A reader writes:
You wrote, "Apple could manufacture the iPhone in America, but its profit margin would drop from 64 percent to 50 percent". Isn't this the real problem? As long as the ultimate goal is the highest profit margin available, how can the US ever expect unemployment to be reduced? Every policy strategy that I hear talked about is how to make it more profitable for these corporations here – tax cuts, no taxes, tax incentives, tax amnesty, etc. What will it take, whether it's policy or political pressure, to make Apple decide, that 50 percent profit margin is enough?
But in the global economy, companies can simply relocate anyway. Trying to prevent this process requires forcing water to run uphill. You could for a while, but unless you really wanted to kill off a free economy, you'd have to keep upping the ante. Another writes:
You mention "brutal protectionism," and I’d be interested in exploring that a bit more.
Isn’t the real problem with our current economy that we allow these corporations (like Apple and Cisco) access to our high-end commercial markets while allowing them to export labor to communist China, Oligarchic India, and Indonesia? Meanwhile, in 2004 and currently, our congress is considering passing a law to allow these same corporations to "repatriate" massive corporate profits earned here by bled through a loophole to foreign subsidiaries. See Matt Taibbi’s discussion on the topic here.
So the corporations overcharge U.S. consumers for electronics (iPhones, etc.) in part driving up their profits by using cheap foreign labor, and our government's going to let them bring that money back at a substantially reduced tax rate (or tax-free) with no promise that those tax-free monies will go to U.S. job creation. It seems to me that if corporations are not going to act responsibly, then the government should tariff the shit out of those companies who use cheap foreign labor but benefit from our markets.
Another:
Why must you assume protectionism would be brutal (or that only a brutal form would help)? I actually found it encouraging to read that building iPhones in the US would only reduce Apple's profit margin from 64% to 50%. That's a hefty chunk for sure, but it could be mitigated some by (yikes!) a modest price increase. And if their competitors had to do much the same, then Apple wouldn't lose market share. Sure, they have a responsibility to their shareholders. But they need to do it within the law, and lawmakers have a responsibility to citizens.
Of course Apple's never going to change anything without the "brutal protectionism" thing kicking in. But is it brutal to compensate for China's currency manipulation with a tariff to offset some of the resulting price advantage (until China floats their currency and does it the right way)? Is it brutal to require some kind of international minimum wage in countries that we sign free trade agreements with – or that we allow our companies to send their jobs to? Ditto minimal environmental regulations?I guess these are left-wing suggestions, but they're not particularly brutal. And if the right can't come up with anything better than third-world wages (or unemployment) for US workers, then it's a left-right issue. You seem to be taking the left side of it as far as the results are concerned, but you're hung up on the right-wing rhetoric that all protectionism is inherently brutal (even when justified by bad-faith actions of our trading partners).
(Photo: A shopkeeper shows a golden accessory of Iphone at a shopping mall on March 25, 2011 in Qingdao, China. By ChinaFotoPress/Getty Images.)
The Dish 