The iPhone, Kindle, and US Unemployment

From ANDREW SULLIVAN The Daily Beast

Here’s a brutal but persuasive piece on why unemployment is likely to stay where it is possibly for the rest of our lives. If you think of American innovation, you often think of Apple, an astonishingly innovative, brilliant industrial high-tech company. The iPhone has been a massive success – but has created jobs mainly … in China. Apple could manufacture the iPhone in America, but its profit margin would drop from 64 percent to 50 percent. And Apple isn’t alone, of course. Which is why China’s high-tech exports to the US keep growing in number and value. Most of those high-tech products are designed and developed by US companies.

Or take the Kindle. Here’s another grim piece:

Amazon’s Kindle 2 couldn’t be made in the U.S., even if Amazon wanted to:

The flex circuit connectors are made in China because the US supplier base migrated to Asia. The electrophoretic display is made in Taiwan because the expertise developed from producting flat-panel LCDs migrated to Asia with semiconductor manufacturing. The highly polished injection-molded case is made in China because the U.S. supplier base eroded as the manufacture of toys, consumer electronics and computers migrated to China. The wireless card is made in South Korea because that country became a center for making mobile phone components and handsets. The controller board is made in China because U.S. companies long ago transferred manufacture of printed circuit boards to Asia. The Lithium polymer battery is made in China because battery development and manufacturing migrated to China along with the development and manufacture of consumer electronics and notebook computers.

As China and India develop even faster, I see no way American skilled workers can truly compete without CEOs hurting their own shareholders. The prospect of a continued corporate profit boom, higher and higher economic and social inequality and persistently high unemployment is real and probably inevitable, absent brutal protectionism. And Perry’s response – creating piss-poor service jobs for lower and lower wages – does not address this core problem.