iPhone (and other imports) Good for the Economy
You don’t have to be a tech junkie to get excited about the iPhone 5. Plenty of people were anticipating its arrival. But purchasing the iPhone 5 won’t just prevent you and your iPhone 4 from getting left in the technological dust. Some analysts say the new iPhone may give the economy a much needed boost. In fact, JP Morgan’s Michael Feroli estimates that the iPhone 5 could boost U.S economic growth by up to 0.5 percentage points.
“[Feroli] figures that the new iPhone 5 will sell for $600 per unit. If each phone contains about $200 in imported parts, then each iPhone sale adds about $400 to GDP. (Imports get subtracted from GDP calculations.) If Apple manages to sell 8 million iPhones, then that’s a $3.2 billion boost to the economy right there, increasing annualized fourth-quarter growth by 0.33 percentage points.”
It may seem a bold prediction that the iPhone 5 could alone have such a strong effect on the U.S. economy. However, the general concept is not farfetched. Imports stimulate the economy, from the clothes you wear to the technology you use. The idea that imports are categorically bad for American job creation is simply false. As Heritage’s Derek Scissors has explained:
“Protectionists frequently assume that the only impact of imports is to displace U.S. production. They ignore the market-expanding effect of the additional choices and competition brought by imports. Some protectionists also conveniently disregard activities that add value to a country’s economy and that apply equally to imports and exports—such as port loading, internal transport, wholesale trade, retail trade, advertising, and after-market service. It is no help to policymaking to imagine what might happen if all goods Americans buy from China were suddenly produced here. This ignores the trade, investment, and business development that have contributed so much to American and world living standards. A more useful analysis embraces the world as it really works—in which imports undeniably support jobs.”
So no need to be overly scrupulous about the negative effect you’re having on the economy when you buy the iPhone 5 or any other imported good, for that matter. Imports are good for the economy, for trade, and for job creation right here in America.