The rear cover of the iPhone tells you it is designed in California and assembled in China. The phone sells, in the absence of carrier subsidy, for about $700. Purchased components – clever pieces of design such as the tiny flash drive and the small but high-performing camera – may account for as much as $200 of this. The largest supplier of parts is Samsung, Apple’s principal rival in the smartphone market. “Assembled in China” costs about $20. The balance represents the return to “designed in California”, which is why Apple is such a profitable company.

Manufacturing fetishism – the idea that manufacturing is the central economic activity and everything else is somehow subordinate – is deeply ingrained in human thinking. The perception that only tangible objects represent real wealth and only physical labour real work was probably formed in the days when economic activity was the constant search for food, fuel and shelter.

This is from John Kay, “Fetish For Making Things Ignores Real Work.” The whole piece, which is short, is excellent. My only issue is that I would have changed the title to “Fetish for Making Things Ignores Real Value Added.”

HT to Mark Brady.

Here is the hot link to the piece that the first commenter below, Steve Fritzinger, wrote. Well done, Steve.