Counterparties: Return of the Mac

By Ben Walsh
December 6, 2012

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American manufacturing has gained boosters recently, with politicians from President Obama to Rick Santorum championing its merits. The Atlantic’s current cover proclaims “Comeback”. Even Apple — the epitome of the Made-in-China multinational — is bringing a mini portion of its manufacturing back to the US: CEO Tim Cook says that “next year, we will do one of our existing Mac lines in the United States”.

Cook’s announcement, which came in the form of an interview with Businessweek, is a savvy move by a company that has faced questions about its reliance on an overseas suppply chain. Still, it’s not much of a homecoming. The FT’s Tim Bradshaw, looking at the $100 million that Cook says he will invest in US manufacturing, notes that it pales in comparison to the billions Apple has invested in Asian manufacturing in the last year alone.

In many ways the much bigger news is that Foxconn, the Chinese behemoth which makes most Apple goods, is expanding into the US. (It might actually be the same news: Cook’s line about Apple’s US manufacturing is “This doesn’t mean that Apple will do it ourselves, but we’ll be working with people, and we’ll be investing our money.”) Steve Jobs famously said that America’s lost manufacturing jobs “aren’t coming back”. He’s still right. As Felix noted, a big problem with tomorrow’s US manufacturing jobs is that they look more like today’s Chinese manufacturing jobs than yesterday’s US manufacturing jobs. — Ben Walsh

On to today’s links:

Size of likely HSBC fine rises to $1.8 billion - Reuters

On Language
Defining deviancy down, troll edition – Farhad Manjoo
Trawling isn’t trolling – Choire Sicha

After Sandy, the NYPD says Occupy reduced crime and saved lives – NY Post

Primary Sources
Cutting government spending worse for growth than raising taxes – IMF

Billionaire Whimsy
It’s special-dividend season in America – Agnes Crane

Steve Cohen’s absence may dent Art Basel’s profitability, sense of superiority – NYT

Oscar Niemeyer, sensual Modernist – NYT
Major-General Tony Deane-Drummond, escaped from capture three times – Telegraph
Dave Brubeck, jazz legend – New Yorker
Elisabeth Murdoch, matriarch of a media empire – NYT

Takedown of a Takedown
“Why is an ESPN VP speading rumors that I’m straight?” – John Koblin

When painful faux-hip-hop slang meets the FT style guide – New Statesmen

Bobby Jindal’s innovative, forty-year-old fiscal policy proposal – Matt Yglesias
Senator Jim DeMint resigns to pursue ideals, larger salary – Reuters

“I am Snoop Lion! Ask me anything!!” – Reddit

DC’s new consensus: truth, justice, and Simpson-Bowles – Alex Pareene


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@Ben Walsh

Felix rarely has time to respond to comments any more (observation not a criticizem), so I wanted to give you a shot. In his original post regarding the return of the Mac he (accidentally?) begrudged jobs paying the median wage in the United States.

After looking at my math below care to embrace the return of the manufacturing as the massive positive that it clearly is?

My Original comment: (Edited to reduce length)

“Am I being naive if I think Americans are LUCKY to be earning $13.50/hour while Foxconn workers have TRIPLED their pay to $400/month. We know how this plays out… the Yuan rises against the dollar the Foxconn wages continue to rise even in local terms… and so the value of a global commodity, one hour of a mans time, converges…

We westerners need to get our heads around the idea that $13.50 is to be CELEBRATED… especially if it comes with any level of benefits and a chance for advancement. Dare I suggest that we promote the idea of two adults working together to raise a family? Perhaps you could get past the traditionalist nature of that ideology by just focusing on the math 13.50/hour X 40 hours X 50 weeks X 2 earners = $54,000… why I bet a number like that would be pretty close to median household income in the richest large nation on earth. Check my digits and let me know what you find!”

Posted by y2kurtus | Report as abusive

@y2kurtus, was running some numbers on our own employment… Mostly making better than $13.50/hr (a combination of advanced degrees and marketable skills), but the two of us combine for about 120 hours/week of employment. I doubt that is unusual, either, in the global marketplace.

Which brings us back to the earlier discussion on the impact of uncertainty. We could sustain our lifestyle on 3/4 of our income, but fully half our income derives from sources that could evaporate next month or next year.

Moreover, we refuse to count Social Security in our retirement planning, since we know that it only has the resources to pay 75% of its promises. Until somebody tells us WHICH 25% will be reneged on, we have to assume that it will include the money promised to us. Thus we are working to save twice what we would otherwise need.

Consider the economic implications on our situation (and that of households like ours) if the uncertainty were reduced?

* We could dramatically cut back on our retirement savings (roughly 25% of our income), plowing that money into consumption. Would be difficult to spend that much money, but we’d give it “the old college try”.

* We might work less, freeing up profitable employment opportunities for somebody younger. Know any starving musicians? Teachers out of work? Would they like a job?

* We would cut back on our emergency savings, presently around 12 months earnings or 24 months expenses. That would mean cash coming off the sidelines, flowing into some combination of consumption and real investments.

We are wealthy (by my standards, at least) and I’m not complaining. But we’ve been operating under a cloud for the last decade, focusing on doing everything we can to establish ourselves in an uncertain economic environment.

The Keynesians might step away from their short-sighted models of economic behavior and ask, “How important is confidence in the functioning of a healthy economy?” Is it even possible to fix the economy while we continue to operate under massive uncertainty?

Posted by TFF | Report as abusive