Is the iPhone hurting the economy?
Apple's smartphone is an American innovation, but since it is assembled in China, it actually inflates the U.S. trade deficit
With Verizon expecting a flood of new customers once it begins selling iPhones next month, the power of Apple's smartphone to boost business is once again in the spotlight. But a recent paper by the Asian Development Bank Institute has financial experts questioning how good the iPhone — and other U.S. high-tech products — are for our economy. Because so much of the production process for these devices has been moved overseas, the iPhone alone actually adds $1.9 billion to the U.S. trade deficit with China. Does that mean that, in a way, the iPhone is actually bad for America's economy?
Nonsense. The iPhone is a huge boost for the U.S.: The trade deficit accounting is highly questionable, says Joe Weisenthal in The Business Insider, but there should be "no doubt that Apple is a glistening example of what's right with corporate America." No matter how much of the iPhone production gets credited to China's balance sheet, the trade is "worth it" for America. Bottom line: "If more companies were like" Apple, "the economy would be healthier."
"How production of the iPhone massively distorts the trade deficit with China"
Sorry, iPhone really does have an economic downside: Apple chooses to make the iPhone abroad to goose its "whopping" 64 percent profit margin on the smartphones, says Josh Harkinson in Mother Jones. "In other words, Apple would rather make a little bit more money than employ more Americans." Assembling the phones here at home "would have added $5.7 billion to U.S. exports last year. When are we gonna get an app for that?" "The iPhone's trade deficit problem"
The math is complicated: "We may never be able to fully determine who really wins and loses from a product like the iPhone," says Michael Schuman in Time. Each unit costs roughly $180 wholesale, but China's contribution accounts for only about $6.50 of that — the rest of the value comes from components made in other countries, including the South Korea, Japan, Taiwan, and the United States. For the purposes of calculating the trade deficit, the total value gets credited to China — but the iPhone really does a lot more good for our economy than the numbers suggest."Is the iPhone bad for the American economy?"