"David L Peterson" wrote in message
news
On Tue, 12 Aug 2003 04:18:16 GMT, "Ed Huntress"
wrote:
That's exactly what I've run into with Congress. They're so afraid that
the
facts will lead them to a protectionist answer, or to an admission that
they're willing to just let our manufacturing go to hell, that they're
falling all over themselves to avoid either. Pressed from both sides,
they've squirted out in the direction of least resistance. Quite a few of
them have now become "fair traders," who focus on 5% solutions to 95%
problems. A fair-trader often is a former free-trader who doesn't quite
get
it yet. "Fair trade" is a comfortable answer because they know that it's
an
endless debate that will keep them from ever having to face squarely the
consequences of trying to compete with a country that makes decent
products
while paying 80 cent/hour wages.
Ed Huntress
Ed, I've been following this and picking up a lot, I'll admit that a
lot of this is simply over my head, and I don't want to ask a bunch of
stupid questions, but I keep hearing this 80 cent/hour wages thing
and it gets me thinking.
These are excellent questions, Dave, but I'm leaving town in a couple of
hours and I can't do them justice now.
I'll try to hit some high points:
1. What part of the cost of our products are due to taxes?
This one can be argued until the cows come home, and I've never tried to
sort out the arguments. The arguments are about the effects of pass-alongs,
which supposedly have a cumulative effect. But they also have the
consequence of *reducing* other costs, because some part of them go to
infrastructure, benefits that we'd otherwise pay out of our own pockets, and
so on.
The bottom line, though, is easy. Taxes are nearly irrelevant as a
competitive issue. I posted a table of the relative tax rates (individual
and business) for our major trading partners here (probably on
alt.machines.cnc, actually) a month ago or so, including those for China,
and it was clear that we're all in the same ballpark. The differences that
do exist have an effect on relative competitiveness with countries that face
similar costs, such as the countries of Europe, but they are insignificant
where there are vast cost differences, as with China and India.
Are our products actually that
much more expensive than theirs mainly because of differences in labor
costs?
Yes. Lower wages percolate throughout an economy. Nearly everything is
cheaper in China, except for things they import.
2. what does this 80 cnets an hour buy in china? I know I could look
up stats for most of this stuff, but I don't know what the numbers
published take into account and I know you have researced thsi stuff
enough to have a good understanding of real situations and not just
comparing published numbers.
It's hard to make a direct comparison, but you apparently can live quite
decently on 80 cents/hour in China. Maybe Hamei will give you some examples.
As for healthcare and other benefits, it varies all over the map. China
actually has multiple economies. If you work for a foreign multinational in
China, the company is required to pay 15% of your wages into a healthcare
fund. I don't know how it's handled by domestic companies.
3. When we say manufacturing jobs what positions are we talking
about? Just the actual semi-skilled laborors? Do they have the same
distribution of wages for other positions within the manufacturing
sector? Would a design engineer (that's me.) be makiing say $1.77 an
hour or is it a different distribution.
The 80 cents/hour figure is based on the wages paid a moldmaker by one of
the companies I inquired about. It seems to be a fair average for fairly
skilled workers in coastal cities. The official minimum wage is $0.31/hour,
but "illegal immigrants" (rural peasants who illegally move to the cities)
are paid much less. So are assembly workers in the interior.
I've heard that engineers make up to $2/hour. A company's chief engineer may
make up to $10,000/year, but that's very rare. I gather it's something like
making $150,000/year here.
Your questions about Eastern Europe and Mexico are good ones, but I can't
really address them without looking up a lot of numbers. If they're still an
issue next week, try me then.
I'm off to Cooperstown to look at some old baseballs. Hasta la vista.
--
Ed Huntress
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