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What the iPod Tells Us About the World Economy
Hugh Pickens writes "Edmund Conway has an interesting article in the Telegraph where he analyzes where the money goes when you buy a complex electronic device marked 'Made in China,' and why a developed economy doesn't need a trade surplus in order to survive. For his example, Conway chooses a 30GB video iPod 'manufactured' in China in 2006. Each iPod, sold in the US for $299, provides China with an export value of about $150, but as it turns out, Chinese producers really only 'earned' around $4 on each unit. 'China, you see, is really just the place where most of the other components that go inside the iPod are shipped and assembled.' Conway says that when you work out the overall US balance of payments, it shows that most of the cash for high tech inventions has flowed back to the United States as a direct result of the intellectual property companies own in their products. 'While the iPod is manufactured offshore and has a global roster of suppliers, the greatest benefits from this innovation go to Apple, an American company, with predominantly American employees and stockholders who reap the benefits,' writes Conway. 'As long as the US market remains dynamic, with innovative firms and risk-taking entrepreneurs, global innovation should continue to create value for American investors and well-paid jobs for knowledge workers. But if those companies get complacent or lose focus, there are plenty of foreign competitors ready to take their places.'"
Maybe the author of TFA could also analyze who makes th eprofits off the many counterfeit iPhones mfg'd in China:
"Illicit phones comprise a staggering 40% of Chinese firms' production, and 13% of the world's, according to iSuppli, a research firm. It reckons China will produce 145m of them this year, up by almost half since 2008. This has hit sales of legal phones."
I refuse to believe that imaginary property is an acceptable replacement for real manufacturing capacity.
And what about low technology good such as clothes, furniture, steel, glass, toys, and widgets? Where does the money flow there?
May the Maths Be with you!
TFA suggests that this means the financial hit of off-shoring manufacturing is actually small. Whether or not the article is correct on money making its way back to the US, there is an important factor. The money is making its way right back into the pockets of the company owners and rights holders. The people who would normally make their living in these manufacturing jobs are still stuffed. I don't think that any "trickle down" effect from returned profits is going to make up for that.
Aide-toi, le Ciel t'aidera - Jeanne D'Arc.
Doesn't work if you don't have the world's reserve currency.
Deleted
The differences in salary relative to cost of living ought to be taken into account. The average daily salary of a Chinese person is was around USD14.1 last year..
Secondly, it's not just about revenue but longer term industrial dependency. Were China to suddenly refuse (due to political embargo, for instance) to produce such items Apple would suffer a considerable economic loss, if only while they secured an alternative manufacturer. Chinese and Taiwanese companies are in a good position to steer the market in their favour, eventually producing (if not already) competing products for their own market - the world's biggest in many sectors - and others abroad.
"Intellectual property" is not a solid plan for balancing trade, since not all countries have the same view on patents and copyrights, and certainly not on trademarks. After all these years of people crying about "counterfeit" goods, why would someone use "intellectual property" as the justification for the current structure of the US economy?
Palm trees and 8
The mistake any article like this makes is it assumes that the people providing the cheap manufacturing labour are content to continue doing so indefinitely - even when the factory owners can easily find out precisely how much their product is making in the country it's sold in and compare it with the amount they get to see.
History has shown that this is frequently not the case - I refer you to the UK's former motor industry.
iPod is an export success, it results in a positive input into the US. So taking that as an example is not representative of the US (which imports more than it exports and has for a long time).
The real truth is that, as the owner of the US$, they simply printed the difference and to justify the growth of their money supply, they claim huge 'intangible asset' values in the companies. But it's just vapour, iPods are a real product, whereas those vapour valuations of 'goodwill & IP' are not.
The harsh reality is that the Federal Reserve refuses to let Congress audit their 'assets' backing the US$, and that tells you that there is nothing of substance holding up the dollar. As for IP rights, well there again, there are so many patents covering the same things, and so the same value is counted as 'goodwill' in the balance sheet of thousands of companies. i.e. it's just another huge fake inflated market.
Dollar is dropping, as others recognise the Bernanke game.
I think the articles authors wishes for the clock to roll back, but nobody will pay Billions for Excite.com now, once the illusion of value goes, it never comes back.
Innovation usually follows production in the long run, since the west things we can survive on IP alone we will have a bad wakeup call in about 20-30 years timeframe, no production, no invention period, the patents usually are the last to follow due to the grace period but they are slowly moving towards asia as well.
Well, that's how it starts. Some places, like Mexico seems, is happy to do just that. But other places with bit more brains, like China, builds on it to take up more and more of the whole production process.
Btw, am I saying Mexico is dumb? In a way, yes. All in all, Mexico seems a lot more of a tiered society with less a sense of national unity, and she's not alone.
Fuck systemd. Fuck Redhat. Fuck Soylent, too. Wait, scratch the last one.
No matter how much money is made in America from items assembled in China, everyone can't work at Wal-Mart and Burger King and be able to afford said items. Don't get me wrong, those are real jobs and I even worked at a Wal-Mart many years ago, but in the past, service jobs were not the base of the economy. If everybody is making minimum wage with no benefits whatsoever, who can afford services? Thus a service-based economy isn't sustainable in the long run. Yeah, we will survive and life goes on, but we shouldn't just count the beans and proclaim everything is alright. We need to take into account several things:
How citizens are treated by the governments of our trading partners, for instance.
What happens to our economy when nothing left but service jobs is another one.
When the trading partners are using the profit from us to build up armies to come back over here and kill us, should make the list as well.
Doctors destroy health, lawyers destroy justice, universities destroy knowledge, religion destroys spirituality
The challenge with this analysis is that it only focuses on a small component of the overall economy. The apple iPod is a great example of this, and areas where the US can develop and market these high tech items we can assemble them oversees as ultimately we will make the profit back here in the US. The challenge is that there are many elements of the economy that based soley on manufacturing and this is an area where China has an advantage. Also many companies that were historically american have been purchased by oversees holdings. Overall if you look at the flow of money for most parts of the US economy the money ends up in other countries. Ultimately to have a healthy economy you need both high tech and manufacturing balanced appropriately so your companies are not too dependent on other countries. This is where the US suffers the greatest
30% Troll, 50% Underrated, 10% Interesting
Score:5, Troll
Comment removed based on user account deletion
Ok if you go into best buy what high end products beside apple are made by u.s. based companies? How does this work for U.S. when you buy samsung, or sony or 99% of the non apple products?
What about non-high end items from china? How do those numbers work what patent money goes back to u.s. corps? Zero. How much in sales do those products have compared to apple products?
If there were a lot more apples then this article would have merit for trade deficit numbers but unfortunately outside of computers, almost all hardware in best buy is sold by non u.s. companies.
inside foxconn shenzhen
please restate bitrate in libraries of congress per hour.
I have doubts about the article's numbers. If that was true, how could China have a huge trade surplus? If the article was correct, all of the export gains would be spent on IP fees to non-Chinese companies, and would reduce their trade surplus. That's not what we observe.
So, while it's important to have a sound R&D and to have plenty of licenses ready to sell for lots of product, this does not replace a good manufacturing basis.
Fantasy: http://ferrisfantasy.blogspot.com/
The article is a complete piece of crap. Because it never dives INTO the money flows. It doesn't show what that 150 dollars the chinese get MEANS. For instance the idiot who wrote this never touches on the most basic point. That 150 dollars to china is a LOT more then 150 dollars to the US. The average wages are completly different, based on a quick google it seems to be about 100 dollar vs 2000 dollars. So 1 iPod sales generates enough money to pay for 1 months work in china but only a ... few days in the US.
This is to say nothing about the effect on the workforce, in China, the jobs are spread out. You both need directors to run the factories and janitors to clean the toilets. In the US, far fewer people are involved. Especially in that section of the economy were the most people fit, the blue-color laborers, the factory workers. So a few designers and Steve Jobs are swimming in it, doesn't help the millions of unemployed, doesn't breath live into ghosts towns were the only jobs are handing out unemployment stamps. And where do these people who longer can find a job get the money to buy an iPod? They don't, they buy a cheapo MP3 designed in China, build in China.
Thank you Mr Idiot from the guardian, we KNOW how the economy works, the exact same idiotic posts were made about Japan. Don't worry, Japan will only take a tiny bit of cash at the bottom, all the real money will be earned by the west. Yeah, this worked SO well, that Japan is now conveniently lumped with the west. He happily lists that core components with lots of IP come from Japan so that those pesky chinese won't make a penny of it. Eheh, so what is China to stop from doing to Japan what Japan has done to the west? If his theory about IP holds up, then those IP could never have become possible in Japan.
If the iPhone was made in the US, the US economy would be richer by 150 dollars as well.
FLAWS:
If you want to see the effect of the global economy, look around. I life in Utrecht, and that has an industrial park called "Lage weide". There is a LOT of distrubution activity, lots of shifting around of good but almost no production. One produces big metal thingies and the building looks ready to collapse and that is about it. Everything else is warehouses, with the contents, "produced in China". And warehouses are easy to automate. Hema (dutch retailer) has opened one of the most advanced warehouses in the world recently, yet fewer people working and the work there requires no skill (and therefor no pay and no security).
Look around, why do you think the economy is in the crapper? Because nothing is being produced anymore. The factory towns may not be glamorous but it is where the core of a country makes its living. Not the rich who rule the country, not the super poor, but the average worker who pays the taxes that allow the government to function, who deliver the soldiers for the army.
Empires collapsed before, the western empire will get a rude suprise sooner or later when China changes its tune. And no, I don't mean in an evil plot kinda way, I mean when China does what Japan did ages ago. Become an economic power with its own IP. Quick check, how many high-tech gadgets in your house are produced in cheap labor country Japan? PS3, Wii, Sony-Ericson phone and countless others where you might not even think they came from Japan? Ask your daddy what the China of their day was (or maybe your granddad if you aren't as old as me).
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
"....with predominantly American employees and stockholders.."
Seriously, I would say that 70-80% of the employees I have seen at various tech companies...at least on the west coast are foreign nationals.
Apple isn't exactly the one to use as an example. Obviously they make a ton becuase all of their products have ridiculous markups. They probably have the biggest profit margin out of any company selling electronic devices. If you look at a Sandisk MP3 player, I bet most of the money stays in China.
Well, I came for some insight, and instead there are eleven posts above me trashing the United States. So here's some actual thinking instead of the usual Two Minutes Hate.
China does indeed make very little from its manufacturing. The Chinese bemoan the fact that they're making so much for the world and getting so little in return. The reason is lack of brands - Chinese people just don't see brands as being important. They don't trust anything that they can't hold in their hands, and you wouldn't either if you had just emerged from fifty years of enforced poverty under a radical leftist government. Another problem is the rampant theft of IP and cutthroat domestic competition. Foreign brands have much of the high end, and Chinese companies are forced to viciously compete on price at the low end. And hey, if you do invest in R&D, Chinese IP laws are so weak that you'll get ripped off - why make money for someone else?
Suppose there was a phone that did everything the iPhone did, but didn't have the Apple logo on the outside. It wouldn't be nearly as popular, because there are plenty of people willing to pay $$$ for anything with that logo on it. Indeed, American companies come to China to make money, and make it they do. Apple is making money hand over fist with the iPhone. The Chinese get the scraps. Companies like KFC and Nike are kicking ass in China's domestic market.
The part about innovation is spot-on: the Chinese simply don't have that culture of "fixin' things" like we do. The usual attitude is to wait around for the government to do something. I've had my product copied so many times when it would have just been easier (and more educational) for the company to make its own damn product. Who knows, they might have made a better one instead of an inferior copy. But they'll never know because they just can't see past the end of their noses.
Here's an interesting link on branding if you want further reading, and here is another.
Shutting down free speech with violence isn't fighting fascism. It IS fascism!
Americans rejoice as the exploitation of cheap workers in far away oppressive countries makes filthy rich investors who happen to live closer, rather than further. The rest of the world's feelings about economic imperialism and the resentment these inequalities create are the products of Emmanuel Goldstein
that this is simply another attempt at rationalizing world government and the demise of national sovereignty. Its just trying to say that our huge deficit to other countries is okay because we get a little back from it, and its not worth demanding any sort of independence.
The author is quite blissful! He completely forget that what he is saying is true, but only half of the truth. In the end, we still need $4.00 of exports TO china to make it all balance out.
When we import any thing, some number of dollars leave this nation. If a corresponding number of exports be it in commodities such as grain or coal, or brain share such as banking services or designs (or legal fees), is not made, we end up owing the nation from which we imported the good from.
In other words, if we import $200,000,000 in a year and only export $150,000,000, we end up owing $50,000,000. Sooner or later those dollars WILL have to make it back to us, whether it is from the other nation buying buildings, gold or politicians (us: china please be kind to your people. china: mind your own business or we will collect on your debt!).
Of course the numbers I quoted are quite small compared to reality. Scale them accordingly.
-- Many men would appreciate a woman's mind more if they could fondle it
Sure you're doing the 10hrs of work each day, but I bought something way back when that makes the fruit of your labour belong to me. Isn't laissez-faire capitalism grand?
To me the whole problem is the retail model; towit how about that $199 to $299 markup
to have these darned things sitting on a shelf? It would be so much more efficient
to cut out the middle men and supply iPOD's on demand...the fact is the blue collar
tweekers got completely screwed by THE MAN. Their jobs were off-shored in favor
of store clerks. Also this article doesn't focus on things like brooms and clothing and
such. No such profits find their way back here due to intellectual property windfall.
The fact is the jobs to make this things are gone with the wind and we let it happen
because we are collectively too greedy to care.
537
Actually, balance of trade calculations have historically ignored payments for intellectual property and services and have only counted raw materials and manufactured goods. This has been pointed out numerous times in the past as people bemoan the balance of trade deficit the the U.S. historically runs. The so called "U.S. balance of trade deficit" really isn't as bad as or doesn't even exist due to all if the money that flows into the U.S. due to IP and services.
Note: this post is based on something I remember from several years ago so it could have changed and I didn't hear about it but I don't think it has. I'd be quite happy if someone were to post a refutation with references since I feel that a number of people use the so-called "balance of trade deficit" for political purposes when, to a large extent, such a deficit only exists in the trade of tangible goods.
Cheers,
Dave
They that can give up essential liberty to obtain a little temporary safety deserve neither safety nor liberty.
Ben
It does not, however, get into the U.S. economy at large. There are the local retail sales people and the like, but the big money goes into the people with big pockets and pretty much stays there. One only has to look at the current figures for distribution of wealth to show that there is nearly no middle class left in the U.S. Further, all the money is being made through imaginary property ownership. Some say the roman empire fell because their economy shifted to an economy based economy... the same with the british empire. The global empire is in trouble for similar reasons.
We need our manufacturing back. We need our agriculture back in the hands of individual farmers. Some things are just better when people are working.
While Chinese producers may only have made $4 net profit (at least, according to the figures of some right wing reporter, from one of the UK's most ideologically right wing 'papers'), there was still a significant net capital outflow from the US economy in exhange for material goods.
Remember that this profit still exists after paying workers wages to make these goods, which still has far more significant benefits for the economic security of a country that 'net profit' to one company.
The Right Wing nuts always choose ignore this fact, because they are predominately the rich individuals who have some stakeholding in the profits of corporations, but for the rest of us, a huge trade deficit is a reflection of an economy that is failing for the vast majority of the general population, as jobs are offshored, and real world wages decline.
'Intellectual Property' huckersterism may look like it offers good returns currently, but if you look at the actual components in the iPhone, many were not actually designed in the West, and China is most certainly developing an indigenous design capability that has already surpassed that is the United States, and UK in many areas. This model will also fail for the rich, ultimately.
Manufacturing has always had small margins, particularly when run domestically - but that doesn't mean that we shouldn't manufacture domestically. In fact, to do so is a matter of national economic security.
It is precisely this kind of Right Wing extremist nonsense that infuriates me, and insults my intelligence. The Telegraph truly is voice of Right Wing greed (and of course, stupidity - its readers).
China occasionally moves the peg as Chinese industry becomes overwhelmed with export demand.
That is not good enough.
If the Yahn floats market forces fix much of this mess over the next 20 years.
If the Yahn remains pegged the dollar will eventually crash all at once.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
so i read many of the comments and thought most were unexpectly fine. so i read the TFA and many of the comments and many of the comments were fine. so i will try to ask a relevant scientific question.
What is wealth?
A good answer tends to explain much, but i have never gotten a response in previous attempts. I suspect it makes people uncomfortable. Yet many of the comments here touch on the question. even TFA touches.
TFA has a nice pie chart with the heading "Value captured by country for $190 of captured value for $299 iPod sold in the U.S."
I am not an economist, can someone explain to me what "captured value" means and what happened to the $109 not mentioned on the pie chart? Where did that go? If China got it, then its more than the $4 mentioned in the article.
1. Make claim that defies common sense and knowledge (but could be correct, common sense and common knowledge are not infalliable)
2. Back it up with mysterious pie chart.
3. ????
4. Profit?
So, the premise is that patent trolls are getting rich while the rest of us are out of work. Isn't that what he said?
No a developed country can't run a trade deficit forever - thus it does in fact need a trade surplus (well dead even is fine too) to survive.
The US gets away with it simply because the US dollar is used as the reserve currency and trade currency for most commodities. Other nations get away with it due to China's games with the US dollar knocking on to their currencies.
What should happen is that the relative value of the currency of the country running a deficit will fall until it is no longer running a deficit. It's simple mathematics.
The rest of the world keeps printing money and buying US treasuries to stop this inevitable re-balancing, but it will happen at some point - it gets more and more unstable the longer the current situation is propped up. Of course humans can keep unstable situation balancing for much much longer than it seems possible (witness US real estate prices - a bubble that "should" have popped in 2003 but lasted much longer, and staill hasn't fully deflated)...
who reap the benefits"
Stockholders mostly.
To bad American employees don't benefit from having a job manufacturing iPods, but you can't compete against 14ct/hr labor - which is in part a result of lobbying by big US corporations.
Their currency is called the Yuan.
We hope your rules and wisdom choke you / Now we are one in everlasting peace
I think this guy is missing the obvious. Who is guying the Ipods....Americans. That means every time apple sells an Ipod there is a net flow of $4 to china. I don't see the Chinese buying products manufactured here.
As usual, the writer misses one critical component; whether or not the bulk of the funds return to the USA is irrelevant, there needs to be INCENTIVE for the US based firm to hire US workers. If you can design it here, build it there cheaply, and simply pocket the profits, why hire anyone else in the US? Jobs isn't going to wake up one day and say, "hey, I got all this extra dough laying around. Maybe I'll hire on more wokrers!" It doesn't work that way. He has to NEED to hire more workers. And if he hires more (hypothetically speaking) he may decide to hire them overseas rather than in the US.
The lack of basic logical thinking is staggering sometimes!!!!
Yes it is a very traditional conservative paper, but it is well known for its high standards of journalism. Simply put if you grow potatoes in Idaho and buy iPods from China you grew iPods in Idaho. Let me dismiss the majority off negative comments on this with the observation that they demonstrate a fair lack of understanding here of either Marxist, Capitalist, or Modern economics. Not that this is terribly unusual since almost everyone thinks that they understand micro or macroeconomics. There are more armchair economists than generals.
Posts, MyBio or Sig, may contain satire, sarcasm, bolded nouns be sardonic or even witty & be Church of SD
The iPhone is the quintessential example of a product in which marketing, design and form are chosen over function. (not that it's a bad product, but it's by far not the most feature-rich nor the best hardware)... so of course in that specific case most of the value-added is American.
Most products do not work this way. And the ones that do are not that big, either. It would have been interesting to see a study of all phones, not just the relatively marginal iPhone, or things other than phones, ie toys, electronics, white goods...
While he's at it, why didn't the author do that study on Windows or MacOS, which I'm sure are manufactured for $2 in China, and sell for $80-$250 ?
Design, advertising, and goodwill are much more fungible than manufacturing capacity and know-how. A handful of counter-examples when those 3 items are maximized cannot be generalized, nor extrapolated over time. Who took over IBM's PCs again ? Are you that sure that, in the long run, the companies that actually manufacture all those things will not be best placed to design - market - sell them ? Give it time. A few years ago, it was electronics, then computers... phones and media-players will follow, and given the sad state of western OSes, software, and services, there's a huge market waiting to be taken over.
The Cloud - because you don't care if your apps and data are up in the air.
The article conveniently leaves out that by giving control of manufacturing to China, the US loses out in the long run. American jobs go overseas and our technical prowess diminishes. Strong economies produce, export, and sell. Service economies are weak and founded on shale. We have seen the effects of a service-based economy in two recessions: dot-com bomb and the housing bust. Manufacturing economies breed technological innovation, encourage higher education, and engage in heavy research and development. Not to mention, a manufacturing economy gives way to strong national security. Being dependent upon China and others leaves the US in a weaker position.
> The reason is lack of brands - Chinese people just don't see brands as being important. They don't trust anything that they can't hold in their hands, and you wouldn't either if you had just emerged from fifty years of enforced poverty under a radical leftist government. Another problem is the rampant theft of IP and cutthroat domestic competition. Foreign brands have much of the high end, and Chinese companies are forced to viciously compete on price at the low end. And hey, if you do invest in R&D, Chinese IP laws are so weak that you'll get ripped off - why make money for someone else?
Somehow, this doesn't all add up. If brands are unimportant, why are western brands seen as "high end"? If IP is the important part, and they can just rip it off, why do they only make inferior copies? It's not like they can only rip off Chinese companies. And there are plenty of western brands that are manufactured in China, so it's not like they don't know how.
Honestly, I think they make the crap products because they're trying to make things cheaper and they have few correctly enforced regulations, even safety regulations (see also: Sanlu milk powder), so they're always trying to take some shortcut that makes the product unreliable or worse.
But it exposes one of the uglier sides of the zero-sum economic thinking that pervades the left: one party's gain is another's loss, so we should keep other countries poor so they can't take our wealth.
Ha, yes--- it's the left that's pissing their pants about the "NAFTA superhighway".
I know the moderators have a quota of stupid conservative rants to +5 up, but sheesh, guys, try harder.
1. Off-shore jobs to China and India.
...
...
2. Fire workers and increase your own salary.
3. Bail out from the company before it goes bankrupt because its products are not competitive anymore.
4. Unemployed, or lower salaried workers lose buying power.
5. State props up economy by printing loads of money, injecting it into the economy, increasing access to loans.
6. Banks go bankrupt.
7. State props up economy by printing loads of money, injecting it into the economy.
8. Foreign investors buy liquidated assets for a song, consolidate by moving remaining manufacturing abroad.
9. Massive inflation.
10. People lose their savings, investors flee from the country, foreign debt goes down.
11. No foreign nation wants to lend money to you anymore because you are a poor investment.
Welcome to South^H^H^H^H^H America!
then explain the significance of this pegging of the yahn, it must be covering something up.
What more do I need to say?
I guess I could wonder how Apple's highly rewarded executives getting rich from all of this is benefiting the unemployed. I think I know the answer.
And the rich get richer, and slave-driving gets different names - currently: outsourcing.
You are solely responsible if you are one.
Something stinks in the state of World.
Doesn't anyone else wonder why the profits on the balance sheets show a credit in China for $150 when only $4 actually goes to the manufacturers? If the balance of trades show $150 going to China (but secretly transferred to profits in the US)... there must be some fancy financial bookwork done, possibly for tax purposes.
How? International banking in places like the British Virgin Islands where most of China FDI flows. Take a pretend loss in China to balance out the books back home. Big multinational companies are good at hiding the flow of money... it's no wonder the money doesn't show up as a credit in the US. So where does the missing money on the balance sheets go and how is it transferred into the US?
What do you mean? The devaluation of the dollar has meant a devaluation of debt on a grand scale. I call that a reasonably shrewd move.
I refuse to believe that imaginary property is an acceptable replacement for real manufacturing capacity.
It sounds like you find the concept immoral in some way, rather than impossible.
I don't find intellectual property so much immoral as it holds back progress. Even the father of the Free Market Adam Smith didn't like patents. He called them a necessary evil. That may of been true in his tyme but I don't believe is still true. Take the case with the iPhone. Apple probably has an exclusive contract with Foxconn and other manufactures to assemble iPhones and other contractors to manufacture the parts. If someone else has those parts somewhere along the lines someone is violating one or more contracts. And the Chinese government cares a lot about that.
As for progress, I believe today patents hold back progress. If someone makes an improvement in an item that is protected by a patent yet they don't hold the patent themself they can not make and market it. Without that patent though in order to continue making money from an invention a business has to provide something others are willing to pay for. A better quality product can be offered, the product can be sold at a lower price, and or improvements (ie progress) need to be made.
Now there are cases where I find IP immoral such as with biopiracy, for instance company X gets a patent for some rice Y or another one gets a patent on the use of a plant as a drug or pesticide even though others have used it in those ways for centuries.
Falcon
Should there be a Law?
The author's primary conclusion is that it isn't necessarily a problem if a developed country runs a large trade deficit. His reasoning is that when a Chinese-made iPod sells in the US for $150, that shows up in the US trade numbers as a $150 deficit to China, but only about $4 of that actually goes to China because they had to import parts and tech worth $146 to make that iPod and the bulk of that $146 eventually flows back to the US.
The problem with this analysis is that when that $146 flows back to the US, it will show up as a trade surplus leaving the US with a net deficit of only $4. Depending upon the routes that the various goods, services and finances take, the net deficit with China may indeed remain $150, but the overall US trade deficit will only have increased by $4. In fact the CRITO quotes that the author included in his article make exactly that point!
The author tries to explain this away by saying that this balancing doesn't happen due to the way in which trade balances are calculated, but doesn't give any details. While there are some peculiarities in trade calculations which lead to phantom imbalances, their effects are marginal in comparison to the US's staggering $550bn trade deficit.
Despite his flawed reasoning, the author's overall conclusion is still correct. But what matters is how the deficit is being used. If the deficit is being used primarily for productive investment, things like power stations, communications systems, plant equipment and so forth, which will boost future productivity, then it's not a problem. If it's being used for current consumption, such as food, clothing and entertainment, then it means that the country is living beyond its means and will eventually have to reign in spending.
In the case of the US, the picture is mixed. Over half of the deficit is used for productive investment, but there's still a big chunk, even before the recent stimulus, which represents the American consumer spending like a drunken sailor on shore leave. The US is currently living beyond its means, but not nearly so much so as the alarmists who point at raw trade figures would have us believe.
-deane
Not that there is anything wrong with that, but the bottom line is ... the bottom line (or in this case, it's still dog shit).
It doesn't matter how much you're making, but how much you didn't piss away at the end of the month.
On that account, the "developed" countries are failing huge.
It's not rocket science people.
- aren't we here at slashdot opposed to some/most copyrights/patents...
Some are, some aren't. Some believe in copyrights but not patents, some believe in both some in neither. Myself, I still believe in copyrights but not patents. I however would change the duration of copyrights. I'd have copyright last not more than 5 or 7 years. From the publication date.
Falcon
Should there be a Law?
Which article? Neither one is about what you say. The first one is about "Why intellectual property is a vital trade for the English-speaking world" and the second "What the iPod tells us about Britain's economic future".
Falcon
Should there be a Law?
It was just as pointless as this rant. Like it this one does not provide any facts. You want facts, the protectionist laws you'd advocate like the Smoot-Hawley Tariff Act lead to a bad economy. When one nation enacts protectionist laws that leads other to enact them too which shuts down the economy. In the case of the Smoot-Hawley Tariff Act it made the Great Depression worse than it would have been otherwise and led to World War II.
If you're so concerned about the poor then you should be trying to increase trade not reduce it. You should also support cuts in taxes, the more money people can keep the more they are likely to buy and invest thus creating jobs.
Falcon
Should there be a Law?
Well because it does so at the expense of our own economy. Most of this money coming back to the US isn't going to the working and lower classes - its going to the upper class (the owners) who own more wealth than anyone at any time in history - again at the expense of our economy.
It wouldn't harm the poor more if they had to pay more? Lower prices make thing more affordable. Of course if you're poor you shouldn't be wasting money on an iPhone when cheap cell phones are available. Where I see a problem is where jobs are offshore or outsourced and those losing their jobs are close to retirement. Just as soon as they can be trained they're old enough to retire.
Falcon
Should there be a Law?
music, movies, microcode, and high-speed pizza delivery"
Where are we getting these people who BUY music, movies, and microcode in China, Russia, Taiwan again?
Seems kinda weak to base your entire economy on IP, when its imaginary.
Common Sense
The U.S. should stop using its incredibly expensive Army, Navy, and Air Force to provide safe Air, Land, and Sea Ways for international trade. Instead, we should begin taking vessels at Sea and taking any and all manufactured goods for ouselves and stop paying for them. Besides, why should we give a rats ass about some other countries imaginary property?
Over-the-top Response Guy! Giving "Over-the-Top Responses" since 1970.
Wealth is access to/plenty of/control of: Water, Food, Shelter, Air. In other words, those things that permit members of our species to survive and procreate. Everything else is window dressing and is nothing more than a display to prove that you have wealth so as to make oneself more attractive to a mate.
Over-the-top Response Guy! Giving "Over-the-Top Responses" since 1970.
1. Eye contact and conversation with people nearby are becoming too frightening for people.
2. Most of the music being produced formally is crap.
3. The Musical Idolatry Complex is no longer capable of concealing Point 2.
4. Cocaine use is dropping because of Point 3.
5. Wall Street has not been affected by Point 4.
6. DRM is dead.
7. Most people think "more bass" is a substitute for a crappy bitrate, but Point 2 makes this fact moot.
8. "Zune" is a crappy name for a product.
9. Consumers and sheep are not disturbed by the suffering of others.
10. Point 9 is as true for international relations and the slaughterhouse as it is for my ears on the bus in the morning.
Rich And Stupid is not so bad as Working For Rich And Stupid.
When the price of food doubles farming becomes more profitable so more people will farm. Since at least 1990 in the US people more people are leaving farms than moving to farms almost every year despite growth in the population. Increases in productivity is partially responsible but rising production costs and declining if not disappearing profits is also responsible.
Falcon
Should there be a Law?
"....with predominantly American employees and stockholders.."
Seriously, I would say that 70-80% of the employees I have seen at various tech companies...at least on the west coast are foreign nationals.
And you know this how? Just because someone has brown skin and speaks with an accent does not necessarily make them a "foreign national." Geez.
You say being dependent upon China and others leaves the US in a weaker position ... but a position for what?
What circumstances are more likely to result in two regions going to war?
1. Each region has its own deliberately isolated manufacturing and trade
2. Each region has its own imbalance of manufacturing and trade, absorbed by the other
Case 1 encourages each region to view the other as a threat. That view will encourage isolation of their own culture, language, and law just as they do for trade.
Case 2 encourages each region to interconnect and communicate. In order to do business, they will need to understand one another's culture, language, and law.
Which case is the better deterrent of war?
In the 80's, Russia and the US were so isolated from each other that they stockpiled vast quantities of nuclear arms, in order to fabricate what is essentially the same circumstance: If one dies, so does the other.
Consider what would happen if we pulled the plug on ALL trade with China.
Kaboom!!
Also, if you think a glut of low-wage factory jobs would have somehow averted the "dot-com bomb" or the "housing bust", you'd better explain how. From where I stand, both of those occurred because a gigantic swath of the country was preyed upon by a deregulated or poorly regulated entity - bank loan officers on one hand, and stock shills on the other - and was convinced that the path to riches was paved in debt and speculation. (That, and, housing construction - a MANUFACTURING JOB - boomed to the point where it over-produced.) How would a bunch of local jobs pounding rivets into a plastic truck, or reloading huge reels of surface-mount resistors, have averted either of those disasters?
this article was written to make Apple look good. Bad Apple.
What the linked story really demonstrates is you can work product placement for Apple gear into nearly any article whatsoever, not just the reviews for competing IT products, non-competing IT products and "competing if you squint hard enough and long enough" products.
The news media's always been fairly open to writing positive copy for their advertisers, but, in the current economic climate of falling sales and falling advertising there must be a powerful temptation to go that little bit too far.
Do you see that awful end-game getting closer, or receding?
Think of how many easy low-tech jobs we could create, if we smashed every computer in the world and did ALL calculations by hand. Not to mention the fantastic manufacturing boom in paper, pencils, erasers, and desk chairs. The number of jobs we could create would be astounding, and even a person with an IQ of 70 could be quite useful, if we gave them all of the simplest arithmetic problems.
The number of middle-managers necessary for this would be incredible. More jobs! Jobs for everyone!
- - -
Clearly, keeping everyone "useful" is putting the cart before the horse. It is a mode of thinking which judges the quality of civilization by a single number on a piece of paper: The taxable employment rate. I submit to you that a better civilization would be one where less than HALF the populace is employed at any one time. Then, in the average two-adult household, one of the adults could stay home and raise the children .
I know, it sounds like an impossible dream, doesn't it.
Actually the US is one of the largest, if not the largest, food exporter in the world.
Falcon
Should there be a Law?
Comment removed based on user account deletion
This is an argument made several years ago by Gave-Kal (Hong Kong investment firm) in a book they produced. They posit the importance of what they term "platform companies" like Cisco (Apple would qualify as well) that set industry standards and reap the vast preponderance of profits available within any product. They also note that this is why people want to invest in the US equity market -- because through exposure to the most dynamic economy available they are able to realize greater relative returns than available in other equity investments in other economies.
Applied to China I bet it will be bloody. Then again the unification of China as is it today was bloody too. Even at it's founding in 1912 the Republic of China wasn't as big as China is today. Mao Zedong had his army invade other sovereign nations. And though it's rarely heard about China has what it calls "terrorists". If I recall right one of the detainees the US has or had in Gitmo is from China.
Falcon
Should there be a Law?
And the Great Depression had nothing to do with it? HAHA!!! Who's making things up?
Falcon
Should there be a Law?
You're an idiot.
Learn to economics and get off your nationalistic high horse.
The big problem is communications. If the company building your product is far away, they are unlikely to contact you when they have problems. Likewise it's impossible for you to find out if something goes wrong. For example we once outsourced a certain RF-cable to china. The result was that they didn't connect the shield at all.
Apple must have simmilar problems, though on a different scale. Since they outsourced their manufacturing the quality went down considerably.
Outsourcing can be made to work for low complexity products like cars. For example BMW, a german car manufacturer outsourced part of it's production to a low-wage north american country just north of mexico. It seems to work.
However countries like china will be able to improve their quality by getting more and more engineers. This however will also mean that they will be less dependent on foreign intellectual property. And chineese manufacturers seem to get a lot more right. Just look at DVD-Players. You used to be happy when you could play VCDs on them. Since the Chineese took over every cheap player can play just anything the hardware can decode. The Chineese just don't build as many stupid limits into their systems.
A lot has been made in the comments here about how trade and brands are illusions.
Well, our modern, global economy lives on a broad number of highly important illusions. Some of the most important are that paper currency has value, and that brands are worthwhile as a means of product differentiation.
If you take one of these core illusions away - such as paper money valuation - you will quickly see the global economy shatter.
But then ask yourself: "What do I do if the cash I have is now, or will soon be, worthless as a trade instrument"?
Do you buy gold and bury it in the backyard? That assumes someone else wants that stuff, which will likely be wrong.
Do you buy livestock/seeds and become an urban farmer? That assumes you know how to grow food crops and preserve their nutrient value; as well as raise, slaughter and butcher livestock and then preserve the result. Not to mention that local laws would allow it.
So it seems you have two choices:
1. Go on with the illusions our modern world has developed, understanding that if you elect people with radical agendas, that the whole thing will behave in an unstable fashion for a while. (whether politically right or left)
2. Learn the methods of food generation and preservation your great-grandparents used, move somewhere out-of-the-way (lots of space and no urban laws against farming) with a good growing season, and begin farming/preserving against the death of illusions.
Before you sound off, consider which one lets you continue to post on Slashdot on your Dell computer, in your Ecko gear, while listening to the music you downloaded from iTunes, in between rounds of Valve's Left4Dead2 on your Microsoft Xbox 360, while being 30lbs overweight and unable to lift heavy loads or put in a full day of honest, sweat-generating manual labor?
Oh, and if you choose option 2 - practice your marksmanship and stock ammo, because if the End of Illusions comes, lots of hungry people will come looking for what you've stocked up. They will not be friendly and rational. And you might want to get a few wives too, just to ensure your genetic code lives on to future generations. Infant mortality is a bitch outside the core of civilization.
FYI: People of this persuasion tend to like Montana and Colorado, and fear black helicopters and the Federal Government. (Just setting you up for the local culture)
The fact remains that Apple will have to continue innovating to retain their market share.
That is exactly how things should be. That's what patents were originally for, to encourage progress, but now they stifle progress.
I can't imagine many iPhones being sold 12 months from now.
While I like and have owned Macs, I'm typing this on one, I can't see buying an iPhone. I'm not even sure I'd get an iPod unless I was given the money.
Falcon
Should there be a Law?
You can run a deficit forever if you are creating wealth internally forever. I won't claim that the US has a sustainable trade deficit, but the US is creating and expanding businesses. That offsets a lot of the wealth loss through trade deficits.
Invest in what?
Thats the problem. All the companies in the world have unused capacity sitting as the rich keep investing hoping the poor and unemployed start buying their products. As long as people don't buy products you have a deficit.
http://saveie6.com/
"That. Plus "intellectual property" is a very vague concept:"
Only to Slashdotters
No way! There is such a thing as a value-added chain and the ones who control how and where it lies make the most money out of a particular one? *GASP*!
What they did _not_ see is that the Chinese start to build their own stuff. And as you can see with South Korea, Japan and Taiwan, that path lead to total and utter economic destruction of those countries. Oh, wait...
It's easy: You rip off a country as cheap labour, but as you are required to give them more and more expertise as their capacity for labour increases, you actually boot-strap their economy with your own.
I am not saying if this is a bad or a good thing, just that it's painfully obvious. And history proves that again and again.
"You obviously haven't noticed the large numbers of people arguing for copyright and against piracy when it comes up here. "
You obviously haven't been paying attention for the last eight years to what gets modded up or down. Of course any internet talk about abolishing IP or Microsoft is effectively just a lot of hot air when it comes to actual result, but that's not what complaints are about.
Internal wealth creation doesn't make a difference. If you run a trade deficit then foreign entities are receiving more of your currency than they are spending on your stuff.
Foreign entities are not just going to sit on the paper forever, at some point they actually want to be paid for their work and will redeem the currency for stuff.
That redeeming causes removes the deficit. Either you had that amazing internal wealth creation you weren't exporting and you start exporting - you now aren't running a deficit due to those exports. Or all that money bids up the price of your stuff by and the value of your currency plummets - you now aren't running a deficit due to the currency revaluation.
The US dollar being the reserve/trade currency means that China (for example) has been able to export to the US, take the US dollars and then buy oil/etc with them. Which is the main reason this seems to have been sustainable.
Combined with currency manipulation - China printing yuans with which is buy up dollars (and just sit on them) that would otherwise cause the currency revaluation above. China has motives for that, but the end game involves them stopping.
And I disagree that the US is expanding. Remove consumption from the GDP (it isn't production, you certainly can't sell it to others), is the US still growing economy?
Internal wealth creation doesn't make a difference. If you run a trade deficit then foreign entities are receiving more of your currency than they are spending on your stuff.
And why is my argument wrong?
Now that I think of it, the US also has inflation - just print money. The main agents which are maintaining the trade deficit (the EU, China, and Japan) are probably destroying a lot of wealth that they receive via trade deficits.
Foreign entities are not just going to sit on the paper forever, at some point they actually want to be paid for their work and will redeem the currency for stuff.
That redeeming causes removes the deficit. Either you had that amazing internal wealth creation you weren't exporting and you start exporting - you now aren't running a deficit due to those exports. Or all that money bids up the price of your stuff by and the value of your currency plummets - you now aren't running a deficit due to the currency revaluation.
Not if it's done in the future when there is a larger trade deficit to mask it. There's a great deal of investment in US government securities (perhaps I should use scare quotes with "investments") and corporate bonds. That addresses the technical issue of currency imbalance.
The US dollar being the reserve/trade currency means that China (for example) has been able to export to the US, take the US dollars and then buy oil/etc with them. Which is the main reason this seems to have been sustainable.
Not likely, there's too much money for that. They buy US bonds and loans with them.
Combined with currency manipulation - China printing yuans with which is buy up dollars (and just sit on them) that would otherwise cause the currency revaluation above. China has motives for that, but the end game involves them stopping.
Maybe China means to do that, maybe not. They'll destroy a lot of their wealth doing that as well as most of their export economy. There isn't a subtle way to get rid of what they have. It's not an obvious move to me even for a soulless giant bent on becoming first place economically.
And I disagree that the US is expanding. Remove consumption from the GDP (it isn't production, you certainly can't sell it to others), is the US still growing economy?
At a glance, I don't know. The GDP figures are a mess.
Face it, you are a nation of consumers with no real manufacturing left.
The US still has manufacturing though much of it is hidden and you have to look for it. Check out Etsy, the place to buy and sell hand made things. Makezine and Craftzine are American zines for American makers and crafters. The US still has spinners who spin and create their own threads. Some of whom will go on to make their own cloth, others sell their threads to those who will make cloth. Then they will make or sell to those who make clothing. Only a few blocks from where I am typing this there's a workshop for hand bound books. Actually Minneapolis has a few places that custom bind books.
And this isn't particularly a dig at the US ... I think all Western economies will go the same way, as the governments and people all have the same short-sighted attitude. Pretty soon the only things left will be service jobs and tech jobs in the West, all manufacturing and production will be done in China and the surrounding ASEAN nations.
Ah but those other nations will become like the West too. The beauty of freer markets is that they improve everyone's lives who are allowed to participate. Your sweatshop is their employees' good life. Even Chinese want their iPhones.
Falcon
Should there be a Law?
Internal wealth creation doesn't make a difference. If you run a trade deficit then foreign entities are receiving more of your currency than they are spending on your stuff.
And why is my argument wrong?
Now that I think of it, the US also has inflation - just print money. The main agents which are maintaining the trade deficit (the EU, China, and Japan) are probably destroying a lot of wealth that they receive via trade deficits.
Because inflation results in the currency devaluing, if it isn't matched by inflation in other countries.
Trade deficits will be automatically corrected by currency exchange rate moves, if you are importing more than you export then the supply of your currency exceeds the demand and it goes down in value.
It has nothing to do with whether deficits are "bad" - they aren't. It's whether a nation can run a trade deficit forever.
You can run a deficit for a long time, but at some point people want to paid for their work.
Foreign entities are not just going to sit on the paper forever, at some point they actually want to be paid for their work and will redeem the currency for stuff.
That redeeming causes removes the deficit. Either you had that amazing internal wealth creation you weren't exporting and you start exporting - you now aren't running a deficit due to those exports. Or all that money bids up the price of your stuff by and the value of your currency plummets - you now aren't running a deficit due to the currency revaluation.
Not if it's done in the future when there is a larger trade deficit to mask it. There's a great deal of investment in US government securities (perhaps I should use scare quotes with "investments") and corporate bonds. That addresses the technical issue of currency imbalance.
Those things have interest payments, so either foreigners end up owning the entire US or they want to convert some of the returns from US dollars into stuff. Selling those dollars then puts more downward pressure on the currency and all we've done is delay and magnify.
The US dollar being the reserve/trade currency means that China (for example) has been able to export to the US, take the US dollars and then buy oil/etc with them. Which is the main reason this seems to have been sustainable.
Not likely, there's too much money for that. They buy US bonds and loans with them.
yes, that's sitting on them which I mentioned as the reason the US is able to run a deficit for much much longer than it should have been able to.
Combined with currency manipulation - China printing yuans with which is buy up dollars (and just sit on them) that would otherwise cause the currency revaluation above. China has motives for that, but the end game involves them stopping.
Maybe China means to do that, maybe not. They'll destroy a lot of their wealth doing that as well as most of their export economy. There isn't a subtle way to get rid of what they have. It's not an obvious move to me even for a soulless giant bent on becoming first place economically.
No they won't. They'll mark to market and lose a lot of paper wealth. But it's not real to start with so they haven't lot anything.
In fact they'll see an economic boom the likes of which we last saw when the US did effectivley the same thing at the end of WW2 (the US stopped exporting its production to the rest of the world in exchange for nothing - it was building bombs, tanks, bullets, guns, etc, etc during the war and using them up - and turned that production into domestic manufacturing).
Or they could maintain the current situation and remove the US from the current loop of:
1. Chinese capitalist invests capital and pays wages (in yuan) to workers to make stuff.
2. US importer buys stuff from Chinese factory which results i
And what you miss is the US is the third largest exporter in the world. While the US imports more it exports a lot too. Here's what the US exports to China.
Falcon
Should there be a Law?
What would we need to do to have a pure free market as you suggest in this country?
I wouldn't, don't, say have a pure free market but make it freer than it is. If a business employer offers employees health insurance the business will get a tax break. However if I, you, or anyone else goes and buy their own health insurance then we do not get the same tax break. The business has their taxes cut but we have to pay just as much in taxes, it obviously better for the employer. What I want is a level playing field, businesses get tax cuts so should individuals. I also want to be able to cross state lines to buy health insurance, that is not possible now because each state regulates insurance. If an insurance company in Florida offers lower priced insurance there than in my state I should be able to buy from the Florida company.
I's also like to be able to open a walk-in clinic in my neighborhood. Before she died Mother Teresa tried to open a homeless shelter in NYC but the city demanded one requirement after another until she dropped her plan. The city cared more about it's rules than about the homeless. Things like this and zoning laws make it hard to open low cost walk-in clinics in areas where they can help people.
Get rid of medicare and medicaid. Aside from those programs, pretty much we have market driven health insurance and health care today
See above, there isn't much market driven health care. As for Medicare, which I am on, and Medicaid I say get rid of them. What I would do instead is have health insurance policy issuers pay into a pool which would then provide insurance for those who can not get insurance, either because no one will sell them insurance or because they can not afford it. I'd also require insurance to accept preexisting medical conditions. Now so there isn't a misunderstanding, I would not require insurance to pay for everything, for instance if someone without insurance breaks an arm then applies for insurance, it would not have to cover the broken arm. However if a diabetic gets a new policy, after say a year it would have to cover diabetes. As I said above I get Medicare. I get it because I am disabled, now if I were to get a private health insurance after a year it would cover my disability.
One last thing, I'd have all medical expenses tax deductible. That is insurance, treatments, and medications.
What I laid out isn't a compleatly free market but it's freer than the market is now.
Falcon
Should there be a Law?
Because inflation results in the currency devaluing, if it isn't matched by inflation in other countries.
Well there you go. It's being matched. That can go on forever, if the participants choose to.
No they won't. They'll mark to market and lose a lot of paper wealth. But it's not real to start with so they haven't lot anything.
In other words, they're destroying real wealth now in order to lose paper wealth later? Sounds to me like the problem is that while China is giving the US rope to hang itself, China might hang itself first with that rope.
In fact they'll see an economic boom the likes of which we last saw when the US did effectivley the same thing at the end of WW2 (the US stopped exporting its production to the rest of the world in exchange for nothing - it was building bombs, tanks, bullets, guns, etc, etc during the war and using them up - and turned that production into domestic manufacturing).
They're already seeing it and have been seeing it since around 1980. So has a bunch of other countries that try the same trick, particularly Japan and South Korea. The problem is transitioning from an economy that is highly dependent on exports to one that isn't. China isn't trying to do so. Maybe they will down the road, but they'll need to stop inflating their currency first.
I am opposed to copyrights that last a century. I am opposed to patents on natural phenomena or obvious combinations of existing technology. I am opposed to laws that abolish fair use of copyrighted material.
But I am very much in favor of intellectual property laws that promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.
They're already seeing it and have been seeing it since around 1980. So has a bunch of other countries that try the same trick, particularly Japan and South Korea. The problem is transitioning from an economy that is highly dependent on exports to one that isn't. China isn't trying to do so. Maybe they will down the road, but they'll need to stop inflating their currency first.
If you think China isn't trying to do so you haven't been following them very closely.
China will do just fine when the US falls off a cliff. Of course just fine means a sharp recession followed by recovery, not "oh look nothing happened".
China will do just fine when the US falls off a cliff. Of course just fine means a sharp recession followed by recovery, not "oh look nothing happened".
That's probably true. Still it's a lot of wealth to discard in the meantime. Remember they're buying US bonds and you're claiming those bonds will be worthless.
Yes they are. And yes I am.
It does not end well.
But I think China will come out of it better off than the US comes out of it. Neither place will call it a good time for the duration though.
China, is so dependent on the US debt they hold, that they have no choice but to keep supplying the US with credit.
Now I consider that as totally different. What you said before was that the US was China's only customer when in fact it is not. Nor is China the US's only lender. India also owns a chunk of US debt. Both China and India compeat with each other to lend money to other nations as well. Both Chinese and Indian businessmen travel the world looking for places to invest money.
As for China being dependent on the US, because China has other customers they are not dependent on the US. Sure, if the US economy crashed China would suffer but they'd ride it out better than the US would. China's own domestic consumerism is growing.
Falcon
Should there be a Law?
I'm curious to know which category you would file patents in. Adam Smith dodged the question but you are still alive and so you can answer it. Tell us.
Me, I'd abolish patents. Here I'm arguing against software patents as I am here. Here with inventions altogether I argue inventors have the First mover advantage. I've argued that if patents are issued then their monopoly term should be shortened as well.
If I had my way patents would be abolished.
Falcon
Should there be a Law?