BF2S Forums Fixing America's trade

Dilbert_X wrote:

KEN-JENNINGS wrote:

not to mention dilberts drive-by explanation of manufacturing costs is simplistic at best.

I thought I'd better dumb it down for Uzique's benefit.

Yes, labor costs (in China) are not as far off as people generally assume.  Resources are cheaper in developing nations.  Ability to scale manufacturing is cheaper.  Labor laws are more pro-industry.  Environmental laws aren't as strict.  China is not the cheapest labor pool in the world anymore, but pure labor cost isn't everything.

They suck up a lot of shit and say yes sir no sir so execs like them, but quite often moving stuff to China costs more and creates other problems.

I don't know many people in the business world who turn down potential business - the Chinese are no different from any other demographic in that regard.  Everyone sucks up in the business world.  The Chinese advantage is becoming incredibly ruthless regarding price concessions, and if you're not careful, adjusting your BOM to lower their cost while passing zero savings on to you.

Jay wrote:

Cybargs wrote:

KEN-JENNINGS wrote:

not to mention dilberts drive-by explanation of manufacturing costs is simplistic at best.

Yes, labor costs (in China) are not as far off as people generally assume.  Resources are cheaper in developing nations.  Ability to scale manufacturing is cheaper.  Labor laws are more pro-industry.  Environmental laws aren't as strict.  China is not the cheapest labor pool in the world anymore, but pure labor cost isn't everything.

To be honest it isn't OBM's that are 'sending jobs overseas', pretty much all manufacturing is outsourced and done by a supplier. Companies just source material from whoever can give the better value.

It seems that a lot of consumer goods are all built in the same factories, just with different brand names affixed. Like, Sam Adams beer is actually brewed by Miller in Milwaukee because they have the facilities that can handle the large scale manufacturing. Sam Adams simply provides the recipe and oversees the ingredient procurement. If I walk into a Home Depot I'll see the same tool with three different brand names on it and at three different price points. There is no Ridgid factory anymore, or a Milwaukee tools factory, it's all made by TTI in Hong Kong. Differences between the products are negligible. We've commoditized everything and it's all been VE'd to fail at 10,000 cycles.

OEM and ODM business is far more prevalent than OBM business, but yeah, it's not the manufacturers themselves ANYMORE.  The infrastructure is in place - investment in China has resulted in a booming EMS industry that doesn't outside investment anymore - you simply go where the infrastructure, knowledge, supply chain focus, top down authoritarian mandates favor manufacturing, etc.  But to pretend this wasn't some long term decision based primarily on the cost of labor and profit maximization is stupid.  China has spent the last 25 years investing heavily into manufacturing - and you can draw parallels to where China is now and where the US was right after WW2 - both had a leg up on manufacturing, China because of the reasons previously listed, and the US because most other producing nations had their infrastructure demolished because of the war.

Why would a company invest in US jobs when everything is already skewed towards China?

This is an area of expertise for me....I have been working in global supply chain for over 10 years now, specifically electronics.

Jay wrote:

If our corporate tax rate was even marginally competitive, it would help, but it's not. At least we don't have a VAT.

VAT is so much smarter than a sales tax tbh.

Jay wrote:

If our corporate tax rate was even marginally competitive, it would help, but it's not. At least we don't have a VAT.

If you had a VAT you could have a competitive corporate tax rate, this is not complex.

Cybargs wrote:

Jay wrote:

If our corporate tax rate was even marginally competitive, it would help, but it's not. At least we don't have a VAT.

VAT is so much smarter than a sales tax tbh.

They're both abominations. Income tax? Yeah, ok. Property tax? Sure. But how does the government justify a tax on every transaction when it has contributed nothing to it?

We don't have universal sales taxes. Some states don't have one, while other, more kleptocratic-leaning states, like my own, have relatively high ones. I get to pay an additional 9.875% on everything except unprocessed foods and clothing purchases under $100. Wanna grow an economy? Put that 10% back in the hands of the consumer so they can buy more crap.

I remember when an anonymous complaint drew the great eye of OSHA to my business. Nothing wrong was actually found, but it still cost thousands of dollars in consultation while we were still in the stage of trying to stock up on equipment that allowed us to stay in business. Also fantastic that the employers have to process income withholding for child support. Sounds nice when they call you a "valued partner," but the paperwork and check writing falls on your shoulders unless you pay for someone to do it for you.

/fwp

KEN-JENNINGS wrote:

Corporate profit tax is based on where the company is located, not where the sale happens.  You pay sales tax based on where the sale is generated.  You pay profit tax based on where your company was incorporated.  That makes it so you don't pay US profit tax AND Ireland profit tax if you are a company located in Ireland doing business in the US.  Double dipping.  If you are not incorporated in the US, that means you don't have a Federal tax ID (EIN). If you do not have an EIN, how can you pay tax federal profit tax?  But regardless-

Your argument is that if we had lower corporate tax in the US, companies would manufacture here because they would offset any losses from a difference in CoGS with the lower tax rate?  Why would they do that?  They would continue to manufacture in China, and reap the rewards of a lower corporate tax in the US.  How is that an incentive?  You're an economics guy, so you should understand the idea of incentive.  There is no economic incentive for a company to bring manufacturing back to the US, except in very small corner cases.

There is none. As a country we're entitled. We've moved way beyond just being happy to have a job, and our social safety net allows people to be picky. I'm not saying that that's a bad thing at all, it's just not competitive with a place like China or Vietnam where they crawl over each others corpses to get any sort of job that gets them out of poverty. They don't have the environmental laws, they don't have the labor laws, and they have a motivated workforce that moves to where the jobs are.

uziq wrote:

Jay wrote:

KEN-JENNINGS wrote:

Corporate profit tax is based on where the company is located, not where the sale happens.  You pay sales tax based on where the sale is generated.  You pay profit tax based on where your company was incorporated.  That makes it so you don't pay US profit tax AND Ireland profit tax if you are a company located in Ireland doing business in the US.  Double dipping.  If you are not incorporated in the US, that means you don't have a Federal tax ID (EIN). If you do not have an EIN, how can you pay tax federal profit tax?  But regardless-

Your argument is that if we had lower corporate tax in the US, companies would manufacture here because they would offset any losses from a difference in CoGS with the lower tax rate?  Why would they do that?  They would continue to manufacture in China, and reap the rewards of a lower corporate tax in the US.  How is that an incentive?  You're an economics guy, so you should understand the idea of incentive.  There is no economic incentive for a company to bring manufacturing back to the US, except in very small corner cases.

There is none. As a country we're entitled. We've moved way beyond just being happy to have a job, and our social safety net allows people to be picky. I'm not saying that that's a bad thing at all, it's just not competitive with a place like China or Vietnam where they crawl over each others corpses to get any sort of job that gets them out of poverty. They don't have the environmental laws, they don't have the labor laws, and they have a motivated workforce that moves to where the jobs are.

so you're just agreeing with what i said and what you disagreed with about a page ago?

When did I ever say the jobs were going to come back?

Anyway

I was listening to the David Axelrod podcast (Obama's 2008 campaign leader) and he had John Kerry on. Kerry was relaxed throughout but got noticeably excited, maybe irritated, when David brought up criticism of the Trans Pacific Partnership. Kerry went on to defend TPP and free trade and argued that the issues that middle america is facing due to free trade is the result of a lack of redistribution of profits and gains downward to the lower classes.

It makes sense but I don't see how we can get displaced people to go along with redistribution of wealth without scaring them or making them throw a fit when they think they won't get a "fair" cut.

SuperJail Warden wrote:

Anyway

the issues that middle america is facing due to free trade is the result of a lack of redistribution of profits and gains downward to the lower classes.

Because essentially their bread and butter jobs have been taken away and the profits offshored, thanks to thing like the TPP not being linked with rational corporate tax structures.

I think there'll be a Trump euphoria boom which will implode when people realise nothing adds up.

SuperJail Warden wrote:

Trump team floats tariffs

The Trump transition team is floating the possibility of an early executive action to impose tariffs on foreign imports, according to multiple sources.

Such a move would deliver on President-elect Donald Trump's "America First" campaign theme. But it's causing alarm among business interests and the pro-trade Republican establishment.
The Trump transition team didn't immediately respond to a request for comment on the prospect of new tariffs. But a transition official said the team has discussed implementing a border adjustment tax measure under consideration by House Ways and Means Committee Chairman Kevin Brady, which would tax imports to spur US manufacturing.

http://www.cnn.com/2016/12/21/politics/ … index.html

Prediction: trump will slap some bullshit tariff on some negligible item and then claim a big victory

it'll most likely be on chinese made products which is fair enough.

trying to import something into china is a fucking nightmare.

Cybargs wrote:

SuperJail Warden wrote:

Trump team floats tariffs

The Trump transition team is floating the possibility of an early executive action to impose tariffs on foreign imports, according to multiple sources.

Such a move would deliver on President-elect Donald Trump's "America First" campaign theme. But it's causing alarm among business interests and the pro-trade Republican establishment.
The Trump transition team didn't immediately respond to a request for comment on the prospect of new tariffs. But a transition official said the team has discussed implementing a border adjustment tax measure under consideration by House Ways and Means Committee Chairman Kevin Brady, which would tax imports to spur US manufacturing.

http://www.cnn.com/2016/12/21/politics/ … index.html

Prediction: trump will slap some bullshit tariff on some negligible item and then claim a big victory

it'll most likely be on chinese made products which is fair enough.

trying to import something into china is a fucking nightmare.

yeah, we should put tariffs on chinese made products because it's hard to import stuff into china.

A+ bro.

SuperJail Warden wrote:

Tariffs directed specifically at China would be a really dumb thing to do. I meant I expect him to put a tariff on something like imports on a certain kind of wood or minor specialized electronics. Then he can go to American factories and talk about how many jobs he saved with his tariff.

China makes americans pay almost double what other countries pay for visa's entering china. it's part of their diplomacy tool box.