Pipe Dream

One of the most common mantras overheard at Trump rallies is that he will will bring jobs back to America, specifically the manufacturing jobs that have fled overseas. It’s a good sound bite but is it really something that can be accomplished? Not practical if you ask me and I will tell you why. There is a good reason why iPhones and Levi’s jeans are not made in this country. The work can be done cheaper overseas.

The new iPhone 8, reportedly releasing later this month, is rumored to cost around $1,000. That’s a lot of money for a phone and chances are that most Apple fans don’t care and will once again stand in line overnight – or for days – to get their hands on one. Consider that the labor required to put that phone together in China is a fraction of what it would cost in the States. Consider also that the parts required – the hardware – is for the most part manufactured in Asia at a fraction of what it would cost if they were produced in the U.S. If the iPhone was made in America with locally sourced parts it would likely be twice, some say three times, as expensive. Ouch!

You can buy a pair of Levi’s jeans for anywhere from $35 to $50 or so. If they were still made in American instead of overseas sweatshops they would likely be $100 or more a pair. While that is probably not bad considering their durability and and practicality, most Americans would balk at that price point. True Religion brand jeans – made in America – can run up to $300. That’s almost ten times the price of some brands found at Walmart. Yikes!

So the bottom line in getting jobs back to America would be U.S. consumers buying more expensive American made products. Consumers would in effect have to subsidize American workers. This would be fine in an altruistic society in which the good of all was the most important goal. Unfortunately, Americans do not want to pay more for American goods so that American workers have access to good paying jobs. They want to buy their products as cheaply as possible. And American companies don’t want to pay higher labor rates and benefits to American workers when they can pay a pittance overseas and pocket bigger profits.

It’s quite the dilemma but at heart it is what a capitalist society is all about, is it not? Profit. Make as much money as you can by lowering labor and material costs by any way possible. Carrier can build those AC units cheaper in Mexico, import them into the United States, and make a much higher profit than they did running a plant in Indiana. This despite Donald Trumps promise that the jobs would remain in the U.S.

From a purely capitalist viewpoint can you really blame companies for moving jobs overseas? In America, if you aren’t breaking profit records each quarter you are failing. Stockholders and activist investors are constantly screaming for higher profits at any cost. In many cases ethics have taken a back seat to the quest for cash – Martin “Pharma Bro” Shkrelli and the whole big pharma complicit opioid epidemic are shining examples.

There’s really only one way to get those jobs back. Make it cost effective for the employers. That would mean placing huge tariffs on overseas goods to make them less competitive with American made goods. That would force consumers to pay higher prices for goods, which would also ensure higher paying American jobs. Well, good luck with that Mr. President. Trump himself employs foreign workers at his Mar A Lago estate in Florida. Silicon Valley is one of the biggest beneficiaries of the H1B visa program, allowing them to import cheaper tech workers. Can the president bite the bullet and pay higher wages to local workers? Can he force Silicon Valley to hire American workers and pay them what they expect?

No.

We have made our bed and now we have to lay in it. The GOP hates big government and regulations and it is absurd to think they would force companies, through regulation, to move their operations back to America so that we could have more and better jobs available. To be fair, the Democrats would not do it either. It’s just a pipe dream. It plays well as a political sound bite but has no basis in reality in these modern times and will never happen. Besides costing American consumers more it would start global trade wars and quite possibly political instability. There are many economies that have grown dependent on American outsourcing and some, like China, could suffer seriously if American companies seriously entertained the idea of a “Made In America” mentality. Even more so with the U.S. government stepping in and forcing it through regulation.

Think of it this way. Would you as a consumer be okay with pushing your cart out of your local retailer knowing that you just paid 30% more so that some of your fellow Americans could have good jobs? No matter what you or I might say, I think that most Americans would not be happy with that. That’s why it will never work. We don’t want to pay a premium so that Joe the Plumber can make a decent living. We’re quite happy with Jose the Fontanero. And that new iPhone 8? We’ll pay the grand but that’s pushing it buddy!

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