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Comment by myrmidon | Hacker News Reader

That's just one perspective and I disagree with it.

European carmakers are where they are because electromobility reset their legacy advantages (a lot of which they built up more than half a century ago on much cheaper wages); now the same dollar amount gets them less R&D output than in China, because engineers are more expensive, and production itself is difficult to keep competitive for the exact same reason (also why a lot of car production has shifted east into lower wage European countries long before Chinese cars became competitive).

If wages were significantly lower because of more labor migration, the industry would (obviously) be more globally competitive as well (I'm not saying that would be desirable, just that it's a given).

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>a lot of which they built up more than half a century ago on much cheaper wages

Wrong, auto-sector wages back then were much higher in regards to local purchasing power (especially on the housing front) and also unions were much stronger. Now they're already lower class jobs. A VW factory worker could buy a house and take his family on vacation with a stay at home wife. Good luck with that today when you see how much housing prices have outpaced wage growth since then.

>If wages were significantly lower because of more labor migration, the industry would (obviously) be more globally competitive as well

You forget EU car makers have factories outside the EU, in places with much cheaper labor and less regulations. As do Japan's car makers.

>If wages were significantly lower because of more labor migration, the industry would (obviously) be more globally competitive as well

Well, if we just never freed the slaves, we would still have a globally competitive cotton industry.

> just that it's a given

Are ASML and Airbus selling well because they're cheap to make or because of their unique innovations competitors can't easily replicate?

The west's industry marches on high end innovative exports, not competing in the cheap nicknack market. If your western cars aren't cutting edge and innovative you failed. And they aren't cutting edge and innovative because you didn't invest enough in R&D at the right time, because you valued short term shareholder returns, basically the plague of most western corporation.

> You forget EU car makers have factories outside the EU, in places with much cheaper labor. As do Japan's car makers.

Yes, but many of their billions of R&D spending are still spent on (globally) very well paid (local) engineers. Not saying this is bad, but makes it harder to compete.

> Well, if we just never freed the slaves, we would have internationally competitive cotton.

The US still is the leading exporter of cotton.

> The west marches on high end innovative exports, not competing in the cheap nicknack market.

This is an overgeneralization. E.g. Several of the most successful German companies are grocery retailers (as boring and low-tech as it gets).

> Are ASML and Airbus selling well because they're cheap to make or because of their unique innovations competitors can't easily replicate?

I'm not saying you can't pay out globally uncompetitive wages as long as you're sitting on an R&D advantage, but your low-end un-innovative neighbours will catch up to you when R&D is much cheaper for them (just consider the Japanese electronics industry in the 80s/90s for example; people said the exact same shit back then until they no longer could).

>Yes, but many of their billions of R&D spending are still spent on (globally) very well paid (local) engineers.

Not true anymore. They spend more on bean counters, marketers, managers, consultants, lawyers, etc than on engineers.

>The US still is the leading exporter of cotton.

Because of imported cheap labor or because of automation at scale no country can match?

>but your low-end un-innovative neighbours will catch up to you when R&D is much cheaper for them

Only if you make poor deals where you voluntarily give them all your hard earned technology in exchange for access to their market. Otherwise Mexico and Russia would be industrial superpowers catching up to EU and the US, if all it took was neighbouring you and having cheaper labor than you.

I'm not saying that wage level is the only factor for growth. But it is extremely significant.

If you want to keep higher local wage levels, you rely on other comparative advantages (easier access to capital, better education, better political stability), and all those tend to erode over time. As they do, you either lose your wage advantage or the whole industry, there is no alternative.

> Otherwise Mexico and Russia would be industrial superpowers catching up to EU and the US, if all it took was neighbouring you and having cheaper labor than you.

They are! Just compare vehicle production for an easy proxy: Mexico had >100% growth over the last 2 decades, while US numbers are basically flat. Russia is a bad example now because of war, but they did a lot of catching up before.

If your theory is that all western manufacturing struggles just because every single company is stupid and spends too much on lawyers and accountants then I don't know what to tell you.

> Well, if we just never freed the slaves, we would still have a globally competitive cotton industry.

America is the #3 exporter of cotton in the world, and the world leader in manufacturing and exporting the harvesters (John Deere, Case International) which have replaced those slaves as pickers of cotton.

The facts of the matter support your point much better than your counterfactual did (I do realize you probably did not intend to be taken literally here).

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