Why President Trump’s trade tariffs might not work, a post by J. Dedrick, G. Linden, and K. L. Kraemer

We estimate China only makes $8.46 from an iPhone – and that’s why Trump’s trade war is futile

Jason Dedrick, Syracuse University; Greg Linden, University of California, Berkeley, and Kenneth L. Kraemer, University of California, Irvine

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.

https://datawrapper.dwcdn.net/U1BOU/3/

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.

https://datawrapper.dwcdn.net/V0y8K/2/

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.

The ConversationThis is a war that should never have been started.

Jason Dedrick, Professor, Syracuse University; Greg Linden, Research Associate, University of California, Berkeley, and Kenneth L. Kraemer, Research Professor, University of California, Irvine

This article was originally published on The Conversation. Read the original article.

Polarization is Not the Problem: A Post-Civic Culture

Increasingly, the dilemmas facing politics in the United States if not worldwide are being portrayed as outcomes of polarization. It is an attractive topic for discussion, because there is undeniably a great deal of polarization, if defined as wildly different (polar opposite) viewpoints on one or more issues. Moreover, it seems to be tied to popular conceptions of the role of the Internet in enabling individuals to find support for their views online, even if extreme. Conceptions of echo chambers and filter bubbles are tied to this perspective. While I have argued that echo chambers and filter bubbles have been over hyped and under researched, I also can’t believe that polarization has not been prominent throughout the history of American politics.

So what is the problem? What has changed?

Perhaps it is the degree that proponents of different viewpoints have begun to take more ideological, righteous, or even sectarian positions. Their opponents are not wrong, they are seen and portrayed as bad if not evil.

What is surprising about this in the context of American politics is our history of being the model of a so-called ‘civic culture’ (Almond and Versa 1963: 8), defined by a culture based on “communication” and “consensus” in which diverse opinions are moderated by the structures and process of the political system, such as the two-party system and our system of checks and balances. This view was roundly criticized as simply a description of American politics post-World War II, as contrasted with less stable democratic systems leading up to the second world war, such as the Weimar Republic. However, there has been some face validity to this civic culture notion, at least up to the divisions surrounding the Vietnam War. Today, the idea of a civic culture seem ludicrous. 

So I don’t think we should be as focused on the dynamics of polarization, or a diversity of opinions, but more on the dynamics of this politically sectarian righteousness. Maybe it is the nature of the issues being considered, such as the right to life, the environment, and immigration, that have connections with deep ethical or religious principles. But the search for answers to this question will lead in different directions than the search for the dynamics of polarization on the issues of the day.

There is a thoughtful letter to the editor of USA Today by David Engen of Spokane, Washington, that focuses on the decline of civil discourse. I find myself in agreement with him and others who are focusing on the decline of civility in American politics as absolutely central to fixing or mitigating what seems to be a decline of our political processes. Yet even the discussion of civility in American politics has been steeped in claims that one or another sectarian group is to blame, such as a recent story about whether voters see the Democrats or President Trump as more responsible for a decline in civility (Wise 2018).

Are we lost in what I would call a post-civic culture?

References

Almond, G. A., and Verba, S. (1963), The Civic Culture: Political Attitudes and Democracy in Five Nations. Princeton, NJ: Princeton University Press.

Dutton, W. H. (2017), Fake News, Echo Chambers and Filter Bubbles: Underresearched and Overhyped, The Conversation, 5 May: https://theconversation.com/fake-news-echo-chambers-and-filter-bubbles-underresearched-and-overhyped-76688

Engen, D. (2018), ‘We’re all Americans. Let’s be civil, please.’, Your Say section of USA Today, 2 July: page 5A.

Wise, J. (2018), ‘Poll: More Voters Blame Trump than Dems for Lack of Civility’, The Hill, 3 July: http://thehill.com/homenews/395371-poll-more-voters-blame-trump-than-dems-for-lack-of-civility

ICA Award for Applied Research Went to …

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.

Congratulations!

 

Source: news.usc.edu

The Bad Collaborator

A good colleague of mine asked: Has anyone ever told you that you were a difficult colleague to collaborate with? I said “no”, as he was the first to explicitly suggest that. But the more I thought about this question, it is probably true that I am difficult as a colleague. But does that make me a bad colleague or bad collaborator? (I should add that in academia, it is ‘good’ to collaborate. You are not a traitor or defector – a collaborator in a bad way – but a colleague.)

I immediately recalled one of the earliest and most valuable collaborative projects I was involved in – an evaluation of Urban Information Systems (URBIS), which was conducted by a team of researchers at the University of California, Irvine’s former Public Policy Research Organization (PPRO). I was one of five principal investigators, led by Ken Kraemer, but including James Danziger, the late Rob Kling, the late Alex Mood, and myself. We worked together from 1974 through 1979, leading to a couple of books in the early 1980s.* Ken was a management scientist trained in public administration and architecture. Rob was a computer scientist focused on artificial intelligence. Alex Mood was a major statistician and co-author of the famous Coleman Report.** Jim and I were political scientists.

Most of us were difficult to collaborate with. We debated every substantive and methodological decision and every idea developing out of the project. While we would let each other have time to explain their position on an issue, most of us would give real time reactions through making faces, changing our posture, yawning, grimacing, rolling eyes, and subvocalizing if not muttering sounds of disapproval. We would write memos to each other to make our case or critique another’s. We had to fight for each forward step in the project.

Courtesy of Elsevier.com

I should say that not all of us were difficult. Alex mainly gave advice when asked. Ken was always the best listener and translator across disciplinary boundaries. He would explain that Rob was saying this, and Jim was saying that, and enable us to better understand each other’s points. Moreover, while we disagreed and debated nearly every point, we liked and respected each other. We took each other seriously.

That said, the difficulties in collaborating contributed to the best aspects of our work. For example, we would never be able to settle on the first good idea that emerged unless it survived repeated challenges. Most often, we ended up with better ideas downstream that combined features of several contributors. Also, when we met with research teams evaluating our project and the final outputs, we found that we had already addressed every argument and counter argument that could be raised about our work. We had already raised and settled them ourselves. As a consequence, we had no surprising critique of our project and found only a surprising degree of support for our work.

Ever since that experience, most of my collaborations have been difficult but successful. In short, it is possible that a difficult collaborator is not necessarily a bad colleague. Harmony sounds good in all walks of life, but harmony often emerges at the end of a lot of discord and struggle. Certainly in academia, it is not always the case, but quite often, a difficult colleague can be valuable to your work.

References

*Kraemer, Kenneth L., William H. Dutton, and Alana Northrop (1981), The Management of Information Systems,New York: Columbia University Press; and Danziger, James N., William H. Dutton, Rob Kling, and Kenneth L. Kraemer (1982; 1983 paperback), Computers and Politics: High Technology in American Local Governments, New York: Columbia University Press.

** Coleman, James S., Ernest Q. Campbell, Carol J. Hobson, James McPartland, Alexander M. Mood, Frederick D. Weinfeld, and Robert L. York. 1966. Equality of Educational Opportunity. Washington: U.S. Department of Health, Education, and Welfare, Office of Education.

 

Networked publics: multi-disciplinary perspectives on big policy issues

https://policyreview.info/articles/analysis/networked-publics-multi-disciplinary-perspectives-big-policy-issues

The editors of the Internet Policy Review are pleased to announce the publication of our newest special issue, bringing together the best policy-oriented papers presented at the 2017 annual conference of the Association of Internet Researchers (AoIR) in Tartu, Estonia. The issue – on the broad theme of networked publics – was edited by guest editor William H. Dutton, Professor of media and information policy at Michigan State University.

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

Link to Special Issue
https://policyreview.info/articles/analysis/networked-publics-multi-disciplinary-perspectives-big-policy-issues

Frédéric Dubois | Managing editor, Internet Policy Review
 Alexander von Humboldt Institute for Internet and Society

 Französische Strasse 9 · 10117 Berlin · Germany · hiig.de ·

Vint Cerf at MSU on 10 May at 3:30PM: Join Us!

Vint Cerf speaking for the Quello Center at MSU in Communication Arts & Sciences Rm 147, 3:30PM

Vint Cerf is internationally recognized as “an Internet pioneer” – one of the “fathers of the Internet” – in light of his work with Bob Kahn in co-inventing Internet protocol (TCP/IP). He will be in East Lansing, Michigan, giving a Quello Lecture in celebration of the twentieth anniversary of the Quello Center. The Center was founded at MSU in 1998 to recognize the importance of James H. Quello’s contributions as one of the longest serving and most distinguished Commissioners of the Federal Communication Commission (FCC). 

Arguably, over the first twenty years of the Quello Center’s existence, there has been no greater development shaping media and information technology, policy, and practice than the rise of the Internet and related information and communication technologies such as the Web, social media, and mobile Internet. But will the Internet play as central a role over the next twenty years?

To stimulate and inform debate around this question, we’ve asked Vint Cerf to provide his perspective on the Internet’s role in shaping media and information over the past twenty years, and in the coming decades. It is difficult to imagine another person who could provide such an authoritative perspective on twenty years in Internet time.

His lecture will be followed by questions and discussion as well as a reception. Join us on May 10thto celebrate and reflect on the most significant development shaping communication, media, and information over the life of the Quello Center, and also welcome Google’s Internet Evangelist to MSU.

 

An Inspiring Graduation: Congratulations to MSU

I had the good fortune of attending the 2018 graduation ceremony at MSU. I always find these occasions to be a reminder of the importance and responsibility of an academic career. However, this celebration on 4 May 2018 was particularly significant to me. First, it was my last, before I head off to Britain for whatever awaits me there. Secondly, I was proud to be asked to hood one of our graduating doctoral students, Ruth Shillair, who I’ve been working with since my arrival in 2014. Ruth participated in the Oxford Internet Institute’s summer doctoral programme, and has helped me with several papers in collaboration with the Oxford Martin Cyber Security Capacity Center. Ruth has many more academic achievements to look forward to.

Advanced Degree Ceremony at MSU 2018

Finally, I was inspired by the wonderful set of honorary degree recipients. Every year, MSU is able to bring in distinguished individuals, many with close ties to MSU, but during a year of troubles for the university, this year’s honorees were particularly welcome and inspiring. They included:

Marcia McNutt, who gave the commencement speech at the advanced degree ceremonies, is President of the National Academy of Sciences, and former editor-in-chief of the Science journals. She spoke about her role with the U.S. Geological Survey in helping to contain the Deepwater Horizon oil spill.

After the ceremony, at an event for the honorary degree recepients, who spoke at other commencement ceremonies, I was able to hear from others, including:

Akinwumi Adesina, an agricultural economist, who is president of the African Development Bank Group, and former Nigerian Minister of Agriculture;

Bethany Beardslee, a soprano, who rode her bike to MSU, where she majored in music in the early 1940s, when MSU was the Michigan Agriculture College [that is the origin of M.A.C. Street]. She is widely acclaimed, receiving the Laurel Leaf Award for ‘fostering and encouraging American music’ from the American Composers Alliance;

Wanda Herndon, who has held senior-level positions at a number of major companies, including vice president of Global Communications for Starbucks Coffee Company. She now has her own consulting firm, W Communications. Ms Herndon has been named one of the top 12 African-Americans in public relations as well as one of the ‘Top 100 Black Professionals in Corporate America’.

Albert “Albie” Sachs, a judge and legal scholar, who was appointed to the Constitutional Court by Nelson Mandela in 1994, after devoting much of his life since 1952 as a human rights advocate in South Africa.

My thanks to all of those who organized the 2018 graduation ceremonies for bringing such brilliant people to the attention of our students and faculty.

Students Graduating 2018 from MSU

 

Bill Dutton and Ruth Shillair 2018