...That sums up the economic vision of the Trump administration. The president and his advisers are convinced more factories can cure the trade deficits, lackluster growth, and (supposed) joblessness plaguing the U.S. economy. Trump has vowed to lure back plants that departed for cheaper locales such as China or Mexico and sanction companies that dare to leave. The result, he claims, will be investments that revitalize down-on-their-luck communities and American economic vitality. “We will bring back our jobs,” he pledged in his inauguration speech. “We will bring back our dreams.”
The president, though, is plain wrong. ...What Trump fails to appreciate is that the true value in making something is no longer in making it. Companies figured out long ago that they can capture most of the value of a product by focusing on its design and research and development, its branding, and the services that support it after it’s been sold...the lowest point of value—is where the fabrication takes place; the highest value is found at the corners...
... The talent necessary to conceive, brand, and market a new product is much scarcer than the skills to manufacture it. The integration of giant emerging economies such as China and India into global supply chains increased the number of available hands to screw or sew things together, dropping the cost of making a product even further. There’s “a lot of supply for the actual manufacturing, but not a lot of supply for creating the next Google or Apple,”...
...By obsessing over factory jobs that no longer exist, Trump may cost Americans the jobs of the future. The logic of the “smile curve” suggests he should focus on developing and supporting the parts of the manufacturing process that hold the real value—in other words, fostering more Apples. That would entail upgrading the skills of the U.S. workforce by devoting more resources to education and reducing the financial burden of a college degree, while encouraging foreign talent to start their next big ventures in Silicon Valley, not Shanghai. ...
smile curve
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