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The China Thread

Started by Jacob, September 24, 2012, 05:27:47 PM

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The Brain

GL China. I'm not paying a guy $4 an hour.
Women want me. Men want to be with me.

The Minsky Moment

This is really a dog bites man story.

What is supposed to happen as a country develops successfully is that productivity gains eventually translate into higher wages and worker incomes.  As part of that process, the developing country eventually exits low valued-added, commoditized production for higher value production where productivity and technology matter more than raw wage levels.  This is a classic pattern that in the specific Asian context has been analogized to "flying geese": http://en.wikipedia.org/wiki/Flying_geese_paradigm.

In fact, the only thing that is a little unusual about the China example is that Chinese wages have increased more slowly than what could be merited given high levels of manufacturing productivity (roughly equivalent to that of a country with per capital GDP more than double current Chinese levels). 
The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.
--Joan Robinson

MadImmortalMan

Quote from: The Minsky Moment on May 01, 2013, 12:36:20 PM

In fact, the only thing that is a little unusual about the China example is that Chinese wages have increased more slowly than what could be merited given high levels of manufacturing productivity (roughly equivalent to that of a country with per capital GDP more than double current Chinese levels).

Why? Is it related to how our wages disconnected from the productivity increase?
"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

The Minsky Moment

Quote from: MadImmortalMan on May 01, 2013, 03:34:52 PM
Why?

It's hard to pinpoint because the Chinese economy is an odd hybrid of market and command systems.  A lot of the value added that is generated by the economy may be siphoned off in the form of corruption, or alterantively in stockpiling trillions of dollars in the form of inert foreign exchange reserves.  At the level of the labor market, the hukou system and the absence of any real unions also probably suppress wage growth.
The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.
--Joan Robinson

Ancient Demon

I'm a little surprised that labor costs are higher in China than in Thailand. I was under the impression that Thailand was more developed than China.
Ancient Demon, formerly known as Zagys.

Josquius

Chinese wages have increased a fair amount.
By all accounts there's too many jobs in China and not enough workers, they can pick and choose where they work, which is really boosting up the prices.

Maybe Thais don't have quite so horrific conditions when they work so the low pay doesn't seem so bad?
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CountDeMoney

I'd like to see the wage breakdown in China according to region.  I bet it's even higher than the $4 that chart shows along the coast than it is deep in the outback.

Phillip V


CountDeMoney

Meh, those Carnegie people are weenies.

Eddie Teach

Quote from: Phillip V on May 02, 2013, 06:55:51 AM
China Is Nearing U.S.'s Military Power in Region

That would be cause for concern if our power in other regions was immobile.
To sleep, perchance to dream. But in that sleep of death, what dreams may come?

Malthus

Quote from: Ancient Demon on May 01, 2013, 06:10:25 PM
I'm a little surprised that labor costs are higher in China than in Thailand. I was under the impression that Thailand was more developed than China.

Depends very much on region. Thailand looks very different from Bangkok as opposed to, say, Isan.
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane—Marcus Aurelius

The Minsky Moment

Can't find the Carnegie report so can't really comment.
However, the premise that China is narrowing the gap in carrier capability is questionable.  China's carrier program is very embryonic at this point - more like zygotic.  the amount of work that needs to be done in terms of developing effective cadres of pilots, deck crews, and the massive tail of logistical support is enormous.  Not to mention there is currently zero capability to construct or source modern carriers, which is why their sole carrier now is a refurbished 25 year old ex-Soviet wreck.  And it's not like the US is standing still on modernizing and improving its own carrier capability.
More generally, China's ability to project power cannot be measured by a simple count of front-line combat planes, subs, ships, and modern weapon systems.  China's military capabilities away from home base are hamstrung by its weak supply and logistic system and that is going to take decades to improve. 

That said, their capability for home defense and denial of access to their local area is already impressive and is likely to continue to improve.
The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.
--Joan Robinson

Syt

The official Communist party newspaper, Renmin Ribao (People's Daily),  is building a new headquarters for themselves. Err . . .



I am, somehow, less interested in the weight and convolutions of Einstein's brain than in the near certainty that people of equal talent have lived and died in cotton fields and sweatshops.
—Stephen Jay Gould

Proud owner of 42 Zoupa Points.

Tonitrus

Are you trying to imply the architect made a cock-up?