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What the iPod Tells Us About the World Economy

Soulskill posted more than 4 years ago | from the we-look-for-things-that-make-us-go dept.

Businesses 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.'"

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Not so fast (5, Insightful)

Anonymous Coward | more than 4 years ago | (#30255348)

Maybe the author of TFA could also analyze who makes th eprofits off the many counterfeit [economist.com] iPhones mfg'd in China:

"Illicit phones comprise a staggering 40% of Chinese firms' production, and 13% of the world's, according to iSuppli, a research firm. It reckons China will produce 145m of them this year, up by almost half since 2008. This has hit sales of legal phones."

I refuse to believe that imaginary property is an acceptable replacement for real manufacturing capacity.

Re:Not so fast (2, Insightful)

nxtw (866177) | more than 4 years ago | (#30255564)

How many of those "counterfeit" iPhones are really counterfeit iPhones?

Devices like iPhones, BlackBerries, and WM or Android devices have similar hardware capabilities - it's the onboard software that differentiates them the most. When I think of a "counterfeit" iPhone, I'd expect something that runs a cracked/modified version of the iPhone software, not just something that has a similar case and similar home screen.

Re:Not so fast (0)

Anonymous Coward | more than 4 years ago | (#30255612)

It's a bit of both, though the larger category is the knockoffs, not true counterfeits. From the article:

"...China's huge "grey" market for handsets, ... includes some genuine phones imported without the manufacturer's blessing but is mainly comprised of knock-offs."

This doesn't change the fact that factories over there can make what they want, and Apple's profits depend in large part on the willingness of chinese police to prosecute factory owners who break American law.

Re:Not so fast (3, Informative)

LynnwoodRooster (966895) | more than 4 years ago | (#30255952)

The knock-off iPhones available all over Shanghai all run a broken version of Windows Mobile, or a custom OS. None that I've seen run the iPhone OS...

.
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:Not so fast (1)

mike2R (721965) | more than 4 years ago | (#30255978)

I refuse to believe that imaginary property is an acceptable replacement for real manufacturing capacity.

That is an odd way of putting it. It sounds like you find the concept immoral in some way, rather than impossible.

Re:Not so fast (5, Insightful)

betterunixthanunix (980855) | more than 4 years ago | (#30256122)

Well on moral terms, globalized intellectual property essentially means that every country in the world has to enact the same laws as the countries that have intellectual property. Why should they? Some of those countries are democratic, but decided not to enact the same copyright, trademark, and patent system that the USA has -- should the power of the people be usurped just so that the US can balance its trade (on paper)?

On a more realist level, we have yet to convince every nation to take the same aggressive approach to copyrights/etc. that the USA takes, and we certainly have not convinced the citizens of those countries to respect such things. A quick trip to Chinatown reveals the problem: thousands of cheap clones of luxury brands, in many cases made of the same materials and with the same designs as the "authorized" versions, likely produced in violation of trademark and copyright agreements (perhaps from several companies, as in the case of knockoff iPhones). If these things were only being sold in China, it would be irrelevant, but they are being sold here in the USA -- meaning that someone had to buy them from China. Even if it was under the table, it still matters in terms of its economic impact.

So unless you have a way to convince the Chinese government to stop imprisoning people for practicing obscure religions and to start imprisoning them for infringing on American copyrights, I would agree with the GP: it is impossible to base our economy on "intellectual property." Real, tangible goods must form the backbone.

Low Tech Goods? (5, Interesting)

ObsessiveMathsFreak (773371) | more than 4 years ago | (#30255368)

And what about low technology good such as clothes, furniture, steel, glass, toys, and widgets? Where does the money flow there?

Oh much the same way, HOWEVER (5, Insightful)

SmallFurryCreature (593017) | more than 4 years ago | (#30255542)

The article is a complete piece of crap. Because it never dives INTO the money flows. It doesn't show what that 150 dollars the chinese get MEANS. For instance the idiot who wrote this never touches on the most basic point. That 150 dollars to china is a LOT more then 150 dollars to the US. The average wages are completly different, based on a quick google it seems to be about 100 dollar vs 2000 dollars. So 1 iPod sales generates enough money to pay for 1 months work in china but only a ... few days in the US.

This is to say nothing about the effect on the workforce, in China, the jobs are spread out. You both need directors to run the factories and janitors to clean the toilets. In the US, far fewer people are involved. Especially in that section of the economy were the most people fit, the blue-color laborers, the factory workers. So a few designers and Steve Jobs are swimming in it, doesn't help the millions of unemployed, doesn't breath live into ghosts towns were the only jobs are handing out unemployment stamps. And where do these people who longer can find a job get the money to buy an iPod? They don't, they buy a cheapo MP3 designed in China, build in China.

Thank you Mr Idiot from the guardian, we KNOW how the economy works, the exact same idiotic posts were made about Japan. Don't worry, Japan will only take a tiny bit of cash at the bottom, all the real money will be earned by the west. Yeah, this worked SO well, that Japan is now conveniently lumped with the west. He happily lists that core components with lots of IP come from Japan so that those pesky chinese won't make a penny of it. Eheh, so what is China to stop from doing to Japan what Japan has done to the west? If his theory about IP holds up, then those IP could never have become possible in Japan.

If the iPhone was made in the US, the US economy would be richer by 150 dollars as well.

FLAWS:

  • A dollar does not have the same value across the globe.
  • This same argument was held for Japan as country with cheap labor and no IP, now Japan is suddenly listed as an example of a country with IP so that it is safe from cheap labor.
  • Forgets that the shift of money has an effect not just on the whole of the economy, but on different sectors and in different ways, no more factory jobs in the US.

If you want to see the effect of the global economy, look around. I life in Utrecht, and that has an industrial park called "Lage weide". There is a LOT of distrubution activity, lots of shifting around of good but almost no production. One produces big metal thingies and the building looks ready to collapse and that is about it. Everything else is warehouses, with the contents, "produced in China". And warehouses are easy to automate. Hema (dutch retailer) has opened one of the most advanced warehouses in the world recently, yet fewer people working and the work there requires no skill (and therefor no pay and no security).

Look around, why do you think the economy is in the crapper? Because nothing is being produced anymore. The factory towns may not be glamorous but it is where the core of a country makes its living. Not the rich who rule the country, not the super poor, but the average worker who pays the taxes that allow the government to function, who deliver the soldiers for the army.

Empires collapsed before, the western empire will get a rude suprise sooner or later when China changes its tune. And no, I don't mean in an evil plot kinda way, I mean when China does what Japan did ages ago. Become an economic power with its own IP. Quick check, how many high-tech gadgets in your house are produced in cheap labor country Japan? PS3, Wii, Sony-Ericson phone and countless others where you might not even think they came from Japan? Ask your daddy what the China of their day was (or maybe your granddad if you aren't as old as me).

Re:Oh much the same way, HOWEVER (1)

vcgodinich (1172985) | more than 4 years ago | (#30255610)

A dollar does not have the same value across the globe. No. . . .the US dollar does have the same value across the globe. The only difference is that things (labor) is cheaper in China than the US.

Re:Oh much the same way, HOWEVER (2, Insightful)

amRadioHed (463061) | more than 4 years ago | (#30256234)

If everything is cheaper in China and so the Chinese can get more for one dollar than we can in the US, how does that not mean the dollar has greater value for the Chinese?

Re:Oh much the same way, HOWEVER (4, Insightful)

smallfries (601545) | more than 4 years ago | (#30255616)

So extracting the core of your argument from the long pointless rant that you've wrapped it in:
It's wrong to trade with poor countries, because they derive more advantage from it, and become rich countries.

Err, how is this a bad thing? Using your example of Japan, what the value of bilateral trade between the US and Japan immediately after the second world war, and what has that value risen to after decades of investment in their economy.

The best kind of world for rich industrialised countries to be in, is one in which their competitors are rich industrialised countries with similar production costs.

Re:Oh much the same way, HOWEVER (5, Insightful)

h4rm0ny (722443) | more than 4 years ago | (#30255854)


His post was in no way a "long pointless rant." It is accurate and factual. The only thing missing is a corrolary which would have answered your point. It is a bad thing for the developed country because the ownership of industry in in that country (the US) is not even close to equally distributed, but rather concentrated in the hands of a small and hideously wealthy minority. That means that when the manufacturing base is off-shored, this wealthy minority make even more money whilst the class of domestic people that had to work to receive a salary or wage are no longer needed and become poverty stricken. If wealth were more evenly distributed, then offshoring would be an overall good for the country. But in fact it merely increases the gap between rich and poor, pushing middle classes down into the poor and the poor trying to cling on best they can. This leads to a cycle of poor education, destruction of the country's own domestic industrial capacity (and IP capacity perhaps these days). That's the problem.

Re:Oh much the same way, HOWEVER (3, Insightful)

DreamsAreOkToo (1414963) | more than 4 years ago | (#30255950)

Err, how is this a bad thing?

Playing Devil's advocate here...

First of all, do we want places like China and North Korea to be rich countries? China's government structure is not one that encourages freedom of thought. Not only that, but they *support* North Korea. I have no doubt in my mind that if China become the big kid on the playground, they'll start trying to conquer whoever they can. Already, they're hard at work taking what they can.

Secondly, it is the job of OUR nation to run OUR nation. Even if the destruction of America makes 1 billion people richer in India and China, it is our responsibility to not let that happen. Ideally, we run our nation in a way that benefits everyone, but right now, both blue collar AND white collar jobs are being outsourced. If we get India to design our crap and pay China to build it, where are we supposed to earn money? As a nation we have to create more wealth than we spend. It's as simple as that. There's no magic money equations that our nation keeps being told exist. If you don't create wealth, sooner or later the rest of the world devalues your currency and you're left with nothing.

Re:Oh much the same way, HOWEVER (2, Insightful)

amRadioHed (463061) | more than 4 years ago | (#30256270)

China is already the big kid in their playground. If they had an interest in military expansion I don't see anything that could stop them at the moment. I think their government is smarter than that.

Re:Oh much the same way, HOWEVER (2, Insightful)

bnenning (58349) | more than 4 years ago | (#30255984)

Beat me to it. You'd think that enlightened progressives would be thrilled at the prospect of a billion people substantially improving their living conditions. But it exposes one of the uglier sides of the zero-sum economic thinking that pervades the left: one party's gain is another's loss, so we should keep other countries poor so they can't take our wealth.

Re:Oh much the same way, HOWEVER (4, Insightful)

dangitman (862676) | more than 4 years ago | (#30256046)

But it exposes one of the uglier sides of the zero-sum economic thinking that pervades the left: one party's gain is another's loss, so we should keep other countries poor so they can't take our wealth.

What the hell does this have to do with "the left"? If you look at the whining about the Chinese "taking our jobs" it comes just as much, if not more, from the right. But left/right is just a smokescreen here. It's a populist thing, not a particularly ideological one.

I'd wager that you're just a partisan who treats "the left" as some sort of bogeyman without understanding the dynamics, or what it really means.

Re:Oh much the same way, HOWEVER (4, Funny)

rishistar (662278) | more than 4 years ago | (#30255620)

Thank you Mr Idiot from the guardian

Interesting rant, but the idiot was from the Telegraph.

Re:Oh much the same way, HOWEVER (3, Insightful)

Anonymous Coward | more than 4 years ago | (#30255646)

Xenophobic claptrap
if the iPod was made in the usa it would cost $750 and break within days. Just like the cars, which are rubbish.

Trade is not a war - it is a way for us all to get wealthier, healthier and sustainably so. Read what you write with an equal value on each human life - I'd far rather pay a bunch of peasants in China to uplift from inefficient farming than one person in the usa to have a low wage manufacturing job.

Re:Oh much the same way, HOWEVER (1)

gbjbaanb (229885) | more than 4 years ago | (#30255806)

I'd far rather pay a bunch of peasants in China to uplift from inefficient farming

you won't when the price of food doubles, said peasants can no longer buy enough to feed themselves, meaning they have to work all hours for even less money leading to mass immigration to 'rich' countries where wages are driven down by immigrant peasants working for far less than the standard rates, leading in turn to mass unemployment, bubbles in shoddy real-estate development, and more tax being raised to support benefits.

A nice equilibrium is what we want, not exploitation based on cheap workers.

Re:Oh much the same way, HOWEVER (1)

at_slashdot (674436) | more than 4 years ago | (#30255674)

If the iPhone was made in the US, the US economy would be richer by 150 dollars as well.

If iPhone were made in the US it would cost $1000 or more, few people would buy it and both China and US would lose..

wealth (3, Interesting)

astar (203020) | more than 4 years ago | (#30255976)

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:wealth (0)

Anonymous Coward | more than 4 years ago | (#30256244)

Wealth comes from work. Work is done by people.

Re:wealth (1)

AlXtreme (223728) | more than 4 years ago | (#30256332)

What is wealth?

Wealth is what you have that some other entity wants (regardless if that other entity is a person, company or country).

I don't see how such a question would make people uncomfortable, it's the basis of economics.

Re:Oh much the same way, HOWEVER (1)

Eil (82413) | more than 4 years ago | (#30256348)

The average wages are completly different, based on a quick google it seems to be about 100 dollar vs 2000 dollars. So 1 iPod sales generates enough money to pay for 1 months work in china but only a ... few days in the US.

Wait, what? In which fairytale American city is the average wage anywhere near $2000 for a few days' work? I'll grant that the dollar is worth far more in less developed countries but don't blow it out of proportion, please.

Misleading Conclusion. (4, Insightful)

h4rm0ny (722443) | more than 4 years ago | (#30255370)

TFA suggests that this means the financial hit of off-shoring manufacturing is actually small. Whether or not the article is correct on money making its way back to the US, there is an important factor. The money is making its way right back into the pockets of the company owners and rights holders. The people who would normally make their living in these manufacturing jobs are still stuffed. I don't think that any "trickle down" effect from returned profits is going to make up for that.

Re:Misleading Conclusion. (1)

ColdWetDog (752185) | more than 4 years ago | (#30255426)

The people who would normally make their living in these manufacturing jobs are still stuffed.

OK, think about this a bit. The i(x) or any small electronic device really doesn't consist of much. PCBs with chips can be fabbed anywhere. Nobody is even using hard drives. Plastic cases? Same thing.

So it's not surprising that much of the money is not tied up in manufacturing the product. Nobody is getting rich actually making the thing. Even if you paid the factory floor worker a decent wage, it wouldn't change things all that much. I would like to see a similar breakdown on bigger items: Cars, heavy machinery, etc.

The other take home message is that you can bypass ANY particular country and not get into economic trouble. Whether that is by design (from the Illuminati) or just an accident how things happened makes the system a bit more robust.

Re:Misleading Conclusion. (1, Offtopic)

postbigbang (761081) | more than 4 years ago | (#30255554)

Each element that you speak of, right down to the packaging and external box labels, are manufactured.

The problem is that most of these pieces don't happen in the USA, they're individually made mostly in China and the ASEAN countries. We've exported the labor component, as have many US companies.

The 'shareholder' value is corporate speak for being enslaved to Wall Street for the task of producing excellent quarter after excellent quarter. No regard is made for US labor at all, and the fact that the labor is exported is lauded.

Yes, innovation and IP from Apple are rewarded handsomely. And the US labor market keeps looking uglier and uglier because US manufacturers can't deal with manufacturing processes that utilize cost-effective US labor in its products. What do Chinese laborers get? Not very much. OSHA and pollution controls? Not very many. People hungry for work? Plenty.

Re:Misleading Conclusion. (1)

BACPro (206388) | more than 4 years ago | (#30255462)

The rich get richer
The poor get poorer

How long has this been going on?

Re:Misleading Conclusion. (1)

arb phd slp (1144717) | more than 4 years ago | (#30255720)

The rich get richer
The poor get poorer

How long has this been going on?

Since the last time a batch of rich people were rounded up and shot by the poor people. In the case of China, this means only a few decades.

Re:Misleading Conclusion. (1)

arethuza (737069) | more than 4 years ago | (#30256166)

Or in other countries, since your country was invaded and anyone with any power/riches was disposed of by the invaders. Around here that is close to a thousand years.

Re:Misleading Conclusion. (2, Interesting)

eclectro (227083) | more than 4 years ago | (#30255528)

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.

Re:Misleading Conclusion. (1)

gbjbaanb (229885) | more than 4 years ago | (#30255914)

Really, I wonder who even buys the "trickle down" nonsense anymore.

Rich people. The same ones who are driving this imbalance in trade and work.

Re:Misleading Conclusion. (1)

amRadioHed (463061) | more than 4 years ago | (#30256316)

Retail jobs are also being lost to online merchants, which no doubt frequently turn into outsourced IT support jobs.

Re:Misleading Conclusion. (4, Insightful)

Reziac (43301) | more than 4 years ago | (#30255924)

I agree... and read the comments following TFA; they're much more on point. Once we export all our knowledge, what do we have left? manufacturing is long gone, and food production is going overseas too. What happens when we are purely a nation of consumers?

Tho sometimes one thinks that most businesses are already mainly selling marketing to each other, rather than selling an actual product.

It's the dollar (1)

Colin Smith (2679) | more than 4 years ago | (#30255386)

Doesn't work if you don't have the world's reserve currency.

 

Re:It's the dollar (0)

Anonymous Coward | more than 4 years ago | (#30256102)

Enjoy it while you have it. The Euro will become the new global reserve currency within a decade.

That said.. (2, Insightful)

delire (809063) | more than 4 years ago | (#30255396)

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.

The differences in salary relative to cost of living ought to be taken into account. The average daily salary of a Chinese person is was around USD14.1 [china.org.cn] last year..

Secondly, it's not just about revenue but longer term industrial dependency. Were China to suddenly refuse (due to political embargo, for instance) to produce such items Apple would suffer a considerable economic loss, if only while they secured an alternative manufacturer. Chinese and Taiwanese companies are in a good position to steer the market in their favour, eventually producing (if not already) competing products for their own market - the world's biggest in many sectors - and others abroad.

Re:That said.. (1)

vcgodinich (1172985) | more than 4 years ago | (#30255652)

Secondly, it's not just about revenue but longer term industrial dependency. Were China to suddenly refuse (due to political embargo, for instance) to produce such items Apple would suffer a considerable economic loss,

The laws of a free market state that China would suffer the exact same economic loss. The reason China is paying so little for labor is that they NEED the jobs in a big sorta way. If their country didn't need companies like Apple, they would charge more for their services.

Not a solid plan (1)

betterunixthanunix (980855) | more than 4 years ago | (#30255400)

"Intellectual property" is not a solid plan for balancing trade, since not all countries have the same view on patents and copyrights, and certainly not on trademarks. After all these years of people crying about "counterfeit" goods, why would someone use "intellectual property" as the justification for the current structure of the US economy?

Re:Not a solid plan (0)

Anonymous Coward | more than 4 years ago | (#30255454)

ACTA

We will see just how solid it is very soon.

Different Problem (1)

DaveAtFraud (460127) | more than 4 years ago | (#30255692)

Actually, balance of trade calculations have historically ignored payments for intellectual property and services and have only counted raw materials and manufactured goods. This has been pointed out numerous times in the past as people bemoan the balance of trade deficit the the U.S. historically runs. The so called "U.S. balance of trade deficit" really isn't as bad as or doesn't even exist due to all if the money that flows into the U.S. due to IP and services.

Note: this post is based on something I remember from several years ago so it could have changed and I didn't hear about it but I don't think it has. I'd be quite happy if someone were to post a refutation with references since I feel that a number of people use the so-called "balance of trade deficit" for political purposes when, to a large extent, such a deficit only exists in the trade of tangible goods.

Cheers,
Dave

Re:Different Problem (1)

betterunixthanunix (980855) | more than 4 years ago | (#30256038)

Except that tangible goods are exactly that: tangible. Copyrights, patents, trademarks, and trade secrets are only meaningful if governments are willing to enforce them. Claiming that it is OK for one country to import tangible goods at a higher rate than they are exported because the imbalance is corrected by contractual agreements is kind of like saying it is OK to smoke a cigarette at a gas station. It is something you can get away with for a while, but it is not a good idea in the long run, and it will undoubtedly blow up in your face.

Sorry, references are not on hand at the moment.

Re:Different Problem (1)

dangitman (862676) | more than 4 years ago | (#30256100)

Copyrights, patents, trademarks, and trade secrets are only meaningful if governments are willing to enforce them.

Tangible property is no different. Your "property rights" are meaningless unless the government enforces them - someone could just come and take your land by force.

Re:Different Problem (1)

betterunixthanunix (980855) | more than 4 years ago | (#30256174)

Except that we are talking about trade. If you sell tangible goods to China, and the Chinese government does not respect its citizens rights, that does not mean there is a problem in terms of the trade balance. If you sell copyright contracts, you are relying on the Chinese government to respect your rights as guaranteed by America's laws -- much shakier ground to be on.

Re:Different Problem (1)

dangitman (862676) | more than 4 years ago | (#30256230)

Perhaps, but I was responding to your notions of copyrights and whatnot somehow being illegitimate forms of property, and that they uniquely require government enforcement, where other property rights don't. Which is clearly not true.

Perhaps a smidge short sighted? (2, Insightful)

jimicus (737525) | more than 4 years ago | (#30255418)

The mistake any article like this makes is it assumes that the people providing the cheap manufacturing labour are content to continue doing so indefinitely - even when the factory owners can easily find out precisely how much their product is making in the country it's sold in and compare it with the amount they get to see.

History has shown that this is frequently not the case - I refer you to the UK's former motor industry.

Re:Perhaps a smidge short sighted? (4, Insightful)

MemoryDragon (544441) | more than 4 years ago | (#30255496)

That is the problem of the western economic journalism and generally also the western economists they have forgotten to think in long terms usually their memory lasts and foresight lasts only for the next 2 years without taking history into acocount.

IP is vaporware, production is also assembling of knowledge, and in the long run no producer needs any middleman once he has earned enough money he can provide the goods himself, also IP is fading if you do not produce it steadily enough. If you produce you have to do also do some research which means you build up your own ip in the long run and then you can cash in from the others (within the bounds of the system) so if you dont keep some core industries in the country as well as to try to build knowledge upon it you soon will be paying only without getting anything back.
The chines pretty much know that, but our western economits dream of clouds (jobless recovery, IP based economy etc... all of those constructs did not work out in the past, why should they now, the rule of the game does not change unless humanity changes)

The funny thing is, the stronger we try to build up our ip laws on a worldwide scale now, the more problem we will have in about 20-30 years to get out of the misery we are building currently for the sake of the quick buck.

Re:Perhaps a smidge short sighted? (2, Funny)

bnenning (58349) | more than 4 years ago | (#30256024)

So in summary, we'd be better off if Silicon Valley were replaced with textile factories.

Smash imperialism! (1)

For a Free Internet (1594621) | more than 4 years ago | (#30255428)

For international socialist revolution!

iPod is a success, US is not (0)

Anonymous Coward | more than 4 years ago | (#30255438)

iPod is an export success, it results in a positive input into the US. So taking that as an example is not representative of the US (which imports more than it exports and has for a long time).

The real truth is that, as the owner of the US$, they simply printed the difference and to justify the growth of their money supply, they claim huge 'intangible asset' values in the companies. But it's just vapour, iPods are a real product, whereas those vapour valuations of 'goodwill & IP' are not.

The harsh reality is that the Federal Reserve refuses to let Congress audit their 'assets' backing the US$, and that tells you that there is nothing of substance holding up the dollar. As for IP rights, well there again, there are so many patents covering the same things, and so the same value is counted as 'goodwill' in the balance sheet of thousands of companies. i.e. it's just another huge fake inflated market.

Dollar is dropping, as others recognise the Bernanke game.

I think the articles authors wishes for the clock to roll back, but nobody will pay Billions for Excite.com now, once the illusion of value goes, it never comes back.

Re:iPod is a success, US is not (0)

Anonymous Coward | more than 4 years ago | (#30255814)

The harsh reality is that the Federal Reserve refuses to let Congress audit their 'assets' backing the US$, and that tells you that there is nothing of substance holding up the dollar.

The dollar is backed up by the strength of the US federal government. When you're the only organization to ever put a man on the moon, invent atomic weapons AND the internet, and have a military that can realistically take on the next five strongest countries (at once), you have a pretty good bundle of strength behind ink and paper.

And don't forget that the other reserve currencies, such as gold, have their actual value due to the EXACT SAME mechanism that the dollar gets its actual value from: it's perceived widely enough to be rare enough to be a good store of value.

Re:iPod is a success, US is not (2, Interesting)

Cwix (1671282) | more than 4 years ago | (#30256212)

As a veteran full of patriotic zeal I approve of your ideas, and wish to subscribe to your news letter. As a realist, I should point out that we obviously have problems taking on two third world countries at once. That can be attributed to lack of foresight in the planning stages thou, I would say that if we had to take on the biggest five militaries in the world, they might bring friends with them too. How about we leave military might out of an economic discussion, it muddies the waters a bit.

Re:iPod is a success, US is not (0)

Anonymous Coward | more than 4 years ago | (#30256250)

How much for the moon landings? If you were to sell history, how much would it sell for? You quoted stuff that is not tangible assets that can be sold. The Romans invented aquaducts, ... and what value is that today?

As for the military.... they can't even hold two third world countries. Seizing assets won't work in developed countries because the assets are the work of the people and they just won't work. You also lost money on the invasions.

Other currencies are based on their trade, not their historic success.

It's very simply, the dollars printed by the Federal Reserve to buy assets are supposed to be of equal value. but they are not, and the Federal Reserve can't open the books. Which means the dollar is based on junk, a deception.

You have some successes (like the iPod, which is why he quoted it as an example), but that is tiny compared to the money you printed. Since Bush came to power, the quantity of dollars has DOUBLED, but it has not grown that much, it's just fluff.

The dollar should drop. China has the yahn pegged. (1)

HornWumpus (783565) | more than 4 years ago | (#30255960)

China occasionally moves the peg as Chinese industry becomes overwhelmed with export demand.

That is not good enough.

If the Yahn floats market forces fix much of this mess over the next 20 years.

If the Yahn remains pegged the dollar will eventually crash all at once.

That does not work out (1)

MemoryDragon (544441) | more than 4 years ago | (#30255442)

Innovation usually follows production in the long run, since the west things we can survive on IP alone we will have a bad wakeup call in about 20-30 years timeframe, no production, no invention period, the patents usually are the last to follow due to the grace period but they are slowly moving towards asia as well.

A snapshot myopia (1)

oldhack (1037484) | more than 4 years ago | (#30255448)

'China, you see, is really just the place where most of the other components that go inside the iPod are shipped and assembled.'

Well, that's how it starts. Some places, like Mexico seems, is happy to do just that. But other places with bit more brains, like China, builds on it to take up more and more of the whole production process.

Btw, am I saying Mexico is dumb? In a way, yes. All in all, Mexico seems a lot more of a tiered society with less a sense of national unity, and she's not alone.

We can't destroy our manufacturing base (4, Insightful)

transporter_ii (986545) | more than 4 years ago | (#30255456)

No matter how much money is made in America from items assembled in China, everyone can't work at Wal-Mart and Burger King and be able to afford said items. Don't get me wrong, those are real jobs and I even worked at a Wal-Mart many years ago, but in the past, service jobs were not the base of the economy. If everybody is making minimum wage with no benefits whatsoever, who can afford services? Thus a service-based economy isn't sustainable in the long run. Yeah, we will survive and life goes on, but we shouldn't just count the beans and proclaim everything is alright. We need to take into account several things:

How citizens are treated by the governments of our trading partners, for instance.

What happens to our economy when nothing left but service jobs is another one.

When the trading partners are using the profit from us to build up armies to come back over here and kill us, should make the list as well.

Re:We can't destroy our manufacturing base (1)

RatPh!nk (216977) | more than 4 years ago | (#30255748)

If everybody is making minimum wage with no benefits whatsoever, who can afford services? Thus a service-based economy isn't sustainable in the long run.

This is a point I bring up all the time. You see these talking heads, economists (usually, but not limited to, right leaning, business friendly) and such on television talking about how 2/3rds of the US economy is consumer spending (most recently propped up by cheap money), while at the same time saying that the manufacturing jobs that were the backbone of the middle class dream are "gone forever". All it takes is stopping to think that if those stable good-paying jobs are "gone forever" and the days of cheap credit are "gone forever", then the next logical idea is that a US economy where 2/3rds of the US economy is derived from consumer spending is also "gone forever". No one seems to want to bring that up, and I think the fact is self-evident. Which leads to one or two conclusions, either the US economy as we know it is "gone forever", which means a big, big hit to 2 decades of record profits (which is a whole different discussion as to whether the migration of those jobs was necessary or just a really really great idea, in the short term to boost the bottom line). Or, and I hope this is the outcome, corporate profits come back to a little more realistic goals (mathematically increasing profits by N% quarter to quarter forever is not-sustainable) and those jobs are not "gone forever". Everybody is happy.

True to a degree (1)

pvt_medic (715692) | more than 4 years ago | (#30255468)

The challenge with this analysis is that it only focuses on a small component of the overall economy. The apple iPod is a great example of this, and areas where the US can develop and market these high tech items we can assemble them oversees as ultimately we will make the profit back here in the US. The challenge is that there are many elements of the economy that based soley on manufacturing and this is an area where China has an advantage. Also many companies that were historically american have been purchased by oversees holdings. Overall if you look at the flow of money for most parts of the US economy the money ends up in other countries. Ultimately to have a healthy economy you need both high tech and manufacturing balanced appropriately so your companies are not too dependent on other countries. This is where the US suffers the greatest

In May 2009, the US owed China $772 billion. (4, Insightful)

conner_bw (120497) | more than 4 years ago | (#30255472)

And somewhere between then and now, then banks went bankrupt.

Good job, business community.

Only works for apple (0)

Anonymous Coward | more than 4 years ago | (#30255494)

Ok if you go into best buy what high end products beside apple are made by u.s. based companies? How does this work for U.S. when you buy samsung, or sony or 99% of the non apple products?
What about non-high end items from china? How do those numbers work what patent money goes back to u.s. corps? Zero. How much in sales do those products have compared to apple products?

If there were a lot more apples then this article would have merit for trade deficit numbers but unfortunately outside of computers, almost all hardware in best buy is sold by non u.s. companies.

inside foxconn (1)

kaini (1435765) | more than 4 years ago | (#30255512)

inside foxconn shenzhen [chinalaborwatch.org]

Then why does China has a huge trade surplus? (3, Insightful)

ericferris (1087061) | more than 4 years ago | (#30255538)

I have doubts about the article's numbers. If that was true, how could China have a huge trade surplus? If the article was correct, all of the export gains would be spent on IP fees to non-Chinese companies, and would reduce their trade surplus. That's not what we observe.

So, while it's important to have a sound R&D and to have plenty of licenses ready to sell for lots of product, this does not replace a good manufacturing basis.

Have you even been to Apple... (2, Interesting)

pablo_max (626328) | more than 4 years ago | (#30255548)

"....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.

Re:Have you even been to Apple... (1, Insightful)

Anonymous Coward | more than 4 years ago | (#30255598)

"....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.

Yes I have. It is a much smaller percentage there. And, most foreign nationals in high-tech either already have or eventually get a green card and stay in the US. Some even become citizens. In any case, it is still money going to the US, and spend in the US.

Re:Have you even been to Apple... (1)

iammani (1392285) | more than 4 years ago | (#30255630)

Foreign nationals but american citizens probably. I would be surprised if companies had 70-80% of their workforce on H1B visas.

Re:Have you even been to Apple... (0)

Anonymous Coward | more than 4 years ago | (#30255998)

People that hold H1B visas are not american citizens.

stupid example (0)

Anonymous Coward | more than 4 years ago | (#30255578)

Apple isn't exactly the one to use as an example. Obviously they make a ton becuase all of their products have ridiculous markups. They probably have the biggest profit margin out of any company selling electronic devices. If you look at a Sandisk MP3 player, I bet most of the money stays in China.

Sigh (3, Insightful)

DNS-and-BIND (461968) | more than 4 years ago | (#30255596)

Well, I came for some insight, and instead there are eleven posts above me trashing the United States. So here's some actual thinking instead of the usual Two Minutes Hate.

China does indeed make very little from its manufacturing. The Chinese bemoan the fact that they're making so much for the world and getting so little in return. The reason is lack of brands - Chinese people just don't see brands as being important. They don't trust anything that they can't hold in their hands, and you wouldn't either if you had just emerged from fifty years of enforced poverty under a radical leftist government. Another problem is the rampant theft of IP and cutthroat domestic competition. Foreign brands have much of the high end, and Chinese companies are forced to viciously compete on price at the low end. And hey, if you do invest in R&D, Chinese IP laws are so weak that you'll get ripped off - why make money for someone else?

Suppose there was a phone that did everything the iPhone did, but didn't have the Apple logo on the outside. It wouldn't be nearly as popular, because there are plenty of people willing to pay $$$ for anything with that logo on it. Indeed, American companies come to China to make money, and make it they do. Apple is making money hand over fist with the iPhone. The Chinese get the scraps. Companies like KFC and Nike are kicking ass in China's domestic market.

The part about innovation is spot-on: the Chinese simply don't have that culture of "fixin' things" like we do. The usual attitude is to wait around for the government to do something. I've had my product copied so many times when it would have just been easier (and more educational) for the company to make its own damn product. Who knows, they might have made a better one instead of an inferior copy. But they'll never know because they just can't see past the end of their noses.

Here's an interesting link on branding [allroadsleadtochina.com] if you want further reading, and here is another [chinalawblog.com] .

Re:Sigh (1)

YourExperiment (1081089) | more than 4 years ago | (#30255962)

Suppose there was a phone that did everything the iPhone did, but didn't have the Apple logo on the outside. It wouldn't be nearly as popular, because there are plenty of people willing to pay $$$ for anything with that logo on it.

I have to call BS on this part of your argument. Sure, the Apple logo is enough to get the product some initial recognition in the marketplace. However, the iPhone's popularity is mostly down to its innovative interface. Now that we're starting to see devices appear that are capable of everything the iPhone is, and quite a bit more besides, they're beginning to cut into the iPhone's market share. Unless Uncle Steve pulls something special out of the hat next year (which, to be fair, he may well do) the iPhone will nosedive in popularity, logo or no logo.

Re:Sigh (3, Insightful)

zmaragdus (1686342) | more than 4 years ago | (#30256054)

I, personally, doubt the iPhone will "nosedive" as you say. While I agree that their market share will decrease, I think they will remain a leader in their market. Why does Nike stay so popular now that there are many brands that make comparable goods? They have built themselves a reputation that people can recognize and correlate to their expectations. So has Apple with the iWhateverTheyMake. (I think they should make iBoxers. You could listen to your favorite tunes while getting it on.)

Just my two cents

Re:Sigh (1)

YourExperiment (1081089) | more than 4 years ago | (#30256128)

True, 'nosedive' might be too strong a word. The fact remains that Apple will have to continue innovating to retain their market share. Any sign of complacency will result in a loss of that market share, whether rapid or gradual.

The iPhone is beginning to look somewhat dated compared to recent smart phones. I'm sure we'll see a significant refresh next year, but if we don't I can't imagine many iPhones being sold 12 months from now.

Re:Sigh (1)

tuxicle (996538) | more than 4 years ago | (#30256056)

Wasn't the same argument levelled at the Japanese? Heck, I still see it being used when people say the Japanese don't place emphasis on quality software because it isn't something physical they can hold in their hands (like in comments on this article [slashdot.org] , even if it was later refuted [slashdot.org] )

I wonder if the situation in China is similar to India, where people seem to have a preference for brands that are "imported".

Re:Sigh (1)

DNS-and-BIND (461968) | more than 4 years ago | (#30256204)

1. Japan and China are separate nations with separate cultures. Never lump them together just because the people look the same to your eyes.

2. Bad reputations take a long, long time to live down. Thirty years from now, people will still remember the drywall situation and check where their building materials originate.

3. If your domestic brands had such a horrible reputation for quality, you'd prefer imported goods too. True story: friend of mine's wife in another city went to the hospital to get vaccinations for her kids. The nurse could tell that the kids obviously had a foreign father, and asked, "Do you want the real vaccine? It's made in USA." Upon being reassured that she did, in fact, want the real vaccine for her children and not whatever horror was in the vial, the nurse said, "Are you sure? It costs three times as much, and you can't get a refund after we inject it." My friend's wife said let me think about that for a second, MMMMMMyeah, yes we'll pay.

Re:Sigh (1)

tuxicle (996538) | more than 4 years ago | (#30256276)

Japan and China are separate nations with separate cultures. Never lump them together just because the people look the same to your eyes.

Dude, relax. All I meant was these same allegations were once made about the Japanese, and look where they are now. By extension, maybe some day the Chinese companies will have a similar reputation for quality products that the likes of Toshiba and Sony have now.

Re:Sigh (1, Insightful)

Anonymous Coward | more than 4 years ago | (#30256138)

fifty years of enforced poverty under a radical leftist government

Yeah, because the streets in China were paved with gold during the civil war, the Japanese occupation, the decades of being carved up by the west...

Re:Sigh (0)

Anonymous Coward | more than 4 years ago | (#30256288)

There were rich, middle-class, and poor before 1949. After 1949, there were only poor, and everyone was equal - until the early 80s when Deng Xiaoping hijacked the people's revolution and took the Party down the capitalist road. Sorry if you find his statement offensive but it is 100% factual. Anyone suspected of being rich during the Mao years was imprisoned and impoverished.

Poverty is not socialism. To be rich is glorious.
--Deng Xiaoping

Re:Sigh (1)

dangitman (862676) | more than 4 years ago | (#30256192)

Isn't this comment:

The reason is lack of brands - Chinese people just don't see brands as being important

Directly contradicted by the following comment?

Apple is making money hand over fist with the iPhone. The Chinese get the scraps. Companies like KFC and Nike are kicking ass in China's domestic market.

... and also by the fact that they are making knock-offs and imitating the branding of Western products? Or are you saying the West itself is "the brand" they are imitating?

Rejoice! (1)

pm_rat_poison (1295589) | more than 4 years ago | (#30255602)

Americans rejoice as the exploitation of cheap workers in far away oppressive countries makes filthy rich investors who happen to live closer, rather than further. The rest of the world's feelings about economic imperialism and the resentment these inequalities create are the products of Emmanuel Goldstein

Re:Rejoice! (1)

DNS-and-BIND (461968) | more than 4 years ago | (#30255954)

Hey, guy? Emmanuel Goldstein was a capitalist (The Theory and Practice of Oligarchical Collectivism). Big Brother was the communist (Ingsoc = English Socialist Party). Funny how people turn things around to fit what they believe instead of what things actually mean. (Spoiler alert: it turns out that Big Brother invented Emmanuel Goldstein.)

Re:Rejoice! (2, Interesting)

pm_rat_poison (1295589) | more than 4 years ago | (#30256136)

A more careful reading of 1984 would help you realise that Orwell believes that the class war is ultimately circular, with the rising of a middle class which grows powerful enough to be the upper class, no matter which political system is applied, be it medieval mercadillism, capitalism, communism, the fictional Tao or whatever. Also, Emmanuel Goldstein is the "enemy" his loyalties and beliefs the target of the propaganda of the Socialist State. I.e. when Oceania is at war with Anatolasia, he is supposedly "taoist"
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:Rejoice! (1)

zmaragdus (1686342) | more than 4 years ago | (#30256148)

I don't know about you, but I don't know any Americans who "rejoice" at the exploitation of cheap workers. On the contrary, people I've met recognize the existence of and disapprove of the exploitation of cheap labor. What you could fault them for, however, is being utterly apathetic about it.

Sounding angry doesn't make an argument more appealing.

Hmmm it seemeth to me.... (1)

Kral_Blbec (1201285) | more than 4 years ago | (#30255604)

that this is simply another attempt at rationalizing world government and the demise of national sovereignty. Its just trying to say that our huge deficit to other countries is okay because we get a little back from it, and its not worth demanding any sort of independence.

Ignarance is bliss (2, Insightful)

croftj (2359) | more than 4 years ago | (#30255638)

The author is quite blissful! He completely forget that what he is saying is true, but only half of the truth. In the end, we still need $4.00 of exports TO china to make it all balance out.

When we import any thing, some number of dollars leave this nation. If a corresponding number of exports be it in commodities such as grain or coal, or brain share such as banking services or designs (or legal fees), is not made, we end up owing the nation from which we imported the good from.

  In other words, if we import $200,000,000 in a year and only export $150,000,000, we end up owing $50,000,000. Sooner or later those dollars WILL have to make it back to us, whether it is from the other nation buying buildings, gold or politicians (us: china please be kind to your people. china: mind your own business or we will collect on your debt!).

Of course the numbers I quoted are quite small compared to reality. Scale them accordingly.

Re:Ignarance is bliss (-1, Flamebait)

Reziac (43301) | more than 4 years ago | (#30255956)

As I've said before, we're fast getting ourselves into a position where within 50 years (or less) we'll be so far in debt that there's no paying it off. At that point our choices are to 1) nationalize foreign interests and tell our debtors to take a hike, or 2) give them a state or two in payment. I predict that if liberals are still in power, the latter is what will happen.

Re:Ignarance is bliss (1)

croftj (2359) | more than 4 years ago | (#30256252)

So I assume you mean the conservatives will renig on their promise to pay back the debt? Just to be clear, both parties and ALL Americans (well by far most) are at fault for this. The Brits are only at fault for their own economic mess.

Re:Ignarance is bliss (1)

nedlohs (1335013) | more than 4 years ago | (#30256308)

3) Print it.

Re:Ignarance is bliss (4, Insightful)

LynnwoodRooster (966895) | more than 4 years ago | (#30256062)

No, the author's point was that - because of the way trade deficit numbers are calculated - we only apparently have a $700 billion annual imbalance. Basically, the way trade stats are worked results in an iPhone showing a $140 deficit, when in fact it completely ignores the $160 of profit made on the product. China makes about $4 in profit.

.
To summarize, the author's contention is that it's not the gross dollar flow that matters, but the retained earnings - the profit - that matters. And in that case, the vast bulk of the money stays right inside the US.

Re:Ignarance is bliss (1)

croftj (2359) | more than 4 years ago | (#30256238)

And that is where the bliss comes in. Lets aqll BLISSFULY IGNORE(ance) the fact that we keep buying goods from other nations and don't sell them as much back. Just like any good electrical system, once the differential between the poles is high enough, there will be an arc when the dollars WILL come back. the question will be is what will it do to us then? I guessing rampant inflation OR a total loss of our country, I hope for the latter, though it won't be pretty either!

New feudalism... (0)

Anonymous Coward | more than 4 years ago | (#30255680)

Sure you're doing the 10hrs of work each day, but I bought something way back when that makes the fruit of your labour belong to me. Isn't laissez-faire capitalism grand?

The trouble is the retail model of buying stuff (2, Interesting)

Yergle143 (848772) | more than 4 years ago | (#30255686)

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

That's a really good job of spin! (2, Insightful)

erroneus (253617) | more than 4 years ago | (#30255728)

It does not, however, get into the U.S. economy at large. There are the local retail sales people and the like, but the big money goes into the people with big pockets and pretty much stays there. One only has to look at the current figures for distribution of wealth to show that there is nearly no middle class left in the U.S. Further, all the money is being made through imaginary property ownership. Some say the roman empire fell because their economy shifted to an economy based economy... the same with the british empire. The global empire is in trouble for similar reasons.

We need our manufacturing back. We need our agriculture back in the hands of individual farmers. Some things are just better when people are working.

Re:That's a really good job of spin! (1)

bnenning (58349) | more than 4 years ago | (#30256040)

One only has to look at the current figures for distribution of wealth to show that there is nearly no middle class left in the U.S.

That's just silly. Go to an Apple store sometime.

Re:That's a really good job of spin! (1)

dangitman (862676) | more than 4 years ago | (#30256256)

Further, all the money is being made through imaginary property ownership.

Wouldn't that suggest that the property is not so imaginary after all?

Ignorant right wing tat (1, Insightful)

Anonymous Coward | more than 4 years ago | (#30255774)

While Chinese producers may only have made $4 net profit (at least, according to the figures of some right wing reporter, from one of the UK's most ideologically right wing 'papers'), there was still a significant net capital outflow from the US economy in exhange for material goods.
Remember that this profit still exists after paying workers wages to make these goods, which still has far more significant benefits for the economic security of a country that 'net profit' to one company.
The Right Wing nuts always choose ignore this fact, because they are predominately the rich individuals who have some stakeholding in the profits of corporations, but for the rest of us, a huge trade deficit is a reflection of an economy that is failing for the vast majority of the general population, as jobs are offshored, and real world wages decline.
'Intellectual Property' huckersterism may look like it offers good returns currently, but if you look at the actual components in the iPhone, many were not actually designed in the West, and China is most certainly developing an indigenous design capability that has already surpassed that is the United States, and UK in many areas. This model will also fail for the rich, ultimately.
Manufacturing has always had small margins, particularly when run domestically - but that doesn't mean that we shouldn't manufacture domestically. In fact, to do so is a matter of national economic security.
It is precisely this kind of Right Wing extremist nonsense that infuriates me, and insults my intelligence. The Telegraph truly is voice of Right Wing greed (and of course, stupidity - its readers).

Re:Ignorant right wing tat (-1, Flamebait)

croftj (2359) | more than 4 years ago | (#30256262)

Spoken like a truely ignorant left wing tat! A cowardly one at that.

I am missing something in the article (1)

chrisG23 (812077) | more than 4 years ago | (#30256090)

TFA has a nice pie chart with the heading "Value captured by country for $190 of captured value for $299 iPod sold in the U.S."

I am not an economist, can someone explain to me what "captured value" means and what happened to the $109 not mentioned on the pie chart? Where did that go? If China got it, then its more than the $4 mentioned in the article.

1. Make claim that defies common sense and knowledge (but could be correct, common sense and common knowledge are not infalliable)

2. Back it up with mysterious pie chart.

3. ????

4. Profit?

Patent trolls getting rich (0)

Anonymous Coward | more than 4 years ago | (#30256154)

So, the premise is that patent trolls are getting rich while the rest of us are out of work. Isn't that what he said?

More economists who can't do simple economics... (4, Insightful)

nedlohs (1335013) | more than 4 years ago | (#30256218)

No a developed country can't run a trade deficit forever - thus it does in fact need a trade surplus (well dead even is fine too) to survive.

The US gets away with it simply because the US dollar is used as the reserve currency and trade currency for most commodities. Other nations get away with it due to China's games with the US dollar knocking on to their currencies.

What should happen is that the relative value of the currency of the country running a deficit will fall until it is no longer running a deficit. It's simple mathematics.

The rest of the world keeps printing money and buying US treasuries to stop this inevitable re-balancing, but it will happen at some point - it gets more and more unstable the longer the current situation is propped up. Of course humans can keep unstable situation balancing for much much longer than it seems possible (witness US real estate prices - a bubble that "should" have popped in 2003 but lasted much longer, and staill hasn't fully deflated)...

"predominantly American employees and stockholders (0)

Anonymous Coward | more than 4 years ago | (#30256318)

who reap the benefits"

Stockholders mostly.

To bad American employees don't benefit from having a job manufacturing iPods, but you can't compete against 14ct/hr labor - which is in part a result of lobbying by big US corporations.

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