What the iPod Tells Us About the World Economy 380
Hugh Pickens writes "Edmund Conway has an interesting article in the Telegraph where he analyzes where the money goes when you buy a complex electronic device marked 'Made in China,' and why a developed economy doesn't need a trade surplus in order to survive. For his example, Conway chooses a 30GB video iPod 'manufactured' in China in 2006. Each iPod, sold in the US for $299, provides China with an export value of about $150, but as it turns out, Chinese producers really only 'earned' around $4 on each unit. 'China, you see, is really just the place where most of the other components that go inside the iPod are shipped and assembled.' Conway says that when you work out the overall US balance of payments, it shows that most of the cash for high tech inventions has flowed back to the United States as a direct result of the intellectual property companies own in their products. 'While the iPod is manufactured offshore and has a global roster of suppliers, the greatest benefits from this innovation go to Apple, an American company, with predominantly American employees and stockholders who reap the benefits,' writes Conway. 'As long as the US market remains dynamic, with innovative firms and risk-taking entrepreneurs, global innovation should continue to create value for American investors and well-paid jobs for knowledge workers. But if those companies get complacent or lose focus, there are plenty of foreign competitors ready to take their places.'"
Re:Not so fast (Score:4, Informative)
This is the same with most cloned CE products. Knock-off Zunes use a custom firmware, knock-off iPods have their own OS, and so on. The hardware may be the same, but the firmware is usually a custom version, and it's almost always optimized for the Chinese market (being Mandarin with English or other languages a typically-poorly implemented afterthought).
Re:Perhaps a smidge short sighted? (Score:1, Informative)
No but perhaps we would be better off if we actually manufactured the tech we develop.
Re:Oh much the same way, HOWEVER (Score:3, Informative)
An average wage in China is about $104 per month. At minimum wage in the U.S., the monthly wage would be about $1160. A typical factory work earns significantly more than minimum wage, though. So if an iPod brings in $150, that's about 1.5 months at an average Chinese daily wage, or a mere 20.7 hours (half a week) at U.S. minimum wage.
Re:Not so fast (Score:4, Informative)
didn't the US gladly turn a blind eye to infringers when it was to their benefit ?
In fact historically we basically stole British manufacturing and business capabilities from them:
http://en.wikipedia.org/wiki/Samuel_Slater [wikipedia.org]
He's just one guy who did something amazing, but there was a trend behind him, and plenty of other examples. Ultimately it was in our best interests to stop being Britain's hunter/gatherers. By this point Britain was long past being able to stop us. China already realizes being our contract manufacturer isn't good for them, and already makes deals requiring we transfer some amount of our R&D work along with manufacturing. I daresay we can't really stop them either.
IP doesn't historically have a lot of strength behind it. It's easy to steal, it "doesn't hurt anyone" when it's stolen (sure it hurts some guy we don't know or care about!), and it's hard to put a price on it. The military might of planet earth isn't going to get raised in arms because someone stole the plans for the iPhone 4G, or even a semiconductor fab. Too abstract, why do I care, let them eat cake? Blah blah blah.
Re:His post was in no way a "long pointless rant. (Score:3, Informative)
Re:Have you even been to Apple... (Score:2, Informative)
So what? They live here. They spend their money here. They have kids here. They're immigrants, just like every other group of immigrants throughout our history, and that makes them quintessentially all American.
Re:food production is going overseas too (Score:3, Informative)
Actually the US is one of the largest, if not the largest, food exporter in the world.
Not for long, if things keep going at the present rate.
Curious I wanted to see what foods China exports and found this: Chinese Food Exports to US Top US$4 Billion in 2007 [flex-news-food.com]. At the top of that list, with more than $2 Billion in exports is fish and shellfish. That won't last long as overfishing is depleting fish stocks. The next highest is fruits and preparations including juices, at less than half that, only $816 Million. The top 10 Chinese food exports to the US come to less than $5 Billion. Yet in that same year the US exported $11.2 Billion of corn [suite101.com]. Now those aren't really comparative because the China data is for export to the US whereas the US data is total corn exports. Darn, after several minutes looking I didn't find either US exports to China or total Chinese exports. My Google fu isn't that good.
As for California's Prop 2, packaging animals like the prop makes illegal requires a lot more antibiotics and other drugs which leads to the reduced effectiveness of the drugs. Personally as much as I can I eat organic free range food.
Falcon
Re:The treaty of Versailles led to World War II (Score:3, Informative)
Considering that American recovery (and quite a few other countries according to wikipedia) from the Great Depression began in 1933,
American recovery yes, but America didn't start WWII. Europe wasn't recovering as early as the US. You mention wiki but obviously you didn't read the wiki article on the Grreat Depression [wikipedia.org], otherwise you would not have missed the second sentence which says "The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s".
So you're still making things up and I'm end here.
Falcon
Re:Net flow out (Score:3, Informative)
I think this guy is missing the obvious. Who is guying the Ipods....Americans. That means every time apple sells an Ipod there is a net flow of $4 to china.
And you're missing something. Every tyme a Chinese buys something made in the US money flows from China to the US.
I don't see the Chinese buying products manufactured here.
Because you're not looking and seeing the whole picture. Behind Germany and China the US was the third largest exporter [hofstra.edu] in 2007. Here [uschina.org] are some things China buys from the US.
Falcon
Re:Rejoice! (Score:3, Informative)
Face it, you are a nation of consumers with no real manufacturing left. You all demand cheap goods, and if that comes with the price of outsourcing to foreign sweatshops, you accept it by turning a blind eye ... if all your manufacturing was done inside the US, none of you could afford to buy anything.
The USA remains by far the largest manufacturer in the world, producing $1.8 trillion [curiouscatblog.net] in manufactured products in 2006.
If the US refused to import manufactured goods from outside the country, few jobs would be added, since most work would be done by automated machines - they would be cheaper than US human labor.