Made in China

Bike Miles today: 0

Still cold today. Tomorrow it is supposed to warm up, but then go back down to lows in the low single digits. You tough people in Alaska can keep riding, but not me. Since I haven't been riding my bike lately I have to develop new topics to interest my wide swatch of readership (I appreciate both of you reading this) so I'm going to talk about the US trade deficit.

It was recently announced that the US trade deficit ballooned to over $725BILLION last year. Wow, that's a big number. You've probably seen the news stories about how shocking this is to people and how horrible these other countries are for not buying more of our goods back. Is it really that bad?

While I'm not a huge fan of outsourcing and globalization, it is our fault as consumers that it has happened in the first place. It's simple really. Business is trying to maximize profits. That's what a business does (if in a non-regulated industry without a meddling government) So, they outsource to other countries to lower their costs, and thus can lower their sales price and perhaps make more sales. In turn, retailers sell more cheaply to consumers who are crazy happy that their hair dryer is now $8 instead of $12. Even though people are "outraged" about outsourcing and such you don't see them stopping their shopping at the local MegaMart. And they don't stop demanding cheap goods. The same person who lost their job at a Levi's plant when it moved out of America is down at the Gap buying clothes made in Sri Lanka. If they were so concerned about American jobs wouldn't they be shopping somewhere that emphasizes that it saves American jobs? No, because they need to buy the cool clothes from the hot retailer.

Frankly, the most important thing to people in America when they shop is price. They would rather buy a $10 widget that lasts for a year than to spend $15 for something that will last 2 years. As prices go up for an item then we are more likely to pay for quality (notice the huge sales gains by Toyota and Honda for cars) but we don't care on the cheaper items. And the cheaper items are where things are being outsourced. Look at the things around you. All of your electronics are foreign. So are your clothes. Shoes, what about all the knick knack crap that you buy at the MegaMart? It's all from somewhere else. But a lot of the cars we buy are made in America, even if the nameplate isn't GM or Ford (and they make a lot of their cars in Mexico and Canada which are still foreign you know). Our current access to cheap oil helps fuel this outsourcing orgy, and when our oil is depleted we won't be able to ship things from across the world these jobs will come back. But unfortunately the skill sets to do a lot of these jobs won't be here. That is concerning to me.

My point is, as upset as we all might be (or not be) about outsourcing; we as consumers have forced it upon ourselves. Big business is simply doing what they are required to do by shareholders, which is provide the lowest cost product to their customer that they can, while maximizing their profits. It hasn't helped at all that we have allowed big box retailers to destroy our cities and towns and thus we have all been forced to shop at a smaller group of retail outlets that source their products based strictly on cost. This is one instance where the consumer hasn't been right.

FGLB