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Posted by on Nov 18, 2016 in At TMV | 0 comments

History v. Now: And Then the World Opened!

A lot of promises were made to bring back high paying jobs for lower skilled workers in the US. Can this happen?

As US businesses endured the onslaught of competition from foreign companies, they looked for new and innovative ways to compete. The first industry to fall was textiles. Companies in that industry discovered they could have their garments made in SE Asia for a fraction of the cost in the US. Within a relatively short period of time, nearly all mass-produced garments, including shoes, were made overseas. A little company called Walmart exacerbated this movement by re-focusing their massive purchasing power from US-made to low cost goods regardless of where made. Electronics were next.

It is important to understand that, unlike the competition from Japanese and German companies which took profits back home, these imports were by US companies now generating profits brought about by lowering costs of manufacturing overseas. The profits continued to flow back into the US. If US companies had not pursued this option, they would have gone out of business. It wasn’t an issue of patriotism or anti-American worker. It was, and continues to be in some industries, a matter of business survival.

At the end of the 1980’s another huge shift in world competition occurred. China opened. Russia and the Eastern Bloc fell and opened. India awoke. At first, US companies used the model created by the textile industry. Companies entering China and India were American and European companies building facilities too take advantage of very low cost labor to produce goods and sell them at very low prices. Again, the real value of the products, the gross profits, returned to the US or European company, not to China.

This process, of course, put US labor in further direct competition with international counterparts. For the comparatively lower skill jobs, the US could not compete.

Those jobs were lost forever. No one is going to bring them back. Then technology struck. That is for next time.

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