Ever since US manufacturing went to China, and IT jobs went to India, the middle class in America has seen its jobs evaporate and most of them fall into poverty. Most have lost the houses they bought during those good years a decade ago. Most have deep debts. Few have full time employment, and many have no employment at all. For America, prosperity in Asia has been a disaster.
Since last night, there has been a large protest by students and young people in Hong Kong, demanding the right to nominate and vote for their representative government, rather than "voting" for the only person put forward by the Commies. This is a pro-democracy demonstration. The markets were terrified tanks would roll in and kill everybody, like they did in Tianemen Square 20 years ago. Everybody remembers the shopper blocking the tanks motionless. Nobody remembers the machineguns on the tanks mowing down thousands of people, and arresting, imprisoning, and enslaving or executing the survivors. All they care is that their iPhone from Fox-conn is shiny.
Now, I want you to imagine that all these protestors succeed. That China caves and gives them their proper election process, and the rest of China sees this. All those youths slaving away in Shanghai and Quangzhou and Beijing and every city with major populations of youths, working for too little money, because its better than farming. Picture all of them getting a light bulb idea. Now they all protest, peacefully, for higher wages standards, waving communist flags for workers rights. And the party can't attack their own chanting stuff from Mao's Little Red Book, so they enact measures forcing employers to charge more for their products and pay much better wages. Imagine, Chinese workers getting real wages, like we used to, rather than $6 a month, which was double what they used to get as farmers. This causes inflation in China, but the Chinese Peoples Treasury just prints more money and who cares if rice costs 100x more this week? The Chinese are getting paid more. They can import it from America and Vietnam and the Phillippines. Why not?
Trouble is, the new higher prices suddenly require higher prices back in America and Europe, the primary buyers of Chinese goods. The US and EU markets can't absorb the price increases. Their orders drastically fall, so the Chinese factories have mass layoffs because there isn't enough orders to keep them going full tilt anymore. The drop in available parts in the US and EU, and the higher prices, encourages semi-skilled hobbyists and retired machinists and factory tooling engineers to see about building stuff domestically. This sounds great. It would mean jobs in the USA, for all those unemployed people. Only, the companies that built machine tools got driven under by the Chinese and their milling machines used to make the factory equipment are long sold off to China, and new milling equipment isn't available because those factories are shut down too. China is in a Depression. Thanks to fair wages. The rest of the world can't build up their own factories because the only place with the hardware is China. And they're idle. Even with the orders, the inflation is such that they can't sign the contracts because the price is breached in a week and they bankrupt and sometimes the managers suicide to avoid being tortured by the Peoples Army, who has taken that as their standard response to a factory closing. Its chaos in China.
Without machine tools, the USA and EU are in real trouble. Using hand tools provides low quality products, slowly, and there's no interchangeability. Everything is sort of built one at a time. Even shoes. Tires become unavailable as things slow down, and most people end up walking, and only going to work as far as they can walk in an hour, and heading home before dark. Nobody has a working flashlight anymore. Who has batteries? Those are from China too.
Just a little something to worry about. Cheers.
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