America underestimates the difficulty of bringing manufacturing back

It's not impossible to build back, but it would require long term stable policies to favor it at more levels than just tariffs.

(tariffs do nothing to address labor shortages in healthcare, teaching, and other domestic service based sectors, for example)

Instead, the offshore-destinations kept offering more and more services in the value-chain, until the entire skillset to actually create the low-skill labor processes to offshore was replaced with "let the offshore company manage".

See a list of leading US companies that are off of being king of the hill - Boeing, GE, Intel, ... leading industrial US companies continually divested from manufacturing, or shorted long term investment, not because it wasn't profitable, but because it wasn't profitable enough in the moment. It took decades, and many dividends and stock growth was taken in the middle, but the shortfall manifests in time.

>Many US business elected to chase short term growth, and short term and higher margins and minimize long term investments.

I would like to add that this was due to the influence of Milton Friedman. He put the emphasis on shareholder returns being the most important, without considering the survival of the company itself.

Not disagree with your main points, but labor inputs are still very much a huge part of product costs, and often the biggest driver of where to build a new factory when a company is scaling up. Companies aim to build their new factories wherever there's a sufficient pool of cheap labor with the necessary skills.

We don’t want the Chinese making high value goods at slightly lower prices. We want Americans making high value goods and we want to push cheap stuff as cheap as possible. Next step is enforcing environmental rules on Chinese goods and requiring escrow of the funds to pay the Chinese in American accounts until the goods are inspected and pass.

Uber still hasn't managed to make a net profit over its lifetime as a company, by the way.

But the conversation here has he orthogonal goal of being competitive with China as well. I can assure you just paying everyone living wages is one of the main reasons why we are not competitive with China. It’s the main reason why China is beating us today.

So paying everyone living wages doesn’t really do anything to solve the problem because the products created by people who are paid living wages are by definition more expensive due to labor costs.

What tariffs do is they allow us to pay people living wages and sell expensive products and still be competitive because products from China are tariffed to be the same price.

One of the foundations of conservatism is the priority of hierarchy over effectiveness. In a conservative culture it doesn't matter how well things work as long as the right people in charge.

We're seeing the limit of this now, where it's literally more important to maintain hierarchy by denying facts and rationality than to "lose face" by admitting that power isn't absolute.

You can't run a modern country like this. You can't plan for the future, make effective decisions, govern, have a working legal system, build housing, create health care - anything at all - when all decisions are made according to the whims of a despot.

Power and resources - including wealth - have to be distributed. Or at least there has to be the illusion they're somewhat distributed. Anything else guarantees terminal contraction and decay.

IMHO it still is. There are tasks, especially in assembly, that for now require humans to do because robots can't match our dexterity. Stuff like mounting through-hole components like a cable from the battery compartment to the main PCB. That's a few seconds worth of time, and you need barely more than a few days worth of training to get a worker up to speed - a low-skill job. China, Thailand, Vietnam and a bunch of other places have an ample supply of people coming out of utter poverty, which means the pressure on wages is massive - a Chinese worker on average earns about 13200 dollars a year [1], an American worker is 3x-4x that amount and more if the shop is unionized. And on top of that, Chinese workers work 996, American or European workers have much MUCH more employee rights.

The problem is, low-skill employment opportunities are going down and down because automation gets better. For now, China can compete because Chinese workers are cheaper than machines... but once that changes, it's going to get nasty.

> The labor wages themselves are a factor, but an increasingly minor factor in product costs.

There's soft factors as well. Stuff like workplace safety/OSHA regulations, environmental regulations... Silicon Valley is a bunch of Superfund sites from decades of toxic emissions. China? They barely have regulations in place, and other sweatshop countries are even worse.

The core problem we're talking about anyway is that a certain percentage of any population is just, plain and simple, dumb as rocks. Over half the US population is barely literate [2]. No matter how good your education systems are, no matter how much money you invest into equality in schools, no matter how much you protect them from stuff like lead - they are dumb, will remain dumb, and probably their children will also remain dumb. In ye olde times you put them on farms, meatpacking or in factories so they had gainful employment... but that all went away, and now we got hordes of utterly dumb people with no hope of ever getting smart and, crucially, no hope of ever getting a meaningful job.

[1] https://www.statista.com/statistics/743509/china-average-yea...

[2] https://www.thenationalliteracyinstitute.com/post/literacy-s...

Yes, more evolved financial markets provided easier access capital, but, as it so happens in those types of situations, access to capital and enjoyment of said (liquid/financial) capital became a target in itself, the rest of society didn't matter. In fact, the whole (Western) society was moulded around (liquid/financial) capital, it became its raison d'être.

Of course, even where labor cost is truly inconsequential, you would still do that as all the correlations that come alongside cheap labor are still very attractive to manufacturing.

I agree with the rest of your comment, though. The US public markets reward creative accounting and mortgaging the future for quarterly gains. GE and Jack Welch are a great historical example.

They aren't though. In America, "Paying living wages" always means "pay way more", because America underpays labour and overcharges for literally everything (products, services, basic cost of living -- every product on American soil has a insane profit margin on it)

In China, "Paying living wages" doesn't necessarily mean "pay labor more", because they have stronger control over pricing and margins, so it often actually means "make orgs charge way less".

You end up with Chinese folks living in a major city in China, with a 2bed apartment that costs $200USD/month, and a meal out cost $2USD/each, cars that start at like $6k, and they get paid $5USD/hr, but they feel like they're living well, despite only making around $640USD/month, because they can save 10% of their income each month, and have like 40% of their income as discretionary spending, and still get to own their apartment.

But in the US, a 2bed apartment in a big city like that costs at least $2,000/month or more, a meal out there costs at least $20/each, and a basic starter car starts at like $26k, so you can pay someone in a ostensibly-"high labor cost" job of $20/hr, and they feel like their constantly underwater, and have zero chance of ever owning a home, because they only have like 20% of their income as discretionary spending, and they can't save anything at all. (and that's before we even mention differences like how you don't have to worry about being hit with a crazy bill for an ER visit or an Ambulance in China, but Americans have to worry about that 24/7/365).

(It's the same reason many American's dream of getting a job in Europe and leaving the US, because despite making less money-on-paper, you get to generate more real wealth and do so with less life risk and life stress)

The Factories and the labor pool and the infrastructure being absent in the US is hard to solve for, of course -- but it isn't even the hardest part of any of this. The American view of capitalism would have to be completely rewritten to be more diverse, more equitable, and more inclusive to Americans who do actual labor, before Americans could be anywhere close to competitive with most of these Chinese industries.

I also think a significant influence on the Fed was a financialized business community demanding 0% interest.

No, just no.

There is a high variance in job qualities beyond pay.

Work hours, over time, outside vs. office jobs, repetitive Vs. varied, physical and psychological impact, etc.

This is the one upside of chaos monkey crashing the economy. They aren't going to be able to drive rates back to zero in the next four years.

In fact exploitation is the reason why they are the way they are now.

Our nation's prosperity is a very recent phenomenon.

The important part is having a job, that you enjoy, and that allows you to live comfortably while saving for the future. It can be in IT, sales, management, maintenance, whatever - but some people will rather leave a more tangible, visceral, and physical difference in their work at the end of the day, and their preference does not make it a worse job.

No, those are not only preferences, they also have objective health impacts.

Working nights typically decreases life expectancy.

My argument is that this isn't possible. Well let me rephrase that. It is possible but you need to inflict some form of pain to get it going. Tariffs is one way to do this.

I don't think the four year presidency is enough to do this. You need to do this for at least 2 decades.

It doesn't - if you look at the situation in real terms, the amount of resources available to invest is about the same (probably shrinking because some are diverted to people who aren't creditworthy and consume them). So the major effect of artificially low interest rates is to add a whole heap of artificially supported highly wasteful companies to the mix.

All that changes is the market started rewarding people with access to credit instead of people who were responsible and effective. The credit people aren't particularly capable and it'd be better if they had been forced out.

US businesses were free to do the same over the past low interest environment, but we did not have the same incentives, not inclinations in terms of prevailing business strategic appetite for factories. In contrast, for big tech, there was interest and appetite for it and significant capability with protective moats were built - but one could argue that software based tech moats may be faster to bypass.

Tariffs don't do that necessarily. Maybe a tariff applied to a specific strategically important product or industry, could achieve that. Basically you are then subsidizing an important sector of the economy in a way that is economically inefficient and will make us all poorer in favor of some other interest like national security. The kinds of tariffs applied by the Trump administration cannot even achieve price competitiveness because price is nowhere in their extremely dumb equation. They cannot achieve national security because they are applied to inputs and outputs. They cannot achieve anything useful. They can only make us all poorer.

Trying to “Bring Back” Manufacturing Jobs Is a Fool’s Errand - https://www.cato.org/blog/trying-bring-back-manufacturing-jo... - April 21st, 2025