Policy, Politics & Culture
For decades, the booming factories and massive, cheap workforce of East Asia has been both the greatest fear and the greatest envy of the growing ranks of American declinists. What, then, are they to make of a recent article in the FT, which describes manufacturing business moving back across the Pacific to the U.S.? According to the report, Chinese wages have risen dramatically over the past decade, and they have been matched by increasingly stringent regulations that have eroded the country’s competitive advantage. America, meanwhile, boasts higher productivity, falling unit labor costs, and a reputation for quality unmatched by its Asian competitors. Ten years ago, outsourcing was a no-brainer, now many companies are beginning to think twice.
This news may come as a shock to the fashionable and vocal chorus of declinists, but Via Meadia is less surprised. Even the worst financial crisis in generations has done nothing to change the fact that America’s fundamentals are strong. America rose to power on the back of its innovation and its dynamism, two qualities that are in more demand now than ever in an increasingly fast-paced global economy.
We got fat and lazy with decades of easy dominance after World War Two; the shock of new competition was a painful one. But America is responding in the traditional way: adjusting, reforming, innovating, bouncing back. Some amazing things are happening around the world, and Via Meadia welcomes the rise of Asia, the renewal of Brazil and many other signs of progress from all over. But the US still has one important export that we make better than anybody else: the future still bears the label “Made in the USA.”
This does not mean that manufacturing employment will increase. We are in a long-term process of automation that increases worker productivity and decreases worker numbers.
Our manufacturing economy is already larger than the entire German economy, and it is much larger than the entire Japanese economy.
Perhaps a lot of the manufacturing outsourcing was needed to starve out the unions that were killing domestic industries.
Now with those unions, if not gone, then at least a shadow of their former selves, it is more fesiable to manufacturing in the U.S. than when the unions where king of the hill.
Too bad a similar process can’t be found to shrink the bloated pubic-sector union work force.
@bob sykes:
Whether or not this trend increases the number of people employed, this will help everyone. Even our service industry — increasing the value of exported goods supports the value of the dollar, which helps service industry types’ buying power when they buy imports.
More productivity may not help people directly, but it helps everyone indirectly.
By the way, hearing that Chinese wages are trending up is some of the best news anyone can have. Not only does it mean that the Chinese are being lifted out of grinding poverty, but it also leads directly to the trend Mead and FT mention here.
Now, if we can just ensure that energy and raw materials extraction keeps pace with the growth in cash wages, we should see huge gains in overall human average standard of living.
I know this is “the American Interest,” but how about a little more objectivity? A story appeared in our local newspaper (of all things!) about the fortuitous railroad with the most useful direct routes into and out of Mexico, a huge competitive advantage given all the manufacturing now seeking shorter hops to market.
Shades of Jeff Rubin’s 2009 “Why Your World is About to Get a Whole Lot Smaller” is it not? As to objectivity, Rubin’s audience clearly was not limited to the good old U.S.A.
Not to mention what David Orr called to our attention way back in 1992: “Communism has all but collapsed because it could not produce enough; capitalism is failing because it produces too much and shares too little.” Don’t think Orr limited “capitalism” to his native country either.
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