One of the major theories behind the increased income inequality in the United States is globalization. Offshoring, a major component of globalization, means moving a company's process or production outside of the origin country. This typically occurs when a company wants to decrease its costs of production and increase its profits.
China is a major trade partner with the United States: 21% of all goods and services the U.S. imports are from China. The reason companies in the United States are exporting production of goods or administration of services to China is because it costs less. Sure, technology exacerbates the negative effect of trade globalization (makes production faster), but perhaps we should consider whether globalization is fundamentally an effort the United States should continue to pursue.
Of the 21% of Chinese imports into the United States, 50% (or $220B) was machinery or electrical equipment. These types of products can be easily manufactured in the United States - in fact, the state of Michigan would benefit greatly if $220B of manufacturing business was returned to domestic soil. The counterposition in this circumstance is that the cost of paying higher wages and production costs would harm the profits of business.
- Would returning goods production and service administration back to the U.S. help our economy?
- Can American businesses afford to pay the higher costs of producing in the United States?
- Will the income gap between the rich and poor shorten with jobs coming back to the U.S.?
- Should the United States ban trade with China?
- Interactive Nat'l Trade Tool: http://atlas.cid.harvard.edu/explore/tree_map/import/usa/chn/show/2014/
- The Income Inequality Debate: http://www.cfr.org/united-states/income-inequality-debate/p29052
- Globalization vs Technology: https://www.bloomberg.com/view/articles/2015-03-25/what-s-destroying-middle-class-wages-china
- "China Trumps Trade": http://money.cnn.com/2017/01/19/news/economy/china-trump-trade-exports/