Realist, not conformist analysis of the latest financial, business and political news

If They’re Going To Hire Chinese Workers What’s The Point Of Having Foxconn In Wisconsin?

There’s a story – WSJ no less – that Foxconn is hoping to bring in Chinese workers to staff at least part of its new factory in Wisconsin. There are also reports that it has denied this. But the very idea itself enables us to ponder what the value of all this concern over trade and domestic production is. The answer being that time spent on the discussion is wasted, as there’s not much value to even the idea. Who produces and where is simply not important – it’s who gets to consume that is.

Foxconn Considers Bringing Chinese Workers to Wisconsin as U.S. Labor Market Tightens

At which point there’s not much point in all those tax breaks to bring Foxconn to Wisconsin, is there? As the aim was to produce employment for Wisconsin workers. If they’re all already employed doing something else then why bother?

Foxconn Hopes to Staff New Wisconsin Plant With Robots and Chinese Workers

Staffing the place with robots makes a lot more sense. US labour is more expensive than Chinese. US labour productivity is higher than Chinese. The two are, largely enough, the same statement. And the reason that US labour is more productive of that in general US workers use more machines than Chinese do. Machines and robots here really being just shades of the same thing, more capital. This works both ways around. People who use more machines are more productive and thus get paid more. If you move to a higher wage area then you’ve got to use more machines to be abler to afford the higher wages.

Foxconn mulls tapping Chinese skilled workers for Wisconsin plant as U.S. job market tightens

But think on the more basic idea here. We want to be able to consume stuff. To do that it has to be made somewhere. OK, that requires the combination of capital and labour in some geographic location. The fallacy that all too many suffer under is that the location matters in some manner, which it doesn’t.

The capital here is foreign, so it matters not one iota whether it’s working in China, Taiwan or the US. If we add in that the labour is going to be Chinese, even if working in Wisconsin, then, well, what does the location of that labour matter? Actually, we should go further. We care only about the output that we get to consume. So, why should we care whether the labour is from Wisconsin or even in it? The answer being that we shouldn’t – there’s no value to any nativist conceptions of production any more than there is to nativist ideas about capital.

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5 years ago

Isn’t it really the case that Foxconn will bring in some senior people to help get the place going? It’s not Chinese assemblers that will be coming in. I think pretty much every manufacturer does that when setting up a plant abroad. On the other hand, WI possibly didn’t need this as things have been picking up there. But, politicians of all stripes like to cut ribbons.

5 years ago

Perhaps the Chinese labour living and working in Wisconsin will spend some of their remuneration in Wisconsin?

Perhaps it’s simply not important to you, but it is important to others?

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