Put Your 20th-Century Employment Laws Where Your Mouth Is
August 30, 2011 1 Comment
Via Russ Roberts comes this op-ed from the President of MIT saying we need to increase our presence in manufacturing.
Here’s what I never get about this concern. Let’s say, for the sake of argument, that the Manufacturophiles are correct that we need to up our Manufacturing game. Well why then don’t they follow through, go the whole nine yards, and advocate for: no minimum wage, no child labor laws, no subsidies for paying-people-in-Health-Plan, no payroll tax, no enshrinement of unions with official status in law, no work-safety laws, no unemployment insurance, no litigation risk for ‘sexual harrassment’, or for ‘racial discrimination’, etc. etc. etc.
You know, why don’t they agitate for changes in the law that would make it, like, actually economical for companies to hire the median American citizen to do the oh-so-vaunted-and-desired ‘manufacturing’ work currently being done abroad? Because it’s really just not. And the preceding are part and parcel of why it’s not. But if firms could hire Americans for as cheaply as they can hire, say, Burmese to manufacture stuff – then maybe they would! Finally, we could pack factories with Americans again.
And that’d be great! Right, Susan Hockfield president of MIT? That is what you want isn’t it?
But if firms could hire Americans for as cheaply as they can hire, say, Burmese to manufacture stuff – then maybe they would! Finally, we could pack factories with Americans again.
It isn’t even necessary to go that far – if Americans had the same marginal product per dollar as Burmese then you’d be indifferent between hiring them to do manufacturing and hiring Burmese.
Either it used to be that Americans had high enough marginal product to be worth plenty of extra dollars or that other costs associated with manufacturing everything elsewhere were much higher (transportation of the finished goods, supervision of what gets produced, products being ready on schedule, etc.). Reflecting on changes over the 20th and 21st centuries, well yeah, every one of those costs have gone down at the exact same time as the cost of American labor has gone up.
I don’t think this is an accident – I think the intended outcome was that American manufacturing be eliminated*. What other conclusion can there be? I guess the alternative is that they thought that they could defy the gods of the copybook headings and are now trapped because too many people have a veto over rolling back insane policies.