Of course, more reasonable standards will recognize that iPhone and iPad do not have a single country of origin.
More than a dozen companies from at least five countries supply parts for them. Infineon Technologies of the United Kingdom produces wireless chips; Toshiba of Japan makes touch screens; and Broadcom of the United States makes Bluetooth chips, allowing devices to connect to wireless headphones or keyboards.
Analysts believe that the final price of the iPhone or iPad should be allocated to which country, but no one would think that the biggest part should not be China, but the United States. Intellectual property and marketing are the biggest sources of iPhone value.
Taking into account these facts will make China a small piece of pie in this so-called country of origin. Analysts estimate that only $10 worth of each iPhone or iPad actually ends up being paid directly to Foxconn or other contractors in the Chinese economy as income.
This is no longer the world of David Ricardo. In a world dominated by mobile capital, mobile capital is a comparative advantage.
Mobile capital can borrow billions of dollars (or equivalent) at a low interest rate in one country, and then use this capital to own domestic capital with a small amount of credit in another country.
Mobile capital can overwhelm the local political system, purchase concessions and reduce transactions, all of which are borrowed in cash near zero interest rates. Mobile capital can purchase and use resources and cheap labor until resources are exhausted or competition reduces profit margins.
At that time, mobile capital closed the factory, fired employees and moved on.
Where is “free trade” in the world where mobile capital has a comparative advantage? What makes mobile capital virtually infinitely leveraged?
The Central Bank has issued trillions of dollars in funds to banks and other financial institutions with nearly free funds. These banks and other financial institutions have brought free cash to companies and financiers. Then they can roam the world, snap up assets and offer them almost free of charge. Money uses global imbalances.
There is no concept of a simple comparative advantage of “freedom” of trade that is far from “Ricardo”, but rather the flow of capital released by the central bank’s liquidity.
The proceeds from mobile capital flow to those who control mobile capital: global companies, financiers, and banks.
It is no wonder that the share of the labor force in the global economy has stagnated, and corporate profits have reached an unprecedented height.
The increase in income and wealth inequality has a causal relationship with globalization and the expansion of Darwin’s trade and capital flows.
Deprived of sublime abstract concepts such as comparative advantages, trade comes down to Darwin’s four goals:
1. Look for foreign markets to absorb excess production, that is, where dumping can be over-produced.
2. Low-cost extraction of foreign resources.
3. Denying geopolitical opponents access to these resources.
4. Open up foreign markets to domestic capital and credit so that domestic capital can purchase all of the productive assets and resources. This is a dynamic that I explained above.
All remarks about “free trade” are window and propaganda. No one believes in the risk of complete free trade; doing so will open the door to foreign governance as a key resource, asset and market.
Trade is to ensure superiority in the struggle for Darwinism to achieve or sustain dominance
As I pointed out in 2005, the savings from opening up trade with China was estimated at 100 billion U.S. dollars over the past 27 years (1978-2005), while corporate profits increased by trillions of U.S. dollars.
In other words, when the input cost dropped drastically, because the price of the sticker was almost unchanged, the consumer got a saving and the company reserved one US dollar net profit. The company earned the difference, not the consumer.
As one of my long-time journalists has pointed out, restricting trade may be one of the few ways in which they can prevent their resources and assets from being engulfed by international flowing capital and actually have unlimited credit ( United States, European Union, China and Japan).
As Jim Rickards pointed out in “Daily Liquidation”, the protection of fragile domestic industries with tariffs has a long history, including in the United States.
But the real action is not tariffs: the bureaucratic means of restricting trade, and the soft and hard power to secure cheap resources, while refusing to provide these resources to geopolitical opponents.
The bureaucratic means of restricting imports have been promoted as the art of Japan and other export-dependent countries: There may not be any obvious tariffs, but bureaucratic locusts bind the prosperity of imports.
Then there is currency manipulation. For example, China is linked to the US dollar. What is the “free market” price of Chinese goods in the United States?
No one knows, because the link to protect China from its own currency is too strong or too weak to benefit the export-dependent economy.
Those chattering “free trade” is nothing but a Darwinian strategy that benefits them more than anyone else.
Since China’s accession to the World Trade Organization, U.S. corporate profits have quadrupled; is this just a coincidence?
No: Global companies use labor, credit, taxation, environmental/regulatory, and currency inputs to drastically reduce costs (as well as the quality of goods sold by credit-dependent consumers), thereby increasing profits by four times in 15 years.
They do this when they throw a few “always cheap” nickels (and always lower quality) to unlucky consumers.
The neo-liberal agenda is called “free trade” because “free trade” is a cover for “free capital flows.”
Once the central bank promotes the free flow of global company funds, no domestic bidder can exceed foreign mobile capital, because the people closest to the central bank’s credit business can obtain substantially unlimited funds at near-zero interest rates – an unparalleled advantage in snapping up resources and assets.
If we ask Cui Fei, whose interests? We found that consumers obtained inferior goods and negligible discounts from “free trade”, and companies, banks, and financiers benefited from it.
Increases in income and wealth inequality have a causal relationship with globalization and the expansion of Darwin’s trade and capital flows: there are few winners and many losers.
Tariffs will not solve the larger problems of reduced employment, wage stagnation and rising income inequality.
In order to weaken these problems, we need to resolve the policies of the central bank and the central government. These policies promote financial speculation to the supremacy of the productive economy.