The economics of stuffed animals

I had a surprisingly in-depth economics conversation in the car tonight with the boys. They wanted to know why so much stuff is made in China instead of here. We talked about a variety of topics ranging from national debt to labor laws and manufacturing costs. The older ones knew a little about the federal debt/deficit, but the little guys were perplexed that we would actually borrow money from other countries. They were even more shocked to learn that of all foreign holders of U.S. debt, China holds the most of it ($1161.5 billion, as of October 2012). If I have my decimals right, I believe that’s $1,161,500,000,000.

I tried to bring it down to their level by suggesting that you can pay $5 for a stuffed animal made in China or $10 for one made in the USA. That’s where the part about labor laws and manufacturing costs came into play. I told them that without labor laws, I could make them quit school and go to work everyday but not even let them keep the money. In Communist countries where they have few or no such laws, then you don’t have to pay workers very much, so it’s less expensive to manufacture things.

I explained how it’s cheaper for companies to ship all of the materials overseas, pay people there to make the products and then send it all back to the USA than it is to manufacture it here, from scratch. “We” in the USA want stuff cheap, so we buy it. If “we” were willing to pay more and demanded that it be made domestically, then perhaps more stuff would be made here, and more jobs would stay here.

In typical fashion, as soon as they’d heard enough of an answer to satisfy their curiosity, they immediately switched gears and went on to a new topic. Apparently, they are planning to go into business together to build a resort/hotel/museum. It is going to have a shark theme, with a salt water aquarium (with “baby” sharks, so as to not scare the guests) and a swimming pool in shape of a fin or shark tooth. They are also going to sell shark teeth in the gift shop and have a museum for people to learn about sharks. They aren’t quite ready to take reservations yet, but this will be one must-see place to visit one of these days! 🙂

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