Is cheap labor a legitimate source of comparative advantage?

I increasingly don’t think that it is. Yes, we get products more cheaply. But those products are made in countries with fewer labor restrictions, often in places that are not democratic, where workers cannot vote for changing laws. We’re effectively saying we want democracy where we live, for our own white collar professions, but we don’t want to be shackled by those restrictions for how we get rich, or how we enjoy our wealth. We’re effectively telling local blue collar workers that we’re okay with their level of work being taken over by people with less rights than themselves.

That increasingly doesn’t feel just. Comparative advantage makes sense for natural differences between countries, such as availability of natural resources or favorable weather for certain types of crops. But not for fundamental human rights.

For those of you that are complaining about how the article is merely story spinning to target Microsoft, I think you're de-sensitized.

Comparing the worst places to work in North America to the average place to work in China may make yourself feel better, but it's just dishonest thinking. If an American wanted to buy a Computer Mouse would you not think it easier and cheaper to buy one locally? Of course not, because there's too many other countries with unprotected workers to take advantage of that make it cheaper for US..... doesn't this basic concept lend any understanding that there's something wrong here? It does to me. If the treatment norm were that same as you're own country then the product cost would go up.

The playing field isn't level and that's ok, but that doesn't mean we should feel good about taking advantage of them. I know, I know - we're helping them right? Give me a break. There are ways to help them while not taking advantage of them.

Don't buy from countries that don't meet the treatment norms your own country has. It raises the bar for them, and they will to get our business. Meanwhile it's not like Americans couldn't use the work. Yes product costs go up, but so do local jobs increase and quite frankly maybe inflation is the cost of being ethical, maybe North Americans should be a little less wealthy and little more honest.

We ship a lot of animal products (I think medium sized fish and chicken were some of the examples) to entirely different countries to have them processed and then sent back to us.

I've been completely amazed at seeing assembly lines in things as simple as sardine canning factories. Dozens upon dozens of workers literally just shoving sardines in cans, and they aren't sold for much. The tins actually cost more than the sardines going in them. Absolute dirt cheap wages, quite depressing to think about as somebody from the US

That said though, the domestic US flower industry could be potentially ripe for disruption if somebody wanted to front the money to do so.

Also, as time goes on the skills of the entire world population is being equalized. That is to say, the skilled labor market is becoming global. When that happens American workers and middle class simply can't keep enjoying the high wages that are currently prevalent.

Unless of course, you want to start a new era of imperialism and force developing economies to confine themselves to the lower end of the value chain.

Whatever happened to taking pride in what we make and buy? Quality over quantity? Paying more for something better? Looking out for your neighbors and community by supporting their gainful employment? Independence from countries that literally hate us?

It wasn’t long ago at all that we were making most of the stuff we bought. It’s time to go back to that. Call out every company you see that doesn’t make their products in the USA and ask when they’re going to stop selling out their own neighbors just for a buck.

I think the US needs its own Free Trade Zone. Let's put it on the US / Mexico border, allow anyone to take up work there. Promise 0% taxes for a decade and put up no trade barriers at all. Maybe that would bring some of this production back home.

Not exactly. For starters being able to buy products for cheap is generally good for consumers. They have more money left over to buy other things...

Secondly, the U.S. have actively fought to keep wages low in developing nations. For example: https://www.thenation.com/article/wikileaks-haiti-let-them-l... It's easy to cry about low wages though and how that "hurts" American manufacturers. So here's the thought experiment, all workers on the planet now make at least U.S. federal minimum wage. We can now compete with Haitians for underwear manufacturing. Underwear now costs a lot more than it used to. That's not a win for consumers. And all those minimum wage underwear manufacturing jobs aren't exactly a boon to the U.S. economy, go figure.

Thirdly, no nation is going to be able to produce every sort of product itself efficiently and cheaply. Trade is and always has been important. Other nations can do some things better and cheaper and it's not always labor costs that are the linchpin of being out-competed.

Fourth, people imagine peak manufacturing as some sort of ideal that we should be tripping over ourselves to get back to. It's a fools errand. No matter what a lot of manufacturing jobs are never coming back, ever. It's never going to be like it used to be, automation will have seen to that.

A lot of people don't understand the economy, but they have an idea how the economy should be. It's more terrifying than my mom offering to fix my computer, because moms know best.

Can you honestly say you don't buy anything made with questionable labor? Can anyone? Do you know that America has a slave labor force of millions of prisoners? Slavery never really went away in the US; you can't avoid it even if you buy American. For example if you own a car, odds are your license plate was manufactured by American slaves.

For what its worth, we bought my daughter a very nice pair of boots made in Quebec. But it's the only pair she owns that I know are manufactured domestically. They also proudly employ special needs workers, which sounds great except I have my suspicions that it's just a ploy to pay them less. It is absolutely impossible to avoid labor inequality in the modern world.

I see it in what I am doing every day. I truly want to manufacture in the US. I really do. I am angry about this whole situation because of it. Stupid policies prevent me from having the option to manufacture in the US. Policies that are so destructive that you are left with no option but to send the work to China. The only other option is to go out of business.

I do not want to do this! Yet my government and the ignorant masses who vote for them and support their ignorant ways effectively forces me to take that path. It does not have to be this way at all. Yet, on the current path, things are not trending towards getting better at all.

My partners and I have already discussed moving all manufacturing to China. All of it. Just like Apple, we would design here and manufacture there. I am the only one who is stubbornly holding that decision back. And I know I am going to lose. There's nothing I can do about it. It's like fighting the laws of physics. And then I post here and people who don't have a clue refuse to even think about this and attempt to understand. How have we become so ignorant.

It isn't about a single policy. It isn't just about minimum wage. It's death by a thousand cuts.

I'll give you another example that won't be popular. What we are doing with the southern border is absolutely criminal. I haven't kept up with numbers. I think the last estimate I read was that over 1.5 million people got in...and that's the ones we know about.

BY DEFINITION: Every single one of them is unemployed. Yet, they are not counted in unemployment statistics because, well, they don't exist. Even worse, we are not creating 1.5 million NEW jobs per year for them. If we were, there could be justification for accepting people with the right skill sets. We are not. Which means we are importing unemployment. We might even be importing people who will be abused and work for menial wages in the shadows. No matter how you look at it, this isn't a plan for economic growth and stability at all. We are losing jobs and we are importing unemployment.

What's another layer of stupidity? Energy policy. It is beyond belief that we are letting people like AOC even have a word in this conversation. Solar energy is fantastic. I built a 13 kW array. As an engineer, I know everything there is to know about solar and then some. I also know that we need to build nuclear power plants like there is no tomorrow. Solar is far from clean. A solar power plant equivalent to a nuclear plant consumes so much land and resources most would be horrified. Not to mention effects on wildlife, etc.

If we are going to achieve the dream of converting our ground transportation fleet to electric vehicles we are going to need to DOUBLE our power generation capacity (and power transmission infrastructure). You cannot do this with solar. Solar is unreliable and expensive. You have to do it with nuclear, at least a majority of it. That means duplicating the entire US's power generation capacity. We need twice the power. That means we need an ADDITIONAL 1200 GW. A typical nuclear power plant is rated at 1 GW. Yes, that means we need to build somewhere in the order of 1000 nuclear power plants, or maybe 500 and make-up the rest with solar, natural gas, etc.

The other one is the war against oil. This is so ridiculous it hurts to even think about it.

Simple concept: We all want clean cars and clean energy. At scale (300 million vehicles) this means undertaking the largest set of infrastructure projects in the history of this nation. Yes, heavy construction and manufacturing throughout the land.

What do we need to move materials, dirt, concrete, rebar, solar panels, grade and dig the land, etc.? OIL! With oil at $130 per barrel there is no way in hell we can afford the infrastructure development that would be required to transition a nation like the US to clean energy. We need $20 per barrel oil for 25 years. With a mission. In other words, it can't be about lower the cost of oil so we can have cheaper gasoline and diesel. It has to be: We need cheap gasoline and diesel so we can build thousands of solar, wind and nuclear power plants as well as upgrade our entire power delivery infrastructure over 25 to 50 years so we can transition to more those power sources.

Once again, politicians drive the narrative that is most convenient for them in order to secure jobs and remain in power until they retire with nice benefits and pensions. The carnage and long term destruction they create is lost on everyone living for the moment. Sadly, most people don't exercise much in the way of critical and strategic thinking when they vote for and support these charlatans.

Anyhow, yeah, I am angry and frustrated because I want to work in my country and create jobs here but my government and the people who support their dumb policies prevents me from doing this. Even trying to educate people about these realities is futile.

What happens to a lot of business owners --after getting tired of hitting their heads against the wall-- is to capitulate and take a "if you can't beat them, join them" position where they make good money for themselves and stop caring about not being able to create jobs and build full companies here (or in Europe, same problems).

GP was commenting on the expense of hiring American workers and wage competition. While there are some moral arguments for higher labor cost such as (ironically) workplace safety, the necessity for laborers to be able to afford the products they make is just nonsense.

Look at Germany, they have both but that's partly the vertical companies being ethical and patriotic.

If you think you're not being paid enough, increase the price along with creating your own products. It seems weird to me to not let foreign countries buy your raw materials just because you want to produce more stuff yourself.

It's not like I will start buying chocolate made in ghana because they don't want to sell their cocoa anymore. I will still buy from the brands I like and are used to most of the times, which is a local brand.

Why did Hershey's chocolate close the factory not too far from where I grew up, and move the manufacturing to Mexico? Well, labor is cheap there because there are no unions, few health and safety regulations, few workers' rights groups. That makes it much cheaper to operate.

Why can China manufacture clothing cheaply? Well, they have hundreds of thousands of Uighur prisoners being 're-educated' via forced labor.

And while I don't disagree that for some countries that are trying to move up in development, so-called 'sweat shops' can represent a stepping stone forward (2 generations ago, South Korea had plenty of them), the question is how long that's an acceptable excuse?

In my opinion, we need trade rules that explicitly tax and tariff those countries who are only finding comparative advantages through exploitation and unethical activity.