If we were manufacturing everything in the United States, supply chains would still be disrupted because companies would be sending workers home, which is what they are doing already. No supply chain is safe in the event of a global pandemic.

One day there might be a pandemic which affects the West but not China, which would make outsourcing supply chains look pretty smart. You are drawing a general conclusion based on the circumstances of a single, rare event.

Besides, where is the suicide of the west here? The west has benefitted from this arrangement for decades. The west is better off with this arrangement than it would have been without it, and this pandemic would have happened anyway, and it would have disrupted supply chains anyway.

I have not yet seen any evidence that lack of western manufacturing capability has made this pandemic worse. However, there is a massive body of economic knowledge that tells us that exploiting comparative advantage increases wealth.

If your supply chain encompasses two countries then a disruption in either country will take you offline. If you keep everything in-house you only have to worry about one country.

You can also harden your supply chain by having multiple suppliers in different countries, so a loss of any one isn't an issue. For something like Covid-19 it's near impossible to avoid disruption, but for less-global outbreaks it can be a winning strategy.

Only in the case epidemics or natural disasters. And even then I would argue that's nit the case. E.g. there was a major accident in a Chinese chemical park last year, it closed down for the majority of the year. This park manufactured the raw materials for stuff like car lights, the glasses of them. It also was the only source. Did anybody outside the industry suffer any results? No, because supply chains actually adopt pretty well to stuff like that. What would happen so, if everything is in one place is higher costs off-crisis, you wouldn't survive economically to see a crisis that way.

Recovery is key, so. And that is where we will see which companies did their jobs supply chain wise and which didn't.

> If your supply chain encompasses two countries then a disruption in either country will take you offline. If you keep everything in-house you only have to worry about one country.

Yeah but you'd also have all your eggs in one basket.

Why not do that if you are the basket?

The supply chains that you rail against have successfully delivered the greatest levels of prosperity to the largest number of humans in all of history.

They were created not by some mysterious force, but by individuals making rational choices about how they want to allocate their time, their energy and their resources.

The "suicidal deindustrialization" you refer to is the result of people making informed choices that you happen to disagree with. They didn't want a $400 locally knitted sweater, made from neighborhood sheep. They wanted a $40 sweater that was made as efficiently as possible, and $360 of change.

Please don't mistake your belief that you could design a better society for an actual analysis of reality.

Please don't post in the flamewar style to HN, and especially omit personal attacks.

https://news.ycombinator.com/newsguidelines.html

> They didn't want a $400 locally knitted sweater, made from neighborhood sheep. They wanted a $40 sweater that was made as efficiently as possible, and $360 of change.

Except that the difference was never that large and never had to be that local. What happened was that they didn't want a $42 sweater made on the same continent over a $40 sweater made on the other side of the world, because it gave back $2 in change. But monoculture and lack of supply chain diversification was never not worth $2 -- the bill just doesn't come due until it does.

And this didn't happen on its own either. This was conscious policy across the board. The first world was content to impose e.g. pollution and labor regulations locally but not impose the same requirements on the manufacture of imported goods, with foreseeable consequences to where things are manufactured.

Meanwhile China wanted to grow through exports, so they adopted policies like currency devaluation that not only made American and European manufacturing uncompetitive but even manufacturing in other countries with lower labor costs, so that many goods are now produced only in China.

It's one thing when something is produced in China but not the United States when it's also produced in Mexico, Brazil, India, Turkey, etc. It's something else entirely to make the whole world dependent on one country. And customers didn't choose this, government policies did.

>the different was never that large

Here's a basic sweater for $3.19: https://www.alibaba.com/product-detail/women-s-autumn-clothi...

Find me one made in the US within a factor of 10 of that price.

The link you've posted to includes several deliberate misrepresentations (aka lies) about the nature of the product (i.e., claiming it is cashmere when it's just cotton-polyester).

In LA's fashion district I can find you a locally made cotton-polyester sweater for under $10, and the seamstress is making a living at that price and using quality cotton-polyester fibers rather than the scratchy cheap QA-rejects. I could probably even find an actual cashmere sweater for under $50, made out of cashmere wool.

The trick you're using is that Alibaba is essentially a wholesaler and most non-boutique US wholesalers don't list prices on their websites because bulk customers negotiate. I can't even find one that lists wholesale prices for that kind of sweaters.

A minimum order of 2 is hardly wholesale. But fine, here's the ebay version instead, for $2.90: https://www.ebay.com/itm/Women-Wool-Knitted-Jumper-Cashmare-...

Again, the factor of 10 thing.

$13.95:

https://www.amazon.com/Free-Live-Womens-Cardigan-Sweater/dp/...

You're also both times looking at sources direct from China, which are taking advantage of that Universal Postal Union treaty situation that makes it cheaper to ship from China to the US than to ship within the US. If they were paying market rates for shipping the shipping from China would itself be more than $2.90. Notice how similar sweaters on Amazon end up being closer to the price of the made in USA one (or more) even when they're made in China, because then they're being shipped from within the US. (This is also why comparing wholesale prices is more relevant; the "free shipping" that gets incorporated into the price is less of the total.)

And it's difficult to even find non-boutique apparel made in the US at this point, because most of the ones that try to compete on price rather than status then lose to China on price by a small percentage and go out of business. But the boutique prices don't represent what it actually costs to manufacture in the US, they're just the ones who can stay in business in the US.

You won't easily find one after the manufacturing base has already been gutted. It's too late to look now except for the higher priced boutique items that still exist.

the point was that once the production is destroyed you can't catch up, retooling is very expensive,

I actually looked into american made clothing: Jeans.

American-made jeans are anywhere from $160-300. I can also buy some jeans at Levi's for $60-100.

It is not as small as you depict and also not as large as you are responding to, but it is still a very real gap.

First search hit for "american made jeans", prices in the same range as your Levi's, some lower:

https://www.allamericanclothing.com/made-in-usa/jeans.html

I'm not sure those are comparable.

Comparing almost boutique level jeans made in the U.S. with mass produced Levi's made elsewhere doesn't help us determine price differences in off-shoring vs. manufacturing in the U.S.

I think what we would need to know is how much would a pair of Levi's cost if all of them were produced in the United States.

tl;dr: What is, isn't necessarily what could be.

Honestly you're coming off far more extremist than OP is.

OP's just arguing that in times of strife, we could potentially suffer because of a lack of self-reliance. He has a valid point, and should another even worse and longer lasting zoonotic(or any kind) disease spur up again, do you honestly think it's a good idea to make no steps towards developing emergency self-reliance systems in case of catastrophe? What about in times of war even, or other conflicts from upstream suppliers?

You're kinda putting words in OP's mouth and coming off as somewhat naive.

EDIT: Wow you really changed the tone and content of your comment. I'm glad you recognized the flaws in what you were saying and adjusted it, but I'm also semi concerned your original comment is your actual opinion on the matter.

The entire philosophy around open markets and globalization is that you don't need "self reliance" because it's one giant market that shares goals and interdependence.

I've never, ever heard globalization described that way. Globalization has always been about allowing the market to seek the lowest cost production locations and with free movement of goods this means the global (assumed to be homogeneous) consumer gets the cheapest prices possible for their basket. What you're describing is more akin to a network of bilateral trade agreements.

As someone who thinks both parent comments have a point, I don’t really think they’re putting words in OP’s mouth at all. I think the interpretation that OP really seemed to suggest that we should bring it all home is a valid one. And I get it. I agree with you. There’s probably some things we should make here that we don’t. It’s becoming very clear that wholly interdependent Globalism isn’t a cure all, utopian destination for the future. But at the same time, I think the above post has at least some credence to it. There’s a reason people chose this. Perhaps it’s just the tone that makes it so off putting?

Edit: it’s been pointed out to me that the above comment was thoroughly edited after posting, which puts this into better context. Sorry about the confusion

> I think the interpretation that OP really seemed to suggest that we should bring it all home is a valid one.

"Bring" is the wrong word here, because building up industrial capacity in US for critical sectors (including but not limited to pharmaceuticals and electronic components / semiconductors) doesnt mean destroying the capacity that exists abroad.

But yes, I do believe there should be sufficient manufacturing capacity in CONUS so that if on 1 January 2020 all the borders of the US had been closed to all goods/people indefinitely; life could continue as usual in the US: no medication shortages, no ventilator shortages, no mask/respirator shortages, and no iPhone shortages.

Right now we have China openly stating (https://twitter.com/YanzhongHuang/status/1235300037875335170) stuff like this:

> China's Xinhua News just posted a piece titled "Be bold: the world owes China a thank you", which says if China imposes restrictions on pharmaceutical exports, US will be "plunged into the mighty sea of coronavirus".

How does this make you feel?

In the end there's no substitute for having manufacturing capacity in your own country -- whether it means resiliency in the face of these sorts of events, or whether it means that second-hand/surplus/inactive tooling/consumables/equipment/experience can find its way to smaller-volume sectors and enable what'd otherwise be unprofitable. You can go to a machine shop in the US today and there's a nontrivial probability of seeing equipment that was made in the 1940s because it still works! This is the enduring power of a robust industrial base.

Spot on! and it's not like drugs got any cheaper by outsourcing them to China. They are bloody expensive and of much lower quality than locally produced. The book "Bottle of Lies" exposes the low quality of all generics which make up 90% of the US supplies coming in from China.

> > China's Xinhua News just posted a piece titled "Be bold: the world owes China a thank you", which says if China imposes restrictions on pharmaceutical exports, US will be "plunged into the mighty sea of coronavirus".

> How does this make you feel?

Amused. It's just saber rattling and propaganda. They've said similar things before. If they restricted exports it would hurt them too. (At one point they threatened to dump all their US treasury bonds, but that would also hurt them just as much as it hurts the US.)

Besides, plenty of other countries can make pharmaceuticals. It might cost more but we'd buy them.

And I honestly do want a $400 sweater if we have a prospering manufacturing business. How many people stuff their house with clothes that they wear only once? How many people buy toys that their kids play only a few times? How many people hav a whole closet of shoes? Why do we have twice as large of closet room compared with people living in the 50s? Why do people just have to buy clothes every quarter, every month, every week? People around the world seem have been consumed by modern consumerism.

If people around me can get decent jobs because of local manufacturing, if US can keep developing talents in mechanical engineering, chemical engineering, and material engineering, hell yeah, bring me the $400 sweater.

A lot of people can't afford a $400 sweater. What are they supposed to do?

Local manufacturing is for rich people who can afford it.

A lot of now-developed countries had 100% domestic textile production 60-70 years ago and yet nobody went naked (OK not 0% obviously but very few). People owned fewer pieces of clothing overall, but everyone could still afford to be clothed.

If textile manufacturing became 100% local again, local wages would also rise by a similar amount. $400 wouldn't seem unaffordable for a sweater. Or the sweater would cost correspondingly less.

> People owned fewer pieces of clothing overall, but everyone could still afford to be clothed.

Note that owning fewer pieces of clothing overall doesn't significantly affect your yearly cost of clothing, it just affects your initial cost to fill out your wardrobe.

What drives up yearly costs is that most new low-cost clothing doesn't last for many wears - it either wears out quickly due to being of relatively low quality, or is eventually donated/thrown out after languishing in a closet for years.

If local wages rise, wouldn't that include the wages of the people who work at the local cotton producers, textile workers, and clothing retailers? Thereby making the manufactured goods more expensive, rather than less?

If we could have cheap manufactured goods and also pay living wages to the workers who produce them, we would not have outsourced.

You can produce cheap goods with cheap labor (or robots), or expensive goods with expensive labor.

I think there will be an equilibrium. Again refer to the argument in my previous post: production used to be 100% local and everyone could afford clothes. Not as many as now, but enough. The only thing that's changed is we now have more automation, so domestic production should be even more efficient than before.

Maybe sweaters will be $200 and wages will rise enough to be able to afford one every year. But we won't have $3 sweaters on Alibaba. From an environmental perspective, having more clothes than we need at dirt-cheap prices isn't all that great.

Some people may call this a reduced standard of living, and they are right from a reductive viewpoint where less stuff = lower standards. But isn't there more to quality of life than filling your closets with cheap shit you don't really need?

Americans used to spend 15% of household income on clothing, and they got fewer items of clothing in return.

I understand that you think it best if the government force me to support my inefficient local textile manufacturer, my local cotton mill, and my local cotton grower. However I don't think that's best.

I don't have an opinion on the subject frankly. There are plus and minus sides to both approaches. I was just pointing out the fallacy of the unaffordable "$400 sweater".

See the second paragraph "If people around me can get decent jobs because of local manufacturing", and I'm not making that up. People used to buy $300 snickers (or loafer? I forgot) back in the late 80s.

I get that it's just an example but there would be much lower priced locally manufactured goods if they didn't have to compete directly with imports in that market segment.

Do you remember the early 90s and late 80s when clothes were much more expensive than in the late 90s on? That was really tough for a lot of us who didn’t come from rich families. I could probably deal with it now, but you aren’t considering a lot of people who would be absolutely ruined by a return to the old way.

Wages have been stagnant for 40 years. Fix wages (public policy, unions), not continually cutting cost to the bone to appease the shareholder class.

The problem is the data doesn't support your position being even a minority position behaviorally - probably even for the things you own.

The results are in: The overwhelming majority of consumers buy the cheapest things/services that fit their need, and they do not price in externality discounts on their own accord.

But what knowledge is there to extract from people's behavior. It's massively dependent on context and paradigm. Give cheap cocaine to people they'll take it.

> How many people stuff their house with clothes that they wear only once?

Really? In what kind of bubble are you living?

In the 1940s sweaters were american made, did not cost $400, and the median american had more disposable income than now. The people who benefitted from outsourcing were those buying shares, not sweaters.

In 1949, a nylon sweater cost about $7.95 (https://mclib.info/reference/local-history-genealogy/histori...), which in 2020 dollars would be about $86.41. So not $400 and about in line with what an average sweater today would cost.

However, the median American did not have more disposable income back then compared to now. In 2020, the median American has about $16763 in disposable income, whereas in 1959 (the furthest back data I could get in https://tradingeconomics.com/united-states/disposable-person...) had about $351, which inflation adjusted would be $3,120.14 in 2020 dollars (5X less).

So while globalization didn't necessarily drop the cost of sweaters, I think we can say that the median American is better off today than in the past with regards to disposable income.

If you look at the prices of ordinary things over time, I'd guess that the prices stayed relatively same. But consider the fact that while median purchasing power has 5X-ed since the 1950s, prices staying the same is a testament to the power of free trade.

the average price of a house in 1959 was $10K for a disposable income o $351 (3.5%)

the average price of a house in 2020 is $270K for a disposable income of $16K (5.9%)

We have larger disposable income but the difference is not nearly as substantial as these other measures show. I do think that we earn more overall because we are more productive than back then.

That $7.95 stayed in the domestic economy. The 99% are slowly exporting their wealth.

In the $7.95 transaction, the buyer spent a higher percentage of their wealth buying the sweater than the $80 transaction today. By keeping the inflation adjusted price the same but boosting a buyer's disposable income, free trade has allowed the buyer to spend more of their income on other things within the domestic economy.

Multiply this scenario across every buyer (i.e. everyone) in the domestic economy, the increased productivity has allowed for more consumption and economic growth.

Let's consider the scenario in reverse, if keeping $7.95 locally is the best policy, would you advocate someone in California to not buy goods made in Missouri? After all, labor is much cheaper in Missouri. How about someone in San Francisco not buying goods from someone in Central Valley?

An average person could build a house themselves and keep the money they would spend in their "domestic" wallet economy instead of paying some contractor. Why do we hire contractors who might live in a far away town then? It's because it's mutually beneficial. I get a house that's better constructed faster than I could ever build it, the contractor gets compensated for their money. The time and productivity I saved in that transaction far outweighs the cost paid to the contractor.

And why is that? Because it made sense based on the options provided to them. And who decides what those are? The people with money and power, not the consumer.

If you think the median american had more disposable income in 1940 than today, you are hilariously uninformed.

https://fred.stlouisfed.org/series/DSPIC96 (only goes back to ~1960, and the I think this is mean, not median, but also a huge enough trend that it is impossible to deny).

I am trying to understand that graph, it is not so easy actually.

What does it mean that 2020 shows 15K average disposable income in the US? That the average person has 15K left once they pay absolutely necessary to subsist? I find it hard to believe.

I think most people using the word "disposable income" would use the term the way I stated. Also the post you reply to uses it in that sense, not as a relative value to taxes.

I believe this graph shows something different altogether, it simply shows wages - taxes. It has no bearing as to the purchasing power of that salary and what you could afford with it.

> I think most people using the word "disposable income" would use the term the way I stated.

That's "discretionary income" you're thinking of.

> The supply chains that you rail against have successfully delivered the greatest levels of prosperity to the largest number of humans in all of history.

And they've delivered that by building a fragile system with too little safety margin or redundancy.

It's like building an application that can serve the absolute greatest number of requests for the absolute lowest price by having absolutely no redundancy. It looks great, until a disk fails.

> The "suicidal deindustrialization" you refer to is the result of people making informed choices that you happen to disagree with.

I wouldn't call those choices informed, it'd call them myopic. A smart, informed choice with a time horizon of 6 months can be an exceptionally stupid one with a time horizon of 30 years.

> They wanted a $40 sweater that was made as efficiently as possible, and $360 of change.

Bare essential goods have never cost that multiple of minimum wage.

Capital wanted margins, that which they don't pass on to the consumer. How much does Apple make on earbuds, again?

The optimization from a hypothetical $400 sweater to $40 is completely blind to growing unaddressed externalities both in number and scale. Claiming this is the most prosperity for humans ignores the backsliding in prosperity for Americans - especially outside of financially quantified measures.

> but by individuals making rational choices about how they want to allocate their time, their energy and their resources.

Is this a good thing that our oh-so-rational society can’t even cope with such predictable problems?

What prosperity does work off-shored to 3rd world sweatshops deliver? Greater profit for a tiny fraction of the population, and increased financial insecurity for the rest? Creating a tshirt doesn't take any extra effort in the US, the offshoring just adds overhead such as transportation of the goods and raw materials. Yes, labour costs and labour protection is higher in the US, but sidestepping these things does not create prosperity for US workers.

> by individuals making rational choices about how they want to allocate their time

I estimate truthiness of this statement at 10%

Edit: edit. Much better take.

Was there some ninja edit that occurred here? I’m looking at both your comments fresh, with OPs only 5 minutes old, and I don’t see the word ‘nationalist’ anywhere.

100%, OP completely changed the tone and contents of their comment. Like night and day.

Hey I'll take it. We all fly off the handle now and then. :)

Thanks. Sometimes I suck. I'll do better.

Yes. The original comment was dismissive and rude. I'm not sure how it wasn't down-voted to oblivion.

Got it. That makes more sense. Thanks!

The way capitalism works is that it ignores borders with some friction. And it is indeed more efficient. To a point where you suspect those borders don't exist, but they do. And that's the problem. Neither you or the OP are wrong. There is just no perfect way of doing it, but what we can decide is that if those damage that those extreme cases could do were worth the cost of upkeeping those industries when there were no such cases. Would people be willing to pay 300% taxes for everything everyday, I'm pretty sure then they would be damning the government for doing that.

I was thinking of this the other day. Perhaps this pandemic will help reshape our global economy away from its current monolithic structure into self-sustainable micro-service economies where all regions can self-sustain to a large level.

(Apologies for the nerdy analogy but this is Hacker News...)

Sounds incredibly inefficient

Diversification always sounds more inefficient than monoculture, until the monoculture encounters a systemic vulnerability and all fails at once.

> Sounds incredibly inefficient

Just like having redundant servers for your applications and backups for your data.

It doesn't have to be (and likely wasn't) intentional. Economic pressure will twist gravity towards specialization and supply chain consolidation. You need meticulous surveillance and testing combined with authoritative regulatory control to counteract these pressures and maintain a resilient supply chain (which doesn't necessarily need to be in-country).

Assuming that this travels into the country wouldn't the same impact be observed as areas of the country with particular specializations were affected? I don't know how one could prevent supply chain disruptions, they'd just come a little later than sooner.

But if most industrialized countries had retained their mfg expertise some factories would be active while some idle and there could be some kind of staggered affect as the interruption courses it’s way in and out.

So wouldn't the answer to this also be to just move the industrial base to various other developing countries? If we split our manufacturing between more of South East Asia, South America, and Africa, wouldn't that have the same effect?

I don’t see why they should not attain that capability as well and I also don’t see why we should shed our capability to mfg either.

> you're dependent on these hyper-fragile and convoluted supply chains that are optimized for cost above everything.

I'd argue that this is a feature. Economic codependence is a much safer and effective deterrent to war than mutually assured destruction.

I'd argue it is currently assuring interlinked global mutual assured destruction in the form of climate change (while yes maybe it reduces the chance of mutual destruction in the form of nuclear war, at least at the moment while the exponential effects of climate change are still in the lower order distruptiveness)

What happens when you can manufacture from raw materials, but your raws themselves come from offshore?

There is still lots of manufacturing of high quality here. However they're costly and smaller in scale versus overseas.

China, the US and the EU are fundamentally different to most other countries/economies. They are political and economic super powers -- effectively.

Ireland simply cannot make everything the way China can from scratch. It's not even an option on the table let alone some abstract trade off. Complex supply chains are the only way to achieve any meaningful economic growth.

This also affects how our economy works. We don't get the same "multiplier effect" that the US will get from a stimulus package.

>Complex supply chains are the only way to achieve any meaningful economic growth.

I call BS. Complex supply chains are one of the ways to achieve questionably meaningful _GDP_ growth. Hopefully one of the outcomes of this crisis is that we start to question the "number go up" ethos of most conventional economists. It's true that Ireland can't make "everything" from scratch. But do they need to? Though, this becomes an almost circular philosophical discussion very quickly.

Supply Chains have been global ever since the bronze age. So the principal isn't new. Supply Chain resilience is a crucial topic so. One that is, to a certain degree, under rated. Because it is more than buffers you have for general inefficiency.

this sounds like a dog whistle