[Animats]

Is cheap labor a legitimate source of comparative advantage?

That really is the big question.

It worked out OK for the pre-China era of "Asian tigers". Japan, Korea, and Taiwan had a labor cost advantage and exported heavily to the US. Their standard of living went up, wages went up, and they lost the labor cost advantage.

Then the next round - Bangladesh (world leader in T-shirt production), Vietnam, Thailand. Labor costs are still low, but the countries are not big enough to seriously hurt the US.

But they were not as big as China. China is 3x the size of the US in population, close in GDP, and has industrialized very fast. The US can't absorb that shock. Eventually, China may lose the labor cost advantage; it's already declined quite a bit as wages go up. But for now, the US is taking a big hit on this.

[thereare5lights]

China is more than 4x

[TMWNN]

>Eventually, China may lose the labor cost advantage; it's already declined quite a bit as wages go up.

According to Peter Zeihan's The Accidental Superpower (2014), manufacturing in China has gone from being one quarter as expensive as in Mexico to 25% more expensive. He expects that the US shale and natural gas boom will further reduce costs in Mexico and the US.

Also see "Why China should follow Trump’s example and cut taxes" http://www.scmp.com/week-asia/opinion/article/2056874/why-ch... . Quote: "As far as manufacturing is concerned, according to Cao, everything is cheaper in America apart from manpower."