Annie Menefee – Period 4
The iconic country singer Toby Keith came out with a song a few years ago that speaks for part of the American population with regards to items being “Made in America”. Some Americans want the tags on the backs of their shirts to read “Made in America”. It is blatantly obvious that many of the products sold in the United States are manufactured in other nations. Take China for example, China manufactures Apple products, toys, and clothes along with many other products. Many of these products are then imported into the United States. A movement known as The Made in America Movement (MAM) pushes for American citizens to purchase goods from small businesses and stores that sell items with a “Made in America” tag (“The Made in America Movement”). The lyrics of the Toby Keith song, previously mentioned, talk about “[spending] a little more in the store for a tag in the back that says ‘USA’” (“Toby Keith Lyrics”). What is the logic behind this statement and does it actually make sense? The reasoning behind this movement and Keith’s song make sense when justified with supporting American products that are made in the United States. Taking a step back though, a person can see that importing certain products from other countries makes more sense because of the advantages associated with it.
Why does it make sense? Take comparative advantage and absolute advantage for example. One country, the United States, might be more advanced and able to make a greater amount of a product than another country. On the other hand, the United States would gain more by importing the product from another country that has less to give up in order to produce the product. In The Wealth of Nations, Adam Smith gives an example of comparative advantage while considering a wealthy nation and a poorer nation. He states “the most opulent nations, indeed, generally excel all their neighbors in agriculture as well as in manufactures; but they are commonly more distinguished by their superiority in the latter than in the former”. In simple terms, the opulent nation would have the comparative advantage in manufactured goods while the poorer nation would have the comparative advantage in agriculture. Smith continues to talk about the comparative advantage by including France, England, and Poland in what he has to say. One country may have the better tended to land of the two countries, but the other country may have less to give up when making a product. Therefore, the country with less to give up would have the comparative advantage in making the product. Moreover, France has the comparative advantage when it comes to making silk, Poland has the comparative advantage when it comes to making corn, and England has the comparative advantage when it comes to making hardware and coarse woolens.
Today, the comparative advantage might not come strictly from the country that makes the agriculture or the country that makes manufactured goods, but rather from the particular country’s opportunity cost. The United States “has the largest and most technologically powerful economy in the world” (“The World Fact Book”). Therefore, the United States would have the absolute advantage in making many products. However, the United States trades with other countries thus concluding that other countries have the comparative advantage when it comes to certain goods. Imports into the United States come from China, Canada, Mexico, Japan, and Germany to name a few (“The World Fact Book”). China exports “18.4% of overall US imports” thus making it the country America imports the most from (“Top US Imports”).
Looking back to last summer, a headline appeared on many news stations and in many articles that caused outrage amongst Americans. The 2012 London Olympics were the cause of the headline due to the attention that would be focused on the American team as they wore a uniform that many people felt sent the wrong message. The opening ceremony uniforms are significant in the ceremony because so many people watch to see their favorite athletes walk into the Olympic pavilion. Speculation about the uniforms the American team wore for opening night caused media attention to focus on the fact the uniforms were made in China. Now many clothes come from China, but the point that outraged Americans arose because these uniforms would be representing America in front of millions of people. Basically, these uniforms were not just pieces of clothing worn on a daily basis. Instead the uniforms represented the United States by making more of a statement than just any piece of everyday clothing. Why would Ralph Lauren have the uniforms made in China when he is an American entrepreneur? It saves money because China can make the uniforms for less than the amount of money it would take for the United States to make them. On the other hand, American outrage stems from the fact that in order to try to make America less dependent on other countries, making products in China for the Olympics does not convey the right message.
Adam Smith talks about three conditions that lead to an “an increase of the quantity of work”, or efficiency. These three conditions allow for better understanding of why the United States imports certain products instead of making them in America. It also shows why Ralph Lauren would have the American Olympic team uniforms made in China. First, using what Smith says, many products are made in China today because of “the dexterity of the workman”. Many workers in China have a particular job that they know how to do. Whether it be fastening buttons onto shirts or pressing a button on a machine, the workers are already equipped with the knowledge of how to make an item quickly. This segues into Smith’s second condition, to “[save] the time commonly lost”. By making products in China, the United States saves money and time. One reason money is saved is that Americans would want a higher pay than China pays to its workers. Another reason would be that American workers would have to be taught how to make the products that China exports to America and therefore, making the products in China saves money and increases productivity. Lastly, the third condition Smith introduces focuses on the “great number of machines which facilitate…labor”. To relate this once again to China, the machines are already making the products that Americans believe should be made in America. Therefore, the cost to produce new machines to then make the products in America would exceed the cost it takes now to import the products from other countries. Products made in America are more expensive as well because of the price to make them along with the wages paid to the workers.
In closing, would it be better for everything to be made in America? The answer would be a resounding no when considering the facts. Yes, America has an absolute advantage. It is understandable that Americans wish to have products made in the United States. Of course seeing a product labeled ‘Made in America’ gives an American a sense of pride for his or her country. Not only does it enhance a person’s feeling of pride to know that he or she bought something made in America, but it also allows people to help those who do make items in America by allowing them to make a profit. The problem arises when it comes to how much the United States would be giving up when making products that would have less of an opportunity cost if the products were made in other countries. In actual reality, the comparative advantage for America is to export certain products in addition to importing certain products that would cost more to be made in America. This comparative advantage works both ways. The countries that import American products benefit from being able to trade as well. Moreover, China, Canada, Japan, Mexico, and Germany would have a greater opportunity cost if those countries were to make the goods that they import from America. Thus Smith’s ideology and the comparative advantage lead to the conclusion that not everything should be ‘Made in America’.
Made in America. N.d. Photograph. Forbes. Web. 06 May 2013.
“The Made in America Movement.” MAM Corporate Friends Making a Difference in Our Country. N.p., n.d. Web. 06 May 2013.
“The World Fact Book.” Central Intelligence Agency. N.p., n.d. Web. 06 May 2013.
“Toby Keith Lyrics.” Azlyrics. N.p., n.d. Web. 05 May 2013.
“Top US Imports.” Worlds Richest Countries. N.p., n.d. Web. 06 May 2013.