The basis for decision making in corporate America is comparative advantage and specialization. Foreign countries, with vast supplies of cheap labor have a comparative advantage over the west for labor intensive manufacturing. As long as the cost of shipping and the political risk are offset by large enough cost advantages we will continue to shift our manufacturing base to these countries. Is this good or bad? It increases our standard of living by allowing us to purchase these goods at lower prices in the short term. It also increases the standard of living in these poor countries by us paying them to manufacture the goods for us. In effect we spread our wealth around the world. Sounds like it is a win/win situation......right? I guess that as long as the west does not have excess capacity and we all have jobs it is ok...the theory is that we have higher skill sets that will allow us to get better, higher paying jobs. I guess it is like going to work everyday at a manufacturing job and hiring someone to cut your grass or clean your house.....right? I have a good job so I don't have any excess capacity....but what if I lose my job...and I have excess capacity? What do you do? This may be over simplified but it sure hits home.
International economics and politics unfortunately are intertwined. The answer is not simple or complete. But what is the answer?????
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