Eduardo Porter’s New York Times column from yesterday is worth a quick read mainly for two reasons. Not because it sheds much light on its title question of whether globalization is in retreat. Instead, it’s noteworthy because of two valuable contributions to the U.S. manufacturing renaissance debate.
First, Porter joins the tiny band of analysts – including yours truly – who understands the conceptual weakness of claims that soaring labor costs will fatally undercut Chinese industrial competitiveness and become a continually growing bonanza for American factory owners and workers. China’s response, notes Porter, will surely be to “move up the value-added ladder to make more sophisticated stuff. “ The only problem with this statement, as I’ve noted, is that this climb is well underway.
Much more original is Porter’s second contribution. He evidently spoke with two MIT researchers who have looked closely at the corporate announcements of job and production reshoring that have been swallowed by the American media for years. Their conclusions regarding some 50 American companies that are ostensibly joining the reshoring bandwagon, including Apple and GE? “Most have yet to make any move.”
Thus the case looks stronger than ever: If wishful thinking mattered, a U.S. manufacturing renaissance, especially one spurred largely by reshoring and Chinese industrial decline, would already be an undeniable reality. In a fundamentals- and fact-driven world, it’s still a fairy tale.