> China gets the credit for 100% of the iPhone's export value, even though it is only assembling the product designed elsewhere from parts that are made elsewhere.<p>More than anything, this just points to the absurdity of the way these metrics are calculated. An American company sells something to an American consumer -- along the way the product is assembled in China for tens of dollars -- and the American trade deficit between the US and China grows by $500 for each unit sold. Ridiculous.
I question the assumption that Americans need jobs more than Chinese do.<p>Does anyone else ever read this sort of thing and just get <i>floored</i> by the implicit, unquestioned calculus which says that benefits to Chinese workers are worth nothing and that their lost jobs and misery are completely unimportant, so that the only relevant point under discussion is the number of American jobs? Coming next: Someone realizes that many Chinese people have kidneys which could be transplanted into Americans, thus resulting in an improvement in the average American kidney.
>If production was moved from China back to the U.S., they figure that Apple could still get an acceptable profit even though labor costs incurred in the manufacturing process would be significantly higher, while contributing to U.S. jobs and exports:<p>You mean if production was moved from China back to the U.S. <i>through government intervention</i>? Then there would still be an "acceptable", <i>as determined by the government</i>, profit?<p>I don't mind editorials, but I'd wish they would make their politics explicit rather than hiding behind the allure of objective reporting.
So if I understand the process:<p>1. American company creates a design in an air conditioned office in CA.<p>2. The Chinese company produces units from that design for <$7 a piece under relatively terrible working conditions.<p>3. The American company then sells the completed devices for hundreds of dollars taking pretty much all the margin for themselves.<p>It sounds like we are already the benefactors of the current arrangement.<p>The article is lamenting about how unfair it is to America because we can't take that last $7 off the table? Even I'd call that greedy.
Excellent article that works through all the nuances of international trade, in particular the economics and reality of trade with China on high technology products. I went into it worried about the link bait tunnel, but came out quite pleased with the overall analysis.<p>I particularly like this line (quoted) form the WSJ:
"Trade has always benefited the U.S. economy. So rather than launching a trade war with China over $6.50, here's a better agenda for the 112th Congress: Focus on policies that will help Americans and U.S. companies better capitalize on a global economy."
Actually, the number should be even higher in favour of America. If an iPhone that contains $171 worth of parts (source Broadpoint AmTech) and $6.50 worth of labor sells for $500 from China to Europe, currently China gets credit for $500 worth of exports and gets "charged" for the parts it imports from the US, Taiwan, Japan, etc. However, shouldn't the US get credit for the 500-171-6.55=322.50 worth of "value add" that it's design and marketing adds to the bag of parts and labour? In other words, the iPhone should be adding over a billion in "exports" to the US economy, rather than being almost 2 billion in "imports" as is currently calculated, or adding 50 million to exports as the Time article proposes.
Hasn't Andy Grove been talking about this for a while?<p><a href="http://www.bloomberg.com/news/2010-07-01/how-to-make-an-american-job-before-it-s-too-late-andy-grove.html" rel="nofollow">http://www.bloomberg.com/news/2010-07-01/how-to-make-an-amer...</a>
The sooner these trade metrics are recalculated the better. The misinformation from bad trade data can be disasterous for economic policy and ammo for fruitless political infighting.