USA sells quite a lot of cars to China, out of all places...

But these are not American cars, these are German cars made in America.

Americans I meet are always surprised when they see how close are manufacturing jobs salaries in China, and US.

I was surprised when I discovered that the VW group sells like half of their inventory in China and ASEAN region.

If they're German cars made in America, what about all the American goods made in China?

That’s a little naive. No political entity in history has been able to reverse economic decline by looking at what it did best in an earlier age and try to do that again.

There are other countries that are simply better than the US at doing certain things. I don’t understand why Americans can’t just accept that. Embrace the things we’re really good at, work with others to get from them the things they’re good at.

There's arguably a strategic need to keep at least some expertise and a minimal operational capacity even for things that are cheaper to import[0]. COVID-19 demonstrated how fragile supply chains are, and that was just a global emergency, and not purposeful economic warfare.

America is good at things at the edge of the value chain. High-end goods. Services. Demand manufacturing[1]. Things that have value during good times, where the earlier links in the chain are healthy, and consumers have plenty of money to spend. In times of crisis, all this can evaporate quickly.

Also, I feel it might be that the kind of jobs America is good at are different from the lower-level jobs in ways that are not conductive to having a healthy middle class. I've read some convincingly-sounding arguments going in this direction, but I can't recall any right now, and I haven't thought about this topic hard enough to come up with one myself.

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[0] - This is not an unprecedented idea. See Boeing as a point of comparison. From what I read, the company would've been dead long ago if not for government spending. This spending looks wasteful if you look at what gets produced, but not when you realize it's really a way to ensure that manufacturing plants and people knowing how to use them are available in case they're needed for war production.

[1] - Without being too bitter about it in this thread, I feel quite a lot of ways US brings in money are fads and artificial scarcities, created using marketing and intellectual property laws.

I agree with your assessment but I don’t think the solution is to try and artificially shore up domestic manufacturing capacity to the extent that it was before. There also isn’t any reason to believe that those that supply us with what we want desire the kind of economic warfare you’re describing.

As for the middle class: I do agree here, we made a huge mistake gutting the manufacturing sector too quickly. But I suspect where we failed was in providing assistance to the affected communities rather than artificially trying to prop up manufacturing. The increased savings from manufacturing abroad could have been used to fund better healthcare and educational opportunities. Provide some kind of unemployment assistance. Instead all the rewards disproportionately went to a small minority of the owner/shareholder class.

> I don’t think the solution is to try and artificially shore up domestic manufacturing capacity to the extent that it was before.

I agree that fully internalizing this kind of manufacturing is counterproductive. I feel that the optimum level is a limited capacity that could be scaled up quickly in an emergency. It's less efficient short-term, but resiliency always has some costs.

> Instead all the rewards disproportionately went to a small minority of the owner/shareholder class.

I feel there's some confusion in the way offshoring savings were, and are, being talked about. Possibly a purposeful confusion. The way I see it, one can't say "we're saving money by offshoring", where "we" means "our country/our economy". It's the private owners/shareholders that are saving money. The country only saves if they get to appropriate those savings, e.g. through a tax. If companies start to offshore and the government doesn't adapt taxation, then the country is actually losing on this.

>There are other countries that are simply better than the US at doing certain things. I don’t understand why Americans can’t just accept that.

This is essentially a reworded version of the "ricardian law of comparative advantage" which was treated as gospel as an economic theory in the 1990s-early 2000s.

It's almost dead today. The widely believed built in presumption that comparative advantage was static and unchangrable essentially led to American manufacturing being siphoned off overseas to countries that did not share this view.

Almost all policymakers are now starting to treat this as a geopolitical threat.

To expand a bit - Ricardian comparative advantage argument relies on the following assumptions:

- no transportation costs

- no unemployment

- barter economy

- 100% fungible labor - farmer, teacher, chemical engineer, doctor - they're all the same and can switch between jobs instantly, and immediately attain the level of productivity within that sector

- prices are 100% determined by labor costs

- demand for various types of items is static, and never changes

- the demand structure is the same across all countries - i.e. if British prefer tea to coffee, we assume all countries prefer tea to coffee

It's not just a "spherical cow" theory, it's more akin to "if a spherical cow rolls frictionlessly down a valley described by a parabola, then it will oscillate forever". True, but useless.

Keynes, as usual, is ahead of the pack - calling out the theory's unrealistic assumptions, and predicting (in 1930s) that not the production, but the interest rates will do the adjustments - leading to persistent trade imbalances and move the economy further from full employment. Which is exactly what happened

The Austrian School of economics is just bad. Everyone knows that Keynes' policies are bandaids that make the wound recover faster. Meanwhile Austrian economists believe that people must let the wound heal as slowly as possible because of a tendency toward masochism and sadism.

The truth lies in neither. The biggest economic problems stem from rigidity. Money has such an extreme degree of rigidity, it is capable of traveling through both space and time unhindered. It's a time machine and massless particle all in one.

The reason why Austrian economics appeals to some people is either because they have an anti government axe to grind and want more trivial reasons to blame the government, they want to be on the receiving end of a regressive money system (gold bugs), macroeconomics are often abandoned in favor of microeconomics which hides the fact that local decision making can still result in seemingly coordinated failure and finally because they have mistaken moral beliefs about an amoral system most notably the myth of the protestant work ethic and the belief that the promise of work is their own personal property and it should be their right to delay redeeming that promise for all eternity.

I will repeat it again. There are no morals in economics. Anyone who worships savings and frugality in monetary terms is worshipping poverty in real terms. Eat your economic cake, it will be bigger tomorrow because of that and when somebody needs you to show restraint and want to borrow your slice, they'll tell you.

100% of the wealthier people I have met are frugal, and thr majority of them live on much less than the majority of the poor people I know.

I also saw this pattern. Yet many people will insist on getting their wealth because they are greedy.

For me that is plain envy sorry. And, who is the greedy the ones that save their work or the ones that want the wealth made by others? Because that is more greedy IMHO.

Ehat you are saying is not correct.

You are missing that growing in permanent debt has consequences. Some countries have been ruined by external debt. We are on our way.

We people do not manage wealth like that. A call for poverty is to live over our real outcome permanently (this does not mean we cannot invest and have debt as long as we are able to pay and as long as it has expected return in controlled ways).

Eventually you go bankrupt. What is being poorer than not being able to finance your basic services?

And yes, I admit to hsve become somewhat antistate. Because it is a scam, basically, to monopolize services, offer them more expensive, without the innovations that markets could provide you mich faster and on the way saying you are ok thanks to them and that you owe the state everything.

I can deal with market prices and free choice and save a bunch of money, which is MY invested effort, so it is me who should manage it.

States do not give me anything except poor justifications for their existence. The only exceptions could be (and I am not convinced either) security and justice.

I really think they are way more correct than the alternative: that we must be forced in groups under the decisions of ellites. This is not morally right. And, BTW, a higher goal for the sake of others under coaction lead to fascisms and communism. Little by little we lose our freedom. Not a good thing.

Comparative advantage (or rather, the fallacious notion that it is inevitable/static) is still weirdly treated as gospel by the Austrian school. E.g. https://mises.org/library/ricardian-law-comparative-advantag...

Austrians are a crotchety bunch and a bit stuck in their ways. They never really tried to explain the rise of China and are still somewhat in denial about it.

The rise of China. Well. Taking into account that they adopted a somewhat economy market in many areas and that when there was more pure communism the economy was worse...

I would say they did not get here faster because of too much intervention honestly...

Nothing is pure capitalism or socialism. As you open the economy the cash flows more. That is what happened...

BTW, I do not consider China a success since they are like one century late from America and on top of that there is no regike that has killed more than the Chinese. Do you really think it is a success? Well... I would say despite of the people managing it, not because of them...

That said, I am not meaning austrians got everything right, just that I find them relatively convincing in many areas. Of course, they are subjrct to criticism, as everyone else.

The problem with ascribing China's success to being a market economy is India.

India shared similar population size, geography and wealth to China initially.

India had something closer to a market economy that was less interventionist/communist and for far longer and yet it has grown at a far slower pace.

Austrian predictions from the 90s presumed that China keeping tight control of the economy/currency/inward flows of investment and high level of state ownership was shooting itself in the foot.

I am not an economist to analyze this in-depth. And very likely you have your point.

However, for me the discussion is also ethical: I do not find a reason to have an ellite forcing on all the others through coaction what to do. Whether it maximizes economy or not. In other words: peopke are ends not means for others. That is the fundamental point in my view.

I would not take a regime with over 60 million deaths (big leap forward, Chinese cultural revolution, etc.) as an example of something ethical by any measure.

That's the damn point. Backwards governments can still succeed precisely because of the opposite, they can become (reasonably) good governments.

Which standards judge the backwardness, and what a good one?

China is a reasonable government that has over a million Uyghurs muslims in concentration camps.

The history of a reasonably good country that had successes as the Great Leap Forward, the Chinese Cultural revolution and now the Uyghurs, among many others.

You know, Chinese government is not reasonably good at any level by any moral assessment.

Capitalism has been superior in every aspect: as a proof, migration flows went from socialists to capitalists countries, being East/West Germany just one example.