Why Amazon Can't Make A Kindle In the USA

Why Amazon Can't Make A Kindle In the USA

Steve Denning Forbes 8/17/2011

An economist is someone who knows the price of everything and the value of nothing.

Old joke based on Oscar Wilde's quip about a cynic.

Yesterday I noted how conventional cost accounting inexorably focuses attention of executives on increasing short-term profits by cutting costs.

The same thing happens in economics. Take a recent economic study that set out to shed light on role of Chinese businesses vis-a-vis American consumers. Galina Hale and Bart Hobijn, two economists from the Federal Reserve Bank of San Francisco, did a study showing that only 2.7 percent of U.S. consumers purchases have the "Made in China" label. Moreover, only 1.2% actually reflects the cost of the imported goods. Thus, on average, of every dollar spent on an item labeled "Made in China," 55 cents go for services produced in the United States. So the study trumpets the finding that China has only a tiny sliver of the U.S. economy.

So no problem, right?

Well, not exactly. The tiny sliver happens to be the sliver that matters. What economists miss is what is happening behind the numbers of dollars in the real economy of people. ...