- Cafe Hayek - https://cafehayek.com -

Innovation in Sourcing

Tweet [1]

On page 48 of his excellent new (2019) book, Big Business [2], Tyler Cowen writes:

Apple’s iPhone, for instance, relies on components and assembly from the United States, South Korea, Thailand, Malaysia, the Philippines, Taiwan, India, and China. A lot of Apple’s key innovation was not the technology behind the iPhone, much of which already was in place, but rather new ideas about how to build up and maintain such a supply chain.

Given this reality, we can accurately describe tariffs and other trade restrictions as being government-imposed obstructions to innovation.

Most Americans would correctly and rightly regard government efforts to obstruct an American innovator’s attempt to build in his or her lab a less-pricey or better mousetrap as detrimental to all Americans (except, obviously, to the suppliers of the more-pricey and not-better mousetraps).

Yet a large number of Americans, being blind to the destructive nature of protectionism, do not see that tariffs no less maul and obstruct innovation – and, hence, no less harm ordinary Americans – than would successful attempts to blow-up research-and-development labs with dynamite, or to assassinate modern-day Thomas Edisons.

Comments