A friend helped the Wall Street Journal expose the damage this treaty was doing to his small business in the United States as it tried to fend off counterfeiters.
The idea of free trade/globalization is everyone benefiting from the efficiency of each place doing the work it can do most efficiently. Iowa corn and Swiss fine machinery and Arab oil and all sorts of things where one place can do something better and cheaper because of the nature of the place. Poverty (cheap labor) and treaties (cheap postage) shouldn't be the drivers of this efficiency because they aren't caused by fundamental differences, just political ones.
But the issue here is not the differential in efficiencies.
It's China receiving subsidies from the US because it was considered a developing country in 1969. It's not anymore, it's a global superpower now, it can pay its own postage.
Huh. Very interesting. I have a notion that all decisions should auto expire and be explicitly renewed. Because it's so hard to cull outdated or revisit / repair suboptimal rules. Inspired by stuff like IP/TCP leases and cache TTL.
But your example of the powers that be waving thru a bad rule refresh suggests my notion won't be sufficient.
Well, the process did exactly what it was required to do, to classify countries by income levels. China is not that rich, not even passing as a newly industrialised country.
Were it to pass as such, say, Kenya and many other African countries would've too.
This. I've got nothing against US aid to less privileged nations, I'm all for it. I can't stand a US adversary who is running re-education concentration camps for Uighurs and implanting remote access devices into US corporate infrastructure getting an unjust benefit form one cent of American tax money that operates the post office.
Not so fast. You're right that the general operations of the USPS are no longer directly appropriated by Congress. However, the US government and its citizens do give the USPS significant economic benefits, including a 100% tax exemption from state and local taxes, and the ability to "pay" federal taxes back to itself[1]. USPS need not comply with local zoning, parking, toll road, etc. laws.
According to a 2015 report[2] cited by Fortune, that included $2.1B in waived taxes, the benefit of a federal monopoly on deliveries worth $14.9B, and as much as $490M/yr in subsidized lower interest rates due to not having to have a credit rating and borrow on the open market, but instead getting preferential treatment from the Treasury. Not included in the report is the fact that USPS OIG and USPIS are federally funded through appropriations[3]--whereas UPS or FedEx would have to hire their own off duty police offers at significant expense to receive the same level of protection.
That's interesting, thanks for the detailed reply.My point was that their operating expenses are covered by fees for postage and not directly paid through taxes. But now I realize that this is more of a grey area than I had though.
While it's unlikely that money saved would be directed to more useful endeavors internally, as a US citizen I'd prefer that money not subsidize Chinese commerce (or rather, subsidize US consumers purchasing directly from China).
No it has no bearing on China. It is the same policy with Switzerland. You get the international package to America we pay for the final delivery. Pay for a package to Switzerland and Switzerland pays for the final delivery. It was suppose to be a wash for both parties. China just got a much better deal. Cost me more to mail a package the next state away then for me to get a package delivered from China.
Now you have to pay for Switzerland delivery and then the domestic cost.
Why would this change the be end of direct shipping from China? Currently (rounded off numbers) the cost of shipping a 2 lb (1 kg) package within the US is about $7, and the cost of shipping such a package from China to a US address is about $2. The obvious solution would be that the Chinese shipment ends up costing $9 (current Chinese rate of $2 to the US border, plus $7 standard US shipping). The Chinese shipping would thus end up $2 more than the US. Presumably there would be lots of cases where the $2 greater shipping is offset by lower price of the item?
I can order 8 recycling batteries for $2.99 and have them shipped to my house. That is a loss of $4. They are looking at an increase of $7 at least. BTW when I ship a small box 2 pound of cookies to my son from his mom it cost me around $10.
Sure, certain things will no longer be feasible. My doubt was that these less-than-the-cost-of-shipping items were the bulk of the current direct-from-China Ebay orders, and even if they were, I was doubting that there was not a market for slightly more expensive items.
For the US cost, a "Priority Mail Small Flat Rate Box" is $7.20 between any two US addresses, and a "Priority Mail Flat Rate Envelope" is $6.70. If you don't use one of these, the postage will likely will be slightly more.
My understanding is that there's a nominal fee for last-mile delivery the USPS charges mail from other countries, which is all (or the vast majority) that's being charged for Chinese shipments, as the Chinese side is subsidized completely (or almost so) for outgoing mail. I think the $2 you are quoting might be the treaty fee for delivering mail from other countries, which is not the true cost of delivery, but mostly works out as long as there's a fairly even flow of mail between two countries. What we have here is that China is subsidizing their side of the outgoing mail, so all that's being paid is the treaty set delivery fee for external mail (which again, isn't the true cost of last-mile delivery).
the treaty fee [...] is not the true cost of
delivery, but mostly works out as long as there's
a fairly even flow of mail between two countries.
Isn't the core problem here that there _isn't_ an even flow of mail between China and the US? Because there's far more ebay/aliexpress traffic coming out of China than going in.
I think it's not just that, which would be problematic on it's own, it's that China is also subsidizing local delivery, so the only (or almost only) delivery fee for Chinese shippers is the portion they pay to USPS for local delivery, which is artificially very low. So not only are they taking advantage of the difference in trade flows, they are also encouraging it even more.
I think this was covered in an Planet money podcast from NPR.[1] It's also possible I'm not remembering portions of it correctly, but I think they did an interesting treatment of the subject.
The US rates are for small flat rate packages and envelopes on USPS.com. I didn't find an exact source for the China-to-US rate, so the $2 was the low end of a small number of articles about shipping rather than an exact quote. I may have misinterpreted, or converted using outdated exchange rates, or missed details about minimum quantities. As you say, there is subsidization involved, but I think this is about right for the amount charged to the shipper.
> I didn't find an exact source for the China-to-US rate, so the $2 was the low end of a small number of articles about shipping rather than an exact quote.
Oh, I'm not questioning your accuracy, I was just wondering the source, since I wasn't finding anything easily. :)
I don't think this is the end of direct shipping from China, but it is a large blow to that random super cheap Chinese knock-offs market. The Planet Money episode I linked in a sibling comment covers the story of an American (unspillable) mug maker that noticed knock-offs selling super cheap from China. He was able to order one with free shipping for $5.59, free shipping from China. He asked his shipping department how much it would cost to mail the mug across the street, and was told $6.30, just for shipping. I think that illustrates the distortion this has on the market very clearly, where something can be manufactured in China and shipped to a US home cheaper than a US manufacturer can just ship the item.
I'm sure there are plenty of items with a higher base cost where Chinese manufacturers will be able to make up that shipping extra in a lower item cost, but given how large the market of very cheap directly shipped items is, I think this will have a very large effect, especially since I think there's a lot more consumer confidence ordering very cheap things from China than somewhat expensive things. I don't care too much if my $10 item from China is crap, or unsuitable for it's intended use, or just fake, but I might really care if it's a $50 item, so I might choose a North American company to order from.
Actually Swiss Post has the same problem as the USPS: buying something from a Swiss online shop is usually expensive because of high Swiss wages, but you can buy stuff for "dirt cheap" from China, and the delivery isn't paid for by the customer but by Swiss Post. Things like S-ATA cables cost maybe at least 7 Francs in Switzerland, but 0.40 CHF from China, with free shipping!
And yet, if the profits can be prevented from all floating to the top, globalisation would appear on the surface to be an excellent way of redressing global inequality. Massive international wage gaps will be perceived by the market as an exploitable inefficiency, which over time will be ironed out.
Or, to put it another way, if two people wish to trade, it must be in both of their interests. If I, as a westerner, go to a third world country and buy a bunch of stuff that from my perspective is cheap but from their perspective is expensive, we both end up happy. What's so terrible about that?
(Of course where it falls down is where labor is cheaper because of poor worker protections and exploitative practices, in which case it constitutes an end-run around the labor laws of the richer party. But they are the ones that should be upset, not the poorer party, whose labor laws would be terrible regardless of exploitation)
'Labor laws' is a bad argument, particularly in poor developing nations.
If you enforce labor laws in developing countries, the cost of production will be high enough that industry doesn't develop. At that point, the people there have no industry and are much worse off (e.g. a sweatshop is better than subsistence farming).
A better argument is 'labor choice'. Individuals need to have the ability to choose their circumstance. If they can choose, and choose freely, over time the whole society can ratchet up their standard of living by making these choices at the margin.
I don't think you successfully debunked it. You asserted without merit that working in sweatshops is better than subsistence farming, this is both false and a false dichotomy.
Child labor is much the same - a society can only ban it when it can afford to do so. An agrarian society has inevirably plenty of child labor, as part of the family. That said, you can probably ban companies from ever employing children, especially with the productivity level of current mass-production tech.
Investment in people is a red herring. You can give people choice and invest in them. Though guess what: developing countries (which is who we're talking about) don't have money to do the latter.
I’m not sure if Swiss fine machinery is the best example here. What is it about the nature of Switzerland that makes it a more natural place to create fine machinery then anywhere else?
Similarly, using American corn as an example of how free trade should work is pretty underhanded. There’s a ridiculous amount of subsidies there, and the US doesn’t have any qualms with dumping the resulting product on international markets.
The climate and soils in Iowa make it a great place to grow corn - even without subsidies farmers would grow corn in Iowa. Despite a much lower cost of labor in other countries Iowa can still compete well in the world markets because corn grows so much better.
There is probably no advantage to making machines in Switzerland that you couldn't duplicate in Iowa, but because Iowa has the natural advantage in corn it is better for everybody if Iowa concentrates on growing the best corn (hopefully this includes improving their soils to grow even better corn), while the people of Switzerland concentrate on making better machines. Then they trade machines for corn and everybody is better off. If instead everybody was a jack of all trades there would be less corn because the people of Iowa aren't as focused, and the machines the Swiss produce wouldn't be as good because they don't get as much practice making them.
Of course the above is simplistic. Iowa has machinists that make fine machines, and there are Swiss farmers who grow some fine corn.
In reality though, Iowa has more than enough corn farmers for the population, and plenty of low-wage manufacturing workers to create said farm machinery there. Especially when the Swiss Franc/USD are 1:1, the Swiss would just open a plant there and finance it
At least in the theoretical example it depends on whether its more economical to build the machines closer to the farms in exchange for sacrificing farmland to do so.
Even if the world isn't so cut and dry to turn all of Iowa into one giant corn farm if Iowa is the best place to grow corn than corn production should naturally trend there, pushing internal business out that can operate elsewhere while subsuming corn production elsewhere where its less profitable.
That kind of effect is very minute on the actual day to day operating economy and decision making process of business entities involved which is why we don't just see all of Iowa turned into a corn farm, but those kind of effects have positive efficiency influence over long time frames.
Economies without large amounts of bulk natural resources are good targets for specializing in value-add industry.
It is both positive- and negative- feedback. There are lots of things Switzerland doesn't have which makes it specialize in the things it does – that concentration of specialization is it's own efficiency generator.
I had to look up that term [1], thanks for introducing me to it.
I'm still not sure how Switzerland the geographic place intrinsically leads to more efficient watch-making, as Shenzen and other Chinese factory cities make copious use of établissage in many different industries. Also, Apple's offshored Chinese manufacturing demonstrates that extremely high quality hardware manufacturing is not ethno-culturally-bound, and can be successfully transmitted through a corporate culture.
Ricardo's comparative economic advantage in Net age-birthed industries seems increasingly more hand-wavium the further away I get from intrinsically geographically-tied economic inputs like mineral resources, fresh water, salt water fish migration paths, or latitude-dependent agriculture, etc., and the further one transits away from historical network effects like Swiss watch-making, Silicon Valley software-writing, or Belgian diamond-polishing, etc.
The mathematical and empirical analyses of comparative advantage [2] [3], as well as great explanations about it [4], don't seem to address extremely complex goods with very high cognitive input factors, like semiconductors, industrial machinery, bio-pharma products, avionics, spacecraft, high-end electronics manufacturing, fracking, cloud services, search engines, e-commerce, etc., and I suspect comparative advantage breaks down as we evolve those and similar economic areas because ceteris paribus, there is no natural, lasting advantage one nation comparatively holds over another on human cognitive power (which I celebrate). In all those areas, there are leaders, but not so much and to such a comparative degree that they decisively elbow out other nations from economically attempting to enter those industries now or in the future.
The Sudan might be a cognitive desert right now compared to Palo Alto or Shenzen, but there is nothing structurally preventing them from turning into a powerhouse in the future (on a multi-generational timescale) to contend with, as say there is with them turning into the next corn-production hub like Iowa, or oil-producer like Saudi Arabia or the fracking Permian Basin.
in this specific case, it's not about the location of Suisse per se, but more about the people living there - focus on absolute quality, not cost-cutting, not price/value ratio but quality first. Of course this is very simplified, and may be less true for some cases these days.
The other point - most countries subsidy agriculture in some way. If US shouldn't dump their corn on global market, so shouldn't european farmers/milk producers (especially French I think).
Cheap labor/poverty should absolutely drive free trade, at least if you are interested in improving the human condition. People in impoverished nations choose to work in sweatshops because the alternative is so much worse; prostitution, indentured servitude, being completely destitute etc.
Agreed; though that must be actually a choice. There have been cases where governments have made the alternatives worse to push people into "progress".
Its the only choice available because the previous means of survival was at best subsistence farming. And it isn't guaranteed to happen, but impoverished countries will never enter modern society if they are just isolated from it for labor protections sake.
The trickle of money from the pockets of capitalists into the dictators of Indochina in exchange for functionally slave labor is still better than if these countries had nothing to offer the world at all.
You would want the optimistic capitalist means to uplift the third world to be simple investment - you take a country with nothing to offer and no resources, invest money in it to educate its people and develop its infrastructure, and then you would have their substantially improved productivity to profit off.
But that has never happened on just the backs of dollars because there is no way to risk manage that kind of arrangement. It almost always comes second to bombs or prophets as a way to provide that collateral - even if the country fails to recoup the investment, you can pillage the natural resources or convert its people into adherents of your own culture. Because those acting in self interest are approaching a scenario where the other party has nothing to offer (except idle hands) and you have everything.
I once believed this as well, via one of my degrees (economics). It turned out to be contradicted by reality.
Ricardo and Adam Smith argued that the consumer surplus gains of free trade for the higher labor market would be greater than the losses sustained in producer surplus in the same market. I.e. that American consumers reap more $$ from imported foreign cars than American workers/business lose.
However, since then its become obvious that the population that loses jobs cares a LOT more than consumers do about their cars being a few $$ cheaper (e.g. Donald Trump won Michigan and Ohio).
In other words - political differences DO matter. Perhaps economics should return to its previous name - Political Economy - in order to actually describe the real world again.
I want to remind everyone that Chinese economy became what it is today because European, American and Japanese companies invested trillions in China. It was a Republican president who kicked it all off. A policy decision of pure capitalism.
It was also a policy decision driven by necessity. Nixon didn’t go to China for the lulz, China was going down a bad path dangerous to the west and western business was hitting a wall in many ways as well.
> It was also a policy decision driven by necessity. Nixon didn’t go to China for the lulz, China was going down a bad path dangerous to the west and western business was hitting a wall in many ways as well.
My understanding is that Nixon went to China to create a another pressure point on the USSR. The Cultural Revolution was bad, but mostly for the Chinese.
Those areas made far more than they invested, and China needed that huge investment because those three areas had already spent a century exploiting it for profit.
No, China needed that investment because Mao and his communist policies held China back for decades. But feel free to mouth the CCP line of China being a great victim.
> But feel free to mouth the CCP line of China being a great victim
This crosses into nationalistic flamewar, which we ban accounts for, so please don't do it again. More generally, please don't post aggressive snark here, or any snark.
For a start, things before 1950 still happened. Even during the decades you admit happened, those areas refused to acknowledge the existence of China, making trade impossible.
Early Maoist policy hadn't helped matters, but it's pretty hard to argue American, Japanese, and European policy hadn't already left them in an incredibly shitty position.
Are you saying that China was not a victim? They literally had millions of civilian deaths in WWII. I've seen figures from 14 million to 20 million. Never mind the destructive effects of western imperialism up to that point.
As for Mao holding back China, no doubt there were big problems. But the greatest increases in life expectancy at birth came under Mao [1] and his push to greatly expand access to medical care and education in rural areas. That was itself an investment which set the stage for future growth. (It's a lot easier to get things done when your people aren't dying at age 45.)
Depends. Are they so desperate that they want to go to war, or are they rather becoming more of a middle class that wants to play the newest video games?
No it is the demand for better working conditions and wages. That helps the local Chinese and American workers. Oh that's right labor unions are evil????
That is the theory. I might be pessimistic, but it looks to me that everyone claims that one want that even playing field and at the same time, hides as much subsidies as possible to be able to protect ones own industries. Europe is heavily subsidizing its agriculture. The US are heavily subsidizing anything that has a link to anything military and oil. And others are doing the same. True, a few markets have been freed and commerce has increased, but an enormous amount of industries are helped by governments who like to criticize the subsidies of the others.
By the way, there was a nice article last year about how the US are subsidizing the oil and fossil fuel industries in two ways: first by direct subsidies (about $20 billions each year and the "hidden" one about the cost of carbon emissions which can be estimated at $200 billions per year (which is real money on the carbon trading market : the government pays for the carbon emitted by its industries).
(https://www.forbes.com/sites/ucenergy/2017/02/01/the-200-bil...)
It is interesting to see that the "Clean Power Plan" of the previous administration was made to allow for levelling the playing field more or less by removing those hidden subsidies, and that the current administration destroys it. And that is not even including the costs of global warming that will impact the future for todays actions.
So to sum up, the supposed efficiency of the markets seems to me like an illusion, or at least, an ideal that will be never reached because it allways allows for cheating. Same for the postal union of this topic : for years, the US had a net gain financially from it and it didn't seem to bother them. Now, it is China that has this net gain and they are not behaving differently than the US did for many years by trying to preserve this advantage.
I don't think anyone sensible would fault China for taking advantage of something that is advantageous for their businesses, nor for them to advocate for it. It would be irrational for them not to, the subsidies exist so obviously any reasonable business would use them.
Nonetheless, it's clearly not in the interest of US businesses. The US is not obligated to provide subsidies that, due to the scale of trade using this tool, demonstrably favor Chinese small businesses over those in the US and distort the market.
I'd much rather see the market made more balanced by charging the same prices for shipping than by tariffs. At least that's a real cost. Though I have the ulterior motive of thinking charging full price for air freight will reduce carbon emissions and inefficient supply chains.
USA as well, but there is a good reason for it. It's a strategic. You are 9 meals away from a revolution. Other subsidies are for strategic purposes. There are always a few abuses which you hear in the news, but the logic is sound.
New Zealand cut off its agricultural subsides and its food exports exploded. Realities of globalization include problems and trade offs but do not match this criticism.
Globalization is a hegemonic project of the West, best understood as a means to transfer capital from the economic peripheries to the imperial core, and has tended to wreak havoc on developing countries that have exposed themselves to it. China has been very sensible to ignore the dogma about free trade and to exploit weaknesses and loopholes in trade treaties when they find them.
This is true. Nothing to do with what I said, but, it is true.
It isn't what happens at the moment. Every dollar of growth worldwide is subtracted many times over from our environmental commons. At the moment the global economy is a heavily negative-sum game.
You don't need to have read The Wealth of Nations to know that it's possible to increase the GDP of a country without decreasing the overall savings. Service driven economies are the best example of this.
This is a total lie. The economic development of many of the poorer nations that have engaged in global trade has exploded in the last fifty years. Human development in those countries, as measured by uncountable metrics (IDH, child mortality, rates of education), has soared.
Please show your evidence that global trade is a zero sum game and that the "imperial core" has reaped all the benefits. Not one example of a singular country (sure, there are some losers for a variety of reasons), but for example, show us how the African continent has gotten worse due to globalization.
> Please show your evidence that global trade is a zero sum game and that the "imperial core" has reaped all the benefits.
I didn't say it was zero sum. Poorer nations have experienced some growth, and a lot of that growth has been extracted by the West. Generally, the more a developing country has embraced globalization, the worse it has been exploited. This is not a hugely controversial statement.
If you'd really like to understand the power dynamics, you'll need to do some reading. Former World Bank chief economist Joseph Stiglitz's "Globalization and its Discontents" is a good start, though a little dated now.
You would have to eliminate all government policy to get rid of subsidies. There a million ways around every clause in a 1000 page free trade agreement. It's just not possible.
I'm a supporter of liberal trade between all countries but you've got to be honest that pure "free" trade just ain't happening while there's a few hundred individual countries on Earth
I may be cynical but I don't believe this. I think its more about producing goods using more exploitable workers and resources.
If all countries had the same worker and environmental protections and same degree of unionization, aka an actual level playing field, then maybe. But instead its more about exploitation and breaking organized labor unions.
I hear you but if it costs $3 to drop ship something from China to CONUS but $4 for me to send it within CONUS I’m not sure how we can say it’s “not one-sided concessions and subsidies”
I get the argument of globalization but I just don’t see it playing out how people say it’s supposed to.
I kept hearing the claim that the US Post Office was losing money on items shipped by Amazon.
So I asked the Postman delivering my Amazon package on a Sunday, and he confirmed that indeed the Post Office was being paid far less on a per package basis for Amazon deliveries than the regular rate.
In the case of this Postal Treaty, it seems like the Post Office is losing money on delivering these <= 4 pound packages from China.
The US Post Office is struggling enough, I think pulling out of this treaty is a good thing if it can help them.
There’s a little more nuance to it. The Postal Accountability and Enhancement Act of 2006 [1] is the major contributor to USPS’ ongoing financial issues. That act requires USPS to maintain a 75 year reserve for retirement and medical benefits. Other agencies including the Armed Forces max out at 20 years by comparison.
Would the outcome of these negotiations at-least end up creating a path to coin a universally accepted definitions of 'Developing Country' & 'Developed Country'? Is it HDI, industry or by Military Strength Index?
If MSI is taken into account, then India & China are among the most developed nations!
I wouldn't hold my breath. The discussions about developed/developing are probably as old as the distinction itself and (as evidently shown here) many people have to win or loose depending on the classification of a country.
No, they won't. These terms just aren't used any more. That's partly because of the euphemism treadmill, and on the colonial history of these terms.
More importantly: the real world does not conform to any such arbitrary differentiation into a single binary variable.
There just isn't any need for such a classification anyway. If you want to index something to a country's wealth, just use any per-capita economic measure and be done with it. GNP is fine, I'm sure it wouldn't make much of a difference if you used iPhones/per million or the Big Mac Index, instead.
They will pay more because currently the cost is partially covered by the USPS. Such treaty makes sense in two cases:
- the cost of recovery is high. 140 years ago, doing the accounting for all the parcels, letters sent from France to the US would have cost and from the US to France to then "balance" the accounts would have been way higher than the recovered money from one party.
- the traffic is balanced, that is, both countries send/receive approximately the same numbers of parcels/letters each way, each year.
Once these two assumptions do not hold any more, it makes sense to reconsider the situation. This is a question of balance.
That cost is now just properly being paid by those wanting those goods. Previously that cost was being subsidized by all USPS users (and taxpayers via bond underwriting, tax breaks given to USPS, etc).
It is 100% reasonable to have to pay more for shipping when a good has to travel a farther, less convenient voyage and go through customs. Anything else viciously incentivizes overuse of transportation and puts an uncompensated load on border protection.
I've ordered a lot of things from Ali Express, most shipping from China to the US. For a few, the price of the product + shipping was less than the price of a single US stamp! It's hard to justify that ridiculous level of subsidy. I have to pay more now? Too bad.
Of course you realize that this change will likely disproportionately affect the poor and middle-class (who will see a sharp rise in shipping costs) as well as smaller businesses who rely on thin margins to survive.
The cost of $300 million per year as quoted in the article seems like peanuts compared to some of the other actions this administration has burdened tax payers with.
Generally speaking, continuing to kick the crutches out from under the lower classes is a bad idea especially when there are no better solutions being implemented.
You need to keep in mind that the postal treaty wasn't JUST for China either, almost every single nation was part of the postal treaty. Withdrawing from this treaty would likely result in increased postage for all international shipments.
Luckily there is a very easy way for people to avoid paying for shipping... although maybe things have changed since I was young. Shop at local stores if shipping costs make buying by mail too expensive. Like it was forever prior to Amazon.
Prior to 2005 it was consistently less expensive to shop at the local CVS, book store, or radio shack than to order online.
If my business model requires public subsidies for shipping my goods to turn a profit, my business model is garbage since 100% of my profits are literally taxpayer funded. Maybe small quantity mail order batteries from China isn't actually a reasonable thing to have and it maybe actually costs less to buy batteries in giant crates and have them available in local stores.
I might even say that this is obviously the case (for the battery example). Plus you build the local economy rather than subsidizing it's obliteration.
As a person who ran a local store 'back when', the cost of shipping was factored into the wholesale price which then was used by the store to calculate the retail price. The end result was that shipping was included in the mark up percentage, typically 60 to 100%.
If a middle man was used, like an importer/warehouser, that middle man added their markup on shipping as well, typically 20 to 40%.
The only thing I do want to bring up about shopping locally, for electronic components specifically, is that stores like Radioshack are essentially extinct, at least where I am in the Midwest. There are no local electronic stores of any variation except for Best Buy.
Which is precisely why I do not shop at corporate mega stores that make it impossible for smaller businesses to compete using shady practices to lower prices.
Once Amazon or Wal-Mart are the only company left, they will be free to raise the prices to whatever they want.
I doubt it. Chinese companies aren’t sending wholesale stock vis epacket. Losing consumer ability to by tiny quantities of fake LEGO or whatever in quantity 1 volume isn’t putting anyone out of business.
I would rather subsidize domestic shipping to lower barriers to e-commerce entrants if we feel a burning desire to subsidize something in this area.
Most actions disproportionately affect the poor and middle class--that doesn't mean we shouldn't take them. Although it doesn't always work out in practice, ideally, other wealth redistribution policies should blunt the impact of said actions. That said, $300m is not very much, so it seems largely like a symbolic gesture.
This change will likely disproportionately affect the poor and middle-class (who will see a sharp rise in manufacturing jobs) as well as smaller businesses who rely on manufacturing to survive.
Given the state of the economy, "burdened" is not a reasonable description.
Manufacturing jobs are a thing of the past, even China is automating more every day. When "the jobs come back", it won't be to employ the poor and middle-class but to set up automated production. Which, this time around, will be more competitive than low waged Chinese workers.
It isn't time to give up on the USA. The USA got an extra 378000 manufacturing jobs in the past year and a half. That is jobs, not just automated production.
Even if you have a source for this data, how many of these jobs are going to be lost to automation and process improvements in the next 5-10 years? My father recently retired form a steel mill. He wasn't replaced. My city's entire economy used to be based around steel manufacturing. There's still plants here, but the number of people who work in the steel industry has steadily declined. Here is a cited source to say it's down 42% since 1990 [0]. In addition to the steel industry, I work in the financial sector. It used to take a room full of accountants to file with the SEC. Now it takes one or two to input the data and check for errors in the software. Process enhancements and technology are going to eat people's lunch and manufacturing is one of the easiest areas to automate and streamline.
How recent? Steel is doing very well right now. They are hiring. Your source even shows this, not that your source is at all trustworthy.
1990 is a long time ago.
Steel is far from the only kind of manufacturing. Even if steel mill jobs all disappeared, overall manufacturing could be doing well. I'm not even 100% sure that steel should be lumped in with manufacturing; it's kind of like the final step of mining.
Process enhancements and technology face declining benefits. At some point, you've automated everything that makes sense to automate.
The jobs are going to stick around for 10 years unless we go back to a policy of purposely regulating American industry out of existence.
OP was arguing that manufacturing jobs are coming back. I cited a couple examples showing automation is going to make this very hard to be sustainable. I am not arguing that this is a bad thing or that people won't find productive ways to spend their time. I am arguing that bringing manufacturing back is not a long term sustainable plan.
Manufacturing continues and will forever...not "a thing of the past." This subsidy was a small part of the larger policy landscape that caused you to think manufacturing was a thing of the past. We have makers everywhere!!
The sheer volume China, and other Asian countries, are producing in the electric industry pales any impact this treaty could have. I seems to me that this treaty gained significance due to e-commerce. Thus it impacts consumer orders, not industrial ones. So the only parties to be impacted are online retailers (and every private sender).
Not sure how that would impact the current global work-share in any measurable way...
>will likely disproportionately affect the poor and middle-class
...in China, while improving emloyment in manufacturing in USA.
Currently you have an imbalance in America's economy, where the poor and middle-class get goods from China, and the poor and middle-class in manufacturing[1] in China get the monetary reward.
Used to be that, due to local manufacturing of the goods, the same poor-and-middle-class americans would be earning back the money spent on the goods[1] by their neighbors, in effect exchanging with each other (and with local capitalists). However due to the current trade costs imbalance, a lot of the money flows out of american's pockets, but not back to them.
Will there be a price increase right around the change? Sure. But it will make local manufacturing more cost-effective, in effect spurring local employment in both production and related services, and thus looping the money expended on the goods[1] back in to the neighbor's pockets.
It's a win-win for the voters in USA.
[1] and related services, like engineering, transportation, worker catering & care, etc.
The treaty is covering parcels up to 2 kg if I read the article correctly. Industrial scale shipments are in the order of 13 tons upwards to get full container loads. These rates are admittedly dirt cheap. But this is due to over-capacities and not some parcel shipments. I would assume certain online retailers stand to profit for that discision regarding customer order from China.
This has been a big part of the motivational story all along, but what would we sell to the Chinese, and how does that compare to what they sell to us (with or without unfairly subsidized shipping)?
The Chinese are nationalists. Xi Jinpeng is more nationalistic than Trump. They're not globalists. They've been pretending to play the globalist game to build their economy. You can't really blame them for it, but the rest of the world (not just the USA) is waking up to it.
(Fairer trade is literally the one thing I agree with Trump on...)
What about customers and companies not located within the US or China? It seems that the extra cost of doing business will force all of us to do business elsewhere.
The basic principle is a simple one, a letter could be sent to any address in the UK at the universal rate. There would be no surcharges just because you lived in a remote part of Wales. Equally there would be no discount because you lived next to the sorting office in London and wanted to send a letter to the next street.
In the UK we did celebrate Rowland Hill and his work, sadly times have changed and successive Conservative governments have undermined the universal postal service by privatisation and trying to make it 'better' with 'competition'. Hence, rather than one Royal Mail van delivering letters and parcels there is now a small fleet of other delivery vans and outsourced casual labour 'gig economy' type delivery options. It is not more efficient to send six different vans out to a small village, each of them delivering one or two items when you could have just the one Royal Mail van carrying a few dozen parcels.
Moving on from 1837 to today where ecommerce and email has changed things, there is the 'ePacket', not very well understood by most end consumers. Here is an article on Shopify that helps explain the fundamentals:
Now I am no fan of the 'evils of global capitalism', however, I believe that the work done by China Post and their partners in 30+ countries is very much in the spirit of 'the Penny Black'. If your business in the West does have product made in China for good reasons, e.g. that is where your supply chain is, then you want to get your products to customers in good time. Why send a crate of product to your local warehouse to then have people then resend that on to customers when you can have a pick and pack operation in China?
This is particularly the case if you are wanting to offer your product to people internationally. For instance, Australia. If you have production facilities in China and then have a head office and warehouse in the UK, you can't realistically sell to the Australian market if it takes weeks for your parcels from the UK to get there, inevitably spending a week doing nothing in the Netherlands en-route. It makes customer service a non-starter. What you really want, and what your customer really wants is the China Post ePacket service and no extra trip for your products around the planet.
This applies for premium products people want, not the forged knock-off product that people berate Amazon for. ePacket helps the small to medium sized business compete against the giants of industry that can afford their own planes.
There is no 'win' for American innovation here, this is like a 'tariff' in that it is actually a 'tax' on American consumers. ePacket was as bit as innovative as 'the Penny Black' and it facilitates trade on a level playing field.
I am sure that knee-jerk reactions will mod-down my opinions on this, however, the ePacket and how we got here is not understood that well and going Donald Trump on parcel delivery is not going to solve the problems and frictions that genuinely exist with the status quo.
In terms of supply chain set-up, particularly the distribution part of it, there always is a warehouse somewhere. Even the parts you are buying from China are seeing multiple warehouses, sortation centers and cross-docking sites before they arrive at you destination.
Right now the low shipping costs for parcel-sized orders make this set-up, with stock as far from customers as it probably can, economic. Once this cost advantage is gone the last-mile performance from "local" warehouses, read warehouses on the same continent or in the same country, is winning the day.
In short, it is likely that the majoprity of the inventory is moved from China to the individual markets by someone. If this Amazon that would mean competition for seller doing drop-ship out of China. Still, even Amazon is offering FBA-services for the procurement part from China using Amazon container lines. Or it is some sort of wholeseller who is just covering the import part, maybe even up to warehousing.
I see a business opportinity for a logistics provider offering bulk-import, storage and distribution for the existing dropshippers. Workling interfaces to Shopify and co. wouldn't hurt neither.
It will hurt everyone, as a basic fact of economics:
1. American innovators buying components from overseas, which include many on HN and in SV, will now have to pay more, reducing their ability to innovate.
2. American consumers will have to pay more.
3. American consumers will have less innovative products, as their ability to get innovative products from other countries will be reduced, and as innovators in both the U.S. (see #1 and #4) and in other countries will be hamstrung.
4. American innovators will face less competition, which is certainly not what leads to innovation; it leads to profit-taking based on market power, not meritocratic competition.
5. Reduced international cooperation and trade will reduce American innovators ability to sell abroad; the U.S. is only 5% of the world's population; the other 95% of the market is elsewhere. Cooperation and trade will not only be reduced as a direct effect, but also as a result of the U.S. appearing to be an unreliable partner, and as a result of other countries responding in kind by pulling out of treaties when they find any problems.
6. As reduced trade hurts economies here and abroad, Americans will pay more, have fewer people to sell to, resulting in lower wages and fewer jobs.
Finally, the greatest American innovation is democracy, the belief that all men are created equal and that's what leads to prosperity. That innovation has resulted in an explosion of peace and liberty unlikely anything the world has ever seen, and it has, as a secondary side effect, brought an explosion of prosperity unlike anything the world has ever seen. The U.S. is now purposefully killing that innovation.
This is the removal of market manipulation (subsidies on shipping). We should see more innovation because the market can act freely now. For instance, now that China will have to pay for their full shipping, some product may increase in cost to the point where they could be manufactured and sold in the US, spurring innovation. The fewer artificial market constraints the better.
> Finally, the greatest American innovation is democracy, the belief that all men are created equal and that's what leads to prosperity. That innovation has resulted in an explosion of peace and liberty unlikely anything the world has ever seen, and it has, as a secondary side effect, brought an explosion of prosperity unlike anything the world has ever seen.
Yeah, I don't know about that. Maybe in the US we've had a decent run of peace (with 50 years of nuclear holocaust hanging over our heads), but we've definitely dropped a lot of bombs on people. Enough that I think we can say that US democracy has not "resulted in an explosion of peace and liberty unlikely anything the world has ever seen".
> I think we can say that US democracy has not "resulted in an explosion of peace and liberty unlikely anything the world has ever seen".
But we have. Name any other period in world history that has seen the same spread of freedom and peace. There is nothing that comes close.
> The fewer artificial market constraints the better.
The Postal Treaty, and free trade and globalization in general, is a removal of artificial market constraints. Now we will return to artificial constraints at international borders.
> But we have. Name any other period in world history that has seen the same spread of freedom and peace. There is nothing that comes close.
I count the middle east and south east Asia as part of the world, and no what we spread there was not freedom and peace, it was/is decades of war and destruction.
I think you're referencing the cold war and the lack of direct conflict between major superpowers in the 20th century. That was a direct result of mutually assured destruction and the industrialization of the military. It was not caused by democracy. It was also replaced by a number of proxy wars. Again, not peace and freedom.
> I count the middle east and south east Asia as part of the world, and no what we spread there was not freedom and peace, it was/is decades of war and destruction.
I didn't say all the world had freedom and peace, but that it has spread far more than ever before. And it has. Again, name any other era that remotely compares.
> I think you're referencing the cold war
The Cold War has been over since, effectively, 1989, almost 30 years ago. Yet the world is, by some people's measures, more peaceful now than at any time in history. As simple examples, there is almost no international war anywhere. The entire North and South American continents, and Europe east of Ukraine, are at peace.
> It was not caused by democracy
The victors of WWII put mechanisms in place expressly to prevent more wars, including the UN and the EU, institutions designed to apply democracy to international relations. People can always make up reasons, since it's impossible to prove, but the results are what they intended. Further, with the spread of democracy in Europe, for example, the threat of war - which tore apart Europe for centuries before democracy became almost universal there post-WWII, war between European powers is now unthinkable. The exception is the sole non-democratic power, Russia.
Looking around the world, democracies don't tend to start wars or invade their neighbors - there is no chance of war between the U.S., Canada, European countries, Japan, etc. etc. All democracies. In East Asia, almost all threats of war are between the non-democratic power, China, and others. Japan and S. Korea, for example, have no interest in it and work out their issues peacefully.
https://www.wsj.com/articles/this-subsidy-for-china-is-dumb-...
Seems like a win for American innovation if you care about that thing.
Seems like China is going to get hurt by this change which is bad for globalization if you are into that thing.