Thursday, October 6, 2011

Binocular Snapshot for 10/06/2011

LastDayWatchers inside the Recommended Reading is a spot on analysis worthy of 5 stars

Steve Jobs and America's decline

"Written on the back of my iPod are the words, “Designed by Apple in California, Assembled in China.” It was classic Jobs: reframing an issue, the outsourcing of American manufacturing jobs, as something inspirational rather than discouraging. The low-skill assembly jobs and the middle-class lives they provided may be leaving for Asian shores, but the brainy, wealth-creating parts of the process—the design, the engineering, the marketing—were firmly rooted in Silicon Valley. Free traders (including me) loved to cite the research that finds far more of the value in an iPod is added in America than in China.

But behind this glowing story of synergy between American brains and Chinese brawn lay a more disturbing reality. American global economic leadership has, in the last decade, benefited an ever narrower slice of its people. They have become fabulously wealthy, while the vast majority of job growth has been in areas like education and health care, where productivity and wages are stagnant

Americans' entrepreneurial self-esteem is now embodied by Apple, Google, Facebook and Amazon. These are indeed fabulously innovative companies with world-beating business models. Yet one wonders if they are increasingly the exception, not the rule, and if the passing of Mr Jobs is simply the most prominent example of a broader decline in American entrepreneurship

Look no further than this fact: Apple, Google, Facebook and Amazon collectively employ just 113,000 people, a third of GM’s payroll in 1980.

Naturally, as Adam Smith pointed out long ago, the sole purpose of production is consumption, so one should not scoff at the benefits these companies create for Americans in their other role as consumers rather than workers.

In truth, technological advancement has probably done far more than trade to hollow out the middle class and widen inequality. Slapping China with punitive tariffs is more likely to trigger a trade war than restore millions of middle-class jobs."

Inside the May 15th Prophecy written at LastDayWatchers


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