Made In America?

free-trade-cartoon

Have you ever noticed this small yet important detail when you’re out at the store buying a consumer good whether it’s a pair of pants, a carpet, or some brand new shoes? For those of you who are confused right now, there’s a tag attached to the item indicating that the final product was “Made in …..” which indicates the origin of the country the good has come from. I doubt that most people notice this small detail when they’re out shopping and it’s probably not their biggest concern.

However, I do believe it’s very important as consumers to know where our goods and services are coming from and to what sort of quality they are made. It’s also important to ask the question of these companies who make these consumer products, both foreign and domestic, how well are they treating their employees and what do they pay them for their hard work? Do they receive good health benefits and vacation time? Are the working conditions in their factories and shops safe and hospitable?

I have noticed that most of the clothing, household items, and electronic products that I have bought were not made in the United States. I am not against wearing or buying consumer goods that were created and manufactured in other countries. However, I do worry that we are relying too heavily on these foreign-made products in our daily lives instead of having some of these same goods made in the U.S.A., which could improve the lives of many people looking for decent-paying jobs. Many abandoned and dilapidated factories, plants, and mills could be re-opened again if we change the way we look at free trade.

According to the official and most recent numbers on United States International Trade Data, there was a sizable overall trade deficit in goods and services of $43.9 billion dollars in October of 2015. Since ‘The Great Recession of 2007-2008’, the trade balance has not changed greatly in terms of lowering the overall deficit. Over the past five years alone, the monthly trade deficit has ranged from $40 to $65 billion. There has been very little sign of this trade imbalance being decreasingly significantly or being entirely eliminated recently. This means that the U.S. is importing a much larger quantity of goods than we are exporting overseas. While some people would argue that this is not a big deal, I would say that in order to grow the economy at a higher output and decrease unemployment further, increasing our exports overseas with the stamp “Made in America” should be a higher priority especially with the upcoming presidential election.

With the decline in American manufacturing, the U.S. has increasingly looked to its trading partners overseas to fill the void that has been created. Due to free-trade agreements such as NAFTA and the recent passing of the Trans-Pacific Partnership, many American companies and jobs have moved overseas causing the trade deficit to increase over the past generation. This has led to many good-paying middle class jobs with health and other benefits to disappear. There has also been a steady decline in the Unions and their total membership and influence within the U.S.

Examples of the shift towards the growing importation of manufactured goods and products that used to be made in here at home can be found in companies such as Wal-Mart and Apple. These iconic companies that were created by Americans such as Steve Jobs and Sam Walton have changed significantly like many others since their early days. They have become multi-national in nature and have expanded their facilities and operations to multiple countries around the world. Even though their company headquarters are in Silicon Valley and in the heartland of Arkansas, these companies are not taxed like other U.S. companies and carry out their manufacturing and production of goods from overseas suppliers.

American workers are known to be more expensive to train and hire than those workers found in countries such as China, Vietnam, and Cambodia. That’s an unfortunate truth that has led many companies to take the easy way out by calculating how much they would save due to the fact that foreign labor is cheaper. For these firms, there is little to no need to worry about strict labor laws that don’t exist outside the U.S. and other parts of the Western world. For example, huge multi-national companies such as Apple have used subsidiary companies like the ‘Foxconn Technology Group’ for years in order to manufacture their iPhones and other high-tech products. There have been many investigative reports done by The New York Times and other news outlets about the harsh working conditions, poor salary, long hours, and reported suicides and riots occurring at these plants in China.

In a lot of developing countries, the taxes associated with doing business are much cheaper which allows a lot of big manufacturing firms to operate there more freely. Even though multinational companies have to pay U.S. taxes on the profits that they earn from products that they make and sell in other countries, Apple and others can avoid paying these taxes by re-investing their profits made from outside the U.S. on overseas factories, stores, warehouses, etc. Because of that, they won’t have to pay the higher taxes. It’s a significant loophole that hasn’t been closed yet and allows U.S. companies to store billions in profits overseas. “Apple is not alone in this strategy. U.S. companies have $2.1 trillion in foreign profit stashed overseas, according to Capital Economics.”

Once the multi-national companies decide to move their manufacturing and production operations overseas, it’s very difficult to bring them back to the U.S. Competitors like China have the infrastructure and a vast amount of workers willing to work in the factors for these supplier companies. It is the responsibility of companies like Apple to break their agreements with manufacturing giants like Foxconn if they ever decided to move their production operations back to the U.S. However, Apple would have to invest in billions of dollars to build these new factories and pay these workers a fair wage with benefits. This proposition is entirely unlikely to occur in the near future for Apple, Wal-Mart, GE, and others to move their manufacturing back to the U.S. due to the higher taxes, the higher costs of the workers and their desire to make the most profits that they can secure.

Free trade is a complicated subject but I decided to write about this issue because I think as consumers, we should know where our money is going. I am guilty like many other Americans in supporting these popular multi-national companies who have gotten away with sketchy business practices and who have shied away from creating jobs here in the U.S. However, it’s never too late to be informed about where your clothes, your cars, and your electronics come from. Do your research and be informed about these issues.

Globalization and free trade have lifted millions of people out of poverty and allowed many countries to boost their economies but it’s also led to a higher amount of competition, the stagnation of wages, and many environmental concerns. I am not a protectionist and I believe that some free trade is good. However, it’s more important than ever that we support fair trade and business practices from these companies. Workers around the world should be treated fairly with good wages, good health and vacation benefits, and they shouldn’t be taken advantage of whether they are located in Saigon or Detroit.

We have free trade with other countries so that we can exchange goods and services with them to better our economies and our peoples. Lets’ not create a situation where we are importing more goods than we should be at the expense of the American worker and taxpayer. These companies need to be held accountable for what they do both here in the U.S. and overseas.

I would encourage everyone reading this entry to think about where your goods and products come from. If you have the chance and opportunity to do so, I would argue that you should try to buy from the U.S. companies making the goods and services right here in America. I am not against buying foreign goods either but we have to know whether these large companies out there are playing by the rules and are not being exploitative.

By ‘Buying American’, it’s good to show those small businesses and firms that we still support them and that we want them to succeed. If you would like to support buying American-made goods and products, check out this website: http://madeinusachallenge.com/ (Made In America – Master List)

Sources

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