I’m not talking about income disparity among Americans at all, I have no idea where you got that idea. What I meant is that relative to the US, labor costs overseas are going up because foreign employees are demanding and getting more. Our labor(salaries and benefits)could be getting cheaper, or theirs more expensive, or a combination of the two. Our unions might be weaker, in other countries they may be getting more active. Our labor costs may even be rising, but perhaps just not as fast as theirs. And it varies from industry to industry and country to country. Isn’t that what that article was about? It might even have to do with the strength of the dollar relative to other currencies. It has nothing to do with income disparity within the US; although that certainly is a problem in my opinion, one that is getting worse. But it is not what I’m talking about here.

When the manufacturer adds up what he has to pay his work force to produce his widgets, and then factors in other expenses, overhead, taxes, transport costs, the price of energy and raw materials in both countries, there must come a point where it makes economic sense to just move the operation, even when you figure in the start-up costs of a move.

I’m sure the same kind of calculation determines whether a manufacturer moves his operation from, say, California to Tennessee as well, or even if he moves his factory across town.

An example from my own family background, the Cigar industry around 1890. Spanish Cigar factory owners had already moved their operations from Spain to Cuba, where the tobacco was grown. It made more sense than shipping leaf to Spain for processing and then shipping the finished product back to the Americas where the Yankee market was. Cubans learned the many skilled trades needed to process tobacco filler and leaf into fine cigars.

When the Cuban Revolutionary War first broke out, the Spaniards moved their shops to Key West to get away from the fighting, and their skilled workers followed, settling in the USA, this is when my grandparents came here.

Key West was an island, it had no railroad and no deepwater port, so it wasn’t a good place for the industry, but when the war ended and Cuba got its independence, the new government there was very Liberal, and there were no restrictions on unions.
There were very few unions in the USA, the labor movement was just getting started up north.

But by the turn of the century, the railroad had come to Tampa, and there was a world class harbor at Port Tampa as well. Teddy Roosevelt and his Rough Riders had come south on the railroad, and ships had taken his troopers and their mounts to Cuba from Tampa’s harbor.

With this infrastructure in place, the Spanish cigar moguls moved their operations again. Tampa was a fishing village of about 5000 people clustered around the ruins of a shut-down Seminole War fort. By 1920, there were a hundred cigar factories in Tampa each employing several hundred Cuban tobacco workers, and there was a community of over 20,000 Cubans in Tampa working in them, along with an equal number of Spaniards and Italians that had come for the jobs from New Orleans and New York.

This was not a huddled community of starving immigrants, they were highly sklled workers who knew the industry when the few Americans here could not do the job. The Spanish industrialists simply came in and bought up the place, bribed the local officials, negotiated sweet, low-tax deals and police protection, and took over.

The first sidewalks in the city were built in the Cuban quarter. Not even the KKK messed with Ybor City. That’s where the money was, and smart Crackers were cashing in on the boom too. The Cubans outnumbered them, Tampa was a Cuban economic and cultural colony on US soil. You didn’t need to know English to live or prosper there. Even the Italians had to learn Spanish.

So my family would probably never have come to the US, and I would probably have been born in Havana, if the new Cuban Constitution had not guaranteed the Cuban worker the freedom to form trade and labor unions over a century ago, and if they had not been, for all practical purposes, illegal in Florida.

I know your beliefs on income disparity in the US. I think you wrote what you wrote with those beliefs in mind, even if only subconsciously.

If you’d just simply acknowledge someone’s point once in awhile instead of trashing it, things wouldn’t have to get this silly.

I just think its funny how every time you hear a scrap of news that reassures your feelings about how markets work, and reinforces for you how wonderful they are, you have to bring it to the door, drop it at our feet and remind us.

P.S. you can’t have “protectionism” unless you have a government with the authority to interfere with trade.

It makes you wonder, what actually does determine wages? Why does the same work cost more in one place than another, and why is it always changing? Why does it make sense for an American company to open a factory overseas, with all the development and startup that entails, to make a product that has to be shipped halfway across the planet at great expense to be sold to Americans?

Yeah, I know. It makes economic sense, but there does seem to be a “perpetual motion machine”, “something for nothing” kind of aspect to it. In the 1800s, the Indians quit making their own clothes, so the fiber would be grown in India, shipped by sea to England where it was spun into cloth, which was then put on ships and sent back India.

That’s why Gandhi, (who was brought up wearing European clothes) started wearing homespun. And why the Indian flag has a spinning wheel emblem in its center. It was a political statement.

The eventual balancing of wages between the U.S. and outsourcing nations was predictable years ago, but the article had a lot of surprises that, by definition, weren’t all that predictable:

- The effects of the new, lower-cost natural gas and energy prices (yay, fracking!).

- The drastic increase in surface shipping costs.

- The belated discovery on the part of manufacturers that the hands-on manufacturing part of the process is integral to maintaining the quality of the product.

- There’s more to making a profit than simply reducing labor costs (duh).

- Everybody does better when labor, management, engineering, and design are all on the same side.

Bookmarked!