The untrained eye sees jobs being taken away from Americans. The economist sees value being passed on to American citizens in the form of a price reduction of Apple products, and healthy acknowledgement of the reality that the American workforce is no longer suited to produce computer hardware efficiently.
Jobs are not a sign of prosperity; we don't go to work just to go to work. If that were the case, we'd mandate that people must farm with spoons.
The article and video don't seem to be arguing that it's bad to lower costs. They aren't even saying that it's inherently bad to outsource some of these functions to China and other countries.
Rather, there seem to be two points:
(1) Ignoring the cost of labor (which everyone thinks is the reason that US companies outsource to China), it's still logical to send manufacturing to China. Their plants, labor force, and supply chains are all better suited to the needs of high-tech manufacturing than anywhere in the US.
(2) Moving all of these manufacturing jobs to China (or elsewhere) has not only meant the loss of many mid-skill manufacturing jobs in the US, but also many jobs that were created to support those jobs, to a degree that the service sector doesn't even come close to reaching. This has long-term ramifications for US jobs, in that many of the traditional middle-class jobs that people used to be able to get no longer exist.
It certainly sounds to me as though the US should not expect to get any of these manufacturing jobs back. It also seems unlikely that you can train an entire country to do white-collar, high-tech and service-sector jobs. And while I know that the US continues to do a huge amount of manufacturing, it's with many fewer (and more highly-skilled) employees than ever before.
So, what's an economy to do? It's easy for me to tell my own children to study hard and to try to get good jobs, but that's not scalable, nor is it realistic. Maybe when everyone can manufacture things at home, using 3D printers, then manufacturing will be as flexible and portable as software startups nowadays. But barring that, the solution is far from clear to me.
As goods are produced more efficiently, they become less expensive to purchase for the consumer. As efficiency increases, then, workers have to work less.
The amount that Americans have worked per week has dropped almost monotonically (http://eh.net/encyclopedia/article/whaples.work.hours.us) since the mid eighteen-hundreds. The end goal is that we all don't have to work so much; maybe some of us not at all.
In short, an economy should pursue the most efficient strategy for manufacturing and delivering goods, and that happens (mostly) through the price system.
This kind of large scale box-office-hit manufacturing is not coming back.
However, there is still opportunity for smaller scale manufacturing centers to be established outside. These typically involve smaller batches, more specialist products.
I agree with your sentiment, but job creation isn't the end goal. Prosperity is. Prosperity comes through automation, which is the exact opposite of job creation.
>The economist sees value being passed on to American citizens in the form of a price reduction of Apple products
The person in denial more like. Any ecomomist would realise the price of apple products is tied to how much you will pay (ie for profit maximisation), not how much it costs. That is how you make over $400k per employee.
The article points out that wages are a small part of the cost.
That's a false dichotomy. A good's price is tied to how much you'll pay and how much it costs. If an iPhone cost $200 more to make, it'd be a good bet that it wouldn't sell for the same price.
Not really. The price is a function of the value to the buyer, which drives demand and is independent of manufacturing cost. Above a certain price I just won't find an iPhone to be providing value, so demand will drop. Apple has some room to cover costs with price increases, but it's limited.
If the good costs more to make than the buyer is willing to pay then there is no price because there is no sale, so clearly price depends on cost. Functions can have more than one input.
The realist sees the exhorbitant privilege of paying China paper dollars in return for a shipments of iPhones won't go on forever.
When that happens it will be the American workforce clamouring for sweatshop jobs to put food on the table.
Just sayin'.
Jobs are not a sign of prosperity; we don't go to work just to go to work. If that were the case, we'd mandate that people must farm with spoons.