ZDNet The Apple Core: Why Apple gadgets can’t be made in the U.S.

Jason D. O’Grady writes on ZDNet Why Apple gadgets can’t be made in the U.S.:

“During Thursday night’s debate in South Carolina CNN host and moderator John King asked the four remaining GOP candidates their opinions about Apple Inc., which “has 500,000 employees in China” and (obviously) much fewer in the United States.”

I think the comments are, sometimes, even more interesting than the story itself: some reasonable, others jingoistic and us v. them.

In my opinion, what it boils down to, is a matter of proportion: what proportion of the value chain is created in the USA? Which proportion of jobs? Which proportion of sales? Apple sell their products around the globe – does anybody have the breakdown per country/region of income and production for Apple products? It’s fair to expect that the US economy should profit from the sales of Apple products, but then what about other countries where Apple have significant sales? Why shouldn’t the German, British or Japanese economy have some of the fallback too? It’s done with military sales where, frequently, some of the production is moved to the customer’s country – but we talk about fighter jets or tanks, contracts worth hundreds of millions or billions of dollars.

What matters, in the end, is the whether there is a balance or not. When there is an imbalance, countries and companies need to fight back by being more competitive and smarter. The US was the best at this game for a long time, demanding access to markets, to export products and services and, thanks to its political power, obtaining it. Then other countries got smart, over the years: Germany, Japan and now China, not to mention lots of smaller countries, getting better at what they do. The question is, what is their competitive advantage? Are they better – and why?

Perhaps it’s the boring, unpopular long term investments, like: schools, universities, infrastructure like railways, airports and roads. If, in a family, to extract maximum value from every member of the family, you send children to work at 8 or 10 (like in some developing countries), you will get immediate income, but their mental and physical development will be stunted, if they survive. If you invest in the value of each member of the family or community, through healthcare, schools, universities, infrastructure, long-term industrial policy and, not least, care for the environment, you will extract much more long-term wealth than by exploiting children, young people and adults until they drop. Not surprisingly, you find at least some of these elements in the most successful countries at the moment: China, Germany, the Scandinavian countries, Corea, etc. If you add a large population, keen to work for low wages, as in China, India and Brazil, you see some of the key ingredients in the success, at least in some fields, at least at the moment. What are the recipes to compete? Let’s say that the best way to get in a mess is to continue with our short-term approach, when a company is only as good as its latest quarter, where immediate profit, preferably not connected with the underlying production of goods or services, is the only way to go. Where you prefer to throw people out of their homes or work, to save a few bucks, instead of taking the long view, accepting that you cannot always make top dollar, every quarter, that you have to invest, work and wait for the results.

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