Charles Hugh Smith at OfTwoMinds.com describes why so many jobs have migrated to China and Asia. Sad but true.
Several of my informed friends say that a few corporations are moving jobs back to the US. Let's hope it is a trend.
The key dynamic to understanding trade with China is U.S. corporate profits. In broad brush, what happened was simple: U.S. global corporations had run out of profitable places to invest their capital in their home domestic market of the U.S. The technology boom had been underway since the early 1980s, and much of the low-hanging fruit of improved productivity had already been reaped.
In the big picture, the U.S. market was "mature"–everybody already had everything, and the only gains to be had were marginal, shaved off at the expense of competitors. So the marketers conjured up a new line of toothpaste and various gimmicks were added to vehicles, but growth in the U.S. was modest, as befits a mature consumer economy.
So how could corporations increase profits? By slashing production costs. If you can't sell 30% more every year, then how do you make 30% more profits? By cutting your production costs by 30%.
How do you do that? By moving production overseas, mostly to China. … profits for the companies in China which make the goods for Corporate America are slim–from 1% to 3%. The big profits flow not to China-based companies, but to the foreign firms which own the production facilities and sell the goods in advanced economies.
This is the fundamental dynamic of trade with China–it has enabled an explosion in U.S. corporate profits to unprecedented heights. If you think about it, it is absolutely staggering that 10% of the entire U.S. GDP ($13.5 trillion) is corporate profits.
The full story of the decline of manufacturing and industry in the U.S. is not complete without looking at the dominance of finance.The U.S. economy has been effectivelyfinancialized, meaning that Financial Elites have come to completely overshadow industry and manufacturing.
Financialization of the U.S. economy and the exploitation of trade with China are deeply related. Domestic industrial capitalism ran into the limits of overcapacity and saturated markets; additional capital investments reaped marginal gains in profits.
The "answer" was to financialize the U.S. economy with vast increases in credit, debt and leverage, enabling a hyper-consumerist economy built on a pyramid of debt and leverage. Industrial Capitalism shifted capital and production overseas for a "two-fer"–to skim unprecedented profits from lowering production costs and by expanding into newly opened economies in China, India and elsewhere.
Simply put: Finance took over America, and Industrial Capital moved overseas. Both profited immensely, and China gained an industrial sector paid for by overseas capital and 200 million jobs for its restive, ambitious populace.