Bringing back manufacturing jobs -- why would this not work?

[Rachellelogram]

Rather than punishing (via tariffs) other countries that export to the US, it makes more sense to heavily tax the US companies who offshore their labor in the first place. This probably won’t happen, due to lobbyists. But if it wasn’t cheaper to make their products overseas, they’d bring labor back onshore.

And the thought that Americans think we’re “too good” to manufacture plastic toys is bullshit. There are industrial plastic fabricators that do just fine here. The only difference is what shape the molds are, for christ’s sake.

Employees (and potential workers) in other industries than manufacturing would benefit greatly from forced onshoring, as well. Call centers, for example, are outsourced regularly to India and the Philippines. It’s not a great job, but it’s a job. And Americans prefer talking to other Americans because mutual understanding is much higher.

[Human_Action]

@Rachellelogram

Rather than punishing (via tariffs) other companies that export to the US, it makes more sense to heavily tax the US companies who offshore their labor in the first place. This probably won’t happen, due to lobbyists. But if it wasn’t cheaper to make their products overseas, they’d bring labor back onshore.

Not necessarily, they might just replace more workers with automated processes, if that option was cheaper than U.S. labor but more costly than offshore labor.

[XT]

[QUOTE=Rachellelogram]
Rather than punishing (via tariffs) other companies that export to the US, it makes more sense to heavily tax the US companies who offshore their labor in the first place. This probably won’t happen, due to lobbyists. But if it wasn’t cheaper to make their products overseas, they’d bring labor back onshore.
[/QUOTE]

So, seemingly your goal is to drive American companies out of business or drive them to re-flag to other countries, yes? Well, if that’s your goal I’d say it would work pretty well if you got your way here. I’m unsure how this would bring in more jobs, however.

[robert_columbia]

@Little_Nemo

There’s the general problem with tariffs - they increase the price of goods. Let’s say Japanese cars cost $25000 and American cars cost $27000 so people are buying more Japanese cars. So the government slaps a $3000 tariff on Japanese cars. Now people are buying more American cars but they’re still paying $27000 for them instead of $25000 for the Japanese cars at the original price. Everyone’s paying more for their car and some people now can’t afford to buy a car at all. Multiply this by everything in the market. You’ve increased domestic sales but you’ve done it by increasing the cost of living.

The argument is that the guy who used to only be able to afford to pay $25000 for a car can now get a higher paying job working in an American auto plant that will allow him to be able to afford to spend $27000 on a car.

[Leaffan]

@Rachellelogram

Rather than punishing (via tariffs) other companies that export to the US, it makes more sense to heavily tax the US companies who offshore their labor in the first place.

Wouldn’t said companies simply just register in another country to avoid this?

ETA: XT beat me to it.

[Evil_Captor]

@RickJay

Or you could accept that the way wealth is produced is by making things and then trading them, and that countries are actually enriching each other and trade is not a zero sum game.

Never said that trade was not a zero sum game, but who exactly is getting enriched from all this trade? It’s certainly not the American middle class and lower class, they’ve been sucking winds fro decades. Trade that only enriches the One Percent is pointless from the point of view of the 99 percent. Of course, conservatives call the One Percent the “job creators” i.e., Trickle Down Part 2, but no one who knows money thinks they have been job creators in the US over the last few decades. They’ve been the Job Destroyers.

If trade is a zero sum game, then why does the U.S. allow trade between states? Logically, if raising tariffs between it and the rest of the world would enrich the USA, then raising tariffs between Illinois and the rest of the USA would enrich Illinois. You think that’s a good idea? If not, please explain why not.

Well, labor can migrate a lot easier between the states than between countries. So attractive jobs in other states mean people can move to those states and take those jobs. So, even if your very dubious proposal that increasing trade between countries means everyone in both countries benefits is true (and it isn’t) it’s not exactly the same thing as exporting jobs to other countries, is it?

Of course, no one is going to move to another state or another country to take a job where your wages just buy you a bowl of rice. Which is where American workers are headed under your scenario – race to the bottom.

We’ve already been though the replacement of almost all jobs by machines and it worked out okay.

To what, specifically, are you referring? The Industrial Revolution?

[Evil_Captor]

@XT

So, seemingly your goal is to drive American companies out of business or drive them to re-flag to other countries, yes? Well, if that’s your goal I’d say it would work pretty well if you got your way here. I’m unsure how this would bring in more jobs, however.

C’mon, XT. What companies do when they are taxed or regulated is:
A) Find ways to avoid or evade the tax or regulation
B) Use their money to get their Washington buddies to either gut the regulations or hamper the regulatory agencies so severely that they can’t enforce the regulation
C) Draw a heavy sigh, pay the taxes/obey the regulations and raise the prices on thier product by ten cents because of it, even though the actual cost of the regulation is only ten cents. They VERY RARELY close shop or move.

[Buck_Godot]

I’m sure there is a reason this would be a bad idea, but how about this…

We get a bunch of the big developed economies around the world, and advance the idea that there will be high tarrifs on goods that are made by workers whose companies don’t either,

1. pay a wage equivalent to the minimum wage at around the level of that of most of the developed world,

or

2. pay a lower wage so as to not disrupt the local economy but make up the difference in by paying for infrastructure development in the manufacturing country.

Further, a certain level of worker safety and environmental regulations would have to be observed.

That way off shoring to locations where workers are paid peanuts would be less advantageous, no economy is left out in the cold and the developed economies have the advantage of halting the race to the bottom that currently exists.

Thoughts?

[Little_Nemo]

@robert_columbia

The argument is that the guy who used to only be able to afford to pay $25000 for a car can now get a higher paying job working in an American auto plant that will allow him to be able to afford to spend $27000 on a car.

I addressed that point above. Just because a manufacturer is selling more cars does not automatically mean he starts hiring more employees or paying higher wages. The trend nowadays is to figure out ways to reduce labor costs while maintaining or increasing production.

[Little_Nemo]

@Evil_Captor

Never said that trade was not a zero sum game, but who exactly is getting enriched from all this trade? It’s certainly not the American middle class and lower class, they’ve been sucking winds fro decades. Trade that only enriches the One Percent is pointless from the point of view of the 99 percent. Of course, conservatives call the One Percent the “job creators” i.e., Trickle Down Part 2, but no one who knows money thinks they have been job creators in the US over the last few decades. They’ve been the Job Destroyers.

I read an interesting article a couple of weeks ago in which an economist pointed out that nobody can create jobs from the top down. The economist said that jobs are created from the bottom up. You need to have a pool of people with money to spend. It’s this pool of spenders that creates opportunities for businesses to sell products. The argument was that it doesn’t matter how great a product is - the business will fail if there aren’t customers out there to buy it.

[Dangerosa]

@Little_Nemo

I addressed that point above. Just because a manufacturer is selling more cars does not automatically mean he starts hiring more employees or paying higher wages. The trend nowadays is to figure out ways to reduce labor costs while maintaining or increasing production.

see automation, robotics, lean manufacturing.

In fact, because capacity is so capital intensive (aka building a car factory ain’t cheap), some companies may simply increase the cost of their cars to sell fewer of them at a higher price than take the next step - the bottleneck isn’t necessarily people - its the facility and equipment - and in order to hire people, you need the plant. So now you have more expensive cars due to tariffs, more expensive cars due to capacity bottlenecks, and how many jobs?

The company above I worked for had factory capacity issues - we could sell all the parts we could make with our existing facilities working full shifts 24x7. But new facilities, that was a huge investment in capital we didn’t want to make. So we made the high end products that had the highest margin when the demand cycle swung that way. In car terms - when cars are selling, General Motors builds Cadillacs and they don’t bother to build Sonics (if GM has tooled their lines so all cars can come out of all facilities). That might be good for the job market, it isn’t good for people who can’t afford Caddy’s.

[Dallas_Jones]

@Evil_Captor

C’mon, XT. What companies do when they are taxed or regulated is:
A) Find ways to avoid or evade the tax or regulation
B) Use their money to get their Washington buddies to either gut the regulations or hamper the regulatory agencies so severely that they can’t enforce the regulation
C) Draw a heavy sigh, pay the taxes/obey the regulations and raise the prices on thier product by ten cents because of it, even though the actual cost of the regulation is only ten cents. They VERY RARELY close shop or move.

Bold added. Not the US, but sometimes manufacturers DO leave.

GM Holden just announced that they will be leaving Australia by 2017. Mitsubishi pulled out in 2008 and Ford has previously said they will end production in 2016.

This leaves Toyota as the sole automobile manufacturer in Australia, and they are expected to follow. After that all cars sold in Australia will be imported.

Holden confirms it will leave Australia in 2017 | Australian politics | The Guardian

[Human_Action]

@Buck_Godot

I’m sure there is a reason this would be a bad idea, but how about this…

We get a bunch of the big developed economies around the world, and advance the idea that there will be high tarrifs on goods that are made by workers whose companies don’t either,

1. pay a wage equivalent to the minimum wage at around the level of that of most of the developed world,

or

2. pay a lower wage so as to not disrupt the local economy but make up the difference in by paying for infrastructure development in the manufacturing country.

Further, a certain level of worker safety and environmental regulations would have to be observed.

That way off shoring to locations where workers are paid peanuts would be less advantageous, no economy is left out in the cold and the developed economies have the advantage of halting the race to the bottom that currently exists.

Thoughts?

If offshoring is less advantageous, it won’t be done. Why pay a Chinese worker the same wage an American would get, or spend the equivalent on non-excludable infrastructure, when you face the costs of transporting the goods to your intended market, unreliable infrastructure, cultural barriers, the difficulties of remote management and quality assurance, and a less stable government?

Inexpensive labor is the comparative advantage for many nations. If you prevent them from using their one advantage, you have doomed them to eternal poverty.

It’s hard to accept that a race to the bottom is occuring, when global wages keep climbing. See figure 4 on page 12 of this report, which depicts change in real income between 1988 and 2008 at various percentiles of global income distribution.

International standards for safety and environmental impact are more feasible.

[Buck_Godot]

@Human_Action

Inexpensive labor is the comparative advantage for many nations. If you prevent them from using their one advantage, you have doomed them to eternal poverty.

Possibly yes, but given the us vs them zero-sum game that goes with off-shoring jobs, its not clear that Americans even on the left would view this as a bad thing. Find me a politician or CEO who is widely publicizing their position in favor off shoring jobs as good PR and I’ll change my tune.

Presumably there is some middle off shore wage point less than the wages of unskilled local workers, under which the economics balance such that we have living wages and optimal unemployment for unskilled workers here, and comparatively better wages abroad as well.

The real loser in my scheme of course in big business who will see labor costs rise and profits decline, which is why this hasn’t got a chance in hell of going anywhere.

[Human_Action]

@Buck_Godot

Possibly yes, but given the us vs them zero-sum game that goes with off-shoring jobs, its not clear that Americans even on the left would view this as a bad thing. Find me a politician or CEO who is widely publicizing their position in favor off shoring jobs as good PR and I’ll change my tune.

In what way is offshoring a zero-sum game? I mean in a real sense, not a folk-economics sense that might affect what a politician says.

Between 2000 and 2012, the GDP of China rose from $1,324,818 million to $8,226,885 million.

During the same period, the US GDP rose from$10,289,000 million to $16,244,000 million.

There is a mutual benefit at work.

@Buck Godot

Presumably there is some middle off shore wage point less than the wages of unskilled local workers, under which the economics balance such that we have living wages and optimal unemployment for unskilled workers here, and comparatively better wages abroad as well.

Possibly, but it’s surely under the U.S. minimum wage. And remember, wage isn’t everything, things like a dependable electrical grid, courts that enforce property rights, a stable government, tolerable levels of public corruption, and so forth are factors too.

@Buck Godot

The real loser in my scheme of course in big business who will see labor costs rise and profits decline, which is why this hasn’t got a chance in hell of going anywhere.

The real loser would be low-wage countries, who would go from bad (by Western standards) jobs to no jobs, or worse ones. There is a reason they work the jobs they do, and it’s because it’s the best opportunity available.

That said, business isn’t independent of the rest of society. Changes that hurt business can, and often do, hurt everyone who works for or buys from business, which is nearly everyone.

[XT]

[QUOTE=Evil Captor]
C’mon, XT. What companies do when they are taxed or regulated is:
A) Find ways to avoid or evade the tax or regulation
B) Use their money to get their Washington buddies to either gut the regulations or hamper the regulatory agencies so severely that they can’t enforce the regulation
C) Draw a heavy sigh, pay the taxes/obey the regulations and raise the prices on thier product by ten cents because of it, even though the actual cost of the regulation is only ten cents. They VERY RARELY close shop or move.
[/QUOTE]

We weren’t merely talking about a tax or new regulation, but something that would put US companies attempting to sell into US markets at a sever disadvantage, while handing foreign flagged companies a license to steal. And, of course, I was addressing the hypothetical, not pointing out the reality, which is that of COURSE US companies would move heaven and earth to prevent their throats from being cut by such a stupid plan. If you want to see that as the evil rich getting their Washington buddies to prevent the righteous wrath of The People from giving them their just deserts (and destroying them as The People™ intended), well, that’s fine.

You are deluding yourself, however, if you think that US flagged companies would just shrug and move on if what I was addressing was ever actually enacted. Like I said, it wasn’t just a new tax or a new regulation, but the destruction of them in our own markets, or at a minimum putting them at even more of a disadvantage here…all the while probably not bringing in a single new job, of course. Which, ironically, is generally what the reality would be when liberals (at least those totally unschooled in anything like economics or business…there are many liberals on this board who are experts in this, but they aren’t the ones who post the nuttier things of course) start crafting master plans to ‘fix’ the economy and employment.

[RickJay]

@Human_Action

Inexpensive labor is the comparative advantage for many nations. If you prevent them from using their one advantage, you have doomed them to eternal poverty.

Inexpensive labor is a competitive advantage. It is not a *comparative *advantage.

[John_Mace]

@robert_columbia

The argument is that the guy who used to only be able to afford to pay $25000 for a car can now get a higher paying job working in an American auto plant that will allow him to be able to afford to spend $27000 on a car.

What guy? The few who will have manufacturing jobs here? What about the rest of us? I’m not going to get a raise because GM built a factory in Michigan. And what is the car manufacturer supposed to do with a factory that can produce cars for only one market (the US)? He’s not going to be able to sell many cars in Canada, because then he’s competing on the global stage again.

[Little_Nemo]

@Human_Action

If offshoring is less advantageous, it won’t be done. Why pay a Chinese worker the same wage an American would get, or spend the equivalent on non-excludable infrastructure, when you face the costs of transporting the goods to your intended market, unreliable infrastructure, cultural barriers, the difficulties of remote management and quality assurance, and a less stable government?

Inexpensive labor is the comparative advantage for many nations. If you prevent them from using their one advantage, you have doomed them to eternal poverty.

Why do you assume the geographic disadvantage only works one way? China is currently using low labor costs to sell Chinese products to affluent customers in America. But there’s no reason why China couldn’t increase wages, build up its own middle class, and sell Chinese products to affluent customers in China. China’s advantage then would be access to a prosperous Chinese market.

The idea of “We want to pay our workers as little as possible so we can manufacture our products cheaply. But we need for there to be somebody out there paying their workers higher wages so there are customers who can afford to buy our products.” isn’t sustainable in the long run. Cheap labor economies end up ruining the affluent labor economies they need to survive. Any company which isn’t paying its own workers enough money for them to be able to afford to buy the company’s products is just committing a slow form of suicide.

[RickJay]

@Evil_Captor

Never said that trade was not a zero sum game, but who exactly is getting enriched from all this trade? It’s certainly not the American middle class and lower class, they’ve been sucking winds fro decades.

And that’s because of trade, and there are no other economic policies you think might be contributing to that?

Well, labor can migrate a lot easier between the states than between countries. So attractive jobs in other states mean people can move to those states and take those jobs. So, even if your very dubious proposal that increasing trade between countries means everyone in both countries benefits is true (and it isn’t) it’s not exactly the same thing as exporting jobs to other countries, is it?

Actually it’s exactly the same thing, yes. If a tariff can help the United States somehow avoid economic ruin at the cost of the heathen Chinee, why can’t the same policy help Illinois make hay at the cost of Indiana or Wisconsin?

You can’t just say “it’s easier to move” and leave it at that. Aside from the fact that it may be easier to move but isn’t quite as easy as one might think, if putting up trade barriers around the State of Illinois would help its economy, it seems to me people would want to move INTO Illinois to get all those fantastic jobs you claim will pop up there, which would presumably be good for Illinois.

To what, specifically, are you referring? The Industrial Revolution?

What I’m referring to is the fact that most of the jobs people used to do have been completely eliminated by machines. It was once the case - and not that long ago, historically speaking - that most people worked on farms. That is no longer true, in large part because of technology. Huge swaths of the non-farming jobs people went into were eliminated decades ago as well, and yet unemployment did not go up as a result. What happens when machines replace people is that people find other things to do. It has been that way for centuries, and it always will be that way.

This “the robots are going to take our jobs and destroy the economy” crap has been spewed since the 1970s. Turned out to be false then and it’s false now.