First, consider washing machines. I only need to work ca. 15h to earn enough to buy a half-decent one. That's a bargain; I certainly couldn't build one in this time, not from raw materials in any case. But apparently someone can build one for much less than the value of 15h of my time. How? - ThreadSky

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thilogross.bsky.social • 78 days ago

First, consider washing machines. I only need to work ca. 15h to earn enough to buy a half-decent one. That's a bargain; I certainly couldn't build one in this time, not from raw materials in any case. But apparently someone can build one for much less than the value of 15h of my time. How?

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thilogross.bsky.social•78 days ago

The answer is massive division of labor between highly specialized manufacturers. This creates huge 'ecomony-of-scale' savings. Therefore even simple things are nowadays produced by complex supply networks. This reduces competition but also greatly brings down production costs.

thilogross.bsky.social•78 days ago

These complex supply networks cannot exist in any single countries, there can simply not enough businesses to produce everything with a high degree of specialization in one place. This is what drove globalization. (It is also the reason why Brexit never had a chance of working).

thilogross.bsky.social•78 days ago

So where are the six trillion? They are burning up. Trump's 'reshoring' destroys the highly specialized international supply chains that make things cheap, so everything becomes more expensive, and conversely we have effectively less money. So there it goes.

thilogross.bsky.social•78 days ago

Of course not all of this money disappeared in two days. Eventually, it will slowly be burned up as resources are wasted on reshoring and production with less efficient supply chains. Right now the stock market only anticipates this loss. So there might still be a chance to fix this.

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