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.'"
Low Tech Goods? (Score:5, Interesting)
And what about low technology good such as clothes, furniture, steel, glass, toys, and widgets? Where does the money flow there?
Re:Misleading Conclusion. (Score:2, Interesting)
The people who would normally make their living in these manufacturing jobs are still stuffed.
No amount of sugarcoating can make up for the hard fact that manufacturing jobs are outright lost, leaving the American economy with mostly service jobs. The problem is that the US economy is saturated with service jobs.
But even service jobs are being exported (IT and Medical diagnostics) now. If the job is not bolted down to the floor of a fast food restaurant, companies will try to export that job.
Really, I wonder who even buys the "trickle down" nonsense anymore.
Have you even been to Apple... (Score:3, Interesting)
"....with predominantly American employees and stockholders.."
Seriously, I would say that 70-80% of the employees I have seen at various tech companies...at least on the west coast are foreign nationals.
The trouble is the retail model of buying stuff (Score:2, Interesting)
To me the whole problem is the retail model; towit how about that $199 to $299 markup
to have these darned things sitting on a shelf? It would be so much more efficient
to cut out the middle men and supply iPOD's on demand...the fact is the blue collar
tweekers got completely screwed by THE MAN. Their jobs were off-shored in favor
of store clerks. Also this article doesn't focus on things like brooms and clothing and
such. No such profits find their way back here due to intellectual property windfall.
The fact is the jobs to make this things are gone with the wind and we let it happen
because we are collectively too greedy to care.
537
wealth (Score:4, Interesting)
so i read many of the comments and thought most were unexpectly fine. so i read the TFA and many of the comments and many of the comments were fine. so i will try to ask a relevant scientific question.
What is wealth?
A good answer tends to explain much, but i have never gotten a response in previous attempts. I suspect it makes people uncomfortable. Yet many of the comments here touch on the question. even TFA touches.
Re:Rejoice! (Score:3, Interesting)
Literary inaccuracies addressed, even if you were right, that doesn't change the fact that cheap labour in an oppressive communist state is exploited by rich capitalists in an economically imperial state and that the rest of the world sees the inequalities created by this system and despises the state that harbours them. Your attack is on my analogy, not on my argument and its worth is mostly philological.
Re:iPod is a success, US is not (Score:2, Interesting)
Re:Different Problem (Score:3, Interesting)
Re:Misleading Conclusion. (Score:2, Interesting)
The telegraph (Score:3, Interesting)
Re:Not so fast (Score:4, Interesting)
That. Plus "intellectual property" is a very vague concept:
- aren't we here at slashdot opposed to some/most copyrights/patents...
- the US congressmen keep expanding IP scope + duration to please their paymasters Disney and co. Should the rest of the world automatically accept that and follow suit ?
- didn't the US gladly turn a blind eye to infringers when it was to their benefit ?
Re:Misleading Conclusion. (Score:4, Interesting)
Manufacturing is not the end of a society's economic development, no more than agriculture is. Industrialization is just one in a long series of steps a society takes to increase its power and improve the socioeconomic well-being of its populace. The US and the rest of the Western industrialized societies are now finishing the transition from an industrial, manufactruring-based economy, to a post-industrial, knowledge-based one. At the end of that transition, the engines of national wealth generation will be, to quote Stephenson, music, movies, microcode, and high-speed pizza delivery.
That is an odd way of putting it. (Score:4, Interesting)
I refuse to believe that imaginary property is an acceptable replacement for real manufacturing capacity.
It sounds like you find the concept immoral in some way, rather than impossible.
I don't find intellectual property so much immoral as it holds back progress. Even the father of the Free Market Adam Smith didn't like patents. He called them a necessary evil. That may of been true in his tyme but I don't believe is still true. Take the case with the iPhone. Apple probably has an exclusive contract with Foxconn and other manufactures to assemble iPhones and other contractors to manufacture the parts. If someone else has those parts somewhere along the lines someone is violating one or more contracts. And the Chinese government cares a lot about that.
As for progress, I believe today patents hold back progress. If someone makes an improvement in an item that is protected by a patent yet they don't hold the patent themself they can not make and market it. Without that patent though in order to continue making money from an invention a business has to provide something others are willing to pay for. A better quality product can be offered, the product can be sold at a lower price, and or improvements (ie progress) need to be made.
Now there are cases where I find IP immoral such as with biopiracy, for instance company X gets a patent for some rice Y or another one gets a patent on the use of a plant as a drug or pesticide even though others have used it in those ways for centuries.
Falcon
Re:wealth (Score:3, Interesting)
of couse, you right, but aietreme's definition did not require that. and he actually had an actual definition while you just make a practical observation, which seems to imply that wealth is selling something, presumedly desired by a willing buyer and I guess we presume he has something the seller wants to give in exchange. This is not quite right. Consider the versallias treaty and the french invasion of the ruhr? The french looted the industrial capital. the trigger for world war ii. Now wealth presumedly changed hands, but there was not much selling. So my treatment of your position is not quite right and I wonder about the word selling in what you say.
Now suppose OPEC was a big food producing region. They were an autarky.
Everyone there was well-fed. Suppose they had an economic system that did not involve selling. No oil. Do they have some wealth?
The species has been around a long time and we have had economies for a while and they often have a difference or two. And I figure we have had wealth longer than we have had economies. I think these observations are useful, particularly if you treat wealth as a fundamental question.
Re:Oh much the same way, HOWEVER (Score:3, Interesting)
Here's a clue: if everybody in China did get rich, they would be earning more than $6000, and the average for USA+China would be higher.
Not if most of China's riches come from USA. Then the average he posted simply would not change much. Which is the point I believe the GP was trying to make.
Oh, so the only way to become rich is to make some one else poor? The whole world is richer today than it was just 50 years ago. Sure some got wealthier than others but even the poor can eat today in the US. I know, like many others, some of whom I worked with I worked out of a day labor pool and took almost any odd job I could get. I had a roof over my head but some of those I worked with didn't, they instead lived on the street or in the woods. But after a day of work for the labor pool there was enough money to eat.
As for those unable to work much if at all there's help out there, the problem is in finding it. I was disabled more than 10 years ago and since the accident that caused my disability I've been collecting disability income. However this past year I've had my disability income fucked with. A couple of days ago I told someone working with my doctor, paid for with Medicare and Medical Assistance, I was at the point where I could either buy food and eat or buy my medication. She left the office and brought back a printout of dozens of places in my area where I can go get free food. So I can eat and take my medicine. Yesterday I was with a therapist and said the same thing but added something, I could eat, take my medicine, or wash my clothes while what little cash I have still exists. I said the washer and dryer where I live are both coin fed. She suggested I hand wash my clothes. So this morning I did in the bath tub. I then hanged most of my clothes in the shower to dry, some I put on heaters.
Falcon
Re:wealth (Score:3, Interesting)
okay, you like exchange-value. There have been a lot of communialist experiments in the US and I doubt thet were all based on exchange-value. And I recall some renegade jesuits on the pacific coast of south america had an odd thing going and were being successful until maybe the Spanish made a point of sending a military expedition. I do not think they were exchanged based. Figure it was deity based totalitarianism with a communalist slant. Exchange-value events do not fit in well.
But let us take a more contemporary example. In mid-twenthieth century there was a solitary feral human living in the mountains of California. So there was not any exchange-value events going on. I suppose he was stone age. He could kill animals and fashion tools out of the bones. This was very laborous. Now I think it is fair to say these tools had existential significance for him. Were they wealth?
And just for grins, I will mention that I treat economics as having an existential base. And I consider economics an existential issue.
An argument made before and very astute (Score:1, Interesting)
Re:wealth (Score:2, Interesting)
Check out this great essay [paulgraham.com] (under the "Money Is Not Wealth" section). About the best explanation I have seen.
Re:Misleading Conclusion. (Score:3, Interesting)
Exactly my point. Despite what the geek set thinks, the real world runs on food, fuel, and hard goods, not on knowledge or information processing or advertising. All the knowledge in the world is worthless if you have no way to apply it -- be that extraction, farming, manufacturing, or whatever results in a *tangible* product in the marketplace. And knowledge can be copied at zero cost, at which point it ceases to have any market value whatsoever (the lesson we should have learned from digital copyright infringement).
Re:Sigh (Score:4, Interesting)
Taiwan is composed of all of the capitalists who were forcibly evicted from the mainland.
Chinese weren't evicted from mainland China, instead some 2 million KTM Nationalists fled Mainland China and invaded Formosa. There is a reason Formosans call 28 February 1947 Taiwan's Holocaust [taiwandc.org]. Some capitalists stayed on the Mainland though, and had their property taken away. Others made it to Macau or Hong Kong.
Falcon
making (Score:3, Interesting)
Face it, you are a nation of consumers with no real manufacturing left.
The US still has manufacturing though much of it is hidden and you have to look for it. Check out Etsy [etsy.com], the place to buy and sell hand made things. Makezine [makezine.com] and Craftzine [craftzine.com] are American zines for American makers and crafters. The US still has spinners [wikipedia.org] who spin and create their own threads. Some of whom will go on to make their own cloth, others sell their threads to those who will make cloth. Then they will make or sell to those who make clothing. Only a few blocks from where I am typing this there's a workshop for hand bound books. Actually Minneapolis [philobiblon.com] has a few places that custom bind books.
And this isn't particularly a dig at the US ... I think all Western economies will go the same way, as the governments and people all have the same short-sighted attitude. Pretty soon the only things left will be service jobs and tech jobs in the West, all manufacturing and production will be done in China and the surrounding ASEAN nations.
Ah but those other nations will become like the West too. The beauty of freer markets is that they improve everyone's lives who are allowed to participate. Your sweatshop is their employees' good life. Even Chinese want their iPhones [economist.com].
Falcon