In a recent NY Times feature article, Noam Scheiber provided a pretty thorough picture of the mid-to-longer term economic challenges we’re facing and some of the alternative policies that the Biden administration may pursue to address them. The most important forces driving things boil down to a few:
- Manufacturing that has a high labor component is almost universally cheaper to do outside of the US, where the workforce is paid less (and where worker protections may not be as comprehensive.)
- Automation is increasingly being applied to wring manufacturing jobs out of the economy. For companies, this brings improvements in unit costs, throughput, output and quality.
- Globalization (mostly outsourcing the fabrication of components or finished items) reduces costs to US companies and to US consumers.
- While the US is still leading in invention and Intellectual Property generation, other countries, such as China, realize a lot of the value when they manufacture or assemble goods based on our IP. When the US relies on other countries to manufacture and assemble high-tech products, it loses valuable exposure and on-the-ground experience which should inform ongoing innovation. Scheiber cites research presented in