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The Reshoring Imperative

The COVID-19 pandemic brought tragedy and disruption to America. But it has also provided another stark warning concern­ing the country’s disastrous over reliance on overseas production. It has demon­strated that without a strong, self-reliant industrial base, this country’s ability to forge a healthy, prosperous future—and even its ability to defend itself against foreign enemies—will be severely compromised.

The fact that the world’s largest, and theoretically most advanced, economy could not provide basic medical equipment like masks or the basic components of pharmaceuticals came as a shock, particularly as the country was forced to lean on its leading geopolitical rival, China, to address a health emergency that originated there. These developments have stirred some businesses and politicians in both parties to seek ways to encourage domestic production.

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Slow Boat from China

To some in the Biden Administration, the supply chain crisis can be dismissed as a loss of East Asian-made consumer trinkets that, as Vox tells us, we could all be better off without—or as White House spokesperson Jen Psaki suggested, amounts to little more than “the tragedy of the delayed treadmill.” Yet, in reality, a broken supply chain is hardly a rich man’s problem—global bankers are having their best year ever—but mostly impacts ordinary folks suffering from rising prices for everything from soybeans to natural gas. The crisis is now expected to last for at least a year.

The chaos on the ground level may not much hurt the elites of Manhattan or Palo Alto, but inflation, which is now expected to continue apace for at least the next year, has wiped out wage gains in the U.S., the UK, and Germany. Low-income groups are the most threatened, struggling to pay energy costs, surging rents, and higher food prices. All this is also eroding President Biden’s already weak poll numbers.

Our vulnerability to supply chain disruption clearly predates the Biden Administration, forged by the abandonment of the production economy over the past 50 years by American business and government, encouraged and applauded by the clerisy of business consultants. The result has been massive trade deficits that now extend to high-tech products, and even components for military goods, many of which are now produced in China. When companies move production abroad, they often follow up by shifting research and development as well. All we are left with is advertising the products, and ringing up the sales, assuming they arrive.

Unable to stock shelves, procure parts, power your home, or even protect your own country without waiting for your ship to come in, Americans are now unusually vulnerable to shipping rates shooting up to ten times higher than before the pandemic. Not surprisingly, pessimism about America’s direction, after a brief improvement Biden’s election, has risen by 20 points. The shipping crisis is now projected to last through 2023.

Not everyone loses here. For years the American establishment saw China as more of an opportunity than a danger. High-tech firms, entertainment companies, and investment banks profit, or hope to, from our dependency, becoming in essence the new “China lobby.” Behind the scenes these representatives of enlightened capital often work to prevent condemnation for the Middle Kingdom’s mercantilist policy, and its joint repression of democracy and ethnic minorities.

After all, the pain is not felt in elite coastal enclaves, but in Youngstown, south Los Angeles, and myriad other decaying locales. Meanwhile, by enabling China’s focus on production, and the conquest of technologies related to making goods, we have devastated  large parts of our country.  This shift has cost us 3.7 million jobs since 2000. Throughout the period between 2004 and 2017, the U.S. share of world manufacturing shrank from 15 to 10 percent, while our reliance on Chinese inputs doubled, even as our dependence on Japan and Germany shrank.

Yet perhaps even more debilitating has been our drift towards what British historian Martin Weiner has called “psychological de-industrialization.” Weiner was referring to the lack of interest in productive enterprise during late Victorian and Edwardian England, but he could just as easily be describing contemporary America’s corporate and financial elite.

Fortunately, America is not England, now a shadow of itself as an industrial country, living off its imperial connections to bolster its media, finance, and tourism sectors. It is a small country, at the edge of a fading continent in seemingly permanent decline. It lacks our vast expanse with its agricultural, energy, and other resources, not to mention our still considerable entrepreneurial spirit. As a huge continental country with enormous resources, lots of arable land and a large, traditionally hard-working population, the United States should be ideally suited to survive the retreat of the global economy, so evident in the supply chain crisis, and be able to shift to a more autarchic model. 

Read the rest of this piece at American Mind.


Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Homepage photo: Don Shall via Flickr under CC 2.0 License.

Confronting the Supply Chain Crisis

For a generation, the Long Beach and Los Angeles harbors in California handled more than 40 percent of all container cargo headed into the US and epitomized the power of a globalizing economy. Today, the ships—mostly from Asia—still dock, but they must wait in a seemingly endless conga line of as many as 60 vessels, sometimes for as long as three weeks. These are the worst delays in modern history, and the price per container has risen to as much as 10 times its cost before the pandemic. The shipping crisis is now projected to last through 2023.

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Feudal Future Podcast – The Reshoring Revolution

On this episode of Feudal Future, hosts Joel Kotkin and Marshall Toplansky are joined by JR Turner, Michelle Comerford, and Harry Moser to discuss the practice of reshoring, or bringing manufacturing back to the United States.

Economic Civil War

Our national divide is usually cast in terms of ideology, race, climate, and gender. But it might be more accurate to see our national conflict as regional and riven by economic function. The schism is between two ways of making a living, one based in the incorporeal world of media and digital transactions, the other in the tangible world of making, growing, and using real things.

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