This is one of those Mondays with too much news to cover. South Carolina and the Republican primaries. The State of the Union. Ryan Lizza’s fascinating look inside the Obama administration. And two incredible football games. But I want to talk about a feature story from Sunday’s New York Times, which isn’t about any of those things except that, in a sense, it’s about all of those things. Well, all of them except football. The article is about the iPhone and why Apple, which once upon a time built its computers in the U.S., decided to manufacture the devices elsewhere.
Editor's note: As I was thinking about Sunday's New York Times article about iPhone manufacturing, I e-mailed a few economists to see what lessons they drew from it. One was Andrew Samwick, of Dartmouth, who pointed me to a post at his new blog. There, he stresses, among other things, the importance of "agglomeration": Manufacturers like to build new plans in close proximity to suppliers.
Consternation over the loss of manufacturing jobs to China was aroused again recently when Evergreen Solar announced that it would move 800 manufacturing jobs from a decommissioned Devens, Mass. military base to China. In an article by Keith Bradsher of The New York Times, Evergreen’s CEO claims that producing in China is more competitive because its local governments offer partnerships that bring very low-interest rate loans from state-owned banks compared to what U.S banks were offering. For U.S.
These days I do believe we're supposed to hail China as our clean-energy overlords. The country now produces half the world's wind turbines and half its solar panels. How did the Chinese do it? Partly through aggressive renewable-energy laws and various incentives for budding tech industries. And that's to be expected—as long as fossil-fuel externalities go unpriced, renewables are always going to need a little boost. But, according to Keith Bradsher of The New York Times, there's another side to this story.
Gregg Easterbrook has an interesting look back at how car reviewers helped enable America's addiction to gas guzzlers—a trend that, in hindsight, helped bring down Detroit: Because auto reviewers fixated on speed, carmaker executives paid too much attention to horsepower, not enough to manufacturing quality, MPG and safety. The excellent 2002 book High and Mighty by Keith Bradsher not only offers what reads, in retrospect, as a prescient warning of Big Three arrogance and slipshod management.
Recently I reviewed why Amazon’s best-selling Kindle e-reader is actually an emblem of American decline. My point was that because neither Amazon nor another American company could manufacture the device, future related product development and production has potentially shifted abroad.
The good news is that the Chinese have decided to try to resolve the dispute between our two countries over their tire exports at the World Trade Organization, meaning "the disagreement may be containable," as the Journal puts it today.
China, it's rapidly becoming clear, has a trash problem. As the country has gotten wealthier, it's become the world's largest producer of household garbage. Packaging, old electronics, newspaper, bottles, plain old junk—all of it's piling up and there's increasingly no place to dump it. As Keith Bradsher reported in The New York Times yesterday, "Beijing officials warned in June that all of the city’s landfills would run out of space within five years." One remedy is to incinerate the trash, which China has been doing.