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"Why should a country specialize in making things, when it can instead specialize in designing, marketing and financing the making of things?" "This is a legit
by whack 10y ago
"Why should a country specialize in making things, when it can instead specialize in designing, marketing and financing the making of things?"
"This is a legitimate question... Ricardo Hausmann believes that a country’s economic development depends crucially on where it lies in the so-called product space. If a country makes complex products that are linked to many other industries -- such as computers, cars and chemicals -- it will be rich. But if it makes simple products that don’t have much of a supply chain -- soybeans or oil -- it will stay poor. In the past, the U.S. was very successful at positioning itself at the top of the global value chain."
I would certainly call Google's search engines, Apple's iPhones and Intel's processors "complex products that are linked to many other industries". Comparing the fortunes of Apple vs Foxconn also shows that the top of the value-chain certainly lies in design/marketing, as opposed to manufacturing. The evidence the article presents is utterly baffling and unconvincing.
- wickedlogic 10y agoExcept the status quo of the value-chain may not be representative of the natural settling over time. Design/marketing rest very much on the stability and practical enforcement of "IP" in our current attempted world view. That is unlikely to play out in the long run. The world is unlikely to consistently enforce the cost of a one-but-no-longer complex process, when a simple/cheaper process produces essentially the same outcome. Minus rarity of material requirements. What out of "IP" survives? Local trademarks/service marks, sure. Copyright with meaningful global enforcement... not likely. Production of small intricate things/electronics ... likely. Production of easy-to-future-produce/assemble, seems unlikely.
- vkou 10y agoGoogle has a market cap of $570 billion USD, and employs 70,000 people. GM, Ford, and Chrystler have a combined market cap of ~$130 billion USD, and employ 600,000 people. Google makes a lot of money, and pays its employees well. Unfortunately, it hardly employs anyone.
- wyldfire 10y agoYou summed three competitors' employee counts as a comparison against Google. I don't understand. You say "it hardly employs anyone" but from your numbers I read, "70k is a little less than half of 200k".
- freeone3000 10y agoIt employs nearly half the people, and makes about five times the money. That's a 10x spread.
- vkou 10y agoIt's actualy closer to a 40x spread, since the combined market cap of the Big 3 (Now including Fiat) is 130 billion. The market doesn't value job creation. The ideal company is one that doesn't have to employ anyone.
- zebrafish 10y agoI think his point was the market cap.
- beefman 10y agoLooking at revenue instead of market cap, GM and Ford earn about twice what Microsoft and Google do (160B ea) and employ about twice as many people (200K ea).
- rileymat2 10y agoYou should probably look at earnings not revenue to see how much more is left over for more wages.
- beefman 10y agoThe software companies have 4x the margin (20% vs 5%). So you're right: whereas they presently employ the same number of people per $GDP as car companies, they could employ more. It seems the important thing about software here is that it hasn't been commodified yet. Once it has, margins will come down and it will be just like the car industry. In the meantime, whether it's widely believed to cause economic boom or malaise only depends on which side of 2011 we're believing from.
- sokoloff 10y agoUnsurprisingly, the people who design Apple's iPhones and work on Google's search engine are highly compensated and enjoy a very nice lifestyle in the US. The problem is that there aren't enough of those jobs to go around, unlike the manufacturing boom of the 50s and 60s, where lots of American men (it was mostly men then) were able to afford a family of four, a house, a car (or two), nearby vacations, and a secure retirement (often a pension) from reasonably plentiful manufacturing jobs that required a minimum of training before the job started and could be done by nearly any able-bodied American male. Many of those premises are now violated by either tech work requiring a +2 or more sigma of intelligence, often an elite college degree, and either/both of not enough of those jobs to go around and/or not enough people on the right side of the bell curve of ability to successfully hold those jobs.