Trump Misunderstands Trade Again – Apple iPhone Edition


That President Donald Trump misunderstands the basics of trade is obvious enough, he’d not be slapping import taxes upon American consumers if that weren’t so. But it’s interesting to note quite how far he’s misunderstanding the basics here for he’s going further back into said basics errors than just trade. He’s getting the point of our having an economy at all wrong.

The point being that the reason we have an economy at all is so that we can all consume more. It’s not, absolutely not, so that we can all work more. But that’s the assumption that Trump is making here about Apple’s iPhone – that we want the work, not the ability to have an iPhone.

President Donald Trump said Friday he wasn’t concerned about Apple’s future and again encouraged CEO Tim Cook to move his supply chain to the United States. His comments came after the company warned investors this week that its earnings will be badly weakened by a sales slowdown brought on in part by Trump’s trade war with China. Apple’s (APPL) announcement rattled investors and global markets.
“Apple makes their product in China. I told Tim Cook, who’s a friend of mine … ‘Make your products in the United States,'” Trump said. “China is the biggest beneficiary of Apple — not us.”
“My focus is the United States. I want to get those companies to come back,” he added. “I want Apple to make their iPhones and all of the great things that they make in the United States.”

This is just blitheringly stupid economics. What we desire is the ability to have and use an iPhone. This is true of us as individuals, obviously enough. None of us really does want to get out the soldering kit and start ordering touchscreens from wherever now, do we? Quite, we want to take the completed item out of the box and start to use it – we wish to consume an iPhone.

Further, we’d like to be able to consume an iPhone while doing the least amount of work possible as the cost of doing so. The same is true of a nation – we want to be able to consume stuff while having to do the least work possible to be able to do so.

That’s the most basic reason for having an economy at all. Other people do what they’re better at, we do some stuff too, we all swap around the resulting production. And trade is just us doing exactly that. So, if it’s cheaper overall for China to make the iPhones then that’s where they should be made. We get to consume an iPhone in return for the smallest amount of work possible that we have to do.

So, see what Trump is saying? That we positively desire to do that work of building iPhones. Which we don’t, the very idea is ludicrous.

Isn’t it ever so slightly worrying when the people who purport to rule the world on our behalf don’t actually understand how the world works.