Istanbuller wrote:The whole definition of economics is about production and trade. Europe and America can't comply with basics of economics. You fail at production and trade. What else can you say about economics if you exclude these? You are spending more than you earn. China does the opposite. That is why they are beating you very hard.
It doesn't work that way. By that logic any resource extracting country would be rich while everyone else would be poor because they are basically extracting and not paying for it besides salaries while having massive returns from selling oil, gas, any resource to other countries. In reality though only very few resource rich countries are rich when they have small population while majority of resource extractors are underdeveloped countries.
When you look at production then you are buying those resource and then making something out of them while somebody is selling the complete product. Usually owner of the IP, product or technology to produce it which makes them far more money compared to just producing. So the manufacturer is basically getting price that they sell/arranged the production for minus the production cost(all of them) which is far less than the selling price to normal people since you don't own the brand, ip, technology.
Look at the iphone as an example. Total component cost has always been 300-500ish depending on the model. Apple sells them almost for 2x the cost of manufacturing. Foxconn, the manufacturer, who produced those phones got 8 dollars per produced iPhone.
And with everything put together like logistics and so on, apple makes 300-500 dollars of profit per iphone while the actual manufacturer makes 8 dollars.
https://slate.com/business/2012/09/foxc ... tors%20pay.
It might look nice on your trade surplus though that you are exporting iPhone. In reality though you are not the one selling them but just producing them for export.