In November of this year, the 2016 presidential elections will be held in the United States. During these weeks the candidates of each party are being chosen. Although the names of different technological companies are coming and going in the debates, there is a mix that we have not seen until now: Donald Trump and Apple .
According to reports from Gizmodo, Trump wants to force Cupertino’s company to bring the manufacture of its devices to his country (ignoring the fact that the Mac Pro is assembled in this country). He said it in the following words:
A speech that may sound good and win a lot of applause, but ignores the realities of the world we live in. Trump is not the first to raise this idea , nor will he be the last, but while other presidents “suggested” Apple bring manufacturing to the United States, Trump is already talking about “forcing”.
Let’s see why Apple makes its devices in other countries and not in its own.
The old “Made in America” mistake
We live in an increasingly small world, where goods and people travel around the globe in just a few hours or a few days. This freedom is not full, but it is getting wider and wider. That is why it is more and more common to see products from other countries. In the case of technology and a device such as the iPhone, there is no single country capable of producing its hundreds of components as there is a clock Swiss Made (at least, for the most part).
The reason why some countries specialize in one thing or another was explained to us by the classical economist David Ricardo. According to his theory of comparative advantage, countries should focus on manufacturing those products for which their industry is most competitive and exchange these products through international trade for others in which they have not specialized.
The example that is usually used is that of a country that is very good at producing cheese but not so good at making wine. According to Ricardo, this country should produce as many cheeses as possible and exchange them for wine when necessary, as it is beneficial for the country and the world. Returning to Trump and his statement, his wish is that the United States will manufacture everything, even those components for which they are not so well prepared.
Thanks to international trade, each country can specialize in producing what it is competitive in. Without that specialization, we would pay a much higher price for any product
In other words, manufacturing millions of iPhones entirely in the US is expensive. Not only because labor is more expensive, but because of the opportunity cost it represents for both the country and Apple. The US would not be so good at doing everything necessary to make an iPhone Made in the US and we would surely end up with an (even) more expensive product. But that’s not all.
Estamos recopilando todas las barbaridades que dice Donald Trump día a día.
If Trump had his way and got not only Apple but all American companies to bring manufacturing to the United States, the world economy would suffer greatly. The world would be a poorer place, and although we wouldn’t have to go to the extreme of war, there would be an increase in migration from developing countries to the First World. And immigration is something that Trump does not like at all.
So, where do we stand?
Why Apple assembles its products in China
Jobs’ answer was quite direct and sharp, but it hides a very powerful reason . In the same Times article other Apple executives gave the key:
Due to my professional experience, I spent more than four years working on the design of outsourcing projects. And in each and every one of them another country was chosen that was not Spain, not only because of the cost (which also), but also because of the insufficient number of qualified people in the necessary time.
Outsourcing the production of products is not only done for the cost. In the case of the iPhone, the scale of resources that China is able to mobilize in a very short time has an influence
If the US is not able to provide the type and number of employees needed, it is not surprising that they turn to other countries that do have that capacity. As we saw, Ricardo’s proposal is perfectly fulfilled here: China has a comparative advantage in manufacturing iPhones; the US has a comparative advantage in designing them.
To alter that balance artificially would impoverish both China and the United States . If that is Donald Trump’s intention, he only has to say it straight out.