The trouble when I start watching commercial TV in the fall with the National Football League (and the ever hapless Cleveland Browns) in even numbered years is that I am suddenly swamped with commercials. That’s bad enough, but the political ones are worse.
I had just finished reading an item by Andrew McAfee on employment in manufacturing in China when I saw a Romney ad on the same thing. I have no idea as to the veracity of Romney’s figures, but I have an idea that he’s just as clueless about manufacturing now as when he was running Bain Capital.
Check out Technological Unemployment: Not Just for the US by McAfee posted on Sept. 10.
“In a talk I attended the other night, Larry Summers mentioned that manufacturing employment in China peaked in 1996. I found this hard to believe, so did a little Googling. Lesson #1: don’t doubt Larry Summers’s command of the facts.
“Lesson #2: companies all over the world are automating rapidly. Even though hourly manufacturing labor costs in China are only 4% of those in the US, it’s still attractive for Chinese factories to replace people with technology over time. This allows them to turn out more stuff with fewer people. How much more, and how many fewer?”
Yep. The relentless trend to gain more production with fewer people–a trend that began in agriculture and warfare some 4,000 years ago–has reached even the vaunted China. This is just the way the world works. Even through Medieval times in Europe–the so-called “Dark Ages”–technology continued to progress.
The only question is, where will all the displaced workers go to earn middle class incomes? Or can they with our current management style of driving down wages?
An interesting thing about China that might play into this situation. China is getting old very fast, faster than Europe where it is also a problem and much faster than the USA. Some economists have said that China may be the first country in modern times that gets old before it gets prosperous. They have a much larger issue with a shrinking number of young people having to support an increasing number of older persons; much like the USA baby boomer situation but more critical for them. So the need to automate and gain productivity is very important for them.
Good point, Rodney. China did try to deal with its population problem by restricting number of children per family. That dealt with one problem, but then the Law of Unintended Consequences kicks in. It will be interesting to see what happens there.
Why is automation always about labor costs. I wonder if this is more aligned with quality. It seems to me that the issue in China is not the cost of labor but the price they are paying based on poor quality. There are numbers of stories appearing on quality such as Bombardier Transportation recent issues on bearings used on new rail cars. If quality is not improved that it does not matter how cheap a product is. Automation if done right provides quality and consistency. Just visit a German automotive plant.