Hi Mark, <<microwave oven ... below $50>>
Message 19377792 <<October 7th, 2003
a pair of jeans ... US$15 (in New Zealand) about ... Made in China ... cost 50% of a microwave oven in the Shenzhen Walmart>>
The field will not likely be levelled by what Buffett is suggesting, because (a) the manufacturing of microwave oven will not likely return to USA, (b) Chinese microwave plant will lower cost by moving from coastal region to inland, thus dropping labour component by 30-60%, (c) the handling charges by layers of US middlemen will be squeezed instead, resulting in more downsizing and layoffs, (d) US consumers will either do without microwave oven or pay a higher price out of a reduced income, and (e) given reduced world trade, so comes reduced demand for USD, resulting in higher interest rate, lower dollar, lower propensity to consume, and further spiraling towards TeoTwawKi.
The issues with the US-based manufacturing/service may be expensive dollar, dear land, costly labour, stifling regulations, high debt, low savings, stuffed full of paper shuffling as opposed to capital investments, and constipated by lawyers.
OTOH, the US multinationals with factories all over the world are doing OK.
Chugs, Jay |
