Tuesday, November 8, 2011

BREAKING: Basic Economics Applies in China Too

As I've frequently mentioned, one of the biggest protectionist myths out there is the idea that the long, slow decline in US manufacturing jobs has been caused by imports.  In reality, technology advances and changing consumer tastes, not free trade, are responsible for the vast majority of manufacturing job-losses in the United States, and these basic economic principles apply to every country in the world...

The parent company of Taiwanese tech giant Foxconn plans to mass produce industrial robots as part of its efforts to cope with labour shortages and rising wages.  The project, which is initially forecast to cost the Taiwan-based Hon Hai Precision Industry Tw$6.7 billion ($223 million), was unveiled Saturday when Terry Gou, chairman of the conglomerate, broke ground for the construction of a research and development unit in Taichung, central Taiwan.

"The investment marks the beginning of Hon Hai's bid to build an empire of robots," the Central Taiwan Science Park authorities said in a statement.

The investment will be made through Hon Hai's subsidiary Foxnum, a company focusing on the manufacturing of automation facilities and equipment, it said. Foxconn, hit by a spate of suicides at its Chinese plants, plans to replace 500,000 workers with robots in the next three years, official media earlier reported. Foxconn -- the world's largest maker of computer components, which assembles products for Apple, Sony and Nokia -- plans to use one million robots to do "simple" work, China Business News quoted Gou as saying in August.
Now, leaving aside the obvious and disturbing signs of the inevitable robot takeover, this article makes clear what free traders have been saying for a long time now: if you just have to blame US manufacturing job losses on something, blame robots, not China, because the Chinese (and the Germans and everyone else) are dealing with the exact same thing.

Let's just hope that Chinese politicians don't start ignorantly (or maliciously) blaming free trade like many US politicians do.

(h/t Freakonomics)

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