An open letter to America's CEOs
By Scott Sumner
You may face a decision about whether to locate a new factory in America or Mexico. In the past, either location gave you an option of later moving production to the opposite country. It appears that option is about to be curtailed. You will still be free to re-locate jobs from Mexico to America, but you are about to lose your freedom to relocate jobs from America to Mexico.
The loss of this option somewhat tilts the balance in favor of locating new plants in Mexico, where you will have more flexibility to adjust production over time–perhaps to China or India. If you have recently been wrestling with a decision about which location is best, I implore you to opt for Mexico, as it’s the best option where other factors are roughly equally balanced. Remember how your European friends reacted to labor laws making it difficult to fire European workers? They opted to hire fewer workers in the first place. You can do the same. Make America more like Europe!
Perhaps you have Italian friends and already know all this. In that case is my open letter a waste of time? Not necessarily, this might also be of interest to America’s voters.