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Higher Oil Prices Are Starting To Bring Jobs Home
Posted by
kdawson
on Tue Jun 24, 2008 08:40 PM
from the silver-lining-with-a-vengeance dept.
from the silver-lining-with-a-vengeance dept.
penguin_dance notes a report up at ABC News that high oil and gas prices in the US may be moving jobs back home in a trend that some economists are calling "reverse globalization." It's becoming more and more expensive to ship finished product from other countries, so some companies are moving the manufacturing back to the US. The article hints that this trend may spill over soon to raw materials such as steel. One economist is quoted: "It's not just about labor costs anymore. Distance costs money, and when you have to shift iron ore from Brazil to China and then ship it back to Pittsburgh, Pittsburgh is looking pretty good at 40 bucks an hour."
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Telecommuting (Score:5, Insightful)
Now if companies would pull their heads out and either/or/both go to a 4 day work week and re-implement telecommuting...
Re:Telecommuting (Score:4, Insightful)
Telecommuting is great, IF most of your employee base has a high level of experience and is responsible. In this day and age, thats the minority though... I've worked for a small-ish company who did it, but they lucked out big time on the quality of their employees. As for 4 day weekends...considering fridays don't even count as it is for a lot of people because its the "last day of the week", when you cut it to four, its even worse. Again, worked for a company who did that...nothing was getting done. It can work, but you need one hell of a nice corporate culture and good employees to do it. Not for everyone, definately.
And for doing 4 days but more hours each days to compensate...again, very, very few people can be efficient at their job for more than like 6 hours, nevermind 9-10.
These are things that work well in a small company of "special" people who can take it...but people who can take it are quite rare...even though many would pretend otherwise and lie to themselves about their own limits.
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Re:Telecommuting (Score:5, Informative)
I've seen that happen because if you're not there when the execs ask the team for advice, you don't get asked and don't get a boost in perceived value. You won't get invited to adhoc meetings and you'll miss all those water-cooler conversations. You also don't get invited to lunch with the team or the management, which often spread news regarding the project, so when you actually do show up to a planned meeting, you'll appear extremely unprepared because you missed all those casual details. You also don't get the special projects handed out at a moment's notice, which generally saves someone's ass gaining you another supporter. Volunteering for those special projects makes you look like a go-getter, but you'll be completely bypassed because you weren't there to raise your hand. Also, if your teammates work late, it's assumed you're not. If they can't see you putting in extra time, you gain no benefit from doing such. You will watch helplessly as your teammates slowly rise in ranks. They will receive the flagship projects to work on, while you get handed the maintenance projects, which only buries you deeper because you have no chance to shine on those projects. Your teammates will be recognized every time they complete something, which will never happen on on your crappy maintenance project.
I worked at a job in which every member of the team was remote, and it worked out very well, but once the team was consolidated in the office, the stragglers had a difficult time proving they were working as hard as the ones showing up in person. I watched previously great workers drift off into mediocrity because they suffered declining perceived value by management.
But, like I said earlier. I think it works if everyone does it, but not if 1 or more teammates don't.
Parent
Whacked upside the head ... (Score:5, Funny)
... by The Invisible Hand.
Adam Smith strikes.
Macroeconomics (Score:5, Funny)
Yep. (Score:4, Funny)
High oil prices will do way more than Kyoto (Score:5, Insightful)
The fact is, for all the environmentalists out there screaming to put regulations on carbon emissions, etc., the price of energy is the only thing that's going to have a substantial impact on the amount of fuel we use. People are actually considering more fuel efficient vehicles, and at my place of work people are taking advantage of opportunities to work from home once in a while. Especially when their commute is over one hour. If we keep it up, people might move closer to work.
Re:High oil prices will do way more than Kyoto (Score:5, Insightful)
The main problem with high oil prices is that the money is going largely to rich oil producing countries like Saudi Arabia, so that they can build monstrosities like ski resorts in the desert. I would have preferred to pay a carbon tax instead; at least the money would stay in our own economy and be used to build infrastructure. Carbon taxes could be offset by decreases in income taxes, so that we don't pay any more overall. As an environmentalist, I am strongly opposed to these high oil prices, because they are siphoning off our wealth and giving it to rich oil foreign oil companies.
Parent
The steel thing is already happening (Score:5, Informative)
It's also putting the kibosh on the American Dream (Score:5, Interesting)
The problem with telecommuting is that your job is basically dependent on the quality of the IT staff to a much higher degree. My employer tries to do telecommuting, but somewhere between cost cutting in IT, draconian security restrictions, and a dodgy network connection, it fails to be useful for getting real work done.
We've been looking to move out of our high cost of living area for quite some time, but the rising cost of gas has put that on hold. I would like to buy a house - and can afford one on the edge of the suburbs, but alas, any saving in mortgage payments would be consumed by the cost of fuel. Even though I'm just a fifteen minute commute from work, I spend nearly fifty dollars a week getting there and back.
So yeah, it might bring some manufacturing jobs back home. But those of us who have become used to working in the city and commuting out from the cheaper communities are finding themselves in quite a bind. I can't afford a house in my current area, and I can't afford the gas to drive from the places where I can afford a house.
I'm slowly coming to the conclusion that I'm going to have to wait another 5 to 10 years for the next housing market crash before I'll be able to move into a house. When my Dad was my age, the loan on his (our) house was up - and he was a factory worker. Today, I make almost four times what he did, and can't even afford a three bedroom house. So much for the American Dream.
Law of Unintended Consequences (Score:5, Interesting)
They weren't expecting the return of blast furnaces to Pittsburgh, however. So we burn a little less gasoline, and dump tons of coal and limestone in the steel furnaces.
Re:Interersing trend... (Score:5, Insightful)
If high fuel cost continues, it will only bring back the sail-boats, not the off-shore jobs.
Parent
Re:Interersing trend... (Score:5, Interesting)
It should be bringing nuclear wessels [sandia.gov]. With the cost of oil to fire a ship being what it is, the Savannah would have been competitive back in the 70's. The only problem to solve is that high seas piracy still exists and the US government doesn't want the nebulous "bad guys" to steal a nuclear wessel and reuse its atomic fuel for something nasty.
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Re:Interersing trend... (Score:5, Interesting)
"The 163 pounds of uranium she consumed is estimated to have provided the equivalent power of nearly 29 million gallons of fuel oil."
That just put everything in perspective. Holy hell. For the amount of money you saved you could hire a small army to arm your vehicle. US Government could nationalize some ships.
29 million gallons of fuel.
Damn. Just Damn.
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Re: piracy (Score:4, Insightful)
Also, a nuclear ship can sustain high speeds much longer than conventionally-powered ships. Makes you harder to capture.
I think it might be an interesting development to bring back the "Q-ship"... troll for pirates, then blow their asses out of the water by surprise.
Parent
wessels? (Score:5, Funny)
Thank you, Mr Checkov. Mr Sulu, lay in a course for the 1970's.
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Re:Interersing trend... (Score:5, Insightful)
With the high price of fuel....and everything else going up along with it..I could safely bet that the avg. person in the US does not have the environment topmost on their heads. If they could come up with cheap energy for running cars, etc...I think many people in the US would now be comfortable strip mining the Rocky Mountains and The Applachians down to nothing without a 2nd thought. This has hit the general public in a way they never really ever imagined before, and they are shocked. I'd say they'd be prepared to do about anything if the price keeps increasing at this rate.
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Re:Interersing trend... (Score:4, Funny)
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Re:Interersing trend... (Score:5, Insightful)
I highly, highly doubt that. With the mortgage crisis here in the US home prices are falling not increasing. And I doubt that that will stop anytime soon. Another thing is, North America has only been explored within the last 500 years, it lacks the shortage of land which is part of why Europe has such high prices for houses, mix that with the fact that home prices are falling and people with a lot of land are cashing it in to get some cashflow... You get the picture. While this may make large buildings such as new arenas and skyscrapers more pricey, for the average person home prices will only keep falling.
Parent
Re:Interersing trend... (Score:4, Informative)
Houses are not stocks, they don't fluctuate like that. The prices are falling because of all the foreclosures causing more supply and thus less demand, which in turn causes prices to fall. The problem was simply all the variable rates people were taking and the banks doing too many of these risky loans - the market took a turn and suddenly the banks had to jack up the rates, which causes some foreclosures, which in turn causes the banks to loose money (yes they loose money on a foreclosure because they get a house and not the money back), which cause them to jack up the rates to cover their losses, which cause more foreclosures, etc etc. Now, there was more to it than that, but that's the gist.
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Re:Interersing trend... (Score:5, Insightful)
Already there are people complaining that 1/4 of their take-home pay is going to gas. Houses that kind of made sense at $1/gallon, just aren't worth it any more. Better to pay a bit more (you can afford it from the gas savings), live closer to work, and reap the additional benefits of more free time and less wear and tear on your car tp boot.
Even if there were no foreclosure crisis, $5/gallon gas would be lowering the value of houses that were built too far from any commercial center. This is just a happy coincidence - let the get-rich-quick house flippers, speculators, and everyone who lied on their mortgage application "because they just had to have their overpriced dream" eat shit and die. I have zero sympathy for realtwhores crying about how they're going to lose their own homes because they can't find anyone else to drink the kook-aid (no, that's not a typo - too many of them were were kooks, con artists, fraudsters, hucksters, etc. and they made the mistake of believing their own lies).
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Re:Interersing trend... (Score:5, Interesting)
Oil was $10 a barrel in 1999.
That's down from $34 in 1982 (about $80 in 1999 inflation-adjusted dollars).
http://www.ioga.com/Special/crudeoil_Hist.htm [ioga.com]
Why would the saudi's sell oil for $10 when they could sell it for $34?
Because they can't.
Every day this goes on, the longer oil prices will be low.
Every day, more people start carpooling, move closer to work, replace a 13mpg truck with a 31mpg (or higher) car, start riding public transportation, start working from home 2 days a week, start working 9/80 schedules.
My morning commute is now consistently 5 minutes faster in the morning and 15 minutes faster in the evening because the number of cars on the road has dropped that much.
Already, Iran is stacking up tankers because their online storage tanks are full.
Already our national gas usage is down about 4% in one month.
The current prices are caused by speculation. The same bubble of excess wealth passing through it that passed through the stock market in 1996-2000, housing in 2002-2005, and commodities now. The true "last barrel" cost of producing oil right now is about $50 a barrel. Everything over that is excess.
Once demand drops like a stone, then the oil companies STILL have to pay the bills. A lot of them are spending money like water. A very few of them are investing the current profits wisely.
They will sell oil to whoever will buy it- because just like the average salaryman in the U.S., they are just a couple paychecks from being homeless.
Parent
Re:Interersing trend... (Score:5, Insightful)
Umm... Most of the cost that Europeans pay for fuel is in the form of taxes, which they have voluntarily inflicted upon themselves, and not some kind of relationship to status as a world power. Oil is traded in a world market, whoever pays more gets the oil.
Also, the housing prices you linked to are in cost/square METER. Given that there are roughly ten square feet in a square meter, the costs are 2x, not 24x as you suggest.
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Re:Interersing trend... (Score:5, Informative)
The EU is doing just fine dealing with $5+ for a gallon of gas,
Are you kidding? So far Europe has had truck drivers go on strike against fuel tax [bbc.co.uk], fuel delivery drivers go on strike for a 14% pay increase [scotsman.com], annual electricity/gas bills rising at 40%/year threatening to push a quarter of all households (5 million families) into fuel poverty [timesonline.co.uk], councils raising the cost of school meals due to the expense of transportation [northlincs.gov.uk]. Even the police are having to cut back on front line staff due to the additional expense [telegraph.co.uk]. Food bills have risen by 20% since the start of the year. [telegraph.co.uk]
The advertisements on the sides of public transport buses read "Fed up of paying fuel duty to go nowhere, take the bus instead and stop your wallet from going empty". Otherwise many people are choosing to cycle in to work, especially university staff.
All of this is predicted to send house prices down by at least 10%, and then one minister tells people that should stop being so miserable about the rising cost of living. [telegraph.co.uk]
Parent
Re:Interersing trend... (Score:5, Insightful)
I don't care so much about the environment in Alaska. Well, I do, but it's not my primary concern. I'm against drilling there for other reasons. Even the highest estimates say we'll only get about a 10 dollar reduction in the price per barrel of oil. That translates to a few cents per gallon. I think the money and time are better spent trying to figure out how to get us off fossil fuels than just postponing the inevitable decline of oil. And as a bonus, all that territory in Alaska can remain untouched by man.
Parent
Re:Interersing trend... (Score:4, Interesting)
Well, I think that as soon as they announce that we will start new drilling out there in previously 'banned' areas...that speculators in oil will begin selling off...and that should drop the prices almost overnight back to more normal levels.
Parent
Missing assumption (Score:5, Insightful)
You're assuming that OPEC and other sellers won't decrease output to keep production (and therefore, prices) exactly where they are.
All drilling in Alaska is guaranteed to do is to screw up Alaska.
Parent
Re:Interersing trend... (Score:5, Insightful)
Myth said:
"Oil companies have leases all over America to drill for oil. They are currently only using 20 percent of these leases."
I agree. I remember back in the 80's after the Oil Boom, there was many a domestic sweet crude well capped due to low prices on the oil market. I'll bet some of those wells are due to be uncapped in the near future if they haven't been already.
There is a possible additional source in the Barnett Shale in Texas. The offshore sites could be increasingly utilized.
Also, Canada has that oil bearing sand they've been talking about. Extracting that oil is becoming economically feasible.
I'm not too keen on the ANWR drilling idea. We've already despoiled just about every pristine and beautiful place on earth... something needs to be preserved.
Bottom Line: There's oil to be had here without sending the wealth overseas.
It's time for a change though... I'm looking forward to additional advances in Fuel Cell and Solar Technology and other efficient ways to convert energy.
High oil prices, while tough on the buck, just might be the incentive we need to better explore alternatives. It's a bitter pill.
Parent
Re:Interersing trend... (Score:5, Informative)
Yet with all this new supply pouring in from the north the price of oil hasn't dropped a bit.
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Quit buying into the bull puckey talking points (Score:5, Informative)
Check out this article which details exactly what this lease and usage entails.
http://online.wsj.com/article/SB121391719487790187.html?mod=rss_opinion_main [wsj.com]
In other words, the politicians are using word play to infer that the oil companies are drilling on the lands relying on public ignorance that a lease of oil producing lands does not equate to a guarantee of oil.
So basically, the process is.
1. Secure the lease
2. Get the permits to do test drilling
3. Do test drilling
4. Determine if its economically feasible to recover the oil
5. Get permits to actually to set up a site to manage it
6. Get permits to drill on the site
7. Go to court to keep your permits after being sued by every other environmentalist group
8. Drill for oil
9. Profit?
Remember the first rule : If a Congressman's lips are moving he is 99% of the time telling you a lie or a falsehood by omission.
Parent
Re:Interersing trend... (Score:4, Insightful)
I say, save the oil in alaska and use it for truly priceless stuff when it runs out everywhere else.
Given all the yammering-- it's clear if oil was 300 a barrel, alaska would be covered with pipes. so we *will* drill there someday. just a question of when .
Who cares about the environment, it can recover in 20-40 years.
Real problem is still TOO MANY PEOPLE.
Parent
Re:Interersing trend... (Score:5, Funny)
Hmmm, so maybe going nuclear IS the solution...
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Re:Interersing trend... (Score:4, Funny)
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Re:Interersing trend... (Score:5, Funny)
Parent
Re:Interersing trend... (Score:5, Insightful)
I believe the point is that it can be made safer, but never totally safe. Your own point about AC vs DC supports this idea. Yes, electricity is used every day by about a bajillion people (it's a technical term) [wikipedia.org]). The VAST majority of them use it safely, but every day somebody, somewhere does something stupid and gets themselves fried. Electricity is far, far safer than it was, but it is still dangerous in the hands of imperfect humans. Humans make mistakes. Some people think this doesn't apply to them, but they are mistaken.
The difference between a dude who stands in his hot tub to work on the filter pump and the guy who spills soda on the reactor control panel [wikipedia.org], is that hot tub boy only kills himself and at most a few of his friends.
For the record, I am in favor of nuclear energy (Go Isotopes!), but let's not kid ourselves about it being TOTALLY safe.
Oddly enough, it's when we think something is totally safe that we are most likely to screw up.
Parent
Re:Interersing trend... in 1985 (Score:5, Insightful)
IMHO nuclear should be the LAST resort,and with new methods like molten salt and super black materials for solar,ever more efficient designs for wind,geothermal,tidal,etc it is simply not the right course at this point and time. There are simply too many problems we haven't fixed as far as treatment and disposal of waste to make nuclear a good idea at this time. But as always this is my 02c,YMMV
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Re:Interersing trend... in 1985 (Score:5, Informative)
> we haven't figured out what to do with the tons of nuclear
> waster we have NOW,much less if we did like McCain wants and
> added 45 new plants.
Of course ``we'' have:
http://www.eoearth.org/article/Fast_neutron_reactors_(FBR) [eoearth.org]
Prohibited by the Carter Administration in the USA, but used
throughout the World. Breeder reactors use the output of
conventional fission plants as fuel and the resultant waste,
once reprocessed, has a half-life of a few centuries instead
of hundreds of millenia.
Parent
Re:Interersing trend... (Score:5, Informative)
Who cares about the environment, it can recover in 20-40 years.
Where do you get this crap? Take a look at the island of Crete. This island used to be almost completely covered in forest. Then the Minoans began clear-cutting it for lumber to build ships. This continued for several generations. When the forest was clear cut, there was no longer any mechanism for the top soil to be held in place. It washed into the sea. The isle of Crete is now a wasteland in terms of the ability to grow forest -- solid forest has not grown there in thousands years.
You are naive, ignorant, short sighted, and have an offensive disregard for the natural world.
Parent
Re:Interersing trend... (Score:5, Insightful)
You suggest the "natural world" should forever be a snapshot of when you first noticed it. An environment is not an entity of its own accord. It is a result of all its inputs, and we are a very large input on the environment. The only difference between us and other inputs is our self-awareness.
The impact we have on the "natural world" becomes part of that world. Are there not birds, rats, cockroaches, etc. that thrive on the fruits of human progress? What makes them less important than the flora and fauna in a tropical rainforest?
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Re:Interersing trend... (Score:5, Informative)
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No need for that (Score:5, Funny)
Slashdot: Part of the solution!
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Re:Interersing trend... (Score:5, Insightful)
Really ?
Most days I part with my money because I'm trapped between two evils, and I try to pick the lesser. Telecoms, overpriced food (even staples), services done to the lowest possible standards... Greed is spiraling out of control, because those who spend wisely are impossibly outnumbered by the ravenous fools of our society.
Parent
Re:Interersing trend... (Score:4, Insightful)
That is still no reason not to demand value for the value you offer. In a system where fools have no safety net, which is paid for now by those who spend wisely, we wouldn't have this problem. The greed you speak of is not capitalism. The greed you speak of is the one where people want value they have no right to, and force value from those who do have it. Whither those who hold value now have come about it 'justly' or not is of little consequence to the morality of taking it from them now. That becomes a chicken and egg argument. And also indicates that if you yourself will trade in value, instead of trying to swindle, cheat and steal, the cycle may be broken. But the theft of value has become institutionalized by the welfare state. To do the most good, where do you think think we should start then? I think the government should stop stealing from us and giving to ravenous fools, plain and simple.
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Re:Dollar Price is Low (Score:4, Insightful)
It's more that the price of dollars is low than that the price of oil is high. Turning every one dollar bill into a one million dollar bill won't cure world poverty either.
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Re:Yay, Pittsburgh (Score:5, Interesting)
my dad owns a drycleaning plant. steel hangers are one of his biggest supply expenses now. a few years ago a hanger might have been $0.10 or so, then 2 or 3 years ago it doubled overnight to $0.20, and a few weeks ago *that* doubled.
some of the larger hangers are 50 cents each. 50 cents for a metal coat hanger. he needs several hundred of these in a given week, nevermind the price of all the other supplies going up. it hurts, bad, and he has had to raise prices because of it (though not enough to actually cover the added cost)
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Re:Yay, Pittsburgh (Score:5, Interesting)
my dad owns a drycleaning plant. steel hangers are one of his biggest supply expenses now. a few years ago a hanger might have been $0.10 or so, then 2 or 3 years ago it doubled overnight to $0.20, and a few weeks ago *that* doubled.
some of the larger hangers are 50 cents each. 50 cents for a metal coat hanger. he needs several hundred of these in a given week, nevermind the price of all the other supplies going up. it hurts, bad, and he has had to raise prices because of it (though not enough to actually cover the added cost)
Perhaps your dad could provide a discount for customers who provide their own hangers.
Parent
Re:Yay, Pittsburgh (Score:5, Insightful)
Then maybe if steel gets high enough, your dad might stop pointlessly giving away an endless supply of free hangers that end up in the trash. A principle of consuming only what you need, rather than all you possibly can. But then this sort of thing is well overdue.
Parent
Re:higher oil prices = higher prices = higher wage (Score:4, Informative)
No, it's a lose-lose broken window fallacy.
http://en.wikipedia.org/wiki/Parable_of_the_broken_window [wikipedia.org]
Paying for breathing air might increase the GDP, but it would only be making the world net poorer. By definition of the consumer price index (CPI) being fraudulent data, so too is the GDP fraudulent data. Double the supply of money, ceteris paribus, the GDP doubles. Twice as much money trades for the exact same things. But in the real world inflation works it way through the economy discretely and unevenly, not universally evenly. People who get the new money and new credit first, spend more on specific things first. In the late 90s it was internet stocks, from 2000-2007 it was houses, and now it's commodities like oil. The poorest (last to receive the new credit and dollars) will suffer the worst for the longest time.
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Re:higher oil prices = higher prices = higher wage (Score:4, Informative)
Less energy afforded and produced makes the world net poorer exactly the same way less food afforded and produced makes the world net poorer. Decreasing the supply of drinking water by half may make the price of that water double, but that means the world is twice as worse off by definition of having half as much water.
Increasing the costs of trade is just increasing the costs of the division of labor. Would you be better off if you to make everything you have completely by yourself? Grow and harvest your own food, make your own clothes, build your own house, manufacture and build your own computer? You wouldn't have enough time and skill to do it all by yourself and thus you would be much poorer operating as an isolated autocratic individual.
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Re:OMG (Score:4, Insightful)
Yes, producing locally will be more expensive than it used to be to produce externally, and yes this will result in a higher local cost(presumably your basis for the broken window theory).
However where the broken window takes something that was fine as it was and claims that by breaking it and producing work for someone else is a good thing where it actually just creates an unnecessary cost for the baker and lowers overall productivity, this isn't the same situation.
The manufacturing work was going to be done by someone regardless, all this has done is make it more economical to do it locally. It isn't unnecessary work, or lost productivity it's simply someone else doing it.
You could argue that the increase in cost will do more overall damage to the economy than bringing the jobs back home will do good, but even that's sort of immaterial, the cost increase is going to happen pretty much no matter what we do, so our net result from this move is an increase in capital flowing into our the US economy and job creation, from the perspective of the US that's a good thing, maybe not so much a good thing for China, but still a good thing.
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