I have a probably dumb question: we buy stuff made in China/Asia/etc.

[mike1963]

(largely from wal mart) that is produced by people getting paid three dollars a month...why do these products cost about as much as equivalent things made in Peoria, Wichita, Akron, etc.?

(Yes, I do realize that the number of 'equivalent products' is diminishing at a frighteningly rapid rate, but the question has to do with the reality of the moment, economically speaking...)

[xray s]

1. The man in the middle

That's the fat dude.

[RoeBear]

2. It's called...

...PROFIT!

[tkmorris]

3. To be fair

You will find, especially at the low end of the price scale, that goods produced here in the USA DO in fact cost more. This is of course a lot more complicated an issue than that but there is no way Walmart could sell for example a basketball for $3.48 if it was made in Peoria.

[camero]

4. Lots of reasons

The cost of shipping (air and ship shipping is expensive), customs, distributors (read paperpushers. I can't come up with another term),
OTR (over the road) and local hauling of the product, etc.

There are mark-ups at every point of the route from China to here. Then add in the take of the person who runs the store that sells the product and you come up with the final costs.

All this saving money crap is hogwash. It's collective greed. After you factor in all the extra costs it's really cheaper to make it here even with our higher wages.

It's just another way the right wing has hoodwinked us so they can take more money. Each deception needs a thesis and an anti-thesis per Strauss so as to confuse the opposer. Outsourcing is really the right wing decieving us once again.

[CHIMO]

5. Good Question

I bought a valentines card that was made in China and paid 4 bucks. Seems that it is priced at what ever the market will bear which means that it is made inexpensively and then sold at what people will pay.

[togiak]

6. Good Question

I used to work down in the DR overseeing the manufacture of apparel for the US market. So hopefully I can help with a good answer.

First, the sewing itself is usually a relatively small component of overall cost. The piece goods themselves have a much greater % of the cost of a garment than the sewing. Cost of fabric doesn't vary from country to country like the cost of labor does.

Second, most of the large apparel firms outsource product to independent contractors. While these contractors may only pay their employees $1 per hour (including benefits), they bill their work out at a much higher rate. For example, we were based in the Dominican Republic and we paid our employees around $1.5 per hour (including benefits). We billed out, on the other hand, $6.00 per hour for our work.

Third, transportation costs and tariff costs (when they apply) will also raise the costs of outsourcing overseas.

So when it is all said and done, the cost difference of doing it locally vs overseas isn't a great as it would seem at first glance.

That difference, however, does usually end up as profit for the company.

[flowomo]

7. They often do not

For example, I can buy the same picture frame, flower pot, phone cord, hammer and dozens of other things at the local Dollar Store for, well, a dollar that WalMart charges much more for (I've seen the same products in both places) and that other stores charge WAY more for. Retailers charge a) what they can get away with and b) what makes it worth their while to sell the product at (profit, loss-leader, good will, could be a lot of things). I'm waiting for the day the Chinese begin rolling out $500 cars.... because it will happen.

[TreasonousBastard]

8. First problem is...

you have to find things made in Peoria.

Then there is the question of pricing. Hardly anyone bothers with "cost plus" pricing. Pricing is complicated, and ends up as largely what the market will bear.

If production costs are less, you make more money at the same market price.

This business of cost cutting has always been a problem-- long before NAFTA and all that. Here in the Northeast, we have ghost towns where there used to be textile mills and metalworks and woodshops. Many years ago they moved down South for cheaper, nonunion, wages.

Paterson, NJ was once the center of silk and lacemaking in the US-- hasn't been a working mill there for years. Madison, NJ was once the cut rose capital of the country-- the last rose grower just shut down.

First, this stuff went down South when they invented air conditioning, then it went to Asia or South America.