What appeals to me about Gomory’s ideas, is that the benefit is not transferable. Indirectly, the country of origin, or the consuming nation, will automatically have a claim. These are policies that are well within the rights of nations to exercise.

Thanks for the Gomoroy reference. International corporates will seek profit opportunities globally. Their county of origin has no special claim on their loyalty (or even their taxes!) but if the shares are predominantly owned there, then the country of origin (through those shareholders) will benefit from the flow of profits to back home. Essentially, you have global predators who return much of their gains back home. That effect dissipates as share ownership spreads globally; e.g. China trying to buy a big stake in Australia’s RTZ, whose main source of profit is – China.

So, where to now?

Christian Romer, chair of the U.S. President’s Council of Economic Advisors, in her recent talk at the CFR emphasised export and investment led growth for the U.S. This recognises a shift from a consumption led boom, but how is the USA to export more – especially given how hard hit international trade has been? It’s hard to imagine Cadillacs displacing Mercedes on the roads of Paris and HK!

Exports are a small % of the US economy – one reason it has been less vulnerable than Germany or Japan. To get an export led boom and boost to industrial investment would require a major depreciation of the US $, making U.S. labour, land and capital cheaper relative to the rest of the world. Or, in other terms, pricier oil and a lower standard of living for the U.S. worker.

This really as a matter of political reality.

Someone is benefiting from moving plants overseas, and if it is a small group of people, then there the possibility for a “political entrepreneur” to get power by supporting the interests of the “common American worker” against the “evil multi-national corporations.” The problem is that I think that fairly large numbers of people in the United States either benefit from, or see themselves benefiting from multi-nationals opening plants overseas. So many that you aren’t going to find any political market for going “populist.”

It’s probably because we know different groups of people. The people I know are either in software, semiconductors, and finance, and I know extremely large numbers of Chinese-Americans and Indian-Americans employed in those fields.

Talking about how bad H-1B visa holders are for the US economy and how awful it is that jobs are going overseas is political suicide in some places, because the voters are former H-1B visa holders and the Indian or Chinese worker that gets a job from a multi-national is likely to be someone’s cousin.

Do you know how much it cost to produce those chair in china? Cost of labour, cost of material, cost of overhead, depreciation of capital investment, cost of shipping, tax in china, import tariff in US, profit margin of china manufacturer, profit margin of china exporter, profit margin of US importer, profit margin of US whole-seller and retailer? Without those figures, I don’t know how you come to the conclusion that shipping costs are effectively negative. Do you have any factual information to support your assumption that the Chinese manufacturer was subsidized by various government programs?

Here is some information from google: according to Cypress Industries, the shipping cost of 20’ dry container (19’ length, 7’8” width and 7’10” height, cubic capacity of 1,170 ft3, cargo weight capacity of 62,350 lbs) was estimated around $3,000 for goods from china to US. The actual cost may vary depending on the season and oil price. But those figures give you a rough idea of the shipping cost of those Costco chair. Personally, I don’t know how many chair maximum you can put into 20’ container. I am just estimating the shipping cost of those chairs by weight. Assuming each chair is about 50 lbs, we’ll have 1,247 chairs before exceeding the weight capacity of 62,350. In that way, we’ll have $2.41 shipping cost per chair to bring them from china to US. So there is a shipping cost crossing pacific.

As to criticism and boundary, here is my personal experience: I was a Chinese citizen 6 years ago before moving to Canada. I have criticized Chinese government in private and in public long before Canadian government granted me immigration visa. Guess what, nothing happened, I don’t think I was ever been followed, monitored, harassed, torched, or depressed by Chinese government in any way. Why? Because I was nobody and I was not expressing my opinion in a violent way. So who gave a rat’s ass. It is not a secret that there are wide spread social injustice in china. Simply talk about it won’t put any additional risk on national security.

As twofish said, there is a big difference between being “not happy” and about to have a revolution. Wishful thinking doesn’t help when it comes to investment and politics.

I think that will have to agree to disagree. A Lot of engineers and metallurgists that I know are looking for work and have complained that once production moved abroad their work soon followed.

I’m not sure I follow the point you are making. H-1B makes it easier for companies to import skilled labor which reduces the incentives to move jobs overseas.

Glen M: All those Chinese and Indian graduate students, if they return home, aren’t planning to work in low wage factory positions.

And if the jobs aren’t available in China and India, they stay in the United States. If the only thing that Microsoft is offering in China are crap jobs, then Chinese graduate students will stay in the United States.

Glen M: I also disagree with your contention that that Intel or Microsoft opening up in China does not displace jobs in the US. That is nonsense.

I’m just telling you what I see. If you look at what Microsoft China is doing there, and the projects that they put in China end up creating more opportunities for US workers. They are doing some quite cool stuff in China.

Glen M: Eventually those high paying jobs in the US become just as easily exportable

To a large extent aren’t. The thing about the really high value jobs in science and engineering is that they depend very heavily on social relationships.

You either have to move the entire city of Cambridge, Massachusetts to China and India, which can’t be done, or you grow technology centers in China, which takes a lot of time, and also creates lots of jobs for people in high technology.

To the extent that jobs are mobile then people can move with the job. One reason that an American engineer in Redmond is less threatened by Microsoft China or Indian outsourcing then you might think is that if Microsoft puts lots of good jobs in China and India, experienced people have the option of moving to China and India. The fact that a lot of these American engineers are named Patel or Li makes this both possible and attractive.

One thing about the shops that Microsoft is setting up in China is that for the mid to high level positions, they pay wages that are comparable to wages in the United States. The reason I know about what Microsoft is doing in China is that they have these road shows looking for skilled software engineers in the US to work in China. Also, if you go to the high tech centers, you’ll find that pretty much everyone is involved with setting up some business in China.

One reason that I think that over time, the bias in China is going to move to reducing the value of the RMB to increasing it, is that if you appreciate the RMB, you make it easier for companies in China to offer wages which are comparable to US companies to attract high skill labor.

As Dean Baker is apt to point out, high skilled professionals operate in a protected environment. Workers in the Technology field in the US are protected via the H-1B requirement.

I also think that you fail to grasp the temporal nature of the the changes discussed. All those Chinese and Indian graduate students, if they return home, aren’t planning to work in low wage factory positions. I also disagree with your contention that that Intel or Microsoft opening up in China does not displace jobs in the US. That is nonsense. Eventually those high paying jobs in the US become just as easily exportable. Perhaps you should call me on my Hi-Phone and we could discuss the issue.