What goes around comes around. The story of economics... As wages and costs rise in China, the comparative advantage of the US labor force becomes more attractive. Yet this story hides this until the end, and then only obfuscated. Makes it seem more like it is our consumer preference to see made in the USA...but it's not.
http://www.cbsnews.com/8301-205_162-57557617/foxconn-plans-to-expand-manufacturing-to-u.s/
I agree with the statement that you made above. Both businesses and people alike try to purchase goods and services at the lowest opportunity costs available. In a labor market firms demand labor and working people supply it. Jobs were originally outsourced because it was more cost effective for businesses to use foreign labor. Now that wages are increasing in countries, such as China, businesses are once again relocating where their products are made. However, wages are not the only thing that companies need to think about when making goods. They have to take into consideration the cost of shipping their goods to other locations around the world. China is not the most central location in the world, shipping can be quite costly. Once the cost of labor in China comes close to the cost of labor in America, then companies will start to plan accordingly. The cheap labor is no longer cheap and therefore does not provide a benefit for company anymore. So, businesses will start to lower their opportunity cost for factors of production by moving jobs elsewhere. It is important to keep in mind that firms are very similar to us in the sense that they do not desire to pay more than necessary for goods and services. They demand a good or service, and purchase it at the lowest opportunity cost. It simply makes more sense for a business to save money wherever it can. In addition, companies can market towards Americans by mentioning that the product was “Made in America”. Although this does not determine the quality of the product, it seems to provide a sort of incentive to patriotic American buyers. In the end, it is easy to see why companies frequently move locations. They can increase their own profit by lowering their opportunity cost for factors of production.
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