American Economics Thread

[FriedRiceNSpice]

Even ignoring the massive selection bias associated with this type of analysis (with restrictions associated with which foreign-born individuals get employment authorization + US-born Asians are overrepresented in San Francisco/San Jose and U.S. born children generally stay in the metro areas where they grew up) - this effectively concedes the point - US firms (including thousands of successful software publishers) are primarily staffed by U.S.-born residents educated in the United States - and thus by implication, U.S. education is thorough, efficient, and effective. What’s more - the towering global successes of less notable U.S. software publishers - such as Oracle, Adobe, PayPal, Salesforce, VMWare, ServiceNow, NetApp, ADP, Citrix, Ansys, among others - are made by individuals in mid-career and beyond (those educated in the 1990s/early 2000s). Every indicia of educational quality shows education is much better than it was 2 decades ago.

Oracle, Salesforce are going to be pretty close to FAANG, they are at most a half tier below and exhibit similar demographics. PayPal, Adobe, VMWare not much further behind. Engineering quality at ADP is generally going to be more significantly lower, and I personally am not as familiar with the others. In any of these tech focused companies, East Asians/Indians are over represented. All of these tech companies as a whole still represent the top quartile of software engineers in the US. Majority of software engineers in the US are not going to be working at a software-oriented tech firm, they are distributed across firms of varying sizes across a diverse set of sectors. Outside tech and a subset of finance, the bar for software engineers in the US is pretty dismal.

Quality of education in US exhibits significant stratification. If you look at private schools and the top school districts in the country, education in the US is top tier. Otherwise, quality of education exhibit high degree of variance across different school districts. The quality in the least funded school districts are dismal. And at the university level, the US has dozens of world class universities. While unfair, the US education system more or less prioritize education for students with the highest chances of success. And if you look at the demographics of the top school districts, guess what trends you can observe? Increasing proportions of Asians. In many US metro areas, the ranking of a school district exhibits statistically significant correlation with the proportion of Asians. And as proportion of Asians in the best school districts increase over time, then the corollary is that the percentage of Asians in the most competitive STEM jobs will also increase in the future.

 

[chgough34]

The selection bias is that the smartest available to the US make it to those positions and those are East Asians, both from abroad and those who have dominated the best education that American can offer.

The selection bias is that foreigners are overrepresented the only jobs they are allowed to work and that career preferences transmit vertically.

The only point conceded is that US firms are heavily dependent on imported and/or Asian minority input at the upper and most critical rungs and thus by implication, US education is thoroughly, efficiently, and effectively dominated by the Chinese and other East Asians at home and defeated by Chinese education abroad.

It’s not. Not sure why you continue to continue to harp on this point. East Asian enrollment is ~2-3% of total elementary/secondary education enrollment in the U.S. As previously explained - US born residents don’t need to work in any particular job to continue to be allowed to stay in the United States and that will result in a much more diverse range of education and career choices.

also, the Asian immigrants are going to be firmly rooted in the U.S. - they have decades in the U.S., houses, US-born children, US professional networks, U.S. assets, U.S. citizenship (and by implication, no citizenship of Asian countries), accounts receivables from social security and Medicare, etc and doubly-so for their children who have only no material ties to other countries. Those “Asians” are firmly rooted in the U.S. and no other country. Their race and national origin are tbh, quite irrelevant, outside of a civil rights context.

What's more, American successes rely on the foundation that it has built in the past. In regards to technologies of the future, the US is completely unable to compete with China, and that remains the case even with the willing and unwilling recruitment of Western Europeans and vassalized Asian nations. That is why today, an innovatively-defeated US can only resort to political means to attempt to slow down China's inevitable victory in the tech war and dominance of future technologies.

The U.S. having effective education is not contradictory to China having effective education. The two statements are quite harmonious. Even ignoring the questionable statement that “the U.S. is completely unable to compete with China”, for example, see the melting down on this site about ChatGPT and Nvidia earnings; the network effects, scale, technology, workforce development, and existing capital stock that US firms have built over the decades have will endure into perpetuity and continue to drive US firms to the top of the rank tables for decades in the future, regardless of what happens in China.

For example, even though it’s been the greater part of a decade since the ZTE ban went into force, in 2023, Intel made more in a month than SMIC made during the entire calendar year.

 

[gelgoog]

For example, even though it’s been the greater part of a decade since the ZTE ban went into force, in 2023, Intel made more in a month than SMIC made during the entire calendar year.

Intel is an IDM. Totally different business. With different profit margins.

 

[manqiangrexue]

The selection bias is that foreigners are overrepresented the only jobs they are allowed to work and that career preferences transmit vertically.

Puahahaha, so the "only" jobs that East Asians are allowed to work are at the highest rungs of innovation? I know the US has picked up the new hobby of shooting itself in the foot eversince 2016 but do you y'all have to do it with a shotgun?

It’s not. Not sure why you continue to continue to harp on this point.

That's ironically what everyone else here thinks about you, the person who thinks everyone else is driving the wrong way on the highway. And also, I harp it because it's true, the data shows its true, anecdotes show it's true, only American lawyer/politician excuses try to escape that truth.

East Asian enrollment is ~2-3% of total elementary/secondary education enrollment in the U.S.

Please, Log in or Register to view URLs content!

And when it comes to STEM PhDs, Asians go up to 13% (page 9) and then when we go PhDs in the STEM workforce, that's 45% (post #6,788 on this thread). We just get better and better. The higher you go, the more of us there are. But I'm sure you'll come up with some American cope excuse to make yourself feel better this time too.

As previously explained - US born residents don’t need to work in any particular job to continue to be allowed to stay in the United States and that will result in a much more diverse range of education and career choices.

As previously explained, this has no good implications for you. If it bears any influence on this topic, it means that the US allots its most sensitive and intellectually important jobs to foreigners, which is probably only done because its locals aren't up to the job.

also, the Asian immigrants are going to be firmly rooted in the U.S. - they have decades in the U.S., houses, US-born children, US professional networks, U.S. assets, U.S. citizenship (and by implication, no citizenship of Asian countries), accounts receivables from social security and Medicare, etc and doubly-so for their children who have only no material ties to other countries. Those “Asians” are firmly rooted in the U.S. and no other country. Their race and national origin are tbh, quite irrelevant, outside of a civil rights context.

Ahahaha, yes, yes, they are all very loyal and American. Tell the FBI to stop targetting and investigating Chinese American academics because they are just Americans like white people! See what your own FBI thinks about your assertion. In WWII, the US military sent Japanese American soldiers to fight Germany and German American soldiers to fight Japan; they avoided as much as possible sending one to fight against his own ancestral lands. Apparently, you can't figure out why...

The U.S. having effective education is not contradictory to China having effective education. The two statements are quite harmonious.

Zero sum game; a child with Down Syndrome develops and reaches milestones too. But the US has trapped itself in a hostile competition against China; now, if it swims slower than the Chinese current, it's going backwards.

Even ignoring the questionable statement that “the U.S. is completely unable to compete with China”, for example, see the melting down on this site about ChatGPT and Nvidia earnings; the network effects, scale, technology, workforce development, and existing capital stock that US firms have built over the decades have will endure into perpetuity and continue to drive US firms to the top of the rank tables for decades in the future, regardless of what happens in China.

Melting down for what? ChatGPT? It's a toy, and China makes one on its heels within months of its debut. Nvidia earnings? I'm not even aware of what they earn nor do I care to find out about this midget making a mountain of of a molehill. Nobody in China cares about Nvidia while everyone in America freaks about about Huawei/SMIC/SMEE. Here; I'll show you meltdowns right in your congress about China's success and America's inability to compete:

Please, Log in or Register to view URLs content!

Please, Log in or Register to view URLs content!

Please, Log in or Register to view URLs content!

Every CCP session is about how to improve China. Every US congressional session is a meltdown about what dirty tricks they can muster to stop China from running the US over. It's to a point where, "Let's just breed the pandas and keep the babies illegally" has become a serious topic.

For example, even though it’s been the greater part of a decade since the ZTE ban went into force, in 2023, Intel made more in a month than SMIC made during the entire calendar year.

Intel is a general computer company while SMIC is a semiconductor fab company. Intel's job is to make money integrating parts. SMIC's job is to give China an independent and indegenous lithography line, which no other country has. SMIC sends shivers through the halls of American congress, where every effort is made to just slow it down. Nobody in China cares what Intel does.

 

[FriedRiceNSpice]

The U.S. having effective education is not contradictory to China having effective education. The two statements are quite harmonious. Even ignoring the questionable statement that “the U.S. is completely unable to compete with China”, for example, see the melting down on this site about ChatGPT and Nvidia earnings; the network effects, scale, technology, workforce development, and existing capital stock that US firms have built over the decades have will endure into perpetuity and continue to drive US firms to the top of the rank tables for decades in the future, regardless of what happens in China.

Completely unable to compete may be an exaggeration, but it's already a forgone conclusion US and West will fall behind in tech within two decades. This is apparent in the massive effort and political capital the US is expending to protect its core markers from Chinese competition. Despite the high quality of US education, which again is only available to a small proportion of the US population, coupled with immigrants and outsourcing, the US cannot amass the requisite talent to prevail. The most critical form of capital in technological innovation is human capital, and the quantitative and qualitative edge China holds is insurmountable. Using tech companies as an example again, partially because they are a good proxy for baseline quality STEM talent in US and mostly because it's a field I am intimately acquainted with, 90% of FAANG software engineers are not even at the same level as Tencent/Alibaba/ByteDance/Huawei engineers. And US tech companies pay 2-3 times per per engineer which each outputs only 40-50% the value. Quality of education only goes so far, but work ethic and culture are even more important.

 

[AndrewS]

The U.S. having effective education is not contradictory to China having effective education. The two statements are quite harmonious. Even ignoring the questionable statement that “the U.S. is completely unable to compete with China”, for example, see the melting down on this site about ChatGPT and Nvidia earnings; the network effects, scale, technology, workforce development, and existing capital stock that US firms have built over the decades have will endure into perpetuity and continue to drive US firms to the top of the rank tables for decades in the future, regardless of what happens in China.

For example, even though it’s been the greater part of a decade since the ZTE ban went into force, in 2023, Intel made more in a month than SMIC made during the entire calendar year.

You're talking about legacy investments.

---

On network effects, China has an overall lead in the technologies underpinning the next Industrial Revolution.
But in some sectors like EVs, China has already won, as per a recent Morgan Stanley client research note. You can already see the network effects occurring where the US and European automakers have to turn to China for electric vehicle drivetrain, battery and software technology.

On scale, China is a significantly larger market than the US for most categories of goods and services.
And in quite a few categories, China larger than the rest of the world combined. For example, in clean energy spending.

In terms of technology R&D spending, China and the US are roughly spending the same today, if you account for differences in prices using PPP exchange rates. Furthermore, any chart will show a trend of China increasing its R&D spending significantly faster than the US. Given some years, we can expect China to catch up in every area where it lags.

In terms of the workforce, a crude measure is the amount of STEM talent available. If you measure STEM graduates per year, China is an order of magnitude higher than the USA. That advantage will manifest over time. Another measure is the PISA ranking, which show US high-school students as average, with Chinese students near the top.

If you're talking about capital stock, the US has underinvested for some decades now. In comparison, China has arguably over-invested in modern infrastructure, some years in advance of actual demand appearing.

In terms of semiconductors, I expect China will completely catch up in terms of DUV and EUV lithography technology within the next 10 years. At that point, Chinese fabs will flood the market with lower-cost chips. Then profit levels would equalise between Intel and SMIC for example.

---

I would say that the general expectation in the coming years is that China will rival the US in every respect.
Of course, this excludes sentiment from the US, because they are too close to the issue.

 

[chgough34]

Completely unable to compete may be an exaggeration, but it's already a forgone conclusion US and West will fall behind in tech within two decades. This is apparent in the massive effort and political capital the US is expending to protect its core markers from Chinese competition. Despite the high quality of US education, which again is only available to a small proportion of the US population, coupled with immigrants and outsourcing, the US cannot amass the requisite talent to prevail. The most critical form of capital in technological innovation is human capital, and the quantitative and qualitative edge China holds is insurmountable. Using tech companies as an example again, partially because they are a good proxy for baseline quality STEM talent in US and mostly because it's a field I am intimately acquainted with, 90% of FAANG software engineers are not even at the same level as Tencent/Alibaba/ByteDance/Huawei engineers. And US tech companies pay 2-3 times per per engineer which each outputs only 40-50% the value. Quality of education only goes so far, but work ethic and culture are even more important.

Yeah - none of this is contradictory to what I said that
1) both countries have high-quality educational delivery
2) regardless of 1), U.S. firm advantages will persist for decades in the future regardless

you effectively concede it in any case by focusing solely on the talent pipeline instead of talent that already exists

China’s talent pipeline has only been a thing in the very recent past and thus it will take many decades for the talent to get through the commercialization process, scaling, marketing, and the rest.

 

[FriedRiceNSpice]

Yeah - none of this is contradictory to what I said that
1) both countries have high-quality educational delivery
2) regardless of 1), U.S. firm advantages will persist for decades in the future regardless

you effectively concede it in any case by focusing solely on the talent pipeline instead of talent that already exists

China’s talent pipeline has only been a thing in the very recent past and thus it will take many decades for the talent to get through the commercialization process, scaling, marketing, and the rest.

I noticed in addition to cherry picking statistics, data, and sources to fit your narrative, you also tend to cherry pick only portions of others' posts to fit your argument.

China's talent pipeline has been in place for the last 3 decades, not just the very recent past. It has just continued to rapidly improve over the past decade and will continue to do so over the course of the next few. The impact of China's talent pipeline is already felt today. China has a insurmountable talent advantage NOW, and will continue to do so in the future. The level of talent in China's most competitive technology companies is already significantly superior to the talent you find in the most competitive big tech companies in the US.

Access to high quality education is expanding in China, while it is remaining stagnant in the US. Even comparing only the high quality segment of education, the level of competition and the work ethic / culture within China produces better outcomes, outcomes that are already making an impact in industry today. Whether or not the extremely competitive education/work culture in China has drawbacks is another topic, but the reality is it is providing a huge talent and productivity advantage at a critical time in China' development.

 

[chgough34]

You're talking about legacy investments.

Yes. My point is that legacy investments alone guarantee US firm placements at the top of the rank tables for decades.

On network effects

Network effects are to the firm. For example, the ecosystems that are built around Microsoft Windows or SWIFT interbank payments, Intel with the x86 system, Oracle with Java, etc, etc.

On scale

Scale: once again, accumulates to the firm. There are economies of scale and economies of scope to all variety of US firms - from Microsoft, to ThermoFisher Scientific, to Catepillar, to Cadence Design Systems, to Applied Materials. among countless others. Lower unit costs, having suppliers for your specifications, reducing potential firms that may enter as well as locking in existing customers.

In terms of technology R&D spending

I am talking about technology stock, not technological flows. Industrial designs, code based, and the like. COMAC is still substantially behind Boeing in the number of planes sold even after the recent Boeing news and even though Boeing is operating off industrial designs that are 3+ decades old. Pfizer and the rest are globe trotting pharmaceutical firms from pharmaceutical research completed decades ago. Etc, etc.

In terms of the workforce, a crude measure is the amount of STEM talent available.

Mincer equations are instructive here - both education and experience both matter here and workforce development include both. Hence wages rising on both increased experience and increased education. Much of that experience is firm-specific and doesn’t accumulate to other firms: for example, specific knowledge on welding to Boeing planes, or intimate familiarity with ICP-MS but solely on a Keysight instrument, among others. The U.S. workforce has decades more experience on a broad range of skills; China’s workforce is much younger (in the technical areas) and has much less experience. The only way that gap is closed is with decades of more experience.

If you're talking about capital stock, the US has underinvested for some decades now.

Even with the “underinvestment” in public infrastructure for “some decades” (assuming this is true), ends up proving the point. For example, the U.S. generates more nuclear electricity than China and U.S. airports carry more passengers than Chinese airports. So even if the U.S. has “underinvested for some decades now” and China lags in some fairly big areas, it shows how much capital stock accumulation is a large barrier to catch-up.

what’s more - I was referencing to private capital stock - for example, Boeing factories, Microsoft data centers, various kinds of commercial real estate, higher education and healthcare facilities, Laboratory Corp. testing laboratories, IT systems at broad ranges of firms, intangible capital in the form of trademarks, etc, etc. there, since Chinese firms are smaller and younger, they have less capital stock and due to construction being time-intensive, won’t be matching US firm equivalents for many many years, even assuming maximum investing intensity.

I would say that the general expectation in the coming years is that China will rival the US in every respect.

Yeah, I agree with this. The technological frontier is only so large so once firms latch onto it, their position on it is more or less secure for a long time regardless of what happens (as explained above). Chinese firms will eventually broadly converge to the fromtier

 

[chgough34]

China's talent pipeline has been in place for the last 3 decades, not just the very recent past.

No, it’s not. China issued fewer stem degrees than the U.S. even in 2003. It’s a pipeline that’s at most 2 decades old (and some of that is massive catch-up to the near-zero degree issuance in China in the prior century)

Please, Log in or Register to view URLs content!

It has just continued to rapidly improve over the past decade and will continue to do so over the course of the next few. The impact of China's talent pipeline is already felt today. China has a insurmountable talent advantage NOW, and will continue to do so in the future. The level of talent in China's most competitive technology companies is already significantly superior to the talent you find in the most competitive big tech companies in the US.

Access to high quality education is expanding in China, while it is remaining stagnant in the US. Even comparing only the high quality segment of education, the level of competition and the work ethic / culture within China produces better outcomes, outcomes that are already making an impact in industry today. Whether or not the extremely competitive education/work culture in China has drawbacks is another topic, but the reality is it is providing a huge talent and productivity advantage at a critical time in China' development.

And again, nothing I said disputes this. My point is that taking this as 100% true, US firms will continue to lead for decades into the future due to accumulated advantages.