Business, economics: the cost (benefit?) of producing at home

Self-tutoring about business: the tutor looks at the (fading?) blossom of globalization.

Back in the 2000s, Lou Dobbs and others were discussing how America had one chief export: jobs. “We keep shipping jobs to [insert some other country],” was an observation I’d often hear. To my knowledge, it was true. In tandem, the US was paying a lot for imported oil back then, too – oil they could have been recovering from under their feet.

Since 1976, the US has run a trade deficit. 2022 seems to have been their largest, at $0.945T. Figuring out how to make something, then setting up a factory in some other country to produce it, seems to be the American way. However, that may be changing – thankfully.

What if the US (or Canada, for that matter) had to produce its own manufactured goods? We’d perhaps pay a little more for lots of things, at least in the short run. However, the US wouldn’t be exporting its wealth and know-how. That would be good, right?

People may think, from what I’ve just said, that I’m left-wing; not true. I just think that, in many cases, outsourcing is a lazy solution to having to face environmental regulations at home. If another country is willing to sabotage its ecosystem to out-compete the US or Canada, the American thinking seems to be to let them. I think (know) that’s unethical.

The chip shortage I’ve heard about – my suspicion is that’s largely a consequence of outsourcing. If Americans produced the chips in-house – yes, they’d have to pay the “real” price for them – would these shortages be happening?

In my opinion, the “cost-cutting” measure of outsourcing displays painfully short-term thinking that, unfortunately, is typically American. As I’ve said in other posts: no-one loves America more than I do. However, American business seems easily swayed by the instant promise of saving a few pennies on the dollar by outsourcing.

I’d say American outsourcing can’t go on forever; apparently I’m not alone. It seems the Americans fund their importation habit, partially, by foreign investment they receive. That may be starting to dry up: apparently China, for one, is investing less in the US now.

With less money arriving from China, America will have less to buy imports – which is good. Perhaps the MBAs in the US can start finding ways to open production there, as opposed to outsourcing. I’m looking forward to a return to 1975, when the US actually exported more than it imported:)

Source:

macrotrends.net

nationalpost.com

worldpopulationreview.com

msn.com

bea.gov