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kmg said...

Actually, automation will destroy both Chinese and US manufacturing jobs.

Goods will become cheaper and cheaper, however.

Foxconn is already talking of replacing 50,000 workers with robots. Those are not jobs returning to the US or China (but at least US and China costs converge on account of automation).

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PeakTrader said...

KMG is correct.

Manufacturing jobs as a proportion of total jobs will continue to decline, e.g. through productivity.

Similarly, prices of manufactured goods as a proportion of income will continue to decline, e.g. through deflation.

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Offshoring gave us increasing returns to scale, particularly, from 2000-07, and reshoring will give us decreasing returns to scale.

Definition:

Increasing Returns to Scale

When our inputs are increased by m, our output increases by more than m.

Decreasing Returns to Scale

When our inputs are increased by m, our output increases by less than m.

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VangelV said...

Great news. The Chinese will become wealthier and will buy toys and rakes from American workers who earn less. Get out the party hats.

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PeakTrader said...

VangelV, that's not necessarily true. If it cost $100 to produce $120 of output, and the cost of production rises to $120, to produce the same output, then prices rise or profit falls, or both.

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Responding to Jon's constant environmental issues:

PeakTrader said...

Jon would've been a member of the Inquisition, and view non-believers as heretics.

Heretic: A person who holds controversial opinions (like humans don't cause global warming), especially one who publicly dissents (causing removal from the scientific community and/or loss of funding) from the officially accepted dogma of the Roman Catholic Church (or powerful pro-government forces).