Rich posted this thoughtful reminder about globalization and its limitations last week:
Now that everyone has come off their China high, and it seems like an endless stream of editorials about China’s days being over, I think it is time to ask a critical question.
Even if you wanted to go home… could you?
There is a lot of talk about how labor is hard to find in China, about how expensive transportation could become, about product quality, about regional governments not being open to certain industries… but what I find interesting is that no one is talking about the fact that going home may not be an option. That the bed may be made in China, and there is little you can do – or perhaps, there is little you could do that would be cheaper.
The fun stuff is later in the post, which details specifically why it might not be so easy to pick up that factory/supply chain and take it elsewhere. Excellent stuff as usual.
What I immediately thought of was politics and the anti-trade crowd. One of the more ridiculous fantasies that is bandied about by certain U.S. politicians (recall Mitt Romney campaigning in Michigan a few months ago) is that once "the playing field" is leveled between the U.S. and its trading partners, manufacturing jobs will come flowing back to places like Michigan, Ohio and Pennsylvania – all states that are important for the upcoming election, of course.
This fantasy is shattered quite well if you consider some of Rich's comments, although I should point out that he does not close the door on the possibility that some firms could go back home under certain circumstances. I personally think these situations would be quite rare.
What has changed in the years since some of these companies packed up and moved over to the PRC? Yes, costs here have risen domestically, and recently the cost of shipping has risen dramatically. All good reasons to consider whether going home makes sense. However, U.S. costs have not magically gone down, the health care system has not been fixed, and the workforce is no different than it used to be (probably a little more desperate these days, I suppose).
Any move is expensive, but those jobs are much more likely to go to Vietnam, Indonesia, Bangladesh, or Mexico than they are to Ohio. None of this is news, and yet I expect to hear the usual rhetoric this campaign season as savvy Midwest pols tell their discouraged constituents that those factory owners are just waiting for an excuse to come home.