This is how it works.
It's not entirely within the control of US companies decide to shift manufacturing to China or not. Firms from other countries, like Japan and even Europe were already shifting production to low cost China and undercutting our guys. Nokia for example, produces most of its phones in China at super efficient factories. So lets say Motorola refuses to make their phones in China too, and instead sticks to producing phones in unionized, high cost factories in America. What will be the eventual result? Why Motorola would go out of business.
America is not an island, separated from world trade. If competitors of US firms are producing in the lowest cost, most efficient locations, US firms have little alternative but to do the same thing if they want to stay in business.
The moribund unions just don't get it.
Taking your scenario to the end result, if all corporations seek out “slave labor” to produce their products, who will buy them? We have been the dumping ground for the world but now that is over. Credit has dried up, jobs have been lost, luxory items are once again just that,and necessities are paramount with the consumer. Its not just labor union jobs that have left. The first to go were the shirt factories and the textile industry. The “New Economy” was going to replace those jobs and now they are gone. Trade restrictions on equalizing the playing field in the marginal cost of labor must be instituted. Like I said, never was the definition of free trade the “allowing of slave wages to replace a decent wage”. That is unless you want to destroy the wealth of nations. The long run answer is for China, India, etc. to invest in their economy, and increase the standard of living with good paying jobs. Unfortunately there are more unemployed workers in China and India than there are people in the US. Wages in those countries will remain low until demand for labor is such that it drives them higher. For us, we can’t afford to wait until that happens. We still represent 25% of the worlds GNP. If we don’t start taking care of ourselves, who will? If we fail, the world fails. The world faces deflation because of too many goods and too few buyers. It may be time to crank up the helicopters and drop $100 bills across america.