Recently, WSJ wrote a story about apparel “made in USA”. Although apparel manufacturing will never disappear in the U.S. (as the case elsewhere in the world), neither is it likely that those lost labor-intensive manufacturing jobs in the apparel sector will come back in the future. Why? Just ask yourself: Am I willing to spend $1,300 for a blazer, $170 for a dress shirt, $80 for a tie and $390 for a pair of jeans? These are the price tags associated with “Made in USA” for apparel.
Apparel is not a single case. If you’d like to enjoy your iPhone “Made in USA”, please add two “00” to the current price tag. Like it or not?
Similar questions can also be raised to the Europeans, Chinese, Koreans and everyone else in the world. For example, what will happen if China does not import U.S. cotton but totally relies on its domestic supply? What will happen if each country tries to produce their own air plane instead of using Boeing’s aircraft? How about European retailers only accept credit card issued by an European financial service provider and reject Visa or America Express? And how long will it take to deliver a package to Asia if FedEx and UPS are not allowed to operate in these regions? Will these “changes” improve or worsen people’s daily life? The answer is obvious.
Globalization does not mean “Made in China”nor “Made in USA”. Rather, it means “Made in the World” based on each country’s comparative advantage, it means getting access to the world resources and using them more wisely and more efficiently. Why not everyone engages in doing something they are good at doing and then exchange? This is why we go grocery instead of growing vegetables nor raising cows by ourselves today.
Globalization also means a product now can reach the world market beyond the limited domestic market. But a country can only successfully export when another country is willing to import. This is why we need to support trade liberalization so that every country can export more of those products they are competitive in making. And definitely more jobs will be created domestically. I mean every country that engages in such global “exchange”.
We no longer live in the 15th century when the Mercantilism was born. In the 21st century, export is good and import is equally good for the economy. Embrace globalization and enjoy better life~
Data source: American Apparel and Footwear Association (2012)
Data source: U.S.-China Business Council
11 thoughts on “How many U.S. consumers are willing to spend $1,300 for a blazer, $170 for a dress shirt, $80 for a tie and $390 for a pair of jeans?”
It seems as though the “Made in USA” price tags are unreasonable and unaffordable for most US citizens. Even if there was more domestic apparel production, not many people here would be willing to pay $1,300 for a blazer, $170 for a dress shirt, $80 for a tie and $390 for a pair of jeans. It seems to be a more plausible solution for countries to produce what they are best suited for and then to trade internationally. This allows the most efficient use of the world’s resources.
on the other hand, personally I feel those apparel manufacturing remained in the US has to target high end market. However, it won’t successful without a world-class luxuary brand. That’s why western European countries like Italy and France were able to mantain a good proportion of apparel local apparel manufacturing.
I understand the Mercantillism view is no longer plausible in our society today, but my question why do so many Americans still wish to bring apparel production positions back to the United States? The Comparative Advantage theory states that each nation shall produce what they specialize in and trade with one another so each nation reaps the largest advantage or the smallest disadvantage. To me, this view makes perfect sense. Wouldn’t Americans rather lose their jobs to factories overseas, and may even receive help from the TAA, then pay astronomical amounts of money for apparel?
Excellent question! Public view often time is intentionally “mislead” by the media or politician. Think about it, how many people on the street ever heard about the term “Mercantilism” or “comparative advantage”? Actually, American people love to see EVERYTHING “made in USA” just like the Europeans like to see everything “made in EU”. You need to educate them, let them know the “other side of the story”. For example, years ago a study conducted by the CATO institute shown that “workers in apparel and textile trades earned an average of less than $22,000 per year in 2006. If a Democratic T-shirt tax managed to restore the 370,000 low-paying jobs that have been lost in the industry in the past seven years, it would come at a cost to consumers of $59,000 per job — almost three times what such workers are paid.” (http://www.cato.org/publications/commentary/do-we-need-tshirt-tax-save-jobs ). However, on the other hand, interests group will always try their best to influence policymakers to create a set of “rule of the game” in their favor. This is the so called “politics”. Just this weekend, I read one speech delivered by Kevin-president of the American Apparel and Footwear Association. One sentence is well said “When we get dressed each day, we wear more than clothes and shoes. We wear the politics, regulations, legislation, global economics, and political will that make clothes and shoes even possible. We wear the synergy between public policy, politics, and business that results in affordable, fashionable, and safe clothes and shoes for hardworking American families” We will discuss more about policy in the later part of the course
Using a country’s comparative advantage makes the most sense. I liked the phrase, “getting access to the world resources and using them more wisely and more efficiently.” I thought that was a great way to sum up the purpose of comparative advantage. Another thing that stood out to me was the hypothetical issue of countries only accepting credit cards issued by financial service providers in that country. If you think about the amount of money certain countries gain from tourists alone, such as Europe, rejecting American-issued credit cards, or another other country’s credit cards, would obviously decrease the amount of money given to the country. If this happened all over the world, we would run out of resources so fast and there would be economic downfalls in almost every country, hitting the developed countries harder than the less developed.
I don’t think that I know anyone that would be willing to pay $1,300 for a blazer, $170 for a dress shirt, $80 for a tie and $390 for a pair of jeans, including myself. This is why we go to developing countries, like China, to produce clothing because their wages and standard of living are at a much lower cost than in the U.S. Obviously, this benefits us with cheap clothing, but there are many people in the U.S. losing their jobs to China. This is an unfortunate consequence, but realistically no one would pay the prices listed above. “Why doesn’t everyone engage in doing something they are good at doing and then exchange?” I completely agree with this quote from the article. This is one of the reasons why globalization is so beneficial. If countries started making their own apparel, their own airplanes, etc. this would effect everyone negatively and ultimately worsen people’s daily lives. I agree with the comment above when they say that maybe Americans should give up on trying to bring apparel production positions back to the United States. Maybe it’s time to face the facts and come up with a game changer!
Inudstry upgrading is an irreversible trend both in the U.S. and globally.
If each country worked on its own, then each country would fail. That is why globilaztion works today because each country brings something to a table, its exhanged for another good or service by a country that does it better, then resold in the domestic country at a higher price. I think the idea of ‘made in america’ sounds much better than the actual reality of the situation. Americans are barely make ends meet, we have the highest percentage of those on government assistance which tells us we can’t afford much more than we are already. So, if manufacturing was to come back to the United States, I think the majority of united states citizens couldn’t afford $1,300 for a blazer, $170 for a dress shirt, $80 for a tie and $390 for a pair of jeans. More importantly, we are in a fast fashion era, the typical consumer wants to go to a store or online, find a pair of jeans, sweather, shoes, accessories, and maybe some other things for all under $100. They want the best deal, and if it is made in here, you would think it would eliminate costs such as shipping but it would cost more to run a factory, paying for employees, and making a product effeciently to get it to the consumer in the time that they find reasonable.
Working in retail for the past seven years, I have heard many consumers say that they wish everything was “Made in the USA”… What these consumers do not realize is how much more expensive textiles/apparel and all other items would be if they were made 100% in the USA.
I do think that countries should produce based on what their abundant resource is. If rich in labor, produce apparel. If rich in capital, produce airplanes. Increase productivity where possible and still allow people to create apparel and have jobs.
Of course it would be great to have cheap products made in the USA available to us but it’s not as easy as people think.
If costs increase, prices will always increase!
And everything has its oppertunity cost: just like why we buy other people’s merchandise and service everyday. The same at the country and industry level.
If everything that was sold in America was made in America, I don’t think I or many other people would be able to afford half the things we do because of price increase. If we had to buy clothing that were “$1,300 for a blazer, $170 for a dress shirt, $80 for a tie and $390 for a pair of jeans “ we would need higher wages to sustain ourselves. Globalization and a global exchange mean a money flow throughout the world. We need this so we don’t have to pay ridiculous prices on things we need. I’m not saying that everything needs to be made overseas, things still can be made in the U.S. , but it may pertain more to a group of people who are willing to pay more for that.