There is an Economics Problem with the Cost of American-made Products

[Captain Adverse]

Let me preface my remarks with this purchase incident of my own this weekend.

I have been searching for some "business attire" loafers for wear in our office. I would prefer to "buy American," but have found it increasingly difficult to find American-made shoes in my current locale.

The major stores, and "family" shops all had shoes typically made in China, but also India, Vietnam, etc..

So I've ben holding out, seeking something "made in the USA."

Yesterday I stopped into this little family shoe shop and found exactly what I was looking for; a pair of loafers made in the USA. They were comfortable, of good quality, so I bought them without a second thought...

That is when I discovered the price: $231.00, not including tax. :shock:

I didn't complain at the time, but I did rush home to check online for the price direct from the producer, only to discover it is the same price online.

Similar shoes made overseas run between $59.00 - $70.00; meaning I could have bought three pairs for the same price.

I decided to keep the shoes, because the store dealt with me fairly; that was the price and it was my fault for assuming facts not in evidence.

But this begs the question, if things made in America cost soooo much more (as we already know) why do we think we can be competitive is this kind of market?

Clearly we need to focus on technological advances, not only for future developments, but also to remain competitive in "basic needs" markets.

My question to the Forum for discussion is: What do you suggest? How do we do that?

 

[Rexedgar]

“An educated consumer is our best customer” -Sy Syms

 

[gdgyva]

there are some items in which we can be competitive, and some items in which it is nearly impossible to be competitive pricewise

that is why so much of our manufacturing has moved overseas.....

when our basic labor cost averages $ 25 an hour, and theirs is under $ 5 an hour it makes it very tough

for some things, it we can overcome this challenge...for most it is impossible

that is why the tarriffs will hopefully even the playing field and make it closer

 

[Excast]

Let me preface my remarks with this purchase incident of my own this weekend.

I have been searching for some "business attire" loafers for wear in our office. I would prefer to "buy American," but have found it increasingly difficult to find American-made shoes in my current locale.

The major stores, and "family" shops all had shoes typically made in China, but also India, Vietnam, etc..

So I've ben holding out, seeking something "made in the USA."

Yesterday I stopped into this little family shoe shop and found exactly what I was looking for; a pair of loafers made in the USA. They were comfortable, of good quality, so I bought them without a second thought...

That is when I discovered the price: $231.00, not including tax. :shock:

I didn't complain at the time, but I did rush home to check online for the price direct from the producer, only to discover it is the same price online.

Similar shoes made overseas run between $59.00 - $70.00; meaning I could have bought three pairs for the same price.

I decided to keep the shoes, because the store dealt with me fairly; that was the price and it was my fault for assuming facts not in evidence.

But this begs the question, if things made in America cost soooo much more (as we already know) why do we think we can be competitive is this kind of market?

Clearly we need to focus on technological advances, not only for future developments, but also to remain competitive in "basic needs" markets.

My question to the Forum for discussion is: What do you suggest? How do we do that?

The simple answer is that we can't in many cases. It's not always possible for American manufacturers to compete with foreign nations where workers essentially make a slave wage to produce an often inferior product. American workers shouldn't be asked to make even less in a climate where cost of living is outpacing increases in wages.

That level of price variation is definitely on the extreme side though. I enjoy New Balance shoes, which are mostly made in New England, and find them comparable in terms of both price and quality to Nike, which are pretty much all made in Asia.

 

[ecofarm]

Put all the kids in sweatshops. Problem solved.

 

[RabidAlpaca]

Heavy automation is the only chance America has to be a manufacturer, and heavy automation means factories only need a few, very highly skilled technical workers, which we have a dramatic shortage of. The massive factories of the past filled with low education workers is a thing of the past for the US. Coal mining jobs will not be coming back. The sooner the Republicans recognize this and let us start investing in American education and job training the sooner America can get back to being a major manufacturer.

If you think the 3 million truck drivers that are going to be eventually replaced by automation can just retrain themselves to be robot programmers, you're naive and unprepared for the harsh reality of the future.

that is why the tarriffs will hopefully even the playing field and make it closer

Oooh yeah, if we arbitrarily tax Americans, it'll magically make us competitive on the global market! It must be nice to live in an incredibly simplistic world with easy solutions.

 

[OrphanSlug]

There is way too much wrong with this discussion, the politics of isolation makes this worse.

 

[Captain Adverse]

Heavy automation is the only chance America has to be a manufacturer, and heavy automation means factories only need a few, very highly skilled technical workers, which we have a dramatic shortage of.

THIS is along the lines of what I was thinking.

The massive factories of the past filled with low education workers is a thing of the past for the US. Coal mining jobs will not be coming back. The sooner the Republicans recognize this and let us start investing in American education and job training the sooner America can get back to being a major manufacturer.

I agree in general, with one caveat. I suggest "phasing out" Coal because there are still some uses here in the USA, and an export market outside the USA. We should also be seeking to encourage manufacturing, research, and job training investment in places like West Virginia to offer job opportunities for the children of Coal workers and other workers around the nation where their job skills are becoming "obsolete."

If you think the 3 million truck drivers that are going to be eventually replaced by automation can just retrain themselves to be robot programmers, you're naive and unprepared for the harsh reality of the future.

I also agree. Some jobs at this level are still viable and necessary human endeavors, at least at our current level of tech advance.

Oooh yeah, if we arbitrarily tax Americans, it'll magically make us competitive on the global market! It must be nice to live in an incredibly simplistic world with easy solutions.

No doubt.

 

[RabidAlpaca]

THIS is along the lines of what I was thinking.
I agree in general, with one caveat. I suggest "phasing out" Coal because there are still some uses here in the USA, and an export market outside the USA. We should also be seeking to encourage manufacturing, research, and job training investment in places like West Virginia to offer job opportunities for the children of Coal workers and other workers around the nation where their job skills are becoming "obsolete.'
I also agree. Some jobs at this level are still viable and necessary human endeavors, at least at our current level of tech advance
No doubt.

If you're looking for a jobs program, coal mining is one of the worst industries you could pick. Coal mining in 2020 is done by massive and complex machines that are operated by highly skilled technicians. The laid off coal miners from yesteryear are not qualified or capable of running that equipment. There's no reason to keep coal mining active considering we know what it does to the environment and climate.

Instead, we should be subsidizing these workers to retrain into career fields that still exist for now. If we don't do this the social problems of having a large portion of the populace unqualified and unprepared for the jobscape of the 2020s will be far worse than any taxation inconveniences. Even this is just a temporary bandaid. I know conservatives will shudder, but eventually we will have to have a UBI, it's inevitable.

 

[jnug]

The issue is in assigning a basic needs environment to a $231.00 pair of shoes. There is a place in this world for $231.00 shoes. There is even a place for $500.00 shoes and even a place for $1,000.00 shoes. None of that has anything to do with basic needs. That said, you will not find a good pair of leather shoes in this country for less than $100.00 and more likely $125.00 or more. Shoes entirely of synthetic materials are now what you will find in the $50 to $75 range. Nothing wrong with them unless you would prefer that your feet breath a little. In addition, you can care for your synthetic materials shoes till the cows come home (pardon the pun) and you will not much change their longevity in service. Care for a good pair of leather shoes and you might just wear them for a lifetime.

There are certain repetitive task manufacturing and production operations that simply will no longer demand the sort of pay scale that US Labor had grown accustomed to. That is not a bug. ITS A FEATURE. In addition, we have grown accustomed in this country to trading off quality for price always favoring price in order to sate the need of the masses for staple goods.

We had it right when we told ourselves that we needed to transition from considering repetitive labor environments as high skills labor demanding or even worthy of high labor rates. Where we screwed up is the next step after that. We did nothing of consequence to reconfigure Skilled Labor in this country to accommodate a 21st Century environment and we overcompensated Capital while underrating and under compensating Labor. We did not actually give a crap about Labor. Why should we care. "Robots will be doing many of these jobs anyway" is a common and frankly nearsighted theme. That is what started the process of Labor Rate adjustments and price and the quality of staple goods going in the sewer. Now however the price for staple goods has stabilized or if anything is actually going up and the quality is still going the wrong way.

The result......a massive income gap, suppression of the middle class into multiple jobs just to make ends meet. The death of the American Dream and millions of people forced by circumstances to drink filthy water, eat crap food and breath unhealthy air AND BUY SHOES MADE ENTIRELY OF SYNTHETICS.

As it stands today, many in Skilled Labor can find jobs but they are not going anywhere. They are just on a treadmill. We can still reverse this trend but we have lost about 30 years against the actual fight to reverse it. Funny how fast 30 years goes by. We need to redefine Skilled Labor and train for it or we will permanently catalyze a lower middle class or working poor that becomes the middle of the bellcurve for Labor of all types.

 

[Chomsky]

“An educated consumer is our best customer” -Sy Syms

Damn is that a great slogan, or what?

 

[Captain Adverse]

If you're looking for a jobs program, coal mining is one of the worst industries you could pick. Coal mining in 2020 is done by massive and complex machines that are operated by highly skilled technicians. The laid off coal miners from yesteryear are not qualified or capable of running that equipment. There's no reason to keep coal mining active considering we know what it does to the environment and climate.

Instead, we should be subsidizing these workers to retrain into career fields that still exist for now. If we don't do this the social problems of having a large portion of the populace unqualified and unprepared for the jobscape of the 2020s will be far worse than any taxation inconveniences. Even this is just a temporary bandaid. I know conservatives will shudder, but eventually we will have to have a UBI, it's inevitable.

I'm actually talking about a "jobs training" program for work NOT Coal related. As well as encouraging business investment in other forms of manufacturing, etc. to replace Coal mining.

 

[Drawdown]

Let me preface my remarks with this purchase incident of my own this weekend.

I have been searching for some "business attire" loafers for wear in our office. I would prefer to "buy American," but have found it increasingly difficult to find American-made shoes in my current locale.

The major stores, and "family" shops all had shoes typically made in China, but also India, Vietnam, etc..

So I've ben holding out, seeking something "made in the USA."

Yesterday I stopped into this little family shoe shop and found exactly what I was looking for; a pair of loafers made in the USA. They were comfortable, of good quality, so I bought them without a second thought...

That is when I discovered the price: $231.00, not including tax. :shock:

I didn't complain at the time, but I did rush home to check online for the price direct from the producer, only to discover it is the same price online.

Similar shoes made overseas run between $59.00 - $70.00; meaning I could have bought three pairs for the same price.

I decided to keep the shoes, because the store dealt with me fairly; that was the price and it was my fault for assuming facts not in evidence.

But this begs the question, if things made in America cost soooo much more (as we already know) why do we think we can be competitive is this kind of market?

Clearly we need to focus on technological advances, not only for future developments, but also to remain competitive in "basic needs" markets.

My question to the Forum for discussion is: What do you suggest? How do we do that?

LOL. It is because it is not being done in huge volumes mostly. I saw a piece about a company about an hour of me that makes jeans here in the good old USA. I needed some jeans so I visited their website--$350.00. They can kiss my import covered butt.

The problem is the expectation/sense of entitlement of the owners of such company. They strangle themselves to death by thinking something like MADE IN THE USA + owning a business entitles them to some unrealistic lifestyle. They, not the lowly workers, are the ones who are pricing themselves out of business.

 

[Excast]

For me, the real underlying discussion keeps coming back to one question.

What does the world look like when automation means there are simply not enough jobs for everyone who wants one?

That reality is closer than many realize and it will require a fundamental reshaping of society, the tax code, and how people provide for themselves.

 

[Captain Adverse]

For me, the real underlying discussion keeps coming back to one question.

What does the world look like when automation means there are simply not enough jobs for everyone who wants one?

That reality is closer than many realize and it will require a fundamental reshaping of society, the tax code, and how people provide for themselves.

This IS a problem. One that has been growing exponentially as mass production and automation expand.

One solution would be to limit "automation," but aside from the fact we are not a "one world government," this handicaps locales without the large populations needed to work at "slave wages" in dreadful conditions like easily replaceable parts.

As technology advances, the need for basic labor decreases...so we can either impose restrictions which allows others to advance past us, or we figure out new ways to keep people "busy and productive."

That's the question.

 

[Excast]

This IS a problem. One that has been growing exponentially as mass production and automation expand.

One solution would be to limit "automation," but aside from the fact we are not a "one world government," this handicaps locales without the large populations needed to work at "slave wages" in dreadful conditions like easily replaceable parts.

As technology advances, the need for basic labor decreases...so we can either impose restrictions which allows others to advance past us, or we figure out new ways to keep people "busy and productive."

That's the question.

It's probably going to require providing a basic level of income for many people. Yang is actually on to something with that.

If you don't, it's simply going to lead to massive social unrest.

 

[jnug]

“An educated consumer is our best customer” -Sy Syms

Damn...we had a Syms around here once. Boy do I mess that place.

 

[Rexedgar]

Damn...we had a Syms around here once. Boy do I mess that place.

Was metro DC chain, iirc.

 

[Captain Adverse]

It's probably going to require providing a basic level of income for many people. Yang is actually on to something with that.

If you don't, it's simply going to lead to massive social unrest.

I'm not ready to agree with this, not yet.

The problems with "guaranteed income" I've seen demonstrated in many of the neighborhoods I've lived in around the nation. I call it "dependency syndrome," where someone has come to believe it is their "job" to be dependent.

Our welfare system has created generational dependence. Literally from parent to child, "I've got to figure out a way to avoid work so I can get paid."

If I can get more on welfare than I can working minimum wage, why work at all? If I can have my needs for housing, food, and entertainment via welfare, why do anything else?

Meanwhile, who is paying for all of this? Does the government just "print more money?" Well that's the basis for inflation and it's effects on the economy. Do you just increase taxes on those who do work? That just creates class resentment.

I'm no economist, but that also leads to massive social unrest.

 

[TU Curmudgeon]

But this begs the question, if things made in America cost soooo much more (as we already know) why do we think we can be competitive is this kind of market?

Simply put, it can't be done.

You are one of the fortunate ones who could actually afford a pair of $230.00 shoes. At $10.00/hr that's over three days worth of after tax income for some people and they are never going to be able to afford those shoes without shorting on silly things like food, housing, and medical care insurance.

Clearly we need to focus on technological advances, not only for future developments, but also to remain competitive in "basic needs" markets.

Indeed, and that tends to mean "more automated production but fewer production jobs (even though the ones left tend to pay quite well)". Of course, those people who no longer have their jobs because the jobs have been automated out of existence are likely going to be even LESS able to pay for $230.00 shoes.

Part of the problem is that maximizing the returns to the "owning class" has a nasty tendency to reduce the "consuming class" in a rather "Ouroboros Cycle". In fact, in the "ideal" situation 100% of all production would be done with 0 workers so that 100% of the profit would accrue to the "owning class" (which, of course, means that there would be a "consuming class" that consisted solely of the "owning class" [with the other 80+% of the population in either the "serving class" or the "drone class"]).

I did notice that someone made a comment about "slave wages", and have to point out that those "slave wages" are (generally) in excess of the prevailing wage rates so that (for example) someone who is making $5.00 per hour in a society where a reasonable lifestyle is available to anyone making $4.00 per hour is on the UPPER end of the socioeconomic scale (for their society) while someone who is making $10.00 per hour in a society where a reasonable lifestyle is available to those making $15.00 per hour is on the BOTTOM end of the socioeconomic scale (for their society).

My question to the Forum for discussion is: What do you suggest? How do we do that?

Without taking into consideration that the "natural evolution" of a capitalist economy is the concentration of more and more of the wealth in fewer and fewer hands, absolutely nothing can be done about it. Without having a society that is prepared (at the national and individual levels) to "live within its means", absolutely nothing can be done about it.

The actual cost breakdown for Nike runners totals about $28.50, meaning Nike makes profits of $21.50 on a $100 sneaker. After taxes and administrative expenses (including research and development,) true profits are around $4.50.

Admittedly the profit margin is "slightly" higher for a pair of

​

at a MSRP of $3,880.

Until such time as people step back, start thinking, and provide an honest answer to the question

"What is the actual purpose of the economy and what is it really supposed to be?"
​

there isn't going to be any change/improvement and the situation will continue to go downhill until it reaches a stage worse than that outlined in "The Marching Morons" (because, there, everyone DID have an "income").

 

[washunut]

Let me preface my remarks with this purchase incident of my own this weekend.

I have been searching for some "business attire" loafers for wear in our office. I would prefer to "buy American," but have found it increasingly difficult to find American-made shoes in my current locale.

The major stores, and "family" shops all had shoes typically made in China, but also India, Vietnam, etc..

So I've ben holding out, seeking something "made in the USA."

Yesterday I stopped into this little family shoe shop and found exactly what I was looking for; a pair of loafers made in the USA. They were comfortable, of good quality, so I bought them without a second thought...

That is when I discovered the price: $231.00, not including tax. :shock:

I didn't complain at the time, but I did rush home to check online for the price direct from the producer, only to discover it is the same price online.

Similar shoes made overseas run between $59.00 - $70.00; meaning I could have bought three pairs for the same price.

I decided to keep the shoes, because the store dealt with me fairly; that was the price and it was my fault for assuming facts not in evidence.

But this begs the question, if things made in America cost soooo much more (as we already know) why do we think we can be competitive is this kind of market?

Clearly we need to focus on technological advances, not only for future developments, but also to remain competitive in "basic needs" markets.

My question to the Forum for discussion is: What do you suggest? How do we do that?

The are many different ways to look at this. First most shoe companies no longer produce here so not sure if you are not paying for the label as it is unique. Next whe you say similar, not sure what that means. For example a Ford or Toyota sedan may be similar to a BMW and cost less, though built in America.

America is certainly a higher cost to produce. Not just direct labor cost per hour,but cost of health care etc. One higher cost was corporate taxes which many don't understand, that one has been leveled. Fixing HC so corporations don't pick up the tab would be another.

Having more Americans thinking as you do. Paying a bit more (not 2-3 times) is also important. Many complain about income inequality and then will by foreign over American made for a few percent.

Lot of pieces to the puzzle. We broke the model for a large middle class. Not sure if we are willing to pay to put Humpty Dumpty back together again.

 

[Excast]

I'm not ready to agree with this, not yet.

The problems with "guaranteed income" I've seen demonstrated in many of the neighborhoods I've lived in around the nation. I call it "dependency syndrome," where someone has come to believe it is their "job" to be dependent.

Our welfare system has created generational dependence. Literally from parent to child, "I've got to figure out a way to avoid work so I can get paid."

If I can get more on welfare than I can working minimum wage, why work at all? If I can have my needs for housing, food, and entertainment via welfare, why do anything else?

Meanwhile, who is paying for all of this? Does the government just "print more money?" Well that's the basis for inflation and it's effects on the economy. Do you just increase taxes on those who do work? That just creates class resentment.

I'm no economist, but that also leads to massive social unrest.

I'm not sure I see an alternative.

One of the fundamental forms of employment has always been making a product and selling it to someone else. Increasingly, those jobs are being performed by machines that do not require pay, benefits, or time off.

Another is service jobs. Every day more and more of those are also being replaced by automation. Bank tellers are replaced by ATMs. A visit to the local Walmart shows that where there were once dozens of aisles with cashiers bagging groceries, in many instances it's 90% self check out now where you scan your own stuff, throw some money in the machine, and go on your way. Hell, there are places where you can go buy a pizza in a vending machine now. It's just going to get worse.

 

[Captain Adverse]

The are many different ways to look at this. First most shoe companies no longer produce here so not sure if you are not paying for the label as it is unique.

It is an "American" shoe company, I just don't want to give "advertisement" credit (or in this case DIS-credit) in a public Forum.

Next whe you say similar, not sure what that means.

As in similar to many other loafers made of the same materials and similar general design as those I have been looking at for several months.

America is certainly a higher cost to produce. Not just direct labor cost per hour, but cost of health care etc. One higher cost was corporate taxes which many don't understand, that one has been leveled. Fixing HC so corporations don't pick up the tab would be another.

I am well-aware of the "benefit" issue American companies have to deal with. I've discussed them in other threads.

Having more Americans thinking as you do. Paying a bit more (not 2-3 times) is also important. Many complain about income inequality and then will by foreign over American made for a few percent.

I was big on the "buy American" effort back when this issue was in it's infancy. Of course, shortly thereafter we began to see issues with quality and costs develop too.

Lot of pieces to the puzzle. We broke the model for a large middle class. Not sure if we are willing to pay to put Humpty Dumpty back together again.

I think we can if we start shifting to technical training, hard sciences, and technological development. Meanwhile wean away from future generations wasting time paying for worthless social "science" degrees in underwater basket-weaving.

 

[jnug]

It is an "American" shoe company, I just don't want to give "advertisement" credit (or in this case DIS-credit) in a public Forum.



As in similar to many other loafers made of the same materials and similar general design as those I have been looking at for several months.



I am well-aware of the "benefit" issue American companies have to deal with. I've discussed them in other threads.



I was big on the "buy American" effort back when this issue was in it's infancy. Of course, shortly thereafter we began to see issues with quality and costs develop too.



I think we can if we start shifting to technical training, hard sciences, and technological development. Meanwhile wean away from future generations wasting time paying for worthless social "science" degrees in underwater basket-weaving.

Well there is a certain strata of American Society that can continue to scratch the social sciences itch. We had a prosperous company that was entrepreneurial at inception, went through five ownership changes from Venture Capital to finally a strategic. We grew the place 10X when we finally got purchased by the strategic. We had plant employees working at assembly riser tables that could make a decent wage and did good work for us. We did eventually send high volume stuff overseas and our in house skilled labor became experts at supporting Engineering, new product releases, developing SOP'a and WI's, trouble shooting and helping us to manage our offshore operations.

But I digress. The son of the Original entrepreneur was my first boss. I eventually worked my way up to executive management through all the VC acquisitions (a miracle that I doubt is doable any longer). His daughter started college one year after I joined and was STILL in school 9 years later just trying to get through a 4 year program! So the underwater basketweaving model is still available. But if you actually need to turn your investment in 4 year higher education into a career, I would not recommend it.

 

[Simon W. Moon]

But this begs the question, if things made in America cost soooo much more (as we already know) why do we think we can be competitive is this kind of market?
Clearly we need to focus on technological advances, not only for future developments, but also to remain competitive in "basic needs" markets.
My question to the Forum for discussion is: What do you suggest? How do we do that?

I think you're right about trying to compete with all of the other labor markets. It doesn't look like a battle we would want to win.

I heard once that as humans started living in larger and larger groups, individuals' skill sets were able to become more specialized.
At some point, it was no longer necessary that everyone knew how to leach potash, fletch an arrow, or mend a net.
At some point, a good potter was able to somehow exchange that pottery for food and clothes etc. with others who specialized in food and clothes etc.
[ As a bonus, someone who spends all day fletching arrows for years at a time is likely to do create some better arrows for everyone to use than if everyone had to be their own hobby fletcher. ]

As the "world shrinks" and it becomes easier and easier to interact (esp financially) with more and more people, it seems at least superficially similar to living in a larger group than we used to.
The same strategy of specialization in niches may be a good idea now as then.

Each country has advantages of various sorts — maybe rich in minerals or an abundance fertile farmland, or w/e.
Playing to those strengths (and divesting from the weak spots) may be a generally good move for everyone involved.
[ Though I am concerned that this creates the potential for greater consequences for disruptions of the trade networks. ]

Some advantages like petroleum deposits are the result of the happenstance of geography and history.
Some advantages are the result of the nation's choices.

When it comes to technological advances and other forward looking endeavors like orbital manufacturing, it's obvious that education is a necessity.
In this context, investments in education seem obvious.
The returns on investment in education are long-term and continue forward for generations to come.

We should start viewing Americans as infrastructure we invest in rather than merely overhead. Viewing Americans only in terms of costs and overhead is short-sighted and incomplete.
Investing more in Americans' education could be a very expensive proposition.
I share your concern that failing to do so could be more dear.



I don't have a particular program to champion.