We Can't Remain Dependent on China for Manufacturing
No matter what you think about economic policy or tariffs, the United States shouldn't rely too much on a Communist nation for the bulk of its goods.
I don't know all there is to know about economics. I understand the basics well enough, but as far as what policy does or doesn't work the best, I couldn't begin to tell you that.
Thus, I don't have a strong opinion about the ongoing tariff debates. I have no idea if the threat of tariffs, followed by negotiations with countries who are willing to negotiate, is going to solve trade deficits or restore the U.S. economy. Furthermore, I get that people are upset about their 401Ks (I have one, after all) and it's a fair question to ask if these plans in motion are going to get us on a better path.
When it comes to tariffs, the only comments I would make are that (a) they aren't good when it comes to raw materials such as iron, diamonds, oil and crops but (b) they might serve a purpose when it comes to finished goods or products and (c) while I don't see them as the cause of every recession or depression, they aren't something that's going to get you out of a recession or a depression.
But I know enough to know this: The path we took about 30 years ago when it came to our economic relationship with China is no longer sustainable.
Here's the thing: When we started sending all the jobs to China, we may have thought at the time that it wouldn't be long before China would embrace the virtues of capitalism and everybody would prosper. What happened instead is that we made China into a nation in which the United States has become overly dependent upon for the bulk of its manufactured goods, while nothing has replaced the factories that once existed in certain cities and towns.
There may be a burgeoning tech sector that's come along in the United States, but most of that tended to cluster in major cities or metropolitan areas. They came along in places in which the cost of living was higher and, thus, made it difficult for people in smaller cities and town to pack up and move, because they wouldn't be able to afford to live in the bigger cites, all while having no guarantee that they'd land these new jobs.
Furthermore, the whole incentive behind sending jobs to places like China was so big businesses could get away from labor unions and regulations. That is not to say that all regulations were good, but the issue was big business made no distinction between what was bad and what was good, but only concerned itself with regulation at all. As for labor unions, there are those who got involved who were professional managerial types, as opposed to those with experience with the industries in question, but those labor unions could still serve as a check on big businesses and, if they needed to change, they could have focused more on ensuring leadership had previously worked in the industries the unions represented.
More importantly, though, the fact is when we chose to send jobs to China, we sent those jobs to a Communist nation. Communism may have fallen in the Soviet Union and, in the 1990s, China may have been a weak nation, but that didn't mean there was no harm in sending those jobs to a Communist nation — especially if you keep sending so many to that nation, you become dependent upon it, that nation figures it out and then finds ways to essentially hold you over a barrel.
One problem we had was we didn't learn from history. Back when the Soviet Union first formed, it was not an economic power by any means and wasn't yet the military power it became for a few decades. In the 1930s, as the Great Depression happened, American firms were willing to go invest in the Soviet Union because that nation hadn't been impacted, primarily because it had been economically isolated. Over time, though, the Soviet Union used that to its advantage and built itself up into a more powerful nation, one that was able to rival the United States in military power, even if its economic foundation wasn't stable.
And, thus, we repeated the same mistake with China, only in this case, we weren't in anything like the Great Depression. Instead, we were trying to make stuff cheaper, but never asked ourselves if the tradeoffs from cheap stuff would come back to haunt us.
And when we were fixated on the idea of making cheap stuff, we never asked ourselves whether this was better stuff.
When all we do about tariffs is complain about having TVs, iPhones, refrigerators, laptops, clothing and shoes that are too expensive, we don't ask ourselves about the things that people buy on a weekly or monthly basis. If you talk about the cost of food, that's understandable because people buy that on a weekly basis. But who buys a TV or an iPhone on a weekly basis? And while people do buy clothing more often than iPhones, people would still like that clothing to last for a few years, with the exception of those for children when they outgrow said clothing.
Thus, when it comes to items that people don't expect to buy as often as they buy food or pay for things like mortgages, rent or utilities, they are likely to want things that last, not things that fall apart too quickly. That pair of shoes that costs you $10 at Walmart might seem like a good thing when compared to the pair of shoes that cost you $25, but if the former pair barely lasts a year while the latter pair lasts three years or more, the latter pair means you spend less in the long run, even if you spend more up front.
Furthermore, making everything cheaper to buy doesn't do much good if people don't have a job that allows them to take advantage of those cheaper goods. And while the professional managerial class might not see a problem, it's the working class that does see a problem and they don't accept the solution as pack up and move to a bigger city where the cost of living is too high (and in some cases, they might already live in those bigger cities and are already struggling with that cost of living there).
The reality is that we made a mistake sending all that manufacturing to China and we can't just shrug our shoulders and say "nothing we can do." And while I certainly don't expect manufacturing jobs to magically transport themselves back to the United States in just a few weeks, or even a few months, we do have to stop going down this road and slowly work our way back, even if it's painful.
I don't know if tariffs are the answer or not, but if they aren't, then what is? I don't think anyone wants to go to actual war to solve the problem (well, maybe the neocons do). However, the solution can't be to shrug our shoulders and just wait for Communism to fall, assuming that will happen if we don't change course on our end.
At the very least, if China is not playing by the rules that are set by the World Trade Organization, then China needs to be made to comply. Furthermore, we need to make it clear that we are not going to send any more jobs to China. That practice needs to stop and we need to find other ways to ease any burden on businesses, while making sure we don't step on the toes of labor.
Again, I don't know what the answer is. However, I will say that the answer isn't "do nothing" or "stay the course," because neither one is a rational response. Perhaps the rational response is to assess where all the cities and towns that have been damaged by outsourcing are China are at, then figuring out what type of businesses and industries might come in to replace them and how to make it happen.
Some have suggested that the solution is to get more people into service-sector jobs such as plumbing, construction, electrical work or HVAC. While that is an idea worth exploring, it's best done by building internally within cities and towns that need the help, not by directing people in other cities and towns to pack up and move elsewhere.
One does not have to blindly back tariffs to recognize that the United States being dependent upon China for so much is a bad situation and that we need to work our way out of it. And, yes, any means of working our way out of it will not happen overnight. But that it won't happen overnight should never be used as an excuse to do nothing at all.