Menus Subscribe Search

Burgh Diaspora

foxconn-research

The Tsinghua-Foxconn Nanotechnology Research Center in Beijing, China. (Photo: chinahbzyg/Shutterstock)

The International Trade of Talent

• March 27, 2014 • 10:25 AM

The Tsinghua-Foxconn Nanotechnology Research Center in Beijing, China. (Photo: chinahbzyg/Shutterstock)

Just because a net migration number is negative doesn’t mean there is brain drain. A shrinking population doesn’t always indicate a dying place.

I’m done comparing talent to the commodity of oil. I’ve used another metaphor for talent migration: international trade. However, not everyone agrees that international trade is not a zero-sum game. Thus, negative net migration is brain drain. For the sake of argument, I’ll concede the point. When a trade deficit is actually a trade surplus:

If trade numbers more accurately accounted for how products are made, it is possible that the United States would not have any trade deficit at all with China. The problem, in short, is that trade figures are currently calculated based on the assumption that each product has a single country of origin and that the declared value of that product goes to that country. Thus, every time an iPhone or an iPad rolls off the factory floors of Foxconn (Apple’s main contractor in China) and travels to the port of Long Beach, California, it is counted as an import from China, since that is where it undergoes its final “substantial transformation,” which is the criterion the WTO uses to determine which goods to assign to which countries. Every iPhone that Apple sells in the United States adds roughly $200 to the U.S.‑Chinese trade deficit, according to the calculations of three economists who looked at the issue in 2010. That means that by 2013, Apple’s U.S. iPhone sales alone were adding $6–$8 billion to the trade deficit with China every year, if not more.

A more reasonable standard, of course, would recognize that iPhones and iPads do not have a single country of origin. More than a dozen companies from at least five countries supply parts for them. Infineon Technologies, in Germany, makes the wireless chip; Toshiba, in Japan, manufactures the touchscreen; and Broadcom, in the United States, makes the Bluetooth chips that let the devices connect to wireless headsets or keyboards.

Analysts differ over how much of the final price of an iPhone or an iPad should be assigned to what country, but no one disputes that the largest slice should go not to China but to the United States. That is where the design and marketing of such devices take place — at Apple’s headquarters in Cupertino, California. And the real value of an iPhone, of course, along with thousands of other high-tech products, lies not in its physical hardware but in its invention and the work of the individuals who conceived, designed, patented, packaged, and branded the device. That intellectual property, along with the marketing, is the largest source of the iPhone’s value.

Taking these facts into account would leave China, the supposed country of origin, with a paltry piece of the pie. Analysts estimate that as little as $10 of the value of every iPhone or iPad actually ends up in the Chinese economy, in the form of income paid directly to Foxconn or other contractors.

Emphasis added. How we measure trade can cause the observer to come to the wrong conclusion. The trade advantage for the United States is commonly perceived to be a trade advantage for China. In the hands of someone who understands the wizardry behind the green curtain, the shortcoming of the abstraction can be managed. In the hands of everyone else, we have grounds for World War III or Tea Party revolt. Don’t tread on me, China.

Likewise, negative net migration is bad, always bad. To say otherwise makes you a blind civic cheerleader guilty of moving the goalposts in order to gild a turd. Pittsburgh is dying. Seriously, how could outmigration be a good thing? Say Pittsburgh lost 10,000 people to migration over a decade. That means 10,000 more people left than arrived. Almost certainly, people did move to a dying city. In this case, 20,000 young adults with college degrees moved into the urban core. Meanwhile, 30,000 suburban residents without a high school diploma retired and moved to Phoenix. The workforce grows and gets younger. The workforce gets smarter and per capita income increases. Arizona tackles spiraling health care costs sparked by a bunch of Yinzers tired of Pennsylvania winters. Edward Glaeser declares liberalized zoning regulations of the Sun Belt the winner.

I’m a fan of quality over quantity demographic metrics. Data have to keep up with the times. Play moneyball. The fixation with population and immigration is a late 19th-century artifact. A good example of such a critique from India:

Given this background, there is reasonable expectation that the policies of the Government of India towards emigration would be well settled, dynamic and proactive. Unfortunately, this is not so. Indeed this book is an expose of the inadequacies of our policy framework and institutional failure both at the central and state levels. The book has been written by two authors who are well versed in the area both in terms of academic attainment and administrative experience. Krishna Kumar is the founder Secretary of the Ministry of Overseas Indian Affairs (MOIA) and Prof. Irudaya Rajan is associated with the Centre Development Studies (CDS), Thiruvananthapuram, which has pioneered studies on migration to the GCC countries.

Drawing upon a mass of legal, legislative and regulatory framework, they take a dim view of the current situation. Disheartened, they exclaim, “It is not possible for emigration from 21-century India to be managed under 20 century law inspired by a 19-century mindset.

Emphasis added. Twenty-first century America is manged by 20th-century economic development policies inspired by a 19th-century industrial revolution. Population size matters. Population size doesn’t matter. The quality of change, growth or decline, matters. Just because the net migration number is negative doesn’t mean there is brain drain. A shrinking population doesn’t always indicate a dying city. An iPhone manufactured in China does the United States more financial good than it does China. Those blue-collar jobs aren’t coming back home and that’s the good news.

Jim Russell
Jim Russell is a geographer studying the relationship between migration and economic development.

More From Jim Russell

A weekly roundup of the best of Pacific Standard and PSmag.com, delivered straight to your inbox.

Recent Posts

July 31 • 4:00 PM

Thank You for Your Service: How One Company Sues Soldiers Worldwide

With stores near military bases across the country, the retailer USA Discounters offers easy credit to service members. But when those loans go bad, the company uses the local courts near its Virginia headquarters to file suits by the thousands.


July 31 • 2:00 PM

A New York State of Fracking

Court cases. A governor’s moratorium. Pending health study. A quick guide to the state of fracking in New York.


July 31 • 11:17 AM

How California Could Power Itself Using Nothing but Renewables

We don’t need fossil fuels.


July 31 • 8:00 AM

Should Athletes Train Their Memories?

Sure, but it probably won’t help.


July 31 • 6:00 AM

Universal Basic Income: Something We Can All Agree on?

According to Almaz Zelleke, it’s not a crazy thought.


July 31 • 4:00 AM

Medical Dramas Produce Misinformed, Fatalistic Viewers

New research suggests TV doctor dramas leave viewers with skewed impressions of important health-related topics.


July 30 • 4:00 PM

Still the World’s Top Military Spender

Although declining in real terms, the United States’ military budget remains substantial and a huge drain on our public resources.



July 30 • 2:04 PM

The Rise of the Nuisance Flood

Minor floods are afflicting parts of Maryland nearly 10 times more often than was the case in the 1960s.


July 30 • 2:00 PM

The (Mostly Awful) Things You Learn After Investigating Unpaid Internships for a Year

Though the intern economy remains opaque, dialogue about the role of interns in the labor force—and protections they deserve—is beginning to take shape.


July 30 • 12:00 PM

Why Coffee Shortages Won’t Change the Price of Your Frappuccino

You’re so loyal to Starbucks—and the company knows it—that your daily serving of caffeine is already marked up beyond the reach of any fluctuations in supply.



July 30 • 10:00 AM

Having Difficult Conversations With Your Children

Why it’s necessary, and how to do it.


July 30 • 8:00 AM

How to Make a Convincing Sci-Fi Movie on a Tight Budget

Coherence is a good movie, and its initial shoot cost about the same amount of money as a used Prius.


July 30 • 6:00 AM

Are You Really as Happy as You Say You Are?

Researchers find a universal positivity bias in the way we talk, tweet, and write.


July 30 • 4:00 AM

The Declining Wage Gap for Gay Men

New research finds gay men in America are rapidly catching up with straight married men in terms of wages.


July 30 • 2:00 AM

LeBron James Migration: Big Chef Seeking Small Pond

The King’s return to Cleveland is a symbol for the dramatic shift in domestic as well as international migration.


July 29 • 4:00 PM

Are Children Seeking Refuge Turning More Americans Against Undocumented Immigrants?

A look at Pew Research Center survey data collected in February and July of this year.


July 29 • 2:00 PM

Under Water: The EPA’s Ongoing Struggle to Combat Pollution

Frustration and inaction color efforts to enforce the Clean Water Act.


July 29 • 12:40 PM

America’s Streams Are Awash With Pesticides Banned in Europe

You may have never heard of clothianidin, but it’s probably in your local river.


July 29 • 12:00 PM

Mining Your Genetic Data for Profit: The Dark Side of Biobanking

One woman’s personal story raises deep questions about the stark limits of current controls in a nascent industry at the very edge of the frontier of humans and technology.


July 29 • 11:23 AM

Where Should You Go to College?


July 29 • 10:29 AM

How Textbooks Have Changed the Face of War

War is more personal, less glorious, and more hellish in modern textbooks than in the past. But there’s still room for improvement.


July 29 • 10:00 AM

The Monolingual American: Why Are Those Outside of the U.S. Encouraging It?

If you are an American trying to learn German in a large German town or city, you will mostly hear English in return, even when you give sprechen your best shot.


July 29 • 8:00 AM

The Elusive Link Between Casinos and Crime

With a study of the impact of Philadelphia’s SugarHouse Casino, a heated debate gets fresh ammunition.


Follow us


Subscribe Now

The Rise of the Nuisance Flood

Minor floods are afflicting parts of Maryland nearly 10 times more often than was the case in the 1960s.

America’s Streams Are Awash With Pesticides Banned in Europe

You may have never heard of clothianidin, but it's probably in your local river.

How Textbooks Have Changed the Face of War

War is more personal, less glorious, and more hellish in modern textbooks than in the past. But there’s still room for improvement.

NASA Could Build Entire Spacecrafts in Space Using 3-D Printers

This year NASA will experiment with 3-D printing small objects in space. That could mark the beginning of a gravity-free manufacturing revolution.

The Big One

One in two full-time American fast-food workers' families are enrolled in public assistance programs, at a cost of $7 billion per year. July/August 2014

Copyright © 2014 by Pacific Standard and The Miller-McCune Center for Research, Media, and Public Policy. All Rights Reserved.