How Much Did China REALLY Contribute to US Manufacturing Decline?

Friday, January 6, 2012 3:29

[youtube]http://www.youtube.com/watch?v=_G6SYmQ0swg [/youtube]

During the majority of my time in China (nearly 10 years now), one of the most active (and heated debates) surrounding China has been its role as a catalyst for a decline the manufacturing jobs. It is a debate that itself gets heated, at times emotional, and in my view has yet to serve any purpose but to provide opportunities for U.S. politicians to get a bit of air time every few years.

Yet, it is an important debate because, and while promoting his most recent book at Google, Professor Jeff Sachs opens up a dialogue that I found very interesting around the 7:30 minute mark where Sachs speaks of how the process of globalization in the 70s/80s changed the US Manufacturing landscape (forever)

Briefly mentioning China, and recognizing the fact that China’s rise certainly was a factor, Sachs then chose to focus on the fact that since the early 80s, the U.S. government has been reducing its investments in areas that he feels are critical for maintaining competitive advantage(s) with in the labor pool. Particularly (as a labor pool) that is able to remain flexible enough to release itself of the lower paying/ value jobs and move itself up/ across the value chain to effectively IMPROVE the standards of the labor pool.

For Sachs, it was a dialogue meant to drive a discussion more about the positions of US politicians on increasing taxes, and the fact that the position has led to a routing out of what Sachs calls the “government”, which the led to (in part or whole) the US finding itself in a position where its labor force isn’t the world’s most competitive…. and has been unable to transition its laborers into the new economy..

For me, it provided another opportunity to question what the real role of “China” has been, and following that, what should be done to “bring jobs home”. Whether it is worth the time to move the RMB from 6.3 to 6.0 or the better investment would be something local that would help to (regardless of China) turn an idle industrial asset into a hub where the unemployed are retained, trained, and put back into the economy at a higher level than where they left it.

A cycle this recent UPS survey Continued Support Education Needed To Show Value Of Exports To Small Biz seems to indicate has legs:

America’s political leaders have recognized the importance of U.S. exports to the economy and just recently approved three free trade agreements, but a new survey shows more needs to be done to educate small-and mid-sized businesses (SMBs) on the potential of engaging in global trade.

Something to think about for the weekend.

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6 Responses to “How Much Did China REALLY Contribute to US Manufacturing Decline?”

  1. Renaud says:

    January 6th, 2012 at 6:26 am

    Interesting video, thanks… I watched it until the end.
    He doesn’t try to guess which factor (lack of education or China) had the greatest impact… But he explains nicely the impact of the lack of spending in education (and other “egalitarian measures”) on the low income of the male population (which also has a hard time because of globalization/China). 

  2. Alicia Weir (Recruiter for Food Manufacturing Jobs) says:

    January 6th, 2012 at 6:37 am

    Does anyone have insight into projections for the percentage of food manufacturing that will be outsourced to China over the next 5 / 10 / 15 years? I’d be interested in learning about this, particularly as it relates to the United States.

    Alicia

  3. Today on China from the blogosphere January 6, 2012 | China You says:

    January 6th, 2012 at 10:33 am

    […] All Roads Lead to China » How Much Did China REALLY … During the majority of my time in China (nearly 10 years now), one of the most active (and heated debates) surrounding China has been its role as a catalyst for a decline the manufacturing jobs. It is a debate that itself gets … […]

  4. Rich says:

    January 6th, 2012 at 8:54 pm

    @renaud – I only posted the video because I knew it was a slow period for many of us now! Sachs’s theories, like Friedman, Krugman, and others do more to spark more ideas than answer questions (in my mind)… For this question, I think it is worth a bit of real research as it would help policy makers make better policy in the future, but not much application outside of that.

  5. Rich says:

    January 6th, 2012 at 8:59 pm

    @alicia – Good question. I know a lot of processing in seafood was happening here, and it would be interesting to know how labor / energy inflation and product safety may impact that going forward.

    R

  6. Is China Hurting America/Europe? : China Business Leadership Blog says:

    January 8th, 2012 at 11:42 pm

    […] at All Roads Lead to China has a nice piece on who is responsible for American decline.  Find it here   Naturally, it is a very complicated topic to say why a certain eceonomy is doing well or […]