June 19, 2008


I was reminded of something when I saw this piece, on how companies are investing less in China, because costs have become too high. (Or, delicious irony, "building highly automated factories" in China!)

A commenter on my recent post "The libertarian dream turns into the totalitarian nightmare..." wrote: "...I am concerned for this wonderful country. Why can't I find "American Made" on the market shelves? Why are the companies moving to other countries?.."

My hasty answer:

....I suspect your definition of "American made" is out of date. Suppose you buy a kid a plastic toy for $10, and it says "Made in China."

What probably happened is that China got a crummy 50¢ for the object. and American workers got $9.50 for adding value of a more intangible sort. For advertising, for the entertainment industry that lives of advertising, for insurance and legal work, for trucking, for sales clerks and store managers, for government regulators. For a zillion jobs that go into getting that Barbie Doll into your hands.

It's really 95% "American made;" we just exported the low-end low-pay jobs, and kept the better ones. And the Chinese got money to buy our movies and software and Boeing jets, (if we do a good job making and selling them.)

I'm always intrigued by the way, in the Information Age, intangible things tend to become more "real" than actual physical objects. If a factory in China burns down, (or just loses favor with foreign companies) information can can be sent immediately to companies in Vietnam or Malaysia, and soon containers full of Barbie Dolls or shoes or tools will be flowing towards America, and no one will notice the difference. But if the designers, and the designs, and the CAD/CAM files were lost, then there would be big problems....

It's the same here. When the World Trade Center towers were destroyed on 9/11, most of the companies with offices there had good back-up systems, and the business they were doing was switched to other locations. In some cases offices on the other side of the planet. And all the physical stuff regenerated almost immediately. That is, new offices were leased, truckloads of cubicles and computers and fax machines were assembled, and Dilbert's world is made anew within a week or two....

Big buildings take a little longer, but the essence is the same. The irony is that the 9/11 attackers thought they were dealing us a big blow, but, except for the symbolism of it (another intangible) they destroyed phantasms. The real stuff was much too tough and resilient to be hurt by bombs!

Posted by John Weidner at June 19, 2008 8:47 AM
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