How Romney and/or Obama should have answered Candy Crowley’s Apple assembly question

“Toward the end of last night’s presidential debate between President Barack Obama and Gov. Mitt Romney, the moderator, CNN’s Candy Crowley, asked a perfectly legitimate question, one that Obama himself is once reported to have asked a group of tech executives that included the late Apple CEO Steve Jobs,” Arik Hesseldahl writes for AllThingsD. “Essentially it was this: Why can’t iPhones and iPads be manufactured in the U.S.?”

“Sadly, both Obama and Romney flubbed their answers, and educated voters not at all,” Hesseldahl writes. “Here’s what one of them — either one, I don’t care which, and assuming no time limit — should have said in response.”

Candy, I understand how some people might get frustrated when they see Chinese workers assembling iPhones. It’s easy to think that those jobs rightly belong in America. The reality is a little more complex, but when you understand it, there’s a surprising amount of good news for American workers.

The fact is, assembling iPhones and iPads is the final step of a complex process, and is really a low-skill, low-cost kind of job. China has spent decades building much of its economy around these low-skill jobs, in part because it has such a large labor force and plenty of workers who are willing to do the work. And, frankly, here in America you wouldn’t want to try to support a family on the kind of wages a job like that would pay. I know it sounds harsh, but it’s true. So I know this may sound odd when I say it, but I ask you to hear me out: I’m perfectly comfortable letting those kinds of jobs go to China or somewhere else.

In fact, some researchers at the University of California at Berkeley found that for every iPad or iPhone manufactured, Chinese workers add $10 or less to the value of an iPad or iPhone. On an iPad, they found that American workers add $162 worth of value, and on an iPhone it was more than twice as much.

In America, when we talk about manufacturing, we should be talking about advanced manufacturing jobs for highly skilled workers that require a solid education and pay wages on which you can support a family. And the fact is, there’s a lot of American work that goes into an iPad or an iPhone or a Mac.

Tons more in the full article – very highly recommendedhere.

[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]

Related article:
Romney and Obama spar over Apple’s Mac, iPad, and iPhone manufacturing jobs – October 17, 2012

73 Comments

      1. I think that neither candidate understands the reality of a lot of situations and for those that they do understand, they are too cowardly to be honest with people anyway. This is not necessarily a fault of theirs. The American People don’t want to hear the truth in most cases and will punish any politician who tells them something they don’t want to hear.

        As a country, we are getting the leadership we deserve.

    1. The answer isn’t really as complex as many think it to be. The answer is uncomfortable for both candidates for opposing reasons.

      Among the many factors that is driving US manufacturing off-shore (and there are many, the least of which is cost of labor), is taxation. Products produced in China are only taxed if they are consumed in China. In the US, products are taxed no matter where they are consumed. So in essence, we burden US products that are destined to other countries, at the same time that those countries do not tax products destined fore the US.

      Since the 1960s the world has shifted away from taxation of production (recognizing the importance of a world economy long before the US did) and instead implemented national sales taxes and/or Value Added Taxes.

      When the US taxes corporate profits at any rate (especially 35%) it places an unfair burden on US manufacturers. On the other side of the coin foreign manufacturers, because their products don’t arrive in the US bearing foreign tax burden. The to top it off, those products aren’t taxed in the US, except at the local level.

      You can see how this difference in tax strategy impacts a multi-national such as Apple in the effective tax rate they pay. The US corporate tax rate is 35%, yet Apple consistently pays about 25%. This is the result of manufacturing in China and exporting from there to countries that do not charge production taxes. The blend knocks 1/3 off Apple’s tax bill.

      When you consider the totality of production taxes charges in the US (income tax, media-care, social security, unemployment, disability, both employer and employee contributions) its amazing that US manufacturers can compete at all. Switching to a consumption tax (which is what Romney favors) lowers the cost of exported US goods, increases the cost of foreign made products and leaves the cost of domestically consumed US products about the same.

      THIS simple move increases US production (aka jobs) dramatically.

      The problem for the candidates goes like this:
      Romney (Republicans in general) is painted as favoring the rich/corporations over the common man (who has no concept of the difference in production and consumption taxation).
      Obama (Democrats in general) lose their core campaign/election issue when they lose the ability to fovent class warfare by pitting the ‘haves’ and the ‘have nots’ (“pay their fair share” sound familiar).

      The truth is that the top 2% of producers pay half of all income taxes, and almost 50% don’t pay any income tax. But still they have been convinced by Democratic campaigning that the “haves” aren’t paying as much as they do.

      Change that one thing (taxation strategy) and you dramatically improve the manufacturing environment in the US.

      1. I have long advocated a simplified taxation strategy such as a VAT. As the name implies, taxation is applied as value is added during the product life cycle. In the European approach, VAT is applied at the end, essentially like a sales tax.

        A consumption-based tax has a lot of merit. Some essentials could be exempted. There is no reason that this has to be a partisan issue. If implemented correctly, it will be good for everyone except tax attorneys and companies like H&R Block.

      1. Ahh.. Back to the normal discourse on politics found on this forum… I was worried for a moment that MDN forum contributors had gotten reasonable…. My faith is restored ….

  1. … in a church one block from my home which served 200-300 meals a day for near 15 years. Two blocks away was a busy McDonalds. the McDonalds held constant recruitment drives, it struggled finding staff , cut hours and finally closed down.

    (I live in a small expensive tourist ‘resort’ city run by extreme liberals: the city council gives out free heroin needles and was debating giving out free bong pipes to reduce ‘infection risk’. A city of 80 thousand supports thousands of ‘homeless’. They live in hostels with private rooms with panelled wood floors and cleaning services and three meals a day. Hordes of ‘homeless’ come here. House taxes are sky high with average cost of a house here (it’s a resort city) at half a million. The houses and Taxes are so expensive that working people like McDonalds staff can’t live in the city. )

    Note: I’m not beating up on all homeless or liberals, I consider myself a liberal and some people fall into bad times but the above are the facts in the place I live…

    If Foxconn built a factory here it wil CLOSE down because it will never find workers. The city is deciding to build 5 more big homeless ‘shelters’…

    1. to clarify my post:

      the shelters provide food yet there are food kitchens because the attraction of the city can’t keep up with the constant stream of ‘homeless’ people flooding in.
      The city council gives out free needles because it knows most of thsoe ‘homeless’ are drug addicts.
      A resort town is a big attraction as vagrants can beg and get hand out from tourists. City council builds vast shelters as crowds of vagrants are bad for the tourist industry…

      Aid in my city almost equals minimum wage, how would Foxconn survive?
      I know my city situation is perhaps abnormal but still something to think about…

    2. By the numbers you posted, a homeless kitchen putting out 200-300 meals a day in a city with a population of 80,0000 was feeding 0.38% of the population.

      I just found that interesting is all. I have nothing to add to the discussion. lol.

      1. I live in Spokane WA (greater Spokane County population about 500,000). In a 10 sq block area downtown, next to I-90, there are 15 soup kitchens. Twenty years ago there weren’t any. Twenty years ago the number of homeless hanging around the freeway was practically nil. Today there are hundreds. BUT, in about 6 weeks they will have mostly disappeared as they head south for the winter.

  2. Romney turned into a blathering lying mess last night. He turned into sarah palin by the end.

    Sad. Maybe next time the republicans will stop catering to tea baggers and religious nuts and get the party back on track.

      1. Romney was the smaller man on that stage. At one point when Obama called out how insulting it was to politicize the ambassador’s death, Romney was stupefied into awed silence. He was completely owned from that point on and obama knew it. Romney is a nattering liar.

        So you really think Romney is going to abolish the capital gains tax?

        1. I have access to internals you do not. However, that does not excuse you from looking at the publicly available internals to which you do, as a peon, have access and educating yourself so as to to look like a complete idiot.

          Here, from liberal outlets, so you don’t get too scared upfront to look at the facts:

          CNN:
          • 58% of debate watchers say Romney would better handle the economy vs. 40% for Obama
          • 51% of debate watchers say Romney would better handle taxes vs. 44% for Obama
          • 59% of debate watchers say Romney would better handle the deficit vs. 36% for Obama

          CBS:
          • “Which candidate would do a better job of handling the economy?” After the 2nd debate, 65% said Governor Romney, 34% said President Obama.

          This race is over. What I’ve cited above is the tip of the iceberg.

          As I’ve been saying for months now:

          President Romney and Vice President Ryan. Get used to it.

        2. Strange. I watched the same debate you did, with the opposite of your interpretation. 🙂

          Removing the capital gains tax makes sound economic sense. Remember that investments involve risk, and profits are based on funds that have already been taxed previously.

          Want to plan for the education of your children and for your retirement, and at the same time help grow the economy? Removing the tax on capital gains would benefit you.

      2. That poll is four days old, so last night’s debate isn’t factored in. Obama looked like a loser in Denver, allowing Romney to dominate. Last night changed the narrative again, because Obama took on his opponent. We’ll see how that poll looks in a few day’s time. My guess is that gap will be closed.

      3. Among likely voters, Romney leads Obama by 6 percentage points, 51%-45%.

        Translation:
        Among FauxNewz watchers who consider all other media slanted, Romney leads Obama by 96 percentage points, the Republican slanted Gallup organization reported.

        Dewey vs Truman was a Gallup call. Gallup said it was Dewey in a walk. There is no Dewey Presidential Library.

        [kyte.tv appKey=MarbachViewerEmbedded&uri=channels/405150/1699939&tbid=7743&p=5744&height=450&width=640]

        1. See my post above citing CNN and CBS internals.

          This race is over.

          As I’ve been saying for months now:

          President Romney and Vice President Ryan. Get used to it.

          1. You keep telling yourself that. I recall a few saying the same about McCain/Palin back in 2008, yet on election day there was a landslide in the other direction.

            A week ago the polls pretty much all showed Romney ahead, now they’re split between Romney and Obama. The Dems are not on the run as you believe them to be.

            Four more years is my prediction, although a lot closer than it was last time. No President Romney, and Paul Ryan spending the next four years doing lecture tours and making a bit of cash.

            1. As if we are going to take your word for it, F10T12. You claim to have access to “internals” unavailable to the rest of us “peons.” How delightfully condescending of you! I can’t wait to hear your excuses in November. I have no doubt that you will be casting blame left and right…actually, just left.

      4. And I like to add as a liberal that in case you’ve forgotten. the US does not have direct election of its Presidents. The Electoral College will have the final say in this election as it all ways does.

        George Bush got, nationwide, over 500,000 votes less that Gore in 2000, but Bush won because he got the contested Electoral votes in Florida-the ones needed to push him over 270. According to several sites, including the Huffington Post, at the moment, based on the best estimates as of now, Obama will win the Electoral College vote with more than enough for a second term. It all depends on what states are in play.

        Stay tuned.

      5. F2010, I hope you have some therapy in place for your inevitable defeat. I’d hate to read about you going postal in an Apple retail store (or anywhere else!)

  3. Well, the author’s suggestion is basically what Obama said according to Fox News transcript:
    “Candy, there are some jobs that are not going to come back. Because they are low wage, low skill jobs. I want high wage, high skill jobs. That’s why we have to emphasize manufacturing. That’s why we have to invest in advanced manufacturing. That’s why we’ve got to make sure that we’ve got the best science and research in the world.”

  4. “In America, when we talk about manufacturing, we should be talking about advanced manufacturing jobs for highly skilled workers that require a solid education”
    I believe the Presidents had a similar answer.

  5. “I live in a small expensive tourist ‘resort’ city run by extreme liberals”

    American liberals vote Democrat and live in the cities.

    I always thought extreme liberals move to Cuba, North Korea, Venesuala or mainland China.

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