Beating China. It Can Be Done. But Not That Way.

Posted By Cliff Tuttle | March 5, 2011

ABC News ran a series this week called “Made in America“. It began by exploring  the origin of goods found in a typical American Household. After everything made in China was removed, the  house was empty except for a small glass flower pot.

So far, nothing new.

Then, on the second night, the producers began searching for American products to replace  all of the Chinese stuff.  They were able to find “Made in America” versions of everything  except an electric coffee maker.

The best news, however, was that the American goods cost a little less, at least in the    aggregate. This was followed by a certain amount of whooping, which ignored the obvious question.  If American made goods are cheaper, why has China conquered the market?  No answer was attempted for that one.

During the course of the report and for that matter, the whole newscast, the word “jobs” was repeated constantly.  We Americans are obsessed with the idea that employment Americans used to enjoy  has been exported to China, India and other East-Asian countries.Robert Reich, an economist who was once Secretary of the Treasury, argues persuasively that manufacturing jobs are not coming back. But that does not mean that manufacturing cannot come back.

Americans can take back a sizable share of the consumer goods market, but only if we are willing to pay the price.  No — not low wages. Actually, the wages will probably be better, but the jobs will be quite different.

Future technology is being developed, much of it in Pittsburgh, that will soon produce consumer goods more cheaply and of better quality than Chinese.  But don’t start getting excited about the return of all of those manufacturing jobs. Those are not coming back.  America can take back the cost advantage it lost in manufacturing if and only if we are willing to invest in new generations of robotic workers.

The idea that Americans should pay more for consumer goods to enable other Americans to compete with Chinese workers is simply backwards.  To win this game, we  need to employ technology that makes goods more cheaply than can be made with low cost human labor.  This increases wealth and in the long run, employment.  If you focus on creating employment, in the long run, you lose.

CLT

No. 592

Welcome

CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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