Saturday, September 25, 2004

The trade defecit isn't really that scary

Here is a great article describing how the world and the US economy are changing, and why this means that the trade defecit (difference between imports and exports) is quickly being rendered meaningless. The point:

Look at a laptop. It sells for $1000. $200 of that is for an Intel chip (Intel's gross profit is $180) and $100 for Windows XP (Microsoft's gross profit is $99.99!) The margin of those two products is more than the gross margins of all the companies that make the other components combined and of the laptop itself. What drives the ability of companies to create such margins? Intellectual property.


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