Thursday, 13 January 2011

Answering the wrong question

Michael Shuman at Curious Capitalist asks a bizarre question: Is the iPhone bad for the American economy?

His careful analysis shows that the iPhone has a finely balanced effect on the US trade deficit. It makes a negative impact if the internal components exported from America are valued at their manufacturing cost, and the assembled iPhones coming back from China are valued at full price. But if you count the design and assembly expertise as a US export, the impact is positive.

Fascinating. But completely irrelevant to the question he asks.

To see this, simply ask if the iPhone is bad for the British economy? Or how about this: is copper bad for the British economy?

Whether a product is made, mined, designed or assembled in a country is almost irrelevant to whether it's a good thing. Our lives are very much better with copper in them, even though there's a big trade deficit in copper for most countries outside of Chile.

And for the same reason, of course the iPhone is good for the American economy. The billions of dollars Americans have volunteered to spend on them is quite enough evidence for that.

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