

The U.S. Can't Manufacture the Kindle - Cinnamon
http://blogs.harvardbusiness.org/hbr/restoring-american-competitiveness/2009/10/the-us-cant-manufacture-the-ki.html

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robotrout
Ever since before Adam Smith, this model of countries not being able to
produce everything that they require, but instead, focusing on a few things,
and trading for the rest, has been accepted as a more efficient system, where
everybody benefits from the savings these efficiencies allow.

I think this model works extremely well ... until it doesn't. Until some event
keeps trade from occurring, whether that event is a currency collapse, a
drought, or, more often, a war.

I don't know what the right answer is. We seem to be muddling along fine,
however, with the system as it is, but there's always a specter of catastrophe
hanging over our heads.

~~~
gaius
Yes, "comparative advantage" this is called. Everyone should try to do the
highest-margin thing they can, even if they are capable of doing lower-margin
things more efficiently than their competitors. The article is worrying about
downstream effects, i.e. that by giving up a low-margin business in the
present, you cut yourself off from future high-margin businesses.

~~~
robotrout
Errr, I'll give you 50% credit for pulling out the catch phrase "comparative
advantage" which indeed is used to weakly describe the concepts Mr. Smith was
outlining.

As for the article itself, as it is from harvard business school, the author
may indeed be concerned about margins. I'm more interested in the inherent
dangers of a system that makes you extremely vulnerable in bad times, and how
to balance that against the obvious advantages, in good times, of that system.

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jsz0
Economic mutually assured destruction. Asia depends on the US, the US depends
on Asia. It may not solve all our problems but it's nice to know the world
economy is so interwoven at this point that there's no incentive for any one
of the major powers to destroy each other. Not bad considering 30 years ago we
were on the brink of annihilation over ideologies. If manufacturing and trade
gaps are going to be the H-Bombs of the future we should all consider
ourselves lucky.

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jmount
The article is actually fairly careful to note the difference between
manufacturing (high value) and assembly (low value). This distinction is
usually missed when discussing trade.

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h_operator
Funny -- an article on HN yesterday
([http://blogs.telegraph.co.uk/finance/edmundconway/100002310/...](http://blogs.telegraph.co.uk/finance/edmundconway/100002310/what-
the-ipod-tells-us-about-britains-economic-future/)) tells us more about the
Kindle and Western manufacturing than an article that putatively deals with
both those subjects.

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hop
This author leaves out that the Kindle could be a loss leader for Seattle
based Amazon to sell a shit load more book downloads that cost them just a
sliver of bandwidth.

Plus, Amazon is getting a foot hold in a new industry they have created from
thin air.

Further, do you think the foreign E-ink disdlay maker is the only game in
town? A lot can change in a few years.

~~~
jacobolus
Actually, he didn't leave that out.

> _Of the total cost of $185, perhaps $40 to $50 is captured in the U.S. Is
> that a problem? After all, Amazon seems well-positioned to capture most of
> the value of the Kindle (the difference between the product's wholesale cost
> and retail price) and a healthy portion of the profits generated by sales of
> e-books to Kindle owners. In addition, the Kindle's wireless data service,
> which uses Sprint's data network, resides in the U.S._

> _So why does it matter if the Kindle can't be manufactured in the U.S.?_

And then he goes on to answer that question.

