If this argument was true, they would not even have tried competing in manufacturing.
You need to understand why it is true.
The US manufactures 12 fold what it manufactured in 1945, it does it with only a million more people than were employed in 1945 in manufacturing jobs. Productivity growth is slow, but it is relentless. The reason we can produce so much more is because capital equipment and improved technology allows US manufacturing companies to produce so much more stuff with far fewer people.
In the US people are more expensive than machines because we have a high cost of living and high employment costs. It pays to reduce head count with capital equipment, patents and R&D needed to improve processes. This makes each US employee in manufacturing highly productive, regardless of their level of education or expertise. Higher order goods are capital intensive, even retail in the US is now capital intensive due to the high cost of labor.
China, OTOH, because of it's inexpensive standard of living and low wages, much smaller capital base, has a hard time being competitive (against other Chinese companies) when they replace people with machines. Capital equipment is relatively more expensive for them, than people are, even highly educated ones. This will be true until they start to approach income parity with the developed world. So they are far better off competing with us in those industries which require a high head count and not a high capital expenditure. They make the stuff we used to make, sometimes even the way we used to make it. Meanwhile we make the stuff they can't make yet because their capital base isn't mature enough yet.
Some of the people with deepest technical knowledge in the fields you mentioned are of Indian or Chinese origin.
And those educations are completely useless in an under-developed environment. Ask a few bio-chemists of Asian descent why they are here working.
And if you are the biggest manufacturer of PCs in the world, don't you think you would have the brightest minds in Silicon Valley
You assume that the best can work anywhere in the world, assuming where the largest concentration of smart people are and where the living expense is low.... but if that were true why would Silicon Valley exist where it does now? You assume it is the minds which create the goods and this is true to an extent, but even the most brilliant mind in China in the 57 years of Communist rule couldn't do what a mediocre student could do in Silicon Valley.
Inventors and entrepreneurs require access to risk capital, before you risk your capital you require good personal property laws including protection for intellectual property (China has very few laws protecting private property and a sometimes capricious interfering government). Capitalists also require low taxes and a non-confiscatory government. Then the finished product requires a populace wealthy enough to afford it and want it. China might produce the best engineers, but I seriously doubt they are all going to try to find work in rural China. A great many people who have great highly skilled jobs in the US would not be able to find a market in China for what they do at any price. Some of the biotech tools we produce here in the US (with our Asian/American workforce) have only the three most developed countries as a market for their wares. This, of course, will change as China and India become more wealthy.
BTW PCs are already commodities, there's no margin in them anymore. If we tried producing them here the biggest PC makers would get eaten alive. We're already on the next thing. |
