There is no limit to the variety of ways to obtain a good education in America – from schools and colleges to books and magazines, from the tutelage of our parents to the speeches of our politicians.

But one of the less likely sources can be bountiful with folk wisdom and even lessons in economics.  I submit for your consideration the character of Russell the Pharmacist, on Two and a Half Men.

In my favorite moment of this show filled with bad examples and vivid warnings, Russell offers Charlie a medication – without bothering with the legally required prescription – and very seriously looks into his eyes and quotes every drug pusher in folklore, saying:

“The first one’s free.”

If that doesn’t sound like an economic lesson to you, allow me to turn our gaze to the American manufacturing sector, and our neighbor across the Pacific, the People’s Republic of China.

For over ten years now, our business and political news has focused on America’s relationship with Mainland China – our tight integration with their manufacturing sector, our logistics and supply chain partnerships, our persistent trade deficit, our efforts to manage that relationship with punitive tariffs, our fear that someday China’s military goals will finally collide with our growing dependence.

Similarly, outside the mainstream news sites, we have witnessed a growing cultural clash.

Rank and file workers increasingly upset that our manufacturing is so dependent upon Chinese components, our consumers looking angrily at product labels and finally refusing to consider products that are Made in China, our colleges, and increasingly our businesses as well, filled with Chinese government-backed plants who are obligated by Chinese law to act as agents for Beijing, their families back home under constant threat if they fail to follow the orders of the Politburo.

When we look at the American economy, we see all sorts of connections that are practically inextricable.  

American wholesalers and retailers dependent on Chinese goods for their sales, American manufacturers dependent on Chinese components and subassemblies for the products they make here.  American food distributors who send American-grown vegetables and meats to China for processing, then reimport the finished dog food, cat food, and people food for sale in our grocery stores.

We see builders putting up homes made of American lumber, paint, siding and roofing, then covering them with Chinese solar panels, or powering their communities with Chinese windmills, and filling them with appliances that are made in North America but depend on Chinese sources for their most critical components --  the heating element in the oven, the compressor in the refrigerator, the pump in the washer, the printed circuit board running the furnace.  Without these critical Chinese components, that American-made house isn’t livable.

Now step back, and survey the whole town, or even the whole county or state.  Flush with cash from this trade deficit, the Chinese government has been buying up American real estate, from houses and apartments to office buildings and farms, often (coincidentally?) situated near U.S. government installations.

We see cars and trucks – gasoline, hybrid and electric alike – filling our roads, dependent upon Chinese components – and some of those components are the wifi-enabled controls that could shut them down for good with a single instruction from far away.

If we wondered whether this trade war was premature or overblown, all we have to do is read the headlines; so much manufacturing and distribution stopped cold in April when the China tariffs were so high that American businesses paused our imports. If our level of dependence on China wasn’t far greater than people had allowed themselves to believe, that pause wouldn’t have stopped so much activity.

What ought to terrify us the most isn’t the number of things in the stores with a “made in China” label, but the number of things in the stores that are made in the U.S.A. or elsewhere, but still depend on Chinese parts to operate.  Not to mention the amount of land, business, education, and infrastructure that doesn’t just depend on China, but is completely controlled by China.

Today, our political and economic discussions concentrate on the many ongoing crimes that the government of China has been directing its agents to commit – the theft of export-controlled technology from universities or businesses, the bribery of politicians and interference in our elections, the spying and infiltration of our military installations, the theft of copyrights, trademarks and patents in everything from manufacturing to clothing to media.

And we talk about the big crimes that the Chinese government itself commits, such as product dumping through export subsidies and currency manipulation in violation of international law. And this just touches the surface.

But as we move forward, through President Trump’s unrelenting efforts and through our institutions’ attempts, one by one, to wrest control back from these foreign puppetmasters, we must think back on how we got to this point.

China didn’t always have tentacles in our factories, our shops, and our research departments.  China didn’t always serve as the sole provider for countless critical items, from rare earths to motors, from electric wire to batteries.  How did it get this way?

At some point, 30, 35, even 40 years ago, American businesses – in their corporate headquarters or in the business schools that feed them – made the conscious decision to outsource key components to foreign countries, using the mantra “we’re delivering value to our shareholders!” as their holy justification.

One by one, then two by two, then ten by ten, we moved production of castings from American foundries to cheaper Chinese foundries (we didn’t care if they were cheaper because of slave labor and currency manipulation; they were cheaper and that’s what management measured).

One by one, then ten by ten, we moved production of custom injection moldings and tiny printed circuit boards and lithium ion batteries to Chinese manufacturers (we didn’t care if this meant our lead time was extended by three months or that we would be unable to react to sudden spikes in demand; the piece price was cheaper and that’s what we measured).

And then by the thousands, American manufacturers who used to make all these products here shut down, too much of their business having been yanked away for them to be able to survive.

Now in a monopoly situation, China can and does flex its muscles, with IP theft, port closures and price hikes. Now that we’ve taught them how to make things, they compete with our products outright.

So America lost countless industries – industries we are trying now to revive, with tax cuts and regulatory relaxation, and with protective tariffs to attempt to restore balance.

This crisis didn’t happen in a day. One by one, Chinese companies offered to make a part cheaper than our American suppliers did.  We didn’t notice as these quickly added up.

We didn’t think of the American factory workers and factory managers and factory towns who lost out as a result; our eyes were distracted by that shiny object: the lower price per unit of the Chinese alternative.

Long ago – twenty, thirty, forty years ago – thousands of American businesses each allowed a cheap Chinese bid to let our guard down and allow China’s foot in the door.  And before we knew it, they were the only source left standing, as their low price drove all our other competitive sources out of business.

We are learning our lesson today, painfully and angrily, as we strive to diversify our supply chain and rebuild our own American industrial base. With the help of President Trump and his trade team, we are breaking ourselves of the addiction to dangerous, destructive Chinese manufacturing dominance.

But American industry must ensure that it really learns its lesson this time, by establishing ground rules for the future, making sure we never again sacrifice our economic independence on the tempting altar of cheap imports.

Every buyer, every CFO, every manager must commit to memory the painful lesson of the slippery slope we suffered in developing our addiction to Chinese imports:

The first one’s free.

John F. Di Leo is a Chicagoland-based international transportation manager, trade compliance trainer, and speaker. Read his book on the surprisingly numerous varieties of vote fraud (The Tales of Little Pavel), his political satires on the Biden-Harris years (Evening Soup with Basement Joe, Volumes I, II, and III), and his most recent collection of public policy essays, Current Events and the Issues of Our Age, all available in eBook or paperback, only on Amazon.

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