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Let Businesses Decide for Themselves Where to Make Their Products

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Tags U.S. EconomyPolitical Theory

01/13/2017

On Monday night, Dirty Jobs host Mike Rowe joined Tucker Carlson on Fox News to discuss Ford’s and Chrysler’s respective plans to reinvest in US manufacturing. Rowe, who is a proponent of technical and skilled jobs, told Carlson, “Get a skill that’s in demand, that’s really in demand, that can’t be outsourced. Plumbers, steamfitters, pipefitters, carpenters, mechanics, those men and women right now … can pretty much write their own ticket.” Rowe is right about skilled jobs. According to the Manhattan Institute, there are around a half-million US skilled jobs that aren’t being filled. Millennials are spending their time in the college safe spaces instead of doing the “dirty jobs” which can pay well.

However, when Rowe talked about making things in the US he got it wrong. “There’s just something … larger at work here,” Rowe said. “It has to do with our identity, it has to do with what it feels like when we’re actually making things as a country.” This “be American, buy American” attitude has been prevalent in the US for some time, however, making everything at home isn’t always the best route.

Take, for example, our cell phones. By outsourcing full production to China, our phones cost hundreds of dollars, not thousands. By having a low price, the phone companies attract more consumers and bring in more revenue. The jobs that would have been taken away by outsourcing are more than made up by the US based jobs in research and development, retail, sales, customer service, repairs, and any of the other jobs in the technology fields. After all, the biggest job creator in the past several decades has been the US service industry, not manufacturing. If we built our phones and tablets in Los Angeles, there would be far fewer highly skilled and creative jobs available in Silicon Valley.

By importing parts, components, and raw materials cheaply from abroad, companies are able to invest that savings in higher skilled and higher paying jobs here at home.

If an appliance company were to source screws, nuts, bolts, washers, and other parts from the United States, prices would rise, consumers would buy less, and there would be fewer jobs available from that company. By importing these parts from China, businesses can afford to hire more American workers at higher wages than those who would make the hardware.

However, making things in America can be a great thing when it’s not coerced. Channellock has been making pliers, wrenches, and other hand tools in Meadville, Pennsylvania for over 100 years. This decision was driven not by government intervention, but because consumers will pay more for Channellock’s quality tools than for their cheap Chinese counterparts. Channellock still manages to provide tools of the utmost quality for a relatively low price — less than $20 for most tools. They do so while providing a livelihood for their workers and the craftsmen who use them.

Making products in the US isn’t inherently bad or good. There are advantages and disadvantages to outsourcing. The best indicator of where to produce a product is clearly economic analysis done by the company itself. Depending on each situation, it may be advantageous to build in the US or it may not be. When the government tariffs imports, this disrupts price signals and discourages trade. If Ford, Chrysler, Carrier, and any other companies decide to stay in America because of expected deregulation and lower taxation, that’s good. If they do so because of expected protectionism, that’s bad.

Reprinted with permission. 

John Sulzer is a student and a contributor at The Liberty Conservative. John has been writing on politics, culture, and public policy since 2015 from a conservative perspective.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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Tellessa Myles www.flickr.com/photos/110382334@N05/
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