China

Automation Causes Job Loss in China, Too (And That's Great For Human Wealth)

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The (good, wealth-creating) properties of technological improvement allowing us to do more with less are clear even in faraway and mysterious China, even where labor costs are tiny compared to those in the United States.

Details from Andrew McAfee's blog:

 Even though hourly manufacturing labor costs in China are only 4% of those in the US, it's still attractive for Chinese factories to replace people with technology over time. This allows them to turn out more stuff with fewer people. How much more, and how many fewer?….

China's manufacturing output was over 70% greater in 2008 than it was in 1996. Over the same period, manufacturing employment in the country declined by more than 25%.

Obviously, this is not because of outsourcing (companies outsource to China, not from China). It's because technology is now so cheap, useful, and universally available that when more and more Chinese companies upgrade an old factory or build a new one, they don't fill it up with cheap labor. They fill it up with hardware and software, just like we do in the US.

Reason on outsourcing and China.

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  1. Will there be a Reason article on the forthcoming “Death by China” documentary? Nick Gillespie lives in Ohio, IIRC, so he should be able to see it before it fades into oblivion.

  2. Four hundred years ago, on the planet Earth, workers who felt their livelihood threatened by automation flung their wooden shoes, called sabot, into the machines to stop them… hence the word: sabotage.

    reason‘s web designer should feel his job threatened by formatting that regularly places ads overtop of images and embedded video. That graph was probably informative, had we been able to see from 2005 on.

    1. What graph? All I see is text?

  3. FoE—As you noted, that graph—still visible at the link–couldn’t be formatted (at least by my skills) to be readable. I deleted it. Apologies, and it’s still there at the link.

    1. Oh, THAT graph. Ok.

  4. I’m just idjit automation engineer and have been doing this for 25 years. The value of automation does not primarily come from replacing humans with robots to save wages. Toyota has at least one assembly plant in every corner of the world. These factories are all highly automated regardless of the local labor cost. Why? Precision and repeatability (sp?). Value overall.

    Toyota sells a truck in the US market called the Tundra. It’s no-named in most places, just a Toyota truck. If you find yourself in East Buttfuckistan and want to get back home to see your kin, I suggest you get find a Toyota Tundra and climb on in. Let the local do the driving.

    1. Good point about the real motivation. I’d imagine you still have to have human quality control folks in the process at some point.

      1. Tulpa Doom| 9.11.12 @ 8:59PM |#
        …”I’d imagine you still have to have human quality control folks in the process at some point.”

        Maybe, but QC of our products would be better served by robots. Our volume doesn’t yet make that economical.

    2. If you find yourself in East Buttfuckistan and want to get back home to see your kin, I suggest you get find a Toyota Tundra and climb on in.

      If I ever find myself in that place, I’ll probably be afraid of the locals. Very afraid.

  5. No!

    If we can’t have our poor-quality shit made by Chinese slaves, then goddamnit, we might as well make it here.

    We want to know that our shirts were made poorly, in sweatshops, by illiterate people, not made well, by machines, in some clean facility in a first-world country.

    Right?

  6. Wow I thought kids will worked for 8 cents an hour over there. In Apple factories at least lol.

    http://www.Anon-Tech.tk

  7. What still amazes me is that the whilst China apparently took the top spot on the list of manufacturing countries ranked by dollar output in 2011, the US was #2. I couldn’t believe that when I first saw it.

    But apparently the US is soon to retain the lead, according to recent UNIDO stats.

    The US, with a manufacturing growth rate of 4.3%, pipped(sic) China to retain its position as the world’s top manufacturing country.

    But holy shit! Someone else is building our t-shirts! THIS CALLS FOR A GOVERNMENT PANEL!!!

    MAYBE EVEN A BLUR RIBBON PANEL!!!………

    ………this is a job for……..!!!!!

    1. A BLUE ribbon panel, is of course what I meant.

      Stupid preview.

      1. We make more things in a less labor-intensive way — we also leverage our advantages (more educated workforces and better property rights) to manufacture different types of things; things that need more sophistication to produce.

        Cheap shit will always be made by shitty countries with low labor costs and a somewhat favorable business environment. China is the current go-to country; Mexico was it before. Southeast Asia and the Philippines are manufacturing more and more and chipping away at China’s competitive advantage; won’t be long until we see a basket of countries usurp China’s current dominant position.

        1. The Immaculate Trouser| 9.11.12 @ 10:03PM |#
          …”Cheap shit will always be made by shitty countries with low labor costs and a somewhat favorable business environment.”

          But not for long. The progs call it a race to the bottom, when it’s obviously a race to the top.
          As a yute, “Made in Japan” meant crap; German stuff had already started climbing the price ladder.
          US (union) wages are dropping because they were wildly uncompetitive for the skill level.
          If you’re selling ‘skills’ that can be matched by Deng fresh off the rice paddy, don’t gripe when Deng underbids you; get off your ass and learn something worthwhile

          1. US (union) wages are dropping because they were wildly uncompetitive for the skill level.

            And US (non-union) wages are disappearing (in the form of “no jobs”) because, you don’t just hire a US worker. You hire a US worker, plus you buy shares in the US government (in the form of taxes that double the cost of the worker).

            The most “worthwhile” “something” US workers could go learn, is how to get themselves a rational, cost effective government.

            But now I ask entirely too much of the (unionized) US education system.

        2. China is the current go-to country; Mexico was it before.

          And Mexico will be it again.

          Due to Mexico’s proximity to the US, as Chinese labor gets more expensive Mexican labor becomes much more affordable and efficient overall.

          China’s remaining advantage is that their industrial centers are so huge, they can turn on a dime to rapidly bring a boatload of new production to meet new needs.

      2. Actually, BLUR is a lot closer to reality for most of those things.

      3. Actually, I liked “Blur Ribbon” better. Kinda captures the reality of these time and money pits.

  8. Obviously, this is not because of outsourcing (companies outsource to China, not from China).

    Not true. Read an article a while back where companies were relocating jobs from Mainland China to even cheaper places like Pakistan or Bangladesh or Vietnam. Which is good — the poorest people on the planet then have a chance at a better life.

  9. These factories are all highly automated regardless of the local labor cost. Why? Precision and repeatability (sp?).

    Well, not exactly. The “local labor cost” isn’t just the lowest wage paid anywhere in an area, it is the cost of labor that can actually do the job at hand. It is possible to have humans do the labor of robots with the same precision and repeatability, but they can’t do it cheaper than a non-unionized robot that can work around the clock for no wages, other than the upfront purchase price plus maintenance.

    If it was cheaper for people to do it, they’d be doing it.

    1. …”It is possible to have humans do the labor of robots with the same precision and repeatability,”…

      Picking of the nits:
      In many cases, it may possibly be to use hand labor, but in others…
      Even a very talented shop worker can’t deliver repeatable cam-ground IC pistons, not to mention masking silicon to make chips.
      Some modern production requirements simply makes hand labor obsolete.
      Agreed that in other than those conditions, but those sorts of conditions are becoming the standard.

      1. I’m not gonna correct that mess; have a laugh.

    2. It is possible to have humans do the labor of robots with the same precision and repeatability…

      No, it isn’t possible. But thanks for sharing.

      1. Maybe I should elaborate a bit. When Intel comes out with a new microprocessor do you think someone sits at a patch panel and pushes buttons to open and close the logic gates on the processor’s pins to figure out whether or not its ready for sale in a PC or cellular phone application?

  10. Look, until we all have robot slaves, the promise of true freedom will not be realized.

  11. …companies outsource to China, not from China…

    A few seconds with Google suggests otherwise:

    “China is still known as the “factory of the world,” but Chinese companies are now building factories in places like northern Vietnam — where wages are up to 30 percent cheaper than in China’s Pearl River Delta — to tap into the growing Vietnamese market.
    In essence, China is outsourcing its own manufacturing success to its southern neighbor. There are also Chinese-owned plants in Vietnam, mostly garment factories, that export to Western countries.”

    http://www.taipeitimes.com/New…..2003382393

    And that was more than five years ago.

    Also this from 2011: http://www.wallstreetdaily.com…..omic-plan/

  12. Maybe I should elaborate a bit. When Intel comes out with a new microprocessor do you think someone sits at a patch panel and pushes buttons to open and close the logic gates on the processor’s pins to figure out whether or not its ready for sale in a PC or cellular phone application?

    I overstated the case. There are some instances, as you pointed out, where humans simply can not do what a robot can do, no matter how talented they are or how slowly and carefully they work. There are other instances where a human can do what a robot does, but the robot does it cheaper. The remaining situations are the jobs where humans have a comparative advantage and are employable versus robot labor … for now.

    1. Fuck I can’t wait until we get medical robots.

  13. …”It is possible to have humans do the labor of robots with the same precision and repeatability,”…

    No, it isn’t.

    In fact, it’s quite impossible. A computer/robot/mechanized device creates the same object the same way every time, minus entropy of the machine/die/etc. A human being can’t even manipulate the transistors in a fucking microwave anymore.

    Sure, humans can get pretty close. And for some fitted parts, they do need to be machined by hand to account for variances in density that would be cost prohibitive for a machine to account for at current technology levels; however, you will never get a human to produce as similar of an object in anywhere near the time span a robotic device can.

    Case in point: 3d printers.

    1. A computer/robot/mechanized device creates the same object the same way every time, minus entropy of the machine/die/etc.

      That’s assuming that whoever set up the robot-thingy knew how to control all the relevant processes, to get for example the right material properties out the other end. Process control is quite often the big wall that has to be gotten around. See for example fab process control problems with polymer matrix composites.

      Nonetheless I agree with your point.

      1. I read an obtuse book by Robert (Dick) Morley many years ago. Morley invented the Programmable Logic Controller, the PLC. You drive by dozens of them on your way to the market. A PLC is an embedded computer that runs traffic lights, electrical grids, and water pumps. PLCs are in every manufacturing operation worldwide. His theory is that it all comes down to a man, his plant, and a dog. The dog is required to bark at or distract the man when he gets an itch to fix his plant.

        1. And I assume the dog is driven by a PLC so it barks at just the right time?

          We don’t need no stinking people no more.

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