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Why it Matters
"Labor is prior to, and independent of, capital. Capital is only the fruit of
labor, and could never have existed if labor had not first existed.
Labor is the superior of capital, and deserves much the higher
consideration."
Abraham Lincoln
"made in China" and other foreign made products? Possibly not.
You've most likely realized that a majority of the products on American store shelves are those that are manufactured outside of the United States. You may have questioned why when you finally come across American made products, they are often more costly in comparison to those made elsewhere. Unfortunately, at least when it comes to China trade (and some other countries), there is more to the story than meets the eye.
In 1980 the exchange rate of the Chinese yuan was 1.50 to 1.00 U.S. dollar. By 1997 the value of the yuan had declined to an exchange rate of 8.27 to 1.00 dollar. From 1997 until 2005 the yuan remained at the same value, despite the fact that China's economy grew enormously during this time. The yuan should have appreciated substantially - yet it did not appreciate at all. Today the yuan is still undervalued by as much as 40%, according to some economists. It is about 6.83 to the dollar. Many believe that this currency manipulation is a major contributing factor to the U.S. trade deficit.
By undervaluing their own currency, China has effectively caused their products to be artificially cheaper for other countries to buy (like us, their largest export market), and at the same time caused the goods coming in from other countries to be artificially more expensive for the Chinese consumers to buy. This has obviously encouraged sales of products made in China and discouraged sales of goods from other countries. The United States buys about 40% of China's exports - while they buy only 2% of ours.
With every dollar that we spend on China products and other imports that isn't matched with a dollar coming back from exports we reduce our domestic demand and therefore, our employment as well (see 'Trade in Goods with China statistics from 1985-2009'). When it comes to our American economy, by buying cheap foreign products we're actually shooting ourselves in the foot (or more accurately, the head). Sure it's nice to save a little money, but when it causes our businesses to close and our jobs to be sent elsewhere, how have we really saved?
There are health and safety reasons for buying products made in the USA as well. As the numbers of products that we import continue to climb, our government recall numbers climb also. Over the past couple years we have been bombarded by reports of fish products being raised in sewage contaminated water, antifreeze solvents in toothpaste, lead in toys, cosmetics and dishware, melamine poison in pet food, infant formula and chocolate. The list goes on (read here about leaves for herbal teas made in China being dried by truck exhaust fumes containing lead).
It can be and is argued that "these things can happen anywhere". While it is true that our own products are recalled at times, China imports are being recalled at an alarming rate. In fact, according to the U.S. Consumer Product and Safety Commission, over 60% of recalls in 2008 were of products made in China. American companies have found cheap labor overseas (going back to currency manipulation), but what is the cost to the health of American families?
Though buying American products is not an easy task these days (The American Made is working daily to change this), it's clear that the benefits to each and every one of us are enormous. And if enough of us DO IT, we just may create a large enough market demand to encourage new businesses for that demand. Sure, we're told that those companies who've moved our jobs overseas will not be coming back. That does not mean that they can't be replaced. Clearly, by supporting our American businesses today, we are helping to ensure that we have American businesses tomorrow. This is our mission and we hope you will join us.
You've most likely realized that a majority of the products on American store shelves are those that are manufactured outside of the United States. You may have questioned why when you finally come across American made products, they are often more costly in comparison to those made elsewhere. Unfortunately, at least when it comes to China trade (and some other countries), there is more to the story than meets the eye.
In 1980 the exchange rate of the Chinese yuan was 1.50 to 1.00 U.S. dollar. By 1997 the value of the yuan had declined to an exchange rate of 8.27 to 1.00 dollar. From 1997 until 2005 the yuan remained at the same value, despite the fact that China's economy grew enormously during this time. The yuan should have appreciated substantially - yet it did not appreciate at all. Today the yuan is still undervalued by as much as 40%, according to some economists. It is about 6.83 to the dollar. Many believe that this currency manipulation is a major contributing factor to the U.S. trade deficit.
By undervaluing their own currency, China has effectively caused their products to be artificially cheaper for other countries to buy (like us, their largest export market), and at the same time caused the goods coming in from other countries to be artificially more expensive for the Chinese consumers to buy. This has obviously encouraged sales of products made in China and discouraged sales of goods from other countries. The United States buys about 40% of China's exports - while they buy only 2% of ours.
With every dollar that we spend on China products and other imports that isn't matched with a dollar coming back from exports we reduce our domestic demand and therefore, our employment as well (see 'Trade in Goods with China statistics from 1985-2009'). When it comes to our American economy, by buying cheap foreign products we're actually shooting ourselves in the foot (or more accurately, the head). Sure it's nice to save a little money, but when it causes our businesses to close and our jobs to be sent elsewhere, how have we really saved?
There are health and safety reasons for buying products made in the USA as well. As the numbers of products that we import continue to climb, our government recall numbers climb also. Over the past couple years we have been bombarded by reports of fish products being raised in sewage contaminated water, antifreeze solvents in toothpaste, lead in toys, cosmetics and dishware, melamine poison in pet food, infant formula and chocolate. The list goes on (read here about leaves for herbal teas made in China being dried by truck exhaust fumes containing lead).
It can be and is argued that "these things can happen anywhere". While it is true that our own products are recalled at times, China imports are being recalled at an alarming rate. In fact, according to the U.S. Consumer Product and Safety Commission, over 60% of recalls in 2008 were of products made in China. American companies have found cheap labor overseas (going back to currency manipulation), but what is the cost to the health of American families?
Though buying American products is not an easy task these days (The American Made is working daily to change this), it's clear that the benefits to each and every one of us are enormous. And if enough of us DO IT, we just may create a large enough market demand to encourage new businesses for that demand. Sure, we're told that those companies who've moved our jobs overseas will not be coming back. That does not mean that they can't be replaced. Clearly, by supporting our American businesses today, we are helping to ensure that we have American businesses tomorrow. This is our mission and we hope you will join us.
Related Links
Made in Nations - Excellent country of origin resource for consumer goods.
American Economic Alert - Trade news and opinions.
American Jobs - Investigative film by Greg Spotts on the loss of American jobs to foreign competition.
AAM - Alliance for American Manufacturing
AMTAC - American Manufacturing Trade Action Coalition.
TradeReform.org - Blog by the Coalition for a Prosperous America.
Economy in Crisis - Daily economic report.
Union Forums - Forums promoting organized labor and solidarity.
AverageJoeEconomics.com - Ideas for growing our economy.
- Lots of info here..news and videos you may not see elsewhere.The latest 'Made in China' worry is drywall for homes.
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