a. Do you care? b. Do you think the economic effect is positive? Why? Why Not? c. There are two products: one “Made in America”, and one “Made Elsewhere”. Assuming they are identical products in regards to both quality and features, with a 20% increase in price for the “Made in America” one, which do you buy? Why?
I’m not convinced the stimulus created from organic growth in domestic jobs (at least when referring to manufacturing jobs) will override the benefit of globalization with respect to outsourcing inflation. a. Yes, i do care but as a gauge of quality rather than patriotism. b. As stated above, I do not think the effect will be positive. Furthermore, the balance of trade and the balance of surplus/deficits between China and US will be altered heavily. c.I buy the 20% increase because im a sucker for veblen goods. Dry humor aside, i will purchase the product with a better deal. Although I like the concept of buy america, basic economics tell me such philosophy is not the best method of creating change.
I’m with you whatsyourgovt on the basic economics (all I really know) telling us its pareto efficient, comparative advantage, bluh bluh. However, when you look at asia’s growth, our semi-decline, you start to wonder where the evidence is. Then, if you take the general intuition that one persons spending is another person income, you can see a sort of “river effect”. Where you purchase your product and the chash flows down a river, if it’s “made in china” that is a long river over to china, which once there, breaks off into many estuaries- as factory workers spend their money, and forth and so forth. If it’s a TRUELY “made in america” product, then that river breaks apart into smaller and smaller rivers, and streams, inside of america, and must undoubtedly have a larger multiplier. Factory workers go to the local restaurant, the waitresses go to the movies, the restaurant owner buys a new car, the care dealership owner buys a new house, the realtor goes to the bar, the bar tender buy a mountain bike, the bike shop owner stays at a bed and breakfast-- lol you get the point. I’m basically just saying that some of the free-trade stuff really battles your initial intuitions, or am I the only one?
I consider them identical. I’m not sure that a US made good will necessarily have higher quality standards (cough cars). Furthermore, modern manufacturing uses less and less people so doubt many “jobs” will be brought back.
A. No, if they’re the same quality. (Like WYG hinted at, some things made in China are crap.) B. No. All countries benefit from trade. C. The cheap one (assuming that they’re really identical).
It’s not just factory jobs being shipped, it’s overhead, factory job, formerly used american services. and it’s not all robots, hundred of real-person jobs still exist-- and are being shipped out… aka less people with money for your to manage. Automatic Data Processing will lay off between 50 and 200 workers in San Dimas, Calif., because the company’s services have been “outsourced to India,” says Linda Ellen, TAA Analyst for the state of California in Sacramento. “Staff were required to train the associates from India in correct letter writing, communications and grammar.” Federal Mogul’s Chicago plant has laid off 130 workers due to production being moved to Los Reyes, Mexico, according to Stacey Miller, the company’s Human Resources Manager. Sony Pictures Imageworks in Culver City, Calif., is laying off 100 workers involved in visual effects and animation because “the work is being outsource to Canada and India,” according to Susan Campos, a TAA specialist with the state of California in Los Angeles. Seco Tools based in Lenoir City, Tenn., is laying off 72 workers because “the manufacturing is moving to Seco plants located in France, Sweden and India,” writes Jennifer Ostroff, HR manager at the company. Baldwin Hardware, a subsidiary of Spectrum Brands (and a subsidiary of Stanley Black & Decker), in Reading, Penn., is laying off 166 workers making door locks and hardware because “production is being shifted to Nogales, Mexico,” writes Sylvia Lehn, HR Manager at Spectrum. Osram Sylvania in Winchester, Ky., is laying off 24 workers in its lighting division because “LED lamp assembly at the Winchester, Ky., facility is being transferred to the Juarez, Mexico, facility between 6/2013 and 9/2013,” writes Janice Berryman, Osram Sylvania Human Resources Manager. Agilent Technologies of Cary, N.C., is laying off 41 workers because “all production activities are being shifted to Agilent Technologies Inc. manufacturing facility in Penang, Malaysia,” write workers filing on their own behalf. “All R&D functions are being transferred to Agilent Technologies Inc., in Waldbron, Germany.”
Greenman, Trade is all good until they ship your job overseas. Finance is next. Accounting is all ready happening. and well your freshman year of college economics textbook says free trade is good, I’m starting to wonder.
Consider this though: say we block off international trade and essentially produce/consume only domestically. This gives way to an increase in demand for manuf jobs and those newly found jobs increases consume spending in their towns/cities. Now, since the min wage here is 7+, where as some products min way outside the us is nonexistant, all goods increase x%. More than likely, the x% increase in inflation will be greater than the newly found income for those new works. On a more dangerous note, i think china would dump their UST and the USD would depre 30%+ creating way for hyperinflation. Overall, i like where you are going trying to unlearn some of the stated “facts” but i gotta disagree with your theory.
MMP, I know a little about this since I did a thesis in service sector outsourcing. You can really only outsource jobs that require no touch. Why hasn’t every call center been outsourced to India? Because some companies realize that customer service is important and worth the cost. Big accounting firms are always going to need somebody to sell their service and to relate with customers. This is true for finance as well. Not saying trade is “all good”, but people consistently overestimate the amount of the service sector that can be outsourced. When I was in consulting I helped to manage a large office in Bangalore. It was a nightmare and we repatriated the jobs. Also distance is a factor I would never want to run a team where I only saw my employees two or three times a year. If you have a George Jetson job where you basically push a button all day then you should be worried and try to develop your skills to change roles. If not, don’t worry too much.
@WhatsYourGovt I’m not suggesting trade barriers put in place in a top down approach. Im suggesting consumers go out, into the free market, and weigh not only price and quality-- but the effects of the origin of their product on the people they live with and do business with-- their country. in the case where USA products are competing with international, and not in a “top-down protectionism” environment, then international competition can still put some downward pressure on prices. While I see what you’re saying about the marginal increases in wages, to inflation, and so forth, I think there are even more variables to go into that cost-benefit analysis— more than I could put together, but I have a feeling… http://web.mit.edu/newsoffice/2012/manufacturing-pie-overview-0125.html
@Brainwash Interesting. I have no experience i this, so it’s good to hear yours. Law, Accounting, and the like are all getting outsourced. While I’d like to not worry much, staples just sent the majority of their accounts payable office over to india. Not the end of the world for accounting-- but if all the entry level jobs are in India, how do americans enter? All of the sudden it makes sense to higher the more experienced outsourced worker. India’s call centers 10 years ago are not what they are today, india and it’s people are adjusting with demands.
Last I checked, even the American flag was made in China…ha ha Reminds me of a funny story where the Chinese police arrested a man for manufacturing and selling the Tibetan flag. The guy was clueless. Apparently, he got the orders by fax and got paid on time. That’s all he cared about.
A major problem with these academic studies is they are mostly conducted in a vacuum and not realistic. What I read in your comment is a redistribution of wealth paradigm. Those who are wealthy are looked upon to be socially responsible and purchase the american product for the good of the nation (although it probably will have no effect on them). The lower middle class and lower will invariable purchase the cheaper good because they do not have the disposal income. What i sense here is fear of competition. If India is as good, or better, than US workers, why shouldn’t they be given the opportunity. I am blessed with the opportunity to work with outsourced laborers on a limited basis and I can tell you a huge gap still needs to be procured before your fears come to fruition.
Because, another rule of intro-econ besides free trade is that we live in a world of scarcity… not zero-sum in the near future, but inevitably zero sum in the long-run. And our cities are perishing. If these jobs you say don’t matter and don’t effect anybody in the US, why is detroit legitimately DEAD? It’s on the ground bleeding out. inflation adjusted income per capita is stagnant/dropping in the US-- and this is structural.
don’t care.
Detroit is a bad example for your argument. Why is Detroit failing? An obsolete, inferior product (check the forum about buying cars and see if our educated consumer recommends a car “imported from Detroit”. Another, reason is union demands and obligations that were beyond their means. Finally, corruption probably plays a part in the reason Detroit stands where it does. As a success story, look into my man Elon Musk and TSLA. Innovative and successful and still expanding, and probably will reach the global community very shortly. I think a more resourceful manner to getting 'merica back on track would be to cut defense spending and practice a more self-secluded, internal affairs only policy. Last time i checked, america spent 5x-10x the amount on defense spending when compared to the next closest country. Furthermore, our 25% contribution to UN could, and should, probably be cut immediately. Finally, and this is cold hearted, cut most social programs and let survival of the fittest pan out.
I agree the reason Detroit has no jobs was from a plethora of things (many their own fault). Why they have no jobs aside, what I’m saying is look at detroit without those jobs. How can you say jobs are of no importance? You say the rich that are looked at to “buy america” are not affected, but I’m sure many of these detroit-based rich people, were affected by the loss of jobs in Detroit. It may not seem to affect them when looked at in a micro sense-- but the aggregate affects will build up and everyone will feel it. competition matters. Price and quality matter. I’m just suggesting another feature, its origin, be involved in the decision too. So, if the USA product goes WAY too much up in price, people buy foreign , but when quality, features, and price are closer-- let the decision come down to origin. AS for your thoughts on low-incomes not spending the extra dough, Walmart is rolling out made-in-america sections in their stores soon. We all know walmart is the king of data, so I’d bet your intuition on that is, in some cases, wrong. I think its true not all low-income people can afford to or will, but walmart is betting a good amount do/will.
a. I care, but not enough to think about it when I’m shopping. b. Yes, the effective is positive as long as the quality and total cost are the same. c. No, that’s too much of a premium. I would probably exclude the US made product on price alone without even bothering to look where it’s made. If they were closer in price (I don’t know how much closer), I MIGHT think to look at where each was made and buy the US one.
It’s tough to debate a product when quality / features are alike or similar because this is not likely going to occur unless its some generic product. Furthermore, one needs to consider that most of these products are US based companies just producing abroad. So their revenues & profits should be considered along with the salaries / bonuses of the directors vs bottom of the line employees. Lets us NIKE as an example, I have a few friends that work as analyst for converse and some of their compensation is tied to share performance (and they are probably mid lever employees) so further up im sure stock options play a even more important role with BoD and upper level managers. So then, the debate turns to trickle down vs trickle up with consumer spending. With respect to WMT, i think this is more of a PR initiative as opposed to something they truly believe in. Their consumer base are typically (but not limited to) low income areas that are usually the most patriotic. They can advertise a build a stronger america and create a segment or department dedicated to “built in america” but more than likely their true intentions are to create even more foot traffic. Perhaps they place that department in the back of the building. I really enjoy debating this topic but its starting to dig into my work so ill have to reconvene with your next post a bit later in the day.
I’d like to believe, but I honestly don’t think programs like “buy American” are likely to help that much. Particularly since I’m still not sure that buying an American-made product is likely to help American workers all that much, or if it is simply a robotically produced item that makes shareholders wealthy by attracting larger market share. If I were more certain of the linkage between buying a product and helping those struggling in my country, I would take it more seriously. This is why I actually think taxes aren’t such a bad idea over consumer jawboning (though I also feel there is insufficient control over how those taxes are spent, so I’m not as “yay, taxes” as people here like to paint me, I just see them as a necessary evil that in some cases can do some good).