NYTimes has article about a large factory in India being built for i-Phone production with dormitories for 37,000 workers. Most of the factory workers in the Tamil Nadu part of India are women, who tend to be smarter and more trainable than men.
intercst
Tim Cook, preparing for the coming trade war with China. Smart cookie, that guy.
The “trade war” with China is an effect of China’s challenge to USian hegemony. India has size and population too. If all the production done in China moved to India, would India start challenging USian hegemony? Will we be in the same place, in another 50 years?
Steve
Coming?
This war started with the Orange One’s presidency. And escalated under the current president.
I agree about our war due to China’s intellectual property theft & counterfeit products production including electronic components…some which end up in US military equipment[1] and supply chain reliance upon China that proved its weakness during Covid pandemic.
But perhaps tariffs were not the answer. Bringing back strategic product manufacturing such as microchips helps income inequality reduction.
But more important in reducing income inequality is the increase in minimum wage in most states which has boosted low wage income earners situations.
https://www.nber.org/system/files/working_papers/w32082/w32082.pdf
We study the economic and political consequences of the 2018-2019 trade war between the United States, China and other US trade partners at the detailed geographic level, exploiting measures of local exposure to US import tariffs, foreign retaliatory tariffs, and US compensation programs. The trade-war has not to date provided economic help to the US heartland: import tariffs on foreign goods neither raised nor lowered US employment in newly-protected sectors; retaliatory tariffs had clear negative employment impacts, primarily in agriculture; and these harms were only partly mitigated by compensatory US agricultural subsidies.
David Autor, one of the authors of the above study made a short 3 minute video, 5 years ago, about how turning China into the world manufacturing center benefited China by creating a larger middle class there. But increased inequality in the US because of manufacturing job. The US benefited as a whole from reduced product cost. Manufacturing employment fell 30% from 1999 to 2011. A historical change. The mid-west section of the nation was devastated and manifested into despair of those affected. A feeling that their economic plight was ignored by the government caused political upheaval in 2016.
[1]
Production of strategic items like microchip will return to the US.
Hopefully we learned, due to Covid pandemic, that having most manufacturing centralized located is not a good thing.
And, when a market is sheltered, what happens? What happens to every defense contract Lockheed “wins”? Massive delays and cost overruns.
Steve
I think India has a plan to not be the “New China”.
IMO, India is WAY different than China, both today and 50 years ago.
India was a putative democracy, all be it with a caste system.
India was and is much more “free market” capitalist.
The populace understands democracy and capitalism.
China’s populace did NOT understand democracy… And little about capitalism, or at least not enough about “complex/organized” capitalism.
India was and is more “amenable” to Russian influence, due to US/Western choices in the 1970s. And British colonialism since the 1700s…
India IS VERY CONSCIOUS of “Western” abuse.
India today is working hard to NOT ALLOW Western influences to further abuse India and or Indians.
India is currently a solid demographic for young workers, population growth curves, and the future consumer/producer dynamics.
India learned from China’s Western experience and is resisting the Western influences that caused China to be vulnerable to Western sanctions.
With the solid population dynamics, India has plans to grow its own internal economy.
India has its own military.
India has a large tech educated population, and infrastructure.
I don’t see India being as vulnerable to Western sanctions in 50 years, as China is today.
China is having real problems with its internal economy. (Was this PLANNED by US/Nixon/Western governments, companies, etc, back in the late 60s through 2015 or so?)
China’s supply chain monopolies and US/Western sanctions cut cut both ways.
This is all JMO.
ralph
By complex organized capitalism I mean that running a small farm or fruit vegetable stand in ones village is vastly different than running a multinational company, bribes, corruption, authoritarian rulers, etc.
IMO, it is very unlikely India that will be able to sustain China’s past rate of economic growth for as long a period. The size of the workforce drives economic growth such that when that workforce starts to decline, economic stagnation results. China thought they would hit this threshold in the 2030s, but it occurred a decade earlier. We are now seeing the consequences to the Chinese economy.
India has already achieved the replacement fertility rate of 2.0 so it only as a couple of decades in the workforce “sweet zone” for dynamic economic expansion and I don’t believe it is as prepared as China was in the 1970s for this type of change.
That’s a new one. The US workforce has been declining for decades and I’m pretty sure the economy has powered forward.
Understanding America’s Labor Shortage | U.S. Chamber of Commerce.
In fact, the decline of Americans' labor force participation is nothing new – **fewer and fewer Americans have been participating in the labor force for decades, resulting in a smaller workforce that is expected to continue shrinking for years to come.**Jan 9, 2024
Well, a lot of us retired!! Aged out or nudged out, what I wonder about is our GKs, so far their future is unclear…
They’ll be fine as long as we have some kind of Universal Basic Income by then. Likely happier, too.
intercst
If by workforce you mean a group of people working or available for work, then this workforce has been increasing in numbers for a long, long time. Here’s the data on civilian labor force, which has been almost always increasing except for short time windows, like the pandemic shock (Civilian Labor Force Level (CLF16OV) | FRED | St. Louis Fed).
From the US Chamber article on the workforce = labor force:
Even though we have more Americans participating in the workforce today than before the pandemic, the overall share of the population participating in the labor force has dropped. If our labor force participation rate today was the same as it was in February of 2020, we would have 2.2 million more Americans in our workforce to help fill those open jobs.
I think the article is focused on labor participation rate, not the absolute numbers of workers, although the language seems a bit cagey or carefully worded, if you will.
Some definitions
civilian labor force - People ages 16 years and older and classified as employed or unemployed.
unemployed - People who had no employment during the reference week, were available for work at that time, and had made specific efforts to find employment sometime during the 4-week period ending with the reference week.
(Glossary : U.S. Bureau of Labor Statistics).
We have already had the trade war. What is coming is China’s endless fade.
Not really new in the sphere of basic macroeconomics. The relationship between workforce and GDP is pretty well established. From Stanford:
We estimate that a 10% increase in the fraction of the population ages 60+ decreases GDP per capita by 5.7%. We find that this reduction in economic growth caused by population aging is primarily due to a decrease in growth in the supply of labor. The Effect of Population Aging on Economic Growth.
The recent data bears this out. From the Bureau of Labor Statistics
Changes in the labor force have an outsized effect on economic growth. Slower labor force growth over the last few decades has contributed to slower gross domestic product (GDP) growth. Labor force and macroeconomic projections overview and highlights, 2022–32 : Monthly Labor Review: U.S. Bureau of Labor Statistics.
The impact of an aging population where the workforce declines relative to nonworker dependents is a general phenomenon that seems culture independent. For example, Japan:
