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Friday, October 11, 2013 12:28 PM

Canadian Reader Comments on Outsourcing, Automation and Ten "Real" Problems With the US Economy

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In Ten "Real" Problems With the US Economy I took a look at complaints by Paul Craig Roberts that outsourcing was the "real" problem behind the crisis.

I dismissed Roberts' claim, while listing ten real problems, only one of which (warmongering) noted by Roberts.

Ten Real Problems

  1. Fractional Reserve Lending
  2. The Fed
  3. Lack of a gold standard
  4. Deficit Spending
  5. Public unions
  6. Davis Bacon and prevailing wage laws drive up costs
  7. Disability fraud
  8. Warmongering
  9. Politicians get into bed with corporations, unions, and crony constituents
  10. Lack of incentives to hold down costs on medicare, food stamps, and entitlements

I stated "If you fix the first four or five, most of the rest of the problems will be fixed automatically."

Comments From a Canadian Reader

Reader Martin, from Canada, thought I should have emphasized one of the points I made about outsourcing. Martin writes ...
Hi Mish,

I am a bit addicted to your Blog, and love your different points of view, so thank you.

Sometimes you make some small points/comments that actually need to be in bold, I found this comment by you particularly interesting:

"As for the loss of manufacturing jobs, I would point out that even China is losing them - to automation."

You are very right! A very close friend of mine designs systems and programs automation (robotics) for a large electronic manufacturer headquartered here in Toronto, Canada. I told him that he chose a great line of work based on what I have read on your Blog. They also have manufacturing and contracts with companies in China. Recently on one of his trips to China he visited one of these plants and found it was totally automated (they build components for solar panels, which are then sent to Canada to be "built-in Canada", which is another story altogether). He was amazed that in China of all places with all of their "cheap labour" they would automate an entire plant! While going over the design and systems he worked closely with the owners, they told him that true labour costs were growing exponentially and they wanted to get a head of the curve. Well turns out more and more of these plant owners are going this way, a true sign of the future. 
It's also very neat to see that these entrepreneurial Chinese are using contracts with big western companies to gain access to experienced manufacturing process and talent, pretty smart if you ask me.

Thanks Martin. Outsourcing is a scapegoat for the real problems I mentioned.

Mike "Mish" Shedlock

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