When Obama brags that “over 1,000 Americans are working today because we stopped a surge in Chinese tires,” he’s implementing a small-scale version of a similar idea. Blocking an influx of cheap Chinese tires does, indeed, preserve jobs for tire-makers. But tire-buyers pay higher prices and presumably curtail their purchases of some other goods or services in exchange. Meanwhile, Chinese tire-makers have lost jobs and are now less likely to buy American soybeans or DVDs of our movies. … This line of thinking swiftly stumbles into self-contradiction. After lambasting companies that “ship jobs overseas,” Obama launched into a feel-good anecdote about how “Siemens opened a gas turbine factory in Charlotte and formed a partnership with Central Piedmont Community College.” Is a politician in Germany giving a speech lambasting Siemens for shipping jobs to the U.S. and complaining, as Obama did, that it’s “not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized,” perhaps through partnerships with community colleges.
This is where Obama gets things wrong. You can compete by having poorly paid workers living in dorms working 60 hour weeks with no concern about the health and safety of those workers or you can compete by having workers produce much more value per hour worked. The former is the developing nations model, the later is the developed nation model. Why I think the later is a better idea for the US should be obvious in the same why it is obvious why China picked the former.