Market Watch: The Future of Production

Francesco Carta fotografo

Francesco Carta fotografo

It is commonly known that American businesses relocated most of their manufacturing to oversea developing countries in order to save expenses. Developing countries like India and Vietnam have a lower infrastructure and labor cost, lower tax rates, and lower regulation than in the US. At the same time, workers in the developing nations can do the same quality of work as workers in the US, but with less benefit (aka lower costs). Therefore, it is not hard to understand why manufacturing jobs are leaving the US. Even American high school economics books now mention the trend of developed countries’ labor forces existing more in the service sector than in the manufacturing sector. 

However, there are still significant numbers of Americans that believe that manufacturing jobs will return to the US. In a survey conducted by Gallup in last month, about 19% of Americans suggested “American businesses should keep manufacturing jobs in the US,” responding to the open ended question of “In your opinion, what would be the best way to create more jobs in the United States?” At the same time, only 2% of the respondents replied that creating more “green” jobs will be helpful in this situation.

Political alignment seemed to play a role in this survey. Among those who replied “keep manufacturing jobs here” or “stop sending jobs over sea,” more than half of these were recorded to be Republican leaning. They are also more likely to suggest that the nation hires more American citizens and stops hiring illegal immigrants. However, those who responded “create more green jobs” were almost entirely Democrats leaners. Nevertheless, Republican respondents also favor government actions like reducing government regulation, lowering taxes, and increasing import traffics than Democrats. At the same time, Democrat respondents are favor of creating infrastructure work, increasing wages for the middle class, and improving education. The topics that both sides agreed on is to help small businesses thrive, give out less welfare, and cut government spending.

In fact, there are already a lot of green jobs in the US. Solar, wind, and even nuclear energy are replacing coal as source of energy. There are more Americans having jobs related to solar energy than coal. Surprisingly, President Trump withdrew the US out of the Paris Climate-Agreement in recent days and try to reenter later after finding a “better deal.” He claimed that it is unfair for the US is sent $3 billion to developing nations to reduce greenhouse gas. At the same time, he believed that developing nations like India and China were taking manufacturing jobs from the US. His objective was to withdraw from this agreement and try to bring these “lost jobs” back to the US. 

Even if businesses agree to hire American workers to mine coal and produce energy in the US, hiring Americans would raise the cost of production much higher than it would be from outsourcing. Thus, if the energy companies wanted to make their shareholders happy, they will need to raise the price of electricity. At the same time, if the coal refineries’ industrial waste polluted the water, then clean water would be more scarce and may increase the price too due to the cost of purification. With increase of water pollution, there is more likely to emerge more illnesses related to water pollution. Agricultural products and fishes may be more expensive along this chain reaction; at some point it will become apparent that everything is simply a large chain. 

Besides the fact that developing nations provide better locations for businesses to manufacture, artificial intelligences are taking over manufacturing jobs worldwide as well. Businesses now can simply "employ" automatic machines to do the manufacturing work. These robots can work 24/7 as long as they are powered and only require maintenance fees. Most importantly, robots don’t need to take breaks, vacations, have employee benefits, or insurances. In other words, factories will favor these robots over human labors over jobs since the electricity bill of these automatic robots will be cheaper than hiring a team of full time human labors. Nevertheless, even professional jobs like lawyers may be in danger of losing their jobs to robotic lawyers, which are even capable of giving legal advices.  

Automation is inevitable. In the future when automation become so sophisticated and able to take over maintenance and management positions, it is possible to have very little or no humans working in large manufacturing plants. It is very likely to have factories of entirely automations, as there are already certain aspects of factories at that stage already (automotive). Even if president Trump is able to bring back the outsourced manufacturing jobs in developing countries back to the US, they won’t last long due to automation. These blue collar workers will still need to find new ways to make livings. 

It is understandable how blue collar Americans wanted to have their manufacturing jobs brought back to the US. Although the US is recovering from the recession and the unemployment rate is the lowest point since 2010, the U-6 unemployment rate is still at 8.4%.  Also, it's not realistic for factory workers to learn professional skills like accounting or programming quickly to become accountants or software developers overnight. It will also be hard to adopt the fact that the skill you trained and worked at for most of your life may be replaced. In a sense, it resembles how the samurais lost their jobs and military effectiveness once their swordsmanship skills become obsolete during the Meiji Restoration. Eventually, the government will need to find a solution about what to do with those who lost their jobs to robots now or in the future. With the highly efficient futuristic production, it will be hard to imagine which media's version of a sci-fi future we will become.