OuttaNowhereWregget wrote: ↑Fri Feb 16, 2024 12:04 pm
NattyBohChamps04 wrote: ↑Fri Feb 16, 2024 11:37 am
OuttaNowhereWregget wrote: ↑Fri Feb 16, 2024 8:01 am
I'm not sure where to pose this question so I'll plunk it here:
Would someone explain to me why we started having so many of our goods shipped in from other countries, and when?
I'm (barely) high school educated so brevity and layman's terms are a bonus should anyone care to explain things to me. I know precious little about the economy and tariffs and trade wars, etc. I have an
idea that the US government got greedy and began imposing all kinds of taxes and such which inspired US companies to begin manufacturing their goods in other countries, or importing goods from other companies, but I don't
know that for certain sure. Thanks in advance.
I manufacture consumer products in the US.
The USA began offshoring lots of manufacturing in the late 70's and early 80's. We did so because it was generally cheaper, leading to larger profits for companies. We offshored mostly to Latin America and East Asia countries.
The reasons why it was cheaper are complicated, as seacoaster mentioned, and do involve politics at times. A huge reason was cheaper labor and cheaper materials as a result. For instance, in 2002, Chinese manufacturing workers were making
$0.57 an hour. Minimum wage in the US was $5.15 at the time.
China implemented its Open Door policy in 1978, which opened up China to foreign companies. China had 1/5th of the global population at the time. Other things like the increase in global free trade, improved supply chains and more lead to moving a lot of our manufacturing to the cheapest countries.
The good news is that manufacturing jobs have been increasing since 2009. Domestic manufacturing output has increased a ton as well, outpacing job. A large part of that is due to increased automation.
Tax rates for corporations and people have been decreasing since the 1950's, so it isn't a big factor in considering offshoring. But tax rates are certainly taken into account by many companies when planning where to locate manufacturing facilities.
An acquaintance of mine recently moved his facility and 100+ employees from Utah to Mexico. They manufacture wedding related goods. The main reason for the move was due to labor costs and ease of finding people willing to work hard for not a lot of money. He's paying production floor laborers ~$800 per month there.
I greatly appreciate your explanation here. Clears up a lot of what I found confusing.
One follow up question, if I may: Is there anything reasonable the United States government could do to woo manufacturers back to this country?
In view of your self-professed educational deficit, I'll keep this simple.
The North American continent, largely isolated from frequent visitation and economic exchange with the Eurasia, until the 15th century, was relatively rich in natural resources, and after the smallpox plague decimation (or worse) of the native population (not truly indigenous, but certainly present for thousands of years prior to Eurasian settlement and trade), relatively unpopulated.
Upon discovery and regular contact and establishment of settlements created for the purpose of conquest and resource extraction, see Spanish gold and silver shipments, the territory was divided between various world powers, i.e. England, France, Holland, Spain, Portugal, Russia (Alaska), etc. Various commodities were extracted as well as the offloading of problematic populations -- poor, religious extremists, criminals.
During this period there was little manufacturing beyond that needed for local consumption, and little exports except raw goods with no added labor value. The usual trading route was - raw materials shipped to Europe, unload, load finished goods for return trip. Due to the high mortality rate of labor in the New World, and relatively low population base, both finished goods and labor were returned. Given the location of the prevailing winds and currents, the return route took the ships across the lower latitudes towards the Caribbean, where again goods were unloaded and in this case, rum and sugar were taken on. The low, or later, no-cost labor was initially poor European under "contract," but issues with importers of said labor honoring terms (land and equipment), led to the favoring of African slaves, who had no rights and did not represent potential capital outflows as there bondage never concluded.
In the North, manufacturing and value-added labor drove the economy, whereas in the South, with its lack of deep water ports and fewer navigable rivers affording access to the continents interior, the economy remained largely agrarian with little to no value-added labor exports. This dichotomy led, inevitably, to the Civil War.
Following the Civil War, the westward expansion into the territories (similar population relief mechanism for the East that Europe had used centuries earlier) by immigrants and displaced "native" European inhabitants, coupled with a rapidly growing industrial base afforded by the exploitation of water-borne transport to the interior (Great Lakes) allowed the US to be the low-cost labor and factory of the world. The happy geopgraphic accident of two oceans insulating it allowed for the US economy to escape most of the European wars of the later 19th and first half of the 20th century.
The easiest way to understand US history is through the lens of capitalism and its interactions with natural resources and labor. When Labor was cheap and markets existed for finished goods, a lot of capital was invested in the creation of finished goods for export. When labor got more expensive, the capital moved.
Never forget what capitalism dictates: return on investment. Period. Is the US a pure capitalism society? Should it be?
Now, when you speak of "wooing" business (capital) to return the labor input function to the US, well, what do you think the role of the government is and who has the most sway in policy? That is where things get interesting -- see organized labor, Great Migration (movement of Southern black population o the North during WWII to escape Jim Crow and economic repression (sharecropping and carceral slave labor system).
But don't take my word for it. Educate yourself - read widely from as many sources as you can find, remembering all authors and teachers have a bias, as do you.
"There is nothing more difficult and more dangerous to carry through than initiating changes. One makes enemies of those who prospered under the old order, and only lukewarm support from those who would prosper under the new."
