Comment by rickdeckard
12 days ago
The weird part for me is this: While the economy was evolving, Production was offshored from US for cost-reasons, but also in part to focus on higher-skill labor in US, delegating the low-skill mass-production to China.
Over time, China also developed mid/high level skills, complemented their low-skill production offering with it and now competes in new industries, new tech, etc.
So...to compete with China, the country with 4x the US-population, the solution is that low-skill labor needs to return to US....?
Shouldn't instead the focus be to again foster mid/high-skill labor, moving the part that is offshored again towards low-skill labor...?
I think the mistake here is the model of low-skill/high-skill labor is not a useful distinction. Manufacturing is high skill period, however there are low-infrastructure and high-infrastructure products and factories. The labor wages themselves are a factor, but an increasingly minor factor in product costs. By bypassing investment in US manufacturing skills and infra, the US sat itself on the sidelines for the ability to build, staff, and supply modern low, medium and high infrastructure factories.
It's not impossible to build back, but it would require long term stable policies to favor it at more levels than just tariffs.
The solution is to pay everyone a living wage, regardless of job, and disconnect healthcare from employment. Lots of inertia against those ideas though. So, instead, "good manufacturing jobs" is the parroted point. Any job is a good job if you can live off of it.
(tariffs do nothing to address labor shortages in healthcare, teaching, and other domestic service based sectors, for example)
Citation:
Trying to “Bring Back” Manufacturing Jobs Is a Fool’s Errand - https://www.cato.org/blog/trying-bring-back-manufacturing-jo... - April 21st, 2025
That’s a solution of human rights and is orthogonal to becoming competitive to China. No question human rights needs to be fulfilled and we need to pay people living wages.
But the conversation here has he orthogonal goal of being competitive with China as well. I can assure you just paying everyone living wages is one of the main reasons why we are not competitive with China. It’s the main reason why China is beating us today.
So paying everyone living wages doesn’t really do anything to solve the problem because the products created by people who are paid living wages are by definition more expensive due to labor costs.
What tariffs do is they allow us to pay people living wages and sell expensive products and still be competitive because products from China are tariffed to be the same price.
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> Any job is a good job if you can live off of it.
No, just no.
There is a high variance in job qualities beyond pay.
Work hours, over time, outside vs. office jobs, repetitive Vs. varied, physical and psychological impact, etc.
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The distinction is between high- and low- skill politicians and managers, not labour.
One of the foundations of conservatism is the priority of hierarchy over effectiveness. In a conservative culture it doesn't matter how well things work as long as the right people in charge.
We're seeing the limit of this now, where it's literally more important to maintain hierarchy by denying facts and rationality than to "lose face" by admitting that power isn't absolute.
You can't run a modern country like this. You can't plan for the future, make effective decisions, govern, have a working legal system, build housing, create health care - anything at all - when all decisions are made according to the whims of a despot.
Power and resources - including wealth - have to be distributed. Or at least there has to be the illusion they're somewhat distributed. Anything else guarantees terminal contraction and decay.
Not disagreeing with you, but isn't the issue that the US stopped investing in the skills and infra which made mass-production low-skill in the first place?
Instead, the offshore-destinations kept offering more and more services in the value-chain, until the entire skillset to actually create the low-skill labor processes to offshore was replaced with "let the offshore company manage".
Yes climbing the value chain was a necessity for nations like China. But in the US popularized in the 90's, was a business strategy trend that strongly discounted the value of long term capital investments - particularly for this discussion, investment in factories. They do require extra management attention and they do tie companies to strategies in longer time frames at lower margins - but they deliver long term value and long term synergistic growth benefits (in the vein of go slow to go fast). Many US business elected to chase short term growth, and short term and higher margins and minimize long term investments.
See a list of leading US companies that are off of being king of the hill - Boeing, GE, Intel, ... leading industrial US companies continually divested from manufacturing, or shorted long term investment, not because it wasn't profitable, but because it wasn't profitable enough in the moment. It took decades, and many dividends and stock growth was taken in the middle, but the shortfall manifests in time.
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Actually I think it’s variation of this. Tariffs can protect high skill jobs with high value product output. They can also force the Chinese to make cheap stuff even cheaper ( back down below $1 goods plus tariffs ).
We don’t want the Chinese making high value goods at slightly lower prices. We want Americans making high value goods and we want to push cheap stuff as cheap as possible. Next step is enforcing environmental rules on Chinese goods and requiring escrow of the funds to pay the Chinese in American accounts until the goods are inspected and pass.
America already makes high value goods in China and takes most of the value from them since they did the IP and the software for those products. China desperately wants in on that, they are no longer happy making the product while America takes most of the profit! They would swap places with America in a heartbeat if that’s what Trump is offering.
Yes, they could make more use of the Uyghurs. https://www.state.gov/forced-labor-in-chinas-xinjiang-region... not to mention other slaves. https://worldpopulationreview.com/country-rankings/countries...
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> The labor wages themselves are a factor, but an increasingly minor factor in product costs.
Not disagree with your main points, but labor inputs are still very much a huge part of product costs, and often the biggest driver of where to build a new factory when a company is scaling up. Companies aim to build their new factories wherever there's a sufficient pool of cheap labor with the necessary skills.
> Companies aim to build their new factories wherever there's a sufficient pool of cheap labor with the necessary skills.
Of course, even where labor cost is truly inconsequential, you would still do that as all the correlations that come alongside cheap labor are still very attractive to manufacturing.
> I think the mistake here is the model of low-skill/high-skill labor is not a useful distinction.
IMHO it still is. There are tasks, especially in assembly, that for now require humans to do because robots can't match our dexterity. Stuff like mounting through-hole components like a cable from the battery compartment to the main PCB. That's a few seconds worth of time, and you need barely more than a few days worth of training to get a worker up to speed - a low-skill job. China, Thailand, Vietnam and a bunch of other places have an ample supply of people coming out of utter poverty, which means the pressure on wages is massive - a Chinese worker on average earns about 13200 dollars a year [1], an American worker is 3x-4x that amount and more if the shop is unionized. And on top of that, Chinese workers work 996, American or European workers have much MUCH more employee rights.
The problem is, low-skill employment opportunities are going down and down because automation gets better. For now, China can compete because Chinese workers are cheaper than machines... but once that changes, it's going to get nasty.
> The labor wages themselves are a factor, but an increasingly minor factor in product costs.
There's soft factors as well. Stuff like workplace safety/OSHA regulations, environmental regulations... Silicon Valley is a bunch of Superfund sites from decades of toxic emissions. China? They barely have regulations in place, and other sweatshop countries are even worse.
The core problem we're talking about anyway is that a certain percentage of any population is just, plain and simple, dumb as rocks. Over half the US population is barely literate [2]. No matter how good your education systems are, no matter how much money you invest into equality in schools, no matter how much you protect them from stuff like lead - they are dumb, will remain dumb, and probably their children will also remain dumb. In ye olde times you put them on farms, meatpacking or in factories so they had gainful employment... but that all went away, and now we got hordes of utterly dumb people with no hope of ever getting smart and, crucially, no hope of ever getting a meaningful job.
[1] https://www.statista.com/statistics/743509/china-average-yea...
[2] https://www.thenationalliteracyinstitute.com/post/literacy-s...
The problem is ecosystem effects. High-tech industries evolve from and depend on low-tech ones. There is a limit to how much they can be separated.
Moving the low-cost jobs offshore was fine until automation filled a lot of those jobs. Now the high skilled automation skills and infrastructure (production lines and robots) are also offshore. I have done my fair share of western factory tours and the number of people on the factory floor is soberingly low... they are simply not needed, as they line runs like a vast, complicated machine.
Japan led in automation in the 90s before the rise of China put a stop to those investments paying off. Now China is making those same investments at a time when the tech is much better. America could solve its manufacturing problem in the future just by importing China automation tech.
>"America could solve its manufacturing problem in the future just by importing China automation tech."
Assuming there is no embargo by then.
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Trump et al. really run a motte-and-bailey argument here. They woo reasonable people who agree that critical industries: food, energy, defense-adjacent, metals, etc. - must have substantial capacity on-shore or at least very near. They then flip to what amounts to massive handouts for his rust belt base, basically saying we should make everything here.
The obvious answer is this:
1. it doesn't matter if our t-shirts are made in Bangladesh.
2. it does matter if our stuff is made in an enemy nation (china).
3. U.S. labor is too expensive to move back to mass manufacturing the way we used to do it, c.f. baumol's cost disease.
4. offshoring and illegal labor have suppressed investment in automation and manufacturing technology for decades, which will be painful to undo.
The sensible outcome of these facts is
1. Focus on moving everything out of china to other cheap countries with reasonable levels of human capital.
2. Focus on re-shoring critical industries.
3. Launch moonshot investments into robotics and automation. Bringing back a big chunk of manufacturing is sustainable; bringing back jobs is not.
4. Invest in large-scale roll-out of SMR energy so we have reliable power for this new industrial build.
Completely agree with your main point.
I do disagree somewhat with point 4. I think this is frequently overstated:
Building and operating automated factories is just as wage-dependent as anything else (just the coefficients are a bit smaller). You still need engineers, construction crews, supervisors, repair crews, etc. (and those could all be doing something more profitable as well).
You can see this very clearly in the EU, where there is a pretty smooth wage-gradient, and even the super highly automated automotive manufacturing has moved down that gradient towards Slovenia, Slovakia, Hungary, despite language/culture barriers.
> Bringing back a big chunk of manufacturing is sustainable; bringing back jobs is not.
I think a decent sized manufacturing industry is a realistic goal long term. But longer term US global supremacy in it is not even a realistic goal to begin with, because not only are you gonna fight against the wage gradient now, you are also gonna face the fact that the US is only ~5% global population, and manufacturing will naturally drift towards the very biggest markets for its goods, which the US probably won't be in half a century or so, simply because of demographics and economical growth in China/India generally.
So basically, Biden's CHIPS act plus infrastructure (energy, roads, etc.) investments (e.g., solar and wind and battery part of Biden's IRA plus additional baseload). Yeah, we had all that going under the previous administration, and the current administration is distracting us from their dismantling of these sensible investments and incentives by strangling the entire global economy. Is it still "fringe" to think Trump is a foreign asset?
> 3. Launch moonshot investments into robotics and automation. Bringing back a big chunk of manufacturing is sustainable; bringing back jobs is not.
Absent sufficient jobs, or some other arrangement for the masses that provides both material comfort and some sense of purpose, you'll never get to the automation because you will likely have a revolution first.
china isnt an enemy nation unless we decide we want to fight them
Or, if they decided to take lands belonging to allies.
Though after this administration I'm not sure we'll have any allies left.
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