How much do you think it costs to make a pair of Nike shoes in Asia?

It's also worth considering that certain industries (fisheries and agriculture for instance) are subsidised. It's in our national interest to maintain production capacity, so profits are the least of our concerns. Both the UK and the EU's agricultural sectors are heavily subsidised mainly for this reason. It's cheaper to import than to produce locally, especially with our environmental standards and targets, but we need to keep producing. More so in the current geopolitical climate.

And whilst nobody wants to risk being starved to submission, it's also equally important to promote more profitable sectors, and tax accordingly, so that we can support our more strategic sectors. I wouldn't say we're doing a good job at that for what its worth.

> Games Workshop brings in > 0.5 billion in revenue (!!)

I had no idea that Warhammer was such a huge industry - they must sell almost 600 sets a quarter.

What’s even more astounding is that most of Games Workshop’s manufacturing remains in the UK.

There's a problem with just directly comparing them - because JKR probably brings in more revenue to the UK than fishing, with Potter copyrights.

But most of that revenue goes to JKR, whereas most of the fishing revenue may end up in "working class" people's pockets.

> … that they don' even paint for you

Of course. That way they can sell you the official paints.

Fortunately, it seems they’ve dropped that you’re required to use the official paints if you want to enter a sanctioned tournament.

And then you try to eat figurines, and find out they're not as digestable

A game that is not on a computer... So they don't even calculate damage or move distance for you. And you have to buy each figurine and paint it yourself...

And people are spending all their money on this? That's why we're not mining asteroids right now?

I feel like people could just use AR glasses for this and spend nothing but their time.

The UK ain't alone in that either. California's agricultural sector is one of the largest in the world (let alone in the US) in terms of revenue and output, in many cases providing most/all of national and even global supplies of various fruits, vegetables, and nuts. Virtually all American almonds and broccoli, 90% or more of American dates and avocados, top producer of peaches and dairy products, the list goes on.

And yet, California's entire agricultural sector only totals to $50 billion in annual revenue. There are multiple tech and entertainment companies in California that individually surpass that, in some cases (like Apple and Amazon) by an order of magnitude.

The US appears to be trying to end the reserve dollars. Something that surprisingly few people have mentioned recently is that having the biggest trade deficit is the same thing as being the global reserve currency. Because they're the same thing, ending one of them also ends the other.

There does seem to be some sort of cycle in play: first a slave-driver-type economy creates a whole lot of wealth, then people get human rights, then they stop being driven like slaves and coast off the accumulated power, but forget the basic principles of wealth creation in the process (see also "good times create weak men" etc) and just spend all their resources arguing about who gets the wealth that is there instead of creating more. And I'm not saying that in an individualist framework - the reason individuals can't do it is a problem with the whole society, not with those individuals.

I think Germany is a bit of a special case due to what happened after the war, I think a more objective comparison might be say France.

Yeah this is arguably the tail wagging the dog - Trump is a reaction to the end of US hegemony, not the cause

A precision injection moulding factory can (I assume) relatively quickly start producing other plastic parts for military use.

Post-Brexit, there's now increased incentive for Games Workshop to build their next factory in the EU.

(Games Workshop is one company, but this applies to every manufacturing company in the UK.)

How much of a fish industry will remain when the North Sea is a battleground?

Is there any fishing going on in the Black Sea at the moment? (genuine question)

That article seems confused, e.g.:

> If government spending isn’t going to pay government workers, it must be going to pay people who work in the private sector — nonprofits, for-profit contractors, consultants, and so on. In other words, state capacity is being outsourced.

The money is going to social security payments. Social security went from <1% of federal spending at its outset to more than 20% of federal spending today. Medicare and other assistance programs are a similar story. Most of the money from these programs goes to paying benefits rather than administrative costs, which is generally regarded as a good thing. But they're also what together now constitute the majority of federal spending.

Meanwhile there is another reason why the number of government workers has gone down: Computers were invented. Things that used to be done by hand are now done by machine, and then you don't need as many clerks and bookkeepers to manually process paper records. This is also generally regarded as a good thing.

The points it makes about unfunded mandates and NIMBYs holding everything up with meritless lawsuits are valid, but the "ministerial review" it proposes is the existing permitting process. The problem is we have unfunded mandates and NIMBY lawsuits on top of that, which could simply be deleted and replaced with nothing.

This really seems like the fundamental misunderstanding:

> And guess who’s responsible for monitoring Medicare spending? Bureaucrats. So that’s at least a 2300% return on investment in bureaucracy!

If you only look at the most efficient thing a bureaucrat could be doing, look how efficient bureaucrats are!

Meanwhile the government is still paying thousands of people to process paper records because although computers were invented many decades ago, only parts of the government have discovered them and there are still many things you have to do by bringing physical documents to government offices to be processed in person even when those things have no legitimate reason not to be a government website.

What we need is not to have more bureaucrats, but rather to finish computerizing the things that have no reason not to be so the existing government employees can do the high value stuff instead of wasting time shuffling paper that should have been bits.

All this talk of state capacity and global trade puts me in mind of Europa Universalis

For another "not just the UK" example france has managed to persuade the EU not to buy british weapons out of the extra defence fund unless the UK give France some of it's fishing rights. Can you imagine being Poland and not getting the best anti-tank weaponry, or the best missiles because you want the french to have more fishing rights?

Completely barking mad.

https://www.politico.eu/article/uk-rejects-eu-plan-tie-defen...

"A broader employment base is generally better for social and political stability than explicit wealth redistribution"

. This is what stops revolutions and civil wars.

Sorry, but I don't think this is the reason. There were vastly more people in financial services calling for us NOT to have brexit than fishermen asking for it, even in number of people. I honestly don't think this was a numbers of people affected vs "% of GDP" affected issue. Not at all.

What good did it do for us? At the time everyone was running around rubbishing and laughing at the "outrageous" claims of 10% GDP loss, and where are we now?

You completely disregarded the central thesis of the comment you responded to.

The one child policy means there are no people to do the manufacturing in China in the future. The population pyramid is inverted. You can't do manufacturing without lots and lots of people. Or at least you'll get out competed by your neighbours who have lots of labor.

India has no energy. It imports most of its energy. While China has lots of coal and burns it to provide energy for its industries.

I am genuinely curious about what would happen if China allowed their currency (RMB/CNY) to float. The most obvious thing I can see that would put tremendous downward pressure on the currency would be capital flight from China to more politically predictable/safe places. Currently, normies are limited to 50K USD per year. (Of course, there is a large grey market to move more money.)

India's population pyramid is about where China's was in 2000. Their bulge of working age people is just barely hitting the workforce, so it's way too early to say what the outcome will be by 2045 when they've ridden the wave the way China did.

It's a lot more nuanced than that. China's internal diversity is much higher than Westerners typically understand, and their social cohesion and political stability are less well maintained than their external-facing image would lead you to believe.

Trump is on the record extensively as being very pro H1B (probably spurned on by Musk, Zuck, and Pichai). Because many of these workers can be overworked without complaint for lower compensation than American workers.

It's never been about protecting Americans...

Wouldn't this just be income tax?

I think Japan would have pushed through their real estate bubble if they just able to focus on automation like they were in the 80s and 90s. But the rise of cheap labor and great logistics in China ironically did those efforts in (or maybe it came too early?) and the Japanese economy fell behind for two decades.

it really seems like there's a push to de-skill Americans. like Bessent's remark that the laid-off civil servants could become factory workers as we bring back domestic manufacturing, and the recent corporate push towards vibe coding and integrating AI everywhere, and the purge of seasonal and unskilled migrant workers while keeping the H1B program.

it almost seems like we're trying to clear immigrants out of the chicken plants to make room for laid-off graphic designers.

English is the second language of most young and middle-aged Chinese, so you should be fine at least in tier-s cities.

Remember to carry your passport at all times, as you'll need it to buy a train ticket.

Even a simple metro ticket.

You can also smile at the CCTV cameras, which are in groups every 100m or so within cities.

I took a year of Mandarin as an undergrad, speaking is doable, reading and writing is hard, but Google Translate & Co. would make that less daunting now.

Austerity measures predate Brexit by quite a bit as a result of deliberate choices by a conservative government. Brexit accelerated pre-existing downtrends.

Many parallels may be drawn: austerity vs DOGE in gutting government services, the deluded nativist/isolationist core of Brexit vs the tariffing the entire world, xenophobia, and most obviously a nostalgia of past-greatness that doesn't quite fit the present circumstances.

The USA has also been greatly advantaged by being host to the world's reserve currency (also known as having a massive trade deficit). It has been able to buy, buy, buy without needing to sell in kind; essentially getting stuff for free.

But it wants to throw that out the window now too, for some reason. Crazy.

IMO for the Garmin vs alarm clock example, it's less about costs and more about power & branding.

The retailer & the wholesalers involved all have a reasonable idea about what people will pay for the products in question. The portion of that final consumer price that stays with the retailer is just the result of negotiation.

The retailer can likely buy decent alarm clocks from anyone, so alarm clock makers & wholesalers have no pricing power and the retailer can demand high margins.

But the retailer can only get Garmin from Garmin. If Garmin has done a good job promoting the brand, such that the retailer feels they have no choice but to stock it, they will have to suck it up and accept low margins.

Sure, but that has nothing to do with costs and everything to do with what the market will bear (while still recovering costs).

People will go and shop around for the best price on a $300 item, but for a $10 item they'll buy whatever's infront of them, so long as it's not clearly outrageous.

Which is why Derek [correctly] points out that everything is percentages, not fixed dollar amounts.

That's just a for-instance.

The general point is that additional cash is tied up in shoes which cannot do something else. Who bears the burden of the loss of that additional cash changes over time (Nike to Footlocker to consumers) but the burden is bourn.

(And that's before you count the impact of the inevitable reduction in unit sales. There're various kinds of overhead that don't scale linearly units sold, or that have a long lag before scaling, or have a significantly-sized step function in the scaling.)

BTW, where did the cash go? Oh yeah, into the hands of the US federal government. We have a word for that: tax.

To less people? I think I touched on that but yes.

All of that would typically be tied together as inventory cost (aside from theft, though some people do).

Lots of fascinating things in retail. Around half of all theft will be from your own employees, for example.

[flagged]

That's not the fundamental cause, though. Companies can't just raise prices to achieve whatever return they want, because once you go above the profit-maximizing price, the fall in demand outweighs additional revenue per item, and once you go above competitor's prices, demand similarly falls.

Yes investors look for maximal returns, but those are limited. Fundamentally the ceiling is set by demand and by your competitor's prices.

Take this to the logic absurdity, you have a car you previously sold for $2 for $1 COGS. Tomorrow COGS is $1M for the car. Could you sell it for $1M+1? No you would lose your ass because your line of credit and investments would not be able to be supported by the returns, in fact if this is your only option you would probably stop making cars altogether and invest in another business and sell your assembly line, eventually enough car companies would go out of business until the supply curve met a high enough % profit to normalize with performance of other businesses.

Now this analogy has a LOT of problems but the point is it directly affects investors, even if the interpolations inbetween are imperfect.

If you can make $5k/year by investing $100k into shoe-selling, then those profits have to rise at the same rate as base costs, otherwise, people will just invest into eggplant-selling, instead.

Another perspective is that Footlocker would sell you those $25 Nikes for $300 if they could-- but if they tried, someone else would get active in the retail business and invest into a slightly less profitable operation (with lower margins) to eat into their market share.

But if the costs for everyone rise, raising the prices proportionally (instead of by fixed amount) makes total sense because it is not really gonna cost you market share (only decrease total market volume depending on consumer price sensitivity).

Note: We just observed those exact dynamics with Covid/Ukraine driven price increases, where retailers and other middlemen actually came out really good instead of sacrificing their margins to keep consumer costs down.

Surely you can see that putting in $75 to make $150 for a $75 profit is significantly different than putting in $10075 to make $10150 for the same $75 profit, yes?

The market cares about dollar returned vs dollar-x-time invested. A shoe sits on a shelf until it is sold. If it costs 1.5 times as much to stock a store with shoes, then you need to earn 1.5 times as much money after the same time-delay.

Think in the extreme. $1 billion can probably earn more in a saving account than as a shoe that generates $50 profit after 2 weeks.

Selling shoes that you purchase wholesale for $75 has costs that go beyond selling shoes that you purchase wholesale for $50. There's the cost of money to buy the inventory, the cost of holding the inventory (and insuring it), the cost of shrinkage, the risk of being unable to sell some of that inventory. Most of those costs scale with the wholesale cost of the product being sold, although not necessarily fully linearly. As a result, a top line $50 margin on a $75 product gains you less than a $50 margin on a $50 product -- in a world with cheap capital. If you're restricted to holding $N of inventory due to cost of capital, this becomes even worse -- not only are your bottom line margins going down as much as 15%, but you're able to do it on only two thirds as much inventory, which (depending on turnover rates, etc) can drive you even lower.

Inventory costs money not just due to the cost of storage, but also because it’s bought on credit. The higher the price, the more money needs to be borrowed. The longer it takes to sell it, the more interest needs to be paid.

(If it's not bought on credit, there is still opportunity cost, since that money could have been used for something else.)

I agree fully. Having comfortable shoes with reasonable lifespans isn't a luxury.

If you spend more money and get a proportional increase in quality, that's not luxury. A luxury good occurs when the marginal increase in quality cannot be justified by the increase in price. For example, you could buy a quartz Casio for $25 that's more accurate than a $10,000 mechanical Rolex. Both tell you the same time.

The difference between selling every shoe at $150 and selling less than every shoe at $300 (or whatever the secondary market is charging) probably gets tossed around in pricing meetings.

Plus, higher secondary market prices drive demand for the less desirable shoes as everyone can't afford to spend a week's wages on a pair of shoes but can stretch their budget for the still-kind-of-cool models. I'd go so far as to say the secondary market prices drive more demand for the lesser models as the cool kids want to be seen wearing what the rich cool kids are wearing.

I'm sure they spend a lot of time discussing what price they can charge without people openly revolting against their 'predatory pricing' strategies.

It's worse than a sales tax. Tariffs have a few market-distorting effects that a sales tax doesn't.

* Domestic consumers and companies are incentivized to potentially go for the 2nd best product. This over time can impact productivity as the tooling will decline over time as inferior solutions are bought.

* Reduced competition. We've seen this with the 25% "chicken tax" on pickup trucks. Arguably one culprit in US automakers falling behind is that they had a protected market around pickup trucks where it was hard to impossible for foreign competition to keep them on their toes. So US automakers retreated more and more into this safe haven.

* Destruction of economies of scale: If everyone wants the entire supply chain to be replicated in their country, we obviously loose economies of scale and thus efficiency. This sounds like it would be small but having multiple Shenzhen's is just not viable and we'll have to deal with higher prices and less product choice.

* Galapagos island syndrome: Over time separation of markets can lead to incompatible technologies which amplifies all other points.

> sales taxes are something people innately understand if they have spent any time in the US

The way they are done in the US is maddening. You go to the counter and find the price is higher than the tag price by some random amount. It seems to vary wherever you go and depend on what you buy.

A tariff might actually be better.

They’ll pay more if the imported shoe costs the same or more.

The US does massive amounts of injection molding. I just signed off on my molds to be cut and run this month, how much experience do you actually have with this I wonder?

In some cases, in e-commerce your trading rent for shipping expenses. It helps you scale quicker as you have wider reach but the variable cost of shipping and taking returns can go sideways.

The good thing about rent is it’s relatively fixed so it’s possible to gain leverage with volume. That is also a risk if volume shrinks, etc.

You can buy shoes directly from Nike here in Australia. Is that not the same in the states?

Nike Sales DTC versus Total

  Fiscal Year | DTC Sales (in billion USD) | Total Sales (in billion USD) | DTC as % of Total Sales
  ----------- | -------------------------- | ---------------------------- | ----------------------
  2020        | 12.4                       | 37.4                         | 33%
  2021        | 16.4                       | 44.5                         | 37%
  2022        | 18.7                       | 46.7                         | 40%
  2023        | 20.3                       | 47.6                         | 43%
  2024        | 21.5                       | 48.2                         | 45%

> Okay, then we'll have unions then. I don't see what the issue is here.

America wont have unions nor consumer protections. For that matter, it wont investigate crypto scams either and will accept industrial pollutions to save factory owners money. Meaning, workforce will be less healthy due to impact on air they themselves are breathing.

There is no planned change to create protections for low level employees, but there are many changes allowing owners to do whatever. Once competition ranks up, they will be forced to pollute and mistreat workers or go out of business.

>it is better for society spiritually in the long term to have the majority of society focused on producing something real rather than just having an endless network of fake jobs as a means of wealth distribution.

OK, you want to sacrifice health of some for "spiritual benefit" of others. But those jobs will be as fake as healthier jobs those people have now.

> no union member can be fired or held accountable in any way, and that led directly to Doge. Corporate unions were so abusive that companies were forced to move overseas, losing American jobs.

This is a complete re-writing of history.

Unions were not "abusive". Typical union negotiations pushed for safe(r) working environments and reasonable wages.

Companies moved overseas not because they were abused (Jesus Christ). They moved because there's lots of parts of the world where you have access to psuedo-slave labor.

I don't want to be a slave. My fellow Americans don't want to be slaves, either.

> Each worker can negotiate easily on their own behalf or simply work elsewhere.

This is delusional.

Let me put this bluntly. If you're not even willingly to acknowledge the obvious asymmetry in leverage during labor negotiations, then your opinion on unions is worthless. You're not an honest party, or maybe you have trouble coming to terms with reality. Unfortunately, that means your opinion is better suited for the loony bin, and not any serious discussions.

As an aside, there are lots of great arguments to make against unions. Do that instead.

Do Crocs bought today match up to those old ones?

Explain the strategic value like I'm 5? I see people reference this idea all the time, but I'm unconvinced it's actually valuable enough to be worth it given all the other downsides. I don't actually believe it's a positive value proposition.

I see the argument for things of military significance. The common one is electronic components. But PCBs manufacturing is easy to spinup quickly. Which leave the critical components like IC where the ones we'd actually need are still exclusively overseas. The TSMC factory being built wont produce the newest generation chips.

Same for agriculture, if we're totally self sufficient, what happens when a blight takes out a staple crop or two? You can't just spin up food production or global food trade the way you can with manufacturing.

Meanwhile, having robust global trade is just a less lethal version of MAD, here being mutually assured economic destruction. It's much harder for other nations to turn on you when you both depend on each other for comfort, convience, or survival. Look at how the US is being seen by the international community. The reputation we had as a strong ally and worthwhile partner has been badly damaged. Why would other nations want to help us now? How are we stronger alone, instead of having their eager support?

There are two people, one grows all his own food, and makes all of the tools he needs. He doesn't need anybody. The other works with his neighbors, they share food, he kinda knows how to sharpen an ax, but he uses the ones made by the guy down the street, who's basically a professional blacksmith, even though he introduces himself as a gardener.

which one of those guys appears stronger? Who's more likely to survive something bad happening? who do you think is more likely to win in a fight? (yes their neighbors will come to help) which one would you rather be?

Domestic production that is perceived to benefit national sovereignty is protected.

See: farming, energy, and defense spending/subsidies.

There is no point in history where any nation, anywhere, has needed to be self-sufficient in the production of Nike Air Maxes.

That being said, my sneakers, New Balance 990v6s, were made in the US-- probably Maine. They're $200.

The shoes I typically wear for work, Red Wing Iron Rangers or Work Chukkas, were made in the US-- probably Minnesota. They're $350 and $290 respectively.

I don't know if increased volume will decrease the prices by much, they're only higher than premium imports by a little bit.

There is domestic production already here.

Are cheap sneakers a strategic asset now?

Self sufficiency is just not a credible argument here.

This is about consumer footwear, not agriculture (nor all of manufacturing).

The US (and most other nations that can afford to) is perfectly used to throwing ~$20 billion at the sector to keep local agriculture operational.

We did not do this for literally every industry in the past because we had (and have) neither the idle workforce to do this, nor does the local population want to do the work (even for slightly uncompetitive wages), nor do consumers want to pay for the difference.

My personal prediction is that people will realize this pretty soon with the consequences of the Trump tariffs manifesting and the whole thing will be rolled back and scaled down, with pretty much nothing to show for it.

I know you're asking "why not outsource ALL manufacturing and agriculture if someone else can do it cheaper" in jest, or as a rhetorical device, but basically every single economist on earth will say "Yes, we should do that, that's a good thing"

We don't have the labor pool for self-sufficiency unless we want to drastically scale back how we live.

Yes, the goal is for everyone to be doing the thing they can do most cheaply and then trading with everyone else. Karl Marx and Ludwig von Mises would agree on this point. The idea that the Westphalian state should get in the middle of this is the aberation. The only reason national security is a consideration is because of the nations. I don't care if my shoes are made in Asia, though I suspect they wouldn't be if we paid Asian shoemakers an honest, globally-clearing wage.

Self-sufficiency is irrelevant to the discussion above. If prices go up, Americans can buy less, and the number of non-manufacturing jobs at these companies will go down.

> shoes won't be so disposable and professions for cobblers and the like will be in higher demand.

It doesn't necessarily follow that more expensive shoes will be easier to repair. It's more likely that shoes will simultaneously become more expensive for the consumer AND lower quality and therefore even less amenable to repair.

Unless they dramatically change the design and manufacturing of those shoes, they won't be less disposable - just more expensive.

We buy and waste a lot of stuff. Fast fashion is pretty insane. Look in the closets of your friends who are constantly clothes shopping and it's a ton of shit that never gets worn and eventually "donated" (5% makes it to thrift store shelves, but most of it gets burned or sent to Africa .. and then burned).

Reversing the transmission of western consumerism is not an easy change. Few people are willing to pay an extra $50 for a more durable good that lasts. Long term thinking isn't easy for most, and many can't even afford to think that way.

But the tariffs are really a tax, a federal sales tax on the consumer. Biden tried to put in "unrealized gains tax" (which is really Federal property tax). So both presidents are trying to use executive power and double speak to get their people to support new taxes that are ultimately horrible for every American.

Trump Derangement Syndrome runs both directions.

Is that better? We need at least one cobbler sure, but if shoes are so scarce that we need to repair them like some communist country, are we better off?