When manufacturing returns, consumer prices may not rise; rather, stockholders may see lower profits

We've never off-shored entire fundamental sectors of our economy before, nor have we taken them back. So we have no history to consult when we try to figure out what might happen once the Trump administration begins to bring manufacturing back to the United States.

Certainly the company's labor costs will be higher -- cutting costs on labor was the main reason they sent the jobs overseas in the first place. Why pay an American who expects $20 an hour, when a Mexican or a Chinese will do it for $5?

But if a company tries to pass that higher labor cost onto the consumer in the form of higher prices, they risk pricing themselves out of the market. After all, there will be other companies in that sector who will raise their prices by a smaller amount in order to grab the customers. This competition creates a race to the bottom, where they won't end up passing on much of the higher labor costs at all.

If they want any business whatsoever, they're just going to have to get by on smaller profit margins than they had been enjoying during the era of off-shoring.

This assumes there's a healthy level of competition, but for most of the stuff we're talking about -- clothing, tools, appliances, electronics, furniture, etc. -- there are already numerous companies competing against each other.

We can dismiss any hysteria about the profit margins already being so razor-thin -- that's more for retailers, not the producers themselves. We know that the smaller profit margins are sustainable because that's how the economy worked for decades and decades before the stock market boom that only began in the 1980s. Labor costs were high because companies paid good wages, yet profits were not very high as seen in the low level of stock market value. It must have been that prices to consumers were not outta-whack with what we see today.

It's striking to look through old ads and adjust prices for inflation -- cars, scissors, power drills, all kinds of stuff doesn't seem to have been much more expensive back when it was made in America, and when labor costs were therefore higher than today's junk made with cheap Chinese sweatshop labor. (This is not even counting how much greater the quality was when it was made in the first world.)

All sorts of other things have gotten much more expensive than even the overall rate of inflation, like housing, health care, education, and more recently energy and food. These are subject to bubbles of one sort or another, unlike garden-variety consumer products like silverware, screwdrivers, and sweaters.

Most of the scaremongering about higher prices if we return manufacturing to America seems to come from those with a lot of stock market wealth that could evaporate if higher labor costs, combined with a competitive mature industry, means that profits will start to tank for shareholders. That's all for the good: they only got all that wealth since the '80s because off-shoring jobs allowed shareholder value to soar. They got rich from dismantling our economy, so they can lose their ill-gotten wealth in order to restore our economy.

Restoring a healthy economy will lower the top, which has been shooting off into outer space over the past 30 to 40 years, and will raise the bottom, who have been scraping by on stagnant or declining real incomes.

This form of narrowing inequality does not involve taxing the rich and handing out goodies to the poor. It simply removes the ability of elites to leverage a decision about off-shoring into massive wealth to stockholders, which also has the effect of providing good-paying jobs to the bottom layers of the pyramid. This way does not stoke class war in the way that Robin Hood policies would -- some degree of those might be fine, too, but only after making these structural changes that are not an overt form of class war.

An entirely similar line of argument shows the effect of deporting the illegals in the American labor market, and even curtailing the ranks of legal immigrants in our workforce. Whether the foreigner who steals the American's job lives in his homeland (off-shoring) or has been brought here (scabs) makes no difference.

Getting rid of illegals will increase the labor costs to the companies who must now employ Americans, but in any competitive industry these will not be able to be passed on very much to the consumer as higher prices. Rather, the company will simply make less in profits and their stock won't be worth as much.

Very well -- most of us don't own that much wealth in stock, and if you do treat the stock market as a great big casino, you have to accept the possibility of getting burned big-time. You should have invested your money in a more responsible way than in the disgraceful dismantling of your own country's economy. It's far beyond time for the 1980s stock market bubble to burst for good.