A billionaire explains the middle class

pyotr filipivich wrote in news: snipped-for-privacy@4ax.com:

And if you could refrain from quoting him, he'd stay there for the rest of us too.

And I think you are just as wrong in you assesment.

The Japanese had no reputation for quality at the end of WWII.

We are not going to become a third world country, but we are going to be in the same league as China, Japan, and Korea. Which is a step down from where we were at the end of WWII.

Dan

I'll likely take you up on that offer, mon. One of the $2 CDs I ordered last year was on Archery. Something like 18 books on it, all the way back to Toxophilus (1545) and Yahi (1918). But having a HUmon advisor would help a lot, too, in getting me back up to speed. I haven't used a bow since my teens. That's a lot of years for us Olde Fartes.

Hopefully, it's on its way to me now. I'll call you when it arrives and I play with it a bit. I picked up a free target (1Mx1Mx.5M) from a guy on Freecycle. It has 8 holes in it. The downside is that a raccoon sat atop the fence it was leaning on and shat on it a few times. Now where's my jug o' Clorox?...

Your opinion is noted. _The Economist_ disagrees with you. So do many other economists:

Thanks to W. Edwards Deming, they woke up fast, and set a new quality standard for the world. The Chinese are still mostly bottom-feeding in international markets.

Not likely. We have an innovative vitality that only South Korea can match. And they haven't been at it long enough to see how sustainable it is. In Japan, it's already largely kaput. China isn't yet out of the starting gate in that department.

Doug Miller on Mon, 29 Dec 2014

19:49:03 +0000 (UTC) typed in rec.crafts.metalworking the following:

Sorry about that. My mistake.

-- pyotr filipivich "With Age comes Wisdom. Although more often, Age travels alone."

As I read it the Economist just says that China will still be behing the U.S. twenty years from now. But what will be the situation in say forty years?

So what do you think of the Chinese Stealth Planes?

And you expect this to remain the same for forty years?

You are an optimist.

Dan

Do you remember Japan after WW II?

The Japanese did exactly what the Chinese are doing now, albeit on a smaller scale, they leaped into foreign trade with what they could manufacture and the words "Made in Japan" was a synonym for "Junk!". Now look at them. The first Nikon FP camera was made in 1948 and by the Korean war Nikon and Canon had become the preferred camera of most news correspondents and Leica and Contax were headed down the slippery slope.

Granted there are differences between Japan and China but at least in certain industries, perhaps in many, there is a very definite intent on improving.

A friend does fiberglass work on yachts and a Wholesaler in Bangkok recently sent him some fiberglass cloth samples in an effort to convince him to buy from them. It was really rough stuff with the weave very uneven and a lot of knots where a strand had been spliced. He sent the stuff back and included a sample of the Australian (I believe) cloth that he uses. The Wholesaler called home to discuss the matter and in the conversation the Wholesaler said that he had sent the cloth back to the Chinese factory and they were very interested in my friend's comments and would strive to do better and would send improved samples at a later date.

Here there are many single cylinder, water cooled, diesel engines used

- they even "home build" built a small truck with them called a "Etan" which originally was powered with Japanese made "Kubota" engine, see:

For an action shot see: Today, they are nearly all powered with either a Chinese copy of the Kubota, or a Chinese made Kubota as Kubota has established factories in China in order to remain competitive.

I suspect that question is how much longer can the U.S. maintain its current levels of income as more and more jobs move overseas. The current unemployment rate in the U.S. is, I believe, 5.8% and it is being bragged about. Thailand, on the other hand is 0.7.

Yes, that is correct. But at the same time the international markets are so much larger now and as Walmart seems to have proved there is money in selling to the bottom end.

Well, yes, but two of the top 7 banks in the world are Chinese (None of them is a U.S. bank). China accounts for a fifth of the world's manufacturing. The U.S. lies 2nd, I believe - it was first in 2010 and manufacturing jobs have decreased about 30% since 2000.

"Innovative vitality" is the sort of term one often hears in advertising and political speeches, but what does it really mean? That the U.S. is the leader in the ship building business, or the high speed train business? Nope, the Japan pioneered the advances in both of those. Or perhaps the personal computer or smart-phone business? Nope, China seems to be the leader there. Computers? The most powerful computer I see is a Chinese made computer, the Tianhe-2 at

33.86-petaflops is as of Nov. 2014 the most powerful.

Predicting 40 years ahead is beyond my pay scale.

I haven't paid attention. If they're anything like the Soviets were, their war machines are unlikely to have any positive fallout for their economy, nor to represent what they can do on a human economic scale.

But I don't know what their planes are like.

I just can't project that far ahead.

Not usually. But in this case, yes, I'm optimistic that our economy will do quite well.

I hope the Chinese economy does well, too. An equal trading partner would be very good for both of us.

I wasn't born until 1948. But I remember when Japanese products were junk.

In about four years. After 1950, and Deming, Japanese industry focused on quality and it paid off in just a few years:

"Deming is best known for his work in Japan after WWII, particularly his work with the leaders of Japanese industry. That work began in August 1950 at the Hakone Convention Center in Tokyo when Deming delivered a seminal speech on what he called Statistical Product Quality Administration. Many in Japan credit Deming as the inspiration for what has become known as the Japanese post-war economic miracle of

1950 to 1960, when Japan rose from the ashes of war to become the second most powerful economy in the world in less than a decade, founded on the ideas Deming taught:"

Japan became interntaionally recognized for quality in just over a decade. China is still known for junk, after three decades or so.

We'll see how successful they are. Fourteen years ago, executives at VW's China factory said they'd be ready to export to Western countries within five years.

'Still waiting.

We could go on forever with anecdotes, John, and I could point you to some analyses by specialty labor and trade consultants, but you could find them if you want. Let me just say that the number of US jobs "lost" to offshoring is wildly exaggerated for a number of reasons.

But the most importnat figures are these:

Total private (non-government) US employment, before the effects of the recession were felt, Nov. 2008: 113,636,000. As of Nov. 2014:

118,868,000.

Even counting losses due to fast-climbing productivity improvements, and counting the recovery from the recession, our net job gains are not bad. Offshoring has hit some specific job categories and industries pretty hard, but the US has one hell of a resilient economy. Overall, the effect of offshoring is estimated to reduce our employment growth by around 10% to 12%. It's a very hard thing to measure accurately.

As for those "trucks" you linked to, they tell a story in themselves

-- and it's not a story that US truck manufacturers are going to worry about. d8-)

On 12/29/2014 8:10 PM, Ed Huntress wrote: thread getting too long...snip

It's not rocket science. It's simple math. The first order approximation to ANYTHING is to assume the current trend continues at the same slope. If you don't like the trend, saying you can't predict is not helpful. The correct course of action is to decide where you want to be in 40 years and take affirmative action NOW to point the trend in the direction you want. Any correction is better than none. Watch the result. If conditions change, or you picked wrong, just reassess the situation and adjust the vector. You must anticipate your competition will to whatever they think necessary to readjust the trend back to their preferred direction. The wind will change direction. You must keep a firm hand on the tiller.

In a sea of independent democratic (and non democratic) societies, or on a smaller scale, the US congress, you can't get agreement on anything. Can't get a majority vote on positive change, but you can sure get enough votes to kill any and all proposals. There ain't no leadership with cojones plus a willingness to admit they were wrong and the authority correct the course continuously in real time without continued infighting for control of the tiller.

Another result of multiple societies competing for dominance is that any change by one results in a knee-jerk cascade of changes to the forces on the vector. The system is rather sensitive to small changes in initial conditions. There are a bunch of societies wanting to control the vector to their advantage.

I've heard it said that if you're behind a wreck on the racetrack, head for the crash. You don't know where the cars will head, but you can be pretty sure they won't be where they are now and you might get out alive. Some action, any reasoned action, is statistically better than none.

If it were me, I'd put Snow White in charge of the economy. She's got at least seven people she can trust. That alone puts her miles ahead of anybody else you could name. Learning all about economics from scratch is far easier than getting seven economists to agree.

I'd also assign Santa Claus to her team. He's very good at nosing around to see who's naughty and who's nice. He's also got high-volume manufacturing and distribution experience well tuned to understand and respond to demand down to the individual. And a propaganda machine second to none. Few even realize there's a birthday in the mix.

Merry Christmas to all and to all a zzzzzzzzzzzzzzzzzzzzzzzzzz

Can you put that ratio in context with other metrics over 6 years? Population? GNP? Income distribution? Cost of living vs wage growth? How many highly paid manufacturing jobs got replaced by "do you want fries with that?" Job availability for young workers entering the work force for the first time and those forced out by cheaper/new workers? How many of the newly employed were forced to do that because one income could no longer support the family? Welfare rolls/costs? And in relation to government employment that all the rest of us pay for with taxes?

A favorite trick of statisticians is to pick two points in time that maximize the peak in goodness for whatever they're promoting while avoiding the hockey-sticks on either end of that period. That gets compared to some other metric over a slightly different time period that either avoids or includes those hockey-sticks as required to support the thesis. Results of one action often show up as delayed responses in later time periods. So, it's not too hard to claim whatever you want and support it with facts...as long as you're vague enough. You're not unemployed if you've given up looking for work or your benefits have run out and you're no longer counted.

If I were young or had descendents, I'd be very worried the future.

I'd like to hear some good news, but I'm jaded.

True. The Japanese have a long history, right back the "Black ships" and before, of acquiring foreign technology.

But a lot of junk. Far more then Japan ever produced. Harbor Freight is a 2 billion dollar business and Walmart probably more, to say nothing of all the other countries.

Japan's GDP grew from 102,607 (Millions of dollars) in 1945 to 375,090 in 1960, a growth of 360%. China's GDP grew from 225.3 Billion Rmb in

1970 to 1985 (15 year period) to 896.4. a growth of 398%.

A large volume, low cost, product is not unique to China, after all the largest employer (except for the U.S. government) does exactly that.

In reality, who cares?

I don't have up-to-date figures but in 2005 Chinese White Goods exports to the EU alone was worth 4,185 billion dollars. In 2005 China produced 31 million refrigerators, 30 million washing machines and 75 million air-conditioning units, for export. Again, I don't have comparative figures but in 2012 VW's world wide earnings were 254 billion.

Whether VW-China is a success or not may not be a significant detail.

And the Economist's current estimate is that China's economy will exceed the U.S.'s by 2021 but their graph shows the Chinese economy to continue to grow at an accelerated rate while the U.S. lags behind. A previous estimate made by the Economist (2011) showed China exceeding the U.S. in 2018 so their updated forecast (2014) seems to be well within the limits of most estimates.

Difficult to analyze but jobs alone may not be the important factor. If Macdonald's hires more counter persons certainly the unemployment number goes down but I'm not sure that is a significant fact when looking at the overall economy.

Well, the link wasn't supposed to impress you with the vehicles, it was to demonstrate the varied use of Chinese made engines in 3rd world countries :-)

The problem is... it is not anything less, either.

New York Times Economist Paul Krugman wrote this in September 2, 2009 about the 2008 economic crisis:

"Few economists saw our current crisis coming, but this predictive failure was the least of the field's problems. More important was the profession's blindness to the very possibility of catastrophic failures in a market econ omy. During the golden years, financial economists came to believe that mar kets were inherently stable -- indeed, that stocks and other assets were al ways priced just right. There was nothing in the prevailing models suggesti ng the possibility of the kind of collapse that happened last year. Meanwhi le, macroeconomists were divided in their views.

--

=all&_r=0

Same to ya, but I had a rotten Christmas. Too much trouble with the gf. ;(

It sounds like the real problem is that you'd rather speculate than look the numbers up.

Most of what you're asking is readily available. Just look.

Decide first which trend you're going to follow. Ir it's changes in GDP growth rates, in 40 years Americans will all be rich and the Chinese won't have a pot to pee in.

'Not likely. It is not simple math. It's immensely complex.

That's a lot of junk.

You're comparing retail with manufacturing.

The Chinese care. They're getting antsy about not being able to sell cars to advanced Western countries.

Econometric forecasts for China are running into the same syndrome as similar projections that were made for Japan, in the 1980s. Some weaknesses appeared in Japan's economy that weren't in the econometric models. Then the economists scrambled to figure out what had happened. All projections were scrapped. Now the big question is whether Japan will escape the "liquidity trap" and be able to stimulate their economy again -- ever.

If you follow the economic projections carefully, you'll see the possible beginnings of a parallel situation. China's current slowdown was NOT predicted. Now the economists are falling all over themselves to figure out what's going on.

Stay tuned. They're approacing the Lewis Turning Point while they still have huge numbers of peasants in the countryside, wanting in on the action.

Bottom-line answers to this come from tracking GDP per capita and then doing a quintile analysis from IRS data. People have done it. The result is that middle incomes are dead flat and have been for almost three decades. Uppermost incomes are roaring ahead.

That's a big problem, but it's not because they're all working at McDonald's. You can use the analysis tools at the Federal Reserve, the Bureau of Labor Statistics, and the Bureau of Economic Analysis websites to get answers to these questions.

I"m glad they found a market. There are a lot of water buffaloes that are going to be out of work. d8-)

Right. They've had democracy since 1925 and that made foreign investment/trade from the west easier. That results in economic maturity output sooner.

Taiwan (known as the Republic of China - as opposed to the mainland's People's Republic of China) has had democracy around 1949 and since then. So Taiwan's economy is further along quality-wise than mainland China.

In a democracy, foreign investment is more comfortable for both sides (as opposed to mainland China where there is more restriction).

Restriction strangles foreign investment and trade and that results in less overall quality.

As long as the "democracy" is "our [US] kind" of democracy.

Populist governments that put the needs of the majority of

*THEIR* citizens first, rather then the welfare/profit of the supranational corporations, need not apply...