U.S. advantage over China in semiconductor manufacturing is in strong U.S. labor law

August 3, 2022

The unspoken advantage that the U.S. can have in winning the commanding position in the geostrategically important manufacture of semiconductor chips is that the U.S. labor force is free and exists under a democratic system of government. The majority of semiconductor chip manufacturing is in mainland China, where workers are remarkably unfree. Yes, we do buy a lot of products from China for a variety of everyday uses, but this unique geostrategic element to the manufacture of semiconductor chips gives us the leverage to make this a significant labor issue, as well. American workers can do a better job making semiconductor chips because we have much more favorable labor laws than China does. Of course, U.S. labor law can be further improved to benefit the conditions of workers, which are still not where they need to be: – but that is actually a point in favor: that US labor laws can be improved, which is not the case in China. Despite China being called a communist country, it's factually not a "communist" or "socialist" system for the workers: it's factually communism only for the rich, if at all. We can easily verify this with easily accessible memory - for example, several members of the Trump family were taking advantage of very exploitative working conditions in China to manufacture cheap and low quality goods. Ivanka Trump was very vocal about how those exploitative labor conditions made it very easy to take advantage of Chinese workers to get those cheap products. That the quality of Chinese goods is low is sort of common knowledge these days, but that comment should really be generalized to say that any product made by low-paid and exploited workers will not be of high quality, and any industry that is making its bones by ripping off workers can't maintain the quality of its product for very long. The so called "Flying Geese Model" from development economics is actually the bit of economic mumbo–jumbo that explains this fact from common sense: that in order to maintain the buy-in of workers in a "developing" economy you have to continue to advance to more and more complex industries, because if an industry is frozen in time in a place, it begins to become more and more exploitative, and the workers will become discontented. However, we should also be very clear that the term "developing countries" is elite code for countries where there are weak labor laws and workers can be exploited. In a country like the US with stronger labor laws than China, the development of high-tech manufacturing can more easily expand along with workers wages and rights and safety – although we will need to commit to strong and vibrant labor unions in the industry. Without that, it's functionally impossible to maintain worker confidence, and without worker confidence, the quality of the product suffers. China, it should be noted, does not have labor unions, certainly not independent labor unions. We have a legitimate shot at taking a leading role in the high tech 21st-century economy, but even though we're taking on China in that race, our fundamental advantage in that is to lean on our own fundamentals, and that means an economy that is built on workers' rights and strong labor law, which is something that the US and Taiwan share.