boats, you would need more water than what we have now. Since you can't create matter - I fail to see where all this extra water is supposed to come from. Someone will make money, and someone will suffer. As someone once said on a forum somewhere - "we are fast basing our economy on selling cheap foreign-made crap to each other" . I'm sure it can succeed, but I just think our standard of living is not going to exactly be the envy of the world.
oltmannd: The last bastion of cheap labor will be Africa - and even there industrialization will eventually push up labor rates as the economy grows, just like in China. Once labor rates equalize, then the rising tide of economic activity raises all boats.
The last bastion of cheap labor will be Africa - and even there industrialization will eventually push up labor rates as the economy grows, just like in China. Once labor rates equalize, then the rising tide of economic activity raises all boats.
To raise all boats, you would need more water than what we have now. Since you can't create matter - I fail to see where all this extra water is supposed to come from. Someone will make money, and someone will suffer.
As someone once said on a forum somewhere - "we are fast basing our economy on selling cheap foreign-made crap to each other" . I'm sure it can succeed, but I just think our standard of living is not going to exactly be the envy of the world.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Railway Man waltersrails: There would be a lot more American Made Products and tons more jobs if the EPA Would butt out of everyones Bizness. USA and Steamers all the way!!!! The cost of environmental compliance is insignificant next to the cost of labor, machinery, raw materials, and energy. Even for a very dirty process such as oil refining, environmental compliance is less than 1% of operating costs. The American Petroleum Institute (the industry's own advocacy group) calculates that environmental compliance costs about $0.14 per barrel of refined products sold. Cancelling every possible environmental regulation tomorrow wouldn't move significant jobs back to the U.S. RWM
waltersrails: There would be a lot more American Made Products and tons more jobs if the EPA Would butt out of everyones Bizness. USA and Steamers all the way!!!!
There would be a lot more American Made Products and tons more jobs if the EPA Would butt out of everyones Bizness. USA and Steamers all the way!!!!
The cost of environmental compliance is insignificant next to the cost of labor, machinery, raw materials, and energy. Even for a very dirty process such as oil refining, environmental compliance is less than 1% of operating costs. The American Petroleum Institute (the industry's own advocacy group) calculates that environmental compliance costs about $0.14 per barrel of refined products sold. Cancelling every possible environmental regulation tomorrow wouldn't move significant jobs back to the U.S.
RWM
I believe Mr. Marx figured that the desire to eliminate labor will lead to labor eliminating capitalists.
But robots don't buy cars...
Granted the people that fix them, do... but how many of them are there vs. assembly line workers? Is there ever a point where we cross the line and over-automate? And don't we learn anything from movies... you know the robots will rise up against us some day.
It's been fun. But it isn't much fun anymore. Signing off for now.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.t fun any
Captain Kirk's replicator is not yet reality. Like Captain Kirk called the Enterprise, we now call home on a cell phone.
Watch old newsreels of flight control surfaces (fins) being fitted on the assembly line to new DeSotos. An army of men repeat their tasks like piston rods. Watch a video of an auto assembly line online. Your streaming video shows a line of robots repeating their tasks like piston rods.
Like agriculture before it, manufacturing is taking less labor per unit produced.
As automation advances, labor could become such a small part of price that it is largely decoupled from the cost of production. Assuming labor leaves the equation, what happens to the location of production and in turn the demand for transportation?
Thanks to Chris / CopCarSS for my avatar.
oltmannd The last bastion of cheap labor will be Africa - and even there industrialization will eventually push up labor rates as the economy grows, just like in China. Once labor rates equalize, then the rising tide of economic activity raises all boats.
Ulrich [snip] . . . the real cost as it relates to the environment may be in the litigation. [snip]. Larger businesses with deeper pockets who are able to withstand larger losses may look at the risk return equation differently.
[snip]. Larger businesses with deeper pockets who are able to withstand larger losses may look at the risk return equation differently.
Most environmental litigation - though certainly not all - such as 'Super-Fund sites" relates to acts and events from way in the past, such as clean-up ("remediation") costs and the 'toxic tort" suits. And often the people who have to deal with it now either weren't there then, were legitimately unaware until a recent discovery or disclosure, or inherited the problem via an acquisition, etc. No modern business that wants to stay viable and retain its assets will risk creating that kind of problem for itself.
Agree completely with your points about the risks of globalization; and for larger businesses having taken the plunge and made the intellectual, cultural, legal, and financial investment to do that - how quick will they be to abandon and 'write-off' their overseas operations, on something as volatile as the current political instability and surge in oil prices ?
- Paul North.
zugmann Firelock76: Yes, I'm sure corporate greed is a factor that I can't discount. Look at the mess the "whiz kids" made of the economy the past few years. I have no love for those irresponsible idiots AT ALL, considering all the people they hurt. As James Kilpatrick said "I'm a capitalist, and business has no bigger friend than me. But they sure make it hard, sometimes." And by the way, the standard of living in China is rising, no wonder with all the money coming in. Not at our level yet but they're on their way. All this being said, I stand by my previous post. Once China gets too expensive, we'll move to the next 3rd world country. But there is a bright side... some day we will get to be that 3rd world country providing slave labor for other countries. Yay.
Firelock76: Yes, I'm sure corporate greed is a factor that I can't discount. Look at the mess the "whiz kids" made of the economy the past few years. I have no love for those irresponsible idiots AT ALL, considering all the people they hurt. As James Kilpatrick said "I'm a capitalist, and business has no bigger friend than me. But they sure make it hard, sometimes." And by the way, the standard of living in China is rising, no wonder with all the money coming in. Not at our level yet but they're on their way. All this being said, I stand by my previous post.
Yes, I'm sure corporate greed is a factor that I can't discount. Look at the mess the "whiz kids" made of the economy the past few years. I have no love for those irresponsible idiots AT ALL, considering all the people they hurt. As James Kilpatrick said "I'm a capitalist, and business has no bigger friend than me. But they sure make it hard, sometimes." And by the way, the standard of living in China is rising, no wonder with all the money coming in. Not at our level yet but they're on their way. All this being said, I stand by my previous post.
Once China gets too expensive, we'll move to the next 3rd world country. But there is a bright side... some day we will get to be that 3rd world country providing slave labor for other countries. Yay.
While environmental regulations and compliance in and of themselves may not be large cost factors, the real cost as it relates to the environment may be in the litigation.
The biggest negative to globalization is the risk inherent in dealing with fare flung customers and suppliers in far away lands where the laws and values are different from our own. Usually the real cost of going global is thus only realized when things go wrong (as they so often do)..
Speaking from personal experience, I have resisted doing business on a global scale although I have customers who want me to manage their Asian and European transportation needs. As a small business I purposely stay close to home to minimize risk. Larger businesses with deeper pockets who are able to withstand larger losses may look at the risk return equation differently.
Murphy Siding K4sPRR: Thanks for the interesting input and thought guys, but will higher fuel prices push buyers more toward American made goods...how about starting with American made oil. I would guess that "American made" oil, pumped from a well in Wyoming costs more than oil pumped in Saudia Arabia. The reason being, when the price of oil drops too low, they cap a lot of American oil wells and keep pumping overseas. If the foreign oil cost less, they would be the ones capping their wells when the price went down.
K4sPRR: Thanks for the interesting input and thought guys, but will higher fuel prices push buyers more toward American made goods...how about starting with American made oil.
Thanks for the interesting input and thought guys, but will higher fuel prices push buyers more toward American made goods...how about starting with American made oil.
It's interesting to me that currently only 9% of U.S oil imports come from the Middle East (we get more and more oil from Canada and Mexico) and yet a crisis there will drive fuel prices through the roof due to the fact that the energy market/industry is globalized...
"I Often Dream of Trains"-From the Album of the Same Name by Robyn Hitchcock
....Doesn't really make much economic sense for us...the Americans....to continue to give billions in aid / support to countries all over the world since we're not in a very good position to be doing so.
Quentin
Murphy Siding I would guess that "American made" oil, pumped from a well in Wyoming costs more than oil pumped in Saudia Arabia. The reason being, when the price of oil drops too low, they cap a lot of American oil wells and keep pumping overseas. If the foreign oil cost less, they would be the ones capping their wells when the price went down.
I hate to say it guys, but this buy American rhetoric is just plain flag waving hot air. The US has been uncompetitive in a world market for a half a century. The list of failed US industry is long -- steel, automotive, electronics, photography, shoes, clothing, textiles, et al. The argument says that the US rebuilt European and Japanese industry with our money. True, but what about our own industry? Did the worn out rail and steel industry get helped in any way? They were ignored by the Feds and the steel industry eventually failed. Foriegn steel unfairly competed with Euro steel and people complained about dumping, they said. Well, who funded the new, more efficient mills, them or us? You betcha, Uncle Sam did. Where were they when all the big mills in Pittsburgh died? Where were they when the rust belt began? The Feds were no where to be seen. Not a dime for any of them. It appears that the Feds don't care about anything but a big military, anything for the people comes last. I still remember Lyndon Johnson asking, guns or butter? Butter lost.
The point being of all this is, when you go shopping for ANYTHING, do you even see any American goods to buy? Americans are true capitalists from top to bottom, they buy with their wallet. If there's a foriegn car for $15,000 and an equivalent Made In America car for $20,000, which one get sold? It was once quoted somewhere that a container full of $30 blouses made in China that is delivered to NJ, the transportation cost per blouse is in the neighborhood of 30 CENTS. How can fuel costs even come close to changing that? Americans cannot compete because the Federal Govenrment is not behind them, railroad included, especially railroads.
K4sPRR Thanks for the interesting input and thought guys, but will higher fuel prices push buyers more toward American made goods...how about starting with American made oil.
Railway Man I deal with environmental regulations and the factions on all sides of the debate on a daily basis, as they affect railroad planning, construction, and operation. The problem is really not environmental law, it's property rights. Environmental law is at its core all about who gets to do what with private and public property. No one wants anyone to tell them what to do with their private or public property, and no one is willing to allow anyone to do anything that might negatively affect the value of their private or public property, or their view, or their air, or anything. RWM
Interesting insight and formulation - seems valid to me - wish I'd thought of it, or even seen it before.
Railway Man [snip] Democracy is messy that way. China just takes whatever it needs from its property owners, the property owner has no rights to complain or argue, and while it's true China gets things done, is that really the way we want to live?
Its also easy to forget that environmental regulations provide jobs too. For example, my girlfriend used to be a field tech for a firm that made the equipment that monitors air quality compliance. Its not all bureaucrat jobs. There's a lot of work in those fields for all sorts of people.
Petroleum is somewhat fungible commodity, although there are a lot of different grades of petroleum. I doubt that petroleum from US wells would be appreciably cheaper than that from other locations. Drilling offshore, especially in deep water, is appreciably more expensive than land-based operations.
Railway Man Modelcar: Just heard on a morning program that OPEC has announced it will up production to cover the loss that might occur from Libya. EPA regulations. Perhaps a better set of regulations could be devised if appropriate people, organizations, government, businesses and any other proper people that should be at the table and hammer out that better system of what really makes economic sense, and still protect the population in a reasonable manner. China just takes whatever it needs from its property owners, the property owner has no rights to complain or argue, and while it's true China gets things done, is that really the way we want to live? RWM
Modelcar: Just heard on a morning program that OPEC has announced it will up production to cover the loss that might occur from Libya. EPA regulations. Perhaps a better set of regulations could be devised if appropriate people, organizations, government, businesses and any other proper people that should be at the table and hammer out that better system of what really makes economic sense, and still protect the population in a reasonable manner. China just takes whatever it needs from its property owners, the property owner has no rights to complain or argue, and while it's true China gets things done, is that really the way we want to live?
Just heard on a morning program that OPEC has announced it will up production to cover the loss that might occur from Libya.
EPA regulations. Perhaps a better set of regulations could be devised if appropriate people, organizations, government, businesses and any other proper people that should be at the table and hammer out that better system of what really makes economic sense, and still protect the population in a reasonable manner.
China just takes whatever it needs from its property owners, the property owner has no rights to complain or argue, and while it's true China gets things done, is that really the way we want to live?
..........No, not in my opinion, it is not....!
Modelcar Just heard on a morning program that OPEC has announced it will up production to cover the loss that might occur from Libya. EPA regulations. Perhaps a better set of regulations could be devised if appropriate people, organizations, government, businesses and any other proper people that should be at the table and hammer out that better system of what really makes economic sense, and still protect the population in a reasonable manner.
I deal with environmental regulations and the factions on all sides of the debate on a daily basis, as they affect railroad planning, construction, and operation. The problem is really not environmental law, it's property rights. Environmental law is at its core all about who gets to do what with private and public property. No one wants anyone to tell them what to do with their private or public property, and no one is willing to allow anyone to do anything that might negatively affect the value of their private or public property, or their view, or their air, or anything.
Everyone's definition of "reasonable" is different, and no one sees any reason to budge. I go to at least one of those "let's all sit down together and hammer this out" meetings every week, and it's a rare meeting when something is actually hammered out. Democracy is messy that way. China just takes whatever it needs from its property owners, the property owner has no rights to complain or argue, and while it's true China gets things done, is that really the way we want to live?
waltersrails There would be a lot more American Made Products and tons more jobs if the EPA Would butt out of everyones Bizness. USA and Steamers all the way!!!!
Sorry, but I have a preference for reasonably clean air and water.
Paul, thanks for the link to the WSJ article from a couple of years ago...I remember reading that at the time and felt optomistic. Then came the Great Recession.
The uncertainty in the Middle East is certainly sending waves out around the world. The list of African/Middle Eastern countries with unrest is again pushing us to explore alternatives for oil. Throw in the uncertainty of the Suez Canal and there is little wonder we have oil issues again.
Let's take a look at what is occuring at this time:
1. Egypt's administration resigns
2. Libya is unstable
3. Protests in Iran a year ago
4. Protests in Madison, Ws and now other states
5. QE2 in US is suddenly pushing commodity prices higher with food prices beginning to rise.
6. China's low cost advantage is beginning to melt away (slowly). Other issues with China includes a demand for protein and a shortage of women...how are they going to keep the population happy?
7. The mess in Europe. How long can the Euro survive? How long can Germany prop up the Euro?
I am sure there are more issues, but these are the ones that pop to my mind this morning. There is considerable unrest, anger, and uncertainty out there and with the infrastructure of instant communications everyone knows everything that is occuring.
Can manufacturing return to US? Perhaps as a steady uptrend as all of these uncertainties exist worldwide. As I see it, for manufacturing to return a company either must be extremely large in order to face all of the regulations or very small (exemption from regulations are generally pegged at 50 employees or less).
I remain cautiously optomistic. In my sales job, I see hundreds of old factory buildings vacated and left for reclamation. I dont see those buildings being filled with workers again - too expensive to maintain and operate...but the real estate should be cheap and somewhere there is smart money waiting.
Ed
Before this "Great Recession" circa 2008, there was already anecdotal evidence in the Wall Street Journal of some companies coming back 'on-shore' again - some to the US, some to Mexico for the reasons pointed out above by others - due to both higher fuel costs back then for overseas shipping, and the trend of higher labor and other costs in China reaching a new equilibrium between the limited supply and a higher demand, as RWM memtioned. So I would expect that trend to resume.
Today's WSJ had an article about Maersk ordering 10 new 'world's largest" containerships - bigger than a U.S. Navy aircraft carrier, even - with an option for 20 more, at a mere $190 million each. See "Maersk Orders 10 Huge Ships From Daewoo" at:
http://online.wsj.com/article/SB10001424052748704476604576157871902178028.html
They will be Maersk's "Triple-E" class ships, 1,312 ft. long, 193.5 ft. wide, 239.5 ft. high, with a capacity of 18,000 TEUs - nothing said about the engine HP, though. And they won't come to the US - no harbors deep enough, per the article. But they do illustrate the trend to more and cheaper trans-ocean containerized shipping.
While the current Middle East crisis may be driving up oil prices, I believe that general price inflation of commodities is also beginning. Depending on whom you believe, our fed policy of printing money will cause inflation. Bernanke says it will cause inflation, but somehow that will be a good thing. I don’t pretend to comprehend monetary policy and world currency trading, but I am not convinced anybody else does either, including the fed chairman. Unless our economy starts to really boom, I don’t see how we are going to grow out of our current debt.
I suppose that rising fuel prices might have some sort of silver lining effect, but I am not sure what. One benefit might be that it will ease traffic congestion because fewer people will be driving. But it will raise the price of everything that needs to be transported. Add to that the general inflation of food, energy, and clothing, and I don’t see how any good comes from it. I don’t see wages keeping up with it. Social Security won’t keep up with it.
As we've seen in the news over the last month, globalization involves complexity and risks which are beyond the control of even the largest enterprise. Are those costs sufficently offset by the economic advantages of doing business in those countries? I would say that increasely the answer would be no.
I work with customers who have for the most part rejected globalization..these are manufacturers who see the benefits in manufacturing locally inspite of higher labor cost and more stringent environmental laws here. These advantages are:
1) less complexity...and often a resultant lower cost at least from that vantage point.
2) faster response time..if you're in Toronto and you need a widget from a supplier in Toronto you can get it on that day instead of having to wait weeks for it to come in from China...response time is often important. if you're in business...
3) less risk...that's pretty much self explanatory..
4) lower overall transportation cost. If you're supplier is in the same city you're in you can get a 40 thousand pound load moved for 250.00 dollars...that jumps to four thousand dollars and up if you're bringing in those same supplies from overseas. Transportation is expensive and time consuming...thus from the manufacturers' perspective the less of it you need the better off you are.
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