Your humble author acknowledges not being as eloquent as others, or readily able to self-restrict to simple yet catchy wording and/or phrases, but nonetheless can be willing to engage in a civilized discussion, even when blocked on social media. One such series of questions involves questions about, and/or confusion over, manufacturing and regulations.
To answer, even if just in part, an honest question, your humble author responds to this Twitter/X thread below.
“If US companies have off shored manufacturing due to US laws and regulations, why is it acceptable for those same companies to import the goods back to the US with impunity? The companies are point blank avoiding US laws in doing so. That’s what’s at issue.”
To understand why, one must differentiate between the laws/taxes/regulations involved in manufacturing, specifically, domestically and the laws/taxes/regulations over the manufactured goods/parts themselves.
Generally speaking, an imported good must meet the same requirements as any domestically manfactured good to be sold, such as safety and efficacy. But even then in many cases a foreign company manufacturing in a foreign country can be required to meet the requirements of U.S. laws/taxes/regulations as it pertains to the safety/efficacy of said goods, such as, for example, applies to food and drugs.
This may require a non-financial audit, certifications involving recognized harmonized standards, &c. The laws being avoided are not laws pertaining the the manufacture of the goods themselves, but to other conditions involving running a business.
This is not unfair to domestic manufacturers because they have to meet the same requirements and adhere to the same regulations when it comes to the goods themselves. The difference is the application of other business related burdens, and the unfairness comes from the U.S., as well as state and localities, imposing excessive laws/taxes/regulations.
“When you drill down, all the way down, into the matters that people flatly refuse to address directly, that’s what is going on. It’s too expensive to make whatever in the US due to the US laws so we’ll go somewhere those laws don’t exist and then just bring the stuff back.”
In actuality, many people are addressing these issues. Regulatory reform, lowered taxes, and reducing other burdens on companies has been an issue on the conservative right for decades now, and much success has been seen at the state level and below. And even where it isn’t addressed the problem is widely aknowledged by many.
But yes, the simple problem is that it not only becomes much more expensive to manufacture low-end goods in the U.S., but impossible to hire the workforce necissary with the high cost of employment, not only monetarily but also with other compensation and the work needed to provide that. Even with those burdens being met, there is a dearth of people willing to work those jobs even at present, with the choice either to bring in workers from foreign companies or to just not bother with domestic manufacturing and either invest overseas or outsourse to overseas businesses. This lowers the cost of goods domestically, including for domestic manufacturers who specialize in higher end goods who use more affordable parts as part of their supply chain.
This burdern it crushing for low end manufacturing. But this, and the thread to which your humble author is replying to, ignores that the United States is still one of the top manufacturers in the world with a growing output. That manufacturing, though is in higher end goods with higher paying jobs, and without the environmental foodprint associated with the lower end jobs. So there are benefits to manufacturing domestically if those benefits outweigh the costs.
“This brings up a corollary issue. If those US laws and and regulations are so important, if those laws and regulations exist as a matter of basic worker and environmental safety, why shouldn’t there be tariffs or other financial penalties on trying to avoid those laws?”
The simple reason is that U.S. laws involving basic worker rights and environmental safety issues generally don’t extent to foreign countries. This is not to say that the Federal government has zero say as it pertains to the conditions under which a good (manufactured or otherwise) is produced. Prohibiting good made by slave labor, for example, is one such imposition.
The reason why we do not, or at least should not, impose tariffs or other financial penalties is because the foreign manufacturers aren’t avoiding these laws because a foreign law that doesn’t apply to them does not, nor should, require avoiding to begin with. This is no different than a company investing in a low-regulation/low-taxation Red state rather than a high-regulation/high-tax Blue state.
But what this last question is suggesting is that companies should be immune from the pain of high taxation and high regulation by punishing foreigners living abroad for daring to not adopting the same burdens.
“Are we off shoring manufacturing? Or are we offshoring environmental issues and exploitative worker treatment? If the reason is that it’s so much cheaper overseas, the why is it so much cheaper is an extremely important factor to know.”
The aforementioned reasons stated by your humble author, at least in part, addresses these questions. Additionally, we must avoid manichean thinkinging. Not all companies operate overseas or outsourse to oversea companies in order to set other countries rivers on fire instead of our own (again). Not is this just some faceless corporation scheme to enslave foreign sweatshop workers to save a buck.
It really is a question of comparative advantage and what would be burdensome for a worker in the U.S. would be a boon to a worker overseas. A low-end manufacturing job can pay only so high in the U.S. before it becomes economically unfeasible for the company, and only so low before it becomes economically unfeasible for the worker. The free market is about the free interaction of free individuals for their mutual benefit. The company must value the labor input more than the compensation to the worker, and the worker must value that compensation more than said workers labor to themselves.
In a foreign country, this holds true as well. The lower pay is economically beneficial to the company, or those who pay for a foreign company’s goods, while that same pay is often a step-up for the foreign worker and an opportunity for them and for the economic development of their community. That foreign worker is happy with less than the minimum wage for a domestic worker for whom that same wage is unacceptable or at least barely tolerable.
But the current question of trade and tariffs is not strictly one about environmental issues or exploitative worker treatment. Many countries have domestically imposed on themselves economic burdens for the sake of workers rights and environmental “justice”—Canada and the E.U. being just tow prime examples—so such concerns are not so universally applicable.
The problem isn’t just with the level of environmental/worker protections, but the often uniquely high cost of our particular laws/taxes/regulations concerning that. If we impose our regulatory burden, or the tariff equivalent thereof, then why would they continue selling to the U.S. at a loss?
“Now that everyone’s furious and yelping about how I’m a Commie, it’s extremely important to know so that we can have an adult conversation about trade offs and what the American public is willing to accept. And that conversation should be public and honest.”
This post—Q.E.D.
“What level of environmental protections are actually necessary? Has OSHA changed from an organization making sure that companies aren’t turning off necessary safety features to one nit picking in order hit a competitor I mean non regulatory captured of course with fines?”
More than what we used to have, but also not as much of a burden we have now, whether the burden is due to mere extent of the regulation, complexity of meeting that regulatory burden, or the manner in which the regulatory structure operates.
A good guideline would be James FitzJames Stephens three rules for legitimate compulsion: “Compulsion is bad: (1) When the object aimed at is bad. (2) When the object aimed at is good, but the compulsion employed is not calculated to obtain it. (3) When the object aimed at is good, and the compulsion employed is calculated to obtain it, but at too great an expense.” To this I would only add that such compulsion, as it pertains to the discussion herein, must be within the powers of the Federal government, and therefore within Constitutional bounds.
Simply firing regulatory employees does not, ipso facto, result in a reduction in regulatory burden, but can instead increase it. Whether there are too many or too few regulatory employees is a function of the nature of the regulatory state, and not a driver thereof.
“Why did that industry (say lumber milling about which I know nothing) move to another country? What was the burden on it that made it cheaper? And is that a burden which absolutely should exist for basic environmental and worker protections?”
First we must ask which of the three precepts noted above was the reason for the fleeing from domestic imposition. If the first point, then there are laws that, in some cases at least, makes it illegal to import goods, such as goods made from slave labor. If the later two, then it a choice made by us and the effect a consequence of that choice; in these later two possibilities, then we should not blame them for avoiding out imposition but asking if the consequences of that burden is something that is worth it to us.
“If a company chooses to move manufacturing and production to another country to avoid those costs, why should that company be allowed to sell its products in the US without some costs to make up for not having to comply with the US laws on manufacturing and production?”
Allowed to? They are “allowed to” sell their products/parts because those products/parts meet all the same requirement and regulatory burdens, including when it comes to safety and efficacy, as domestically made products. Those costs we impose domestically have costs, one way or the other. It is our burden that we choose to impose and pay the price for.
Punishing people for finding a legal way to reduce the burden on themselves imposed by the government is rational self-interest and a rational self-interest that practically all of us have and would again employ. They don’t have to bear the burden of those costs because we can’t impose them overseas. If we want them to accept the burdens we impose they need a reason to see a benefit that outstrips that burden.
Imposing the cost of our domestic over-regulation via tariffs or other exactions does not solve the problem that cause low end manufacturing to flee to begin with. It is reversing cause and effect. Try to cover over the effect and you still have the cause gnawing away at out businesses and our economies.
“What trade off between price and environmental and worker protection is the US consumer willing to make? These are the fundamental questions that I don’t even see addressed, let alone asked. And these are the ones that the most important.”
This is why we should heed Chesterton’s Fence (or Gate, if you prefer) and understand why the U.S. began regulating the way we have. Our object of our regulation must be good and the imposition as simple and straight forward to meet as possible.
We can reduce the burden, but in order to do so we need to understand the underlying purpose and be knowledgeable about what we are regulating—simply smashing things up and firing people willy-nilly. But even if we take our time and doing things stepwise and properly, with all due consideration and understanding, there will always be a burden. We can but reduce that burden as much as we are willing.
Low value manufacturing can come back, but the jobs won’t be. The loss of agricultural jobs did not equate with a similar loss of agricultural capability; America is a manufacturing powerhouse and it is a manufacturing powerhouse because of innovation, automation, and use of higher end technologies that require a smaller number of more highly trained workers. Reducing regulatory burden on not only the Federal, but also state/local level can help make that possible. But many of these burdens are separate from regulations and laws involving minimum environmental issues and workers rights.
“It is impossible to have adult discussions about adult matters without adults being willing to face harsh realities and without being willing to accept that there is always, always, always trade offs. Always. There ain’t no such thing as a free lunch after all.”
And the free market under the rule of law with minimal arbitrary and capricious shenanigans or crushing regulations and tariffs. We must decide what burdens we place on ourselves and accept that we are the ones responsible for our actions.
“Yet heaven forfend that anyone even ask these questions. The gods forbid that they be answered. After all, can’t click bait and fund raise off that.”
Answered, and without social media clickbait.
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