This assumption that everything will be cheaper seems a bit disingenuous, because why would these companies want to automate themselves so badly if they weren't going to keep most of the savings as profit?
Even if prices were lowered by a few percent for some goods thanks to cheaper shipping, that's little help when you have no source of income. This will only exacerbate the demand-limited economic slump we're currently experiencing.
Things got cheaper because they are being made where wages are cheaper. At the end of the day, everything that is a expense to me is a source of income to somebody else. Only robots don't get paid.
There's no reason for that. As production improves in efficiency it is natural for things and services to become cheaper. That also means you get more for your money, instead of getting more money. That concept is not too strange for the population to accept.
Historically prices of goods to consumers have dropped dramatically as automation and globalization have reduced the costs of production. Your hypothesis that most of the gains would be captured by producers in the form of increased profits is wrong for almost all consumer goods.
I don't understand why they would have to lower prices just because they bought more efficient machines. That defeats the point (as mentioned) but has two obvious solutions that I can think of: keep prices flat, or raise prices.
The 'reality' of which you speak involves a lot of fobbing off external costs to others and to the future.
Everything from sustainability of companies and economies, fossil fuel subsidies and regulatory capture, pollution and climate costs, and far more make shipping things 5000 miles APPEAR to be cheaper in the current time frame.
That does not mean that it really is cheaper.
It is like the problem of buying boots - do you get the $40 pair that might last you a year, or the $160 pair that will last you a decade, and perform better on every parameter the entire time? Which is really cheaper?
It has more to do with supply and demand than cost of production (except for commodities). It's especially true for luxury goods (even robot made luxury goods) and experiences.
They are forecasting a lower demand in the short term future. I’d guess they ran the numbers and producing fewer high cost items is more cost effective for them.
Unfortunately, this likely means more shortages and costs stay high for the consumer.
Prices are low because we have lots of machines using cheap fossil energy working for us. If we have less machines working for us, we'll produce less goods, and we'll be less rich.
once goods became cheap, it's hard to make it expensive again (as consumers will have gotten used to the lower price). If it was possible to have the off-shoring, it will happen.
And why not? Most sensible people start with a budget and work their way from there. So yes, the price is absolutely a factor. All things being equal if the factory line is becoming more automated then where is the money being spent. It's not being spent in labor, it's not being passed back to consumers, the price of commodities has been relatively stable (steel, plastics, glass).
In this case prices falling is likely a good thing. One of the reasons shipping prices are so high is because suppliers are shipping earlier than they would to make sure they hit the market on time. There's no use trying to meet demand for back to school season if your products can't make it to the shelf until October.
This massively pulls demand forward puts stress on already stressed infrastructure and ultimately pushed shipping costs through the roof. As the supply chain stabilizes, suppliers will start building in less buffer for shipping problems and costs will ultimately go down.
Competition still exerts a downward force on prices, and as the cost of labor increases the cost of developing automation will become more and more attractive to replace it.
Even if prices were lowered by a few percent for some goods thanks to cheaper shipping, that's little help when you have no source of income. This will only exacerbate the demand-limited economic slump we're currently experiencing.
reply