The new policy is designed to boost income for the government (though the value isn't known yet) and create better jobs, especially high-tech manufacturing jobs that produce value-added tax revenue--not low-cost textiles.

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Like the UC-Irvine iPod study before it, the ADBI analysis found that just a tiny fraction of the cost of producing the iPhone is Chinese value-added.

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As wages rise, manufacturers find themselves unable to compete either with lower-cost producers elsewhere or, in higher-value-added products, with more advanced economies.

ECONOMIST: Banyan

But the key to economic growth is not just the low cost of production, it's the value added--the innovation, design or better architecture, or the sheer intangible of exciting fashion.

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Namely, beyond foregoing the obvious benefits that come from value-added processing such as refining (gasoline sells a lot more per gallon than the cost of a gallon of crude oil), we are incurring secondary costs that impact, in part, the very environment that radical environmentalists are trying to protect.

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What began as an outsourcing of manufacturing to low cost countries has evolved as China and India have moved up the value-added manufacturing curve.

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