Critical items, sure, we should have the capability to make stuff we need for military reasons, though I’m not sure if the cost is sustainable. I’m talking not about China as a market though, but as a supplier of consumer goods. We don’t have the capacity, nor the desire or anything else, to make the quantity of stuff Americans want to buy. Even if we could, we could not do it cheaply enough. I suspect a political platform of “return to 1950s level consumption” is not going to go over well.
I think you’re wrong, partly because you’re misreading the target.
The policy goal is not that “we” in the US alone must replace all Chinese supply. Rather that “we”, countries allied with or relatively friendly to the US, could. That considerably increases the range of wages available.
Not an overnight project, but rather a decade(s) long project. It’s already happening, and I suspect will accelerate.
Well, the countries that can make consumer goods cheaply enough are hardly paragons of human rights, either… The truth is, cheap manufacturing means cheap labor which means generally horrible conditions in horrible places. At least until we do the sensible thing and automate all of that and find real work (as in, stuff that helps humans and the planet) work for people to do.
Maybe you could offer a constructive comment, rather than just criticism? It seems you’re pretty much resigned to the status quo, because every thing else is too hard, too expensive, too something.
If you can’t control China’s behavior, but can control US policy, what would you do?
Hmm. I don’t agree with their freedom-killing policy, but I do approve of their harmonica-killing policy.
My understanding is that manufacturing labor in China is actually quite a bit more expensive that it used to be, but the reason there is still so much done there is more due to its highly-developed infrastructure and high manufacturing capacity. I remember reading something that said that labor in some places in the US may be just as cheap, but the costs to set up factories and logistics systems make it cheaper to just continue producing in China.
People are always complaining that labor is too expensive in the US, but the minimum wage in some red states isn’t really that far from factory wages in China.
Boy, are you touchy. Sometimes the status quo is not really changeable. I don’t see any practical way to avoid dealing with China in the global economy. I also don’t think that anything that moves us back from global connections towards national economies is very productive, either.
I think letting Beijing know we find their practices odious, and stonewalling them on Taiwan, is about the best we can do. I don’t think we will help anyone in China by making threats we can’t act on, nor is shooting ourselves in the foot economically worth the minimal results. If China attacks Taiwan, well, that’s a different story of course.
You are probably right. I guess I should say that the cost to set up in the USA the sort of manufacturing we now get from China is prohibitive; I doubt the profits would be there in the timeframe any Western business would support. In fact, I really wonder if at this point anyone would be willing to take on that task.
Something else that is worth noting is that one reason that companies like manufacturing in China is that their labor union is centralized and controlled by the government. This means that the government can ensure relative stability in labor wages and production. However, COVID lockdowns and their effects on production have shown that the government is willing to sacrifice this stability in order to push its domestic agenda. This and new policies/subsidies from the US government will likely encourage more companies to move away from China.
Also, before COVID, the Chinese government was already signaling that they wanted to move the country to a service economy rather than a manufacturing one (and initiative pushed heavily by Xi), but that seems to have changed in recent years.
It wasn’t intended as an offense. I find it’s a useful clarifying question - thanks for answering.
I used to believe that prosperity would be a moderating influence on China, as it usually has been most places. I don’t think that’s true anymore. I think that building trade blocs that exclude China and applying heavy tariffs to counteract their economic shenanigans and sanctions to signal disapproval of their human rights violations are the way to go.
Basically mostly exclude them.
Heh, I’m never offended. I mean, it’s the Internet, we’d be offended all the time if we let ourselves. I appreciate your point of view, too. I tend to skew towards a utilitarian approach to these things even if it sometimes means unpleasant compromises, but I am quite open to arguments for a more deontological approach too.
One of my brothers is a manufacturing engineer, so he was on the front line of this change during the 90s. He graduated with a Masters in the mid-90s and got a job in a small industrial Illinois town. My Dad was a retired electrical engineer and was looking for a house for my brother and got a job offer and moved to that town too, helping make batteries for Motorola. Everyone in that town was basically some kind of engineer, and there was a lot of manufacturing. And then one company after another that my brother worked at was pressured by Walmart to open a factory in China or they would stop doing business with them and stop selling their products.
Then he moved to Chicago because the little town’s manufacturing companies nearly all shut down. In Chicago he worked for a Printer company, and they were also pressured to move to China and they eventually did after a LOT of pressure over two or three years.
Now he has worked for one company after another that makes medical devices, since that’s one of the few things we’re not willing to outsource to China.
But my point being, the U.S. built a lot of stuff here in the 90s, and could again. It was a lot of pressure from Walmart and other companies that finally resulted in manufacturing moving to China. So why can’t there be pressure to move manufacturing out of China?
Because the best way to do so would be to use top down political pushes to do so, because the reality is strict monetary considerations push things towards China and so we would need to change the math using non lassez faire methods.
I agree with this wholeheartedly, while also chuckling because this is a conversation that can and will devolve into gibbering insanity. Just as soon as I point out that what you suggested is exactly what the Trump administration was trying to do.
Such as 25% (or higher) tariffs on nearly everything made in China, rising sanctions and sanctions risk against firms operating in or sourcing from China, increased restrictions on US investment into new supply chains in China, subsidies to build new supply chains in the US and partners, etc etc etc.
All of which are either already in place, or in process/more or less certain to happen in the near future.
I think a problem with much of the “that’s impossible” reaction to calls to shift away from China is it is based on what happened in the 2000s as a immutable force of nature. That was mostly policy induced (both US and China policy changes). The reverse is also possible, with the right policy changes - and time.
Another observation is that if one thinks a supply chain shift out of China is unlikely, it means a climate change mitigation strategy is probably impossible. Not that the two are intertwined, but the politics and cost of the former is so much easier than the latter.
The problem with Trump wasn’t the notion, but the arbitrary and unthinking manner which they executed.
like if you are going do it, think it through, work with other countries and come up with try a plan for multipolar action. Do the work basically. Target at the areas of greatest impact/ benefit. Don’t just slap a number out there and declare ‘mission accomplished’
The other thing is simply slapping on a tariff day one is it is unlikely to actually inspire the change you want. If the goal is shift manufacturing away from China, thats fine, but things take time. If you deploy an immediate tariff, that simply becomes the new cost and prices rise for consumers, and the new cost is just what it is. Where if you set a timeline with increasing ratchets but a few years for the full bite? You give companies time to adjust supply chains and shift production. Capital expenditures don’t happen in a day, so if you set it with penalties to start in 6 months, and increase every quarter for 3 years until the full impact is had? Well now it becomes something businesses can plan and adjust for. This is far more likely to see meaningful changes in factory locations.
That type of ratcheting mechanism is something I have also suggested in the past. But it needs to be serious enough that it incentivizes the desired behavior - eg 25 percent increase per year, so at 100% in 4 years. That would certainly change supply chain investments.
But this isn’t politically feasible. Both Trump and normal politicians like big announcements, today, not veiled threats that your successor may or may not implement. Don’t let the perfect be the enemy of the good (enough).
I think the confusion is that yes, what @AK-Icebear is discussing is in fact possible, in terms of being something that could conceivably happen. At the same time, though, there is a lot of reason to believe that the sort of commitment, will, and expenditure to make it happen would not be possible. And in terms of opportunity costs, would it be worth it? I don’t have an answer for that, but I’m guessing many folks would say “no.”
Sadly, I think this is also true. The West spent centuries extracting wealth from the rest of the world to fuel its own economic growth. When we now are at the point that we have to switch gears to save the planet, we are in the position of going to the people who are just now hitting their stride in building the consumer societies we’ve enjoyed for decades and telling them, sorry, put on the brakes, no more flat-screen TVs and fancy cars for you, we gotta save the world. It’s a hard sell.