This scares me. While I have nothing against the wealth of Steve Jobs and his revolutionary products, what America needs to maintain the middle class throughout the 21st century is to compete with China and its ilk: raw materials, cheap renewable energy, and basic manufacturing. Because the revolutionary products we sell to the rest of the world aren't even made here.
Or, more specifically - how will racing China (and every other developing country) to the bottom in the manufacturing game be sufficient to maintain the middle class?
Because of our balance of payments crisis. We need to stop our country's net outflow of dollars. Lauding Steve Jobs and trying to reproduce his success won't solve that problem. Suppose we all become designers of hit products that are manufactured abroad. How do we guarantee that the USA doesn't get cut out of the vertical stack? I have total faith that the other countries of the world will be able to innovate and support just as well as we can, if not already.
I understand the economic benefit, but I have yet to see a good explanation of how it might happen. Americans aren't willing to work manufacturing jobs for $5 or even $10 an hour - and you can't support a middle class in the US on $5 or $10 an hour.
All manufacturing requires is a decent infrastructure, reasonably stable political and legal system, and a workforce willing to work cheaply enough. Trying to compete against China - and the rest of the world - on those terms for today's market, rather than doing everything in its power to keep its lead and define tomorrow's markets, is the biggest mistake the US could make.
Manufacturing is a relatively low skilled job - the expectation that manufacturing = middle class made sense 50 years ago, but not today.
Edit: a lot of my thinking on this issue is colored by the book The World is Flat (http://en.wikipedia.org/wiki/The_World_Is_Flat). It's a complex issue, and I'm definitely open to new ways of looking at it.
Manufacturing is not necessarily low skilled. Look to Germany for example, which is a heavy manufacture that uses very advanced factories, some even completely automated.
I have no problem having China make goods for us. Manufacturing is usually a dirty process and the jobs can be relatively low paying.
While this makes sense, I don't think the ratio is very high. Workers outnumber engineers by extreme amounts and so a replaced "unskilled" job will necessarily open up less jobs than it will close. No?
And the question stands, what to do with those workers? Move them to the facility that builds the robots that displaced them, in a loop?
That said, I do not oppose the replacement of workers with robots in any way, as that would be artificially trying to stop the progress of mankind. But what happens to the workers is a serious issue. What are all the people from the closed American car factories doing?
There's nothing magical about manufacturing, though--the US got cut out of (some) manufacturing because other countries are able to manufacture just as well as we can if not better.
There are no guarantees and you have to compete. If you're going to have to pick your battles, pick one that's worth winning. If the US became a nation of engineers and designers and businessmen, that would do more to support a middle class and a high quality of life than if the US went back to being a nation of factory workers and coal miners. And it turns out the US has a lot of things--a vast, high-quality higher education system, a relatively free market, a culture amenable to entrepreneurship--that give us competitive advantages in these fields. What competitive advantage do we have in manufacturing?
Maybe the one thing holding us back is a lack of appreciation for great design. Apple is truly an outlier in that respect.
The problem is not a BOP deficit, the problem is how we are financing the import of cheap goods from China, and that is in fact cheap money from China. We are currently caught in a sort of circular flow of cheap trade with China and even cheaper money to finance this.
We can guarantee that we stay on top of the vertical stack by continuing to innovate by designing and commercializing new products. This is what Joseph A. Schumpeter called creative destruction.
How can we stay ahead of other countries in this endeavor? I do not know. Economic theory tells us that national boarders and countries have no significance in economic growth. If we have open countries that allow trade and the movement of capital all countries and people should benefit from new innovation regardless of whether it is made in the USA or in Pakistan. This question was answered nearly 200 years ago by David Ricardo and others.
Obviously countries are not completely open to trade, however the trend is toward higher levels of international openness. One need only look at the succes of Singapore. Others will follow slowly.
The us vs. them mentality will not get us to the land of milk and honey.
I don't think developed countries should focuse on being competitive in raw materials and basic manufacturing.
Countries that have a substantial percentage of their population that is not very educated have a comparative advantage (in the technical sense [1]) in fields that require a lot of unskilled labor. E.g. raw materials & basic manufacturing. So the developed world will always have a hard time competing with them in these fields.
Everybody brings this up, but the reason manufacturing was sent overseas was because of technological progress. If you can't even convince Americans to pick their own peaches anymore, how are you going to convince them to make their own sneakers like they do in Indonesia?
cheap renewable energy
Coincidentally, the cheap labor overseas might make this a reality in the form of inexpensive thin-film solar panels.
Manufacturing was sent overseas because of cheap labor and plenty of available raw materials in other countries. Am I wrong?
Inexpensive thin-film solar panels made by cheap labor might be a net win, if we spend less on solar panels then we do on oil. We just need balance of payments, we don't need to make EVERYTHING here.
"Competing" with China is a recipie for disaster. A better strategy is to cooperate with China by allowing mutual free trade. Then, China and the US are one large market, and their success is Americans' success.
what America needs to maintain the middle class throughout the 21st century
20th century notions of the "middle class" are probably already becoming obsolete; talking about "throughout" the 21st century is really premature. Going from 2000 to 2100 is like going from 1900 to 2000, but faster.
It seems likely that we're moving into more of an "information age" where you will basically have a prosperous and successful "information class" (with a huge variation in income, but even those at the bottom will be living comfortably), and a "labor class" for which there is less and less labor over time.
Fortunately, these "classes" are not fundamentally based on birth (as classes were originally envisioned). Also, I think it's perfectly feasible for the size of the "labor class" to shrink at a comfortable rate (i.e., people needing jobs will not outstrip available work to the degree that lots of people have to be living in extreme poverty). But for that to happen, it will be necessary to abandon strong welfare policies in countries with large segments of society that are "stuck" in the "labor class" (America in particular comes to mind).
This is just off the cuff thinking... I may want to retract some of this later on.
The article subtly points out a logical disconnect: Obama says that we expect Jobs to be rich having created several innovative products, yet the majority of his fortune did not come from these products (at least not the recent ones), but instead from the sale of Pixar.
So by celebrating Jobs's wealth, we're celebrating his investment acumen more than his innovation.
His Disney stock is from the Pixar sale, not active investment. Smart of him to keep it all this time (probably an easy choice given the dividends it pays), but he ultimately has it due to the innovation at Pixar, not investment acumen.
the corollary is that some investors in Apple have profited (certainly in proportion to the significance of their input) from its success to a greater extent than Steve Jobs. I'm willing to bet not all of them were investing capital raised through their own ingenuity in other fields...
Yeah, I hadn't realized that it was tilted that far toward the Disney side either.
The way he tends to talk about Apple is that they want to make products that sell so that they'll get to "come to work the next day" and keep making more. Obviously there's some public positioning / PR going on there, but I think there's at least a kernel of truth, too.
Most of Jobs' wealth comes from shares of Walt Disney Co. that he received when the media conglomerate acquired Pixar in 2006. Disney shares recently hit a 52 week high of $38.
I'm surprised that most of Jobs' wealth comes from the sale of Pixar. Even with Apple's stock price ($323) valued at nearly 9 times the value of Disney ($37).
The tidbit that surprised me most is that Steve Jobs gets a greater fraction of his wealth from his shares in Disney than he does from his shares in Apple.
Steve Jobs sits at the core of what Apple represents by his attention to detail down to the aesthetic micrometer. There is an almost sinister genius in what he does at Apple, and at the end of the day you end up with a consistent, applicable and fluid user experience at every level including sales. People want to be involved in that because they know what they're getting. Apple constantly proves itself as a company that does more than talk about thinking outside the box. They think outside the shipping container, and down the street some.
Steve Jobs is an entrepreneur who knew attention to detail, and consistently pushing the envelope beyond a "good product" will bring in dollars.
Zuck sits at the core of a social networking behemoth that has no clear sense of direction, constant changes to using the site, frequent controversy about privacy, fragmented user networks, and no consistency in approach.
Mark Zuckerberg, as much as some people will suffer from bleeding ears after hearing (reading) this: got lucky.
I agree with this and what I find more interesting is that he also brought us Pixar. He is definitely not a one trick pony and definitely has something great in him!
There is an almost sinister genius in what he does at Apple
That's an interesting thing to say. Why sinister?
I'm not saying you're doing this, but a lot of people associate evil with efficacy (think Darth Vader, or the "evil genius" character in movies). Actually, that's not so realistic. Thinking about Bill Gates, Steve Jobs, and so on - these people are not necessarily paragons of virtue overall, but the qualities that make them so productive ARE virtuous, i.e., good, and not evil.
When Zuckerberg has been building great stuff for 35 years—-as opposed to hiring people to build great stuff that he didn't even think up, for a year or two--then he can be compared to Jobs.
