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Why wouldn't they just move production to another, cheaper country besides China? I think you are underestimating how much more expensive an iPhone would be if

Why wouldn't they just move production to another, cheaper country besides China? I think you are underestimating how much more expensive an iPhone would be if it was made entirely in the United States: https://fee.org/articles/a-made-in-america-iphone-would-cost-2-000-studies-show/ https://fee.org/articles/a-made-in-america-iphone-would-cost...

Kranar 6y ago
The article you linked argues why it wouldn't be possible to move to another country. In fact the article argues heavily that labor costs are not the biggest advantage that China has.
- totalZero 6y ago
  The article argues why it would be more expensive in the short term. The argument I've seen for bringing production closer to home is that it's going to be painful either way so we ought to rip the bandaid off, because every year that we continue the status quo represents more money and market power amassed by other nations on the back of American demand. There's more to corporate or economic strategy than today's cost of doing business.
  - valuearb 6y ago
    That’s silly, we get as much benefit from free trade as every other country. Let China or India do assembly at wages that would be below minimum wage here, and take those savings to get a bigger piece of the market, sell more iPhones, do more software and hardware design and create more developer jobs.
    - totalZero 6y ago
      > we get as much benefit from free trade as every other country Considering that trade relationships are fundamentally asymmetrical (ie, you wouldn't have them if you were self-sufficient in the market segment being traded), I think this is a naive view of the wealth transfer and externalities associated with international trade.
      - valuearb 6y ago
        First, the relationships are voluntary. Second, the relationships are mutually beneficial else one party would end them. Lastly, free trade doesn’t create a wealth transfer, it creates new wealth for both parties. Chinese assembling iPhones lifted a huge number of Chinese laborers out of rural poverty working in much more physically demanding and dangerous jobs at a fraction of the pay. A significant part of Apples market share, market cap, and tens of thousands of US iOS developer jobs are owed to cheaper iPhones enabled by Chinese labor. The only time “wealth transfer” occurs is when free trade breaks down a monopoly. Like if we ended sugar tariffs, the wealth would be transferred from certain politically connected families in Florida, to US consumers and foreign workers.
  - bryananderson 6y ago
    Trade is complicated and protectionism is not always bad, but the idea that "money going out == bad" is a common misconception that underlay the "mercantilist" economic policies of the early modern era. Kings and parliaments were alarmed to see precious gold leaving their shores. Adam Smith set them straight: money and value are not the same thing. In fact, money is only valuable if you can use it to acquire something else of value! If you "give up" an amount of gold but receive valuable goods, which can be combined with other goods to create even more value, the national wealth can go up even with "precious gold" leaving town.
yuriko_boyko 6y ago
They are starting to do that in India.
- kamaal 6y ago
  As an Indian, India isn't exactly a cheap manufacturing destination. The reasons to move to India for a country like US are more political than economical. The US perceives China as an ideologically incompatible competition at a political level and wants to work with India. That's pretty much it.
- simonh 6y ago
  Only to avoid crippling Indian import taxes.

Kranar 6y ago

The article you linked argues why it wouldn't be possible to move to another country. In fact the article argues heavily that labor costs are not the biggest advantage that China has.

totalZero 6y ago
The article argues why it would be more expensive in the short term. The argument I've seen for bringing production closer to home is that it's going to be painful either way so we ought to rip the bandaid off, because every year that we continue the status quo represents more money and market power amassed by other nations on the back of American demand. There's more to corporate or economic strategy than today's cost of doing business.
- valuearb 6y ago
  That’s silly, we get as much benefit from free trade as every other country. Let China or India do assembly at wages that would be below minimum wage here, and take those savings to get a bigger piece of the market, sell more iPhones, do more software and hardware design and create more developer jobs.
  - totalZero 6y ago
    > we get as much benefit from free trade as every other country Considering that trade relationships are fundamentally asymmetrical (ie, you wouldn't have them if you were self-sufficient in the market segment being traded), I think this is a naive view of the wealth transfer and externalities associated with international trade.
    - valuearb 6y ago
      First, the relationships are voluntary. Second, the relationships are mutually beneficial else one party would end them. Lastly, free trade doesn’t create a wealth transfer, it creates new wealth for both parties. Chinese assembling iPhones lifted a huge number of Chinese laborers out of rural poverty working in much more physically demanding and dangerous jobs at a fraction of the pay. A significant part of Apples market share, market cap, and tens of thousands of US iOS developer jobs are owed to cheaper iPhones enabled by Chinese labor. The only time “wealth transfer” occurs is when free trade breaks down a monopoly. Like if we ended sugar tariffs, the wealth would be transferred from certain politically connected families in Florida, to US consumers and foreign workers.
- bryananderson 6y ago
  Trade is complicated and protectionism is not always bad, but the idea that "money going out == bad" is a common misconception that underlay the "mercantilist" economic policies of the early modern era. Kings and parliaments were alarmed to see precious gold leaving their shores. Adam Smith set them straight: money and value are not the same thing. In fact, money is only valuable if you can use it to acquire something else of value! If you "give up" an amount of gold but receive valuable goods, which can be combined with other goods to create even more value, the national wealth can go up even with "precious gold" leaving town.

yuriko_boyko 6y ago

They are starting to do that in India.

kamaal 6y ago
As an Indian, India isn't exactly a cheap manufacturing destination. The reasons to move to India for a country like US are more political than economical. The US perceives China as an ideologically incompatible competition at a political level and wants to work with India. That's pretty much it.
simonh 6y ago
Only to avoid crippling Indian import taxes.