Even if Apple’s iPhone manufacturing came to America, the jobs wouldn’t

[sinkspur]

http://www.aei.org/publication/manufacturing-to-america-the-jobs-wouldnt/

Even if Apple’s iPhone manufacturing came to America, the jobs wouldn’t

James Pethokoukis
May 17, 2016


First, this headline in a Washington Post op-ed by Vivek Wadhwa: “Trump’s demand that Apple must make iPhones in the U.S. actually isn’t that crazy.”

Well, maybe not that crazy if you don’t care who might assemble those iPhones. Actually, not “who” but “what.” If POTUS Trump could somehow coerce Apple into moving manufacturing to the US, it might not be humans getting those jobs. Wadhwa:

When American companies moved manufacturing to China, it was all about cost. China’s wages were amongst the lowest in the world and its government provided subsidies and turned a blind eye to labor abuse and environmental destruction. Things have changed. China’s labor, real estate, and energy costs have increased to the point that they are comparable to some parts of the United States. Subsidies are harder to get and Chinese labor is not tolerating the abuse that it once did. China is now a more expensive place to manufacture than Indonesia, Thailand, Mexico, and India according to Boston Consulting Group. … Technology is, however, changing the labor-cost equation even more and China is becoming unpredictable because of its faltering economy. It may make sense for Apple to locate some of its manufacturing closer to other markets just to protect itself from this uncertainty. …

What is changing the labor situation is robotics. Robots can now do the same manufacturing jobs as humans — for a fraction of the cost. A new generation, from companies such as Rethink Robotics of Boston, ABB of Switzerland, and Universal Robots of Denmark, are dexterous enough to thread a needle and nimble enough to work beside humans. They can do repetitive and boring circuit board assembly and pack boxes. These robots cost less than $40,000 to purchase and as little as a dollar per hour to operate. And unlike human workers, they will work 24-hour shifts without complaining.

There you go. The era of cheap labor is over. As it is, Chinese manufacturing employment looks to have peaked more than a decade ago. Beijing realizes this and is making a big automation push. As I have written, “So when Trump says he wants to force Apple to make its products in America, what he’s really unintentionally saying is that he wants American robots to do the work of Chinese robots.”

I don’t think this is what some Trump supporters are counting on. As Wadhwa adds, Apple’s manufacturing partner Foxconn might built a $10 billion iPhone facility in India: “India does have a labor cost advantage over the U.S. but robots could eliminate this. Similar manufacturing facilities could be set up in the United States, product by product.”

Products manufactured by robots, that is. Not that zero human jobs wouldn’t be created in the process. But the story of manufacturing is one of greater productivity through automation. We are not returning to mass manufacturing employment. The 1960s ain’t coming back.

An illustrative chart (although one that overstates the decline on factory jobs) from my colleague Mark Perry:

[The Jackal]

Exactly. The era of employing human beings into mass manufacturing is over. That's why Trump's pledge to Make America Great Again is one of the most insidious lies of the century. And Trump supporters fell for it hook, line and sinker thinking they were in a Bruce Springsteen music video.

[kevindavis007]

Exactly. The era of employing human beings into mass manufacturing is over. That's why Trump's pledge to Make America Great Again is one of the most insidious lies of the century. And Trump supporters fell for it hook, line and sinker thinking they were in a Bruce Springsteen music video.

I agree.. Times are changing.. Those who think we can turn back the clock is living in a fantasy world.

[r9etb]

Exactly. The era of employing human beings into mass manufacturing is over.

Assuming that's true (and I think it probably is) - what sort of society/economy replaces the manufacturing-based model that started with the Industrial Revolution?

[kevindavis007]

Assuming that's true (and I think it probably is) - what sort of society/economy replaces the manufacturing-based model that started with the Industrial Revolution?

Who knows, but I think we are on a verge of something new.. 

[Weird Tolkienish Figure]

Assuming that's true (and I think it probably is) - what sort of society/economy replaces the manufacturing-based model that started with the Industrial Revolution?

I think it'll be what it is now, services.

[The Jackal]

Assuming that's true (and I think it probably is) - what sort of society/economy replaces the manufacturing-based model that started with the Industrial Revolution?

And that...is the $64,000 question. Two schools of thought on this. First, is the assumption that new economies will be created as they were in the past. That's a big assumption to make. Particularly when one considers that the technological innovations of the late 19th and early 20th centuries were technologies to increase productivity, not designed to wholly replace the human being as today's technology seems designed to do.

Unfortunately this scenario suffers from the law of diminishing returns. Going from old-world, hand-made craftsmanship to the assembly line and mass production allowed for a lateral shift in the workforce. But since today's technology is designed to eliminate the workforce there will be massive unemployment on a scale not seen. There's only so many, 'robot technician' jobs. And the skills necessary for such jobs are on an order of magnitude beyond the average intelligent human being. So there will be no second lateral shift. You don't make robotics technicians and AI scientists out of someone who works the assembly line at Ford. Of course there is the, "anybody can do anything if they set their mind to it," rugged individualism mindset. But that's not going to play out over an entire population. So those who advocate a second, knowledge-based economy are deluding themselves. Secretly they know (and are hoping) that natural selection deals with a problem they cannot solve.   

Second school of thought is actually akin to the original intent of Marx. That having been relieved of the burden of labor, and relieved of the traditional economics of supply and demand, the the cost of manufacturing and consuming resources becomes zero  so we will evolve to become a society of thinkers, poets and artists and trade goods and services if we want to.

[Mechanicos]

Assuming that's true (and I think it probably is) - what sort of society/economy replaces the manufacturing-based model that started with the Industrial Revolution?

I have been researching this issue for investment purposes for awhile.
Some initial assumptions:
Automation is  advancing very fast. Example. http://www.chonday.com/Videos/cojeyjapa2
Local energy generation is developing steady, Solar, etc.
Driver-less trucks and other operator less delivery systems are almost here
lazy populations congregate in cities
Cities will increasingly become adverse places to live.
3D printing. etc will make it easier to make buildings/goods

What I see happening is manufacturing will go from large central operations to diverse smaller widely distributed manufacturing operations all over the country. What needs to happen is deregulation and removal of protectionism laws for the Globalist big guys allowing smaller operations to develop and compete in a free market. Very likely guilds will then make a comeback as a way of regulating the various smaller manufacturing operations.

[Mechanicos]

And that...is the $64,000 question. Two schools of thought on this. First, is the assumption that new economies will be created as they were in the past. That's a big assumption to make. Particularly when one considers that the technological innovations of the late 19th and early 20th centuries were technologies to increase productivity, not designed to wholly replace the human being as today's technology seems designed to do.

Unfortunately this scenario suffers from the law of diminishing returns. Going from old-world, hand-made craftsmanship to the assembly line and mass production allowed for a lateral shift in the workforce. But since today's technology is designed to eliminate the workforce there will be massive unemployment on a scale not seen. There's only so many, 'robot technician' jobs. And the skills necessary for such jobs are on an order of magnitude beyond the average intelligent human being. So there will be no second lateral shift. You don't make robotics technicians and AI scientists out of someone who works the assembly line at Ford. Of course there is the, "anybody can do anything if they set their mind to it," rugged individualism mindset. But that's not going to play out over an entire population. So those who advocate a second, knowledge-based economy are deluding themselves. Secretly they know (and are hoping) that natural selection deals with a problem they cannot solve.   

Second school of thought is actually akin to the original intent of Marx. That having been relieved of the burden of labor, and relieved of the traditional economics of supply and demand, the the cost of manufacturing and consuming resources becomes zero  so we will evolve to become a society of thinkers, poets and artists and trade goods and services if we want to.

3rd school of thought: Space exploration/exploitation  will require lots of warm bodies...

[The Jackal]

3rd school of thought: Space exploration/exploitation  will require lots of warm bodies...

Very possible and I think that could work. We just need that to happen before societal degradation. "Musk Industries. Now serving The Belt. "

[r9etb]

What I see happening is manufacturing will go from large central operations to diverse smaller widely distributed manufacturing operations all over the country. What needs to happen is deregulation and removal of protectionism laws for the Globalist big guys allowing smaller operations to develop and compete in a free market. Very likely guilds will then make a comeback as a way of regulating the various smaller manufacturing operations.

That's a reasonable analysis, though I suspect that the companies that "make the things that make the things" will likely remain huge.  And certain industries (e.g., mining and metals, energy, rail, airliners, etc) seem better suited to larger than smaller companies, due to significant economies of scale.

That said, I really can see how a guild-based economy (or perhaps, more likely, a franchise-based economy) could very well take over a lot of what is currently done by the big guys. 

And with that might very well come a political revolution, as the relationship between behavior and consequences will be much closer than it is now.  Pressure for deregulation would come after the shift, not before.

[Mechanicos]

Very possible and I think that could work. We just need that to happen before societal degradation. "Musk Industries. Now serving The Belt. "

http://www.lockheedmartin.com/us/products/compact-fusion.html

[r9etb]

3rd school of thought: Space exploration/exploitation  will require lots of warm bodies...

Not until there is money to be made by sending people into space.  There's no serious market for manned spaceflight at present, and there is unlikely to be one for some time.

[Mechanicos]

Not until there is money to be made by sending people into space.  There's no serious market for manned spaceflight at present, and there is unlikely to be one for some time.

First Astronomer/Scientist detects gold in an asteroid its on...

[kevindavis007]

Not until there is money to be made by sending people into space.  There's no serious market for manned spaceflight at present, and there is unlikely to be one for some time.

Well if Musk keeps landing his boosters, the cost will be going down.

[Frank Cannon]

First Astronomer/Scientist detects gold in an asteroid its on...

Spot gold closed at about $1280 an ounce today. No one is wasting their time going to space for something that cheap especially that  when they bring the gold back and flood the market it will crush the price. No wonder you are a Trump supporter. You have a 3rd graders grasp of the world.

[r9etb]

First Astronomer/Scientist detects gold in an asteroid its on...

Nah.  It would cost at least 1000x more to send a person there instead of a robot; and even with robots the cost per ounce of space-mined gold would be vastly greater than that of Earth-mined gold.

The "humans in space" idea won't ever have a chance unless and until there's a significant infrastructure available to keep people alive, and building that won't generate any profit.

The sticking point in all of this is that it costs a LOT to reliably launch things into space, and it costs a LOT to make things that will work reliably in space for a long time.  If you could get the launch costs under $50-100/lb, then maybe you'd be getting somewhere.

[kevindavis007]

Nah.  It would cost at least 1000x more to send a person there instead of a robot; and even with robots the cost per ounce of space-mined gold would be vastly greater than that of Earth-mined gold.

The "humans in space" idea won't ever have a chance unless and until there's a significant infrastructure available to keep people alive, and building that won't generate any profit.

The sticking point in all of this is that it costs a LOT to reliably launch things into space, and it costs a LOT to make things that will work reliably in space for a long time.  If you could get the launch costs under $50-100/lb, then maybe you'd be getting somewhere.

I suggest you follow companies like SpaceX and Bigelow..

[r9etb]

Well if Musk keeps landing his boosters, the cost will be going down.

We'll see.  The problem is that those re-used engines need to be reliable for the next launch -- and making sure of that costs a lot of money (as they found out with the Shuttle engines).

And of course, SpaceX costs have actually been going up since they realized that, hey, people dislike their payloads getting blown up as SpaceX payloads have not infrequently done.  Reliability is expensive. 

[r9etb]

I suggest you follow companies like SpaceX and Bigelow..

Hah!  SpaceX relies on government money and their reliability is not too great -- their costs are going up as they put in more checks.

And call me when Bigelow actually launches something.....

[bilo]

I know manufacturing jobs are going to be impacted by robotics, but in the trades there is a huge shortage of people and robotics can't fill that role.

[Mechanicos]

Nah.  It would cost at least 1000x more to send a person there instead of a robot; and even with robots the cost per ounce of space-mined gold would be vastly greater than that of Earth-mined gold.

The "humans in space" idea won't ever have a chance unless and until there's a significant infrastructure available to keep people alive, and building that won't generate any profit.

The sticking point in all of this is that it costs a LOT to reliably launch things into space, and it costs a LOT to make things that will work reliably in space for a long time.  If you could get the launch costs under $50-100/lb, then maybe you'd be getting somewhere.

First ones will likely be man-less automated.

[Weird Tolkienish Figure]

Economics is about problem solving. When we run out of jobs we will have run out of problems to solve.

Curing diseases will be the last great job "creator" of the human race IMO.

I don't think humanity will ever run out of problems to solve, hence we will always have jobs available.

Getting into space is an interesting case. I wonder if you could cheaply turn electricity from the sun, into hydrogen gas through electrolysis, then build hydrogen powered ships (I know I know, Hindenburg) to escape Earth's gravity.

Interesting stuff.

[r9etb]

then build hydrogen powered ships (I know I know, Hindenburg) to escape Earth's gravity

Many rockets are hydrogen-powered already....

The problem isn't really lifting things off the ground; it's that you've got to speed them up to several thousand mph so that they can stay in orbit.

[kevindavis007]

Economics is about problem solving. When we run out of jobs we will have run out of problems to solve.

People will always find ways to build a better mousetrap..

Getting into space is an interesting case. I wonder if you could cheaply turn electricity from the sun, into hydrogen gas through electrolysis, then build hydrogen powered ships (I know I know, Hindenburg) to escape Earth's gravity.

Interesting stuff.

Also to getting some place fast (which people are still working on), has to be taken care of..