These eight words explain the pros and cons of globalization: "Designed by Apple in California, Assembled in China." They show why even high-tech products invented in the US don't increase exports, but rather exacerbate the nation's trade deficit.
Tonight, as American athletes enter London's Olympic Stadium, all eyes will be on China. More to the point, on the made-in-China uniforms Team USA is sporting.
Reports that Ralph Lauren Corp. outsourced production of the uniforms to China has US lawmakers in a lather. Senate Majority Leader Harry Reid said the outfits should be put in a pile and burned. A new bill, the "Team USA Made in America Act," ensures athletes' attire is more politically correct for the 2014 Winter Games, which fittingly will be in Russia.
This controversy is so contrived it hurts: It's nothing more than a ready-made excuse to beat up on that economic bogeyman, China, which replaces the Soviet threat of old in a US election year. Uniform-gate is just a preview of how ugly things may get and, frankly, pointless.
President Barack Obama is under pressure to explain why unemployment is still higher than 8 percent ahead of the Nov. 6 election. Mitt Romney, his Republican challenger, must offer a vision for creating millions of jobs. Expect China to come up early and often as both men try to whip up emotions and support. Wouldn't it be better if each offered specific ways to revitalize the US job market, perhaps even with China's help?
These shallow politics of the moment trivialize the most important relationship in the world and the magnitude of the real strains. The Obama and Romney teams should be brainstorming about ways to correct the global imbalances that thwart America's recovery. Xi Jinping, the man in line to be China's next president, should be telegraphing a new direction for a lopsided economy that so far can only thrive by pursuing zero-sum trade policies.
Instead, the US and China are wasting time assigning blame and hoping globalization's biggest challenges work themselves out. The leadership in both countries that might develop and promote a rebalancing is nowhere in sight.
The uniforms episode reminds us that the US is engaging in fatuous pandering. Consider the lack of outrage over Roots Canada Ltd., the Toronto-based company that made US-team duds for the 2002 Salt Lake City Games (headed by Romney) and for Athens in 2004.
The difference is that Americans don't view Canada as a rival that threatens US primacy. The US doesn't fear Canada when it comes to exchange rates, cheap labor, human-rights records, military buildups, support of repressive regimes, designs on conquering space or massive stockpiles of Treasuries; that distinction is all China's.
Yet it's hypocrisy to blame China for the US's woes. Apple Inc. probably could assemble its iPhones and iPads within driving distance of headquarters in Cupertino, California, where it dreams up these gadgets. It makes them in Shenzhen sweatshops for reasons that have more to do with the US economy than China's. US consumers want bargains; shareholders demand that Apple produce its goods as cheaply as possible; Americans insist on high-paying jobs, and US laws prohibit China-level wages.
Consumers would be shocked to learn how many of the American flags they fly are made in China. Ditto for the Louisville Slugger baseball bats they buy for their kids and the fireworks that cities use to celebrate Independence Day. Yet these eight words explain the pros and cons of globalization: "Designed by Apple in California, Assembled in China." They show why even high-tech products invented in the US don't increase exports, but rather exacerbate the nation's trade deficit.
Sure, China should let its currency appreciate. Yes, it cheats on trade. Intellectual-property rights still mean little to officials in Beijing. An equally big dilemma is the direction American-style capitalism has taken during the past 20 years. The only way to reverse things is for Apple and other icons of US industry to begin producing at home. And for most products, that's not about to happen, given the vast gap between US and Chinese labor costs.
Looked at this way, Ralph Lauren is only doing what US politicians, by way of government policies, encourage it to. Executives who denounce Obama as anti-business while gleefully pumping up profits produced abroad and squirreling away cash in tax havens should look in the mirror as they decry the lack of household demand since the 2008 financial crisis.
The US doesn't have a monopoly on hypocrisy. China is indignant over the Team USA uniform uproar; the official Xinhua News Agency calls it "a blasphemy" on the Olympic spirit. Come on, the commercialization of the games and the corruption scandals that plague the International Olympic Committee should disabuse us of that. The Summer Games is "American Idol" with sneakers. And although it may shock many in China, plenty of the US's gripes are legitimate.
Devising smart policies will yield better results for the US than bashing China. Striking free-trade agreements around the globe would do more good than waiting for the yuan to strengthen. So will looking for new markets. So will reviving the entrepreneurial passion that made the US economy No. 1.
The key is to find ways to keep more of the jobs that some of the world's most dynamic companies create at home. Bellyaching over who dresses Team USA won't get America onto the medal podium.
William Pesek is a Bloomberg View columnist. The opinions expressed are his own.