Yes it's what everyone is talking about but bear with me. In the following question I'm not trying to start an argument, I'm not even from the US. This is a question and not a kick-starter to a debate.
- Donald Trump claims he'll create a load of jobs in the US by bringing back factories that US based TNCs (trans national corporations) have built in China, Bangladesh, India etc.
- It appears people think that because of his success in business he'll help repair the national debt.
So these may not look like two contradicting points but here's how they are: So FDI (foreign direct investment) is the driving force of globalisation and since the 1920s a global shift of manufacturing from the US to China. So all this outsourcing by TNCs is in effect, saving the US a lot of money. Here's why:
- It costs less to build a factory in China than it does in the US
- Due to the large amount of the population in poverty, minimum wage is lower and therefore less money has to be paid for a same amount of work
- Operating overseas spreads the brand name. Ford for example is made and used all over the world.
- Having a factory in another nation allows the host country to take advantage of a trade bloc the invested nation may be part of, decreasing the money spent on trade tariffs.
So the basic advantage of investing in other countries is creating a vast network of hubs that utilise (take advantage of) trade blocs, cheap labour, spreading of brand, bigger market, less building/safety restrictions. All of these save a big corporation a lot of money. This is money that is eventually making it to the US. (if the corporation is from the US) Therefore rebuilding, renovating and re equipping derelict factories in the US is going to create jobs, but because the minimum wage is higher and stricter rules around working environment. This sets the corporation back a lot of money spent of higher wages and newer factories. Yes they can sell the factories in China but that wouldn't cover the costs.
So my question is:
How would Donald Trump go about bringing back industry to the US without making all the TNCs go bankrupt?