This article discusses how President Trump's policy threats to manufacturing firms who plan to relocate some of their factories overseas affect the economy both short-term and long-term. Trump's policy might appear to be working at first; since it makes some chief executives manufacturing firms decide not to put their production lines overseas to prevent the harsh judgment from President Trump. That could create and maintain more jobs, in the long run. However, as soon as President Trump leaves the White House, these firms will move their production lines to overseas if that's what it takes to maximize profit. The seemingly positive effects of President Trump's policies are temporary, which will not impact the economy fundamentally.
If manufacturing firms cannot move their production lines overseas, that will show up on their balance sheets -- the lack of improvement in their profits. Meanwhile, producing domestically where expenses are higher, will result in higher prices for consumers. If these firms make bad decisions following President Trump's "advice", they could be sued by their shareholders. Capitalism is based on that "Invisible Hand", with many participants, moving in various directions; but in the long run, the market is what it is. I failed to recognize the benefits of Trump's policy intended to prevent manufacturing firms moving overseas.
Link to article: https://www.nytimes.com/2017/01/27/upshot/donald-trump-offshoring-factory.html?ref=business
1 comment:
Jobs in the manufacturing sector will increase during Trump's time in the White House, however, companies will lose money from paying higher wages by not being able to move operations abroad. Also moving operations doesn't just save money on labor, but conducting business in different countries helps the US for example improve their GNP, which helps promote growth in the economy.
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