The hypocritical American consumer

You read about it every day.  Some self-righteous politician or activist deplores the “shipping of American jobs overseas.”

The portrayal is always that of the “greedy business man” taking advantage of cheap labor and other overseas business advantages at the expense of the clearly more deserving and higher quality American workers.

The fact is, it is the American consumer who is greedy.  If “Made in America” made a difference at the store, we wouldn’t be having jobs disappearing overseas.  Unfortunately it doesn’t.  The American consumer goes to Wal-Mart, compares prices, and buys the cheapest thing, which of course is made overseas.  Then he goes home, turns on his Made in Mexico or Made in Indonesia TV, and watches another media report about big, bad, greedy companies outsourcing overseas.

He complains about customer service being done in India, or the Philippines, but he buys from the cheapest supplier, economically preventing the company he’s dealing with from hiring more expensive American workers to do the job.

The fact is, if you are the market leader with something very desirable, you set the price.  If you are a follower, the market sets the price. Most companies cannot be market leaders – so they have to be aggressively price-competitive in the market.  If they are not, then all the jobs go away, because the company goes away.

And most consumers are not value buyers, they are “acceptable value, lowest price” buyers.  As a result, if an overseas supplier can make it cheaper, even considering the shipping, then the market will favor that item unless there is something incredibly compelling about some unique market-leading feature of their item.  Even then, the compelling American-made item, think Steinway Pianos or Taylor Guitars, cannot be too much more expensive than their alternatives.  And even Taylor Guitars, for example, has to make their lower-end guitars in Mexico to be price competitive in that market.  Companies do not send their jobs overseas because managing overseas is easier and more fun, it’s because they can’t survive as a company if they don’t.  The American consumer won’t let them survive.

The next time you hear someone complain about jobs going overseas, congratulate the complainer on being willing to pay the premium for “made in America,” and ask them how much extra they pay or are willing to pay for the American-made item.  Then watch their face flush.  What they really want is a free lunch – they want someone else to pay the premium while they still buy the lowest priced item – which often comes from overseas.

Essentially all the negative talk about outsourcing jobs overseas is self-serving hypocritical political rhetoric, because no matter the words coming out of their mouths, Americans vote on jobs in America with their wallets, and that means the jobs go overseas.