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Posts tagged with "economic growth"

Jan 22

Apple, America, and the Loss of U.S. Jobs

For everyone who doesn’t understand why companies move jobs overseas (hint: It’s not just the wages). And for those who don’t understand why the government can’t do anything about those jobs.

I’ve worked in international trade so much, I don’t even really see where the questions come from. It’s pretty self-evident when one looks at the actual facts and numbers. We do not have the production base with the technically skilled workers needed for such large-scale production. We’re on the wrong end of the supply-chain. We have a different mentality on mobility, work ethics, and needs.

That, in no way, suggests the Chinese model is better as a value judgement. Just more economically efficient. And it really, really, really is efficient. 

I’ve spent some time in Shenzhen when they were first building it up. Hong Kong was still the place for international trade, and the movements back and forth were cumbersome (anyone remember the cardboard border pass?). It wasn’t until Shenzhen became a free trade zone that it really blew up. Twelve lane highways connecting Shenzhen to different ports, all full of container trucks. The explosion of port facilities in Dalian, Fujian, Xiamen, etc. I wouldn’t go so far as to say Hong Kong is a ghost town, but it’s not the international trade darling it once was.

As far as the working conditions, social benefits, etc for Chinese workers, that’s not something I can decide for them. I try not to take a relativistic viewpoint, but really, this is what the US did during our Industrial Revolution. Why should we dictate what their social and employment mores are, especially when we’re in our own social economic crisis. It’s working for them, and millions are being moved out of poverty and subsistence farming from the western areas (with plenty of hardships left to warrant their own constant protests). There are things they do incredibly correct, and things they do incredibly wrong.

The other problem is that China is a very labor-intensive society. They can be, because they have the population for this. The West, especially America, is very capital (machine) intensive economy. Even if American companies moved their jobs back to the US, the first thing they’d do is find a way to automate the system. It’s about leveraging your competitive advantage. China = massive workforce with low pay. America = mechanized workforce with minimal (but still expensive) labor force.

There’s a lot more to change between our systems than some simple bumper sticker taglines. The sooner people get hip to that, the sooner we can start coming to real, workable solutions.

Apple, America, and a Squeezed Middle Class: How U.S. lost out on iPhone work.

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

Posted 1 month ago

Comments

3 notes

China, United States, economics, economic growth, apple, iphone, international trade, production, GDP,

Jul 23
Does Immigration Lead to Higher GDP? A couple weeks ago, a friend of a friend and I had a “friendly” discussion on the status of European immigrants. His comment about Germany’s high net immigration piqued my curiosity and so I did some additional research. Turns out that Germany does have roughly 9% net immigration; however, this doesn’t tell the whole story. Net immigration is the total of immigrants minus emigrants: total people coming into the country minus total people leaving the country. Germany’s actual immigration numbers were roughly 12.5% of the population, meaning they also lost roughly 3-4% of their population to people leaving. However, that still wasn’t the whole story, because this individual and I were talking about immigrants from outside of Europe (e.g., North African Arabs, Southeast Asians, etc.). The European Union allows citizens from within EU countries to move about, so a Greek who moves to Germany is considered an immigrant. This can skew the numbers, since it’s similar (but not exactly) like saying someone who moves from California to New York is an immigrant. Europe’s non-European immigrants average about 3-4% (Spain and Portugal have much higher numbers due to their proximity to North Africa). Various countries in Europe have seen nationalistic uprisings over the past decade, and have really intensified since the 2005 race riots in France. France, Italy, Germany, Denmark, Norway, and a slew of others have seen nationalists win elections into their Parliaments and local governments. Polling seems to indicate a strong anti-Muslim backlash, and there is a false sense of the “Islamification” of Europe. Even the recent tragedy in Oslo, Norway has an anti-Muslim tint to it, since the alleged bomber/shooter has strong nationalistic, anti-Muslim ties. So, my question was: Do immigrants create any benefit to these countries? In the United States immigration has historically been used for economic growth. The Chinese built our railroads. The Irish and Italians built our cities. Even now we see a strong push for Asian and Central Asian immigrants for high-technology positions. And at the opposite end of the spectrum we see the effects of cheap Hispanic labor in agriculture and construction. Still, even the United States experiences anti-immigrant sentimentality (even going so far back as the Potato Famine and Irish immigrants). Just to check out my idea that immigration actually does help grow an economy I ran some numbers from the World dataBank and their World Development Indicators. Specifically, I ran numbers for different aggregate regions, their GDP per Capita (at constant 2000 dollars), and their immigrant population as a percentage of their total population. I used a time spread of 1975-2005 at five-year increments, because migrant data is reported every five years and 2010 GDP per Capita wasn’t available. The picture attached is a screenshot of the scatterplot and trendlines. The PDF that I created is on Google Docs, and is available for Public. Here’s a quick primer about GDP per capita for my non-economic friends. GDP per capita is the average of the total income/wealth of a country divided by the total number of people. GDP, or the Gross Domestic Product, is used pretty universally by economists to compare different countries in their state of development. The higher the GDP, the more money and assets the country has. The United States, for example, had a GDP of $14.7 trillion in 2010. China’s GDP in 2010 was $5.98 trillion. The problem with GDP per capita is that it’s not a very good benchmark for quality of life when it’s used to compare the average citizen of two different countries. Although China’s $5.98 trillion seems large, when averaged over its 1.4 billion people it’s only about $8,000 per capita. Compare that to the U.S.’s $14.7 trillion against approximately 360 million people and GDP per capita is $47,200. Another way to look at it: you have Country A and Country B, both with 100 citizens. Country A has 1 person earning $1,000,000, and 99 people who earn $zero. GDP is $1 million, and GDP per capita is $10,000. Country B has a GDP of $500,000, all 100 people earns $5,000 which makes their GDP per capita only $5,000. So, which country is worse off? Which country’s citizens is worse off? It’s not perfect, but unfortunately GDP per capita is the best we have to compare countries and their well-being. So, here are some interesting correlations. First, rich-world developed areas (North America, Europe in general, and the European Union) all have strong positive correlations. Second, very poor areas (Sub-Sahara Africa, North Africa, and the “Arab World”) that have moderate immigrant percentages but flat correlations. Third, Latin America and East Asia have slightly higher GDP per capita, yet no discernible or even negative correlations. The World, as an aggregate, seems to show a positive correlations on par with rich world, developed nations. These results leave me with more questions than answers (which is the fun part, I must admit). What is the direction of the rich world positive correlation? Is GDP per capita higher because of our efficient use of immigrants? Or, do we have more immigrants because of the higher GDP per capita? How would East Asia look if I teased out China and Japan? Is the loss of GDP per capita in Latin America and Africa due to their emigrations to the US and Europe? Are there institutions involved that makes immigrants in the Arab World less efficient, even though they are notorious for higher levels of migrant construction labor? What are some other factors that may keep lower per capita countries from experiencing positive correlations? I’m curious to your thoughts. 

Does Immigration Lead to Higher GDP?

A couple weeks ago, a friend of a friend and I had a “friendly” discussion on the status of European immigrants. His comment about Germany’s high net immigration piqued my curiosity and so I did some additional research. Turns out that Germany does have roughly 9% net immigration; however, this doesn’t tell the whole story. Net immigration is the total of immigrants minus emigrants: total people coming into the country minus total people leaving the country. Germany’s actual immigration numbers were roughly 12.5% of the population, meaning they also lost roughly 3-4% of their population to people leaving.

However, that still wasn’t the whole story, because this individual and I were talking about immigrants from outside of Europe (e.g., North African Arabs, Southeast Asians, etc.). The European Union allows citizens from within EU countries to move about, so a Greek who moves to Germany is considered an immigrant. This can skew the numbers, since it’s similar (but not exactly) like saying someone who moves from California to New York is an immigrant. Europe’s non-European immigrants average about 3-4% (Spain and Portugal have much higher numbers due to their proximity to North Africa).

Various countries in Europe have seen nationalistic uprisings over the past decade, and have really intensified since the 2005 race riots in France. France, Italy, Germany, Denmark, Norway, and a slew of others have seen nationalists win elections into their Parliaments and local governments. Polling seems to indicate a strong anti-Muslim backlash, and there is a false sense of the “Islamification” of Europe. Even the recent tragedy in Oslo, Norway has an anti-Muslim tint to it, since the alleged bomber/shooter has strong nationalistic, anti-Muslim ties.

So, my question was: Do immigrants create any benefit to these countries? In the United States immigration has historically been used for economic growth. The Chinese built our railroads. The Irish and Italians built our cities. Even now we see a strong push for Asian and Central Asian immigrants for high-technology positions. And at the opposite end of the spectrum we see the effects of cheap Hispanic labor in agriculture and construction. Still, even the United States experiences anti-immigrant sentimentality (even going so far back as the Potato Famine and Irish immigrants).

Just to check out my idea that immigration actually does help grow an economy I ran some numbers from the World dataBank and their World Development Indicators. Specifically, I ran numbers for different aggregate regions, their GDP per Capita (at constant 2000 dollars), and their immigrant population as a percentage of their total population. I used a time spread of 1975-2005 at five-year increments, because migrant data is reported every five years and 2010 GDP per Capita wasn’t available. The picture attached is a screenshot of the scatterplot and trendlines. The PDF that I created is on Google Docs, and is available for Public.

Here’s a quick primer about GDP per capita for my non-economic friends. GDP per capita is the average of the total income/wealth of a country divided by the total number of people. GDP, or the Gross Domestic Product, is used pretty universally by economists to compare different countries in their state of development. The higher the GDP, the more money and assets the country has. The United States, for example, had a GDP of $14.7 trillion in 2010. China’s GDP in 2010 was $5.98 trillion. The problem with GDP per capita is that it’s not a very good benchmark for quality of life when it’s used to compare the average citizen of two different countries. Although China’s $5.98 trillion seems large, when averaged over its 1.4 billion people it’s only about $8,000 per capita. Compare that to the U.S.’s $14.7 trillion against approximately 360 million people and GDP per capita is $47,200.

Another way to look at it: you have Country A and Country B, both with 100 citizens. Country A has 1 person earning $1,000,000, and 99 people who earn $zero. GDP is $1 million, and GDP per capita is $10,000. Country B has a GDP of $500,000, all 100 people earns $5,000 which makes their GDP per capita only $5,000. So, which country is worse off? Which country’s citizens is worse off? It’s not perfect, but unfortunately GDP per capita is the best we have to compare countries and their well-being.

So, here are some interesting correlations. First, rich-world developed areas (North America, Europe in general, and the European Union) all have strong positive correlations. Second, very poor areas (Sub-Sahara Africa, North Africa, and the “Arab World”) that have moderate immigrant percentages but flat correlations. Third, Latin America and East Asia have slightly higher GDP per capita, yet no discernible or even negative correlations.

The World, as an aggregate, seems to show a positive correlations on par with rich world, developed nations.

These results leave me with more questions than answers (which is the fun part, I must admit). What is the direction of the rich world positive correlation? Is GDP per capita higher because of our efficient use of immigrants? Or, do we have more immigrants because of the higher GDP per capita? How would East Asia look if I teased out China and Japan? Is the loss of GDP per capita in Latin America and Africa due to their emigrations to the US and Europe? Are there institutions involved that makes immigrants in the Arab World less efficient, even though they are notorious for higher levels of migrant construction labor? What are some other factors that may keep lower per capita countries from experiencing positive correlations?

I’m curious to your thoughts. 

Posted 7 months ago

Comments

6 notes

world development, development, WDI, economics, economic growth, africa, europe, north america, asia,

Jul 11

China versus Democracy

Good write up in the Economist on democracy and China’s growing economy:

http://www.economist.com/blogs/democracyinamerica/2011/07/democracy-v-china

My views on this subject are influenced by having lived for many years in the world’s other fast-growing capitalist communist confucian country, Vietnam, and watching predictions that rising wealth leads to democratisation fail to bear any but the most modest of fruit. China and Vietnam have structures and cultures of governance that are about as similar as one can expect for cross-country comparisons. And what’s striking in both countries is the remarkable absence of any serious challenge to Communist Party domination of every corner of political life.

This is something I’ve often said for many years: capitalism does not require democracy. One of the main arguments by mainstream economists has been that capitalism and open trade eventually leads to democracy, because businesses need freedom of property and speech to make decisions for their own best self-interest. This freedom supposedly leads to better choice among consumers and producers, and as such freedom of economic choice (see Hayek, Friedman, and de Soto). But, China proves time and time again that this is not the case.

Ironically, this actually helps the corporate right wing in America. Who pushes for equality, voter rights, economic equalization, and equal access? Certainly not the conservative right, if their rhetoric and policy decisions of the past 30 years are any indication. Without democracy coupled with economic freedom then autocratic rulers have the ability to disregard the will of the people for social equality regulation and look at strictly cost-benefit analysis.

Posted 7 months ago

Comments

8 notes

economics, china, vietnam, democracy, economic growth, capitalism, autocracy,