[HN Gopher] How much do you think it costs to make a pair of Nik...
___________________________________________________________________
How much do you think it costs to make a pair of Nike shoes in
Asia?
Author : taubek
Score : 363 points
Date : 2025-04-09 12:58 UTC (10 hours ago)
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| sharemywin wrote:
| bottom line there's very actual margin for the companies to play
| with on tariffs.
| SV_BubbleTime wrote:
| Best to avoid the tariffs then? Is there a reason that Nike can
| not make shoes in the US?
| goatlover wrote:
| They will be more expensive to make in the US and will likely
| sell less shoes as a result. This will be the case for most
| things that are cheaper to make overseas. Or with things that
| are difficult to grow here at scale.
| Clubber wrote:
| >The second thing we see is that Asian manufacturing in Asia
| produces US jobs. You go to Footlocker to buy a pair of $100
| shoes because you can afford them. This creates jobs for the
| Footlocker employees, Nike designers, marketing teams, and other
| US people throughout this chain.
|
| In all fairness, most of those jobs would still exist if
| manufacturing was brought onshore. The fact that they were
| manufactured in Asia makes no difference here, except for perhaps
| the longshoremen that was included in "other US people."
| ravelantunes wrote:
| The author's point is that the lower cost of goods coming from
| Asia results in increased demand, which then generates more
| jobs in the post-manufacturing part of the chain.
| xienze wrote:
| That completely discounts the strategic value of self-
| sufficiency. I mean, why not outsource ALL manufacturing and
| agriculture if someone else can do it cheaper? Surely that
| wouldn't come back to bite us, right?
| ElevenLathe wrote:
| Yes, the goal is for everyone to be doing the thing they
| can do most cheaply and then trading with everyone else.
| Karl Marx and Ludwig von Mises would agree on this point.
| The idea that the Westphalian state should get in the
| middle of this is the aberation. The only reason national
| security is a consideration is because of the nations. I
| don't care if my shoes are made in Asia, though I suspect
| they wouldn't be if we paid Asian shoemakers an honest,
| globally-clearing wage.
| basisword wrote:
| Self-sufficiency is irrelevant to the discussion above. If
| prices go up, Americans can buy less, and the number of
| non-manufacturing jobs at these companies will go down.
| coffeebeqn wrote:
| Are cheap sneakers a strategic asset now?
| wegfawefgawefg wrote:
| Learning piano makes me better at music. Learning the
| violin is then easier.
| xienze wrote:
| Are you intentionally being obtuse and thinking I was
| only talking about sneakers? Obviously I'm talking about
| trying to keep a wide range of vital goods manufactured
| within the US. Food, weapons, chip fabs, electrical
| components, pharmaceuticals, medical supplies, etc. are
| all things we should try to have robust domestic
| production of.
| myrmidon wrote:
| Self sufficiency is just not a credible argument here.
|
| This is about consumer footwear, not agriculture (nor all
| of manufacturing).
|
| The US (and most other nations that can afford to) is
| perfectly used to throwing ~$20 billion at the sector to
| keep local agriculture operational.
|
| We did not do this for literally every industry in the past
| because we had (and have) neither the idle workforce to do
| this, nor does the local population _want_ to do the work
| (even for slightly uncompetitive wages), nor do consumers
| want to pay for the difference.
|
| My personal prediction is that people _will_ realize this
| pretty soon with the consequences of the Trump tariffs
| manifesting and the whole thing will be rolled back and
| scaled down, with pretty much nothing to show for it.
| dboreham wrote:
| The shoes aren't even needed. Growing up in Scotland (not
| poor) in the 1970s I had one pair of shoes. When they
| wore out my mother would buy me a new pair. Today in the
| US I have so many pairs of shoes I don't really have
| space to store them and sometimes end up buying a new
| pair of shows I already own because I can't keep track of
| what's in the closet.
|
| Btw the one thing that will be left to show is a wider
| realization that it's a bad idea to elect a crazy person.
| giardini wrote:
| dborehamsays _" Btw the one thing that will be left to
| show is a wider realization that it's a bad idea to elect
| a crazy person."_
|
| Regret to inform that _all_ of them are crazy.
| krapp wrote:
| >Regret to inform that all of them are crazy.
|
| I'm sure it's comforting to assume that all politicians
| are equally corrupt and equally insane and so your vote
| doesn't actually matter one way or the other but Kamala
| Harris wouldn't be acting like this, nor would Biden.
| Hell, not even other Republicans.
| os2warpman wrote:
| Domestic production that is perceived to benefit national
| sovereignty is protected.
|
| See: farming, energy, and defense spending/subsidies.
|
| There is no point in history where any nation, anywhere,
| has needed to be self-sufficient in the production of Nike
| Air Maxes.
|
| That being said, my sneakers, New Balance 990v6s, were made
| in the US-- probably Maine. They're $200.
|
| The shoes I typically wear for work, Red Wing Iron Rangers
| or Work Chukkas, were made in the US-- probably Minnesota.
| They're $350 and $290 respectively.
|
| I don't know if increased volume will decrease the prices
| by much, they're only higher than premium imports by a
| little bit.
|
| There is domestic production already here.
| myrmidon wrote:
| > I don't know if increased volume will decrease the
| prices by much, they're only higher than premium imports
| by a little bit.
|
| I don't think its reasonable to expect lower prices for
| domestic production at all, because the demand for
| domestic products is only going up (from people that used
| to buy Vietnamese Nikes).
|
| Personally I think the whole tariff experiment is
| predictably going to fail, because "increased self
| sufficiency" does not buy you anything, and at some point
| people are just gonna push back politically if the cost
| increases get too bad.
| Clubber wrote:
| I've had it explained to me that now that manufacturers
| won't sell to China because of retaliatory tariffs,
| they're more product to sell domestically which would
| push down prices. Less demand due to tariffs from China =
| lower prices.
| myrmidon wrote:
| Maybe there are some products that this argument works
| for, but certainly not footwear I'm sure.
|
| The US exports ~1 billion worth of shoes per year, and
| imports ~25 billion (mainly from Vietnam and China),
| according to https://www.usitc.gov/research_and_analysis/
| tradeshifts/2023...
|
| I also think the argument is bad in general, because
| more/similar exports than imports would only really hold
| for the countries least affected by the new tariffs,
| anyway.
| p_j_w wrote:
| We don't have the labor pool for self-sufficiency unless we
| want to drastically scale back how we live.
| grayhatter wrote:
| Explain the strategic value like I'm 5? I see people
| reference this idea all the time, but I'm unconvinced it's
| actually valuable enough to be worth it given all the other
| downsides. I don't actually believe it's a positive value
| proposition.
|
| I see the argument for things of military significance. The
| common one is electronic components. But PCBs manufacturing
| is easy to spinup quickly. Which leave the critical
| components like IC where the ones we'd actually need are
| still exclusively overseas. The TSMC factory being built
| wont produce the newest generation chips.
|
| Same for agriculture, if we're totally self sufficient,
| what happens when a blight takes out a staple crop or two?
| You can't just spin up food production or global food trade
| the way you can with manufacturing.
|
| Meanwhile, having robust global trade is just a less lethal
| version of MAD, here being mutually assured economic
| destruction. It's much harder for other nations to turn on
| you when you both depend on each other for comfort,
| convience, or survival. Look at how the US is being seen by
| the international community. The reputation we had as a
| strong ally and worthwhile partner has been badly damaged.
| Why would other nations want to help us now? How are we
| stronger alone, instead of having their eager support?
|
| There are two people, one grows all his own food, and makes
| all of the tools he needs. He doesn't need anybody. The
| other works with his neighbors, they share food, he kinda
| knows how to sharpen an ax, but he uses the ones made by
| the guy down the street, who's basically a professional
| blacksmith, even though he introduces himself as a
| gardener.
|
| which one of those guys appears stronger? Who's more likely
| to survive something bad happening? who do you think is
| more likely to win in a fight? (yes their neighbors will
| come to help) which one would you rather be?
| Clubber wrote:
| Imagine if China decided to invade Taiwan like they've
| been threatening to do for a while. They would instantly
| cut off all exports to the US, because that's the smart
| thing to do. They would probably blockade Japan and other
| countries as well to keep them from exporting to the US,
| because that's the smart thing to do. Now since our
| supply chains were greatly disrupted (remember COVID?) we
| can only go to war with the equipment we have and will
| struggle to produce any more equipment in a short period
| of time. No more uniforms, no more tanks, no more drones,
| no more missiles, no more artillery shells, no more
| medicine, etc, because all the materials for those things
| are largely sourced from Asia, which would now under a
| blockade.
| dboreham wrote:
| Well needless to say all this has been realized about
| 2000 years ago and there are legions of smart people
| ensuring that it isn't a problem. Heck I used to ride the
| light rail in Sunnyvale past an old fab that had notices
| on the doors saying it was owned by the US Navy.
| absolutelastone wrote:
| I thought those smart people were the ones saying our
| military supply chain is dependent on China.
| tharmas wrote:
| I think the point being made is that under Trump's plan
| (repatriate production) China is MORE likely to invade
| Taiwan than before. Under the current situation China is
| LESS likely to invade Taiwan BECAUSE they rely on selling
| stuff to the USA. Once that reliance is gone, there are
| less negative consequences for China if they choose to
| invade Taiwan.
| Clubber wrote:
| >Under the current situation China is LESS likely to
| invade Taiwan BECAUSE they rely on selling stuff to the
| USA.
|
| I mean the took over Hong Kong already. I think that is
| wishful thinking.
| grayhatter wrote:
| Wasn't it that they installed sympathetic politicians,
| which then led to the UK willingly turning over control
| (despite the local protests). Calling that a takeover
| seems misleading to me.
|
| Ahh somewhat willingly, the lease to the land expired. So
| seemingly no choice was given.
| Clubber wrote:
| They broke the agreement for the handover by about 25
| years.
|
| https://en.wikipedia.org/wiki/One_country,_two_systems
| bitsage wrote:
| China could also use the US' dependence on it as leverage
| to discourage them from intervening in Taiwan. We just
| saw this play out with Russia's invasion of Ukraine. We
| routinely see Turkey threaten the EU with migrants over
| the bloc's reliance on Turkey. We also saw Azerbaijan
| make a move for Artsakh knowing the EU needed their gas
| following the invasion of Ukraine. I believe China would
| prefer being able to extort the US rather than face the
| possibility of fighting an unbowed US.
| teachrdan wrote:
| > Imagine if China decided to invade Taiwan like they've
| been threatening to do for a while. They would instantly
| cut off all exports to the US, because that's the smart
| thing to do.
|
| I think what you're getting at is that China would have
| more leverage over the US if they attacked (attempted to
| invade) Taiwan, which they could use to make it more
| difficult for the US to protect Taiwan.
|
| In that case they could do things like block some or all
| exports to the US until we, say, stopped escorting cargo
| ships in and out of Taiwan. But the notion they would
| "instantly cut off all exports to the US" is nonsense.
| There's no reason that's somehow a no-brainer post
| invasion.
| Clubber wrote:
| >In that case they could do things like block some or all
| exports to the US until we, say, stopped escorting cargo
| ships in and out of Taiwan. But the notion they would
| "instantly cut off all exports to the US" is nonsense.
| There's no reason that's somehow a no-brainer post
| invasion.
|
| You think they would supply their enemy? Biden said he
| would protect Taiwan pretty emphatically. I assume Trump
| would be advised of the same.
| grayhatter wrote:
| > we can only go to war with the equipment we have and
| will struggle to produce any more equipment in a short
| period of time. No more uniforms, no more tanks, no more
| drones, no more missiles, no more artillery shells, no
| more medicine, etc, because all the materials for those
| things are largely sourced from Asia, which would now
| under a blockade.
|
| So if instead all of these weren't sourced from
| exclusively Asia, and were sourced from many different
| countries, including domestically, there wouldn't be a
| problem?
|
| Also, is your assertion _really_ that US military would
| be at a near term disadvantage, if exports from Asia
| stopped? That 's a wild take.
|
| > They would probably blockade Japan and other countries
| as well to keep them from exporting to the US, because
| that's the smart thing to do
|
| You're the first person to try to convince me that it
| would be smart for China to start a world war with the US
| and it's allies over Taiwan.
|
| Needless to say, I disagree that it would be smart, I
| disagree that china would be willing and likely to do it,
| and disagree they could do it if they actually tried.
| alexb_ wrote:
| I know you're asking "why not outsource ALL manufacturing
| and agriculture if someone else can do it cheaper" in jest,
| or as a rhetorical device, but basically every single
| economist on earth will say "Yes, we should do that, that's
| a good thing"
| Clubber wrote:
| I see your point. I suppose a counterpoint is now shoes won't
| be so disposable and professions for cobblers and the like
| will be in higher demand.
| guhidalg wrote:
| Is that better? We need at least one cobbler sure, but if
| shoes are so scarce that we need to repair them like some
| communist country, are we better off?
| teachrdan wrote:
| > shoes won't be so disposable and professions for cobblers
| and the like will be in higher demand.
|
| It doesn't necessarily follow that more expensive shoes
| will be easier to repair. It's more likely that shoes will
| simultaneously become more expensive for the consumer AND
| lower quality and therefore even less amenable to repair.
| meepmorp wrote:
| Unless they dramatically change the design and
| manufacturing of those shoes, they won't be less disposable
| - just more expensive.
| airhangerf15 wrote:
| We buy and waste a lot of stuff. Fast fashion is pretty
| insane. Look in the closets of your friends who are
| constantly clothes shopping and it's a ton of shit that
| never gets worn and eventually "donated" (5% makes it to
| thrift store shelves, but most of it gets burned or sent to
| Africa .. and then burned).
|
| Reversing the transmission of western consumerism is not an
| easy change. Few people are willing to pay an extra $50 for
| a more durable good that lasts. Long term thinking isn't
| easy for most, and many can't even afford to think that
| way.
|
| But the tariffs are really a tax, a federal sales tax on
| the consumer. Biden tried to put in "unrealized gains tax"
| (which is really Federal property tax). So both presidents
| are trying to use executive power and double speak to get
| their people to support new taxes that are ultimately
| horrible for every American.
|
| Trump Derangement Syndrome runs both directions.
| 4ndrewl wrote:
| Incorrect. The price of manufacturing, because of the cost of
| living differences, would result in a far more expensive
| product.
|
| Free-trade brings into being products that previously would not
| have existed (Nike trainers for the masses).
| jasonlotito wrote:
| > In all fairness, most of those jobs would still exist if
| manufacturing was brought onshore.
|
| Yes, if you waved a magic wand.
|
| But considering bringing manufacturing onshore to replace Asian
| manufacturing will take at best years if not decades, no, those
| jobs will not still exist.
| doctorpangloss wrote:
| The reason you're buying Nike and not GLRMNTXH brand knockoffs
| manufactured in the same factory and half the cost is because
| of stuff the US employees are doing.
| arbitrary_name wrote:
| If those shoes cost $200 because of higher labor costs, then a
| lot less people are buying them. They will buy worse imports at
| $180. The consumer loses.
| onlyrealcuzzo wrote:
| The point is - there isn't a market for $400 crappy basketball
| shoes.
|
| There is a market for $120 ones...
| JSR_FDED wrote:
| It's like people excited about the new datacenter being built in
| their town, think of all the jobs that will bring they cry.
| Nobody realizes it takes 6 people to run a datacenter.
|
| Bringing "manufacturing back to the US" is a fool's errand. The
| future of manufacturing is automation, not jobs.
| netsharc wrote:
| I saw a video today on Instagram (from Tiktok), AI generated of
| course, where rows and rows of people sit at sewing machines
| sewing shirts, but instead of the typical Asians one commonly
| expects to see, they're all overweight American-looking
| people...
| tekla wrote:
| Apparently China propaganda making fun of the US.
| basisword wrote:
| I'd say this is more satire than propaganda.
| some_random wrote:
| Political satire usually is propaganda.
| hdjjhhvvhga wrote:
| Not always and I'm not sure if usually, but in this
| particular case it's both.
| keybored wrote:
| Yeah. And people need to stop thinking that things that
| they can label as funny or whatever else is not
| propaganda. Everything with an agenda is propaganda.
|
| "Wholesome Biden & Obama memes" are probably propaganda.
| And videos about "fat Americans" being marched into
| factories sounds like something the Chinese could make.
| yostrovs wrote:
| https://x.com/damengchen/status/1909288019750011006?t=kO7hvU.
| ..
| thrill wrote:
| Sometimes the darkest humor is the most accurate.
| xienze wrote:
| I think you're missing that the bigger value is having the
| manufacturing on your home soil instead of depending on being
| in the good graces of China.
| vidarh wrote:
| Forcing China to become more independent of exports to the US
| also means China will care less about being in the good
| graces of the US. It cuts both ways.
| xienze wrote:
| Except for the whole military superpower thing. The US is
| actually in a somewhat unique situation compared to other
| countries.
| hello_moto wrote:
| Unique for now. It's changing.
|
| The moment is threatened Canada , Denmark sovereignty and
| EU/NATO, countries are planning for life without US
| vidarh wrote:
| It's only in a somewhat unique situation if people the US
| is willing and able to stomach a large-scale war, and
| people believe that to be so, and that belief has also
| dropped dramatically.
| briankelly wrote:
| See the threads on the state of US shipbuilding.
| NoMoreNicksLeft wrote:
| One could easily have the impression that despite this,
| China has never really given a rat's ass about being in the
| good graces of the US, and that when they do relent it is
| often the case that they do not do so in good faith at all.
| If they comply with ethics and human rights, it's to the
| absolute minimum of that and in an underhanded way designed
| to undermine, but often not even that and they're just
| cheating and good at hiding it.
|
| In other words, not much would be lost except the devious
| lip service.
| absolutelastone wrote:
| This outcome is probably the end result for either
| scenario. The degree to which China is dependent on the US
| has been steadily decreasing. There's no law of nature that
| says the US will keep winning and have its advantages
| forever.
| hello_moto wrote:
| If US doesn't need X, X will try hard to avoid US (who's
| bullying everyone right now).
|
| Eventually US will be in isolation.
| lm28469 wrote:
| That goes against like 50 years of global trade policies but
| ok...
| itishappy wrote:
| Strategic shoe manufacturing?
| kjkjadksj wrote:
| You always depend on someones good graces. What difference
| does it make if they are an american you are dependent on or
| a chinese person? Still a human at the end of the day. Its
| the political leaders that want you to say that an apple and
| an apple are different species. It doesn't reflect the
| reality that we are all equivocal humans on earth. The sooner
| we get out of our nation state well of stability as a
| species, the sooner we advance technologically to the next
| level as a species.
| bitshiftfaced wrote:
| Isn't that an even more compelling reason to do it, since
| unemployment is already low? It means more vertical
| integration, more domestic investment and productive capital.
| wegfawefgawefg wrote:
| i think a lot of people are fixating on the market.
|
| I will share a metaphor you can spread.
|
| I run a mile every morning not because it is the most calorie
| efficient way to get around, nor because it is the most
| monetarily productive use of my time, but because it keeps my
| legs strong and me healthy.
| throw310822 wrote:
| It's a good metaphor, but I guess the idea here is that a
| middle-aged sedentary person has suddenly decided, for his
| own good, to only eat what he can catch and kill with his
| bare hands.
| vidarh wrote:
| Indeed, US manufacturing has a higher output now than before
| outsourcing took off. But it employs far fewer people per
| inflation adjusted dollar of output. Because the manufacturing
| that stayed was largely the manufacturing that was so cost-
| effective to automate that not even third world labor could
| compete.
| piva00 wrote:
| Just to add to your point: what stayed was either cost-
| effective to automate or had so much value added that the
| labour component is quite low (like jet engines).
| jacknews wrote:
| i don't understand the obsession with jobs anyway
|
| people don't want a job, they want money and purpose
|
| most jobs barely deliver either
| explodes wrote:
| Human society has been optimizing for the wrong thing since
| 20,000BC.
|
| To that end, the future I want doesn't focus so much on
| money, but on needs. Letting a market dictate "needs" is
| clearly not working for the betterment of humanity a whole.
| While it helps with progress, I believe there is an upper
| limit when human behavior is brought into the equation.
| jacknews wrote:
| exactly, the market doesn't deliver human flourishing
| snapcaster wrote:
| Compared to what?
| bpt3 wrote:
| Market economies have gotten us to the point where true
| needs are made available to all in the developed world.
|
| That's because money lets people efficiently deploy
| resources where they feel it is needed.
|
| What makes you say it's "clearly not working", other than
| comparing developed nations to a non-existent utopia?
| bpt3 wrote:
| Can you propose something better that provides money and
| purpose?
|
| Keep in mind that most people are unwilling and unable to
| sustainably maintain self-employment.
| kjkjadksj wrote:
| Something like a grant from the government to work on your
| project of interest with no expectation that it be
| commercially successful. You want to be an artist the
| government gives you a grant to support yourself while
| contributing to the cultural lexicon. Scarecity is
| manufactured today for profit and not real; nobody needs to
| work at a 7/11 but they are essentially trapped into those
| sorts of jobs because they are profitable for those
| business owners vs a good use of creativity or labor for
| our species.
|
| Now before you get all hung up how this isn't possible.
| There is precedent. The government would do just this
| during the great depression, sponsoring artists knowing it
| is more valuable to have artists in the population than to
| lose that talent pool and benefits to culture over cold
| cruel economics.
| bpt3 wrote:
| Why on Earth would taxpayers give their hard earned money
| to other people to work on their "projects of interest"?
|
| Scarcity is very real, I'm not sure why you would feel
| otherwise. Fortunately, we have largely eliminated
| scarcity of the necessities of life due to economic
| policies that are as far from your suggestions as
| possible, but that doesn't mean that they are produced at
| no cost or that scarcity in general does not exist.
|
| And you don't need to go back 100 years for precedent. We
| basically paid people to sit at home during covid, and I
| didn't see some sort of renaissance as a result. Why
| would this be any different?
| kjkjadksj wrote:
| Maybe it is more meaningful for people to be creative
| than it is to staff yet another sheetz on the side of the
| road because truckers tend to piss and need smokes at
| that intersection. But who knows maybe you are right and
| it is better we take on jobs at a local gas station if we
| have such a wonderful opportunity like that in front of
| us. So much innovation is produced as we know from people
| who have the opportunity to work 60 hour weeks on minimum
| wages between two jobs that won't schedule them full time
| and incur any potential added worker benefits from having
| a full time vs part time laborer. You are right.
| jacknews wrote:
| "self-employment" seems like a bit of a joke, like `self-
| flagellation
|
| money to survive, purpose to thrive
|
| you don't need a 'job', and particularly a 'job' who's only
| purpose is to make profit for someone else
|
| we really need to rethink society
| bpt3 wrote:
| You need money to buy food, shelter, etc. to survive.
|
| How do you get money when you are unable to do so without
| an entity (e.g. a company) providing direction and
| resources?
| palmotea wrote:
| > i don't understand the obsession with jobs anyway
|
| > people don't want a job, they want money and purpose
|
| And society will not give them any of that without a job.
|
| There, now you should understand "the obsession with jobs."
|
| > most jobs barely deliver either
|
| And no job delivers _even less_.
| weregiraffe wrote:
| >And society will not give them any of that without a job.
|
| Unless you are an aristocrat. Them your "job" was to fleece
| the peasants, and somehow "society" accepted this for
| thousands of years.
| jacknews wrote:
| then we should change society
|
| that is my point
| palmotea wrote:
| > then we should change society
|
| > that is my point
|
| You're letting the perfect be the enemy of the good.
| Realistically, you're not going to change society to give
| people "money and purpose" without a job. Fixating on an
| unrealistic goal takes focus away from more realistic
| ones.
|
| I mean, for a least a century people have been proposing
| using productivity improvements to increase leisure time
| and distribute goods more equally. And in that time work
| demands have _increased_ (e.g. going from one full-time
| worker in a typical household to two).
| int_19h wrote:
| Up until 1970s or so, productivity gains translated to
| increases in worker pay, so it certainly doesn't have to
| be like it is now.
| iteratethis wrote:
| Appreciate the fresh thinking.
|
| Until the 90s, that's the trajectory we were on. For life
| to constantly get better whilst human servitude is
| lessened over time.
|
| We should be getting ever shorter work weeks and earlier
| retirement ages. It's the entire point of technology.
| 999900000999 wrote:
| They'll start forcing us to make Nikes in prison.
|
| Even then the quality wouldn't be up to par. Since we've
| collectively agreed we don't need to have due process anymore,
| I guess I can look forward to making shoes will I'm being
| indefinitely detained.
| danaris wrote:
| But _even that_ is impossible in the near-to-medium term.
|
| The US just doesn't have the supply chain that China does.
| You need to be able to source the materials, and they have,
| effectively, _entire cities_ dedicated almost wholly to
| producing those "intermediate" raw materials--eg, things
| like the grommets for the shoelaces, the big sheets of faux
| leather that can be cut to the right size & shape to make the
| body, etc. They also have the industrial capacity to do the
| molding for the soles, and produce the laces, at scale.
|
| None of that exists here--in some cases not in the scale
| required, but in most cases not _at all_.
|
| With _across-the-board_ tariffs, the only way to fully avoid
| them is to start from the raw materials on up--mine and
| purify the minerals, raise the animals for their leather,
| pump and refine the oil for the plastics, harvest the trees
| for their rubber (are we still getting rubber that way...?).
| All here in the US.
|
| Some of those raw materials likely don't even _exist_ on our
| land in sufficient quantities to supply all our industrial
| needs, even setting aside how much time, money, and manpower
| it would take to set up the mines (and ranches, and oil
| fields, and rubber farms), the several stages of refining,
| and all the different ways the materials need to be shaped or
| alloyed or combined or extruded or or or...
|
| And where is the money to fund all that going to come from?
| _Clearly_ not the federal government (unless, I suppose, you
| posit that it 's one or more of Musk's companies doing all
| this--I suppose that _could_ be one of the aims here; just
| give Musk a monopoly over _literally everything_ we make...).
| Every domestic company is going to be cutting back six ways
| from Sunday, because _every_ product is going to cost
| massively more, so even the people still making as much money
| as they were last year are going to be buying less. And many
| people will be making less, either because of those same
| cutbacks (through layoff or hour /wage reduction), or because
| they were part of the federal agencies getting wantonly
| gutted for no good purpose, or among the companies that did
| business with them and now have lost a major customer.
|
| Bringing manufacturing onshore for any significant percentage
| of our consumer _or_ industrial goods is barely even a pipe
| dream. It 's pure cloud-cuckoo-land fantasy.
| 999900000999 wrote:
| >cloud-cuckoo-land
|
| Welcome, this is where we're going to be for foreseeable
| future. Prison made inferior Nikes will end up costing 500$
| a pair. Not that anyone is going to have money to buy them.
|
| As you mentioned we'd probably need to still source from
| other countries. The bigger issue here is the USD may lose
| its reserve currency status.
|
| The rest of the world might just trade in Euros and Yuan.
| Inflation will truly take off then.
| Lendal wrote:
| I think you underestimate them. They'll just buy shoes
| from another country, import them in secret, repackage
| them, and sell them as American made Nike. They could
| easily strong-arm Nike to make a deal to go along with
| this. They'll do a "tour" of the "factory" that makes
| nothing, and MAGA will eat it up. They'll show us
| doubters all how wrong we were to doubt the carnival-
| barking-clown savior of America. And then he'll get a
| third term out of it.
| danaris wrote:
| > They'll just buy shoes from another country, import
| them in secret, repackage them, and sell them as American
| made Nike.
|
| _Who_ will?
|
| The Trump administration? Why would they be selling
| counterfeit Nike shoes?
|
| Nike themselves? Why would they buy shoes from someone
| else? And if you mean they'd just keep manufacturing them
| elsewhere...they'd still have to pay the tariffs when
| they hit customs, so they'd still be $$$$. Unless you're
| proposing that Nike is going to start an industrial-scale
| smuggling operation...? Or that the Trump administration
| is going to provide some kind of sooper sekrit tariff
| waiver just for them, so they can pretend to be selling
| Made in the USA Nikes? And that's only talking about
| Nike. What about all the other manufacturers of consumer
| --and industrial--goods?
|
| None of that passes the smell test. Nike's not going to
| take a loss to pretend their foreign-manufactured shoes,
| which now cost _them_ much more, are actually being
| cheaply made in the USA just to prop up Trump. And Trump
| is, to all appearances, 100% all-in on these tariffs: he
| would rather have them and utterly wreck the US (and
| global) economy than have things cost the same because no
| one is _actually_ paying the tariffs just to "prove"
| that his bonkers excuse for an ideology actually works.
|
| No; if Trump gets a third term, it will be, purely and
| simply, because he has managed to utterly destroy the
| machinery of democracy so that a free and fair election
| in the US is a wistful memory.
| cyberax wrote:
| To add to your point, for tariffs to even work, they _have_
| to be permanent. There can't be any room for negotiation in
| them.
|
| If an investor wants to build a factory to produce shoes (a
| process that can take years), they need to be sure that the
| tariffs won't just go away next year.
|
| Trump's tariffs are anything but this.
| rayiner wrote:
| > Bringing "manufacturing back to the US" is a fool's errand.
| The future of manufacturing is automation, not jobs.
|
| That's probably correct. But the current trajectory means that
| China will have the robot-operated factories, not the US. What
| do you anticipate the US will do to obtain goods from those
| Chinese factories? Especially when AI stands poised to obsolete
| a lot of the white collar jobs where the US still retains a
| competitive edge?
|
| You can't treat the reserve dollar as something that will
| perpetually defy physics. The pound used to be the world's
| reserve currency not too long ago. There's no reason for the
| world to continue flocking to dollars when other economies
| surpass the US.
| _DeadFred_ wrote:
| 'The dollar might be weakened in the future so we must
| immediately blow it and our entire deeply thought out,
| researched, and supported policy since the 1940s up to now
| with no plan all based on a book the President read and hope
| things work out better than what might have happened sometime
| in the future (but that there were no signs was happening
| soon)'.
| ibeff wrote:
| > China will have the robot-operated factories, not the US.
| What do you anticipate the US will do to obtain goods from
| those Chinese factories?
|
| Why not let the market take care of it? It's cheaper to buy
| things from China then make them yourself. When that changes,
| production will naturally move to the next best place. I
| don't see the issue.
| chrisco255 wrote:
| Because China doesn't share the same goals, desires, or
| policies we do. They will have the power and cards to
| dictate world policy if you roll over and let them
| dominate. Realpolitik matters here. You either dominate the
| future (or at least stay competitive) or you become a
| vassal state.
| rayiner wrote:
| Because no economic theory proposes that the efficient
| outcome is one where the US retains its sovereignty and
| independence. Nations seek to create bubbles of local
| maximums, not in maximizing the economic efficiency of the
| world as a whole. A world where american kids have to learn
| chinese and fight to immigrate to China may well be an
| economically efficient outcome from the point of view of
| the markets. But American policy should fight very hard
| against that outcome.
| fach wrote:
| What's comical is the US commerce secretary literally says this
| out loud:
|
| https://www.youtube.com/watch?v=nsyyGHuPR88
| snarf21 wrote:
| I agree and if people want an example of this that isn't about
| a "what if ..." future, they need only look at Detroit. While
| we still manufacture cars in the US, the auto industry will
| continue to automate any jobs that they can.
| SV_BubbleTime wrote:
| Better than the three towns in my area that all gave away land,
| tax breaks, county paid power infrastructure to... coin miners.
|
| All three districts fell for "thousands of tech jobs"... turned
| out to be a couple dozen of people they brought in.
| kingraoul wrote:
| Still, the value chain is what drives innovation. We should
| cheer efforts to clothe and feed ourselves that don't rely on
| near slave labour sweatshops.
| chrisco255 wrote:
| Tesla's factories have a ton of automation, but the factory
| here in Austin employs 22K+ people. Automation will no doubt
| increase, but that just means the value humans provide is
| higher level and managing, maintaining, and redesigning the
| assembly lines as market demands and product categories shift.
| Datacenters are nothing like factories.
|
| Meanwhile, if it ever gets to the point that automation has
| truly replaced humans, why not have the machines here at home?
| There's no good argument against it and plenty of arguments for
| it.
| bluedino wrote:
| The real jobs are in building the datacenter and the people
| involved with the software that runs on the datacenters
| computers
| greatgib wrote:
| All around the "developed world", the
| shop/retailer/supermarket/distribution part of the price of a
| product is around 50%. Whatever the product or its price.
|
| I'm wondering if part of our issue with crazy inflated prices
| despite low margin for industry and manufacturing actors is not
| because of this abused margin for retailers. That have also a
| huge power as it is difficult to negotiate when you depend on
| your product to be buyable in the market.
|
| To me, that explain a big difference with asian world, where you
| notice, even for asian shops in western countries that prices are
| still quite cheap.
|
| Something parallel to that that I have noticed is that decades
| ago we were used to buy from small individual shops, but now a
| few retailers and chains have almost a monopoly on the market.
|
| I see the same pattern for movie theaters. They used to be
| independent mostly with affordable prices. Now 2 or 3 big chains
| bought them all, and it is very rare to still encounter
| independent movie theater. And once they got a good monopoly,
| ticket prices skyrocketed to insane levels.
| netsharc wrote:
| Isn't what you're describing the effect of hedge funds moving
| into everything in order to "maximize returns"?
| bryanlarsen wrote:
| > retailer part of the price of a product is around 50%
|
| Not according to the article. The retail price is $100 for a
| shoe they buy from the manufacturer for $50, but $24 of that
| $100 is "discounts". Therefore the average price sold at is
| $76, making the retail part of the price 1/3.
| potato3732842 wrote:
| While retail gross margins are not atypically on the order of
| 100% (less for more expensive goods, much more for cheaper
| ones) actual net margins are typically single digits. It costs
| money to retail goods.
| DoneWithAllThat wrote:
| You're essentially just claiming price gouging without saying
| as much because otherwise the economies of scale would not
| exist (which anyone with any knowledge of how the economy works
| knows does in fact exist). "Smaller number of larger players
| with greater buying leverage as well as lower marginal costs
| leads to higher prices for consumers" is just using a lot of
| words to say "evil corporations are price gouging", which is
| not true.
| vel0city wrote:
| > I see the same pattern for movie theaters. They used to be
| independent mostly with affordable prices.
|
| Movie theaters _used_ to be extremely integrated with the movie
| studios. You had to go to a Paramount movie theater to see a
| Paramount movie. Antitrust laws broke that up until just
| recently Sony bought Alamo Drafthouse.
|
| But that said, there's still a lot of different brands of movie
| theaters around me. On top of the normal Cinemark and AMC
| there's also Alamo Drafthouse, Studio Movie Grill, B&B,
| Angelika, and several other single-location theaters.
| toast0 wrote:
| If you look at the retailer margin on an individual product, it
| looks pretty big. But if you look at their overall financial
| report, their overall margins aren't anywhere close to that.
|
| There's a lot of cost to running a retailer. If it was so easy
| to avoid the costs and the margins, you'd see more brands going
| direct to consumer exclusively, but most brands do a little
| direct to consumer and most of their sales through retailers.
|
| Movie theater economics basically suck and have gotten worse
| over time. The projectors are very expensive, the pricing to
| show a film is bad, so ticket and consession prices go up and
| people stop showing up. Big chains have more negotiating power
| for film terms and equipment, which can help them survive.
| Sometimes the independents band together for group purchases,
| but I think that doesn't always happen.
| pjc50 wrote:
| A lot of that retailer margin goes into (a) wages, i.e. the
| jobs that everyone is supposedly trying to create, and (b)
| rent.
| Gothmog69 wrote:
| I think part of the bet of tariffs is that people will be
| less likely to go to physical stores moving forard anyways
| megaman821 wrote:
| For me this glosses over on why would see the same 100% markup on
| the customs duties as they rise. A 100% at a low tariff rate is
| just pricing in the increased paperwork and accounting, but at a
| super-high tarrif rate this become pretty unjustifiable. Why is
| not more likely customs becomes mostly a passthrough cost?
| Cerium wrote:
| It is a passthrough cost because of the business models. In
| this example the importer (Nike) is paying the cost, and then
| retailers are buying the product from them at a price that
| includes the tariff. The retailers don't care why the shoe is
| $75 or $50. A retailer is concerned that there are customers
| willing to pay a price which enables them to make a profit. For
| most retail businesses that price needs to be about 2x cost of
| goods.
|
| Until you get to extremely high-end goods this multiplier
| system works fairly well to accommodate the various costs the
| business has. It is an assumption that there are many business
| costs that scale linearly with sale price. In reality not all
| do, but there are many: insurance, return costs, loss, and
| customer service expectations all scale with dollar values.
|
| Edit: if we switched from an import tariff to a foreign goods
| sales tax we could avoid this particular problem.
| SoftTalker wrote:
| > if we switched from an import tariff to a foreign goods
| sales tax we could avoid this particular problem.
|
| How are these materially different in terms of what the end
| consumer pays?
| _diyar wrote:
| Because tariffs are calculated based on the value of the
| good at the time of import, while sales-taxes would be
| calculated at the end.
|
| The article explains the tariff scenario. In the tax
| scenario, Nike can operate like in the pre-tariff world,
| while the retailer would have to charge the tax.
| SoftTalker wrote:
| But the consumer is still the one who can either afford
| the shoe or not. He doesn't care who is collecting the
| tax or where in the pipeline it is assessed.
| _diyar wrote:
| When in the supply-chain you are creating the "taxation"
| matters to the final cost, assuming 1) the gross margins
| remain the same and 2) the costs scale linearly.
|
| Consider a fictional supply-chain with three players A,
| B, C. Assume that B and C have 50% gross margins.
|
| In a no-tax world, if A sells the product to B for 10$,
| then B to C for 20$, C will sell it retail for 40$.
| (A:10$ -> B:20$ -> C:40$)
|
| Now imagine a 100% tariff scenario for the transaction
| between A and B. Now, A sells the product to B for 20$
| (10$ + 100% tariff), then B to C for 40$, C will sell it
| retail for 80$. (A:20$ -> B:40$ -> C:80$). _This nets the
| government 10$_
|
| In a third scenario, imagine a world where this 10$ is
| not charged as a tariff but as a sales tax. A sells to B
| for 10$, B to C for 20$, and C to the customers at 50$
| (40$ + 10$ freedom tax).
|
| By changing where in the supply chain the tax is levied,
| we arrive at a lower retail price for the same tax
| income. This is a natural consequence of the above two
| assumptions, especially the idea that costs scale
| linearly. If maximum income from the taxation of imported
| goods is your goal, this is the way to go. Whether this
| would have the desired effect of discouraging imports is
| another matter.
| SoftTalker wrote:
| I think in your scenario that B and C would drop their
| margin percentage because the tax does not represent
| anything that will increase their costs in handling the
| product. E.g. B would sell to C for $30 and C would sell
| retail for $50, making the same profit in dollar terms.
| If they don't, a competitor will, because a consumer will
| prefer the $50 price to the $80 price.
| _diyar wrote:
| You're suggesting businesses B and C would just absorb
| the tariff cost by reducing their margin percentage to
| keep the same dollar profit. However, as Cerium noted
| earlier, many business costs do tend to scale with the
| price of goods, making this difficult without impacting
| profitability.
|
| For financial costs, higher inventory value due to
| tariffs increases the cost of capital (interest on
| loans/tied-up funds), insurance premiums, and potentially
| transaction fees.
|
| For operations costs (handling and labor), increases due
| to indirect effects: As the price of the average consumer
| basket increases due to tariffs, the average citizen
| either demands and receives higher wages or has to reduce
| spending; this means that the per-item variable cost of
| processing goes up, either because the wages of those
| employees increased (higher wages) or because the sales
| volume decreases (reduced spending).
|
| Of course this does not mean that every business will
| have exactly this outcome. And absolute size of these
| effects is also dependent on the actual demand
| elasticity.
| TheJoeMan wrote:
| I think the shoe graphic after the $75 cost is disingenuous to
| be still shown as $100 base instead of $150 base. This would
| show that this basic "100% markup" is just scalping. Expenses
| and overhead would not double so it's just more in the profit
| bucket.
| SoftTalker wrote:
| If your inventory now costs you $25 more per unit, your
| carrying costs are higher.
| rayiner wrote:
| Americans need to get over their view of "Asia" as being about
| making shoes. When I was working in engineering in the early
| aughts, we mocked the Chinese as being able only to copy American
| technology. Today, China is competitive with or ahead of America
| in key technology areas, including nuclear power, AI, EVs, and
| batteries.
|
| We need to anticipate a future where China is equal to America on
| a per capita basis, but four times bigger. Is that a world where
| "Designed by Apple in California, Made in China" still makes
| sense? What will be America's competitive edge in that scenario?
|
| What seems most likely to me in the future is that the US will
| find itself in the same position the UK is in now. Dominating
| finance and services won't mean anything when both the IP and the
| physical products are being produced somewhere else.
| bpt3 wrote:
| Their population is declining, and they are a long way away
| from parity with the west on a per-capita basis. I think China
| missed their opportunity.
|
| Also, the UK hasn't dominated finance for a century and has
| never been dominant in services, so it doesn't seem like an apt
| comparison.
| bryanlarsen wrote:
| > Their population is declining
|
| Not where it matters. China has a much larger under-employed
| population base than the US has. They still have a few
| hundred million peasant farmers whose children can and are
| getting educated and moving to the city. Their pool of labour
| is growing while the US's is stagnant.
|
| Not that it needs to grow -- over the last decade or so
| China's factory employment has been relatively constant while
| output has surged dramatically. Their factories are rapidly
| automating.
| giardini wrote:
| We don't need "peasant farmers" to educate, we need AIs to
| program!8-))
|
| The race between manual labor and machine labor is heating
| up anew. We don't yet have humanoid robots but they're on
| the design table, so it may be time to fasten your seat
| belt.
| themgt wrote:
| > We don't yet have humanoid robots but they're on the
| design table, so it may be time to fasten your seat belt.
|
| Right ... so about that, here's Morgan Stanley's report
| on humanoid robots from a couple months ago:
|
| _Investors will notice that 73% of the companies
| confirmed to be involved in humanoids and 77% of
| integrators are based out of Asia (56% /45% out of China,
| respectively). A common refrain we hear from investors is
| the lack of Western firms to add to their humanoid
| portfolio outside of TSLA and NVDA. In our view, this is
| important information in and of itself as it represents
| the reality of the current humanoid ecosystem which we
| expect may need to change materially over time (see the
| West's current experience with EVs which has significant
| supply chain overlap with humanoids). Our research
| suggests China continues to show the most impressive
| progress in humanoid robotics where startups are
| benefitting from established supply chains, local
| adoption opportunities, and strong degrees of national
| government support._
|
| https://advisor.morganstanley.com/john.howard/documents/f
| iel...
| thfuran wrote:
| Educating a few hundred million former peasant farmers is
| how you get things invented.
| numpad0 wrote:
| You might as well start from educating peasant farmers
| even at that.
| bpt3 wrote:
| The US labor pool is far from stagnant thanks to
| immigration, though Trump is trying to screw that up as
| well.
|
| And those children will be burdened with caring for their
| elderly parents, often alone, continuing to keep internal
| consumption low. They are automating and moving up the
| supply chain, but have a long, long way to go as a nation.
| ttoinou wrote:
| But look at per capita per purchasing power
| lotsofpulp wrote:
| Power of the purchasing power was a luxury of the US being
| the most desirable source of stability, creating a high
| demand for US securities and money. If trust in the US goes
| down, then so does purchasing power.
| slt2021 wrote:
| there will always be states-hostages to the US Navy and
| US Air Force that will be forced to purchase USD, for
| example Gulf States that basically pay ransom in term of
| keeping the petrodollar and investing in USD.
|
| The moment oil producing gulf states decide to stop
| buying USD bonds, they will receive "democracy".
|
| The whole intent to fight Iran is not only to protect
| Israel, but also to choke off China's major oil supplier.
| If Iran folds into US control, it will be easier to choke
| China in terms of energy supplies
| DrillShopper wrote:
| Per capita purchasing power will decrease rapidly in the US
| if USD stops being the world's preferred reserve currency.
|
| China's per capita purchasing power will increase rapidly
| if RMB becomes the world's preferred reserve currency.
|
| Trump seems to be doing everything to speed up the former
| and as a result is also speeding up the latter.
| vlovich123 wrote:
| > I think China missed their opportunity.
|
| I think so too prior to the Trump tarrifs. Now their
| influence abroad is picking up steam again, with former WW2
| enemies now becoming trade allies. I think this has
| reinvigorated their opportunity.
| bpt3 wrote:
| China hasn't changed, as their new "partners" will be
| reminded of soon enough.
|
| I suspect they will squander the opportunity the US
| unforced error has provided, but we'll see.
| vlovich123 wrote:
| The partners didn't want to establish strong trade ties
| because of national animus between their peoples stemming
| from WW2 and regional security concerns, not because
| China is an unreliable trading partner. From what I've
| read, China is actually a very reliable trading partner
| and generally asks a lot less of countries than the US
| does. Obviously that's how they attempt to gain influence
| and leverage in US spheres of influence longer term to
| make larger asks, but most politicians only think of
| short term consequences.
| int_19h wrote:
| And national animus can change significantly over time.
| Just look at where US and Vietnam are (or were, prior to
| tariffs).
| FuriouslyAdrift wrote:
| Lesson I learned doing business with PRC over the
| decades: if you're not family, then you are an enemy. If
| you're not Han, then you're not human...
| throwacct wrote:
| This 100x. This is the time to go all in and truly shake
| everything from the ground up. If the US moves at least 25%
| to the continent, it could solve lots of issues by developing
| manufacturing for critical products in-house and nearshoring
| the rest to LATAM, helping reduce illegal immigration
| considerably. Win-win for the whole continent.
| goatlover wrote:
| It will be more expensive for the consumer who will have
| been busy paying the tariff sales tax to get to that point.
| There's a reason businesses moved industry overseas.
| lossolo wrote:
| The first effects of their population decline will be felt
| around 2050 by UN estimations. What do you think they'll be
| doing for the next 30 years? Considering they already ship
| more robots than the rest of the world combined, I don't
| think that will be a huge problem.
| boelboel wrote:
| No their population decline is felt already, they don't
| have enough people to fill the factories right now and too
| many highly educated people. This is mostly about people in
| non stem related fields and non elite universities. If
| you're a young chinese with a so-so degree you're basically
| fucked. The UN estimations are fully off for all countries
| in the world (look at the actual fertility rates published
| by countries). If you look at UN you'll see like 1.7
| fertility rate for colombia, in reality it's 1.0. All
| countries are kinda demographically fucked, the US is the
| one that's doing the best. They have been forging their
| demographic numbers for years already as well. I'm not
| saying it looks rosy for the US but it's not great for
| china either unless you believe in some kinda rapid rise in
| robotisation in the next 10 years.
| Sonnigeszeug wrote:
| 'declining' on which level?
|
| China will surpass USA from a GDP Point of view in 2035.
|
| China surpassed Germany as industry machines export in 2018.
| ebruchez wrote:
| > China will surpass USA from a GDP Point of view in 2035.
|
| Don't be so sure, this has become much less clear. For
| example, in this article: "The Centre for Economics and
| Business Research, which in 2020 predicted that China would
| overtake the U.S. by 2028, revised the crossover point two
| years later, to 2036. This month, the British consultancy
| said it will not happen in the next 15 years."
|
| https://www.newsweek.com/2025/01/31/china-us-compete-
| biggest...
| thfuran wrote:
| That was before the US decided to shoot itself in the
| face with economic policy.
| ebruchez wrote:
| Yes, but this will likely hurt China as well. You can't
| assume only the US will be hurt by this.
| thfuran wrote:
| I don't. I'm saying all prior bets are off, though I do
| think US is going to be in the center of the nexus of
| pain, even if China is also hurt.
| edm0nd wrote:
| China routinely inflates and lies about their GDP
|
| https://bigdatachina.csis.org/measurement-muddle-chinas-
| gdp-...
| bpt3 wrote:
| Their population is declining in absolute terms.
|
| They have been projected to pass the USA in GDP for a long
| time now. We'll see if it happens. Their demographic trends
| are not favorable, but the US seems to be testing out how
| many self-sustained wounds its economy can survive.
| engineer_22 wrote:
| We can afford to be lazy, the chinese have their own
| problems.
|
| Word for that, hubris
| kolanos wrote:
| > Their population is declining, ...
|
| This can not be overstated. China is on the verge of the
| largest population collapse in human history.
|
| By 2080 China's population will drop by 600 million. If that
| trend continues, by 2150 China's population will drop to 280
| million.
|
| Other asian countries such as South Korea and Japan are on a
| similar trajectory.
| gowld wrote:
| Why would that trend continue for 100 years? No reason to
| believe that.
| stackedinserter wrote:
| Because women are obligated to work 40 hours every week
| just to stay afloat. Unless you find a way for young
| educated family to live a decent life on a single
| husband's income, the trend will continue.
| Ancalagon wrote:
| And that wont happen to the US?
| stackedinserter wrote:
| What is "that" that "won't happen"?
|
| US, Canada, Europe are demographically cooked too, but
| they (partially) solve this problem with immigration,
| that is not an option for China and the rest of Asia.
| tim333 wrote:
| The UK may not have dominated finance for a while but we had
| headlines like:
|
| "London Beats New York as the World's Leading Financial
| Center in the Latest Ranking"
|
| in 2015 before the glory that is Brexit.
|
| https://www.bloomberg.com/news/articles/2015-09-28/london-
| be...
| pjc50 wrote:
| > US will find itself in the same position the UK is in now
|
| The thing is .. there's a point here, but it's not at all tied
| in with physical products. People are obsessed with one side of
| the ledger while refusing to see the other. Most of the stuff
| the UK is struggling with (transport, healthcare, energy) are
| "state capacity" issues. Things where the state is unavoidably
| involved and having better, more decisive leadership and not
| getting bogged down in consultations, would make a big
| difference.
|
| The UK stepped on its own rake because it was obsessed with
| tiny, already vanished industries like fishing. Fishing is less
| profitable for the whole UK than Warhammer. It's not actually
| where we want to be. While real UK manufacture successes (cars,
| aircraft, satellites, generators, all sorts of high-tech stuff)
| get completely ignored. Or bogged down in extra export red tape
| thanks to Brexit.
|
| To improve reality, we have to start from reality, not whatever
| vision of the past propaganda "news" channels are blathering
| about.
| sitkack wrote:
| > we have to start from reality, not whatever vision of the
| past propaganda "news" channels are blathering about
|
| Ha ha ha. I was this naive once. This just isn't our reality.
| You would have to have a functioning education system AND a
| population with adequate emotional regulation. Do we even
| have the pieces anymore?
| myrmidon wrote:
| > Fishing is less profitable for the whole UK than Warhammer.
|
| This sounded completely insane to me. I tried to look up
| numbers and found that Games Workshop brings in > 0.5 billion
| in revenue (!!), compared to all of UKs fisheries at 1
| billion-ish (profit margins are, as you'd expect, pretty
| favorable for the plastic figurines that they don' even paint
| for you).
|
| Thanks for this interesting fact.
| bombcar wrote:
| There's a problem with just directly comparing them -
| because JKR probably brings in more revenue to the UK than
| fishing, with Potter copyrights.
|
| But most of that revenue goes to JKR, whereas most of the
| fishing revenue may end up in "working class" people's
| pockets.
| 3abiton wrote:
| > But most of that revenue goes to JKR, whereas most of
| the fishing revenue may end up in "working class"
| people's pockets.
|
| I am sure JKR has to pay taxes still, which goes back to
| the government.
| throw0101c wrote:
| > _I am sure JKR has to pay taxes still, which goes back
| to the government._
|
| Does JKR personally own the copyrights, or have they been
| sub-licensed to a corporation in (e.g.) Ireland?
| edm0nd wrote:
| With the levels of money involved, highly likely its all
| wrapped in legal fuckery.
| bunderbunder wrote:
| But still, the money that's going straight into working
| class people's pockets is probably better for the UK in
| the long run. Don't worry, it will get taxed over and
| over and over and over again as they pay each other for
| things.
|
| Velocity is one of those critically important concepts
| that often gets left out of these discussions because
| it's hard to understand if you haven't formally studied
| economics because it's all about second order effects.
| But it's a big part of understanding why, historically
| speaking, maximizing corporate profits doesn't seem to
| correlate all that well with overall prosperity trends.
| tim333 wrote:
| There are quite a lot of people who make money from Harry
| Potter apart from JKR. People running cinemas, bookshops,
| making the movies, running the studio tour and so on.
| bunderbunder wrote:
| Right.
|
| And the more of that that happens, the better for the
| economy overall. The less of that that happens - implying
| more of it ends up in JKR's proverbial dragon hoard, not
| doing much good beyond being an impressive pile of wealth
| for the dragon to sleep on top of - the less good for the
| economy overall.
| ViktorRay wrote:
| I don't think your comment is accurate.
|
| When rich people get large amounts of money they don't
| hoard it like they did in Roman times.
|
| That money either goes into the stock market or to a
| bank. If it's in the stock market that money is being
| used in investments that further economic growth. The
| portion of the leftover money that's in the bank is then
| lent out by the bank to others in the forms of loans and
| so on for purchasing houses, starting business and so on.
|
| The idea that the pile of wealth is simply hoarded to be
| slept on is out of date and not representative of modern
| economics.
|
| Also, as for JK Rowling specifically, she had donated a
| significant amount of her wealth to charity.
| fwip wrote:
| JKR's net worth is less than a billion, which means she's
| probably not raking in over a billion annually.
| dubiousdabbler wrote:
| Isn't this because she gives so much to charity?
| tweetle_beetle wrote:
| Quoting Wikipedia's source, Forbes estimated her
| donations were $120 million to date in 2012. However, she
| co-founded her own charity in 2005, of which she is the
| president, and I suspect most of it has been donated in
| that direction.
|
| Personally, I'm always dubious of the rich and famous
| genuinely finding unmet cases for charitable
| organisations. Especially when they've made a fortune
| outsourcing being morally dubious to others - she can
| save children because others are paying her to be allowed
| to sell low quality merchandise almost certainly made in
| exploitative conditions.
|
| She's not alone, there's many more e.g. Messi donating
| lots to children's cause through his own charitable
| organisation after gladly being a global ambassador for
| unhealthy snacks targeted at children.
| throwaway48476 wrote:
| During feudalism the rich donated a far larger percent of
| their assets. The trend has been that the rich donate a
| smaller percent since then
| Symbiote wrote:
| Rowling made a lot of her money from books, which would
| mostly be printed by adults in the country they are
| published in. Also films, filmed in the UK.
|
| That's a long way from advertising unhealthy snacks.
|
| Lego isn't made in dubious conditions, so for toys she's
| already above average.
| Symbiote wrote:
| The comparison was with Warhammer, not Rowling.
|
| Warhammer requires designers, moulding experts, warehouse
| staff and so on.
|
| Games Workshop is a public company, in case you want to
| look up their accounts for the comparison.
| bojan wrote:
| I do wonder how much of fishery money ends up in the
| working class pockets. I assume the surviving companies
| survived because they have economy of scale, meaning most
| of the profits goes to corporate. If somebody has the
| numbers, I'd like to know.
| pavlov wrote:
| There are lots of JKR-adjacent industries that employ
| working class people.
|
| The Harry Potter World theme park in London has over two
| million visitors annually. That tourism must be more
| economically significant than fishing for cod.
| ModernMech wrote:
| > But most of that revenue goes to JKR, whereas most of
| the fishing revenue may end up in "working class"
| people's pockets.
|
| What an _amazing_ argument to tax the rich!
| chgs wrote:
| "Working class" fishermen sold their rights years ago.
| same as "working class" farmers who sell a field for a
| couple of million quid
| eyko wrote:
| It's also worth considering that certain industries
| (fisheries and agriculture for instance) are subsidised.
| It's in our national interest to maintain production
| capacity, so profits are the least of our concerns. Both
| the UK and the EU's agricultural sectors are heavily
| subsidised mainly for this reason. It's cheaper to import
| than to produce locally, especially with our environmental
| standards and targets, but we need to keep producing. More
| so in the current geopolitical climate.
|
| And whilst nobody wants to risk being starved to
| submission, it's also equally important to promote more
| profitable sectors, and tax accordingly, so that we can
| support our more strategic sectors. I wouldn't say we're
| doing a good job at that for what its worth.
| flir wrote:
| While not disagreeing with you, I don't think we've done
| a great job of maintaining fisheries.
| wongarsu wrote:
| Also, continuing overfishing is a terrible long-term
| strategy. Sure, we will have the boats, fishermen and
| infrastructure around fishing, but that's of no help if
| the fish are gone.
| immibis wrote:
| Politics isn't about good long-term planning - it's about
| accountability sinks.
|
| This decade: "We're not the ones trying to steal your
| fishing jobs!"
|
| Next decade: "It's not our fault there aren't fish!"
| AndrewStephens wrote:
| > Games Workshop brings in > 0.5 billion in revenue (!!)
|
| I had no idea that Warhammer was such a huge industry -
| they must sell almost 600 sets a quarter.
| gmueckl wrote:
| This is either a joke that flies over my head or there
| are a few zeroes missing. Which is it?
| miningape wrote:
| Look up the price of a single small unpainted figure.
| You'll be shocked.
| smadge wrote:
| The joke is that Warhammer sets are expensive.
| xmprt wrote:
| Warhammer is expensive
| Symbiote wrote:
| It's priced in a similar way to Lego.
| stevage wrote:
| I don't find Lego especially expensive. And Lego is way
| more difficult to manufacture, has very exacting
| functional requirements and extremely good QA.
| iamacyborg wrote:
| I don't know a great deal about injection moulding but
| I'd assume GW kits are more detailed than lego, having
| seen some sprues.
|
| The stuff they're putting out these days is really quite
| good.
| Symbiote wrote:
| I bought a Warhammer set during Covid and was amazed at
| the detail, compared to the 1990s stuff I had as a kid.
|
| I can't say what's more difficult to manufacture -
| millions of identical bricks that snap together, or a
| huge range of different, detailed designs which fit
| snugly together but don't lock.
|
| Just the first thing on the home page:
| https://www.warhammer.com/en-GB/shop/Deathlords-
| Mortarchs-Ma...
| stevage wrote:
| > millions of identical bricks
|
| Clearly you are not aware of the extraordinary range of
| Lego pieces.
| Symbiote wrote:
| Proportionate to the size of each company and the amount
| of toys they produce, I'll bet there's significantly more
| variety in Warhammer.
|
| Just from a quick search, within a year Games Workshop
| offer about 3000 different model kits, each of which will
| contain ~1-4 unique moulded sprues. There seem to be at
| least 50 new kits each year, possibly 100, otherwise
| what's available rotates around the older kits.
|
| Lego have produced about 15,000 different sets since
| 1950, and a huge number of the parts are shared between
| sets. (That's the whole point of the toy, no?)
| stevage wrote:
| Yeah I tried to look up the number of different Lego
| partszbut it gets hard to define what a Lego part is. And
| are we counting different colours, different designs
| printed on them, etc. Somewhere between 5k and 60k.
| jay_kyburz wrote:
| It's a very expensive hobby. My kids are not allowed to
| look at the models in the window in case they get any
| ideas.
| blacklion wrote:
| I've read, that now GW have more than 50% of revenue from
| licensing IP, not selling books & plastic.
| iamacyborg wrote:
| What's even more astounding is that most of Games
| Workshop's manufacturing remains in the UK.
| wahern wrote:
| > Fishing is less profitable for the whole UK than Warhammer.
|
| There are 3x as many fishermen in the UK than employees of
| Games Workshop, and much more again if you count the number
| of related fishery jobs.
|
| At the end of the day, politicians and voters alike respond
| more to employment than nominal monetary figures. A broader
| employment base is generally better for social and political
| stability than explicit wealth redistribution (e.g. tax +
| entitlements). The latter is what economic theory tends to
| emphasize--i.e. equivocate incomes based on state wealth
| redistribution schemes--but such economic theory is how we
| got Trump, Brexit, and a host of other ills. Economics hasn't
| figured out, yet, how to _price_ the constituent inputs that
| produce political and economic stability. GDP, Gini, per
| capita income, employment rate, etc metrics are gross
| approximations that work well until they don 't (though
| they're still better than rhetoric and handwaving). But to be
| fair, social and political theorists haven't solved that
| problem, either; at least, not with a rigorous quantification
| model.
| matt-p wrote:
| Sorry, but I don't think this is the reason. There were
| vastly more people in financial services calling for us
| _NOT_ to have brexit than fishermen asking for it, even in
| number of people. I honestly don 't think this was a
| numbers of people affected vs "% of GDP" affected issue.
| Not at all.
|
| What good did it do for us? At the time everyone was
| running around rubbishing and laughing at the "outrageous"
| claims of 10% GDP loss, and where are we now?
| ben_w wrote:
| > What good did it do for us? At the time everyone was
| running around rubbishing and laughing at the
| "outrageous" claims of 10% GDP loss, and where are we
| now?
|
| Impossible to say, as it was swamped by the pandemic. My
| guess as to the fatalities due to Brexit is also
| untestable as a result.
| matt-p wrote:
| true, impossible to come up with a scientific answer, but
| you could compare with european countries who also went
| through a similar covid response and start to see a bit
| of a trend leap out.
|
| For what it's worth I'm not sure if the number is
| actually 10%, but I'd hazard that it's more than 5/6.
| throwaway7783 wrote:
| "A broader employment base is generally better for social
| and political stability than explicit wealth
| redistribution"
|
| . This is what stops revolutions and civil wars.
| throw0101c wrote:
| > [...] _are "state capacity" issues. Things where the state
| is unavoidably involved and having better, more decisive
| leadership and not getting bogged down in consultations,
| would make a big difference._
|
| See "America needs a bigger, better bureaucracy":
|
| > _I believe that the U.S. suffers from a distinct lack of
| state capacity. We've outsourced many of our core government
| functions to nonprofits and consultants, resulting in cost
| bloat and the waste of taxpayer money. We've farmed out
| environmental regulation to the courts and to private
| citizens, resulting in paralysis for industry and
| infrastructure alike. And we've left ourselves critically
| vulnerable to threats like pandemics and -- most importantly
| -- war._
|
| [...]
|
| > _If government spending isn't going to pay government
| workers, it must be going to pay people who work in the
| private sector -- nonprofits, for-profit contractors,
| consultants, and so on. In other words,_ state capacity is
| being outsourced. _But this graph doesn't actually capture
| the full scope of the decline, because it doesn't include
| outsourcing via_ unfunded mandates -- _things that the
| government could do, but instead simply orders the private
| sector to do, without providing the funding._
|
| * https://www.noahpinion.blog/p/america-needs-a-bigger-
| better-...
|
| Mentions the paper "State Capacity: What Is It, How We Lost
| It, And How to Get It Back" (22pp, so short):
|
| * https://www.niskanencenter.org/wp-
| content/uploads/2021/11/br...
|
| And the book _Bring Back the Bureaucrats: Why More Federal
| Workers Will Lead to Better (and Smaller!) Government_ :
|
| * https://www.rutgersuniversitypress.org/templeton-
| press/bring...
| AnthonyMouse wrote:
| That article seems confused, e.g.:
|
| > If government spending isn't going to pay government
| workers, it must be going to pay people who work in the
| private sector -- nonprofits, for-profit contractors,
| consultants, and so on. In other words, state capacity is
| being outsourced.
|
| The money is going to _social security payments_. Social
| security went from <1% of federal spending at its outset
| to more than 20% of federal spending today. Medicare and
| other assistance programs are a similar story. Most of the
| money from these programs goes to paying benefits rather
| than administrative costs, which is generally regarded as a
| good thing. But they're also what together now constitute
| the majority of federal spending.
|
| Meanwhile there is another reason why the number of
| government workers has gone down: Computers were invented.
| Things that used to be done by hand are now done by
| machine, and then you don't need as many clerks and
| bookkeepers to manually process paper records. This is also
| generally regarded as a good thing.
|
| The points it makes about unfunded mandates and NIMBYs
| holding everything up with meritless lawsuits are valid,
| but the "ministerial review" it proposes is the existing
| permitting process. The problem is we have unfunded
| mandates and NIMBY lawsuits _on top of that_ , which could
| simply be deleted and replaced with nothing.
|
| This really seems like the fundamental misunderstanding:
|
| > And guess who's responsible for monitoring Medicare
| spending? Bureaucrats. So that's at least a 2300% return on
| investment in bureaucracy!
|
| If you only look at the most efficient thing a bureaucrat
| could be doing, look how efficient bureaucrats are!
|
| Meanwhile the government is still paying thousands of
| people to process paper records because although computers
| were invented many decades ago, only parts of the
| government have discovered them and there are still many
| things you have to do by bringing physical documents to
| government offices to be processed in person even when
| those things have no legitimate reason not to be a
| government website.
|
| What we need is not to have _more_ bureaucrats, but rather
| to finish computerizing the things that have no reason not
| to be so the _existing_ government employees can do the
| high value stuff instead of wasting time shuffling paper
| that should have been bits.
| hermitdev wrote:
| > Meanwhile there is another reason why the number of
| government workers has gone down:
|
| Uh...excluding the very recent cuts this year under
| Trump; the number of civilians in the US Federal work
| force has gone up fairly steadily. [0]
|
| We had 23.592 million civilian employees in Jan 2025.
| 21.779M in Jan 2021, after being largely stagnant overall
| the previous 10 years. That's a net change in excess of
| 1.8M employees under Biden.
|
| I do find it interesting that it appears that employee
| count was flat, or even down under Obama, but until
| COVID, there was a steady increase under Trump v1.
|
| [0] https://fred.stlouisfed.org/series/USGOVT
| vkou wrote:
| > Most of the stuff the UK is struggling with (transport,
| healthcare, energy) are "state capacity" issues.
|
| Oh, boy, let me tell you, the 'State capacity' of the United
| States, when it comes to doing things that _aren 't_ making
| war on its own, or other people, was both rotten to begin
| with, and won't survive another four years of this regime.
|
| Dysfunctional as the UK is, it's government is not stuck at a
| triple point of learned helpelessness, intentional sabotage
| and paralysis (the US is currently, among other things, doing
| its best to bring cured diseases back), and a deeply
| negative-sum culture.
|
| I've heard that the United States was a magical land of milk
| and honey in this respect, back when 'competent bureaucracy'
| wasn't a swear word in it, but I understand that ended ~45
| years ago. (With a few surviving holdouts, like the Fed)
| FredPret wrote:
| All this talk of state capacity and global trade puts me in
| mind of Europa Universalis
| callamdelaney wrote:
| Eh, brexit means we've halved our US tarrif rate and have the
| ability to negotiate independently. Perhaps if 2 Tier Keir
| will enshrine freedom of speech in law, we'll be able to
| negotiate it towards zero.
| lostlogin wrote:
| Do you think Brexit has helped the UK?
| callamdelaney wrote:
| I think it could have been a great help to the UK.
| lostlogin wrote:
| Yes, a small majority agreed.
|
| But that isn't what I asked.
| philjohn wrote:
| This is the problem - brexit meant something different to
| everyone who voted for it ... and the reality was never
| going to match up because we have binding agreements like
| the GFA which meant Northern Ireland was always going to
| have to be treated differently than mainland UK.
| matt-p wrote:
| If we'd of done what, out of interest?
|
| Personally I don't 'agree' with brexit, but it's the
| reality that we're in. In typical british fashion we're
| trying to stay friends with the EU, even though they
| basically hate us, while also trying to do trade with the
| rest of the world. Predictably we can't really do much of
| 2 without 1 becoming a problem (and vice versa). However
| 1 is currently our biggest trading partner (as a bloc, US
| as a country) so what have we done? Sat in the middle not
| doing anything radical hoping we can be best friends with
| everyone.
| peterfirefly wrote:
| We don't hate the UK. We are just waiting (impatiently)
| for you to come to your senses.
| matt-p wrote:
| So would we be able to get the exact same deal we had? We
| are under the impression the answer is no, as whenever we
| try and negotiate away stuff that's in neither of our
| interests it gets rejected.
|
| Take this Eitas Visa for example, this is literally just
| sowing resentment towards the EU in the UK. It benefits
| nobody and is totally insane, it's just making people
| hate the EU. Same with not being able to use the digital
| passport machines at airports.. why?? We're a pretty
| secure country, we have digital passports. Brexit happens
| and now every time I go to Europe, which is _a lot_ I 've
| got a 50/50 chance of waiting 3 hours at the border for
| someone to stamp my passport while the digital gates have
| no queue. That means I now have to arrive 3 hours early
| every time just in case. If I bring a tool for work I
| need to spend weeks of paperwork on something called a
| carnet so I end up buying there and throwing out.
|
| At the moment we're trying to give security backing for
| Ukraine and you're asking us to give up our fishing
| rights for the honour of helping secure Europe.
|
| I get it, actions have consequences, but the thing is
| that only a minority voted for Brexit, most of us didn't.
| Each year you're disenfranchising a new generation of
| would be Europeans with this path. To me it's all
| dreadfully regrettable, the whole things a mess.
|
| It's impossible for us to 'come to our senses' while we
| get treated like this in my view.
| rassimmoc wrote:
| >At the moment we're trying to give security backing for
| Ukraine and you're asking us to give up our fishing
| rights for the honour of helping secure Europe.
|
| You are not trying to secure Europe, you are trying to
| sell something to Europe. We would rather build capacity
| to make whatever you want to sell us ourselfs.
|
| I agree we should work closely together, more so after US
| started dancing naked around burning brides. But everyone
| is looking into how to secure themselfs, without
| depending on 3rd party, and from EU's perspective UK is
| on the outside (even if not as crazy as US has become).
| matt-p wrote:
| You'd rather build capacity because you think you're
| likely to be at war with us one day or we'd stop
| defending Europe? That would be the only reason to say
| that surely? If so I simply don't know what to say to
| that.
|
| So then you won't be wanting our troops there for peace-
| keeping, something only ourselves and France have even
| offered. Nor any of our finance, we can stop giving
| billions a year to Ukraine as the EU want to take over?
|
| Seriously it's ridiculously isolationist to be thinking
| like this. Not working with us just because we left your
| club is beyond mad.
| Symbiote wrote:
| You are perhaps unaware that since last week, Britain has
| required EU citizens to go through an e-visa process.
|
| The offer from the EU for a youth exchange program was
| rejected by the UK.
|
| The fish thing looks like anti-EU nonsense. The anonymous
| source "hinted", whereas the people speaking on the
| record denied it.
|
| Starmer ruled out joining the customs union, so blame him
| for the tool import paperwork.
|
| > but the thing is that only a minority voted for Brexit,
|
| So with such a failure of democracy, it's no wonder that
| the EU would require changes to the voting system (for
| example) before Britain can rejoin.
|
| The EU doesn't want a half-in half-out Britain. It had
| that for decades.
| matt-p wrote:
| I am aware. Of course, if you require a visa from us then
| it becomes politically impossible NOT to require a visa
| from you in return. We were very clear that we didn't
| want it at all.
|
| Re the fish;
|
| >But in an interview with POLITICO, the minister said EU
| member governments were unlikely to sign off on a
| security deal with the U.K. unless negotiations are also
| resolved on other "sensitive" issues, including access to
| British waters for European fishing fleets. A deal on
| fish would also help in "building trust" between London
| and Brussels, she added.(1)
|
| It's just a combination of low turn out and a 52/48
| marginal split, it does not mean we have a failure of
| democracy, that's a bit of a stretch.
|
| (1) https://www.politico.eu/article/uk-eu-defense-pact-
| really-do...
| notatoad wrote:
| this is not a hypothetical, brexit happened...
| Symbiote wrote:
| Freedom of Expression is part of the Human Rights Act 1998.
|
| It's not the Labour party that's campaigning to repeal this
| act.
| callamdelaney wrote:
| Yes and replace it with one that's fit for purpose and
| actually protects freedom of speech.
|
| You are being facetious. Repealing the current act does
| not mean that there would be no human rights or statute
| protecting them. Nobody is arguing for that.
| philjohn wrote:
| Except since no parliament can bind a future parliament
| it won't be worth the paper it's written on.
|
| The loudest voices calling for a scrap are exactly the
| people you DON'T want deciding what human rights you'll
| be "allowed".
|
| And incitement to violence is, and always should be,
| unprotected speech - your silly "two tier kier" is
| informing me greatly that you're on the "they locked them
| up for hurty words!" bandwagon.
| callamdelaney wrote:
| Weird, the bill of rights act of 1689 is still in force.
|
| It's literally the policy of this country to sentence
| white men to harsher custodial sentences with more chance
| of a custodial sentence than any other group, simply for
| the crime of being a white man. Are these the sorts of
| people you think should decide our rights?
|
| If the government would do what people have been voting
| for for decades and end mass immigration and take real
| action on this ridiculous and purposeful misuse of the
| human rights act, then nobody would want to redact it.
|
| But they won't.
| immibis wrote:
| > [things identical to what neonazis say]
|
| Please provide some evidence that you aren't coming from
| the same place as the neonazis, lest you be viewed as
| one.
| logifail wrote:
| > The UK stepped on its own rake because it was obsessed with
| tiny, already vanished industries like fishing
|
| This isn't just a UK issue:
|
| "Fishing is a relatively minor economic activity within the
| EU. It contributes generally less than 1 per cent to gross
| national product."[0]
|
| and if you look beyond fishing, agricultural policy as a
| whole is - not sure how to put this politely - not easy to
| understand:
|
| "The CAP is often explained as the result of a political
| compromise between France and Germany: German industry would
| have access to the French market; in exchange, Germany would
| help pay for France's farmers [..] The CAP has always been a
| difficult area of EU policy to reform [..]"[1]
|
| [0] https://en.wikipedia.org/wiki/Common_Fisheries_Policy [1]
| https://en.wikipedia.org/wiki/Common_Agricultural_Policy
| matt-p wrote:
| For another "not just the UK" example france has managed to
| persuade the EU not to buy british weapons out of the extra
| defence fund unless the UK give France some of it's fishing
| rights. Can you imagine being Poland and not getting the
| best anti-tank weaponry, or the best missiles because you
| want the french to have more fishing rights?
|
| Completely barking mad.
|
| https://www.politico.eu/article/uk-rejects-eu-plan-tie-
| defen...
| logifail wrote:
| > Completely barking mad
|
| Well, we'll see that and raise you the European
| Parliament in Strasbourg.
|
| The EU could get rid of this idiocy overnight, except -
| well - France.
|
| (I have nothing against the French, I've visited France
| dozens of times and have many friends there.)
|
| "Once a month the European Parliament moves from Brussels
| to Strasbourg at a cost of PS150m a year as lorries
| transport paperwork."[0]
|
| "Top EU official brands Strasbourg shuttle 'insane'"[1]
|
| "EU parliament's EUR114m-a-year move to Strasbourg 'a
| waste of money', but will it ever be scrapped?"[2]
|
| [0] https://news.sky.com/story/meps-on-the-move-madness-
| of-stras...
|
| [1]
| https://www.theguardian.com/world/2006/sep/05/eu.politics
|
| [2] https://www.euronews.com/2019/05/20/eu-
| parliament-s-114m-a-y...
| matt-p wrote:
| Pretty sure you could engineer France leaving the EU by
| just tweaking fishing quotas, farming subsidy, naming on
| sparkling wine or removing (as you mention) strasbourg.
| They will start a riot and then when you don't give in,
| they'll be gone.
|
| I'm not saying it's what happened to the UK, but we asked
| for what we needed, got turned down and then left.
| logifail wrote:
| > They will start a riot and then when you don't give in,
| they'll be gone
|
| If you haven't already done so, read up on TARGET2[0],
| things could get somewhat spicy if a Eurozone country
| were to leave the EU.
|
| [0]
| https://data.ecb.europa.eu/publications/ecbeurosystem-
| policy...
| Symbiote wrote:
| What did the UK ask of the EU before Brexit?
|
| All I remember was Cameron asking to expel jobless
| immigrants, which confused the EU as Britain was already
| allowed to do that.
| matt-p wrote:
| I think it was a ban on European migrants from sending
| benefits and particularly child benefit (some money you
| get from the state if you have kids) back to thier home
| country or something like that.
|
| I remember Poland stopped us from getting it
| (supposedly).
|
| The french didn't want us to exempt from financial
| regulation that was primarily targeted at the euro even
| though we use the pound.
|
| Various nonsense, that people at the time felt strongly
| about (keeping the pound, not giving benefits and a
| council house to people as soon as they arrived, or some
| such exaggeration)
| blitzar wrote:
| The UK is no longer in the EU.
| ajb wrote:
| There are two parts to the fishing thing. From a pure
| economic perspective, fishing is insignificant. But within
| living memory obtaining food was a national security issue
| for the UK (during world war II). In a world in which states
| look not to grow their economy, but to harm others - and
| guess what, that's where we just arrived - not all industries
| can be considered purely on their revenue. Man cannot live on
| warhammer alone.
|
| We need to distinguish between paying over the odds to keep
| industries which are essential to have in an antagonistic
| scenario, from loss-aversion and nostalgia for industries
| which don't provide as much employment as they used to.
| Symbiote wrote:
| A precision injection moulding factory can (I assume)
| relatively quickly start producing other plastic parts for
| military use.
|
| Post-Brexit, there's now increased incentive for Games
| Workshop to build their next factory in the EU.
|
| (Games Workshop is one company, but this applies to every
| manufacturing company in the UK.)
| ajb wrote:
| Fair. I'm not a fan of Brexit and I think it's been both
| driven and implemented more listening to nostalgia than
| strategy.
| matt-p wrote:
| Brexit is mad, driven by nostalgia etc.
|
| However, if we got a free trade agreement with the US
| would the inverse be true, EU companies are better off
| moving to the UK due to brexit? What about _just_ a FTA
| with all commonwealth countries (why haven 't we done
| this??)?
| Symbiote wrote:
| Trump is unpredictable. He made a new free trade
| agreement with Canada and Mexico in his previous term,
| but has put tariffs on some Canadian goods this time
| round. That isn't going to reassure investors.
|
| A FTA with the USA would come at a significant price --
| the UK would be pressured to accept low-quality American
| agricultural produce, and lower many other standards from
| their current European level. If it does this, that
| reduces the global value of British exports.
| matt-p wrote:
| Hard to say that's the exact compromise he'd want, as you
| say he's unpredictable.
| sterlind wrote:
| there was much ado about chlorinated chicken a few days
| ago. apparently the US washes chicken carcasses with
| chlorine to disinfect them, whereas that's illegal in the
| EU, which has more stringent farm cleanliness standards
| instead. I think there's similar issues with an arsenic
| compound (seriously!) being fed to chicken as some sort
| of antibiotic.
|
| iirc Trump did say he wanted EU to accept our livestock
| to reduce the trade deficit, leading Lutnick to memorably
| proclaim "They hate our beef because our beef is
| beautiful and theirs is weak!"
| Symbiote wrote:
| "Chlorinated chicken" has been a discussion topic in
| Britain since before Brexit, when some politicians were
| saying it would be easy to get a deal with the USA to
| replace trade with the EU.
|
| It's not something that will be forgotten easily. British
| people on all sides were against reducing food standards.
| hkt wrote:
| Why does everyone assume the commonwealth _wants_ and FTA
| with us?
| matt-p wrote:
| Because free trade is typically a good thing that lifts
| everyone? It's also not "FTA with the UK" it's FTA
| between everyone, we just happen to be a member. We may
| be quite low down the list for say Canada as a trading
| partner and that's fine?
| XorNot wrote:
| No. Because there wasn't any significant trade barriers
| to the EU from the US up till last week.
|
| And then today all the tarrifs are suspended (down to
| 10%) so it's hardly like there's a reliable advantage
| there.
| matt-p wrote:
| Yes, and we'll see what next week brings _sigh_. For all
| any of us know we 're going to wake up in the morning and
| the EU has a 125% tariff too. I'm not even sure Mr orange
| himself knows what happens in 90 days when these
| temporary reliefs expire.
| mvc wrote:
| How much of a fish industry will remain when the North Sea
| is a battleground?
|
| Is there any fishing going on in the Black Sea at the
| moment? (genuine question)
| NikkiA wrote:
| > Is there any fishing going on in the Black Sea at the
| moment? (genuine question)
|
| yes, while fishing vessels fairly rarely broadcast AIS,
| there's plenty of turkish, bulgarian, and even three
| russian fishing vessels broadcasting AIS in the black sea
| right now. No ukrainian vessels that I can see, but
| again, AIS is fairly rare for fishing boats anyway.
| avtolik wrote:
| Of course. There are three NATO nations and Georgia on
| the Black Sea, and there is no war in their waters. The
| Black Sea is not very productive fish-wise, but this is
| another topic.
| rayiner wrote:
| The free traders also need to accept the reality that the
| UK's decline started long before Brexit and disputes about
| fishing. In terms of per capita GDP, the UK lost its edge
| over the rest of Europe in the 1970s, and then simply never
| recovered from the 2008 global financial collapse. Without
| the empire, the UK's "competitive advantage" in financial and
| legal services wasn't worth shit.
|
| I strongly suspect the US _cannot_ maintain its outsized per
| capita wealth, on the back of the reserve dollar, in a world
| where China has an economy twice the size. Just as the UK
| couldn't when the US economy overtook the British empire and
| the dollar replaced the pound as the reserve currency.
|
| The question, instead, is how we'll be able to adapt to that
| new reality. And I suspect we'd rather be Germany in that
| future than the UK.
| matt-p wrote:
| I think Germany is a bit of a special case due to what
| happened after the war, I think a more objective comparison
| might be say France.
| hkt wrote:
| German engineering etc was famously rather good before
| the war too. The Ruhr valley is part of the reason for
| this: energy sources (coal) and minerals (iron, copper,
| etc) very close together. It was the ideal setting for an
| industrial awakening.
|
| Also, even after the marshall plan, Germany kept its
| existing advantages in industry in large part simply by
| actually encouraging them to exist. The UK has no
| industrial policy and actively shed most industries in
| the 1980s, relying instead on direct investment and
| deliberately not growing domestic companies.
| matt-p wrote:
| It wasn't a criticism of Germany at all, just that I
| think alot happened there that was special politically
| with the east and west, support for reunified Germany was
| massive, it's just therefore a bit hard to say what would
| of happened if after the war it was lumped with huge debt
| and ignored.
| sdwr wrote:
| Yeah this is arguably the tail wagging the dog - Trump is a
| reaction to the end of US hegemony, not the cause
| watwut wrote:
| Trump has zero to do with previous level of US hegemony.
| He represents what large part of Americans are - for
| internal reasons that have nothing to do with
| geopolitics.
| sdwr wrote:
| "Make America Great Again" - the geopolitics are
| literally right there on the label!
| hkt wrote:
| Americans might not know their number is up explicitly,
| but they can smell it. The days of US hegemony are
| numbered. In one way or another, people get it. Why else
| would they want to Make America Great Again? It is an
| inherent recognition of decline.
| immibis wrote:
| The US appears to be trying to end the reserve dollars.
| Something that surprisingly few people have mentioned
| recently is that _having the biggest trade deficit is the
| same thing as being the global reserve currency_. Because
| they 're the same thing, ending one of them also ends the
| other.
|
| There does seem to be some sort of cycle in play: first a
| slave-driver-type economy creates a whole lot of wealth,
| then people get human rights, then they stop being driven
| like slaves and coast off the accumulated power, but forget
| the basic principles of wealth creation in the process (see
| also "good times create weak men" etc) and just spend all
| their resources arguing about who gets the wealth that is
| there instead of creating more. And I'm not saying that in
| an individualist framework - the reason individuals can't
| do it is a problem with the whole society, not with those
| individuals.
| Izikiel43 wrote:
| > While real UK manufacture successes (cars, aircraft,
| satellites, generators, all sorts of high-tech stuff) get
| completely ignored
|
| Here is my take on this:
|
| For those things, you probably need a lot of technical
| training and/or advanced degrees.
|
| For fishing you just need to be more or less healthy and be
| able to follow instructions.
|
| Most people are more or less healthy and are able to follow
| instructions. A small subset of those has advanced technical
| training and/or advanced degrees.
|
| Therefore, fishing becomes important because a lot more
| people can do it, and those people vote.
| niemandhier wrote:
| The total volume of money flowing through fishing related
| business is much larger than through warhammer related.
|
| Fishing distributed about 1 billion in household income in
| the uk.
|
| Fishing supports about 12.000 direct jobs plus 5.000 in
| related industries in the UK.
|
| Warhammer has about 3000 employees GLOBALLY. Trickle down is
| not really present here.
|
| Businesses that do not distribute wealth in the general
| population are much less relevant than those that do. Taxes
| are nice but businesses are good at avoiding them (
| especially via Ireland ), whereas income tax is the major
| supporter of our states.
| ljf wrote:
| You aren't comparing the same things here - if only
| counting Warhammer employees, then you shouldn't you only
| count actual fishermen (c6500 people)?
|
| For example, what about the people who work in Warhammer
| adjacent companies (plastics production, importing and
| labelling to name just a few, but also freelancers in
| publishing, illustration and design ) who would not appear
| in the 3000 Warhammer employees, but who earn the majority
| of their livelihood from Warhammer.
|
| For a period my brother dated someone from the family that
| supplied grey plastic to Games Workshop - they probably had
| over 100 permanent employees, and were a 'small' regional
| company.
| niemandhier wrote:
| I could not find numbers for warhammer related industries
| in the uk. Probably because they are to low. Warhammer
| has a large profit per piece sold, at least compared to
| fishing.
|
| US citizens often fail to realise that earnings of an
| industry are almost irrelevant, it is how much said
| industry distributes into society that matters, both for
| people and the state.
|
| Classical industries like mining and steel distribute a
| significant percentage of their revenue.
|
| Digital businesses does not, neither does warhammer.
|
| The interesting point is, that in the end the value of
| the money digital good as as well as plastic toys are
| measured in is based on physically realised wealth:
| Without physical businesses, the money warhammer is
| evaluated on would be ethereal.
| jdasdf wrote:
| >Most of the stuff the UK is struggling with (transport,
| healthcare, energy) are "state capacity" issues.
|
| None of those are state capacity issues.
|
| Those are "State is pointing a gun at anyone who would fix
| them" issues.
|
| Friendly reminder that 95%+ of the UK railway system was
| built by private for profit companies, with state involvement
| being primarily limited to not preventing it from happening.
|
| All of these issues are 100% self inflicted by the state
| getting in the way.
|
| All that needs to happen for them to fix themselves is to
| stop actively preventing private individuals from fixing
| them.
| Symbiote wrote:
| Railways and electricity are run by private companies in
| the UK.
|
| They've had 30 years to make it work, and have failed.
| Earw0rm wrote:
| Those railways were built early on in urbanisation.
|
| Do you honestly think private enterprise could raise the
| financial and political capital to build a new regional
| rail line through a major city like London or Manchester?
| slt2021 wrote:
| Agree, UK did not have a smart and capable leaders and elites
| for a very long time.
|
| The elite/ruling class need to be replaced with the more
| capable and smarter ones
| api wrote:
| It's not rational at all. It's nostalgia.
|
| I wonder how deeply connected all this politics of nostalgia
| is to the fact that birth rates have been declining for
| decades and populations are older.
|
| Given the older population and the country's history as a
| bygone empire I bet nostalgia is thicker in England than the
| US, but US side there sure is a lot of it.
|
| A lot of MAGA is about making the country the way it was when
| boomers were kids (50s, 60s) to prime age adults (80s to
| early 90s).
|
| There's even a hint of genX nostalgia too. A while back I was
| hearing some IDW type railing about how "woke" killed comedy
| and it hit me that there's a strong undercurrent of nostalgia
| for the 90s when comedy and pop culture were all about being
| an edgelord.
|
| Change reminds people of their mortality and it always
| generates a backlash. You're not young anymore.
| yapyap wrote:
| > Americans need to get over their view of "Asia" as being
| about making shoes
|
| I'm not sure if you're just speaking on what you experience or
| because of this post but the OP is a clothing guy so it makes
| sense he will look at it from a clothing (including shoes)
| perspective.
|
| I agree though, if Americans truly do see Asia as just the
| cheap clothing factory continent they're sorely mistaken. All
| you have to do is to just look at TSMC (Taiwan Semiconductor
| Manufacturing Company) and realize that if you were impacting
| just that company alone you would get a slap in the face as a
| country, all (~70%) the major chips come from there.
|
| I am aware the US is developing a Semiconductor factory in
| their own country but it is not done yet and it will not go as
| tiny in nms as TSMC already is.
| lossolo wrote:
| This. Anyone who doesn't believe it -- please go spend some
| time in Shenzhen, Shanghai, or similar cities, like I did. I
| just got back from China. I've been (also lived and worked) to
| the U.S. many times, and I can confidently say that China's
| tier-1 cities are on another level when it comes to development
| and QoL (and not only T1 cities, I was in smaller regions in
| the north too). It's also incredibly clean, super safe, and the
| infrastructure is breathtaking.
| tayo42 wrote:
| That's been my current dream trip for a little. I think it
| woukd be so cool to ride the trains around the country and
| see what it's really like there. Learning the language is
| hard though
| markus_zhang wrote:
| English is the second language of most young and middle-
| aged Chinese, so you should be fine at least in tier-s
| cities.
| decimalenough wrote:
| I recently visited China and even the people you'd expect
| to speak English (front desk at Western branded hotel,
| airline check-in, etc) either spoke zero English or
| really struggled. My shitty Mandarin got a workout.
| Symbiote wrote:
| Remember to carry your passport at all times, as you'll
| need it to buy a train ticket.
|
| Even a simple metro ticket.
|
| You can also smile at the CCTV cameras, which are in groups
| every 100m or so within cities.
| magnuznilzzon wrote:
| Train tickets sure, for the high speed rail, but metro?
| Not in Shanghai at least
| Symbiote wrote:
| Metro ticket machines in Beijing won't sell a ticket
| until you've scanned an identity card.
|
| Tourists must wait at the ticket window. Foreigners
| aren't usually asked to show the passport unless they
| look Chinese.
| dom3k wrote:
| No need to wait at no window. After you activate Alipay,
| just click on "Transport" and create a metro card for
| Beijing. Scan code on enter, scan on exit, pay the sweet
| low fare automatically. One app, 30+ cities.
| Symbiote wrote:
| "Activating Alipay" requires using an identity card or
| passport.
| blitzar wrote:
| > You can also smile at the CCTV cameras, which are in
| groups every 100m or so within cities.
|
| 1/100th the amount of smiling at the CCTV cameras
| compared to the UK then.
| blacksmith_tb wrote:
| I took a year of Mandarin as an undergrad, speaking is
| doable, reading and writing is hard, but Google Translate &
| Co. would make that less daunting now.
| tayo42 wrote:
| I thought speaking would be hardest with the tone
| changes. I took one online class, was overwhelming
| blacksmith_tb wrote:
| I felt like it started making sense after a month or so,
| but even though I got up to ~1500 characters at the end
| of the year, reading was never easy.
| toephu2 wrote:
| Yup, Chinese Tier 1 cities (Beijing, Shanghai, Guangzhou, and
| Shenzhen) are probably 20 years ahead of their Western
| counterparts (in terms of crime, or lack thereof, public
| transportation, convenience, cleanliness, etc).
| da02 wrote:
| Any experience or thoughts on Vietnam and Malaysia? Are they
| also moving ahead?
| tim333 wrote:
| Vietnam was one of the fastest growing countries in the world
| but from a low base. They were following a similar trajectory
| to China but about 20 years behind. Not sure how the tariffs
| will affect things.
| decimalenough wrote:
| Vietnam is the next China, they're still behind but catching
| up fast.
|
| Malaysia is handicapped by the resource curse (lots of oil)
| dysfunctional government and race politics that serve to
| drive out everybody who is not ethnically Malay.
| Herring wrote:
| > _What will be America's competitive edge in that scenario?_
|
| Comparative advantage means countries benefit from specializing
| in producing goods or services where they have the lowest
| relative opportunity cost - not necessarily where they're the
| best overall. Even if China focuses on technology (and this is
| far from decided), America can still thrive by specializing in
| other areas where its relative efficiency or unique
| capabilities are better.
|
| Examples: Germany specializes in high-precision manufacturing,
| India does well with software development, IT services, and
| medicines, Australia exports minerals, natural resources, and
| agricultural products, etc. Everybody brings something to the
| table. The world economy cannot possibly get worse by adding 1B
| people doing top-level work.
|
| > _Ricardo 's theory implies that comparative advantage rather
| than absolute advantage is responsible for much of
| international trade._
|
| https://en.wikipedia.org/wiki/Comparative_advantage
|
| BTW these would have been great ECON 101 discussions to have
| before the election.
| harvey9 wrote:
| India does well on software development partly on a volume
| basis. Their top end developers often want to move abroad for
| career development and earning potential. I would not be
| surprised if potus put tariffs on H1Bs
| FredPret wrote:
| Wouldn't this just be income tax?
| harvey9 wrote:
| There could be a charge to the visa sponsor based on the
| salary of the worker
| alfalfasprout wrote:
| Trump is on the record extensively as being very pro H1B
| (probably spurned on by Musk, Zuck, and Pichai). Because
| many of these workers can be overworked without complaint
| for lower compensation than American workers.
|
| It's never been about protecting Americans...
| lolinder wrote:
| Be careful extrapolating based on China's current population
| and demographics. Too much of our armchair assessments of
| China's velocity is based on their meteoric rise on the backs
| of a historically large working-age population--a population
| that is now rapidly aging out of the workforce with nothing to
| replace it thanks to the one child policy. The US's
| demographics aren't stellar, but they're a lot better off than
| most of the developed world.
|
| It remains to be seen how different 2010's China--with 90% of
| the population being under 60--is from 2050's China--with only
| 69% of the population being under 60.
|
| https://www.populationpyramid.net/china/2050/
| peterfirefly wrote:
| The one-child policy didn't play as large a role as people in
| the West think. Chinese fertility rates had already fallen
| drastically before that policy.
|
| (It was also not as absolute as people in the West think.
| There were exceptions for rural China and minorities.)
| ninetyninenine wrote:
| >We need to anticipate a future where China is equal to America
| on a per capita basis,
|
| This is a nice way to put it.
|
| Anticipate a world within your life time where China is the
| dominant economic, technological, military and cultural super
| power.
|
| Anticipate jealousy, anticipate fear, but know that as
| Americans who have been top dog for decades there is nothing
| wrong with not being the best.
|
| Additionally anticipate a changing world view less focused on
| the view that freedom and democracy as the only possible way to
| lead and anticipate that despite the fact that China is a
| communist country and centrally controlled they don't want
| conflict and they don't want total war.
|
| China and the US are not perfect. The US needs to accept this
| fact and it needs to accept that another is about to take it's
| place as the top dog.
| zppln wrote:
| > cultural super power
|
| My impression is that Chinese culture has very little appeal
| elsewhere (at least in the West). They can't seem to be able
| to (or care to) package it in an appealing way. Sure, they're
| being catered to in films and video games but I see very
| little organic interest in Chinese culture, especially
| compared to Japanese or Korean culture.
| j-krieger wrote:
| China is not communist in anything but name. They are an
| authoritarian capitalist country with social policies.
| overfeed wrote:
| > What will be America's competitive edge in that scenario?
|
| A few months ago, I'd have said soft-power and goodwill built
| over decades with the rest of the western world, which roughly
| equals China in population size. Instead, I agree that the US
| is staring down a "managed decline" like the UK, but hopefully
| not as steep.
| nipponese wrote:
| I think it's pretty clear what Trump's long-term solution is
| with unobtainable economic goals on China and strategic
| outreach to Russia -- He wants to turn that 4x into 1x via hot
| war before the Xi's 2027 military goals are reached.
| umanwizard wrote:
| I'm no Trump fan but I think it's a bit of an exaggeration to
| say he wants to genocide a billion Chinese people...
| bboygravity wrote:
| Except that that future of a big powerful China doesn't exist.
| Their birth-rate is 1.
|
| Game-over.
| Izikiel43 wrote:
| The USA is also below replacement levels.
| philg_jr wrote:
| Not with immigration.
| eagleislandsong wrote:
| Immigration will take a nosedive under Trump.
| peterfirefly wrote:
| That's not necessarily a good thing. Do the New Americans
| want the same things as the pre-existing ones? Are they
| as capable? Not just "in a few generations" but here and
| now? Are they even likely to be as capable "in a few
| generations"?
|
| If the statistics aren't very wrong, it doesn't seem like
| a solution.
| marxplank wrote:
| Indian Americans make the most money in America, I'm sure
| immigrants can be capable
| ezst wrote:
| Don't worry, Republicans are hard at work making the USA
| a pariah state and turning away the educated migrants
| who've been behind most of the innovation and research of
| past decades.
| slt2021 wrote:
| Immigration is a double edge sword. Sure, it brings
| highly educated people on the top end, but also less
| educated at the bottom curve.
|
| and on balance it changes demographics dramatically, that
| also shapes US policy in the future. It will be harder
| for USA to continue to be bloody warmongering machine
| with Military industrial complex dictating the policy and
| bombing countries and blowing up civilians around the
| world.
| missedthecue wrote:
| China will probably be the only country that solves this.
| boznz wrote:
| ..Any country can solve it, just incentivise families.
| Simple things like ensuring young people have access to
| affordable housing and daycare. If I was at the start of my
| career ladder in a major urban area now, having a family
| would be close to the bottom of my priority list. Its not
| rocket science.
| jraby3 wrote:
| This isn't true and has been tried in the Nordic
| countries.
|
| This is an outstanding article on the subject:
| https://www.newyorker.com/magazine/2025/03/03/the-
| population...
| WarOnPrivacy wrote:
| > .Any country can solve it, just incentivise families.
|
| In the US, parenting time is up 20-fold, from a few hours
| per week to 24/7 adulting.
|
| Companion to that is that free-range land has shrunk from
| many sq/mi to a few sq/yds. Car culture and trespassing
| culture has eliminated the irreplaceable environments
| where adult-free, peer time nurtured mental health and
| abilities.
|
| As near as I can tell, parenting and childhood is
| irreparably broken in the US.
|
| We certainly seem incapable of recalling what sustainable
| parenting once looked like.
|
| On rare occasion someone will recall that kids once
| roamed all over. Maybe that gets connected to less mental
| health issues. Either way it's all forgotten moments
| later.
| fragmede wrote:
| I agree it's broken, just in the other direction. Just
| stick an ipad in front of the kid and ignore it for hours
| WarOnPrivacy wrote:
| From before written history until a few generations ago,
| kids spent hours/day in adult-free, peer time making
| mistakes in everything from social interaction to
| physically risky play - and learning from those mistakes.
|
| Today kids live entirely in adult curated, adult
| populated boxes. I'm not inclined to blame ipads for
| that.
| theendisney wrote:
| Daycare is some weird shit with such abundance of
| [lonely] old people.
| boznz wrote:
| Unless they are friends or family regulations will never
| allow. But you are right there is an abundance of old
| lonely people who would do this for nothing and it would
| benefit everyone.
| j-krieger wrote:
| > Any country can solve it, just incentivise families
|
| The point of OP and what people don't get is that it's
| far easier to shift policies to brace for tough
| situations when you have a uniparty system and you're
| willing to make sacrifices. No 4 year administration is
| in any way incentivised to enact policies that only
| become effective after the next election. Note that I'm
| not saying that undemocratic systems are the solution.
| FuriouslyAdrift wrote:
| Considering their moves in Africa, I wouldn't be surprised
| if they bring the slave trade back.
| ignoramous wrote:
| > _When I was working in engineering in the early aughts, we
| mocked the Chinese as being able only to copy American
| technology. Today, China is competitive with or ahead of
| America in key technology areas, including nuclear power, AI,
| EVs, and batteries._
|
| I wrote this not long after (10y ago) and I think this view is
| still unpopular now as it was then (for reasons beyond me):
| I fully expect Baidu and other tech giants on the Chinese
| shores to try and push the boundaries of technology. Silicon
| Valley (and the US) in general has always been the hot-bed of
| innovation. But with enormous increase in wealth in China (and
| to an extent in India), I can see these companies being more
| and more ambitious. Not long ago Andrew Ng of Coursera and
| Stanford AI Lab fame joined Baidu to further their rival to the
| 'Google Brain' project. Xiaomi has long been
| positioning itself as a company with design chops of Apple,
| engineering chops of Google, and e-commerce chops of Amazon,
| all rolled into one-- and I can see where they are coming from.
| If they manage to pull it off, I guess that's when we'd start
| seeing the proverbial "Death of Silicon Valley" as in, it
| loosing its strange monopoly and strangle hold on tech world in
| terms of both talent and innovation.
|
| https://news.ycombinator.com/item?id=9421471
| eagleislandsong wrote:
| > for reasons beyond me
|
| It might help to understand that the resistance you have
| faced is probably driven by deep-seated biases and
| stubbornness.
| j-krieger wrote:
| Silicon Valley has stifled its own innovation by making too
| much use of regulatory capture and IP laws.
| stronglikedan wrote:
| > Americans need to get over their view of "Asia" as being
| about making shoes.
|
| The vast majority of us were over that decades ago. Please
| catch up for the sake of all humanity.
| Symbiote wrote:
| Yesterday your vice president referred to the Chinese as
| "peasants".
| greenchair wrote:
| all part of the negotiations :)
| IncreasePosts wrote:
| Something like 35% of China's population works in the
| agriculture sector, many of whom are poor with little or no
| land holdings living in small villages. Is there a word for
| that kind of person?
| umeshunni wrote:
| The reality is that most USians and EUians still have some
| 1990 view of what Asia and China is. Or they cope with some
| 'freedom' or 'slave labor' anecdotes.
|
| My comment on another thread about how China is now a
| developed country was downvoted by some HNer who swallowed
| some Guardian anecdote:
| https://news.ycombinator.com/item?id=43627315
|
| Exponential growth is a hard concept to internalize.
| jjulius wrote:
| HN frowns upon griping about downvotes, and encourages a
| discussion around why someone's point or rebuttal might be
| wrong. Just sayin'...
| profsummergig wrote:
| > Americans need to get over their view of "Asia" as being
| about making shoes.
|
| I blame Peter Zeihan for this kind of thinking. His views are
| immensely popular in the very powerful and influential circles.
| And he constantly derides China's capabilities. Since 2014 he's
| been saying it's going to collapse any day now. He still says
| it.
| Aaronstotle wrote:
| Maybe it will come full circle and the US will commit IP theft
| to catch up to the dominant Chinese companies.
| bilbo0s wrote:
| All for it.
|
| We should be doing that right now.
| senderista wrote:
| Then they'd just be back to where they started in the early
| 19th century, stealing Britain's IP to become an industrial
| power.
|
| https://www.history.com/articles/industrial-revolution-
| spies...
| pbreit wrote:
| These analyses always assume no margin compression which is
| wrong.
| ReptileMan wrote:
| >What seems most likely to me in the future is that the US will
| find itself in the same position the UK is in now.
|
| Not quite. USA is big enough to be able to be self sufficient
| if they keep mexico and Canada tightly bound via NAFTA or
| military might. UK have no option but to trade. UK was rarely
| able to feed and fuel itself after the industrial revolution.
| Thaxll wrote:
| Average American would be shocked to see a city like Shenzhen.
| It's like living in the future.
| throwaway48476 wrote:
| The average Brit is now poorer than the average Pole.
| Dominating finance hasn't worked out well for the citizens of
| the UK.
| markus_zhang wrote:
| > What will be America's competitive edge in that scenario?
|
| I'm sure that the US still has many edges over China in high-
| end technology. I remember I read a research article back in
| 2012/2013 which listed all fields that China were lagging
| behind, including pharma, computer chips and some other stuffs.
| It's a fairly long list. I'm sure China managed to catch up in
| some of the fields but I doubt all of them.
| bilbo0s wrote:
| _I 'm sure China managed to catch up in some of the fields
| but I doubt all of them._
|
| And if you could guarantee that they'll never catch up in the
| others, we'd all feel a bit better about the permanency of
| American superiority.
|
| Absent that guarantee, we need to bench test those scenarios
| and be prepared with plans that best serve American interests
| should those scenarios come to fruition.
| bdangubic wrote:
| american has superiority in like number of incarcerated
| people per capita and infant mortality - that's about it :)
| XorNot wrote:
| China used to be lagging behind in _all_ areas. Now it is
| not.
|
| The US pre-WW1 was an isolationist nation with few I'd any
| exports, not the global manufacturing powerhouse it became
| afterwards.
|
| Things change and _always_ change.
| lanthissa wrote:
| US wont end up in the situation that UK finds itself in because
| the land it occupies is some of the most productive land on
| earth and at a similar scale as china. The incredible wealth of
| america, is that its a land mass that in the old world would be
| supporting 500m-1.5b people, but is divided only amount 350m.
|
| The city at the center of the Missouri and Mississippi if it
| were in europe would be a major civilization. In the US its
| saint louis. The US, CA, and AU have an option few countries do
| -- at any point they want nominal gdp growth all they have to
| do is open the door.
|
| I agree with you though that china's incredibly impressive.
| niemandhier wrote:
| Nope. Well maybe, if trumpism continues.
|
| Point is: The best and brightest go where they think their life
| will be most fulfilling. Up to last year that was California
| for tech and New York for culture.
|
| Even the Chinese think china is oppressive.
| https://en.wikipedia.org/wiki/Tang_ping#:~:text=Tang%20ping%...
| decimalenough wrote:
| It's not the best and the brightest who are lying flat, but
| those who lost the rat race.
|
| All things considered, most Chinese would prefer to stay in
| China, and if you're rich there you've got it made.
| niemandhier wrote:
| By all accounts, you do not get rich in china by work. I
| work with the most talented Chinese scientists and none of
| them expects to be wealthy at home, the best hope to be
| what would be middle class in the US.
|
| Unless they manage to get to the US they return, because
| they would not be safe from harassment anywhere else.
| encoderer wrote:
| Do they not just steal our IP and then industrialize it better
| than us, partly because of their current demographics (which
| are rapidly changing), partly because of lax environmental
| standards, and partly because they need economic growth to
| support their oppressive regime?
| hemabe wrote:
| China could not only be 'equal' but 'better' than the USA - we
| should get used to the idea. China has an average IQ of 104 out
| of 1.4 billion people, while the USA has an IQ of 97. In purely
| statistical terms, this means that the USA has around 700,000
| people with an IQ >= 140. China has 11,480,000 people with this
| IQ. This human capital will make the difference.
| ericmay wrote:
| IQ isn't much of a proxy for anything, especially in this
| context.
| nomel wrote:
| It's especially related in this context, which is
| engineering success. IQ is directly related to academic
| achievement in STEM, which is directly related to
| engineering career success.
| ericmay wrote:
| Well we're not talking about career success, we were
| talking about comparisons of nation states. Having an IQ
| advantage there might prove marginally more helpful, but
| it's not really that important. I'd argue physical size
| and strength of a people are even more important than IQ
| when we're looking at across the board averages. Plus you
| have things like, idk, access to raw materials,
| geographic advantages, cultural advantages or
| disadvantages, systemic advantages or disadvantages
| including strong or weak institutions, training programs,
| etc. In fact, if you wanted to do a comparison between
| America and China you'd really have a lot better things
| to look at to show China as better than IQ.
|
| With respect to "career success" you can have 50 million
| people in your country with IQs >140 and there's still a
| limited market to sell to. There are diminishing returns
| on capacity - you can have business analysts or call
| center folks with the IQ of Einstein and they'll be
| limited by the systems they are placed in.
|
| The other side of this is that just because you are smart
| doesn't mean you are capable of doing well in the real
| world. Recall how there are a lot of "dumb rich people"
| and "smart poor people".
| ahartmetz wrote:
| China has a millenia-long history of organizing a very
| large amount of people fairly well. They basically
| invented bureaucracy. Not everything is better in China
| of course, but don't forget about that aspect.
| bloqs wrote:
| Performance IQ and verbal IQ create the compound IQ
| figure.
| marxplank wrote:
| this has to be one of the most illogical hedges
| slt2021 wrote:
| due to immigration, USA draws talent from global population
| of 8.2 billion, so the top limit of people with IQ>140 that
| can live in USA should be drawn from 8.2 billion, not 340 mln
| strich wrote:
| Not anymore it shouldn't.
| slt2021 wrote:
| why? has any immigration law been changed?
| seb1204 wrote:
| The orange dude is kind of putting people off.
| slt2021 wrote:
| yes, donny woke up the ancient racist anti-immigration,
| the blood & soil type crowd, but the economic benefits of
| immigration are still there (albeit with higher risks and
| higher hurdles).
|
| I suspect this will simply make labor more expensive on
| top end of the talent curve
| ForOldHack wrote:
| Korea, despite developing MRI, still has a large amount of
| farmers, that do not get paid a living wage: No one really
| knows, because its a souce of shame.
|
| "AI Overview
|
| It's difficult to provide a precise number of Asian countries
| where farmers don't earn a living wage without specific, up-to-
| date data and a clear definition of "living wage." However,
| many Asian countries face challenges in ensuring farmers
| receive sufficient income to cover basic needs."
|
| I will assure you, from being an eyewitness, its worse.
| seanmcdirmid wrote:
| The US was going down the "let dominate IP/technology" angle
| for awhile, but we only accomplished it with imported labor
| (look at any SWE shop). China is obviously developing the
| talent to do the same, and they are rapidly automating
| manufacture work as they approach a demographic cliff. They are
| basically making all the right investments for the future while
| we try to go back to the 1950s. It is extremely frustrating.
| bamboozled wrote:
| Back to coal mines.
| sterlind wrote:
| it really seems like there's a push to de-skill Americans.
| like Bessent's remark that the laid-off civil servants
| could become factory workers as we bring back domestic
| manufacturing, and the recent corporate push towards vibe
| coding and integrating AI everywhere, and the purge of
| seasonal and unskilled migrant workers while keeping the
| H1B program.
|
| it almost seems like we're trying to clear immigrants out
| of the chicken plants to make room for laid-off graphic
| designers.
| sorcerer-mar wrote:
| Bessent et al's plan isn't even internally coherent.
|
| Yeah, Americans are going to go back to working in
| factories. But not for low wages, because errr ummm
| actually it'll be robots doing the work! So where will
| Americans be working? Errr ummm well... in the factories!
| (??)
| bamboozled wrote:
| America is not going to get there and stay there by being
| stupid.
| runako wrote:
| > We need to anticipate a future where China is equal to
| America on a per capita basis, but four times bigger. Is that a
| world where "Designed by Apple in California, Made in China"
| still makes sense? What will be America's competitive edge in
| that scenario?
|
| The likely answer lies in the fact that this would mean China &
| America are both high-income countries. There are likely to be
| other countries looking to be "the next China" to ascend the
| income ladder. As is now, rich countries will outsource work to
| those poorer countries.
|
| This doesn't have to be zero sum.
| yodsanklai wrote:
| > We need to anticipate a future where China is equal to
| America on a per capita basis, but four times bigger.
|
| Is it even possible in terms of resources? there are limits to
| growth and it may not be feasible for 1.5 billions people to
| consume and pollute as much as an average American.
|
| Also are the US willing to lose their supremacy peacefully?
| XorNot wrote:
| It seems apparent that the answer is yes though. The US likes
| the idea of wars more then fighting them: the guy who talks
| about the greatest military on the planet is also not subject
| to the draft and never tried to join.
|
| In so much as generalizing a nation can still leave large
| exceptions, wars of conquest are useless to America: it hates
| running occupations, and it's own citizens are not going to
| move abroad in sufficient numbers to provide a labor force to
| utilize the conquests.
| 9283409232 wrote:
| Even if you believe this, the way you do it is incentive
| manufacturing in the US not 200% tariffs. It takes time to
| build up domestic manufacturing.
| j-krieger wrote:
| > When I was working in engineering in the early aughts, we
| mocked the Chinese as being able only to copy American
| technology
|
| Perhaps you should have considered that like in Art, the first
| step to proficiency in anything really is mimicry.
| hermitShell wrote:
| True, and now I believe China has kept their industrial might
| while also pursuing higher technology. So they have the mine
| and the steel plant and the car factory. I recall Musk
| commenting that through human history, it's more normal for
| China to be the most advanced nation on the planet, not the
| USA. Still, brutal place to live and work. Ultimately you
| have to offer people a chance at happiness, or else internal
| failures tend to sabotage all external signs of success.
| gizajob wrote:
| Designing the most stylish bevel radius on edges.
| 627467 wrote:
| > we mocked the Chinese as being able only to copy American
| technology
|
| As you state they haven't been "only" copying for a while and
| my problem with people keep repeating this "logic" (mea culpa)
| is precisely what's at stake right now: designing and
| "creating" is critical, but I'd argue that civilization is not
| made my design or one-off (or limited) editions. Civilization
| is the ability to innovate in mass production, in doing so,
| consistently in lower and lower costs. China excels (and will
| continue to excel) while they continue to appreciate this. The
| "service sector" world stopped caring about this.
| ersiees wrote:
| So, 100$ Nike shoes will soon be 125$.
| darknavi wrote:
| The specific (fictitious) example they gave was $100 -> $150
| due to a ~$23 tariff.
|
| > But if we bump the cost of freight, insurance, and customs
| from $5 to, say, $28, then they wholesale the shoes to
| Footlocker for about $75. And if Footlocker purchases Nike
| shoes for $75, then they retail them for $150. Everyone needs
| to fixed percentages to avoid losses.
|
| The point being that many parts of the supply chain don't
| operate on fixed costs and instead percentages.
| Symbiote wrote:
| > The point being that many parts of the supply chain don't
| operate on fixed costs and instead percentages.
|
| That's how it was working in most wealthy countries, where
| tariffs were generally low or very low.
|
| I don't see why it must continue to work that way in the USA
| with 50% or 100% or more tariffs. If Footlocker wish to
| charge double the post-tariff price, that leaves room for a
| competitor to change double the pre-tariff price.
|
| (Or double the pre-tariff plus a tiny bit, to account for the
| increased cost of insurance, theft etc.)
| kjkjadksj wrote:
| Still $25 when they hit the burlington or ross in 6 months then
| back to $75 when people resell those ross shoes on ebay.
| tmaly wrote:
| I think the one thing I am not seeing much discussion on is, will
| the end consumer pay for these $150 sneakers or will they simply
| switch to lower cost alternative brands?
| bryanlarsen wrote:
| The assumption in the modelling is that sales will decline
| proportional to the price increase. IOW, they'll sell 2/3 as
| many shoes at 150% of the price.
|
| Probably not a great model, but it's simple and a reasonable
| guess. Remember all the competitors will have price increases
| too.
| gorfian_robot wrote:
| fun fact: sneakers are already $150. went shoe shopping at a
| "sketchers warehouse" and found a pair that fit well and noped
| them back on the shelf when I checked the price.
| giardini wrote:
| My sneakers have been $200* for the past 5 years but then
| they're made in the USA. It's time to buy a new pair.
|
| * - I have a large foot and believe I'm paying primarily for
| the _materials_ in my shoes, which easily weigh twice what my
| friends ' shoe do!
| thfuran wrote:
| Unless you're getting goretex or leather (and even then,
| shoes are small), there's not really anything in a shoe
| besides a bit of rubber, some EVA foam, and probably some
| plastic mesh. The materials cost is very low.
| tmaly wrote:
| yes, I know we already have $150 sneakers, but you can get
| sneakers for $30 at Costco still.
| gorfian_robot wrote:
| Nike doesn't sell shoes. Those are a loss leader. They sell you
| brand and lifestyle bullshit at a very high markup.
| reed1234 wrote:
| "In fiscal 2024, footwear accounted for 68 percent of Nike's
| total revenues."
| https://www.statista.com/statistics/412760/nike-global-reven...
| echoangle wrote:
| Revenue doesn't really show they are not loss leaders. Profit
| would be more useful.
| crazygringo wrote:
| That's a bold claim. Do you have a source for that?
| hx8 wrote:
| > But if we bump the cost of freight, insurance, and customs from
| $5 to, say, $28, then they wholesale the shoes to Footlocker for
| about $75. And if Footlocker purchases Nike shoes for $75, then
| they retail them for $150. Everyone needs to fixed percentages to
| avoid losses.
|
| I don't understand this paragraph. If Footlocker was okay with
| $50 profit/shoe, why do they need to claim $75 profit/shoe in
| their costs per shoe go up? The costs of handling the shoes,
| retail space, advertising, and labor are all fixed.
| ty6853 wrote:
| Because the market recognized value add is the capital
| investment and returns, including the credit basis on which
| inventories flow. These people are operating on a per $ basis,
| not a per shoe basis. If the margins % lower then the capital
| will flow to something else more profitable and then prices
| rise until the margins are relatively flat across similar
| productive investments.
| pfortuny wrote:
| Gains and losses are measured in % not in quantity because a
| dollar (or ant currency) has no fixed value.
|
| Sorry: I intended to reply to the grandparent.
| pfannkuchen wrote:
| That doesn't really make sense to me.
|
| The market cares about dollar returned vs dollar invested. If
| some piece in the middle of the chain goes up and end
| customer prices go up as well, that doesn't directly affect
| investors at all.
|
| The way it could and likely will affect investors is if
| people start buying fewer shoes, but that is a different
| process than what you are describing.
|
| If I'm off base can you help me understand what you are
| saying?
| jon_richards wrote:
| The market cares about dollar returned vs dollar-x-time
| invested. A shoe sits on a shelf until it is sold. If it
| costs 1.5 times as much to stock a store with shoes, then
| you need to earn 1.5 times as much money after the same
| time-delay.
|
| Think in the extreme. $1 billion can probably earn more in
| a saving account than as a shoe that generates $50 profit
| after 2 weeks.
| hamburglar wrote:
| Surely you can see that putting in $75 to make $150 for a
| $75 profit is significantly different than putting in
| $10075 to make $10150 for the same $75 profit, yes?
| lupire wrote:
| "putting in" is doing a lot of work.
|
| A shoe doesn't sit for a year waiting to be sold.
|
| It turns over quickly.
| hx8 wrote:
| Sure, I can see the difference.
|
| I hope you can see how spending $75 to make $150 revenue
| and $75 in profit is a much better position than spending
| $50 to make $100 in revenue and $50 in profit, if you are
| limited to how many transactions you can make in a day by
| physical infrastructure.
|
| I think it's understandable for the store to charge more
| for their shoes, and for the stores to make more than
| $50/profit per shoe to cover higher capital investment
| and increased risk of loss, but I don't understand the
| logical leap where the store now can make 50% more profit
| per shoe.
| hamburglar wrote:
| From an investment perspective, $50 -> $100 is exactly
| the same as $75 -> $150. The difference in the number of
| transactions that actually occurred is trivial. I see the
| point you're making but I don't agree that it matters
| until the transaction value shrinks to the point where
| you're selling things in huge batches (e.g a 5 cent part
| you sell for 10 cents, but you sell them by the 1000s)
| addaon wrote:
| Selling shoes that you purchase wholesale for $75 has costs
| that go beyond selling shoes that you purchase wholesale
| for $50. There's the cost of money to buy the inventory,
| the cost of holding the inventory (and insuring it), the
| cost of shrinkage, the risk of being unable to sell some of
| that inventory. Most of those costs scale with the
| wholesale cost of the product being sold, although not
| necessarily fully linearly. As a result, a top line $50
| margin on a $75 product gains you less than a $50 margin on
| a $50 product -- in a world with cheap capital. If you're
| restricted to holding $N of inventory due to cost of
| capital, this becomes even worse -- not only are your
| bottom line margins going down as much as 15%, but you're
| able to do it on only two thirds as much inventory, which
| (depending on turnover rates, etc) can drive you even
| lower.
| ty6853 wrote:
| Take this to the logic absurdity, you have a car you
| previously sold for $2 for $1 COGS. Tomorrow COGS is $1M
| for the car. Could you sell it for $1M+1? No you would lose
| your ass because your line of credit and investments would
| not be able to be supported by the returns, in fact if this
| is your only option you would probably stop making cars
| altogether and invest in another business and sell your
| assembly line, eventually enough car companies would go out
| of business until the supply curve met a high enough %
| profit to normalize with performance of other businesses.
|
| Now this analogy has a LOT of problems but the point is it
| directly affects investors, even if the interpolations
| inbetween are imperfect.
| hx8 wrote:
| But you might not sell the COGS for $2M, you might do
| just fine with $1.5M.
| pfannkuchen wrote:
| Okay I think I understand, thanks for explaining.
|
| So basically the money a business uses to produce the
| next tranche of goods (so to speak) normally comes not
| from income from sales of the last tranche, but rather
| from external funding sources such as loans or capital
| injection from investors?
|
| Is that really so common as to be universal and affect
| investor behavior like you suggest? Like for certain
| types of business, and especially for early stage
| businesses, I do expect this to be the case. But does it
| apply to the market broadly? Scary if so, since it seems
| like a destabilizing force.
| myrmidon wrote:
| If you can make $5k/year by investing $100k into shoe-
| selling, then those profits have to rise at the same rate
| as base costs, otherwise, people will just invest into
| eggplant-selling, instead.
|
| Another perspective is that Footlocker would sell you those
| $25 Nikes for $300 if they could-- but if they tried,
| someone else would get active in the retail business and
| invest into a slightly less profitable operation (with
| lower margins) to eat into their market share.
|
| But if the costs for _everyone_ rise, raising the prices
| proportionally (instead of by fixed amount) makes total
| sense because it is not really gonna cost you market share
| (only decrease total market volume depending on consumer
| price sensitivity).
|
| Note: We just observed those exact dynamics with
| Covid/Ukraine driven price increases, where retailers and
| other middlemen actually came out really good instead of
| sacrificing their margins to keep consumer costs down.
| skybrian wrote:
| Inventory costs money not just due to the cost of storage,
| but also because it's bought on credit. The higher the
| price, the more money needs to be borrowed. The longer it
| takes to sell it, the more interest needs to be paid.
|
| (If it's not bought on credit, there is still opportunity
| cost, since that money could have been used for something
| else.)
| amluto wrote:
| I don't think this is quite a sufficient explanation. If I
| were an investor / owner of a distributor or retailer, I
| think I would observe that these businesses don't scale
| arbitrarily and I would care about returns as a function of
| cost of goods sold, operating expense, and of cost of
| customer acquisition. In this context, cost of goods sold
| will include actual wholesale cost as well as associated
| costs that scale along with it: insurance, shrinkage,
| samples, etc. Cost of customer acquisition will not scale as
| strongly with wholesale cost -- one would need to advertise a
| bit more to convince people to buy a more expensive shoe, but
| this should be less than linear. And operating expenses
| (retail square footage, warehouse space, cashiers, shipping
| and handling) are almost independent of the cost of the pair
| of shoes.
|
| All that being said, tariffs drive up the cost of living,
| which drives up wages, which makes everything more expensive.
| Vvector wrote:
| But the cost of buying and holding inventory goes up. If a
| store has 10k shoes in inventory @ $50/each, they are carrying
| $500,000 in inventory. If the shoes now cost $75, they need
| $250k more for inventory. Capital for inventory isn't free.
| anthony_d wrote:
| The need for inventory decreases at the same rate as the
| sales throughout, e.g. if it takes twice as long to sell a
| pair of shoes than you only need to hold half as many.
| alangibson wrote:
| Short answer is return on investment. If I get $50 on a $75
| investment when I used to get it on a $50 investment, my ROI
| goes down. My investors are now mad. They sell their stakes and
| buy into a company with a better ROI. My stock price goes down
| and now I'm mad.
| matt-p wrote:
| In theory, you're right, however it ignores some key points;
|
| -Some of their costs are in fact linear based on the cost of
| the item.
|
| Inventory cost doubles, perhaps now they have to take out
| higher interest debt to finance that. Things like insurance
| would also at least double.
|
| Transaction fees (like card fees at about ~2%) and other parts
| (like returns risk) also increase linearly.
|
| -Reduced sales due to increased prices.
|
| If an item is less affordable people buy less of them. Theft
| will also go up. If trainers were $100 a week ago and are now
| $200 - you will sell less, they will be stolen more.
|
| All in you actually do need more than the fixed $50 of margin
| if the wholesale cost of the item changes from $50 to $100 - it
| may actually be that $100 is the correct number, or even too
| little - sales volume would concern me the most, particularly
| on this 'luxury' item.
| bgirard wrote:
| Presuming that theft rates will increase also if the item is
| more costly and affordable to less[edit*] people. Also if
| inventory is damaged in the warehouse or on the sales floor,
| lost or unsold then those cost scale with the cost of the
| item.
| matt-p wrote:
| To less people? I think I touched on that but yes.
|
| All of that would typically be tied together as inventory
| cost (aside from theft, though some people do).
|
| Lots of fascinating things in retail. Around half of all
| theft will be from your own employees, for example.
| hmottestad wrote:
| I think it depends a lot. I remember working in retail for a
| summer and saw some of the prices. If you wanted to buy an
| alarm clock, that was 100% markup, but if you wanted to buy
| the Garmin GPS then it was 15% markup.
|
| I would think that specialised and expensive shoes have less
| markup than cheaper and more common shoes. But if the cheaper
| and more common shoes become 50% more expensive then there
| aren't really any cheap shoes left to feed the bottom line...
| matt-p wrote:
| Sure, but that has nothing to do with costs and everything
| to do with what the market will bear (while still
| recovering costs).
|
| People will go and shop around for the best price on a $300
| item, but for a $10 item they'll buy whatever's infront of
| them, so long as it's not clearly outrageous.
| treis wrote:
| Because it's mostly wrong. Luxury goods like Nike's, iPhones,
| et.al. are priced to maximize revenue. If those started growing
| on trees for free it wouldn't appreciably change the price.
| They'd just bank the extra as profit.
| kstrauser wrote:
| An aside: the actual functional Nikes aren't luxury items,
| just really good shoes. My wife's a foot surgeon and she
| won't run in anything else because they fit her perfectly.
|
| I've never found Nikes that work for me, but Brooks seem
| custom made for me personally, so that's what I get. They're
| about the same price as my wife's Nikes.
| hx8 wrote:
| I agree fully. Having comfortable shoes with reasonable
| lifespans isn't a luxury.
|
| If you spend more money and get a proportional increase in
| quality, that's not luxury. A luxury good occurs when the
| marginal increase in quality cannot be justified by the
| increase in price. For example, you could buy a quartz
| Casio for $25 that's more accurate than a $10,000
| mechanical Rolex. Both tell you the same time.
| lupire wrote:
| Every product is priced to maximize profit (not revenue).
|
| Apple sells lots of phones at different price points. So
| there is some price sensitivity via a vis value for money or
| competitive pressure.
| gorbachev wrote:
| The truly luxury Nikes, the ones that cost way more than $100
| - $150 are not priced to maximize revenue, however. The
| evidence is their pricing on secondary markets, which often
| price them at multiples of the retail price.
| UncleEntity wrote:
| The difference between selling every shoe at $150 and
| selling less than every shoe at $300 (or whatever the
| secondary market is charging) probably gets tossed around
| in pricing meetings.
|
| Plus, higher secondary market prices drive demand for the
| less desirable shoes as everyone can't afford to spend a
| week's wages on a pair of shoes but can stretch their
| budget for the still-kind-of-cool models. I'd go so far as
| to say the secondary market prices drive more demand for
| the lesser models as the cool kids want to be seen wearing
| what the rich cool kids are wearing.
|
| I'm sure they spend a lot of time discussing what price
| they can charge without people openly revolting against
| their 'predatory pricing' strategies.
| NegativeLatency wrote:
| They'll sell fewer $150 shoes than $100 shoes?
| ajmurmann wrote:
| In addition to the points others are making, there is also the
| increased cost of inventory that doesn't sell. The flipside to
| the high markups from retailers is the high discounts you get
| on last season's fashion. This is the "fixed percentage to
| avoid losses"
| dizhn wrote:
| My local produce store was complaing about this. The prices
| increased about 20 fold. What was once a small loss due to
| spoilage now became significant.
| oliwarner wrote:
| Margin isn't profit. It's gross, before all your business
| expenses. If it's anything like the second example, they only
| see a few dollars out of that $50 as corporate profit.
| allturtles wrote:
| There was a very good exploration of this in the context of
| boardgames here: https://stonemaiergames.com/the-math-of-
| tariffs/
| crazygringo wrote:
| It's a great question, and the answer is that you're missing
| the change in demand.
|
| Let's say Foot Locker tries to keep the same absolute profit
| $50 and retails the shoes for $125 instead of the previous
| $100.
|
| Now demand goes down, because more people will skip a new pair
| of sneakers. So Foot Locker's absolute profit goes _down_.
|
| But they still have the same fixed retail space, advertising,
| and labor as you said.
|
| So to try to keep their profitability, they need to increase
| the price _more_ , which reduces demand _even more_ , but it
| settles somewhere higher. And the place it settles (where total
| absolute profit is maximized) tends to be around the same 100%
| markup as before.
|
| It doesn't need to be _exactly_ the same, but as a general rule
| of thumb, these things do tend to work in proportional terms
| rather than absolute terms. And we 're fortunate they do,
| because when manufacturing costs fall, that means absolute
| profit per unit can fall as well (while percentage remains the
| same), because it's made up for by more people buying.
| rvnx wrote:
| There is also the fact that with each USD you can buy less
| and less as a private person.
|
| So to have the same quality of life, you expect higher
| returns.
|
| Which mean that you will choose to invest into companies that
| offers a better return, and for that, these companies will
| have raise their prices, which in turn, spirals into
| additional price raises.
| crazygringo wrote:
| That's not the fundamental cause, though. Companies can't
| just raise prices to achieve whatever return they want,
| because once you go above the profit-maximizing price, the
| fall in demand outweighs additional revenue per item, and
| once you go above competitor's prices, demand similarly
| falls.
|
| Yes investors look for maximal returns, but those are
| limited. Fundamentally the ceiling is set by demand and by
| your competitor's prices.
| bryanrasmussen wrote:
| I seem to remember from many years ago in retail that you
| should double charges every step of the way, so if you are
| paying 20 dollars for a t-shirt you should be charging at least
| 40 for it, as a sort of rule of thumb.
| tshaddox wrote:
| Isn't that pretty intuitive? Imagine if they had to spend one
| million dollars in order to make $50 profit.
| mclau156 wrote:
| Every single person in the supply chain has a lever they can
| pull to change price, except the end consumer
| lostlogin wrote:
| > except the end consumer
|
| You can usually change what you buy.
| tim333 wrote:
| >why do they need to claim $75 profit/shoe in their costs per
| shoe go up?
|
| A lot of the costs come from bidding against other retailers
| for employees and retail space. If you don't make as much as
| the rival retailer they'll outbid you.
|
| You can sometimes get around that by buying direct from the
| internet.
| conductr wrote:
| Margin as a % is a key metric, more so than margin as a $. It's
| not always sensical but it's dominant in the
| business/investment community.
|
| For example, you may announce to public markets that your
| profit has increased $10M despite margins eroding from 50% to
| 30%. You will likely be punished in terms of stock price. This
| is because you sold a lot more or trimmed some expenses (which
| is short-term good) but you are also now more risky because if
| sales decrease you will more easily run into trouble breaking
| even/covering operating costs (which is long-term bad).
| aimor wrote:
| Trying to summarize the summary for myself
|
| From a $100 shoe that sells for $76:
|
| - $24 goes overseas (22 cost, 2 freight)
|
| - $8 goes to the US gov't (3 import, 2 Nike tax, 3 Footlocker
| tax)
|
| - $33 goes to US employees or businesses (5 Nike marketing, 11
| Nike expenses, 17 Footlocker expenses)
|
| - $5 goes to Nike (11% return)
|
| - $6 goes to Footlocker (8% return)
|
| But now with 100% tariffs, it's a $100 shoe that sells for $100
| (or a $132 shoe that sells for $100) and:
|
| - $24 goes overseas (22 cost, 2 freight)
|
| - $29 goes to the US gov't (22 import, 3 Nike tax, 4 Footlocker
| tax)
|
| - $33 goes to US employees or businesses (5 Nike marketing, 11
| Nike expenses, 17 Footlocker expenses)
|
| - $7 goes to Nike (11% return, 7.15 exactly)
|
| - $7 goes to Footlocker (8% return, 7.45 exactly)
|
| And if a US shoemaker wanted to undercut the import, a Made in
| USA shoe that sells for $100:
|
| - $7+ goes to the US gov't (? shoemaker tax, 3 Nike tax, 4
| Footlocker tax)
|
| - $79 goes to US employees or businesses (46 to shoemaker, 5 Nike
| marketing, 11 Nike expenses, 17 Footlocker expenses)
|
| - $7 goes to Nike (11% return, 7.15 exactly)
|
| - $7 goes to Footlocker (8% return, 7.45 exactly)
| milesskorpen wrote:
| The piece to add there is that all this money is getting paid
| by the consumer. The overseas piece doesn't change, same number
| of US dollars going to the other country. The $24 increase in
| cost is paid by the US consumer.
| slg wrote:
| It's just a sales tax. I don't know why people opposing
| tariffs never talk about them in this manner because sales
| taxes are something people innately understand if they have
| spent any time in the US and "tariffs" clearly aren't as well
| understood.
| ajmurmann wrote:
| It's worse than a sales tax. Tariffs have a few market-
| distorting effects that a sales tax doesn't.
|
| * Domestic consumers and companies are incentivized to
| potentially go for the 2nd best product. This over time can
| impact productivity as the tooling will decline over time
| as inferior solutions are bought.
|
| * Reduced competition. We've seen this with the 25%
| "chicken tax" on pickup trucks. Arguably one culprit in US
| automakers falling behind is that they had a protected
| market around pickup trucks where it was hard to impossible
| for foreign competition to keep them on their toes. So US
| automakers retreated more and more into this safe haven.
|
| * Destruction of economies of scale: If everyone wants the
| entire supply chain to be replicated in their country, we
| obviously loose economies of scale and thus efficiency.
| This sounds like it would be small but having multiple
| Shenzhen's is just not viable and we'll have to deal with
| higher prices and less product choice.
|
| * Galapagos island syndrome: Over time separation of
| markets can lead to incompatible technologies which
| amplifies all other points.
| lostlogin wrote:
| > Tariffs have a few market-distorting effects that a
| sales tax doesn't.
|
| There are still stupid edge cases. The cake-versus-
| biscuit saga in the UK comes to mind.
|
| https://en.m.wikipedia.org/wiki/Jaffa_Cakes
| ajmurmann wrote:
| Just double checking, you are saying reduced competition
| and scale economics are "stupid edge cases"?
| lostlogin wrote:
| I'm saying that using a courtroom to decide the
| definition of a biscuit indicates a problem with sales
| tax legislation.
|
| Flat rate sales tax has its problems, but avoiding Jaffa
| cake situations is entirely desirable.
| lostlogin wrote:
| > sales taxes are something people innately understand if
| they have spent any time in the US
|
| The way they are done in the US is maddening. You go to the
| counter and find the price is higher than the tag price by
| some random amount. It seems to vary wherever you go and
| depend on what you buy.
|
| A tariff might actually be better.
| peterfirefly wrote:
| There's actually a really good argument in favour of that
| -- and in favour of paying income tax not as a direct tax
| (withheld from wages) but with a delay.
|
| It makes the taxes visible and painful and they will
| therefore (potentially) not rise as fast or as much.
| milesskorpen wrote:
| I think that's an argument, but not necessarily a good
| one
|
| Need to balance transparency in pricing vs. visibility of
| taxes. I don't think sales taxes are actually all that
| visible most of the time- it's not like the cashier is
| telling you "and your taxes are $X." But it does make it
| much harder to detect if the store is charging you more
| than list price.
| aimor wrote:
| Yes that's right. The manufacturing cost in the US would have
| to be $46 or less to undercut the import. So ignoring tax
| changes, something like...
|
| A Made in USA shoe that sells for $100:
|
| - $7+ goes to the US gov't (? shoemaker tax, 3 Nike tax, 4
| Footlocker tax)
|
| - $79 goes to US employees or businesses (46 to shoemaker, 5
| Nike marketing, 11 Nike expenses, 17 Footlocker expenses)
|
| - $7 goes to Nike (11% return, 7.15 exactly)
|
| - $7 goes to Footlocker (8% return, 7.45 exactly)
| barbazoo wrote:
| That's what I don't get. It's always phrased as the US
| somehow making all this money when in reality it's Americans
| that are paying for it. Among other reasons to be able to
| afford tax cuts in the future. Sure this will hurt other
| economies but primarily right now it seems to hurt the
| American economy and people the most.
| singron wrote:
| Just to say the obvious, they are also going to sell
| fewer/cheaper shoes according to the demand elasticity since
| the consumer price is 32% higher. Despite Nike making slightly
| more on a per-shoe basis, they are probably going to make less
| overall.
| washadjeffmad wrote:
| I wouldn't assume that they wouldn't segment products. Nike
| already offers more expensive lines with higher margins to
| offset less profitable ones. Why should we expect them to
| pass on direct costs to customers?
|
| The blog also doesn't acknowledge the externalities of
| shipping. Having a "Nike USA" brand that becomes their
| premium domestic flagship won't incur the same logistical
| expenses or tariffs. I may be biased because I'm from a
| debtor colony that understood there's no way free people can
| compete with slave labor, but the distaste for compensating
| workers is largely a classist taboo.
|
| People are theorycrafting ways to lose, but I would only
| expect that from a company that was trying to signal their
| disdain for current trade policy, not actually run their
| business.
| SV_BubbleTime wrote:
| Is there a reason, be-it special buildings, tools, skills that
| shoes can not be made in the US to avoid the tariffs?
|
| If Nike shoes exceed the cost of domestically produced shoes,
| isn't that... like... kind of the point?
| rsoto2 wrote:
| Every country has optimized their own economy so it's
| incredibly cheap for us to import shoes, or it was. Now it is
| not, so sure we could try to make some cheap shoes here. But
| now we have to make cheap shoes, grow cheap citrus veggies,
| make cheap computer chips, make cheap needles etc etc.
|
| How much capacity do you think the US has to manufacture
| these things? and what about the supplies?
| SoftTalker wrote:
| > As the US has switched to a post-industrial economy, a lot of
| the wage growth has been in knowledge intensive services--
| medicine, law, engineering.
|
| I.e. bullshit jobs.
| hackeraccount wrote:
| Hey! There's no need to make fun of my job!
| Gothmog69 wrote:
| I mean only one of those is a bullshit job.
| ck2 wrote:
| I was going to link the excellent solereview article but it looks
| like that's exactly what the post is about.
|
| I used to be able to buy good running shoes on clearance every
| year at $30-$50
|
| Even through 2020-2021 or so
|
| But not anymore, now even on "clearance" they almost never drop
| below $100 and never ever to $50
| yapyap wrote:
| This derekguy guy always has the best posts clothing related
| afaik.
|
| Also > Again, it's a popular misconception that all overseas
| production is sweatshops. Production can be done ethically abroad
| and still be relatively cheap because the cost of living is not
| the same everywhere. I encourage you to note assume that every
| Asian worker is a slave
|
| No not necessarily slave slaves but I do assume they're wage
| slaves, at least the line workers, the higher ups will be
| compensated a bit better I'm sure.
| xpe wrote:
| Are comfortable and repairable shoes possible and sensible from
| an economic point of view? Any recommendations?
| crazygringo wrote:
| Classic leather dress shoes can last decades and can be resoled
| many times.
|
| But most people don't consider them comfortable. More the
| opposite.
|
| But no, the foam and rubber modern "comfortable" shoes are made
| of are not repairable. Fundamentally, the foam or other sole
| material simply breaks down. The rubber wears away. And the
| woven and plastic materials the upper are made of fray, lose
| padding, and otherwise break down as well.
| codazoda wrote:
| I don't think they are right now.
|
| I have very wide feet, so much so that I've seriously
| considered manufacturing my own shoes (possibly with a 3D
| printer). Shoe makers and repair shops do exist but they are
| becoming quite rare.
|
| My understanding is that a good quality repairable shoe is
| about $500 or about 5x the price of the $100 shoe we're talking
| about. Repairing it is labor intensive and adds even more to
| that cost. So, I can buy at least 5 pairs of $100 shoes for the
| price of a good quality and repairable shoe and that doesn't
| consider the repair costs.
| singron wrote:
| I've used shoe goo to get more life out of shoes. It's marketed
| as an adhesive, but you can apply it to the bottom of the sole
| to rebuild thickness to the tread. A single tube could be used
| for dozens of repairs. After that for me, usually the textiles
| in the upper fray from the inside out, and I just ignore it
| until it becomes externally visible or uncomfortable.
|
| I don't think more extensive repairs are economical, and you
| are better off wearing shoes you like until they disintegrate.
| There is a bit of mythology about buying expensive boots and
| repairing them in the hope that it's more economical, but it's
| really not: https://mastodon.social/@danluu/111068432320682422
| TrackerFF wrote:
| I've had a couple of leather shoes (goodyear welted oxfords)
| repaired, and the last pair cost me around $100 to get re-
| soled. It was a local cobbler that has a very, very small shop.
|
| I mean if you pay $300 and up for a pair of shoes, it could
| make sense. If you pay $100 for a pair, you might as well just
| purchase a new pair. In my case I re-sole the shoes because my
| shoes fit me well, and they're more on the high-end and thus
| I've paid a bit for them at the time of purchase. Makes sense
| for me to re-sole a pair of $1k shoes, rather than purchase a
| new pair.
|
| To get the prices down, you'd need a lot more cobblers though.
| And there just aren't many going to trade school for that. It
| is very much a "artisanal" craft today, akin to tailoring.
| H1Supreme wrote:
| I have 4 pairs of Allen Edmonds shoes. The oldest pair is 6 or
| 7 years old. With some light care (conditioning / polishing)
| they've held up very well. To address another comment about
| comfort: They're quite uncomfortable at first. Over time the
| leather (and cork insoles) mold to your foot. Making them
| comfortable.
|
| These are leather dress shoes though. As far as I know, this
| doesn't exist in the athletic shoe world. Considering the
| materials used in athletic shoes, I don't know how a
| "repairable" athletic shoe could exist without some serious re-
| engineering.
| sitkack wrote:
| Article has absolutely nothing to do with the actual cost of
| shoes. Just the simple cost of model of manufacture ->
| distributor -> retailer. Nothingburger.
| asdefghyk wrote:
| my guess, less than $5
| chrisco255 wrote:
| This is closer to correct than the article's claims. You can
| buy sneakers for $3 on Alibaba, as an individual:
| https://www.alibaba.com/product-detail/Cheap-New-Trendy-Leat...
| e44858 wrote:
| Or $0.80 if you make a big order of 100k.
| crmi wrote:
| Interesting article but fails to mention about Nike big pivot to
| DTC around covid times. So will likely be taking home a lot more
| than 9% (or _were_ up til last year)
| amotinga wrote:
| what is DTC?
| asadotzler wrote:
| probably direct to consumer, website sales and the like.
| crmi wrote:
| Yes, direct to consumer
| hed wrote:
| Direct To Consumer. Selling directly to their customers on
| Nike.com disintermediating Foot Locker or another
| distributor/retailer network.
| jimt1234 wrote:
| Sorta related: Those Crocs/clogs shoes have been _extremely_
| popular for a few years now. ... I 've always wondered how much
| it costs to make that type of shoes (Crocs/clogs) - it can't cost
| more than $1 to make most of them; they're just injection-molded,
| right?
| josefresco wrote:
| You can buy Croc knockoffs at the "Dollar Store" yet Crocs
| still exists. Why? Is it purely first-mover advantage/brand or
| is there an engineering edge?
| mkipper wrote:
| There are _some_ differences in quality, but I think they're
| pretty minor.
|
| I recently visited the Philippines and a friend bought some
| knockoff Crocs at a market. The little rivet thing holding
| the strap to the shoe had the logo printed right on the
| exposed plastic, and after a few days, the logo was mostly
| scratched off. But my wife's Crocs that she bought a decade
| ago still look fine because there's some sort of sealant on
| top of the logo.
|
| Is that worth an 800% markup? Probably not. But the knockoffs
| do cut some corners that the genuine articles don't.
| thfuran wrote:
| Do Crocs bought today match up to those old ones?
| lolinder wrote:
| I had a pair of knockoffs that were passable for limited
| purposes but certainly didn't pass muster as my primary shoe.
| I thought that the style just wasn't my thing. Then I got a
| pair of real Crocs and they very quickly became my go to for
| most purposes.
|
| I don't know enough about shoes to explain why, but the
| difference in comfort level was huge.
| swah wrote:
| I don't know about Crocs but brazilian flip-flops "Havaianas"
| never lost market share even though it feels so trivial to
| clone it.
|
| The only two modes of failure of this sandal is "drying up"
| after a couple years and broken thong straps (yes, 3rd
| parties sell those as replacements..)
|
| I guess they make sure they have cheap offerings and are
| always investing in design and marketing so no one can enter
| this market..
| adamweld wrote:
| The material used by genuine Crocs seems to last much longer.
| My brother bought some knock-offs at the same time that I
| picked up a new pair. He wore through the soles in about two
| years while mine are still kicking after almost 8 years of
| near-daily use.
|
| You can get the genuine ones for $18 to $35 on ebay depending
| on the color, so while I'm sure you can save some on clones
| it's not worth it for the durability and comfort.
| skirge wrote:
| cost != value and value != price. and consider alternative cost -
| highly trained workforce making shoes is a waste of resources.
| logifail wrote:
| According to https://news.ycombinator.com/item?id=41283368 we
| should be linking to the primary source.
|
| Q: Is there a specific reason* that this thread links to
| threadreaderapp?
|
| * other than politics, which we try Really Hard not to bring into
| HN...
| devb wrote:
| One great reason is that you need an account on X to read the
| thread. I deleted my account many months ago, along with many,
| many other people.
| logifail wrote:
| I've just opened https://x.com/dieworkwear in a private
| browsing window and - from here at least - I don't appear to
| need an account.
| gdown wrote:
| From what I can tell you need an x account to read replies,
| so I can only see the first tiny bit of the thread without
| an unroller. (For this thread:
| https://x.com/dieworkwear/status/1909741170953273353)
| octernion wrote:
| afaik you still need an account to read more than the first
| post in a thread, and many of us don't have twitter accounts
| any longer
| axegon_ wrote:
| There was an interview with the local marketing managers for Coca
| Cola and Pepsi when I was a kid. I vaguely remember it (and also
| the idea was somewhat foreign to me since the world had just
| started opening for eastern Europe and it was the first time many
| of us heard the names such as Coca Cola, McDonald's, etc). The
| one thing that stood out was the Pepsi manager raging about
| campaigns, failed products and whatnot. The Coca Cola manager
| calmy looked at him and said: "Sir... Look at our product... Who
| in their right mind would pay for a rusty-colored liquid as a
| beverage? Absolutely no one. It's all about the advertisement".
|
| Same story here - would you buy a pair of shoes from anyone,
| seeing the horrible conditions they work in, sleep deprivation
| and poverty if you knew they'd still get close to nothing?
| Probably not. You see a fancy store (or website these days), you
| see a product you like and you're invited to open up your wallet
| for a fancy pair of shoes. Deep down you still know they came
| from the people working in horrible conditions but, you know, out
| of sight, out of mind. And thus, you are willing to pay the extra
| price.
| sys32768 wrote:
| I prefer leather shoes that last five years or more, and will
| happily spend $200+ for them.
| _diyar wrote:
| How is this relevant to the article?
| int_19h wrote:
| That is great for those who can afford $200+ shoes, not so much
| for those who're already struggling to make ends meet. Sure, in
| principle, they will save more long term. But it'll take time
| for those savings to realize, and they need shoes _now_ (to
| wear them to work, for one).
| raincom wrote:
| I worked in the retail; it is the shittiest job I ever had. I was
| given an abnormal schedule: two days closing, one day opening,
| one mid shift (and I should work either Saturday or Sunday). The
| churn is really high: people leave even if they find a better yet
| shitty job. Which jobs do you want to create in US? Retail jobs
| or manufacturing jobs?
| chrisco255 wrote:
| Both!
| phkahler wrote:
| I've always wondered why the supply chain has exponential price
| increase at each step. The example given (guessed at) is the
| factory produces the shoe for $12.5 and sells it to Nike for $25.
| Nike then sells it to Footlocker for $50 and they then sell to a
| customer for $100. Everyone expects to mark up their costs by
| about 100 percent. Why is that the case? Even if we say the
| markup isn't 100 percent, why is it a percentage of cost at all?
| If the shoe factory can make $12 then why can't Nike and
| Footlocker both make $12 and retail the shoe for $50?
|
| I'm not saying things should be different, just wondering why it
| is the way it is. If Footlocker was also selling some cheapo shoe
| for $50 presumably they do the same amount of work to bring that
| to the store. Are they only paying $25 for those? Why does it
| cost half for them to handle a cheaper shoe?
| sandermvanvliet wrote:
| Isn't this simply taking advantage of what the market is
| willing to pay?
| gnfedhjmm2 wrote:
| Because then one unit of thing is theoretically one standard
| deviation from being profitable. So you can have a break even
| price.
| phkahler wrote:
| Can you clarify that? It sounds like there may be theory
| behind it, or are you trolling?
| yibg wrote:
| The numbers at each step is only considering the marginal cost.
| There are various overheads that are fixed, some described in
| the article. And of the day the actual profit at each step
| isn't necessarily very high.
| audunw wrote:
| On thing you have to consider is the scale at which these shoes
| are sold at each step. From the factory they're processed and
| shipped in giant containers. The overhead of handling each shoe
| is fairly small at that stage.
|
| When it comes to the retailer, there's a huge increase in the
| amount of work and overhead for each shoe sold. And the labor
| cost for that work is much higher than on the Asian side of the
| supply chain. That's also where you get potential waste from
| returns and discarded inventory and such. The retailer also
| have their own marketing costs.
|
| I don't find it strange at all that the retailer expects a 100%
| markup.
| blitzar wrote:
| Real estate is insanely expensive - you have to sell a lot of
| shoes with your "100% markup" to make rent.
|
| The flip side however - e-commerce with its totally different
| cost structure and same traditional RRP as brick and mortar
| retail - should be - a gift from above for retailers.
| hnburnsy wrote:
| The thread was kind of hand wavy over the "$24* discount" for
| Footlocker? From the linked article...
|
| >Footlocker's purchase price (read footnote #3) for every sale of
| $100 shows up as $66 in their financial reports, and not $50. In
| plain terms, Footlocker sells its merchandise for a 24% discount
| on the average.
|
| So $100 was never the sale price, just some made up, hoped for
| number that only appears on the shoe box, and not on anyone's
| financial statements. Really this should be Footlocker makes $6
| on selling a $66 sneaker, for a margin of ~9%.
|
| BTW, both Footlocker and Dick's have gross margins ~30% but
| Dick's has an operating margin around 12% while FL is 1-2%.
| Clearly FL is an inferior retailer.
|
| And the linked article does cover Nike selling directly...
|
| >And what happens if brands skip the retailers and operate their
| own stores? adidas and Nike already have their own shops, but
| direct-to-customer retail comes with its set of challenges.
| Brands will incur costs otherwise absent in the wholesale
| business model; spends like leasing+manpower+operational costs,
| store set-up and periodic re-modelling cost, the entire risk of
| inventory, and costs associated with warehousing and
| distribution. That's only at the store level, there will be
| additional off-site resources needed in the back-end to support
| retail operations. The brands will make some extra margin selling
| out of their own stores, but the best case scenario will be an
| additional 10%, which is slightly above what a highly evolved
| retailer like Footlocker makes annually after taxes.
|
| I would argue that a great deal of selling today is direct, no
| stores involved at all.
| timothyduong wrote:
| " I would argue that a great deal of selling today is direct,
| no stores involved at all."
|
| That assumption burnt the previous Nike CEO post COVID.
| Spivak wrote:
| Yep, direct from the manufacturer-- no. Direct from the
| retailer without touching a physical store-- yes.
| jay_kyburz wrote:
| You can buy shoes directly from Nike here in Australia. Is
| that not the same in the states?
| notatoad wrote:
| >So $100 was never the sale price, just some made up, hoped for
| number that only appears on the shoe box, and not on anyone's
| financial statements. Really this should be Footlocker makes $6
| on selling a $66 sneaker, for a margin of ~9%.
|
| yes. but any arguments you see in favour of onshoring
| manufacturing would use undiscounted list prices, so it makes
| sense to start from that place.
| AtlasBarfed wrote:
| "Everyone needs a fixed percentage to make money"
|
| I get they WANT to, and it's what a shoe retail strives for, but
| this isn't accurate.
|
| Cars for example aren't 100% marked up. That would be insanity.
| bluedino wrote:
| Shoe dealerships don't sell used shoes and have service/parts
| departments where they make most of their money
| bluedino wrote:
| What about the $25 shoes at Walmart?
| markus_zhang wrote:
| I hope the elites of US are not thinking about moving shoe-making
| back to the US because it doesn't make sense.
|
| I'm sure (I hope, actually) that some policymakers, or some
| researchers, have done some conclusive researches about -- give X
| years into the future, and let's see we do not want to disrupt
| the current social-economic reality too much (no revolution, no
| major wealth re-distribution, no world wars, etc.), which
| industries can we bring back, and into which state, and sell its
| products into which countries, realistically.
| bloppe wrote:
| The opinions of "elites" simply don't matter. There's only one
| guy who matters when it comes to policy now. And he's not known
| for his thinking abilities
| markus_zhang wrote:
| If the elites don't disagree with him I'd say they probably
| "in average" agree with him. Trump is just one man.
| codexb wrote:
| It doesn't make _financial_ sense when the tax policy of the US
| is to tax domestic companies that produce things but not
| foreign companies that produce things and benefit from selling
| them in the US market.
|
| We don't need to do research to decide what makes "sense". The
| market will figure out what makes financial sense themselves.
| The only thing we need to know is what the tax rate for foreign
| producers should be so that domestic companies are not the only
| ones shouldering the federal tax burden.
| 2muchcoffeeman wrote:
| Once I was in the US and bought a pair of New Balance that were
| made in USA. I had the exact same model made in Vietnam or
| Indonesia.
|
| The Asian made shoe of the same model out lasted the US shoe by a
| couple years. The US made started falling apart less than a year
| in.
| christkv wrote:
| Relatively easy stuff like shoes can be made in a bunch of
| countries and that production will just move to whoever has the
| best tariff deal at the end of all of this.
|
| More interesting will be stuff like electronic components. Most
| of the cheap versions are all made in China. More expensive
| versions can be sourced in Japan, Taiwan and Korea (likely to do
| tariff deals). I think we might be looking at the end of very
| cheap electronics for awhile.
| ForOldHack wrote:
| "I encourage you to note assume that every Asian worker is a
| slave." I do NOTE, that I was on Korea for 18 months, and saw
| over 20 factories, and knew a few people that worked there. They
| were making 1/10 of the minimum wage in America at the time,
| $0.75 vs $7.50, Today they are making $6.94, so I would assume
| that They are making few shoes in Korea.
|
| "While it's difficult to pinpoint exactly which country pays the
| absolute least for shoe manufacturing, countries like Vietnam and
| Cambodia are known for having lower labor costs and are major
| footwear exporters, making them likely to be at the lower end of
| the wage scale for shoe production."
|
| In Cambodia, they pay $208 per month, which is assuming a 160
| hour work month, which I guarantee is the bare minimum which
| gives them $1.30 in wages per hour.
|
| "In Vietnam, shoe manufacturing workers typically earn wages that
| are significantly below a living wage, though some companies
| affiliated with the Fair Labor Association (FLA) pay double the
| minimum wage."
|
| In Vietnam they pay $68/ month, which is $0.42 and 1/2 cents an
| hour.
|
| The premise of the article, and the statistics they use are all
| based on preported manufactures claims, not the reality that
| exists in that country.
|
| I would dismiss this article as pure fantasy.
| le-mark wrote:
| Clearly shoes and textiles in general are extremely difficult to
| automate, but you only have to build one shoe building robot, and
| copy it. Why hasn't this been done? Expecting a "too hard" answer
| honestly, but is it really?
| FredPret wrote:
| Manufacturing machines are hard to invent, and harder to keep
| running right, and even harder to network together into an
| effective factory. You need skilled operators, technicians, and
| engineers to design and run a factory.
|
| You also need to put down a big whack of capital upfront and
| will see a return years down the line, hopefully.
|
| With low enough wages, it could easily be financially better to
| rent a big building in the third world and staff it with actual
| people.
| dbacar wrote:
| "I encourage you to note assume that every Asian worker is a
| slave. " The tone of this sentence, I dont know, a bit
| disturbing.
| 486sx33 wrote:
| Now they'll just have to make shoes for $11 or new balance will
| have to come back to North American manufacturing and make shoes
| for $40 wholesale
|
| Shipping , customs , duty , port fees , transportation ,
| packaging that can survive across the ocean should all be things
| that make the product unrealistic to make outside North America,
| not to mention environmental tariffs that should be applied to
| products made in Asia.
| cryptoegorophy wrote:
| I recently bought shoes while in Thailand on lazada $1.5 with
| shipping. Of course the quality was terrible and all, but I just
| don't get it how they could cost less than $1. My guess is labor
| camps.
| stevage wrote:
| > First, adding $26 tariff at the port doesn't just add $26 to
| the final price. Everything here works off of percentages.
|
| This doesn't have to be the case though, right? It seems very
| weird that when you jack up tariffs, some middleman in America is
| seeing their profit jump.
| dcow wrote:
| I wish the discussion included the margins the fashion industry
| makes. In the labor sector, 10%-20% margin is respectable. But in
| the fashion and consumer goods sector at least 30% margins are
| expected. 80% margins are normal for "luxury" goods, which I'm
| sure is the bracket Nike falls into. I wish margins were included
| in the thread. It's only true that everything increases in cost
| if you also have to keep the same margins.
| hyperpape wrote:
| There are profit margins in the thread. They're a lot lower
| than what you described.
| numitus wrote:
| This shows how non-automated retail is. on the production line,
| workers assemble the crosses in 5 minutes. And when selling, the
| courier will spend 15 minutes looking for your house to give it
| to you. It is reason why production is 1/4 of the price
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