Just walk into the toy section of a Wal-Mart ( WMT) if you want proof that China's emergence as a global economic power reaches deep into the lives of all of us here in the U.S. China manufactures about 80% of all toys sold in the U.S., even such iconic products as Etch A Sketch. In 2001, Ohio Art moved production of Etch A Sketch (which it playfully likes to claim is the world's first laptop) to Shenzhen near Hong Kong from Bryan, Ohio, where the toy had been made for 40 years. Count the ways this one example ripples across our economy:
- Manufacturing jobs that paid $9 an hour in Bryan are shipped to China, where workers at the new manufacturing plant make 24 cents an hour.
- Toys are cheaper at Wal-Mart, where an Etch A Sketch sells for just $9.99. (That's pretty remarkable for a toy that sold for an inflation-adjusted $23.99 in 2004 dollars when it was first introduced in 1960.)
- There's more pressure on the pensions and health benefits of U.S. workers because most of the workers they're competing with don't get those costly "perks."
- Massive and rapid swings in the prices of limiting inputs such as railroad cars or ocean freighters.
- A sharp spike in consumer dissatisfaction as we hear more and more often, "I'm sorry. That's not in stock."
- A rapid differentiation between companies that actually master this system (and gain lots of new customers and make lots of money) and those that don't (and go out of business).