Why "Made in China" Doesn't Mean What You Think It Means

Are you hesitating on buying that new audio component because it's "Made in China" and you want to be part of the United States' solution to the trade deficit rather than part of the problem? Well, buck up Charley; this article in the Wall Street Journal explains how an iPhone with a manufacturing cost of $178.96 only puts $6.50 in the coffers of the Hon Hai Precision factory that assembles the iPhone in China. Japan, Germany, and South Korea all make more money from each iPhone than China does!

Here's a quote that sums up the gist of the article. "The latest results are broadly similar to analyses made by the Personal Computing Industry Center at the University of California, Irvine, of the trade and manufacture of another Apple product, the iPod. That research also found that Chinese labor accounted for only a few dollars of the iPod's value, even though trade statistics credited China with producing its full value."

My own take on all this is that we live in a such a interconnected society that simplistic approaches to economic behavior no longer hold any water. Buy American, or buy local, may actually be counter-productive not only to peace and well being worldwide, but actually has a negative impact on the very domestic economy that this behavior attempts to improve.

The moral of the story is that simple solutions to complex problems rarely accomplish what was intended .

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