Ford’s CEO, Jim Farley, is very scared of Chinese automakers. He should be. The US trails badly.
An ‘Existential Threat’?!
Jim Farley labels China’s electric carmakers ‘existential threat’.
That’s a term we hear about climate change and nuclear war. But cars?
The Wall Street Journal reports What Scared Ford’s CEO in China
Jim Farley had just returned from China. What the Ford Motor chief executive found during the May visit made him anxious: The local automakers were pulling away in the electric-vehicle race.
In an early-morning call with fellow board member John Thornton, an exasperated Farley unloaded.
The Chinese carmakers are moving at light speed, he told Thornton, a former Goldman Sachs executive who spent years as a senior banker in China. They are using artificial intelligence and other tech in cars that is unlike anything available in the U.S. These Chinese EV makers are using a low-cost supply base to undercut the competition on price, offering slick digital features and aggressively expanding to overseas markets.
“John, this is an existential threat,” Farley said.
In the span of a few years, Chinese EV maker BYD, backed by Warren Buffett, and other domestic brands have clawed away gobs of market share in China from once-dominant foreign rivals, through a combination of lower prices, high-tech interiors and rapid vehicle updates. Today, they are quickly expanding in Europe, the Middle East and other Asian markets.
Shortly after the trip, Farley arranged to have Chinese EVs shipped to Michigan for executives and directors to check out and sit in. The models were displayed in a Ford conference center near its headquarters. During board-meeting coffee breaks, directors took turns fiddling with cars.
One was the first EV from smartphone giant Xiaomi, which has drawn comparisons to a Porsche and sells for $30,000 to $40,000, below Ford’s similarly sized Mustang Mach-E SUV. The Xiaomi has a fragrance diffuser and an infotainment system that can connect to devices inside the home when the car approaches—turning on the home lights or air conditioner, for example.
On a visit to China last year, he watched engineers dissect an electric car from Chinese juggernaut BYD to reveal elegant, low-cost engineering. A spin around a test track in another China-branded EV left him blown away by the car’s ride quality and high-tech features.
BYD’s cheapest EV, the Seagull, starts around $10,000 and features a fashionable cabin; a rotating, iPad-like touch screen; and more than 300 miles of driving range, comparable to EVs from legacy automakers that are priced three times higher. It is currently for sale in China and Latin America and BYD plans to start selling it in Europe next year for around $20,000.
Farley, who races vintage cars and has an encyclopedic knowledge of car models, thrashed the EV around Changan’s sprawling test track in central China, as Ford Chief Financial Officer John Lawler rode shotgun. Afterward the executives sat silently, stunned at the progress Changan had made. The ride was smooth and quiet and the cabin upscale, with easy-to-use technology.
“Jim, this is nothing like before,” Lawler told Farley after the drive. “These guys are ahead of us.”
Ford’s Response is Amusing
Farley and Field huddled around a laptop, looking at a spreadsheet of line items for the future midsize electric pickup. The goal: figure out how to extract $800 in cost.
The team had overachieved on the driving range by 16 miles, Field explained, which meant they could wring out about $500 by shrinking the battery. Finding the rest of the savings would be a slog. Would it really need a heated steering wheel? Maybe the front trunk was expendable, one of the execs suggested.
Before long, Farley worried aloud that they might be cutting too many corners, and that “the product could end up being really sh—y.” He suggested to Field an informal process: How about they slap sticky notes all over the prototype to hash out what should go?
China’s Advantage
Ford is MickeyMousing around with trying to cut $800 here and $500 there when Ford vehicles cost $20,000 too much.
Biden’s response is to up tariffs on Chinese cars by 100 percent.
China has an advantage in labor costs and mineral costs to make batteries.
Team US (Biden, Harris, Trump) all insist on US parts and US labor. Great. This forces US buyers to pay $20,000 more for less features.
China Produces 55 Percent of All Steel, Biden and Trump Eye Tariffs
On May 5, I noted China Produces 55 Percent of All Steel, Biden and Trump Eye Tariffs
China produces nearly 80% more than the next nine biggest steel producers, which are, in order, India, Japan, the US, Russia, South Korea, Turkey, Germany, Brazil and Iran.
Hey, let’s drive up steel costs too. Why not.
Ford Loses $132,000 on Each EV Produced
On April 26, I reported Ford Loses $132,000 on Each EV Produced, Good News, EV Sales Down 20 Percent
Ford (F) reports a huge loss on every EV. Sales are down 20 percent holding the losses to $1.3 billion.
BYD Unveils the “Shark” a Plug-in Hybrid Pickup Truck Built in Mexico
On May 14, I noted BYD Unveils the “Shark” a Plug-in Hybrid Pickup Truck Built in Mexico
The Chinese automaker BYD (Build Your Dreams) announces a 700-mile range PHEV that will be built in Mexico, this year.
Hey, let’s ban those too. So China will sell cars and Trucks in Mexico. Because of tariffs, the US won’t.
Another Green Energy Company Declares Bankruptcy
Conflicting goals often leads to the worst of both outcomes. That’s what’s happening with solar panels and EVs.
For example, please note Another Green Energy Company Declares Bankruptcy, Thank Biden’s Tariffs
Tariffs and Subsidies Backfire
Biden only wants clean energy if it every piece of it is made in the USA. That means higher costs, even with subsidies.
I commented on this in advance as it was easy to see.
The attempt to force production of solar panels in the US resulted in prices so high that few wanted them.
Three Results
- No noticeable increase in US production
- Lost jobs from installers
- No furthering of clean energy goals
The goal now appears to be to put so many restrictions and tariffs on everything without the necessary infrastructure. This makes EVs, solar panels, etc., too damn expensive for the masses to buy.
How’s the EU Doing?
Good question. Please note Volkswagen’s Choice: Fire Union Workers and Cut Costs, or Go Bankrupt
Everyone in Germany is angry over closures and the firing of union workers.
Bottom Line – More Inflation
Here is the bottom line result in case you haven’t figured it out. 370,000 UAW members gain. Biden cheers. The 52 million people buying cars in the US overpay.
Yet, despite all the rules, regulations, mandates, monetary printing, and free money handouts, economists cannot figure out why people are angry.
I recall a bumper sticker decades ago: Hungry, Eat Your Foreign Car.
If only we could.
Meanwhile, Ford’s CEO want to compete with BYD by cutting $800 off a $45,000 car that is $20,000 overpriced.
If the cars did not meet US and EU safety standards they could be denied entry on that basis. So obviously, they do.
This is precisely what the Ford said
1: “this is an existential threat”
2. “Jim, this is nothing like before,” Lawler told Farley after the drive.
3: “These guys are ahead of us.”
If the cars fell apart after three years, consumers would not buy them.
The US cannot compete on a cost/quality basis, thus tariffs.
An additional problem is: Biden, and government in general, promote raising the cost of labor. Especially union labor. This leads to constant inflation. The whole system is geared to growth in the money supply every year, through government printing.
Social Security and pensions then need to index to cover rising costs. Which, in turn, adds to the inflation. We are now trapped in an inflation spiral. Austerity is the only solution to the inflation problem. But nobody is willing to do that. Government’s mantra of constant growth is unrealistic. Most of it now is inflation from deficit spending, that government tries to pass of as growth. There is no growth when the work force is not growing.
Example: If a company like BYD is subsidized to the point where Tesla can no longer compete. And Tesla must close doors. I’m not advocating tariffs, but does the US company (Tesla) just close down until China realizes they can no longer subsidize?
I bought a new Chinese motorcycle 20 years ago. A friend told me I should have bought a used Japanese one instead, and he was right. The Chinese motorcycle was junk, so I wondered how much of a threat the Chinese really are with cars.
Of all places, Chile has a near tariff free car market, and I had read previously China was making some inroads there. Well, it appears they are kicking butt for sure: https://www.france24.com/en/live-news/20240824-chinese-cars-make-inroads-in-latin-america
In Chile, with near-zero duties, Chinese models represented nearly 30 percent of car sales last year.
“We tend to stigmatize Chinese brands, but no… this one was super good, super good. So I don’t regret buying it,” Perez said of his first purchase, which he said he had expected to be “plastic-like.”
And his next car will be Chinese too, he said.
Yeah, it looks like American auto manufacturers are in for a world of hurt. They are going to need the pols to protect them.
We all need to pay more for vehicles so that unskilled union auto workers can drive around in $80K pickup trucks.
Ford shuttered all its plants in Brazil after over a century of manufacturing cars, light and heavy trucks locally. Take a guess on which country the automakers that bought the heavily discounted facilities originate from.
Thanks to all — even those with whom I disagree — for a very interesting and informative discussion.
My solution is not to buy any lithium-ion Elec. car since it might catch on fire in my garage in the middle of the night. It takes 25,000 gallons of water to put the EV fire out & by them my house would be ashes.
I’m waiting for solid state batteries to power EVs.
There is no guarantee solid state batteries will be any safer.
To put out a solid-state battery fire you have to throw solid water at it (ice)
This may not be avaiable outside the UK, but if you can, watch it: https://www.bbc.co.uk/programmes/b01brd8t
Top Gear visits China. Aired in 2012, the summary is: Chinese cars were crap. Now (in 2012) they’re not too bad. Future? Watch out! We are now in the future.
Some Chinese cars are great some are crap Some USA cars are great some are crap
What are the “great” Chinese cars?
Don’t know which are “great”, but these are some numbers for the first two months of 2024.
Top-selling Chinese cars in Europe (January-February 2024)
MG ZS: 14,085
MG4: 8,805
MG HS: 7,795
BYD Atto 3: 2,132
BYD Seal: 1,082
MG5: 1,029
BYD Dolphin: 987
Xpeng G9: 530
MG Marvel R: 362
GWM Ora 03: 320
MG3: 290
Zeekr 001: 263
Maxus Euniq 6: 210
BYD Han: 185
BYD TANG: 167
Omoda 5: 135
GWM Wey 05: 126
Aiways U5: 111
Leapmotor T03: 106
DFSK Seres 3: 85
DFSK Fenguang 580: 79
Beijing X35: 67
NIO ET5: 65
NIO EL6: 62
Geely Atlas: 56
Hongqi E-HS9: 56
NIO ES8: 56
Beijing X55: 51
Xpeng P7: 51
Voyah Free: 47
NIO ET7: 41
JAC E-JS4: 36
NIO EL7: 34
JAC E-JS1: 32
Zeekr X: 31
DFSK iX5: 28
Forthing T5 Evo: 28
SWM G01: 28
Yudo 3: 14
BYD Seal U: 10
Forthing U-Tour: 9
Elaris Pio: 7
Maxus Mifa 9: 7
Maxus Euniq 5: 6
Beijing X7: 4
Elaris Beo: 3
DFSK T5 EVO: 2
Forthing T5: 2
Geometry C: 2
GWM Blue Mountain: 2
Thanks Papa! I had not seen it broken down so detailed. Seems like perhaps sales are down to me. Roughly 20,000 vehicles per month is not many…
I’m sure the Chinese can follow the Japanese by locating much of their production overseas.. No American president is going to put 100% tariffs on products coming from Africa or Mexico. The only answer to China is the rapid development of robots that eliminate humans from the manufacturing process altogether. But that outcome seems about as remote as cold fusion.
“The only answer to China is the rapid development of robots that eliminate humans from the manufacturing process altogether.”
What is it with the obsession with mindless weird sh%t?
Chinese auto workers make MORE than US ones, if you measure the only way that matters: What their salary affords them to buy. China has a HUGE shortage of working age people already. They can afford to be very picky.
The reason for this, is that EVERYTHING is <half price over there. That’s what free markets and competition results in. Steel is cheaper, housing is cheaper, batteries are cheaper, schooling is cheaper, health care is cheaper, food is cheaper, clothes are cheaper, transportation is cheaper, government is cheaper etc.,etc.. Hence, automakers can pay less nominally, while workers still get to “make more.”
There is no “Biden can have an epiphany after hitting his head at the bottom of a flight of stairs and decree something” which will magically allow Ford, nor anyone else in America (In 10 years it’s Boeing, Intel and Qualcom…), to “be competitive.”
The whole economy needs to be competitive. Starting at the bottom. That’s the only way supply chains will be competitive enough to provide “higher”, “more advanced” industry with cost competitive inputs. Since absent that, they can not compete neither.
America is already a generation behind China by now. Even with some mythical “Galt’s Gulch party” winning all and every election, “we” will still need at least 30 years to just reach parity. Probably plenty more. And with Trump or Kamala or any other “1st priority is to backstop retards ‘making money from my hooome and invechtments!!’” : FawgettAboutIt!! The delta will only continue to grow 10% a year. Without slowing down, until we are no closer to China, than they were to us under Mao.
What “we” need to do, is figure out what policies will allow “every.single.thing.made.in.America” to be meaningfully cheaper than in China. Starting with textiles and rice. First figure that out. Then we can worry about the rest. After all: They are making stuff BETTER than us by now. Hence “we” need to beat them on price.
It’s either that, or we’ll just continue to rapidly fade away in their rear view mirror, becoming ever less relevant, while mindlessly screeching about every dumbeff drivel’y imaginary hobgoblin under the sun: From Mehicuns to Mee-Too to Saaaaviiing the Syyyystem.
No mention on what the cost would be to be compliant with US safety standards. Not saying that Chinese are not getting better at production and quality but need to compare products destined for the same market.
Us safety standards where?
If the cars did not meet US and EU safety standards they could be denied entry on that basis. So obviously, they do.
BYD is run by an outstanding engineer/scientist. Ford is run by a Wall Street financier. BYD’s goal is to be the greatest auto manufacturer in the world by producing great cars at a low price. Ford’s is to maximize shareholder value by charging the highest price possible in a limited market. Guess who is going to win over the long run…
This is exactly the point. During the 2008 financial crisis, GM, maker of crappy cars, effectively went bankrupt and got rid of their CEO, who at that time was making 23 million, with an Ivy MBA (forget which one; they’re all worthless). I read an article pointing this out, and adding that the CEO of Honda, which makes superb cars, was at the same time making 1.5 million [dollars, not yen] with a Ph.D. in engineering from a prestigious Japanese university (forget which one). I’ve met a few auto execs. They were all between 6’0″ and 6’3″ tall, white, male, graduates of the same schools, and bean-counters. The US auto industry needs to be turned upside down, and it’s beginning to look like that might even happen.
…And, after 50 years of nothing but debasement theft in the US: The same story is repeated across pretty much every company, and across every industry….
I think you just described what is and has gone with America over the last, what 50 years.?
The financialization of our economy, culture . It is turning America into slow rotting flesh
We are not dead, but slowly dying.
It will take people a lot smarter than me to fix this for America
Untrue. You are certainly smart enough. Free (Freeer) markets and less market interference is the solution.
“One was the first EV from smartphone giant Xiaomi, which has drawn comparisons to a Porsche and sells for $30,000 to $40,000, below Ford’s similarly sized Mustang Mach-E SUV.”
Not 30 to 40K, 30 to 40K, less. Was just reading that the dollar is worth 3 cents, compared to when the FED began. An average house used to cost 30-40K. The FED gets an F for it’s 2% inflation target.
Mercedes in trouble because of cutting costs.
https://www.channelnewsasia.com/commentary/south-korea-electric-vehicles-ev-china-competition-mercedes-garage-fire-4588341
well if we don’t use tariffs to keep prices ‘high’ then our newly devalued fiat $dollars would become worth more – just doesn’t sound right worth MORE??
they are WORTHLESS
Armor personnel carriers (apc) with a F-550 engine, equipped with anti missiles missiles and steel plate. If we lose Ford or US Steel our soldiers will die.
Russia and China produce hypersonic missiles that fly low in the atmosphere at mach7/8, maneuverable, hard to detect, hard to intercept, carried nukes, which can reach the US from subs or the north pole. China isn’t a mercantile state, Shi and Putin are a threat. Trump/Vance + Putin vs China are better for the US.
This morning the Hooties launched a hypersonic missile to Tel-Aviv.
I have no evidence for this; just speculation; but if NATO insists on fighting Russia by supplying Ukranian proxies; and for that matter China by supplying Taiwanese and Filipino ones; they shouldn’t be too surprised if the kit wielded by traditionally poorly equipped, thus far marginal, foes of theirs, “magically” improving dramatically as well. The Houthies have proven a crafty bunch, but hypersonic missiles??? Evading Israeli defenses???
Here is the story.
https://www.washingtonpost.com/world/2024/09/15/israel-gaza-yemen-missile-houthis/
Punching through the most heavily defended airspace that the Israeli and the Usonian defense complex could produce.
WHY TESLA has not come out with a “Honda-CIVIC LIKE” 4-door sedan, with 350 mile ranges and a hybrid setup is beyond me! I know of no such car here in America but if there was one, I would buy it.
I need a 4-wheel Drive, roomy Mini-SUV, with a 350 mile range and hybrid engine.
We own a Ford C-MAX but it is NOT a 4-wheel drive vehicle. The Toyota RAV4 is expensive….so far, no go, so we have to drive around snow when we go from Northern Oregon to CAL to visit a family member there (MOM JUST DIED).
The FORD is really a fine vehicle. NOT ENOUGH CARGO ROOM.
We do not want to tie up $50,000 plus in a CAR right now.
Because Tesla doesn’t make hybrids.
Of course, I know that, but straight-up EV’s are not practical and ELON COULD DO IT but chooses to not do so. THUS, CHINA or FORD or CHEVY will do it. That was my point, which I did not elaborate on but did not think that I had to do so, Friend.
“…ELON COULD DO IT but chooses to not do so.”
No “he” could not. Building cars are hard. Competing with the Civic<<rolleyes>> Heck, even the Chinese makes can’t do that.
I am right there with you. I am saving up some money to buy a hybrid Rav 4 AWD and it’s crazy how much even a used one goes for. And yeah it was stupid for Tesla to not also do a hybrid.
“And yeah it was stupid for Tesla to not also do a hybrid.”
Competing with one of Toyota’s bestsellers is likely, no exaggeration, at least 3 orders of magnitude harder than making tax incentivized fashion objects and selling them at a loss enabled by near infinite free Fed loot.
For Tesla to reach that exalted level of automaking expertise; which, after all, NO other make is able to; would take decades of iteration, even under the most optimistic assumptions. You’d need a workforce able to consistently hold Toyota level tolerances, you’d need machinery/robotic suppliers, parts suppliers, QA processes, parts supply, repair processes etc.,etc. IOW: It’s hard.
Competing with Toyota, against one of their stronghold models, may very well be the single hardest possible undertaking in all of industry. It’s naive to the point of outright insanity, to believe some random hack can just pop out of nowhere and “do a hybrid” to anything resembling Toyota standards.
Toyotas are cheap for what you get. That’s why they’re still sought after, even after years of use. They’re increasingly out of reach for Americans, simply because Americans are getting poorer at a rate faster than even Toyota can improve efficiency. And the main reason for Americans getting poorer so quickly, is specifically that American scarce capital is being redistributed to exactly the kind of hype peddling hacks who are so singularly clueless and naive, they genuinely believe they can “just do a hybrid”, yeah! Lke Toyotuh!! Yeah!
If you want a Honda-like Civic hybrid then look at the ’25 Honda Civic Hybrid at dealers soon.
Ford has gone from “Quality is Job One” to “the product could end up being really sh__y”.
Note to congress: We’re gonna need a bigger bailout.
Wow, this is unbelievably off the mark for this blog. Several things add up to a significant part of the overall cost, 1- R&D and 2- Build quality.
Having travelled to China and worked in manufacturing business for almost 2 decades, the approach taken by local companies is to buy foreign, duplicate exactly skipping the R&D step and then reduce quality to meet price.
There is no way on earth that these two cars would stand up to the same battery of quality tests over a 3-5 year time frame. They also probably wouldn’t come close to passing US safety tests (given the number of fatal accidents I have seen in 20 years overseas I am totally confident of this).
I have also been driven around in a number of local autos from hong kong, vietnam, taiwan, china, etc… These are all “tin can death traps” and the best safety feature they have is that local city speed limits are usually closer to 25 mph.
Obviously correct.
This is precisely why the Ford CEO said
1: “this is an existential threat”
2. “Jim, this is nothing like before,” Lawler told Farley after the drive.
3: “These guys are ahead of us.”
Now go back to the drawing board
I recall the
Sounds like you are basing this on your personal experience from 20 years ago. The last time I was in China was 7 years ago. And I was shocked at how far they had come in the 10 years leading up to that last visit. I bet I would be shocked again if I went there today. Just like the Ford execs.
In 2011, Elon Musk laughed about the build quality of BYD. Today, he considers them a fierce competitor.
The world is changing quickly. Its a mistake to discount your competition.
I go to China 4-6 times a year. I probably spent 25% of my career/life there.
Really? I find that fascinating as I haven’t been there recently. What cities do you frequent in China? What forms of travel to do you usually use when there? Which companies are you dealing with? Since you have been there so often, how good is your Mandarin?
Where did you go? Don’t you want to share your experiences in China with an interested party?
We live in Portugal (50%) and that Country allowed China to come in and put all of the local small LOCALLY OWNED shops (Hardware stores, etc.) out of business. We call them “Chinese Junk Shops.” USA DOLLAR Tree stores have much better, but not THAT MUCH better quality than our equiv junk shops in Lagos.
An example: our refrig has no ice maker. We bought CHINESE JUNK SHOP ICE TRAYS. FINE, they freeze water but the Chinese Engineers never figured out how to EJECT THE ICE (twist, right?) and I have to run HOT WATER over the trays to loosen them.
I am now seeing that happen here with Lower quality and poorly designed stuff (TOASTERS, CAN OPENERS both which do not work). We are seeking a WORKING SET of can openers at a second hand shop.
This is the state of the WORLD. We are behind, but Chinese shit cannot be trusted either.
Ford flip flops more on ICE-EV-HYBRID than Harris flip flops between Kamrade Kamala and MAGA Kamala. Any wonder they keep falling further and further behind.
YES, they are VERY confused but part of it are the incentives (Guv Handouts to THEM) that are not consistent because of course “PRES BIDEN” and “SPECIAL K” cannot make a decision if it killed them…and Trump is not a deeply intellectual type as well, so we are IN BETWEEN converting from Gas Burners to EVs because they are spending so much $$ on wars and kickbacks.
Cost they should be, as they have some of the lowest wages in the World, and far more workers than needed.
Quality is hurting here due to DEI, WOKE nonsense and the like, so no surprise there either. Chinese are far better at basic Manufacturing as a rule, so they will or should be ahead there as well.
The Chinese gen alpha is small. Gen beta (2025-2040) might be smaller. Gobally
combined : 5/6 billions. Knowledge and skills transferred fast. Africa and Brazil are better than us in soccer. When the boomers expire the Chinese population will shrink. The youth unemployment, especially college grads, is high. If India, Africa and S. America compete with the Chinese ev fad — as Toyota did Detroit in the 70’s/80’s — they will rise on the dictatorship. China might enter recession. Losing its RE and EV sectors will cause harm. Is it good/bad for the US.
Consider this: if the USA halved its defence budget, its government could afford to give every man, woman and child ~$1500 each per year, and still have the world’s most powerful military. If so much money wasn’t being wasted on never-ending, futile, destructive wars, that $6k-$8k per annum per family would be more than enough to afford those more expensive EVs, or be redirected towards infrastructure upgrades. But guess what, rotten leadership prefers to line the pockets of the few instead of increasing prosperity for all.
Pentagon charge 50,000$ for a toilet.
You have to pay more tax for that.
Pentagon expenditure is not accountable.
if fed cut SS and medicare…by 3%…you could do same thing.
The Xi dynasty lift hundreds millions to the middle class and beefed up its defense. Only one dynasty in the last thousands year did the same. Most of the time they were divided and conquered. China has 18 land borders with other countries. China is in serial wars with all of them. If China enters recession and protests erupt the invincible Xi can lose his grip and be ousted.
No. The US and Europe lifted hundreds of millions of Chinese out of poverty by exporting our labor there, importing deflation and exporting inflation
face it. Ford can’t compete in EV let alone cars in general.
Adam Smith explained it long tjme ago. A bigger market is a most efficient one. China is a big market. USA is no more one market. There are 500 markets, because of States regulations, plus Chicago regulations, NYC regulations, etc.
Europe is a joke, with markets the size of a house doll.
— Back in the 1950s Greece had not much manufacturing, still trying to recover from the war, lots of unemployment, sparking a large migration wave (to Northern Europe and the USA).
— In the 70s and 80s it had lots of local manufacturing, even appliances (all my appliances except the TV at the time were Greek-made, from actual Greek brands that were not foreign subsidiaries – good quality too!). No migration at the time, except for advance sciences, so the country kept its population and young people.
— Then in the 90s and on, we started de-industrialization and importing everything “because it was cheaper”, and it became a strong trend. Result: massive migration, and for the first time we lost 550,000 young people in the last 25 years alone, most of them university/tech school graduates (country’s population is 10 million). Everyone who visits Greece lately says the same thing: the only young people are the tourists. Tourism is now the only large industry in Greece, young people are becoming waiters and receptionists with continuously decreasing salaries. Because when this is your only industry, you become desperate, and you continuously decrease your earnings not to lose customers. The foreign travel agencies bully them just fine: they know that this is Greece’s only industry left, so the foreigners dictate prices. Beggars can’t be choosers.
Same thing happened in South Italy. Entire regions are now empty of young people, and the older ones are getting poorer by the day.
All because of the philosophy of “let’s keep the consumer happy by reducing prices through cheap imports“. Until there are no consumers left in the area.
Imagine how wealthy we will be when all goods and services are outsourced to low-cost labor countries.
but just imagine all the great deals we can get at walmart and disneytown buying endless shopping carts filled with junk for our junkie houses built to last only a few decades…………
That was the sales pitch for NAFTA and GATT several decades ago. And this is how it turned out.
seems like the problem is like parts of amerika i’ve lived in. alas, who is really at fault. the young or old geezers who didn’t just set up manufacturing and give local companies their business. the fault was the incessant search for cheap pricing. just like the flyover nit wits in amerika who refused to shop at the local hardware store owned by their neighorhood family and go shop at home depot owned by an out of town billionaire narcissist. the fault is usually in the mirror of the whiners, in life. i always shopped local in all regions of the world i have lived. un amerikan. which was the ethos exported to the nit wits of greece……….
visit johnstown pa
You are right about this, to an extent. A lot of local producers/shops suffered in Greece because of this, but the funny thing was that the locals were actually cheaper! The foreigners just had better display windows and appeared more “modern & advanced”, though their products were not better. This was fairly limited, but it was an indication of “modernity bias”.
After that, rules from the EU came to completely destroy local fishermen at first (who were either incentivized or forced to burn their boats), then livestock farmers, then agriculture…
Nowadays in Greece even garlic is imported from China (!). Greece, a country where no necessary food was imported in the 70s and 80s.
Add to that our first Real Estate tax a few years ago, which led to something that was unheard of in the past: homeless people.
One of the modernist parliament members said two years ago that “home ownership percentage in Greece is too high, we have to lower it to German levels”.
I have never seen Western governments being so hostile to their own citizens as they are today.
According to economic theory free market capitalism has been the economic system that has created more wealth than any other system. When a country outcompetes another on production it called creative destruction. Here as in other countries new industries should replace failing ones. These new industries should have higher wages and more skilled workers. The new products in theory are more advanced with a much better competitive moat. This is how a country and an economy evolves. Non skilled production labor costs will always be easily outsourced and protecting these is like outlawing ice vehicles to protect buggy whip makers.
“free market capitalism has been the economic system that has created more wealth than any other system” It has, but in a K-shaped economy, where did the money go?
If 50,000 of the best heart surgeons, top scientists and the most talented engineers… leave, that’s only 50,000/10,000,000 = 0.000005, Greece can became rudderless. But Greece has an enemy : Erdogan. The hellenic air force is one of the largest in Europe. They train with the US and Israel. They produce one of the best subs in the world (Papanikolis). They produce missiles boats and other ships in the Hellenics shipyard. Crete is the focal point that control the flow from and into the Suez canal, Haifa, Latakia and the Dardanelles straits. The US and NATO have a base in Souda bay. China fell in love with Crete. Tourist only see Muslims immigrants and restaurants. Nothing else.
The Chinese are all over Southern Portugal, Too, where we live part time.
In the USA CEOs waste too many resources to payback Wall Street. You can blame the Unions, but dividends and shares buybacks and fixation for the stock price are the real problem. Unless you want to go back to slave labor.
Besides, who is going to buy cars if workers do not make enough money to afford them? Duh?
A company gets the union it deserves. Don’t blame unions – management does have a say. Militancy builds over time, not overnight.
That is how our system of capitalism works. And it has worked pretty well for us for 200 years now. But no system is perfect. Perhaps you prefer China’s system? Maybe you would like to explain what “system” you prefer and why?
Incidentally, the workers in China seem to be able to afford new cars there. In 2011, there were 102 cars per thousand Chinese. By 2022 that more than tripled to 320 cars per thousand. Their domestic auto sales are over 20 million per year.
“And it has worked pretty well for us for 200 years now.”
Until 1971.
The US still works pretty good for me. I feel no desire to move to China. How about you?
I cant name 2 “corporations” that are 200 yrs old, can you?
There are well over 5,000 I do believe…
Labor costs are low when you use slave labor
That’s a common statement, but the facts say otherwise. Chinese wages aren’t as high as US wages, but they are not “slave wages”.
Looking at pay levels for Chinese workers. Minimums are around US $13,000/a and maximums are around $200,000/a. The average is $50,000/a and the median is $46,000/a.
slave labor is expensive. you have to house and feed and breed and doctor to your slaves like a rancher or farmer does with their animals. ask any old money, slave owning family from my old home of charleston SC lowcountry and you will learn that it is far cheaper for them to just be owners of companies and have very cheap labor……instead of the cost of slaves. these are families with the king’s grant on the title to their properties. half of them went back to barbadoes during the revolution as a hedge. they did NOT want to fight for or against the king or the violent revolutionaries. they just wanted their land and slaves……..
Slavery was a way to harness manpower, just as we harnessed horsepower. Fortunately, neither is necessary today, thanks to abundant cheap energy. One barrel of oil is worth 8,000 to 25,000 hours of human physical labor. (or 2200 horsepower hours)
Inexpensive energy is what has allowed economic growth and improved living standards all over the world. And China plans on having the worlds largest supply of cheap renewable energy.
– And China plans on having the worlds largest supply of cheap renewable energy.
> And China very well may do just that? They can Mandate (place # here) Windmills to be built and erected forever. They can do the same with Solar Panels. They already own EV dominance, and that won’t change.
CHINESE Costs of living, Please? That would clarify your point, Papa.
Don’t know. I will leave that for you. But based on Mish’s example, cars cost 30% to 40% less in China than in the US. So, even with lower wages, they can afford to buy new cars; and they are doing so in large numbers.
This is where robots come in. They can be be worked 24 x 7 w/o any complaints, at least, until they become intelligent.
I went to a Hyundai Dealership and spoke to a service manager. He’d just come back from South Korea and an inspection of an assembly plant.
Cars were being assembled completely by robots except for bolting the seats and dashboard in.
But there were a lot of highly qualified technicians and on the floor people making sure everything went smoothly.
As long as there’s no faulty design or faulty components very vehicle comes out exactly the same – 24 hours a day 7 days a week. No Monday or Friday assembling problems.
The Chinese bring new models out to Australia and run them around in all types of conditions. There a bus load of engineers accompanying the tests. When a design flaw becomes evident, immediate rectifications are sent back to the head office for refinement.
I was speaking to a Tesla owner a couple of days ago. He was taken aback not by the car but the depreciation of the Tesla could have bought him a brand new BYD
And this is where cheap, abundant energy comes in. Robots require energy to make them work.
And more efficient robots can produce more widgets with less energy compared to either existing robots or existing man operated machines.
Yes. They get better and more efficient every year. But people still complain about job replacement. Its been that way for 200 years now.
Jojo, I will believe robotics when Spell Check in our WORD PROCESSING can figure out the contextual difference between “EVEN” and “EVENT.” SPELL CHECK/CORRECTION slipped “EVEN” into a phrase talking about a TIME AND PLACE even A.I. and my masterful inability to edit my work (ALL TWO CORRECTIVE MEASURES, along with an editor – – my Neighbor) and NOT ONE OF US CAUGHT THE ERROR and it was released.).
ONCE A.I. is smart enough for that kind of reasoning and error correction, I will not be convinced that robotics has risen to the point that they can ACTUALLY reason out and work like real humans.
The culprit is that I am a fast typist and a very slow editor, Obviously.
The interesting question here, is how has China managed to dominate so many industries in the world today? Could it be because they use a communist system?
Today, the existing communist states in the world are in China, Cuba, Laos, Vietnam, and North Korea. China and Vietnam seem to be making communism work pretty well (though they would probably say its socialism). Cuba and N Korea are not.
China, in particilar, is leading the world in a lot of areas. Steel, ICE vehicles, EVs, PHEVs, solar panels, windmills, rare earth metals, etc.
According to the UN, China is the only country in the world with a fully integrated supply chain. They have developed over 2000 integrated supply chain clusters throughout the country. Each supply chain cluster aligns with regional universities that provide the skilled workers these clusters need.
The results have been spectacular, with efficiencies and cost savings that allow China to manufacture goods at much lower prices than anywhere else in the world.
Looking at pay levels for Chinese workers. Minimums are around US $13,000/a and maximums are around $200,000/a. The average is $50,000/a and the median is $46,000/a.
Good little robots, but I wouldn’t want to become one.
Your preference isn’t the issue. Leaving aside Papa Dave’s characterization of Chinese society as being communist, the question is do the Chinese prefer their system?
Clearly the majority Han people who define modern Chinese society do. The Uyghurs, on the other hand, who are not ethnically Chinese and have a completely different culture seemingly do not.
Many don’t any longer. With China’s strong censorship of all media and the internet, it is hard to get honest opinions. A few months back, in the middle of the border crossings from Mexico, I recall seeing and hearing of many Chinese who were flooding into the USA to escape poor economic conditions in China, looking for any kind of work.
China, along with Japan is in the forefront in the use of robots in manufacturing and service jobs. Despite their calls for citizens to have more children, they are both taking away work from their people through automation and robots.
This is the same thing that is happening more slowly in the US but I believe, is set to accelerate sharply due to the increased costs of employing humans.
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Yes. There are migrants ftom China for the reasons you mentioned, but the numbers are small.
“Nearly 10 times as many Chinese migrants crossed the southern border in 2023 as in 2022. In December 2023 alone, U.S. Border Patrol officials reported encounters with about 6,000 Chinese migrants, in contrast to the 900 they reported a year earlier in December 2022.”
“ While a record 2.5 million migrants were detained at the United States’ southwestern land border in 2023, only about 37,000 were from China.”
I agree with the gist of your comment but I’ve grown skeptical of tales of Uighur woes because they’re generally pushed by people who lie about everything else. Not to mention that if China has come up with a way to suppress Islamic extremism, that’s not unreasonable. They don’t need a little Afghanistan within their country.
Not just the Uighurs but other ethnic minorities are also oppressed. Tibetans being a well known example but there are others. Then there is religious persecution such as Falun Gong or Christians.
And China is making economic ties with the Taliban and investing heavily in Afghanistan. Strange bedfellows.
all these amerikans who bomb the world, point the finger at some empire many days sail or a day flight away……….best to take care of one’s own house before pointing the finger at some other cretin across your little county or continent or world……..
perfect analysis
Did I say I had an issue with their preference? No, I said “I” wouldn’t want the US to become like China.
Aside from that, you’re wrong about what the Chinese prefer.
Keep up the good analsis.
china has always been producers and traders of quality goods(silk shirts and porcelein and much more. sold on credit……on fastest ships 1000 years ago)…… for the past few thousand years. always top down mandarin class of emperors…….. the recent unpleasantness under Mao was a short little episode………they have even replicated the almost identical trade routes including right through venice to northern italy……..and europe…………most amerikans seem to lack any grasp of world history.
China has a long and diverse history; with periods of greatness and also weakness. The years from 1800 to 1960 were not good years for China. And during that time period, the “west” made great advances while China stagnated. Things have been getting better since then, with China dominating again in many areas in the last two decades.
The question now is whether they will continue on this path of progress or stumble, as Japan did in the 90s and early 2000s.
the opium war years was not good for china. perpetrated by drug pushing UK and Amerikan bankers for a few lousy shekels of the 1%. they are paying us back for that past 40 years…..with their drug pushing fentanyl via the mexican cartel. but alas old man Dave, the opium wars are a blink of an eye in chinese history and did NOT topple the emperor and empire. and alas it is the driving force behind the ethos they have since. the shame to them, brought upon their great grandfathers is a driving force………behind the driviing zeal of modern chinese. chris buckley and his father brought this to my attention at a very small think tank discussion about 25 years ago…………..it is true. chris is a chinese expert. and i have verified this is so from many chinese and expat pals that truly know china, not just a computer screen knowledge of the place……..it’s fascinating anyway. i have lived in china town in oakland for years………and here in chinatown in brooklyn.
I have listened to a lecture from a Chinese scholar from Singapore hosted by an Italian university.
He made the case for Chinese culture and system in general – in China.
Not all Chinese might agree, but Xi Jinping couldn’t have made a better case for the system.
You sound like Walter Duranty, Upton Sinclair and others talking about Joe Stalin’s Soviet Union in the 1930s..”I have seen the future and it works”
the 1930s is a blink of eye in world trade. china are manufacturers and world traders. the russians are landowning czars who never had any sense of capitalism like the chinese. not even in the same realm of history or present day………..russians are dumb. but strong.
I’m not a cheerleader for China. I’m just providing some data and facts and asking some questions. Feel free to provide some data and facts that contradict me. In fact, I welcome it.
Perhaps you would like to give your explanation of how China can produce steel, vehicles, windmills and solar panels at such low prices.
China has a few things that helped it dominate in short fashion
1) No legacy costs (ie old inefficient factories, pensions etc). They just went right to the latest technology with no pensions dragging them down..
2) Very few regulations. No environmental groups or regulations to block new factories or power plants. Even worker safety is far lower standards than here
3) A VERY large work force to transition from the fields to the factories. Even if the factory work is long and in poor conditions its still better than the field work.
Over time (another decade or so), advantage #1 is going to go away as newer technologies are developed in all industries and their factories start to age. Even their population is starting to age (and will need pensions in some form) and catch up with that of North America and Europe.
Advantage number 2 is starting to erode too, especially in the environmental area. A decade or so ago (around the 2008 Olympics), China was roughly where the US was in the late 1930s and early 1940s (go look at old pictures of Pittsburgh or other industrial cities from that era and they look like what Bejing looked like in 2008 in terms of pollution and smog). The Chinese people have started to demand better as Americans once did and that’s a big reason for the push to solar and wind power. Today China is probably where the US was in the late 60s or early 70s. In the next couple of decades they will probably reach where the US was in the 90s.
Advantage number 3 we already talked about as their population is aging too and is about 20 years behind North America and Europe in terms of where it’s going to be in terms of retirees to workers. The one child policy that was in place for decades still hasn’t been fully felt yet but will be in the next 10-20 years.
Agree with everything you said. Now, the question is was that because of their system of government or in spite of it?
I am not a fan of communism, but I recognize that it has allowed China to make enormous investments in the infrastructure needed to modernize at a very rapid pace. Their infrastructure is now a huge advantage for them in this century, just as ours was last century. Now ours is old and theirs is new. And most infrastructure is built with the direction and funding from government.
Energy, transportation, communications, technology.
China leads in renewables and electrification. They built as much renewables in 2023 and we built in 20 years and they are pushing ahead even faster this year. They have long term goals and they keep exceeding them.
Transport. They produce more autos than any other nation, including ICE. But their big lead is in EVs and PHEVs. We cannot even compete with them right now.
Transport. They have 90,000 miles of rail track; over 50,000 of it is new and electrified. And 22,000 miles of it is High Speed (minimum 155 mph).
Communications. Yes; they bypassed wiring the nation for telephones and wired their nation for internet and smartphones.
They are not really communist. At least not in strict definition and certainly nothing like they were under Mao during the cultural revolution when you truly owned nothing. The fact they have individuals owning companies and billionaires is enough to prove that fact.
They are simply a 1 party state that functions as a ‘benevolent dictatorship’. It definitely has its advantages when you want to put everyone on the same task (militarily or economically). But it’s not great for individual expression (arts, music, entertainment etc) which has not make many strides.
Yes. I am not a fan of labels. There is no truly Communist, Socialist, Capitalist, or Democratic country. They all share many similarities and features.
Compare one party China with one party Russia. Very different.
The question remains. What is leading to China’s success in steel, cars, renewables etc?
I am suggesting it is partly because of their willingness to invest heavily in their infrastructure.
“Could it be because they use a communist system?”
Partly.
It’s all relative.
Communist systems are basket cases compared to freer market ones. As the Soviet Bloc demonstrated. And the Chinese.
But that doesn’t imply it is not possible to device systems even more dysfunctional than communist ones.
Fully financialized systems, are one such alternative. A lot worse, and less free, than even communists systems.
Hence: Once The West changed from something at least paying lip service to free markets, to purely kleptocratic financialized idiotopias, around 1971…: Suddenly the competition for the commies weren’t nearly as onerous any more. And hence, they are now on top.
true that communists rule the govt…but the truth is MUCH more free-market activity exists in China than usa now
Not too long ago, US taxpayers were forced to bail-out GM. It should have been allowed to go bankrupt. But I don’t think we should give up on the auto industry completely. What we really need is to get government completely out of the auto industry.
While I wouldn’t miss Ford, I would certainly want an option other than China to buy cars from. That’s because as a consumer, I try to buy from companies whose values are not completely incompatible with mine. China doesn’t fit that bill.
So the problems are not materials or wages. The problems are government. And free trade is not going to fix that.
There was a bailout of the UWA, not GM. The GM shareholders and bondholders (even secured bondholders) were wiped out. The UAW pension was made whole by taxpayers.
PBGC has always made pensions whole. nothing new or surprising.
Lol, you’re delusional.
December 19, 2008: President Bush approved a bailout plan and gave General Motors and Chrysler $13.4 billion in financing from TARP.
I do not share the communist values of the UAW.
the VA is communist. the UAW is fascist. if words have meaning anymore.
The Achilles heel of China is that it followed the world leader into the debt based development model with Chinese characteristics.
In this model, every product or service starts its life as a financial asset backed by debt. The overall debt level need to be growing in order for economy to function. The reduction in debt leads to economic contraction, and so needs to be countered by government debt or money printing regardless of asset bubbles.
It’s a trap, but especially so if you outsourced your manufacturing sector.
The difference is that the Chinese debt is mostly from one government level to another. The main exception is the property market. The Chinese people will accept the government finally stepping taking over the private property market, reassigning title and management as they feel necessary and declare the associated debt problem solved.
Three quarters of the population will feel that at least they ended up with something and tolerate the solution forced on them. One quarter will feel they ended up with so little it might as well be nothing and will not be so accommodating.
The Chinese government has lots of experience in sending naysayers away for re-education. The Chinese public has lots of experience in witnessing large numbers of people being invited to government camps where they may stay for a short time, a long time or never return. But at least they themselves got their apartment even if its not what they expected. Now they can get married which is the return that their families members wanted when they financially assisted in purchasing the apartment. All thanks to the government.
There is no private property market per se. All property in China belongs to the CCP. Land is leased out to property developers for 60 years in case of residential or 40 years in case of commercial. The date starts the day the dveloper buys “ground” So if it takes 5 years from taking over the “ground” getting a residential block built and sold to a “customer” then there’s 55 years of lease left. When the 60 years is up the “ground” and whatever is built on it goes back to the government entity.
Most residential apartment blocks have a 50 year life span. They will be bulldozed or razed. The land goes back to the government to be leased out again.
A private citizen has therefore paid an extortionate sum to effectively lease “air” over the time frame.
If China produces ev cars for $25,000, India can produce them for $18,000 and S. Africa for $15,000. They learn fast and are good enough. The US gov can impose duties and still sell for them in the US for $16,000/$17,000. We will produce goods that are important to our national interest to keep us safe during wars. Otherwise China can win a war against us without firing a shot. It’s in our national interest that ev cars will be produced in India, S. Africa, Argentina and Brazil. It will weaken China. It’s anti neo.
you are dumb
Yep. All that is necessary for that to happen is for someone to come in put in ten billion dollars to build the factory, many more billions to put the supply chain in place, some more billions to put the distribution network in place and then……try and break into the established market. And cope with tariffs putting your cheap car into a higher priced market position. You know, if your product is still really, really competitive at one hundred percent tariffs, then two hundred percent will soon be in place.
I’d take a chance and do it myself if I had the billions needed and could afford to lose it if it didn’t work. But…..uhhh…. I don’t.
South Africa can’t produce enough electricity to keep any factory running satisfactorily. Forget twenty four, seven, 365 mass production lines.
“Keep us safe during wars”. Aside from Pearl Harbor – which wasn’t even a state then – the U.S. hasn’t been attacked since 1812. Our wars have always been in someone else’s country. If there’s a war against us here (with China or Russia) it will go nuclear and we have no defense against that. For our latest proxy war in the Ukraine, we weren’t remotely capable of supplying the Ukrainians with enough artillery shells. The U.S. is mainly good at dropping bombs, but that’s of limited utility, as the Taliban proved. We haven’t even been able to stop the Houtis from disrupting shipping.
“BYD’s cheapest EV, the Seagull, starts around $10,000 and features a fashionable cabin; a rotating, iPad-like touch screen; and more than 300 miles of driving range, comparable to EVs from legacy automakers that are priced three times higher. It is currently for sale in China and Latin America and BYD plans to start selling it in Europe next year for around $20,000.”
The toxic and corrosive politics in America are driving Americans to move overseas and the lower cost of living is a key driving factor.
https://www.nytimes.com/interactive/2024/09/06/realestate/american-voters-leave-us-politics.html
What surprised me about the article above was that it isn’t the usual suspects wanting to leave: young digital nomads or ultra rich individuals, it was middle class middle aged working people that are all bailing out and from both political affiliations.
This will exacerbate labor problems already happening in the demographic death spiral America is in.
It’s not just EVs, it’s real estate, insurance, toxic politics, wages, rent, food and on and on, it’s everything. I’m sure before the collapse of the Roman Empire a few smart people saw it coming and bailed out, the rest is history.
Not just US manufacturers having EV problems!
My last Detroit iron was a 1968 Oldsmobile. As intended by engineering design it failed and could not be repaired at 105,000 miles.
amerikans are so greedy they build to fail. crumbling empire 101.
As I have posted previously, if politicians and security people are worried about an app like TikTok being able to steal cellphone data and pass it to China, just imagine what a Chinese EV that is connected into your home network might be able to do!
The CIA will only allow spying technology for which they have a back door.
This is a simple progression. The automaker help (union and white-collar) cost more in the US, so the cars need to cost more. Because the cars cost more, people need to be paid more to buy the cars (and every other thing that is more expensive here).
Because of these higher costs, companies like Ford find ways to cut corners or delay advancements. The next thing you know, our automakers are fielding an inferior product at a higher price point than a country like China.
Political solution? Double the tariff on Chinese cars.
How much is a current tariff on a Chinese car? Will a doubling raise the price enough to push US buyers to American EV’s?
What it’s going to do is reduce car sales in the US.
At first, the lower income brackets stop buying anything remotely new. They will buy older and maintain as long as possible and then buy another old car and repeat the cycle.
As price continues to rise, this trend accelerates through the lower middle class, then the middle class then the upper middle class and so on.
One day in the not so distant future (maybe 10ish years) you’ll wind up back with 1 car families driving 8-10 year old vehicles and over all new sales WAY below what they were a decade or two prior. This will gradually kill off the US auto industry because you don’t need all that capacity when you are selling half as many cars.
Wolfstreet charts this trend regularly. Take a look at the first chart. There are fewer new cars sold now than there were decades ago despite population growth
https://wolfstreet.com/2024/07/03/new-vehicle-sales-q2-evs-surge-yoy-except-at-tesla-stellantis-drops-to-6-behind-honda-first-time-ever-gm-ford-ice-vehicles-dip-yoy-but-their-evs-spike/
we share one auto between 3 families. us and our 2 grown children who live a few miles from us here in a little town……………..walking is healthy and much more fun.
Where is it that you live that you can walk so much? There are a lot of places that’s not feasible for many months of the year.
People always make the mistake that where ever they live and what ever they do can be replicated every where else if only those people wanted to do that. It’s just not true.
Meanwhile, new cars are all over the road in my area (based on license plate number progression). Teslas are like cockroaches. People ARE being paid more and as always ARE not holding back. They are spending their money on new cars, vacations, toys, etc.
Where are you? How representative of the country is it? Here in Minneapolis there are a fair number of Teslas and Rivians. That’s in the wealthier areas. Middle and lower class areas are mostly older ICE’s – obviously. I’ll probably never buy another new vehicle because I’m a cheap bastard.
Actually, China isn’t selling any e.v. cars in America at the present time. Pushing American consumers into e.v.s whether American or Chinese will require something more than tariffs. Your choice to use the word push has a lot to do with the problem that you believe needs solving.
There are several advantages China has on everybody.
Very light patent protection, no patent trolling there.
High percentage of graduates in STEM compared to dead weight social studies, (with the inevitable side product of woke/gender agenda).
Full domestic supply chain.
Social cohesion and low crime.
The West is moving in the opposite direction, and it’s turning into a downward spiral.
And yet China’s economy is struggling.
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That article has some interesting points but missed the real cause. I’ve written about this before:
Under China’s quasi communist economic system: 80% of the wealth is controlled by 20% of the population.
In quasi socialists EU countries: 80% of the wealth is controlled by 20% of the population.
In quasi capitalist countries (e.g. US): 80% of the wealth is controlled by 20% of the population.
In Inca, Maya, Aztec 80% of the power and wealth was held by 20% of the population. I’m sure this statement is true across all cultures around the world. I have yet to find one except perhaps the Amish where this isn’t the case.
The issue isn’t politics or socioeconomic systems, it isn’t the Fed or banking systems. It is human nature or the intrinsic natural phenomenon of the Pareto distribution that seems to rear its head in human affairs century after century, culture after culture.
This is the real problem that needs research not all the other noise we hear everyday.
“…The issue isn’t politics or socioeconomic systems, it isn’t the Fed or banking systems. It is human nature or the intrinsic natural phenomenon of the Pareto distribution that seems to rear its head in human affairs century after century, culture after culture…”
I agree. It’s a feature not a bug so no research is needed. History has shown humans always end up right where we are at regardless of how many rules, checks, balances, or a lack thereof we put in place. Humans are often not rational and therein lies the root of the problem. Rationality and ego driven emotions are like oil and water.
“…I have yet to find one except perhaps the Amish where this isn’t the case…”
This was more than a hoot for me. I grew up around Amish. As a kid I spent many a summer in thier homes under thier care (they were my babysitters). My dad employed and did business with many Amish as well. I know the public’s image of the Amish is all gum drops and lollipops, but they are humans like the rest of us so don’t kid yourself. The local bishop and church elders have all the power and control a great deal of the financial matters for the community. These rules vary from community to community. Many of the rules are meant to do nothing more than to manipulate and control anyone under the bishop’s purview.
my brother owned a steel mill in baltimore with a small shop in amish country. the teens had cadillacs hidden in woods………yes they are human. like the hasidic jews in my hood. when they have big parties the men all get drunk, the teens all smoke dope…….etc……….
“…the teens had cadillacs hidden in woods..”
Look up the term “Rumspringa”. This will explain why the teens had cars, drank, wore “Yankee cloths”, and chased women.
correct. but in modernity, we only really need perhaps 10 or 20% of humans actually being productive and creating goods and services and food……….thanks to technological advances. the fact that moderns do work like activities like running blogs is besides the point. read “in praise of idleness” essay from a century ago by bertrand russell. he nails this one essay.
There isn’t anything to research. Humans will be humans, proven over and over again throughout the historical record. Greed and the desire for power drives most of us in one way or another.
The solution will be when AI takes over.
That may be true but it doesn’t explain EV’s.
Ford clearly bought an EV to test drive. They can also easily reverse engineer everything including the battery tech. None of it is protected by patents in the USA.
china has been a world leader in manufacturing and trading for a few thousand years. dwarfed the roman empire in her time…………
(1) Pure EVs will be a niche product in the USA for a long time to come since the vast majority of consumers do not have a charge at home option, and they don’t want to be stuck planning car charging.
(2) Hybrid technology is the ideal compromise for the American mass market.
(3) I don’t see how American politics will ever allow a car to be sold in the USA for less than $20k.
(4) I see American owned car companies going the way of American shipping companies. They simply cannot compete on the world stage due to a myriad of factors that elevate the cost of production. The saving grace for Ford & GM (from insolvency) is the US auto market is huge and government will protect their price levels.
There is a limit to how much the government can protect the price levels. At some point it will implode. No one knows exactly what that level is but I suspect we are going to find out sometime in the next decade or so.
amerikans are idiots for the number of autos they own and prices they pay. i’m sorry. it’s all marketing for the past 100 years. it’s idiocracy.
America and it’s Allies have shown their Plan to keep China automobiles in check. Increasing Tariffs on Chinese cars until American makers prices are comparable.
Chinese cars will probably sell well everywhere in the world where the local Government does not interfere and impose endless tariff penalties.
As Mish says —American consumers seem stuck with high Electric car prices.
Yes and long term this means the rest of the world gets increased standards of living due to cheaper transportation costs (low cost EVs) while US standards continue to drop.
Knowledge transferred.
If CL will rise the sticky CPI, ex food and energy, will takeoff. Old oil and gas fields are either depleted or near depletion. There are no new ones. We drill 20,000/ 30,000 feet under the ocean floor along with Drilling Uncompleted Wells DUCs. That wouldn’t last long. Fill a pickup truck tank can cost $250/$300. EV can ease the pain. China became fully committed to ev after their RE sector plunge. They flood the world with cheap ev cars. Most countries impose duties on them. Major choke points can suddenly stop the flow of raw materials, oil and commerce to and from China. We are blessed with oil, NG and coal. China will flood the world with safe mini nukes power plants. We have to compete with them on nukes, not ev.
American car companies need to innovate their marketing. Every new vehicle should come with a free $100 prepaid gift card for KFC, a 12-pack of Budweiser and an Allman Brothers CD. Let’s see the Japs match that!
The Allman Brothers Band ‘Live At the Fillmore East’ is one of the great albums of all time!
https://www.youtube.com/watch?v=ANRqzwWu7l0
Yes. I have “A decade of Hits 1969-1979” on CD in my car.
saw them in central park long long ago
HA HA HA. and a fat girlfriend. make it impossible for the japs to do that.
Chinese cars are in a price war. Companies compete for market share because they think the government will decide for the larger companies to absorb the smaller ones.
It will take as long to rebuild US manufacturing capability as it took to lose it. Even then that would be with an intelligent and cohesive US industrial policy which is unlikely. China now has the advantage of being a complete manufacturing ecosystem where there is plenty of suppliers to furnish sub-assemblies and other parts that are needed by the lead manufacturer to build a product. The US needs to pick industries in which it wants to have capabilities and then slowly grow the domestic market with either defense purchases, subsidies, or other means.
The US also needs to solve our overpriced housing problem and healthcare costs problem so that workers can be paid a world competitive wage and still have a better lifestyle than they have now. It isn’t going to be easy and it will be a long, tough road of maybe forty years and stagnant or even declining real incomes.
I don’t believe that we have either the societal or political will to do so.
China does not have planned obsolescence and DEI.
Half right. No DEI, but Minimum Acceptable Quality is a mantra. Given the number of Chinese tools that have broken under normal use I don’t trust them unless someone with a brand to protect is supervising.
I’m surprised their cars meet US safety standards.
The same thing was said about Japanese cars in the 80s and Korean cars in the early 2000s. Then within 2 decades they were suddenly better quality than US made. China is getting there as well.
correct papa. i am old enough to remember when BMW meant break my window, by the anti globalists nit wits in amerika…….the anti nazi sentiment was still strong in the 1970s……..
Good article Mish. To me the more important events come if BYD is actually able to release their next gen blade battery that supposedly has 1000km or 600 Mile range, and is much more unlikely to start on fire and can charge to nearly full in less than double the time it takes to fill your car with gasoline. Oh and they are much lighter and take up less space.
Now IF, and I say a big IF, these things are true, then they will be able to produce realistic EVs that could be used in place of ICE vehicles here.
That is one side of the equation. The other side is producing the electricity to support this and distributing it.
Supposedly they are also going to cover their western deserts with solar panels and wind turbines and create high voltage transmission lines back to the east where everyone lives. It is China so they do not have the NIMBY problems we have here
Again big IFs on this
But if they do, then China will be able to effectively electrify their economy, which makes sense for them as they have few domestic hydrocarbon resources and that represents a geopolitical danger for them
The final question is at what oil barrel equivalent cost they are able to do this. Raoul Pal is on record stating he believes that with technology constantly improving, we can eventually have an electrified economy at something like $10/bbl equivalent cost.
That would change world geopolitics and money flows completely
I wrote an article on this called Confessions of a Climate Crisis Hitman at my substack, bangpath.substack.com
Here are some numbers for the Levelized Cost of Energy in China per MWh (LCOE).
2010: Gas $68, Onshore Wind + Storage $508, Solar + Storage $831
2015: G $81, OW+S $203, S+S $255
2020: $68, $83, $104
2021: $79, $78, $95
2022: $79, $73, $91
2024: $107, $68, $85
All of these are much cheaper than oil and coal.
Which is why China is expanding all 3 as fast as they can. They hit their 2030 target of 1200 GW of solar and wind this year and now plan on reaching 2800 to 3000 GW of solar and wind by 2030. For comparison the US has 360 GW of solar and wind.
Link to source?
statistics/1327637/levelized-cost-of-energy-in-china/#:~:text=LCOE%20in%20China%202010%2D2024%2C%20by%20source&text=As%20of%202021%2C%20the%20levelized,U.S.%20dollars%20per%20megawatt%20hour.
Mike, you need to know why this is. Covid, 2020, Gavin Newsom gave a no-bid contract for masks to BYD. The first no-bid contract was for $1B. BYD then needed more money, so there was a second payment. When the masks were defective, Californians got only $247M of our money back.
Proof.
https://californiaglobe.com/articles/why-did-gov-gavin-newsom-make-hasty-1-billion-deal-with-chinas-byd-north-america-for-masks/
https://calmatters.org/newsletters/whatmatters/2020/07/california-byd-masks-gavin-newsom/
https://ktla.com/news/nationworld/california-pays-3-30-per-coronavirus-mask-under-quiet-deal-with-chinese-company-totaling-close-to-1-billion/
Newsom is WEF-trained, graduating in 2005 from their young “leader” program. Everything he has done has destroyed our State. The very same with Kamala Harris. He’s every bit as corrupt as Biden and Kamala Harris. He IS a foreign agent. Read Peter Schweizer’s books, Blood Money and Profiles in Corruption for proof.
Californians could have used some of those jobs. California is following the WEF Agenda, no autos, EV trucks only by 2035, no gas. Chevron, in California for 140 years, just kicked out by oppressive policies, fees, taxes.
Get ready for higher produce prices, everyone, as California has adopted “no diesel” by 2035. https://www.wired.com/story/truckers-brace-for-a-rule-mandating-electric-vehicles-at-ports/
When I see articles about how wonderful BYD is, please keep these facts in mind. Also, as a former Purchasing professional, I know China has been trying to eat our lunch since the early 1990s, at least. Fairly sure it was when Henry Kissinger urged Nixon to visit China. Thanks.
Politics in the US is worse than Newsom being WEF. The Democrat VP pick is not just a Sinophile but a fanboi of the CCP. If Harris is elected by any means necessary then her VP will be a heartbeat away from being Chinas man in Washington. The only difference between the fiction of The Manchurian Candidate and the reality of what might happen is the character in the fiction did actually serve in conflict.
Rump and Mamala are both manchurian candidates.
Read Peter Schweizer’s book, Profiles in Corruption. Kamala is a foreign agent, like Walz, like Gavin Newsom, like Biden.