Sunday, November 27, 2016

Weekend reading links

1. Adam Minter has a nice article that points to the impossibility of relocating iPhone manufacturing jobs to US.
Low labor costs and minimal regulation were certainly part of China's appeal. But the most important factor was its huge and nimble workforce. The main iPhone facility in Zhengzhou now employs 110,000 workers, with other factories employing hundreds of thousands more. China's 270 million migrant laborers -- most of them ambitious and opportunistic -- have proven indispensable to a business that prizes flexibility. Last summer, Apple contractors reportedly hired 100,000 workers to ramp up production of the iPhone 6s in advance of its fall release. Nothing comparable could ever happen in the U.S., no matter what the president wants. A mass mobilization on that scale, and at that speed, likely hasn't been attempted since World War II. And there's little reason to think it would be successful or desirable today, even if Apple was willing to try. Finding enough skilled labor wouldn't be much easier. 
I would argue that these points apply to the possibility of manufacturers shifting from China to even other developing countries. While some shifts are inevitable, but large scale ones very unlikely for the foreseeable future. It would require cost advantages that are very large to off-set the significant benefits from being part of a large industrial eco-system, as manufacturing facilities in China are. It is no surprise that we find more stories of China leading the drive towards automation as these factories strive to remain competitive in the face of rising wages.

2. Stewart Wood tweets this remarkably prescient extract about a possible "strongman" emerging in the US from Richard Roarty's 1998 book, "Achieving our Country"
The last paragraph is stunning.

The one thing that strikes me is that the protest movements against the likes of widening inequality, stagnant wages, job losses from automation and trade and its concentration in geographical pockets, ballooning college and housing costs, lower capital gains taxation and corporate tax avoidance etc have been so subdued. Given the egregious manifestations of unfairness associated with these trends, it is surprising that these issues have not boiled over into the streets. The "occupy movement", for example, just fizzled out.  

Historically, the leadership for counter-movements against such excesses have originated within among the elites themselves. I do not see the green shoots of any such leadership emerging from within the elites and opinion makers. Even the academic activism against them have been, well, academic. The occasional bursts of protests in the form of books and articles have been staccato and one-off. Into this vacuum, it was inevitable that a demagogue stepped in.

Therefore, the more surprising thing for me is not so much the rise of Trump as the lack of the countervailing elite opinion that would have been the anti-thesis to the prevailing thesis. I think that those who claim to keep the conscience of the liberal order in the US failed badly. 

3. This article in the Economist on Trump's conflicts of interests is baffling in its benign assessment.  The conflicts are enormous, especially given the man's background and the signals of deep engagement of his children, who manage the business, with the US government activities. This article in the Times is an excellent investigation,
Even if Mr. Trump and his family seek no special advantages from foreign governments, officials overseas may feel compelled to help the Trump family by, say, accelerating building permits or pushing more business to one of the new president’s hotels or golf courses... there has been very little division, in the weeks since the election, between Mr. Trump’s business interests and his transition effort, with the president-elect or his family greeting real estate partners from India and the Philippines in his office and Mr. Trump raising concerns about his golf course in Scotland with a prominent British politician. Mr. Trump’s daughter Ivanka, who is in charge of planning and development of the Trump Organization’s global network of hotels, has joined in conversations with at least three world leaders — of Turkey, Argentina and Japan — having access that could help her expand the brand worldwide.
Trump's largest business interests out side the US are in India,
Several of Mr. Trump’s real estate ventures in India — where he has more projects underway than in any location outside North America — are being built through companies with family ties to India’s most important political party. This makes it more likely that Indian government officials will do special favors benefiting Mr. Trump’s projects, including pressuring state-owned banks to extend favorable loans.

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