Comments on: What’s an export? Seriously.

By: Anshu Sharma

Anshu Sharma — Wed, 28 Oct 2009 02:01:12 +0000

I don’t think you are accurate. The chips, the silicon, the casing etc. will all be imports into China (let’s say $50 worth). Then Foxconn would export the manufactured phone to Apple who would buy it for a certain price (let’s say $55 – that’s the $5 margin). Apple can then sell the device for whatever price it wants ($500).

Now there are other tricks that companies sometimes employ to avoid taxes etc. but you get the idea.

At the same time, let me assert that I agree with Cafe Hayek that trade deficits don’t really matter to individuals. As long as you don’t owe money to your neighbor or a Chinese or a German, you are okay. The government debt is debt whether its held by Chinese or Americans.

Long story, go read Cafe Hayek. :)

By: Baruch

Baruch — Tue, 06 Oct 2009 20:50:16 +0000

I had not. That is an interesting book, thanks for the link. I think they’re quite right.

By: Drunkeynesian

Drunkeynesian — Mon, 05 Oct 2009 15:24:37 +0000

I’m an economist who turned to the dark side of trading, so I’m not completely aware of the most recent academic research (as you probably know, traders prefer to read nasty jokes and market gossip). However, have you heard about a research firm called GaveKal? They have been writing a lot about how meaningless current account numbers are becoming. If you care, take a look at the chapter 9 of their book “Our Brave New World”, available at http://gavekal.com/eBooks/OurBraveNewWorld.pdf . I wrote a bit about this very theme on my undergrad conclusion work, but unfortunately it’s written in Portuguese.