I was planning to skip my updates for a few days over the holidays, until I read yesterday's (12/23) Wall Street Journal. A gentleman named Andy Kessler, who is the author of Running Money, wrote a short editorial for the Journal entitled We Think, They Sweat (must be a subscriber to see it online), which is almost as catchy a title as Thinking Faster.
The point of his article was to use Apple as an example of the value of managing ideas and information, versus putting structures in place to keep manufacturing jobs here at home. He says "Their (Apple's) engineers sit around in air-conditioned offices on streets with cutesy names like Infinite Loop...and have others make stuff for them." Later, he points out that "We are moving low-margin, low-wage jobs overseas, but fortunately, are left with high-margin, high-pay intellectual property jobs."
Kessler goes on to point out that doing all we can to keep low wage manufacturing jobs in the US - or weakening the dollar - doesn't really help us be competitive over the long run. He concludes that only by continuing to create new ideas and become more productive will we continue to be the world's leading economy.
Kessler's other ideas about strengthening the dollar and trade deficits are his own. I can't comment on them since I'm not an economist. But this article goes to show that creating ideas and innovation and managing them productively will be the competitive strength of our nation. Kessler thinks that over $15B in market capital of Apple's stock is due to the iPod, which of course is manufactured in China. Now, the iPod, he calcuates, is responsible for $1.5B in trade deficits, but accounted for over $16B in market capitalization, when you include Apple's US partners.
Productivity and innovation have been the lifeblood of this economy for over 200 years, and will become even more important in the future. We may face a day where there is very little actually "made" in the US. Rather, we will be the innovators, designers and consumers for the rest of the world.