President Joe Biden has a surprising answer to high inflation: bring factory employment back to the United States.
This raises questions on a decades-old argument that employers shifted jobs to reduce prices by depending on lower-wage workers.
The pattern led to a loss of 6.8 million manufacturing jobs in the United States, but it also resulted in reduced costs for consumers and reduced inflation. All of which helped to keep broader economic development going.
It was an exchange that many business and political leaders were willing to make in private.
With inflation at a 40-year high, the president is now claiming that globalization is to blame for rising costs.
That’s because exporting supporters overlooked the price of increasingly frequent supply chain failures.
Recent events such as the COVID-19 pandemic and Russia’s invasion of Ukraine have caused a global effect. As a result, leading to an increase in oil prices.
Along with other factors such as shortages of basic items such as semiconductors, devastating floods, and wildfires.
Collectively causing inflation across the nation. In a statement made by Biden recently, the national govt has two options when it comes to inflation.
When emergencies and concerns happen, it can either reduce support, causing salaries and the economy to slow, or it can remove the stress that can lead to inflation.
When Siemens USA announced plans to add 300 jobs on Friday, Biden stated, “We have a choice.”
To control inflation, either reduce wages and make Americans poor or have a better plan: lower costs instead of your salaries.
The president then expressed his belief that more should be done.
Increased semiconductor manufacturing in the United States would lead to more local production of vehicles and other goods. This would fill the supply chain, reducing prices in concept.
However, according to the financial data firm FactSet, this plan would take years to produce. Whereas, the consumer price report due out on Thursday is expected to show that annual inflation increased to about 8% last month.
Biden’s problem is that he has long-term inflation plans to address the pain that consumers are feeling on a daily basis, according to Douglas Holtz-Eakin, head of the center-right American Action Forum, who called Biden’s plan “optics.”
He says that semiconductor manufacturing facilities take years to construct.
Inflation has come, and it has become a concern.