Gabi Orendain- Afternoon class
In America today, it is challenging, if not impossible, to find a store filled with more products made in the United States than in China. More and more products can be seen sporting that notorious gold and black “Made in China” sticker. Similarly, more and more people are becoming dismayed that products made in America are not selling as fast as the Chinese-made products.
“The Chinese’s market dominance is only harming our economy,” some would claim. Still others would negatively point out that all the Chinese ever seem to produce is “a job shortage in America that would not have been present if not for the Chinese.” However, not only is China’s immense presence in the U.S. economy a good thing, but it is also allowing the United States to expand its more intellectual and informational side meanwhile the Chinese profit from being the American source of cheap labor.
As the U.S. economy shifts more towards the informational age and less to the industrial, the Chinese one does the exact opposite. While the United States has moved away from goods such as machines, clothing, and furniture, it has become more focused on providing goods and services such as Microsoft and Apple computers, Facebook, Twitter, and Google search engines. On the other hand, China has found something that it seems to be profoundly good at- producing great quality products at a lower price than their American competitors. And while it is also very good at producing informational products and services, the country is mainly known by American citizens to be a major producer of American goods.
As can be seen by the video seen in class about the Ethan Allen couch’s journey between American and China, the Chinese economy is booming from the profits of manufacturing nearly all of the United States’ goods. American jobs, however, seem to be taking the change in economies pretty hard. Like the people from the video in class, many people have been put-out of jobs because their job was moved out of the U.S. and into China.
The high number of jobs which have been relocated to China have created a growing group of people that are out of work. This greatly concerns most people. Like the dissenters in Frédéric Bastiat’s Economic Sophisms, American people cry out, “But…if foreigners flood us with their products, they will carry off our money!” They are concerned that the benefit that China is getting from the current trading agreement is greater than the American share of the benefit. However, this is not true.
“But if America keeps this trade agreement with China, more Americans will lose jobs!”
True, but in which industry? If America loses jobs in the manufacturing industry, it may simply be because America is no longer a major manufacturing nation. Instead, it is close to attaining a totally service-based economy. For instance, the majority of American workers work not in car, furniture, or engine manufacturing, but in health, education, or service-oriented companies. According to forbes.com, General Motors employs just over 200,000 people. On the other hand, Apple has nearly 300,000 U.S. employees that are not in any sort of manufacturing job (Job Creation n.d.).
Besides that fact, just as Aristotle says in Book III of Politics, “true forms of government…are those…with a view to the common interest,” to focus on the few, even the suffering few, would undermine the entire country’s benefit in the Sino-American trade agreement. For even though it would seem the right thing for America to do is to help its unemployed citizens is to reduce or cease trade completely with China; however, this change would be near devastating if executed rapidly, like the American people expect the action to be. Due to the fact that the American economy is so intertwined with the Chinese one, to pull away quickly from the Chinese would only cause us to become ensnared in the tangled, complicated mess that is reshaping the entire American economy.
Stop and think a minute about how many products Americans buy, own, or probably will own that are from China. The number is most likely astounding. China’s manufacturing market takes up a seemingly monopolistic chunk of the American society. If America were to become completely self-sufficient from China, it would have to fill the huge deficit left by taking China out of the equation. China makes American clothes, furniture, cars, lawnmowers, motorcycles, and many other things. If the U.S. pulled away from China, who would make all the lawnmowers, motorcycles, and furniture?
“Well, the American workers would!”
Yes, but the question is, would the American consumers buy the more expensive American-made goods when they had previously been used to the cheap prices of Chinese goods? Eventually, but say an American family wanted to buy a new car. If they purchased the cheapest Honda Sedan, the price would be around 18,000 dollars (Honda Civic Family n.d.). However, if they wanted to get an American-made car of about the same size, they could buy the Chevy Malibu for just about 22,000 dollars (2013 Chevy Malibu n.d.). Therefore, logically, most people would rather buy the Honda and save money. If, however, the Chinese factor is taken out, the American people are left paying an extra 4,000 dollars. This decreases the amount of money they have available to spend on other things, meaning that in the end, less producers are going to benefit from the American consumer’s willingness to “buy American.” Furthermore, if American workers are manufacturing the products, the prices of production will go up because they are less willing to work for cheap wages, unlike the Chinese. By effect, the producers will then be less willing to produce mass quantities of said product due to the increase of production prices. A decrease in quantity will drive the price higher for the consumer, which means that almost no one will want to buy the product. So, in the end, no one benefits from taking China out of the equation. The United States certainly does not.
So now that we know why it is not beneficial to pull away from the international trade agreement we have with China, it is important for us to know why it is that we trade with them in the first place. The Chinese people are eager and hardworking, not that the Americans are not, but the Chinese are more willing to work harder for a smaller amount of money. Because of this, U.S. producers are able to produce products for a cheaper price, thus enabling the U.S. consumers to save money. This then allows Americans to spend more money on other things, such as entertainment, education, and retirement. By moving our manufacturing industry into China, we allow ourselves to focus more on the other industries such as arts, information, and technology.
As Adam Smith states, the separation of labor “is generally carried furthest in those countries which enjoy the highest degree of industry and improvement” (Smith n.d.). Countries in which workers are specialized and employed to do a very specific thing will thrive more than the countries in which workers are non-specialized and employed to do many things at once. Thus, if the United States stops trying to save its moving manufacturing jobs, it can focus on improving and specializing in the jobs they have more of. Why perform an action that will only serve as detriment to our economy? Three words: we should not.
Trading with China is vital part of the present-day U.S. economy. We as a nation we rely so heavily on the Chinese’s contributions to us that to tear the two economies apart in an attempt to restore a couple thousand jobs would not be worth it. The opportunity cost is too high. So when people decide to buy American instead of Chinese- that’s great! But in order to keep our economy running the way it is today, trade with China is nothing buy necessary.
2013 Chevy Malibu. n.d. http://www.chevrolet.com/malibu-mid-size-sedan.html (accessed June 24, 2013).
Global 500. n.d. http://money.cnn.com/magazines/fortune/global500/2012/snapshots/175.html (accessed June 24, 2013).
Honda Civic Family. n.d. http://automobiles.honda.com/civic/ (accessed June 24, 2013).
Job Creation. n.d. http://www.apple.com/about/job-creation/ (accessed June 24, 2013).
“Selections from The Wealth of Nations.” In The Wealth of Nations, by Adam Smith. n.d.