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Why the Nonfarm Payroll Figures are Meaningless
Let me warn you that reading this analysis about the September nonfarm payroll is a complete waste of your precious time. But since it’s a holiday, and you don’t feel like mowing the lawn, raking the leaves, or washing the car, please read on.
First, the dismal numbers. The Department of Labor reported a net loss of 95,000 jobs, leaving the unemployment rate at a lofty 9.6%. Private sector job gains were run over by the steamroller of 159,000 government job cuts, mostly at the state and local level. There was no change in average hourly earnings. There were gains in health care, business services, and leisure and hospitality, while there were cuts in construction, as always, and manufacturing. Some 14.8 million Americans remain unemployed, 6.1 million for six months or longer.
Now, for the reason I never bother to follow these numbers any more. If you add in discouraged workers, the underemployed, and those working part time who would rather be working full time, the true number of unemployed is closer to 30 million, or about one in five working age Americans. Never mind the statistics that the government pumps out monthly are meaningless. They have been for decades.
The real problem is that the economy is obliterating jobs far faster than anyone realizes. My guess is that over the past decade as many as 25 million jobs were exported to China and other low waged emerging markets by globally adept, bottom line oriented corporations. Tens of millions more have been vaporized by the relentless march of technology. How many elevator operators, radio repairmen, gas station attendants, or telephone operators have you met lately? Add to that a structural over employment by states and municipalities that will take a decade or two to unwind. The net net is that none of these jobs are ever coming back.
My old UC Berkeley economic professor and friend, Robert Reich, told me a fascinating story the other day. After enticing a major European company with huge tax incentives, infrastructure gifts, zoning holidays, and who knows what else, a Midwestern state landed a new manufacturing plant. Since Bob was Clinton’s Labor Secretary, the governor invited him to the ribbon cutting ceremony. But before the festivities began, Bob ran inside for a quick tour. There were only 13 workers, all technicians, who manned the computers that operated the machinery. This facility replaced an earlier one that had once employed thousands. Bob threw up his hands and walked away.
What all this means is that the unemployment rate in the US never going to recover to the heady 4%-5% rate of our youths. At best, we can grind down to maybe 7%-8% in coming years as the economy slowly recovers. Then, when the next recession hits, official unemployment will spike up to 15%, an the unofficial one to 25%-30%. This is why you’ll never hear a recommendation to buy retail or consumer spending stocks pass my lips. I watched Germany suffer through long term structural unemployment for a decade, and it is not a pretty picture, and that was with a huge social safety net in place which we lack.
Let me mention an inconvenient truth here. There is nothing either political party can do about this, despite the blustery promises made by all sides. You can offer all of the tax incentives and job training programs you want. It’s not going to make a bit of difference. The $250 billion in infrastructure in Obama’s stimulus package last year will at best employ a few tens of thousands and add a mere 0.5%-1.0% to GDP growth, hardly a dent in a $14 trillion economy. Even construction companies are becoming efficient in their labor management. You might as well be pissing in the ocean.
Bob gave me another insight into our jobs future. He recently compared at a list of job categories when he was Labor Secretary to the current one, and noticed that about a quarter of today’s jobs did not exist 20 years ago. Eventually, labor and jobs will come into balance through the acceleration of new technologies that create entire new industries, slowing population growth, and imported inflation depriving emerging markets from their cost advantage. That is how our jobless headache is going to end, but it is a decades long process, and certainly not worth losing sleep over the first Friday of every month. By them I’ll be collecting social security, if it hasn’t gone broke. That’s why reading this article was a total waste of time.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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It's time to have a different conversation about employment.
The term "technological unemployment" which is defined as,
Unemployment resulting from the application of new technology, either by eliminating jobs or by changing the nature of work so that those who had performed the work no longer have applicable skills to do so.
Once 60% of agricultural jobs were performed by humans, that number has fallen to something like 1% today. All the while agricutural production has sky rocketed. There is a lesson here.
As we humans struggle against automation it's progress marches on. Robots work 24 hours a day, don't ask for benefits, never complain and represent a fixed expense, not an ongoing investment.
It's time we started looking at the reality of the situation. As long as corporations dictate the landscape of human existence they will pursue every opportunity to increase their bottom lines. Of course they will, corporate officers have a fiduciary obligation to their shareholders to do precisely that.
Whether it's offshoring jobs or automating them into oblivion, this process won't be slowing down, EVER.
While the world becomes more efficient we must begin to alter the way we see it. The old paradigm of getting a job, earning little bits of paper and heading out into the world to trade these bits of paper for food, clothing, gadgets, etc ... may be coming to a slow and painful end. If there are no jobs to be had, then no money will be earned, and the corporations that run our lives will find precious few customers to buy their products.
It's a self-fulfilling prophecy. I don't have any answers but I do realize that there are many questions we need to be asking. Fuck the politics, fuck nationalism, reality marches on. What are my kids going to do? Grandkids?
It’s not the Chinese who stole America’s livelihoods; it’s the United States Congress.
China did not take the jobs, the jobs were outsourced under U.S. policy okayed by the Congress of the United States. A government is formed by its people; its people’s objective is to provide for their protection and promote their common interests. This interest is for prosperity for American citizens and their future.
Along comes Bill Gates and H-1B visas, La Raza and waves of illegal immigration, international bankers with their monopoly capitalism and storehouse in foreign resources, and congressional committees intent on one primary object: reelection. To stay in Washington at the trough is more important to these politicians than fulfilling the needs of their constituents.
Is there a greater demonstration of America’s loss of representative government than this :
It turns out Minnesota Democrat Jim Oberstar (18-term incumbent congressman and transportation committee chairman) collected contributions from only one individual donor in his district for the reporting period June through September.
Donors, instead, for this cap-and-trade-and-Obama-care congressman came from other states, other districts, political action committees and North American tribes.
The jobs went to China because the Chinese government is willing to sacrifice their poor for development and the American government is willing to sacrifice their poor for the rich!
Hi MadHedgefundTrader.
OK, as I told you a couple of days ago, I pluncked down some serious moola on that usd-jpy trade a couple of months ago. You know, the one where you said you expected it to be well above 100 by now, on it's way to 120 and 150 in due course.
Obviously, it's not working out...yet. But I just know it will! How could someone who writes: "Of course, I only speak Japanese, spent a decade living in Japan, another decade running a Japanese prop desk, a third decade managing a Japanese hedge fund, and published three books on the Japanese financial system, so what do I know? But if I’m right, there is a baseball sitting on top of a T-ball stand just begging to be smashed out of the park." How could this person be wrong?
[Hey, that gets me to thinking, I've lived in the US for more than 2 decades, and I speak English too! Think I'll start trading the DXY!]
Anyways...I digress.
A couple of days ago you wrote about shorting the Euro. I also took your advice and went short BIGTIME. [Cashed out my 401k.]
That's not working out, either.
So my question is this:
Like I told you earlier in the last post: I'm working 2 jobs now to meet the margin calls from these trades. My wife filed for divorce after learning about the foreclosure...[I just knew the mortgage money would be better spent chasing this yen trade!] I've cashed out my 401k after your Euro call...
BUT
Last night I got some more cash after I did "something" with "someone" at a seedy motel that, frankly, will haunt me forever...
So I am back in business, baby! Do you think I should use this money to make an extra bet on the yen now that it has fallen even more, or on the Euro, now that it is surging against us as well?
Thanks, so much for any feedback, MadHedgeFundTrader! As always, I look forward to your iconclast views.
You were right. It was a total waste of time!
OK, something that seems reasonable and something that we should all be able to relate to and understand. Lately I have been passing by this person's articles after a series of articles that seemed to be narrow minded and self serving.
Why were those 25 million jobs exported to China when they really did not have to be? (or did they have to be?) Regardless of how poor and how low the wages are in sub-saharan Africa you don't see jobs being exported there. It makes sense that it is more than just pure profit motive. IMO, if TPTB had deemed it in their best little greedy interests, they could have structured the US to be a self-sustaining full employment repersentative democracy. But they decided that their personal interests were better served by stripping the jobs, any pretense of the rule of law and security away from American people.
That is competition. The US is in China to compete for the chinese workforce.
Some sectors like airplane technology sector have an official policy of fishing for the most talented Chinese graduates in order to make the developpment of chinese aeronautics harder.
That is competition as seen every summer on transfer periods in football: big teams dismantling smaller teams with a potential to evacuate the thread of a newly rising competitor.
Contrary to what the guy claims, China is no longer a low cost country. On the contrary, the Chinese are forcing a pay rise worldwide.
Eventually, labor and jobs will come into balance through the acceleration of new technologies that create entire new industries, slowing population growth, and imported inflation depriving emerging markets from their cost advantage.
This is highly optimistic and dependent on the US continuing to be the lead technological innovator of the world. Our education system is piss-poor for the $$$ we put into it and the government cares more about bailing out the elite than putting money towards any meaningful research that does not include military applications. Just those two strikes against us makes me 80% certain that we will be downgraded to "emerging market" status while the far East continues its rise to global dominance.
I love the "new technology will save us" line. It's used as the panacea for peak everything. What we really need is new math. Maybe that will make our crushing debt disappear
Part of the sectors the new technology brought in rely on social aspects. That is industrialized socializing, based on the social network and stuff like that.
It will work fine for every person who inherits a status. For those who has to work to earn that status, well...
This whole thing is so full of bullshit ideas I can only conclude you are an academic and get all your life experience from other academics and political bullshitters. I was not however until I saw you speak of the next recession that I groaned out loud.
Until the debt hanging over our heads is most unpleasantly paid, defaulted or inflated away we will have no true recovery from this ongoing recession. Hiding it with Trillions of dollars of deficiet spending doesn't count unless you are stupid.
Two more points for you to think about if the capacity is there:
One. Companies who chose not to send their production overseas when it is legal and cheaper to do so are not noble. They go out of business and ruin their stockholders. It can not be a choice because somebody will always take the low road and survive putting you out of business.
Two. Competing with slave labor wages and a willingness to destroy your environment sucks in a lot of business. But your people are going to get more and more unhappy and combative if they are held down to slaves wages. They damn well know the sneakers are being sold for $100 a pop and that they are being screwed. When they drag your ass outside the factory and stone you dead it's hard to factor that in as a business expense. Likewise when clean air and water becomes so rare you pay big bucks to find it and your workers are too sick to function that expense becomes apparent. It's not a viable long term stratagy to be the filthy slavedriver. When that bubble pops it will be ugly.
I believe that there will be civil unrest both in China and the US and ultimately there will be a call, maybe fomented by TPTB themselves for some wrong-minded war between disillusioned and unhappy people in the US and disillusioned and unhappy people in China.
... and the real cause will be those self-important useless parasites who have created the environment and prodded the masses into a false flag type blood lusting hysteria. They have done it all over the world. Why not here at home.
Why are there no "good" people in positions of power?
well.. finally 1st piece of information worth at least to discuss
#nonfarm payroll is a complete waste of your precious time.
1st of all... any BLS report is complete of waste of time. why..margin of err
officially is around 100.000 per month,, so any figure is jsut a guess..
#2 so-called economists suddenly turned on private only jobs..
hah hah hah hah.. only ignorant fucktards could propagate such non sense..
heres facts since 2000 yy never ever growth in private parols exceded growth 18+ population.. so under that condition current rate of unempl will be never be reduced..
end of story.. NEVER
#bor and jobs will come into balance through the acceleration of new technologies that create entire new industries
course author is #sshole as I pointed out often..so he puts out such idiot comment..
WELL SIR TELL THOSE BULLSHIT PEOPLE IN DEEEEETROIT...well where are the #ucking jobs ???????? silence..
alx
I find it odd that people want to blame China, and to a lesser but growing degree India, for the loss of "American Jobs" (whatever that means). I interpret that to mean manufacturing jobs, which to me seems the most god-awful and mind-numbing jobs available, but that's not the point.
If you look at the trend of manufacturing jobs as a percent of the total number of jobs back to post-WWII (and even further back, but that data is a bit trickier to get), you will see a steadily declining percentage in goods-producing jobs (manufacturing + construction), and it is a pretty linear trend that has been going on for decades (even when China was 100% Communist with Mao running the show). What are the causes for this?
Going back to Econ 101, I seem to recall the production function being combinations of labor AND capital. In the US, we double-tax dividends and have one of the highest corporate tax rates in the developed world. And in Germany, you have a pretty vibrant manufacturing environment which is quite heavily unionized as well, but somehow they are working it out. I think people are missing the cost of capital story when looking at this issue, and I don't see that getting better as every shit-head politician out there complains about corporations keeping profits overseas and not paying their "fair-share" of taxes, whatever the fuck that means.
Reality is that the US corporate tax code is full of loopholes which, if it was cheese, would make the swiss proud:
http://www.deptofnumbers.com/blog/2010/08/component-tax-revenue.png
Yes, you are reading that right: effective corporate tax rate in the US is 1% of GDP - while individuals pay 6% of GDP. (!)
The average tax rate for individuals in the US is around 12%, so what corporations pay as taxes today is equivalent to a person paying 2% ...
It is one of the lowest corporate taxation regimes in the developed world. That inequality is also the main source of a widespread anti-corporation sentiment in the US.
It seems to my naive mind that if you want corporations to move jobs here, cut the corporate tax rate to zero. Jobs will tend to migrate to the state or country with the lowest tax rate. Example: California = high taxes = losing jobs. Texas = low taxes = gaining jobs.
Maybe naive, but not clueless. The cost of complying with the tax code (corporate and private) is not trivial. So why impose such a high cost of compliance/use of loopholes instead of just lowering rates to what they come out to be on average? Politicians and their grand social engineering schemes brought on by the Progressive/Collectivist movement over the past 100 years in America is a good place to start.
Firstly, the cost of complying with the tax code is tax deductible :-) It is a trifle amount in any case.
Secondly, tax loopholes are generally the result of special interests - which thrive in "hands off", "free market", "self regulation" policy environments - mostly the banner items of the Republican party and libertarians. (But democrats weren't shy to grab a share of the corporate lobbyist money either - they just didnt make national corporate rip-off their explicit agenda per se.)
Progressives tend to argue the opposite (more corporate responsibility, etc.), so they are not guilty of this particular crime.
I did not claim that, so don't bother trying to refute that non-point :-)
The claim I make is that predatory chinese trade policy have cost the US about 2 million jobs. Not more, not less. Jobs that would be badly needed now to get back to equilibrium.
Obviously there's millions of other jobs missing as well: and as I said those are mainly due to the post-crisis output gap and reduced industrial capacity utilization.
I said "people" and not you. No need to take things so personally there chief.
My point is there are other things at play here, including vast amounts of manipulation in the US (from protectionist leanings to currency debasement and de facto bond market rate targets by Uncle Ben.)
Well, you replied to my post which mentioned China as one of its main points. If you tried to imply that you excluded me from the "people" generalization then you failed rather spectacularly at that! :-)
In any case, you indeed said "people", not me. Well lawyered!
Well, open market intervention to protect against deflation and alarming unemployment is sure within the expected and accepted mandates of national policy makers - the effect will also likely increase world demand and world production - so it's a net benefit globally.
What China does is starkly different: it uses a dollar peg (achieved via non-market capital controls) to protect its own mercantilist economic policy - and the net global effect is a decreased world demand and production: everyone but China loses.
That's a crutial difference.
Here is where your argument is showing internal inconsistency: it is not the 'economy' that is 'obliterating jobs'. It is China and its predatory trade practices.
Force the yuan to be stronger and you'll find reverse globalization and reverse outsourcing done on a million US jobs or more ...
(And note that QE2 has exactly that effect of rebalancing China's trade policies forcibly - even if it is very much not advertised as such, for political reasons.)
Conservative estimations of China's currency policy show that they have cost about 2 million US jobs.
Furthermore, your later claims about 'structural unemployment' are unsubstantiated as well. All the unemployment graphs show almost symmetric shocks to the employment markets of various distinct industries in the US - that is a proof of a demand shock, not of selective (structural) unemployment.
Also, arguably more technological invention happened in the 90s: widespread industrial computerization and the PC age. Still the US economy (mainly during the Clinton administration) managed to add millions of new jobs. The dot-com bubble then caused unemployment in that sector - which then got absorbed by other sectors. That bubble was easy to survive.
The current bubble pop is a lot harder to survive: a ~10% GDP demand shock combined with a credit shock is causing strong deflationary forces. The Fed, as an economic actor of last resort, is well advised to act.
Otherwise the US might go down the japanese road, with prolonged deflation, with long-term (and non-structural) unemployment of young people (which under-utilized industries are unable to employ) and with an increase of 40% in the suicide rate:
http://theincidentaleconomist.com/wordpress/wp-content/uploads/2010/10/S...
Not a fun place to be.
China does not qualify as a predator. They are at best scavengers. You might tell as so many think this way that China is doing way too well on the side.
Outsourcing is the result of internal pressures. Outsourcing has been happening on the scale of the US at every stage. The whole US country is organized through zones of similar revenues (peer societies)
Outsourcing is simply the reflection that some job outputs are no longer enough to be performed in the US due the betterment of the general environment.
China is not the only recipient to ease off the internal pressures leading to outsourcing.
The reality is that China collects much of what is expelled from the West and this concerns some here.
Remove China and you wont remove the internal pressures leading to outsourcing.
Actually, if you remove China from the picture, you get freer from moving the jobs around the world as sending them to China is no longer mandatory.
Ugh. China isn't forcing US companies to outsource; that's their choice. And seeing how this has hardly translated in lowering goods prices, and mostly in higher profit margins for those companies, they don't care at all about the fact that they must also make sure that they have consumers somewhere, and that this can only be guaranteed if they offer their expected consumers jobs, as this is the only way to have sustained consumption behavior. As this did not factor into those considerations of whether and to where to outsource at all, their behavior was simply unviable middle-to-longterm behavior, and rather more stupid CEO+shareholder greed. If US companies and investors had not been so enthusiastic about fucking the American worker (thus killing their own customers), and invested in low-income countries to a smaller degree, then China (and those other countries) would be a far smaller 'threat' to the American labor market than they are now, because they simply would've been less developed than they are.
Anyway, if you think this will be fixed magically by yuan revaluations you've got another surprise coming your way. What is it with 'economists' and not caring about or appreciating the timescales on which these changes happen?
Now, to Madhedgefundtrader: What do you think about raising product quality standards in such a way as to make it harder for Chinese companies to meet those demands, in order to make sure that US companies can still compete even though production will be somewhat more expensive here?
China is a massive surplus country and as such is in no position to set the real exchange rate. The US can, if it chooses to, almost arbitrarily increase prices for China.
It has been a US political/policy decision to not do that - but the tides appear to be changing.
The process will likely be much faster than 'convincing China to revalue the yuan' (which might indeed not happen for a long time), and much nastier (for China).
China has little to counter with:
- Ban rare earth exports? Rare-earth mines in California are increasing in value again ...
- Sell all UST holdings? Halleluya, that would get the US out of the deflationary trap ...
Short of starting World War III there's little the chinese can do.
What are you going to increase the price of?!?! China needs nothing from the US.
You cannot infinitely consume if you don't produce. This is the problem in the USA. Everything says "Made in China"
There are several policy tools - decreasing the exchange rate of the dollar is the most obvious one. (It's also less explosive politically, compared to say import tariffs, as China can hardly blame the US for weakening the dollar while they are weakening the yuan.)
A weaker dollar has the effect of increasing inflation in China - which is the last thing China needs (China is fighting inflation not deflation). The US can print a large amount of dollars (and the chinese are forced to buy up a fair portion of them, to keep the yuan pegged to the dollar) - while China can only afford so much inflation before its economy blows up.
It is no accident that the chinese central bank did a surprise rate increase yesterday - and that EUR/USD dropped 200 pips as a result. It's back up 250 pips now - QE2 is obviously stronger.
"You cannot infinitely consume if you don't produce" - funny how simple it is and how often history has taught that. I guess there's one addition to the lesson. You can't infinitely produce in a manner that destroys your means of production. (See agriculture and a host of others)
So you claim it's their "free choice" between outsourcing to cheap chinese manufacturing companies (and letting their US labor force go), while they also had the fantastic option to go bankrupt instead? ;-)
Your claim is ridiculous on its face - there is nothing "voluntary" about reacting to strong, predatory economic forces and never was. There's a reason why there are anti-dumping and anti-trust laws. China is in essencing dumping artificially cheap labor on the world (and is thus generating unemployment everywhere else) and is keeping that unfair position up via capital controls.
Is this the only reason for current unemployment in the US? Not at all - the demand shock resulting in idle industrial capacity was the other big contributor. There's nothing 'structural' about any of these sources of unemployment.
I'm sorry, but have you ever wondered why this 'demand shock' of yours is so persistent? I love terms that explain nothing as much as the next guy, but the point is that, once US consumers could no longer pay for their purchases by promising their future wages in return (a strategy that is bound to stop working at some point, as they will just run out of future wages to promise), there is nothing left. The deleveraging we see is part of it, which will ensure that demand will remain lower than it could be if this deleveraging didn't have to happen, but the far larger problem is that the median income has been dropping like a stone for years if not decades, and that this was only papered over by the property boom. (A choice made by Alan Greenspan, who also believed in 'fuck the poor', which is especially retarded as a policy maker.)
Further: "On its face"? It's amazing how conveniently counter-argument free your post is apart from this 'obviousness' claim, and offering the -- rather trite -- suggestion that 'china is dumping artificially cheap labor on the world'. Are you really stupid enough to believe that there is some sort of simple dichotomy between 'racing to the bottom' and 'going bankrupt'? There are so many ways to prevent american companies from 'going bankrupt' that are different from the choice made by US investors and corporations that it isn't even funny: they could've just been more communitarian, and simply refused to invest outside of your own country (similar to what Japan does/did), they could've lobbied to raise product standards in such a way that those goods simply couldn't be produced in low-income countries with fewer means of production, etc.. Sure, China has laborers, as you say, but they didn't have any of the technology that now allows them to outcompete US workers.. Sure, they could've lots of clothes, but that would've been the end of it. Everything else was only made possible by foreign investment.
Further, you seem to believe that this outsourcing always does result in lower overhead while it really doesn't. Yves Smith writes about this once in a while, and others do as well, but this whole 'outsourcing-to-india' is 99% ideology. (See, e.g., http://www.nakedcapitalism.com/2010/08/so-much-for-workers-in-india-bein...)
We have been lead to believe that the 0.5% of the very rich drive the US economy and consume the vast majority of goods. This is a blatant lie that has been used to justify protecting the rich.
Well, gee gosh without the all mighty parasites we would all be doomed because there would be no one to buy employ slaves, buy yachts and belong to exclusive country clubs.
Numbers drive needs and consumption, not dollars in the bank or in a managed portfolio.
There will be some balancing in the future as demographics kill off the baby boomers. Also, I am convinced that American citizens would work in manual labor jobs if the economy was structured correctly. This new decision (delusional or insidious) to create inflation without solving the structural problems will only make things more expensive for the poor and will cause larger stresses on the governments.
There are so many ways in which your sentence is incorrect that it isn't even funny:
..And another post of mine ripped out of its context by only answering parts of it, and by totally ignoring my criticisms of your silly idea that demand will just pick up where it left off magically once 'china is out of the picture'. Congratulations, you must be so proud of yourself.
"They will produce whatever quality is in demand in developed countries."
They "will produce whatever quality"? Do you really believe that the ability to do this comes magically to people and companies? Where do you think they got the knowhow and who do you think did their R&D and the money to attain this level of technological sophistication?
Yep, I ripped out the facts you claimed and found them to be mostly false.
(I did not have to argue your opinion - it is based on a false premise.)
The answer is just two sentences before the one you quoted:
Tens of millions of iPhones are manufactured in a massive manufacturing complex in China.
Why does China produce a lot of cheap crap in addition to high-quality products like tens of millions of iPhones? It's partly a basic supply/demand force: because people are cheap. If people in developed worlds were less cheap then countries like China would produce higher quality products. Another factor is stickiness of brands: 30 years ago China was barely industrialized - they bootstrapped a lot of new brands and went through the growing pains. They are moving up the food chain now - with the same artificially cheap labor.
Quality does not change the basic economic picture: cheaper labor produces cheaper products - regardless of quality.
So you are mistaken to believe that requiring 'higher quality' would magically make chinese labor more expensive. It would make the products more expensive - but it would still be comparatively cheaper to produce them in China, as long as China keeps up its predatory trading policy.
So because they can produce iPhones now they could also do so 10 years ago? And because they might be able to produce iphone clones now, they would've also learned to do so without Apple's help? What universe do you live in? All you do is magical thinking. China was not an autodidact, nor did it self-fund the technological catching-up it's been doing these last few decades. Pretty much all of it was made possible by western (mostly US) corporations who saw short-term gains, and fucked themselves in the process, by depriving them of their own consumers. Have you heard of Henry Ford? He, at least, figured out that you can sell more goods if you pay his workers well, whereas you seem to think that this should not be a consideration for companies today at all, as this "would [immediately] have led to their bankruptcy".
All the relaxing of capital controls, of allowing foreign investment, of making it possible to instantaneously send money around the world was done at the behest of the investor class, and not at all because the middle class workers were amassing that much capital that they could no longer ensure sufficient returns. Sure, they profit a little bit by being able to do so, but that's offset entirely by the structural problems that are caused by institutional investments abroad.
Lastly, it isn't a question of whether labor costs less, it's a question of whether you can offer the product at the same, or a lower retail price. And there is an arbitrarily huge gap between these two points, which can be widened or tightened in an enormous number of ways. (Which is where political will comes in in part, yes, but, as we know, lobbies have taken over the US political system, so it's not as though companies who saw this move to China for what it was couldn't have mounted a lobbying counteroffensive. But they didn't, and the only ones who did became idiotically complacent (GM and friends) and started building ever bigger cars while lobbying for gas subsidies for consumers. But this also was not a necessary outcome, just another instance of short-sightedness mixed in with cultural values (suburbanization combined with a belief in the importance of owning a really big car/penis). (There does appear to be a pattern there.) But again: see above. China simply could not have become the economic 'threat' that it is today without the money and expertise offered by western (mostly US) investors and corporations.