Like everyone else, I really enjoyed Charles Duhigg and Keith Bradsher’s New York Times article on why the iPhone isn’t made in America. Just go read it, I won’t attempt to summarize it. Something I wanted to add instead, however, is more explicit consideration of the implicit counterfactual. What if Apple’s management team was more patriotic, and decided that rather than generating value for shareholders or enhancing the Greater Glory of Steve Jobs they wanted to serve the interests of the United States of America? What would that look like? What if Apple were less voracious about the pursuit of profit and more focused on the welfare of the American middle class?
Well it turns out that Apple’s gigantic FY 2011 profit of almost $30 billion works out to something like $83 per American. That’s all there is to wring out of them. I’d like to have $83 more dollars, of course. But if increasing my income by $83 caused the electronics I buy to become more expensive, it’s not obvious I’d even be any better off. And of course rather than wringing it out of them by getting them to change their business practices, we could just go socialist and seize the company. Its $390 billion in market capitalization works out to about $1,250 per American citizen. But presumably nationalization would destroy a fair amount of the enterprise’s value. Maybe Johnny Ive would flee back to his native United Kingdom to start a new industrial design company there.
The more interesting question, to me, is why we don’t here more about the possibility of letting the workers come to America. At the same time that a lot of companies seem to want to move certain kinds of production to foreign countries to take advantage of their labor forces, an awful lot of people seem to want to move to the United States. If we believe there are positive externalities associated with having production occur inside our borders (which seems plausible), then it’s extremely foolish for us to be casting aside one of the main advantages the United States has over China or Mexico or Malaysia, namely the fact that people are clamoring to live here. If the workers leave Shenzhen and move to Seattle (maybe they enjoy free speech) then either you have to put the factory in Seattle or else the governing authorities in Shenzhen need to make it a more appealing place.