Offshoring and the myth of the "added value manufacturing industries". [View all]

[Zalatix]

I'm just going to cut to the chase.

Free traders think that we should abandon the production of cheap toys and gadgets - the plastic spoons, the USB memory sticks and even the iPads - and go for "higher value items".

What "higher value items" means today is irrelevant - because whatever is higher value today, is low value / commoditized tomorrow.

The relevant point here is that "higher value manufacturing" is not a big creator of jobs - not in a country with 300 million citizens (and growing). If you send out low end manufacturing jobs and attempt to cram all those people into high value work, you will always end up with the dark side of Comparative Advantage - a bunch of people freed up not to do "other" kinds of work, but rather, a bunch of unemployed people competing with others for lower-paying non-tradable jobs.

We need both higher-value jobs and lower-value jobs in order to keep people employed and keep America agile. The argument that a glut of factories producing plastic spoons and USB memory sticks keeps America from transitioning to building the newest high-value stuff, is an absolute fallacy.

In fact, spending a few years building iPads at an American factory would pay your college tuition to learn all the Six Sigma Black Belt skills and other things you'll need to work in the factory that builds that Next Big High Value Thing[tm].

Getting rid of low value manufacturing does nothing but make a country of 300 million Americans poor.