Not All Innovation is Created Equal

How Offshoring Narrows the Kind of Innovation We Get

Jan 23, 2026

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In 1919, John Alcock and Arthur Brown completed the first nonstop transatlantic flight in human history. It took them sixteen hours in an open cockpit, navigating by dead reckoning and sheer nerve. Fifty years later, in 1969, Neil Armstrong stepped onto the surface of the Moon. In the span of a single lifetime, humanity went from barely crossing an ocean by air to leaving the planet entirely.

Think about the magnitude of change compressed into those fifty years: aviation went from experimental to routine, jets replaced propellers, humans escaped Earth’s gravity, and space itself became a place we could visit. Entire industries, capabilities, and ways of thinking came into existence almost overnight.

Now think about this truly remarkable fact: We are farther in time from the Moon landing today than Neil Armstrong was from that first transatlantic flight. 56 years to be precise. How have we used them?

To answer this question, imagine Neil Armstrong time-traveling from 1969 and walking through your front door. This is a man who has stood on the Moon. He has seen Earth rise over a barren horizon. He would expect the future to announce itself boldly: flying cars, chrome everywhere, maybe a robot maid.

Instead, he would find a space he understands immediately.

Typical 1960s kitchen (Left) vs. today (Right)

Your house isn’t all that different from his. The same basic appliances perform the same basic functions. There’s a refrigerator humming quietly in the corner, a stove where food is cooked, a sink with a faucet that turns on when you twist it. The materials are newer, the styling more sleek, but nothing suggests a fundamental leap. If the future had announced itself only through physical objects, Armstrong might well conclude that progress had slowed to a crawl.

That is, until you showed him the internet.

Within minutes, his sense of continuity would collapse. You would exchange messages with friends and family on the other side of the world instantly. You would purchase your groceries without visiting a store. You would speak a question into the air, receiving an articulate answer in return. You would show him a map that knows where you and each member of your family is at that moment, all the latest news from anywhere in the world, and a library larger than any on Earth.

With only a handful of exceptions, his shock would not come from the physical objects. It would come from software.

That contrast tells us something important about the last 50 years of progress. The biggest, most life-altering changes have not come predominantly from new classes of material goods, but from digital systems layered onto largely familiar ones.

This is a striking reversal from earlier eras. In the nineteenth and early twentieth centuries, progress arrived in the form of entirely new tools for living. The shift from the horse and buggy to trains, cars and airplanes, didn’t make travel slightly faster, it restructured daily life. A computer isn’t a marginally improved typewriter, and a light bulb isn’t just a more efficient candle. These leaps redrew the boundaries of what’s possible to human beings.

So what changed? Why do we get “smart” versions of old things—now with an app—instead of revolutions like the lightbulb and air travel?

The answer is that we offshored manufacturing.

Beginning in the late twentieth century and accelerating through the 1990s and 2000s, much of the West’s manufacturing capacity was offshored, particularly to China—a process we’ve covered extensively in past articles. Between 1997 and 2022 over 70,000 American manufacturing plants were shuttered (CBS News, April 8, 2025), meaning that on average roughly eight U.S. factories closed every single day.

As those factories vanished, supplier networks thinned, and production increasingly took place on the other side of the globe, away from engineers and designers. This shift was framed at the time as a matter of efficiency and cost, but it also changed where learning, iteration, and experimentation in physical products could realistically occur.

Creating genuinely new physical products depends on tight feedback loops between design, tooling, production, and failure. Engineers learn by watching machines break, by seeing where tolerances slip, by handling parts that don’t quite fit, and by making changes on the spot. When manufacturing happens nearby, those lessons feed directly back into design, often within hours or days. As we’ve explored previously, when production moves to other continents, those loops stretch or break. Iteration slows, mistakes become expensive, and experimentation narrows to whatever can be simulated in advance. Without a robust domestic manufacturing ecosystem, inventing and producing novel physical products is an uphill battle.

Over time, these challenges have pushed innovation away from the physical products themselves and toward whatever can be changed without touching the factory floor.

This isn’t speculation—it’s exactly how reshoring companies describe their own experience. In features we’ve done on companies like Guardian and Bath & Body Works, leadership consistently points to speed of iteration as a decisive advantage. Manufacturing nearby allows them to prototype faster, troubleshoot problems in real time, and incorporate factory-floor insights that would otherwise be lost across oceans and time zones. What might have taken months—can now happen in weeks or days. Alongside benefits like quality control, operational visibility, and supply-chain resilience, reshoring restores the ability to innovate quickly and continuously.

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Software followed a radically different trajectory from manufacturing because it was largely insulated from these constraints. Code can be written, tested, modified, and deployed without factories, tooling, or supply chains. Iteration can happen continuously, from anywhere, and improvements can be rolled out instantly to millions of users.

As manufacturing moved farther away and became harder to change, ambitious engineers, entrepreneurs, and investors in the U.S. and other Western countries naturally gravitated toward the domain where feedback was fastest, risk was lowest, and experimentation was cheapest. Hence, the meteoric rise of Silicon Valley.

Over time, this didn’t just produce better software—it redirected the center of gravity of innovation itself.

And this explains why there has been a proliferation of “smart” products—familiar physical objects with software layered on top. Thermostats, ovens, speakers, security systems, even lightbulbs now come with apps, connectivity, and dashboards. These additions can be genuinely useful, but they rarely rethink the underlying product itself. The physical form remains largely unchanged; what evolves is the software wrapped around it.

In effect, we’ve learned to extract dramatic gains from code while leaving the underlying physical design largely intact.

A natural question follows: if so much manufacturing moved to China, why didn’t radical innovation in physical products move with it? Part of the answer is that not all innovation takes the same form.

Lesley Gao illustrates this clearly in her piece, How a $1 Lighter Defied Inflation for 20 Years. Using disposable lighters as a case study, she shows the kind of progress China has become exceptionally good at: relentless, manufacturing-driven optimization. Holding a lighter at roughly a dollar year after year required redesigned production lines to run faster with fewer workers, tooling refined to reduce material waste, components simplified to cut assembly steps, and suppliers clustered tightly enough to squeeze logistics costs.

This is real innovation—but it is innovation aimed at efficiency and cost compression.

The United States and the West, by contrast, historically excelled not only at that kind of optimization, but also at creating entirely new product categories (Bloomberg Businessweek, July 1, 2010). The kind of progress that keeps a disposable lighter at a dollar and the kind that creates entirely new tools for living are both valuable, but they are not the same thing. Incremental improvements tend to work at the margins: gradually shaving costs or adding small features that make familiar products a bit better over time. Transformational innovation operates on a different scale altogether. It changes what people can do. The shift from hand-delivered letters carried by horses and boats to telegraphs, then to telephones, to fax machines, and eventually the internet aren’t gradual incremental improvements; each one completely restructured daily life. (There have been innovative physical products to come out of China as well, but they have been comparatively sparse given the sheer scale of manufacturing that takes place there (Noahpinion, March 4, 2025). And any assessment of China’s contribution in this area is muddied by the well-documented, ongoing theft of foreign intellectual property.)

While increasingly rare, the last few decades have still produced a handful of breakthroughs powerful enough to astonish even the likes of our time traveler, Neil Armstrong.

Show him a modern smartphone, and he would marvel that a supercomputer hundreds of millions of times more powerful than anything used during the Apollo program can fit in his pocket. Place him in a self-driving car and he would watch in disbelief as a machine safely navigates dense urban traffic on its own. Take him to a launch site and he would struggle to grasp that rockets now land themselves, are refurbished, and flown again. Put on a virtual reality headset, and he would step into immersive worlds that respond instantly to his movements, blurring the boundary between the physical and digital.

These are not merely smarter gadgets. They are what Armstrong called giant leaps for mankind, inseparably bound to software that together mark a new and elevated trajectory for human capability.

The lesson running through all of this is not that we can’t still produce marvels; it’s that they have become exceptions. Where once humanity vaulted from ocean flight to lunar landings in a single lifetime, the progress we now see is largely limited within the confines of our screens. The handful of truly foundational breakthroughs outside of the digital world stand out precisely because they are so rare. They required extraordinary effort, capital, and time to overcome the structural headwinds created by decades of offshoring.

The broader pattern remains clear: the most transformative advances—the ones that don’t merely improve existing products, but create entirely new ones—tend to emerge where manufacturing and innovation remain tightly integrated. When production moves to China, we don’t just lose jobs; we lose the dense networks of feedback, experimentation, and tacit knowledge that make breakthroughs a defining feature of America’s industrial past.

If we want more than a few heroic exceptions—if we want sustained, broad-based physical innovation—rebuilding domestic manufacturing capacity isn’t optional. It’s essential. Even leaving aside the growing threat posed by China, this is yet another reason why voting with your dollars matters. Supporting companies that make things Stateside isn’t nostalgia or protectionism; it’s an investment in the kind of innovation that expands what’s possible, raises living standards exponentially, and ensures the next generation of transformative advances actually happen.

Sincerely,

Guy Barnett
PureSource

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