BTW – Since when is price based on cost. Price is based on the value in the market place (one of the four P’s of marketing). Do you think a latte at Starbuck’s is based on cost or better yet a bottle of filtered water. Dasani is Coke without the CO2 and syrup, yet they charge the same as for a Coke.

Regarding administrative overhead:

Have you ever run your own business? Ask anyone who is self-employed, and they’ll tell you that they spend something like 10% to 20% of their time actually *doing* what it is they do. The other 80% to 90% is spent doing things like complying with government regulations and tax forms, keeping the books, marketing the product or service that they provide, meeting with prospective clients, et cetera.

Those businesses fortunate enough to be able to hire specialists to perform those functions for them save a great deal of time, effort and money for everyone involved, because each individual can focus more of their time doing what they do best, instead of having to wear a dozen different hats.

All of those people, while it may at first glance seem that they are unnecessary, contribute in some way to the smoother, more efficient running of an enterprise, which results in products and services being brought to market more quickly and less expensively than they could otherwise be. Were it not so, any employer worth their salt would get rid of those positions – and the companies that fail to do so, will quickly wither away the instant a competitor comes along and offers a product or service with similar benefits at a lower price.

Much of the bureaucratic waste that’s seen in the private sector is caused directly by the overhead imposed by the *government* bureaucracies – entities which do no productive work whatsoever. Their existence does nothing but impose expenses on productive enterprises, and offer opportunities for the unscrupulous to bribe and cheat their way to unearned riches.

Take a look at most doctor’s or dentist’s offices: How many people does a physician in private practice have to employ, just to keep up with the paperwork that the government mandates that they keep? (Paperwork, I might add, that no sane doctor or dentist would ever *choose* to do or keep!)

It’s similar in construction, or the provision of electrical power, or sewer services. Even hairdressers and massage therapists (and in some places even florists have to spend ridiculous amounts of time and effort complying with government regulations.

If that’s the kind of waste you’re talking about, yeah, I’m all for eliminating it. It does add unnecessarily to both the cost and the price of everything we buy.

Can you design a smartphone from scratch, having never seen one before? Somebody, somewhere did. Some intellect stayed up nights figuring out how to assemble other pieces of technology into something that hadn’t been done before. Then it taught other intellects how to replicate the thing so lots and lots of people (who have no idea how it actually works) could have the benefits of using it.

If you do have those skills and imaginative capabilities, how much would you like to get paid for the efforts you put forth?

All production is a work of philosophy. Bread can’t be baked, corn can’t be farmed, computers can’t be built and programmed, without the thinking, reasoning minds of the people who A) discovered or invented the processes for doing such things, and B) didn’t/couldn’t discover or invent them, but learned how to *do* them.

Nothing that is necessary for the maintenance and betterment of human life can be achieved without the intellect of the human mind.

Just as a human is much more that the few dollars worth of chemical elements his or her body is made of, that loaf of bread and that smartphone are worth a lot more than the few dollars or pennies worth of chemical elements that they are composed of.

Here are some factoids for you….

According to CNET, the iPhone component price is around $174 http://news.cnet.com/8301-1035_3-10152771-94.html

You may or may not be aware of what Apple critics refer to as the “Apple Tax,” the extreme markup Apple plies to its products due to their sex appeal. Another example of the Apple Tax is the iPad, with margins estimated at 50% http://www.businessweek.com/technology/content/feb2010/tc2010029_588063.htm

Are you familiar with the OpenMoko smart phone project? http://wiki.openmoko.org/wiki/Main_Page

Apple recently decided to go after HTC for alleged patent infringements. Here’s some observations about the lawsuit: http://9to5mac.com/observations-apple-htc-3409733

Sadly, I am an Apple fan. I do like their industrial design. But in recent months it has become clear to me that Apple is antithetical to everything I stand for. Making that switch to open source software like Ubuntu may be tricky, but it is necessary to support the evolution of open source and drive down costs.

Hope these links are helpful. Best!

Keith