" Maybe it's crucial for innovation to have basic economic production to be done by skilled labor which can think of better ways to do it instead of outsourcing it to the other side of the globe? "
This seems like a false dichotomy to me. What's the argument, here? Chinese factory workers and engineers were less skilled than their American counterparts, and thus less good at inventing new automation techniques? I'm pretty skeptical of this.
A better argument would be that there is less incentive to automate if labor is cheaper. Even so, I would be surprised if the effect was large enough to account for a substantial portion of the Great Stagnation.
> there is less incentive to automate if labor is cheaper.
this is a major hypothesis about the plague being a contributor to the industrial revolution.
There are plenty of ways to improve making things that aren't about inventing new automation techniques.
If a Chinese factory worker has an idea of how a product on which they work can be improved, they have little way to get their innovative idea to the company that manufactors the product.
Part of Tesla's way of creating innovation is to have an enviroment where all the people who are producing the car can actually contribute to making the product better if they have a good idea.
What was the actual timeline for outsourcing to China? Certainly, it didn't immediately happens the second Nixon got off the plane in China. Similarly, outsourcing has happened with many other countries (eg. Japan, India, South Korea, Vietnam), some of which are no longer places that America outsources to. What were the timelines of those and did they have an effect?
The big stagnation is commonly said to have begun in the 1970s. There are many theories of possible causes that are already discussed, but haven't heard blaming Nixon before. Especially I haven't heard blaming Nixon going to China.
Timewise, that makes Nixon going to China in 1972 is an event that happened at the right time to explain the change in innovation.
Maybe it's crucial for innovation to have basic economic production to be done by skilled labor which can think of better ways to do it instead of outsourcing it to the other side of the globe?