Reply to post: Re: Actually it might bring the opposite

Trump's taxing problem: The end of 'affordable' iPhones

P. Lee

Re: Actually it might bring the opposite

>There might be another point. Large companies might move out of the US and set their headquarters somewhere else. Some highly qualified employees might move them,

Isn't that what is already happening? The US companies have gone multinational so they don't pay tax and they bring in H1B-visa workers, which is similar to moving those jobs abroad. The companies are "American" in terms of control, but not really in terms of tax and, to an extent, jobs. If you've got nothing left to lose, you might vote for Trump... oh look! If the government has nothing left to lose in terms of tax, it might start putting up barriers to increase the costs to multinationals and encourage local-based corporations which actually contribute to the local economy... oh look!

Perhaps what is happening is that people are looking at the iphone 7 and Galaxy 7 and think - meh! I don't really need that. Perhaps they look at their laptop and think, "the new ones don't do anything more for me than the old one, but I do really need a job." Perhaps the prospect of cheap IT just doesn't hold much attraction any more. Perhaps they see Dell hiking prices to pay for the EMC acquisition and think, "I see no reason to help Dell pay off his debt." Perhaps they look at the Apple price hikes (yes it isn't a Brexit phenomenon) and think, "Yes it is a better screen and faster CPU, but that doesn't improve my life enough for me to pay what Apple is asking." Apple has lost sight of something they have always known - you have to sell the benefits, not the tech. The tech-industry's problem is that innovation stalled a few years ago. Consolidation, the cloud and now price hikes are an effort to hide the fact that their products are not providing that much additional benefit to customers.

Razer's Core is a product which should have been in the development labs of all laptop makers - its something I've wanted for years and I can't imagine that no-one at HP, IBM, Lenovo, Sony, Acer, Asus, Apple, or Dell thought of it before. The companies have been so good at picking off consumer surplus that they have forgotten that everyone has to win for the transaction to take place.

But back to the tech industry issues. The lack of trade barriers is great while there is a competitive market place. However, we mostly have a (US-controlled) hegemony. In this scenario, higher tariffs, and more expensive imports should stimulate competition. Perhaps the Chinese and the Russians will focus on making their own better chips which will give Intel a kick, much as AMD's competition did a while back. Once we have more effective competition, we can start bringing the tariffs back down. Perhaps licensing tariffs will help put an end to the moving of profits via "intellectual property" licenses to tax havens, leading not only to more government income, but a fairer playing field for those companies too small to take advantage of complicated legal arrangements - again, more competition.

Trump certainly presents himself as an obnoxious idiot. That idiocy may in the short term lead to higher costs and a less free market, but in the long term a more competitive market with lower-cost products. That's sad for the existing producers, but rather good for everyone else.

It isn't a sure thing of course. Tariffs can hide all sorts of inefficiencies, but we seem to have arrived at monopoly or oligopoly markets with little competition. Competition is hard for the companies involved but good for the customers - and who is not an IT customer?

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