Community-based economies the answer?

[Sheilbh]

Sheilbh, I like you, but your bohemian upper class experience is not a general economic trend that is starting to happen.

I also frequently choose more expensive offer because it is "fair trade", or "bio", or "local produce" but it's a delusion to think most people do or will act this way.

  I'm not bohemian upper class

This is a trend - it may not reach the majority of people or the majority of purchases but it doesn't need to for it to be a trend.

At the widest level there's far more emphasis by all retailers on 'local' when they can say it and 'UK' when they can't.  In addition the most successful retailers over the last year have been those that most emphasis localism and associated values (Waitrose, John Lewis etc.).  I think there's been a shift where you won't necessarily buy local stuff every week, because it's expensive, but you will as a treat or for a special occassion.  That is a huge shift from 5 years ago when there wasn't really a market for it.

At the same time there's been a growth of retailers who specialise in this sort of thing, in middle class areas of course, but I actually think it's sort of aspirational now.  It's a way to show off or to feel better about your shopping than otherwise.  There's been a growth of companies offering local products (from the resurgence of traditional beers, to the new micro-brews, through to Riverford or Abel and Cole veg) and of things like farmers markets or city farms.

It may never make the majority of purchases, but this is a trend and it's one that's survived the recession and actually come out stronger.  I think in part because in a globalised world of trillions of dollars swilling round in debt, there's an attraction to the 'authentic' and local.  It's the English version of la France profonde.

[garbon]

I don't know how I feel about the movement other than to say that I have a fairly strong personal distaste for the megalopolies that drive our economy, like Citibank, pharmaceutical companies, etc. because of the policies that I have directly run into that I found fundamentally wrong. (My opinion only.)

What does "evil" pharmacy have to do with this?

[merithyn]

No one really commented on this, but Yi hit this one on the head.

There's a good article in the Atlantic right now about an auto parts manufacturing plant in the south (I think South Carolina.) The article was sort of an exploration of modern American manufacturing jobs. One set of people working there made something like $25/hour, and had training from technical schools and could actually interact directly with the software that controlled these modern industrial machines due to their ability to write in the instruction language that is pretty standard in industrial machines.

Basically, those guys have a pretty good job because the machine they work on does precision work on parts that are very delicate, and the worker running it needs to actually be more than an automaton, has to be able to make on the fly adjustments to the machine and has to really understand what is going on. Because the part is delicate, and because the machine can and is regularly retasked to make a new part day in and day out, outsourcing to China just doesn't make sense.

In the same factory, other parts in the same production chain are made by machines that do far more of the work. These are the meat and potato parts that are bulky and the machine itself is a much simpler device. The person operating it is training a new employee, and in the first 25 minutes of the new employee's shift they have as much proficiency at the job as the more experienced worker. These workers make around $14/hour, and the reason their jobs haven't been outsourced to China is because in the words of the management, outsourcing to China isn't worthwhile for 10% savings (this company has outsourced some parts manufacturing to Mexico, China etc; but the company points out it takes significant savings to justify it.) The parts they make also need to be used along with the more delicate parts that are made by the high-skilled workers, so the part gets made here in the United States.

The question is then posed, why don't they replace that $14/hour employee with a machine? Because all the low skill employees are actually doing is moving parts from one machine to another, a mechanical arm could easily do this work. The reason the employee isn't replaced is because the mechanical arm that would replace them costs more than just keeping the employee. I don't know if it's a company rule of thumb or something in the wider manufacturing community, but the article states that they won't buy a machine that can't pay for itself in 2 years time. The mechanical arm costs more than the employees make in 2 years time.

However, in a world of labor becoming ever more expensive and not being able to find cheap labor overseas, you would, as Yi says, just buy the mechanical arm that isn't price effective right now.

This is great. Thanks, Otto. I guess the only question I have with this is what happens to those workers then, and what affect will too many of those mechanical arms have across the country? I'm a big proponent for when industry changes, change the industry you're in. (In other words, if you can't find a job doing what you used to then re-educate and re-adjust, don't whine about it.) But when it happens to a lot of people very quickly, that's nearly impossible to do. You end up with a lost generation while people figure out what to do where.

What I find most interesting in what you're saying is that the common perception that it is always cheaper to go to China/Mexico/etc just isn't true; at least according to the piece you're talking about. I find that heartening for our country's economy... at least for as long as that remains so.

[Admiral Yi]

I guess the only question I have with this is what happens to those workers then, and what affect will too many of those mechanical arms have across the country?

What happens to those workers then is that they accept lower wages to compete with mechanical arms and Chinese and Mexican workers, or they move to a nontradeable sector in which they're no longer competing with mechanical arms and Chinese.

[Neil]

I guess the only question I have with this is what happens to those workers then, and what affect will too many of those mechanical arms have across the country?

What happens to those workers then is that they accept lower wages to compete with mechanical arms and Chinese and Mexican workers, or they move to a nontradeable sector in which they're no longer competing with mechanical arms and Chinese.

Don't they just go on welfare and end up either taking up criminal endeavours or working dead-end, life-destroying service jobs?

[Iormlund]

This is great. Thanks, Otto. I guess the only question I have with this is what happens to those workers then, and what affect will too many of those mechanical arms have across the country? I'm a big proponent for when industry changes, change the industry you're in. (In other words, if you can't find a job doing what you used to then re-educate and re-adjust, don't whine about it.) But when it happens to a lot of people very quickly, that's nearly impossible to do. You end up with a lost generation while people figure out what to do where.

The problem is many people live with the expectation that their job will be there forever. That isn't true at all, much less today.

I've spent this last month reprogramming an assembly line at a big factory nearby and I can't help but be surprised at the amount of young boys and especially girls working there. How many of those are planning for the future? They can't seriously think their jobs will be there in 5, 10 or 20 years, not while working alongside automata (some as big as houses) that already do a lot of the work men did a few years ago (running the warehouse, soldering, handling heavy parts, gluing, painting, etc).

What I find most interesting in what you're saying is that the common perception that it is always cheaper to go to China/Mexico/etc just isn't true; at least according to the piece you're talking about. I find that heartening for our country's economy... at least for as long as that remains so.

Labour cost is just one piece of the puzzle. Some products are more expensive to ship than to build locally. Some require so much capital in machinery, infrastructure, etc that labour costs are not as important. Often local governments will offer subsidies to big employers to stay. There's the skilled labour thing that Otto mentioned as well, though eventually other countries do train their own skilled workforce.
In the end, often what happens is you have lot of money already invested in a factory, so instead of closing it, you just wait till it is time to build another and locate that one in Mexico, China or Turkey.

[Ideologue]

I guess the only question I have with this is what happens to those workers then, and what affect will too many of those mechanical arms have across the country?

What happens to those workers then is that they accept lower wages to compete with mechanical arms and Chinese and Mexican workers, or they move to a nontradeable sector in which they're no longer competing with mechanical arms and Chinese.

Don't they just go on welfare and end up either taking up criminal endeavours or working dead-end, life-destroying service jobs?

That's the nontradeable sector Yi refers to, I'm sure.