Using people for manufacturing fundamentally will never be cost competitive compared to cheaper markets. There are really only a few ways to resolve this in my view:
1. Give up and just outsource manufacturing and be ok with it
2. Invest heavily in automation, technology etc so we remove cost of labor from the equation. Or at least heavily minimize it
3. Put up trade barriers to artificially raise the cost of imported goods, which is what the current admin is trying to do, at least officially
1. leaves us dependent on other potentially adversarial countries, 3. increases the cost of goods sold so puts a burden on the population. So seems like 2. is the only way to go, if the country can get behind it. But it also inherently won't add a lot of jobs.
1. Ok then what do you make?
2. A bit too late for that given that China is also highly automated.
3. You would have to be serious for this to work.
As for your responses.
1 who is "us"
3. I mean some would be automated etc. There is actually data on how little the cost of labor adds to different parts of manufacturing.
2. You at least have a sustainable economy (I dont mean that in an environmental sense)
Typically as economies advance there is a shift to services and higher value add / higher skill manufacturing anyways. That can be the explicit strategy for the US as well. Focus on renewables, high tech, aerospace etc instead of the lower margin / lower skill manufacturing.
They're not mutually exclusive of course. There can be some national protection via tariffs on some types of manufacturing, while investing in automating some other types and just completely ignoring others and keeping those offshore. Problem currently is there doesn't seem to be a much of a strategy.
It seems like the US in particular isn't able to pick one path and stick with it. The shift towards services has already happened. But investment in silicon, renewables etc is on again off again. There now seems to be a desire to bring all manufacturing jobs back to the US, although it's not clear who wants this or why. e.g. who actually wants clothing and toy manufacturing back in the US?
So we have a set of ad hoc policies (or EOs), that don't seem to have an overarching goal.
A great deal of investment in renewables just meant importing solar panels and wind turbines from China that will wear out in 19 years. Outside of a few jobs in trucking to moving parts and a few jobs to install them, it does not create a solid labour base nor good careers.
I certainly want clothing manufacture back in the U.S. with a focus on using renewable (ie. not microplastic based) textiles to make articles of clothing that don’t wear out in a year or two. I have a handmade pair of pants I bought at a local thrift store that were locally made from domestically produced denim. Got them for $4. New ones from the person who makes them would be around $40-$75. They are custom fitted to you, although I got lucky and the thrift store had one in exactly my width and height.
So far they don’t have any rips, years, and the cuffs aren’t fraying.
My brand new Levi’s and Wrangler’s have fraying cuffs and are much more prone to getting tears because of the thinner fabric. They also seem to stretch after washing or wearing them a long time and then don’t fit as well.
Toys? I want toys for my kids that aren’t full of lead or cadmium, and are something besides battery operated beeping rubbish or something with a screen. I’m glad to pay $25 for a wooden toy. I bought one locally made in Chico, CA at a store called “Chicomade” where everything was locally made.
I don’t see why fast fashion with clothes you need to throw out sooner due to planned obsolescence and plastic trash toys.
If we can make the same product domestically better (cheaper, higher quality etc) then that doesn’t require a barrier in theory. Just make it and sell it for cheaper or sell it for the same but with higher quality.
Problem is for the most part that cannot be done. There is a market for made in USA, where people are willing to pay more for higher quality, more sustainable, local etc, but it’s still a relatively small market.
Just like airline tickets. People complain about lack of space and bad food, but when presented with the choice most people still pick the cheapest option.
"when presented with the choice most people still pick the cheapest option." I actually dont think this is correct. I think when faces with the choices they have they choose the cheaper option. This is not the same thing.
Japan used that strategy very successfully for at least a century. The high cost of imported goods encouraged consumers to buy domestic at prices that were also high, which subsidized exports at competitive prices. The Japanese public is less docile now, but this is one example where import restrictions worked well. I believe you can find other examples from the 20th century, but I'm not sure whether they would work well in the current global environment.
Import substitution can only work when you have a government that is investing in labor and industrial infrastructure, while keeping the local currency cheap. This is not a combination of factors you don't have in the US.
1. Give up and just outsource manufacturing and be ok with it
2. Invest heavily in automation, technology etc so we remove cost of labor from the equation. Or at least heavily minimize it
3. Put up trade barriers to artificially raise the cost of imported goods, which is what the current admin is trying to do, at least officially
1. leaves us dependent on other potentially adversarial countries, 3. increases the cost of goods sold so puts a burden on the population. So seems like 2. is the only way to go, if the country can get behind it. But it also inherently won't add a lot of jobs.