I had the opportunity to work with Merit, Michigan’s research and education network, and the Quello Center at MSU, who have teamed up on a comment to the US NTIA on how to enhance indicators of broadband access. The comment provides an innovative approach to consumer sourcing of broadband availability data that builds off the FCC’s initiatives with crowd sourcing, but also leverages the strategic advantages of Merit, as a research educational network that covers the State of Michigan. If successful, this approach has the potential to be scaled nationally. The comment provides an overview of current approaches, the potential of consumer-sourced data, and an outline of their approach.
We estimate China only makes $8.46 from an iPhone – and that’s why Trump’s trade war is futile
The Trump administration’s tariffs on China have so far targeted mostly industrial goods like aircraft engines and gas compressors. But the administration has also threatened to slap tariffs on US$200 billion in other goods if the dispute continues.
No list of all the goods that might be subject to tariffs has been released, but it would have to include consumer electronics, such as smartphones, which is the largest single product category in China’s exports to the U.S.
One well-known product that might be affected is Apple’s iPhone, which is assembled in China. When an iPhone arrives in the U.S., it is recorded as an import at its factory cost of about $240, which is added to the massive U.S.-China bilateral trade deficit.
IPhone imports look like a big loss to the U.S., at least to the president, who argues that “China has been taking out $500 billion a year out of our country and rebuilding China.” One estimate suggests that imports of the iPhone 7 and 7 Plus contributed $15.7 billion to last year’s trade deficit with China.
But, as our research on the breakdown of an iPhone’s costs show, this number does not reflect the reality of how much value China actually gets from its iPhone exports – or from many of the brand-name electronics goods it ships to the U.S. and elsewhere. Thanks to the globe-spanning supply chains that run through China, trade deficits in the modern economy are not always what they seem.
Who really makes the iPhone?
Let’s examine an iPhone 7 a little more closely to see how much value China is actually getting.
Start with the most valuable components that make up an iPhone: the touch screen display, memory chips, microprocessors and so on. They come from a mix of U.S., Japanese, Korean and Taiwanese companies, such as Intel, Sony, Samsung and Foxconn. Almost none of them are manufactured in China. Apple buys the components and has them shipped to China; then they leave China inside an iPhone.
So what about all of those famous factories in China with millions of workers making iPhones? The companies that own those factories, including Foxconn, are all based in Taiwan. Of the factory-cost estimate of $237.45 from IHS Markit at the time the iPhone 7 was released in late 2016, we calculate that all that’s earned in China is about $8.46, or 3.6 percent of the total. That includes a battery supplied by a Chinese company and the labor used for assembly.
The other $228.99 goes elsewhere. The U.S. and Japan each take a roughly $68 cut, Taiwan gets about $48, and a little under $17 goes to South Korea. And we estimate that about $283 of gross profit from the retail price – about $649 for a 32GB model when the phone debuted – goes straight to Apple’s coffers.
In short, China gets a lot of (low-paid) jobs, while the profits flow to other countries.
The trade balance in perspective
A better way of thinking about the U.S.-China trade deficit associated with one iPhone would be to only count the value added in China, $8.50, rather than the $240 that shows up as a Chinese import to the U.S.
Scholars have found similar results for the broader U.S.-China trade balance, although the disparity is less extreme than in the iPhone example. Of the 2017 trade deficit of $375 billion, probably one-third actually involves inputs that came from elsewhere – including the U.S.
The use of China as a giant assembly floor has been good for the U.S. economy, if not for U.S. factory workers. By taking advantage of a vast, highly efficient global supply chain, Apple can bring new products to market at prices comparable to its competitors, most notably the Korean giant Samsung.
Consumers benefit from innovative products, and thousands of companies and individuals have built businesses around creating apps to sell in the App Store. Apple uses its profits to pay its armies of hardware and software engineers, marketers, executives, lawyers and Apple Store employees. And most of these jobs are in the U.S.
If the next round of tariffs makes the iPhone more expensive, demand will fall. Meanwhile Samsung, which makes over half its phones in Korea and Vietnam, with a lower share of U.S. parts, will not be affected as much by a tariff on goods from China and will be able to gain market share from Apple, shifting profits and high wage jobs from the U.S. to South Korea.
Put another way, research has shown globalization hurt some Americans while it made life better for many others. Putting globalization in reverse with tariffs will also create winners and losers – and there could be far more of the latter.
Why not make the iPhone in America?
When we discuss these topics with policymakers and the media, we’re often asked, “Why can’t Apple just make iPhones in the U.S.?”
The main problem is that the manufacturing side of the global electronics industry was moved to Asia in the 1980s and 1990s. Companies like Apple have to deal with this reality.
As the numbers we’ve cited make clear, there’s not much value to be gained for the U.S. economy or its workers from simply assembling iPhones here from parts made in Asia.
While it’s possible to do so, it would take at least a few years to set it up, cost more per unit than production in Asia, and require a lot of carrots and sticks from policymakers to get the many companies involved to do so – for example, like the potential $3 billion in subsidies Wisconsin gave to Foxconn to build an LCD factory there.
A flawed response to the challenge from China
There is, of course, plenty for the U.S. to complain about when it comes to China’s high-tech industry and policies, whether it’s the lack of intellectual property protection or non-tariff barriers that keep major tech companies such as Google and Facebook out of the huge Chinese market. There is room for much tougher and more sophisticated bargaining to address these issues.
But where trade is concerned, policies should reflect that manufacturing is now a global network. The World Trade Organization has already developed an alternate set of trade numbers that shows each country’s trade in value added terms, but the administration seems to have missed the memo.
Trump’s trade war is based on a simplistic understanding of the trade balance. Expanding tariffs to more and more goods will weigh on U.S. consumers, workers and businesses. And there’s no guarantee that the final outcome will be good when the dispute ends.
This is a war that should never have been started.
Since 1992, Peter Clarke, my former dean at USC, and Susan Evans, a Research Scientist at the Annenberg School for Communication, have been conducting a systematic program of applied research to bring massive quantities of healthy food onto the plates of hungry and malnourished adults and children. Their work is evidence-based throughout, and is exemplary of the potential for applied research in communication to address a pressing human need, promoting food practices that build physical health and wellbeing, and that are the bedrock of strong communities.
Their team had a clear and strong case for the applied research award. Before this occasion, the U.S. Secretary of Agriculture named their project a “Hero of Food Recovery”, and the UPS Foundation recognized Clarke and Evans with its Distinguished Services Award for their accomplishments. So it is timely and wonderful for the ICA to acknowledge their research through its Applied Research Award for 2018. Their decades of focused collaboration have really raised the bar for this award.
Below is a photo of Peter and Susan at ICA with a winner of the best paper award, and former Annenberg student, Professor Arvind Singhal, the Samuel Shirley and Edna Holt Marston Endowed Professor and Director of the Social Justice Initiative in the Department of Communication, University of Texas – El Paso. And another photo tied to their research on the use of a mobile app that helps people receiving vegetables to find good healthy recipes. Here is a link to a 15-minute demonstration of the app’s features. My own research on the use of the Internet in Detroit illuminated the degree of mobile dependence in distressed urban areas, which makes this innovation particularly relevant. This app is available in both Android and iOS platforms, and has been subjected to a randomized controlled field trial among nearly 300 families who patronize 15 pantries.
The seven papers in the special issue span topics concerning whether and how technology and policy are reshaping access to information, perspectives on privacy and security online, and social and legal perspectives on informed consent of internet users. As explained in the editorial to this issue, taken together, the papers reflect the rise of new policy, regulatory and governance issues around the internet and social media, an ascendance of disciplinary perspectives in what is arguably an interdisciplinary field, and the value that theoretical perspectives from cultural studies, law and the social sciences can bring to internet policy research.
This special issue is the first major release of Internet Policy Review in its fifth anniversary year. The open access journal on internet regulation is a high-quality publication put out by four leading European internet research institutions: The Humboldt Institute for Internet and Society (HIIG), Berlin; the Centre for Creativity, Regulation, Enterprise and Technology (CREATe), Glasgow; the Institut des sciences de la communication (ISCC-CNRS), Paris; the Internet Interdisciplinary Institute (IN3), Barcelona.
The release of this special issue officially kicks off the Internet Policy Review anniversary series of activities, including both an Open Access Minigolf during the Long Night of the Sciences (Berlin) and the IAMCR conference (Eugene, Oregon) in June, a Grand anniversary celebration (Berlin) in September and a participation in the AoIR2018 conference in October (Montreal). For up-to-date information on our planned activities, please kindly access: https://policyreview.info/5years
Papers in this Special Issue of Internet Policy Review
Editorial: Networked publics: multi-disciplinary perspectives on big policy issues
William H. Dutton, Michigan State University
Political topic-communities and their framing practices in the Dutch Twittersphere
Maranke Wieringa, Utrecht University
Daniela van Geenen, University of Applied Sciences Utrecht
Mirko Tobias Schäfer, Utrecht University
Ludo Gorzeman, Utrecht University
Big crisis data: generality-singularity tensions
Karolin Eva Kappler, University of Hagen
Cryptographic imaginaries and the networked public
Sarah Myers West, University of Southern California
Not just one, but many ‘Rights to be Forgotten’
Geert Van Calster, KU Leuven
Alejandro Gonzalez Arreaza, KU Leuven
Elsemiek Apers, Conseil International du Notariat Belge
What kind of cyber security? Theorising cyber security and mapping approaches
Laura Fichtner, University of Hamburg
Algorithmic governance and the need for consumer empowerment in data-driven markets
Stefan Larsson, Lund University
Standard form contracts and a smart contract future
Kristin B. Cornelius, University of California, Los Angeles
Mystery Solved: The Spartan Who Named Michigan State University’s Spartans: Stephen George Scofes
After the second world war, Stephen George Scofes ran a restaurant in Lansing, Michigan, called ‘The Famous Grill’, where he became friends with coaches and athletes at Michigan State University. He came up with the nickname for MSU – the Spartans. Here is the story, as told to me.
Originally, MSU was established as Michigan Agricultural College, and then Michigan State College, before becoming MSU. With its tradition in agriculture, the College originally had a common nickname – the ‘Aggies’. But as the college transitioned to a more general-purpose university and became more serious about college sports, its promoters in the athletic department and the city began searching for a more promising nickname and mascot to represent the university.
George S. Alderton, the Sports Editor of the Lansing State Journal, sponsored a contest to find a name to replace the Aggies. In today’s terminology, he crowd sourced a solution. It remains unclear who picked the winner of the contest, but the contest led to MSU ever so briefly being called the Michigan ‘Staters’. The name did not resonate well with many fans, including George Alderton. A local restauranteur, Stephen George Scofes, asked Alderton if he had seen his letter – his submission to the contest, which suggested the name ‘Spartans’. Alderton did not remember the letter, but thought it had promise and researched it with his colleagues.
Initially, in his columns, Alderton misspelled Spartans, using an ‘o’ for ‘Sportans’. Stephen Scofes corrected his spelling, and Alderton started to routinely use ‘Spartans’ in his columns. The name caught on, and the rest is history – or it should have been history but was, in fact, totally forgotten and clouded over time. Much later, neither Alderton or anyone else could remember the name of the person who came up with the Spartan name, which we now know was Stephen Scofes.*
Stephen’s son, George Stephen Scofes, himself of a serious age – 89 – today, told me the story of his father coming up with the Spartan name. This came up when I was driving him and our mutual friend, who introduced us, Dimitri Stathopoulos, to an MSU basketball game. Stephen came to the United States from an area near the town of Sparta, Greece. His son George, was born in the USA, but lived in Sparta from the age of two until the end of the second world war, when he moved back to the US at the age of seventeen. His friend Dimitri was also from Sparta. So the Spartan name did not pop out of thin air or the classics, but from real life.
Because Mr. Scofes had a restaurant, The Famous Grill, George’s father knew all the coaches and many of the athletes and sports writers that covered MSU. One of the great coaches, Biggie Munn, liked to bring his players in his restaurant, The Famous Grill and sit in The Big Ten Room. Munn became athletic director at MSU from 1953-71 and invited Stephen Scofes to award the annual ‘sportsmanship’ trophy to the football team.
The Scofes family remain closely attached to MSU, such as through the basketball trophy under the Scofes name, for example. And later, in the 1990s, when Nick Saban was the football coach at MSU, the coach argued that there were many awards for sportsmanship, so why not give an award to an academic who helps the players academically. Since then, Stephen’s son, George, and George’s son Stephen Scofes (that’s the traditional way Greek families recognize their family heritage) give an award to an MSU academic who helps the players, titled ‘The George Stephen Scofes Outstanding Faculty Award’ at MSU. There were twelve recipients in 2017.
For decades, the person who came up with the name that is central to MSU’s identity was forgotten in the folklore of the university. But the mystery is solved: He was Stephen George Scofes, arguably, the first Spartan.
Months after this blog, Judy Putnam of the Lansing State Journal covered the story of the Spartan name, with the title, “How Sparty Got His Name’.** She came to the same conclusion as I did, but added a number of interesting aspects to the story. Wonderful to have this story covered in the local paper.
*A published narrative of the naming of the Spartans is provided in Constantine S. Demos and Steven S. Demos, M.D. ((2008), The Tradition Continues: Spartan Football. East Lansing: Michigan State University Football Players Association, pages 56-57. Their version differs in important ways from my narrative, such as only alluding to the friendship of the Scofes brothers and Alderton, but with no acknowledgement of Stephen Scofes’ role. You will have to reach your own conclusion about who named the Spartans, but I find my interview with George Scofes, his son, to be most credible.
**Judy Putnam, ‘How Sparty Got His Name‘, Lansing State Journal, May 6, 2018, 13A, 15A.
Try as You May, but Consultations are not Plebiscites
Debate over the current and former FCC consultations on net neutrality have led a number of otherwise well informed telecommunication policy researchers and analysts to focus on the number of submissions for or against an FCC ruling, such as in a WSJ article today: https://www.usatoday.com/story/tech/2017/12/04/fcc-rebuffs-calls-senators-ny-ag-delay-net-neutrality-vote-over-fake-comments/920446001/
Regulatory consultations are simply not plebiscites. They are not opportunities for the public to vote a ruling up or down. They are meant to determine if the ruling has addressed all reasonable issues. So if a member of the public raises an issue that is new or not addressed in the ruling, it is important, and the agency would need to address it. If the public simply raises a point made by others, or which has been addressed by the ruling, then it is superfluous.
For this reason, there have been efforts to use text analytics to read the many submissions enabled by email and other electronic messaging applications leading to thousands if not millions of submissions – more than a few people can read. The area of development has been called e-Rulemaking. Using text analytics, it is possible to identify a new point, and also easy to identify duplicated submissions, for example. One million duplicated submissions that raise no new points are not significant to a consultation, unless people are treating them like votes, which would be inappropriate. That is why it is really not that worrisome that bots are participating in a consultation. There is a human being behind every bot, and unless the bot makes a new and valid and reasonable point, then its significance is nil.
Am I wrong? Let me know.
But try as you may to use comments to consultations as if they are votes, this would be a misunderstanding of their role. They should not be counted as if they were a plebiscite. Software like ‘texifter’ is available and under development to filter and sort through tons of comments to discover valid points for considering in a consultation. Stu Shulman, the inventor of @discovertext playfully characterizes them as BS filters. See a recent talk by Stu to get a sense of the history and status of work in this area: http://quello.msu.edu/event/erulemaking-a-history-a-theory-a-flood/
<p><a href=”https://vimeo.com/239140103″>eRulemaking: A History, A Theory, A Flood by Stu Shulman</a> from <a href=”https://vimeo.com/quellocenter”>Quello Center</a> on <a href=”https://vimeo.com”>Vimeo</a>.</p>
Wonderful to see a chapter by me, Frank Hangler, and Ginette Law, entitled ‘Broadening Conceptions of Mobile and Its Social Dynamics’ in Chan, J. M., and Lee, F. L. F. (2017), Advancing Comparative Media and Communication Research (London: Routledge), pp. 142-170. It arrived at my office today.
The volume evolved out of an international conference to mark the 50th anniversary of the School of Journalism and Communication at the Chinese University of Hong Kong in 2015. But the paper’s origins date back to a project that I did during my last months at Oxford in 2014, and early in my tenure at MSU, as the Principal Investigator with Ginette and Frank, of a project called ‘The Social Shaping of Mobile Internet Developments and their Implications for Evolving Lifestyles’, supported by a contract from Huawei Technologies Co. Ltd to Oxford University Consulting. This led first to a working paper done jointly with colleagues from Oxford University and Huawei: Dutton, William H. and Law, Ginette and Groselj, Darja and Hangler, Frank and Vidan, Gili and Cheng, Lin and Lu, Xiaobin and Zhi, Hui and Zhao, Qiyong and Wang, Bin, Mobile Communication Today and Tomorrow (December 4, 2014). A Quello Policy Research Paper, Quello Center, Michigan State University.. Available at SSRN: http://ssrn.com/abstract=2534236 or http://dx.doi.org/10.2139/ssrn.2534236
The project moved me into a far better understanding and appreciation of the significance of mobile, but also its varied and evolving definitions. Before this paper, I was skeptical of academic work centered on mobile as I considered it one area of Internet studies. However, by the end of the project, I became convinced that mobile communication is a useful and complex area for research, policy and practice, complementary to Internet studies. In the working paper, we forecast the disappearance of the mobile phone device, which seemed far-fetched when we suggested this to Huawei, but is now becoming a popular conception. So look forward to a future in which that awkward scene of people walking along looking at their mobile will come to an end, in a good way.
This paper illustrates the often circuitous route of academic work from conception to publication, which is increasingly international and collaborative. So thanks to the editors, my co-authors, Oxford Consulting, and Huawei for your support and patience. Academic time is another world. But it was all worth doing and the wait.