The point is NOT that given the current system as the leaders of the west set it up that it is irrational.
You correctly identify some trees, and miss the entire forest.
The point is that the western leaders SET IT UP THIS WAY.
Effectively, they externalized the costs of losing the massive geopolitical/economic strategic advantage onto future generations, who will have to deal with the fallout of an authoritarian regime in a very strong geopolitical position.
And these "leaders" effectively sold out for a very transient advantage.
What could have been done differently? 1) Implement laws preventing transfer of IP to China, to counter their laws requiring it. 2) prevent critical components of defense systems from being made there, both to avoid technology transfer and to maintain onshore manufacturing skills 3)Implement quotas and tariffs that reflect the actual costs of the strategic loss. 4) Encourage investment in other low-wage countries that do not pose the same geopolitical risk. This is just the beginning, and none of it was done.
Once those restraints were removed, of course it becomes in the interest of every manager to offshore to the newly opened areas.
>> The same investors that buy stocks at 34x annual earnings, necessitating more than three decades to make back their investment?
Nonsense, decades is not the typical investment expectation. If they are investing at 34X PE, they expect bigger returns sooner. Amazon is a great example, whee you could invest at effectively infinite PE ratios and double your money within years, or get 10X within 7 years. Recent price $3475. It passed $340 in Q1 of 2015, and at that time the P/E was effectively infinite with negative earnings per share. [1] Your example more even proves the point of short term focus. By your example, if investors lost money really means that they're investing for the long term - preposterous.
[1]https://www.macrotrends.net/stocks/charts/AMZN/amazon/pe-rat...