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New York Times Tells Us Only Chinese Near Slave Labor Could Handle Steve Jobs’ Demands

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A New York Times story, “How U.S. Lost Out on iPhone Work,” uses an Obama dinner with Silicon Valley titans to frame its tale of why the US middle class should roll over and die. I am of course exaggerating for effect. But not by as much as you might think. The story by Charles Duhigg and Keith Bradsher does a very good job of explaining why Asia, and China in particular, has come to dominate consumer electronics manufacture, using the iPhone as focus.

The problem with using the microcosm to illustrate the macrocosm is you need to choose the right microcosm. The danger in using the iPhone example is that (as I have discussed at length in prior posts) there are quite a few industries in which the case for offshoring and outsourcing is not compelling, particularly if you allow for the increased risk of extended supply chains, as Apple itself learned in the wake of the Fukushima nuclear disaster. But even in those cases, it still has the effect of transferring income from middle level and factory workers to the top brass. Thus the iPhone/consumer electronics example will have the effect of giving other businesses a free pass.

And not only that, even among computer and electronics firms, Apple was unusually demanding, and not always for good reasons. As much as Steve Jobs was revered for his fixation with design, it could interact with coming up with a final product in nasty ways. The Walter Isaacosn biography of Jobs is chock full of incidents of Jobs changing his mind to the point of wreaking havoc with getting a product out the door. For instance, one of Mac engineers, Chris Espinosa, designed a calculator to be included with the Mac OS. Jobs liked the idea but was not pleased with the appearance. Espinosa came up with new designs in response to Jobs’ input daily, only to get more criticism. He finally wrote a program, the “Steve Jobs Roll Your Own Calculator Construction Set” to put Jobs firmly in charge of finalizing the design. Similarly, on the first iteration of the NeXT computer, Jobs insisted that it be a perfect cube. I will spare you the details but that requirement caused all sorts of costly hassles.

Now consider this vignette from early on in the article:

One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

The authors fail to tell you what this means: changing a production design that late in the game is bad management, period. It’s the sort of stunt you see in a craft manufacturing business like the movie industry, not in one that deals with factory production. But the flexible near slave Chinese workers bailed out Apple’s ass.

Nor does it frame another section properly. Here Jobs has a more logical, if still daunting demand: he wants a phone with a glass screen that won’t scratch, since phones get shoved in pockets with keys and coins. But part of his ask was still unreasonable: “I want a glass screen, and I want it perfect in six weeks.”

Again, China delivered, but notice how:

For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely difficult to achieve. Apple had already selected an American company, Corning Inc., to manufacture large panes of strengthened glass. But figuring out how to cut those panes into millions of iPhone screens required finding an empty cutting plant, hundreds of pieces of glass to use in experiments and an army of midlevel engineers. It would cost a fortune simply to prepare.

Then a bid for the work arrived from a Chinese factory.

When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.

The Chinese plant got the job.

So basically, the Chinese funded a completely non-economical glass R&D facility IN ANTICIPATION of getting the Apple order. There is no way anyone would build a factory like that unless the money was close to free. It already had glass samples in stock! The “some subsidies trickled down” sounds way too innocent. It sounds more like someone recognized the importance of Apple as a marquee customer, and whether the push came from the officialdom or businessmen with the right connections in high places, it doesn’t really matter. This project smells of having serious government backing. How can private businesses anywhere compete with that?

There is admittedly a lot of insightful discussion in the article. It stresses that Silicon Valley executives say that the cost of US labor is not what is driving their decisions. It is the responsiveness of the supply chain, which among other things means ability to recruit factory labor and engineers quickly (and to get the factory workers to put in Foxconn like hours). Thus the savings is in inventory costs rather than labor per se. Nevertheless, it is disappointing that to see the authors seemingly stumble on critical pieces of the puzzle that they fail to integrate into their commentary.

The US is going to have enough trouble rebuilding its industrial base as it is. Not understanding why and how the middle class is being sold out will only make that task more difficult.

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231 comments

  1. Cal

    The solution to offshoring is simple.
    If the president is really concerned about
    American jobs he can issue an executive order that
    all federal tax dollars are to be spent on manufactured items made within the United States. If they are unavailable, there is a one year period in which to find local suppliers. If none are forthcoming, the U.S. government will build its own factories.

    The Veterans Administration used its own laboratories to create a brand new drug for a rare disease that returning veterans were suffering from and that no pharma company could bother with because of the low profit potential.
    Cost? Pennies per dose. Patent owned by the people of the U.S. It can be done if there is political will.

      1. RanDomino

        Exactly. Any solution that doesn’t take into account the fact that the government has been captured by corporate interests is no solution at all.

    1. alex

      “The Veterans Administration used its own laboratories to create a brand new drug for a rare disease that returning veterans were suffering from and that no pharma company could bother with because of the low profit potential.
      Cost? Pennies per dose.”

      Any details? (name of drug, link, whatever). Dean Baker has been advocating such an approach for years.

    2. mk

      there is an even simpler solution, but harder to achieve – don’t buy products made with near slave labor.

      nothing will change until millions of individuals decide they don’t want products made with near slave labor.

      A few months ago my partner excitedly shared that he was going to purchase an iphone, I reminded him about the problems at Foxconn, the slave labor issues, etc. and he bought it anyway, seduced by the idea of “having” the next big thing – everyone at the office has one, he can be a part of that.

      He can’t talk about it much at home. he is excited to have it, but any time he tries to share with me some awesome feature or app, I remind him that it was accomplished with slave labor and that Apple, especially Steve Jobs should be ashamed. But more important, we as individuals have the larger responsibility to be conscious of the business practices of the companies we buy from, then choose not to buy products made with near slave labor. Each purchase says to Apple – go ahead and use near slave labor, we don’t care, we just want what we want.

        1. Cernunnos

          I believe you are missing the point: is having a gadget that is nifty and versatile, though not necessary for life or day-to-day functioning worth the price in human misery?

          1. pws

            I don’t own a smartphone. I do own a cellphone. I specifically asked for the most basic cellphone available. If I don’t have a cellphone I miss out on work, if I miss out on work, maybe I learn to live without food.

            I have absolutely no doubt that my bottom of the line basic cellphone was made in similar slave labor conditions to the iPhone.

        2. mk

          That’s a great question and it’s something I’ve been thinking about a lot, especially after looking into the Carrier IQ thing when I learned my cell phone company uses it. I kept my phone, but changed my plan to the smallest monthly payment. I’ll be looking for alternatives and make changes when I can. Regarding iphones, I chose not to participate at all, and that’s the point, we can’t always opt out, but we can at least look and see if we can minimize harm as much as possible by knowing more about the companies we’re buying from, etc.

      1. xenadu

        First let’s be clear here – the supply chain is about labor prices so the fact that final assembly isn’t concerned about labor is disingenuous.

        Second, due to rising wages for Chinese workers Foxconn is investing in robotic manufacturing which is the ultimate future of the human race. How we will cope with that I don’t know but at some point robots will be cheap enough that it won’t matter if people want to work for $0.05/day – the robots will do it anyway. Manufacturers will simply upload their complete design specs and the factory will turn out whatever they want. I also suspect that you will be able to order things like personal electronics customized just like you do with some car brands (eg: Mini) since that is just a variable in the robot factory’s program. I can see a perpetual replacement society working, based heavily on compulsory recycling that generates almost no waste (as the robots will do the dirty/difficult work of recycling as well).

        Third, don’t ignore the vast opportunity for small businesses that Apple has created and which represents real value to the US economy. They broke the backs of the carriers which is definitely a good thing. The carriers are trying to strike back with data caps but Apple just cut their legs out with text messaging and Sprint is having a real go at unlimited. The bigger factor is the platform Apple provides for small developers to make money (disclosure: I am one of these and the money my app makes has made a real difference to me).

        I expect things will have to get much worse in the US before anything will change. I expect us to limp along for quite some time (if at all possible) before the next big recession hits and triggers a true depression (which will spread globally). Once that happens it will be critical to remove corporate personhood and money from politics by constitutional ammendment while the opportunity exists. Second would be to make all redistricting done by impartial commission of academics. Third would be to require a preferential-based voting system to eliminate the two-party-only system. Again, both would require constitutional ammendments to enact. I predict OWS will be completely ineffective and nothing will change for as long as it is possible (via any means) for the status quo to continue.

        1. Kunst

          When robots make all the products, who is going to buy them, and with what?

          Science fiction of 50 or so years ago foresaw a day when most work would be done by intelligent machines. They portrayed a world of leisure, where everyone lived a colonial life served by robots. Isn’t turning out that way, is it?

        2. Mike

          No,
          it’s not just about labor costs. That’s not a crucial part of total assembly costs, when it comes to hi-tech products. Finnish Nokia stayed on top until last year, remember.
          It’s more about metals and the under-suppliers: everything that matters in a phone/computer/tv etc – chipsets, boards, memory, screen, circuits & so on – is produced closer to China than to Texas, like nearby, next factory. And they have the magic metals needed for (something) in new-tech.

          Still, China has it’s own (demand)crisis, and should rise worker payments – for the benefit of theirs and us in the western world. Or we all lose.

  2. gregorylent

    “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”

    a truth is, that as workers become more desirous of comfort, incentive to work disappears ..

    to me that explains much of the usa job loss in past years ..

    that, and an addiction to efficiency that goes way beyond what emotionally whole humans living in natural surroundings could possibly sustain.

    1. propertius

      Well, I suppose we could just repeal the 13th Amendment. That would take care of that “comfort” problem.

    2. George

      Good point. It is almost as if they just realized slave labor boosts profits. Using near in front slave labor of it is not really adding shades of grey.

      1. digi_owl

        Or in essence reproducing working conditions that have not been seen in NA or Europe since the industrial revolution.

        The road between Communism and Fascism appears worryingly short.

          1. Seth

            I’m sure the FRB is the target of your remark, but I couldn’t help being amused by finding the NFL Players Association next door. The quasi-militarist national pastime has a freaking UNION for it’s players. It’s just weird how the only successful unions in America represent multi-millionaire athletes or actors.

      2. PunchnRun

        So, Jefferson Davis will have his revenge, or, “we have met the enemy and he is us.” If I recall my history right, the US northern states were motivated to end slavery in the south by business interests. I guess those business interests recognized they could not compete with slave labor when the south industrialized.?

    3. Dirk77

      Note that Job’s maniacal drive to be the best need not have led him to employing effectively slave labor. As Chang and others have argued, and Yves implies, capitalism doesn’t come with a moral code, setting the rules in capitalism is how that happens. There is no such thing as a free market; all variants of capitalism embody different moral codes. Some reader of this blog, more sophisticated and connected than me, should take the time to sit down with these NYT types and explain that to them.

      1. Goin' South

        I wouldn’t let Capitalism off the hook so easily by trying to define this behavior away. Capitalism must always embody the profit principle, and that is what leads to awaking workers in the middle of the night and giving them “tea and a biscuit.”

        A more sensible system, not driven by profit and where workers ran the plants, would recognize that iPhone fanatics could live another week or month until a redesign could be implemented more sensibly in ways that didn’t lead workers to threaten mass suicide out of despair.

        1. F. Beard

          Capitalism must always embody the profit principle, Goin’ South

          In the Bible*, “profit” is undoubtedly good but “taking profits” is bad. So how can one “profit” without “taking profits”? One solution is common stock as money. The profits would accrue in the value and quantity of the stock and not be “taken” in the form of dividends paid in another money.

          and that is what leads to awaking workers in the middle of the night and giving them “tea and a biscuit.” Goin’ South

          Common stock as money shares power as well as wealth. If those workers were co-owners of the plant they might have CHOSEN to work that night shift but it is doubtful they would have been forced to.

          A more sensible system, not driven by profit and where workers ran the plants, Goin’ South

          Profit is good; profit taking is bad. The problem is a government backed/enforced counterfeiting cartel that makes it cheaper to exploit the workers than to “share” wealth and power with them.

          would recognize that iPhone fanatics could live another week or month until a redesign could be implemented more sensibly in ways that didn’t lead workers to threaten mass suicide out of despair. Goin’ South

          The counterfeiting cartel, the banking system, is the source of the “rat race” and vast wealth disparity. It should be abolished.

          * ‘profit’ in the Bible

        2. Dirk77

          Goin’ South, you can abandon the profit principle. I was just saying that if you decide on capitalism, you must set the rules. No rules and then the profit principle literally becomes murder, looting and plundering. In films you have organized crime people saying they are “just businessmen”. That is true, but they are operating under a different set of rules than you and I. If you set the rules so that everyone worked 40 and got a living wage, I’m sure Jobs would have been fine with too. All he wanted to do was out-compete his rivals to become the greatest-whatever-was-driving-him.

        3. mk

          saw Leslie Crutchfield on booktv yesterday talking about her book, Do More Than Give: The Six Practices of Donors Who Change the World. In it she referred to Jacobs Center for Neighborhood Innovation. I looked them up and found something really interesting called a Community Development-IPO – :
          ~~~~~~~
          Community Enterprise and Ownership
          Social enterprise ventures — where social mission meets the marketplace — drive the economic engine of The Village at Market Creek.

          As an anchor project for reinvigorating an urban marketplace, Market Creek is designed to give residents a financial stake in their community, build individual and community assets while rebuilding neighborhoods, and keep social responsibility at the forefront of business.

          Harnessing the power of the local economy makes business at Market Creek financially viable. At the same time, businesses look to the double-bottom line with social goals like creating new jobs, providing training and capacity-building, and opening opportunities for resident ownership.

          Commerce in The Village began with Market Creek Plaza and has spread to a network of community owned enterprises called Market Creek Community Ventures.

          Long-term resident ownership is vital to The Village’s sustainability. The ground-breaking Community-Development Initial Public Offering (CD-IPO) transferred units of ownership in Market Creek Partners, LLC to individual resident investors. They, in turn, have set their sights on expanding their investment in The Village through a resident-designed and guided Community Investment Fund.

          more info/video at this link:
          http://www.jacobscenter.org/whatwedo_economic.htm

        4. PunchnRun

          +1 Particularly in this case, as we are referring to the iPhone model 1, wherein there was no current competition. A realistic revision may not have been a month, but more like six months for US facilities to do the R&D and construct facilities. I doubt the fanatical Apple faithful would have been deterred from snapping up as many as could be manufactured. If time to market was really so crucial, the plastic lensed version would still have been acceptable – it was on the iPod – and an iPone1.5 could have been slipstreamed.

    4. VJBinCT

      This is why Chinese companies are outsourcing to less expensive(!) countries in SE Asia and Indonesia.

      But the chain of supply being close to final assembly does make much sense.

      The real issue, though, is whether low ultimate price is worth the savings. I doubt it.

    5. skinla

      how many U.S. companies do you know that provide (or willing ot provide) dorms to employees? The only fashionable claim is from tech companies that, in addition to salary, they provide lunch and refrigerator full of snacks to eimployees. All that is basically load of junk food like Redbull, monster, coke, fourloco and chips and chewable bars. Oh yes, they may even provide exercise ball to sit on as if walking ourside on the ground is too much of work.

      1. Larry Barber

        Willing to provide “dormitories”? Many companies do, in remote locations at least. But possibly a better term would be “quarters”, as in “slave quarters”, or possibly “cells”, as in “prison cells”. Can workers in these “dormitories” leave the grounds during their (very limited) time off? Do they have access to communication facilities like telephones and the internet? Do they have to buy everything from an overpriced company store?

    6. rexl

      We are constantly told how wonderful working conditions are at the various high-tech businesses, apple, google, etc.
      Chefs to prepare meals, bring your pets, ping-pong, hang-ten, and all that. What never gets any air play are the working conditions at the factories. I thought everything to do with these high tech computers, iphones, and pads was just totally sunshine california cool.

    7. Lyle

      It depends on the stage of economic development of the country? Recall that Lowell Ma in the 1820-1840 period hired a lot of young farm girls and provided dorms and house mothers for them to run the machines that made cloth. It is interesting that China in many respects is following the way the us economy developed, including that pollution used to be regarded as a sign of economic progress (Pittsburg 110 years ago).

      1. clew

        Yes, and Lowell was a fair and well-regarded place to work for a scant generation — and then an immiserating factory town when the ‘race to the bottom’ hit.

  3. propertius

    I think it’s fascinating that the Times is positively cheerleading the pauperization of engineers and manufacturing workers while decrying the loss of media jobs to unpaid or low paid bloggers.

    I wonder how long it will take for those suicidal Foxconn workers to realize they’re killing the wrong people.

    1. digi_owl

      Follow the money. one group helps keep prices down and profits up, the other hurts by taking away readers and ad revenue.

      1. PunchnRun

        “All the news that’s fit to print,” or “just the facts, ma’am.” That is, just the facts that we care to print. In this case the additional relevant facts should have included where the funds came from to build an empty factory, where the 8000 engineers came from and what they were paid (and why they were available), and where were the families of those who lived in dorms. Thus making explicit the living conditions and cultural environment that makes that sort of thing possible.

        Plus a count of how many iPhones are currently owned by the people who manufacture them.

    2. alex

      “it’s fascinating that the Times is positively cheerleading …”

      And the most fascinating part is they probably don’t even realize the irony.

  4. Elliot

    It’s nostalgic, that phrase “middle class”. Long gone, isn’t it?
    Not that much space between the bottom of the 99% and the top of the 1% for a middle. I’m from the (last??) generation whose families were mostly single-wage earner and still sent the kids to college. Nobody I know these days can say that.

  5. Hans Suter

    Instead of bringing the slaves into the US, today US corporations are bringing the work to the slaves.
    From 1800 to 1820 the US successfully killed the slave trade by law and the enforcement of it (death penalty).
    Similar laws should be drawn and enacted to define and confiscate the proceeds of slave labour.

  6. ODNC

    raise tariff, and tax the devil out of firms offshoring.

    Have no taxes on firms that are USA based and do not offshore.

    It is as simple as that.

    No other generation but the boomers would have shiped American jobs overseas like this. No other group but the elitist, post 1960′s leftist Democrat Nomenklatura would hate the nation and civlization that enriched them than the BoBO, leftist boomers who came of age in the 1960s’s.

    Obama, the Clintons and the Barney Franks of Congress are the examplars of this. They are willfully destroyinh this nation.

    The Democrats are communists. By definition they hate the middle class and wish ot destroy it. It is just comic that you are tiptoeing around these obvious facts.

    Occupy Wall St.? Occupy the DNC. Occupy Berkeley.

    1. backwardsevolution

      ODNC – still in the right/left belief system, are you? Please, BOTH the Democrats AND the Republicans are OWNED by corporate America. If you don’t go into politics rich, you sure as heck come out the other end wealthy.

      “In the first decade of the 21st century, Detroit, Michigan, lost 25% of its population. Gary, Indiana, lost 22%. Flint, Michigan, lost 18%. Cleveland, Ohio, lost 17%. In St. Louis, Missouri, 19% of the housing is vacant. These population losses were not the result of the Black Plague or killer viruses or a nuclear attack. They were the result of corporate CEOs, pushed by their own greed, by the greed of Wall Street and that of large retailers such as Wal-Mart, aided and abetted by “our” government, into moving millions of manufacturing, software engineering, information technology, engineering, research, development, and design jobs offshore.

      The process of moving American jobs offshore left cities, counties, and states with shrunken tax base.The resulting state and local budget deficits are being used to dismantle public sector unions and to cut social services. Public assets, such as water companies, and future income streams from parking meters, toll roads and bridges, are being sold off to foreign buyers in order to insure another year of local and state government solvency.

      In the first decade of the 21st century, Americans lost 5,500,000 manufacturing jobs. US employment in the manufacture of computer and electronic products fell by 40%; in the production of machinery by 30%, in motor vehicles and and parts by 44%, and in the manufacture of clothing by 66%.

      http://www.paulcraigroberts.org/2012/01/06/the-dismal-economic-outlook-for-the-new-year/

    2. ella

      Excuse me but it was the Republican President Nixon that opened China to trade with the US. It was the Republican Bush who continued to ship jobs to China. The Republicans controlled Congress for many years in the ’90 and the ’00′s, if they wanted to protect American jobs and security why did they allow the off shoring of so many jobs. Why did they reduce taxes on off shore earnings?

      A little truth goes a long way, both parties have done little to protect American jobs. But the Republicans have done more to encourage off shoring the the Democrats.

      1. spacecabooie

        Framing the NYT story around OBAMA’s meeting with SLICKY CONN valley operators leaves the impression that Steve’s Job was a Democrat … but is that in fact the case ? Probably doesn’t matter – partilessness, nationlessness, statelessness, and soullessness is obvious in any case.

        ” “Steve Jobs Roll Your Own Calculator Construction Set” ” – Yves from Ala-Damn-bama

        Steve’s Job accomplished nothing that any talented and competent yet still ruthless engineer could accomplish … with the right backing. Talented and competent goes into transportation, space, medical, some defense, on a daily basis in the U.S. Steve’s hardly wanted to try and compete on that playing field, though. Traitorous – all for the iLine, technology that’s not really technology, but fluff to further market consumer junk as technological luxury item.

        “So basically, the Chinese funded a completely non-economical glass R&D facility IN ANTICIPATION of getting the Apple order.” – Yves from Ala-Damn-bama

        “… changing a production design that late in the game is bad management, period.” – Yves from Ala-Damn-bama

        There was a time when, prior to the lessons to “incompetent management” from know-it-all “Management Consultants” and Finance-types, that the best design and manufacturing/ prduction firms across the U.S. invested in R&D. But the Chinese near slave labor has taken the art to the exact place those Management Conultants would be proud have it – “just-in-time” R&D, ignoring that this is just about the simplest esample of technology R&D one might imagine.

    3. Seth

      ODNC, you are delusional. Please get help. Republicans and conservatives are the union-busters. NAFTA passed with unanimous support from Senate Republicans and was opposed by a majority of Democrats.

      1. JCC

        NAFTA ( a little history – http://en.wikipedia.org/wiki/North_American_Free_Trade_Agreement ) was passed in 1994, under Clinton’s Watch and it was a “treaty”, so Clinton could have very easily vetoed it, but did not, and in fact pushed very hard for it.

        It would appear that by the manner that you blame the Republicans – and they deserve lots of blame for this – you are defending the Democrats.

        They are also defenseless.

    4. Observer

      “The Democrats are communists. By definition they hate the middle class and wish ot destroy it. It is just comic that you are tiptoeing around these obvious facts.”

      ODNC, if you want to know what Republicans think of the middle class, read Niall Ferguson’s “Rich America, Poor America” in Jan. 23 edition of Newsweak.

      Republican or Democrat, it’s propaganda either way. The only “people” who have representation these days are corporations. Literally. And as if we didn’t already know that, the Supreme Court went ahead and just made it official.

    5. Observer

      Oh, and ODNC – anyone who thinks Republicans have any viable answers to the problems of the shrinking American middle class need only look at their list of primary candidates: A vulture capitalist, a K-Street lobbyist, a Christian Right throwback, and an anarchist. ‘Nuff said.

  7. /L

    US and Europe have enough inflation “fighting” unemployed and part timers and marginally attached in the neoliberal system, it takes communism to keep them at the right skill level to be copy the Chinese example. But the system doesn’t allow it.

  8. dcblogger

    I forget where I read it, but apparently Apple has a huge stash of cash in the Cayman Islands. They could perfectly well pay union wages in this country and still have a hugely profitable company. But their management is greedy and capricious. Oh, and congrats to the Apple flack who planted this story.

    1. G3

      http://www.thedailybeast.com/newsweek/2011/08/28/steve-jobs-american-genius.html

      This snippet in a mostly puff piece :
      “Apple has made money so quickly and so prodigiously that it holds an outrageous $76 billion in cash and investments an awesome sum thought to be parked in an obscure subsidiary, Braeburn Capital, located across the California border in Reno because the state of Nevada doesn’t have corporate or capital-gains taxes”.

      Some in Cayman, some in Panama, some money close to home in Nevada just in case … Diversification I suppose.

    2. G3

      Maybe the plant was to neutralise the hit piece done by Mike Daisey for NPR’s “This American Life” ? Also heard Jon Stewart did a piece on Foxconn.

      1. ajax

        Thanks for sharing the details of that moving
        one-hour “radio” show or podcast.

        I think the NYT piece follows the airing of the
        radio program on “American Life” by about 17 days…

        Is there a link? Maybe. Who knows?

  9. Jeff

    In North America, I can turn a concept into a complex product: electronics, mechanical, software and packaging, in a matter of months. Give me a good team and about 6-9 months. Manufacturing can be contracted out once the design is done.

    Or you can buy me a plane ticket to Taiwan or China and I can get you finished units from a pilot production run in 1 month, with the factory ready to go. Your choice.

    Funny, I spend a lot of time in Taipei hotels lately, I wonder why?

    1. Joe

      Jeff, shouldn’t you be working the 20 hour days you so admire in others? Why do you have free time to waste posting on a blog? You obviously aren’t being effeciently used by your betters. Now go get to work; tool.

    2. alex

      “I can turn a concept into a complex product … Give me a good team and about 6-9 months … or … Taiwan or China in 1 month”

      Anything that can be done in a month is not a “complex product”.

      “Funny, I spend a lot of time in Taipei hotels lately …”

      That’s terrible. Why don’t you move there instead?

      1. JeffreyR

        The point of the article was not the wage slaves but rather the better quality/speed of mass manufacture of complex products available overseas. It can’t be complex in 6 months? Obviously not keeping up on manufacture. Your coffee maker is “complex.” It may be easy to use but getting the parts and putting them together for less than 2 bucks is “complex.”
        “Go live in Taiwan” is just a stupid response. Sounds to me like he is living in Taiwan quite a bit. Why is that? Because his job probably is to make the shit you use here in everyday life. Folks, as Steve Jobs is quoted in the article “those jobs aren’t coming back.”

        1. alex

          “The point of the article was not the wage slaves …”

          It pretended not to be, but (see my 11:17) it’s double talk. No problem getting people to work 80 hours/week in America if you pay them enough.

          “better quality/speed”

          Nice piling on of stereotypes. The article addressed speed, not quality.

          “It may be easy to use but getting the parts and putting them together for less than 2 bucks is ‘complex.’”

          Near slave labor wages, government subsidies and assistance in keeping the work force compliant make the “less than 2 bucks” part a lot less complex.

          As for reducing product cost, there was a time (less than 20 years ago) when such issues were addressed (including by Apple) by improving the design of both products and factories. But why do things the hard way when you can use the no-brainer approach of near slave labor and government subsidies?

          As for the complexity of supply chains, etc. in almost any product, it was done all the time here in America long before any of us were born. So much for your “not keeping up on manufacture” nonsense. Do you really these issues (as opposed to the tech) are all that new? The factory system was new in the 19th century.

          “Because his job probably is to make the shit you use here in everyday life.”

          He makes nothing, and I doubt he designs anything. He’s an outsourcing facilitator who hypocritically extols the virtues of Asian manufacturing while enjoying a bloated American style income.

          “Folks, as Steve Jobs is quoted in the article …”

          Can’t you do better than argument from authority?

    3. spacecabooie

      The best argument I have heard yet (actually the ONLY one I have heard) for a new Dark Age – to purge society of weak parasites like yoru ass.

      1. Lambert Strether

        If all the iPhones on the planet vanished tomorrow, I hardly think that would usher in the dark ages.

        Why, I’m so old I remember when there weren’t people yammering on cell phones about their digestive tracts in public spaces! And the world wasn’t so bad then.

        I like the “tea and a biscuit” part. Chinese people still like fresh food, so they given ‘em something in a wrapper laced with gawd knows what.

        1. spacecabooie

          Lambert, I was referring to Jeff, and his defender JeffreyR, as themselves being the best examples, with their fondness for Sino-American flirtations and their inability to be successful without taking th path of least resistence, of the societal improvement that a good purge could bring.

  10. Conscience of a Conservative

    I read the Times story and I think they ignored the elephant in the room(“Taxes”). Apple learned from Microsoft, Big Pharam, and other large American companies the benefits of foreign subsidiaries, transfer pricing and lowering taxes and sheltering profits. In my view low wages can’t be the whole story and more and more of these operations are automated anyway.

    1. Clark

      Bingo. A good, quick, and horrifying read on this subject is “Treasure Islands,” by Nicholas Shaxson.
      Offshore helps drive deindustrialization, off-balance-sheet shenanigans, and the other ills you mention. And the tax code is the oil in the machine.

      1. Conscience of a Conservative

        Seems like the solution is to lower the tax rate, remove deductions, broaden the tax base, and take away the incentive for tax arbitrage.

        1. propertius

          And, just perhaps, instead of yammering about a “tax holiday” for repatriated foreign earnings, we should just remove the favorable treatment for foreign corporate earnings and tax them when earned (as we do for individuals).

        2. F. Beard

          broaden the tax base, Conscience of a Conservative

          Nope. The tax base should be narrowed so long as we have a government enforced/backed counterfeiting cartel looting the rest of us for the sake of the rich. Let those who profit from the cartel PAY for it.

    2. propertius

      You’re forgetting currency arbitrage. There’s also an implicit subsidy from the artificial exchange rate between Chinese and US currency. Those Chinese wages wouldn’t be quite so low (in US terms) if the Chinese allowed their currency to float.

  11. G3

    All these corporate CEOs bitch and moan about the lack of workers with certain skills. Why can’t they train those types of workers instead of always expecting government to do that? Another factor they (or their media sockpuppets) won’t mention: maybe they should pay more to attract people to those types of jobs – after all, don’t they talk about “markets” – demand and supply that is.

  12. G3

    Check it out from “This American Life” :
    http://www.thisamericanlife.org/radio-archives/episode/454/transcript

    Mike Daisey and the Apple Factory – “The guy’s name is Mike Daisey, and he makes his living doing monologues on stage. He’s been doing that for years, though you’re going to hear in this story that he turns himself into an amateur reporter during the course of the story, using some investigative techniques once he gets going I think very few reporters would ever try, and finding lots of stuff I hadn’t heard or seen anywhere else, not like this.”

    1. mk

      Heard that show last week, thanks for posting the transcript, here’s my favorite part, where he is outside Foxconn at shift change as workers are coming out, he and his translator meet some of them and start asking questions, like how old are you:

      “You’d think someone would notice this, you know? I’m telling you that I do not speak Mandarin. I do not speak Cantonese. I have only a passing familiarity with Chinese culture, and to call what I have a passing familiarity is an insult to Chinese culture. I don’t know [BLEEP] all about Chinese culture. But I do know that in my first two hours of my first day at that gate, I met workers who were 14 years old, 13 years old, 12.

      Do you really think Apple doesn’t know? In a company obsessed with the details, with the aluminum being milled just so, with the glass being fitted perfectly into the case, do you really think it’s credible that they don’t know? Or are they just doing what we are all doing? Do they just see what they want to see?”

    2. ScottW

      Thank you for posting the link. I recommend going to the archive and listening to the radio version. Brilliant. The most disturbing part of the show is NYT’s columnist Kristoff’s rationalization that the sweat shops are actually good compared to the old agricultural economic system. As if the only two options, are agricultural poverty, or sweat shops. Never a consideration of how working conditions could be improved by charging more for the product, or not trying to squeeze every last cent of profit off the backs (or in this case the hands) of the workers. People like Kristoff, and Krugman, never discuss why workers’ conditions cannot be improved now, but employ the Western feel good rationalization that “those people” are better off making products for Western consumption. Every I-phone sold should include a one minute tape of the working/living conditions of the assemblers, and how they could be improved if the price were increased $5 and the extra money went directly to improving assembler conditions. But, as the story goes, most of us don’t want to think about how our crap is made. We are so brainwashed in this Country that we resent workers who are well-paid and receive benefits.

      1. Douglas

        Raise the price by $5? Are you crazy? Do you think the margins on an iPhone are so narrow that Apple can’t afford to pay for humane manufacturing without raising prices?

        1. Frank Speaking

          that won’t change the reality that those in OWS posing as the 99 percent are well and truly in the 1 percent globally and they simply can’t handle the truth of that proposistion

      2. G3

        Kristoff is the ultimate example of “limousine liberal”. His paternalism is stunning. Who is he to decide that being wage slaves in sweatshop conditions is a better way for those peasants? Did anyone gave those peasants a choice? There are peasants who don’t want anything but subsistence living – they are not after greed and accumulation and they enjoy it. What does Kristoff say about those? There is subtle racism in Kristoff who thinks the Western way is THE way to go and that he has all the answers for those peasansts even though they may not have any questions.

  13. Maju

    That’s the problem with WTO and in general globalization. Is it iPhone only? Nope: it’s every single big company.

    The alternative? Consistent protectionism: (1) basic standard protectionism, (2) tax or ban if dictatorship, (3) tax or ban if no free unions, (4) tax or ban if no eco-friendly, etc. That could work I guess but needs statesmen committed with their countries or confederations (like EU) and even with making the World a better place and not just with short term profits of companies.

    As in practice politicians will always be bought by corporate dirty money, the only option is radically socialist.

  14. G3

    And of course, Steve Jobs hates workers in USA too – those doing real,honest work :

    http://www.huffingtonpost.com/2011/10/20/steve-jobs-biography-obama_n_1022786.html?icid=maing-grid7|aim|dl1|sec1_lnk3|106076
    =====
    “You’re headed for a one-term presidency,” he told Obama at the start of their meeting, insisting that the administration needed to be more business-friendly. As an example, Jobs described the ease with which companies can build factories in China compared to the United States, where “regulations and unnecessary costs” make it difficult for them.

    Jobs also criticized America’s education system, saying it was “crippled by union work rules,” noted Isaacson. “Until the teachers’ unions were broken, there was almost no hope for education reform.” Jobs proposed allowing principals to hire and fire teachers based on merit, that schools stay open until 6 p.m. and that they be open 11 months a year.
    ==========

    Yep, no regulations, break treachers’ unions and train kids to be compliant workers right from their school days with longer hours, less vacation.

    This is globalization from the 99% point of view. The same disregard and degrading of Chinese workers carries over here.

    1. alex

      “break treachers’ unions and train kids to be compliant workers”

      While failing to mention that he (Jobs) attended unionized public schools and his higher education consisted of one semester at Reed College.

    1. mk

      from the transcript:
      ~~~~~~~~~~~~~~~~~
      They take me up and down the aisles. And the first thing I notice is the silence. It’s so quiet. At Foxconn you’re demerited if you ever speak on the line.

      At no factory I went to did anyone ever speak on the line, but this is deeper than that. As a creature of the First World, I expect a factory making complex electronics will have the sound of machinery, but in a place where the cost of labor is effectively zero, anything that can be made by hand is made by hand. No matter how complex your electronics are, they are assembled by thousands and thousands of tiny little fingers working in concert. And in those vast spaces, the only sound is the sound of bodies in constant, unending motion.

      …They work on the line, and the lines only move as fast as its slowest member, so each person learns how to move perfectly as quickly as possible. If they can’t do it, there are people behind them watching them. And there are cameras watching both sets of people, and people watching the cameras. They lock it down. They sharpen it to a fine, sharp edge every hour, and those hours are long.

      …The official work day in China is eight hours long, and that’s a joke. I never met anyone who had even heard of an eight-hour shift. Everyone I talked to worked 12-hour shifts standard, and often much longer than that, 14 hours a day, 15 hours a day. Sometimes when there’s a hot new gadget coming out– you know what the [BLEEP] I’m talking about– sometimes it pegs up to 16 hours a day. And it just sits there for weeks and months at a time, month after month after month, straight 16′s, sometimes longer than that.

      While I’m in-country, a worker at Foxconn dies after working a 34-hour shift. I wish I could say that’s exceptional, but it’s happened before. I only mention it because it actually happened while I was there.

      And I go to the dormitories. I’m a valuable potential future customer. They will show me anything I ask to see. The dormitories are cement cubes, 12-foot by 12-foot. And in that space there are 13 beds, 14 beds. I count 15 beds. They’re stacked up like Jenga puzzle pieces all the way up to the ceiling. The space between them is so narrow, none of us would actually fit in them. They have to slide into them like coffins.

      There are cameras in the rooms. There are cameras in the hallways. There are cameras everywhere. And why wouldn’t there be? You know, when we dream of a future where the regulations are washed away and the corporations are finally free to sail above us, you don’t have to dream about some sci-fi dystopian Blade Runner/1984 bull [BLEEP]. You can go to Shenzhen tomorrow. They’re making your crap that way today.

      1. Lambert Strether

        As long as the right people are “regulated,” everything’s jake!

        No wonder the workers are killing themselves; they’ve been converted to things. Their only reason to exist is their labor power (“tiny fingers”) just like Mark said. The image is like something out of The Matrix, where people IIRC were turned into batteries; why not simply convert the flesh of the workers into iPhones directly through some sort of cloning process, rather than going through a tedious and cumbersome process of manufacturing (literally “manu,” in this case).

        1. Susan the other

          Very awful. But accurate. We are really putting the cart before the horse. The whole purpose of an industry, whether local, national, or global, is to participate in an economy that serves people. An economy that destroys people is an oxymoron. How can a trade be valued without valuing the people surrounding it. It makes no sense. That’s why money makes no sense. I appreciate this post by Yves because I wasn’t thinking like a cutthroat. I was assuming that Chinese labor was cheap for us but average for China so we were saving and they were benefiting. That was bad enough for our decimated industries… BUT demolishing the supply chain is another dimension. Capitalism, sane capitalism, works best with an open supply chain. This Chinese subsidy just damaged an old and excellent US company: Corning Glass. I’m sure there are a myriad of like situations.

  15. Godfree

    Foxconn is a Taiwanese company that gets kid-glove treatment from the Chinese because they’re trying to win the hearts and minds of the Taiwanese elite–and succeeding.
    Foxconn is notorious amongst young Chinese as an employer of last resort: they treat employees like dirt. The kids who work There are under skilled and undereducated.
    Nevertheless, their wages have been rising 17-20% annually for the past 8 years.
    In response to wage pressures, Foxconn is relocating it’s factories inland, and automating them to eliminate 60% of their manual workers.
    It’s complicated…

    1. F. Beard

      It’s complicated… Godfree

      No, it isn’t. The money system allows the rich and other “credit-worthies” to exploit everyone else.

      “The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.” Lord Acton

  16. Xan

    It is not taxes. It is not cheap labour. I have no idea why the US is clamouring for the worst jobs, the assembly jobs, fighting with China over the scraps of manufacturing. Check the back of the iphone. It says “Assembled in China”. Open it up and it’s a different story.

    About a year ago the WSJ had a piece about the manufacturing cost of the iphone. Their point was that more of the value of the phone was created in the US (7.5%) than in China (1.5%), so we should consider it a trade surplus. (Well, it’s the WSJ. What do you expect?)

    But that only ads up to 9%. They didn’t seem too keen to talk about the other 91%, though they did break it down with a US Today-like info-graph. Turns out 51% of the value of the iphone is created in 3 countries. They are, in order, Japan, Germany and South Korea. Here’s what these countries have: higher wages, higher taxes, universal health care, and America’s former jobs. They did not go to China. They went where the technology is, technology that the US no longer leads in. The US does not not manufacture these high tech items because it is too expensive. It doesn’t because it can’t. The factories in China are filled with Japanese machines, too precise to be made in the US. The iphone is filled with Japanese parts for the same reason. Manufacturing those precision instruments is where the good jobs are.

    All this American exceptionalism nonsense and still judging the world as if it’s the 70s has caused Americans to not notice that the rest of the developed world has leapfrogged American manufacturing technology. Instead, America is innovating financial ‘products’. For the US to catch up again would require enormous amounts of cash. Factories would have to run at a loss for years to gain the expertise to compete. But that is what the Japanese did. And it is what the Chinese are doing now.

    1. sleeper

      Folks:

      There is an elephant in the room -

      Much of production equipment is computer controlled – often called CNC or PLC control. This means that quick change of product is easy to achieve in fact downloading a “new” program is a matter of a few minutes work. But it does require an investment in CNC controlled machinery.

      As other comments note the focus of mainland US manufacturing has been the financial aspect – Why invest in bricks, mortar, and machinery when manipulation of finances will do ?

      A great example of this is the description of GM as a small division of GMAC.

      1. JCC

        As a side-note to “in fact downloading a “new” program is a matter of a few minutes work”

        Although a somewhat simplified example, as a former “field service engineer” (read: factory-trained, factory-employed machine tool service rep – I trained, installed, and repaired these in factories all over the U.S. and parts of Asia), I would add that the figure is actually around 1/2 a shift to swap jobs – tooling changes, test cuts (extrusions in the plastics industries), etc.

        I could write an entire essay on the various elements of destruction that occurred during the 90′s to the U.S, CNC Machine Tool Business and the company I worked for in particular, even without insights to the actual financials of these companies. It was so obvious that it was staggering (surprisingly very few of my co-workers noticed, or chose not to notice).

        When I left in 2000 – even I was able to read the writing on the wall by that time – our top-of-the line machines, without tooling, cost around $70K or so and were operated by $10.00/hr “machinists” and $35K/yr programmers, cheap at twice the price. The price has not gone up that much since then, but this company now “licenses” their name for the mfg of CNC Tools produced in… you guessed it, China and Taiwan, Indonesia, etc. The machines are nowhere near the quality they were, but I guess the stockholders are happy (I wouldn’t know, I sold all my stock in that company shortly after I left in order to get “re-training”).

    2. alex

      “They went where the technology is, technology that the US no longer leads in.”

      In many cases the problem is that “American” companies practically bend over backwards to give away the technology. The article mentioned that the glass was developed by Corning in the US, but they transferred the manufacturing to Asia.

      Other examples abound. GE has a “partnership” and tech transfer arrangement to make jet engines in China. WTF? For the US to allow things like that is suicidal. Only 3 companies in the world have that expertise (GE, Pratt-Whitney and Rolls Royce), and 2 of those are “American”. Would Germany, Japan or S. Korea be crazy enough to allow that kind of tech to be transferred out of the country?

      1. Up the Ante

        Very good points.

        Leading us directly to the CEO Conspiracy. Serious, personal incentives must exist to make such decision making plausible.

    3. spacecabooie

      “The US does not not manufacture these high tech items because it is too expensive. It doesn’t because it can’t.” – Xan from Japan, perhaps

      which is it ? Too Expensive … or … can’t. On the question of skill, if that’s the reference, the top (1-5, depending on discipline) university I attended harbored the entire gamut; Korean, Iranian, Indian, Chinese, Japanese, Pakistani, French, etc., and a few American’s. And, I dare say, while the visa students were happy to schlep by on rice and pork at the micro-waves, there work products could often leave something to be desired. (Just trying to be diplomatic … but I guarantee you there is nothing sacrosanct about the skills a jungle dweller develops over those developed on a baseball field or in a music hall.)

      The middle class is a THREAT to the 0.01%. Simple as that.

        1. spacecabooie

          I have, and again, for many years I have also studied and worked with many fabulous people from other parts of the world. And what I found was that the most gifted among them were from rural environments – just as I have found to be the case in the U.S. But, in the U.S., thanks to the residue of FDR’s policies which Truman’s reversals took decades to finally detroy, music education and dexterity and social development were always available. When has that been available even in centuries old cities and urban areas of Europe ? And while those cultural enhancements may not have contributed to the “gifts” of the gifted, they lift many more to a level where a glimpse of the worl of the gifted may be viewed.

      1. Xan

        Sorry. My grammar was jumbled. I mean to say expense is not the barrier, since so much stuff is manufactured in places with higher costs, including labour costs, but rather technology. Yeah, the States makes the best laser-guided bombs, but Japan makes the lasers. And no, I am not from Japan. Just find its policies interesting. I could say many of the same things about Germany or Austria. But the iphone is made mostly in Asia.

    4. Up the Ante

      “All this American exceptionalism nonsense ..”

      ‘.. expressed through CEO’s payscales ..’

      fixed it for ‘ya

    5. propertius

      Funny, the military-industrial complex seems to be able to manufacture incredibly complex products in the United States. The complexity of an F-35 makes an iPhone look like a stone axe, yet somehow it’s magically built by workers in Ft. Worth (apparently in spite of the “fact” that Americans can’t assemble complex products).

      1. Xan

        That is true. The expertise we do have is wasted on the military and never make it into anyone’s home unless that home is a brick hut in Central Asia.

      2. Up the Ante

        “The complexity of an F-35 makes an iPhone look like a stone axe, yet somehow it’s magically built by workers in Ft. Worth [for far less than who? making the F-22 who, of course, cannot produce it without defrauding the taxpayers] ..”

        There, FIFY, as they say.

    6. Glen

      KaBam – Hit the nail on the head.

      As an engineer in American manufacturing for thirty years, I’ve watched this happen. We are gutting our manufacturing base, we are gutting our R&D, we are gutting our universities, colleges, tech schools, all to save about five percent in total manufacturing costs.

      All to make a very small number of people very very rich,and the rest of us – disposable. All using decisions, policies and tactics your five year old knows will make a quick buck, and then trash the company.

      It’s the American Business Policy:
      Gut your manufacturing base by selling your jobs to the low bidder, and gut your technology base by creating stupid IP laws and sell it to the high bidder (or just give it to China to get your foot in the door.)

      Welcome to The American CEO’s Complete Idiot Guide To Third World America

  17. wunsacon

    “Jobs” are never “coming back”. Automation is relentless. Artificial intelligence will finish off the jobs that remain.

    People better start planning for a world without jobs. (They’ll probably prepare for that just as well as they’re planning on stopping global warming.)

    1. alex

      Nothing like a bit of futurism to minimize the outrage over American policy that screws our middle class.

      1. Frank Speaking

        odd that the middle class has been responsible—through omission or commision—for the policy that has eliminated them as a power center

        1. F. Beard

          It’s not odd because it’s not true. The middle class is being destroyed by a government enforced/backed counterfeiting cartel and that was set up by rich bankers, not the middle class.

          1. spacecabooie

            And the middle class – the upper 85% of Americans without a college degree, and a large portion of those of whatever class – classless? – with degrees but who are sociopaths, think the US deficit is like their credit card balance, constrained to flat revenues (many want flat or even dramatically declining population). Notable among them, think of the T.Piers, the Blue Dogs, and the “random” sociopath in the northeast, west coast, etc..

    2. PunchnRun

      We’re not there yet, slave labor is still cheaper than robotic. With labor rates rising in China, will the owners go elsewhere? Where will they go and when will they run out of places? We can’t predict and I’m afraid that for the foreseeable future that’s going to be the pattern.

      If robotic labor ever becomes so cheap that it’s no longer economic to keep slaves, what happens to the slaves (that’s us)? In an ownership society, only owners will have the right to life.

      Your mission, should you decide to accept it, is to figure out how to avoid starvation while avoiding becoming a slave.

  18. my smug-phone is a 7 year old Nokia

    Talk about the power of marketing. Apple knowingly benefits from labor practices that could’ve come straight from a 19th century Dickensian workhouse and gets a free pass from the media and liberals.

    Disgusting and as hypocritical as anything that Newt Gingrich can dig up about family values.

    1. alex

      “gets a free pass from the media and liberals”

      The media (as in the NYT) doesn’t give them a free pass – it bends over backwards to promote their self-serving narrative.

      As for “liberals”, how many “liberals” on this site are giving them a free pass? And if by “liberals” you mean the NYT or politicians, how many conservative media outlets or politicians are condemning this?

      Get beyond the liberal vs. conservative nonsense. Those brand labels are just part of the narrative that distracts people from what’s really going on.

    2. propertius

      It isn’t just Apple – in fact, Apple was one of the last “U.S.” PC companies to offshore their manufacturing. HPs and Dells are assembled under the very same deplorable conditions – in some cases by the very same companies.

  19. Dan

    Wow. The level of manufacturing flexibility and capacity sounds exactly like what enabled the US to win WWII on multiple fronts. Thank you bare-knuckled capitalism!

    1. Up the Ante

      “The level of manufacturing flexibility and capacity sounds exactly like what enabled the US to win WWII on multiple fronts. Thank you bare-knuckled capitalism! ”

      ‘, championed by ‘the Establishment’ retooling after the end of the Cold War.’
      fixed it for ‘ya

      Could it be the Cold War was a war on labor ?

      1. alex

        “Could it be the Cold War was a war on labor?”

        Quite the opposite. Bad treatment of labor would have made the commies look better. Now they don’t care.

        1. Up the Ante

          Or now they do care and the true Cold War began, upon labor, ’tis implied with super-evident results.

  20. Ed

    Technically, if you WANT the U.S. (and other countries) to have a middle class, the solution is not that difficult and its been pretty much the same solution for the last twenty years.

    Essentially the federal government has to put a tax or tariff on products manufactured outside the U.S., including only partly outside the U.S., which captures the difference in cost of manufacture, and what the cost would be if the product was manufactured entirely in the U.S., to the extent where this difference is explained by U.S. labor, environmental, consumer, and safety regulations. And these include the 13th Amendment. In practice this would mean use of analysts to look at the regulatory regime of each country, including the U.S., and come up with figure as to how much the regulations add to the cost of manufacture, and update this periodically. The executive branch could start assessing fines based on the analysis immediately, but for this to stick longer than a year Congress would have to levy the tax or tariff.

    The alternatives are to repeal all those labor, environmental, consumer, and safety regulations, and yes this will eventually include the 13th Amendment; accept that huge portions of the American population will be unemployable and put them on welfare; or accept that huge portions of the American population will be unemployable and starve them or encourage them to emigrate.

    Our elites have grasped that slave labor = profits! but there seems to have been no attempt to figure out what to do with the large number of non-slaves made unemployable. The ancient Romans, faced with a similar situation, eventually chose the welfare route, coupled with some land redistribution, but it took a military dictatorship that came in after several civil wars to get them even that.

  21. Ep3

    I was just about to share this yves! I barely got thru the first page before throwing up. Isnt it great how flexible Chinese workers are? They don’t go home, they wake up whenever they are told and go straight to work. Those are terrible obstacles to success in the US.

  22. Hugh

    Apple’s business model is a lord and serfs one. Its workers are serfs. It could be building all of its products in the US at good wage rates and doing its part to strengthen the middle class. It would still be plenty profitable, just not quite as profitable. So to eke out that last bit of profit St. Jobs decided to f*ck over American workers. What a visionary!

    I also wanted to bring up the whole “flexibility, diligence and industrial skills of foreign workers” cited in the article. The first two of these have, as Yves has noted, to do with having slave labor working for Apple, but the industrial skills is part of the skills mismatch argument widely used by corporate apologists in this country to explain away high unemployment. What doesn’t get explained though is what exact skills do Chinese laborers fresh off the farm have that American workers lack.

  23. Hugh

    What is the New York Times doing putting this tripe on the frontpage just below the fold? On the other hand, what would we expect from a corporatist propaganda rag?

    The problem with these puff pieces is that they are so blatant and crude that they have the paradoxal effect of undercutting the reputation of both the Times and Apple.

    1. alex

      “The problem with these puff pieces is that they are so blatant and crude …”

      Nonsense, American propaganda is the world’s best! Compare this with, for example, the old Soviet propaganda that almost nobody believed. While Yves, you, I and most of the people on this site see through the nonsense, that means little. No propaganda is perfect. It’s subtle enough and sounds reasonable enough to convince many people. More importantly it furthers that narrative that passes for conventional wisdom. Uncritical thinkers of America unite and swallow this garbage wholesale! The fact that NC is on the web instead of being published like samizdat just adds to the legitimacy. It’s brilliant!

      1. Xan

        I have lived in China and I can tell you that the propaganda in China is superior to American propaganda. But then I don’t have cable tv.

  24. Schofield

    The problem for most people is learning to distinguish between “competition” and “selfishness.” Steve Jobs knew that working conditions and remuneration at many of Apple’s suppliers was appalling but suppressed this information and carried on. Until a majority of individuals realize the Neo-Liberal model of market capitalism is based on the few transferring risk onto the many nothing will change.

    1. alex

      “Steve Jobs”

      Part of the genius of this propaganda piece. The guy has been eulogized as though he were Nikola Tesla and Martin Luther King rolled into one. Funny, I don’t remember such high profile eulogies from when Jonas Salk died. Jobs is apparently some sort of martyr because he died before his time of pancreatic cancer, as though there weren’t thousands of other Americans meeting the same unfortunate end.

      What’ll they do if Jeff Immelt or Jamie Dimon croaks? Insist on a state funeral? Have them lie in state in the capitol rotunda?

    1. alex

      Excellent point. Nowadays when GE transfers jet engine tech to China, the president makes GE’s CEO the “jobs czar”. Can I vote for Ike in 2012?

  25. temp

    A monkey was serving drinks and food to the clients in an eatery in Asia… it was a short news item on TV. My grandmother leaned toward me and said:

    “The monkey works for a banana… they soon will replace the Chinese workers with monkeys”.

  26. Lafayette

    Within 96 hours, the plant was producing over 10,000 iPhones a day.

    “The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

    Puleeze. What product announcement is dependent upon a 96-hour window? None. Had the announcement waited a week, the iPhone would have had a similar success.

    Competition was waiting for iPhone pricing in order to align with their android-based smartphones.

    Aside from being a product genius, Jobs (rest his soul) was bully and a braggart.

    Anecdote for Anecdote: Jobs was working on a windows-based Graphic User Interface (GUI) that would known as a “Macintosh”. He needed the help of some qualified engineers to accelerate the development of the GUI.

    So, perhaps foolishly, he contracted out – to of all people – Bill Gates to do some of the program development work. Now, why in heavens name he trusted Bill Gates is beyond comprehension.

    Anyway, he went ape-sh*t because Gates was spending far too much time with the Macintosh development team asking a great deal of questions about the GUI. He directed his engineers not to talk in any way with Gates.

    Apparently Gates had the information he wanted or needed, because Windows was also announced within a reasonable period afterwards as W95. Supposedly both did not speak to one another again for quite some time.

    (And if you don’t care to believe that bit of hearsay, see here.)

    1. PunchnRun

      Minor quibble, Windows came out years earlier than W95, initially in about ’86 as Windows 1, shortly thereafter followed by Windows 286, then Windows 386, then Windows 3.0 (the origination of the adage that Microsoft usually gets things right by version 3), then Windows 3.1, Windows 3.22 with integrated networking and finally Windows 95 in (wait for it…) 1996.

      During the same period, M$ partnered with IBM on OS/2, which also featured a GUI. That GUI was indistinguishable from Windows at first, and indeed OS/2 and Windows shared their code base. M$ people complained incessantly (and legendarily) about the glacial pace of IBM. Of course the Mac and Windows both met with resounding success. Anyone here familiar with OS/2? Thought not.

      Bill Gates is a bit weird, people who know him will attest. But so was Jobs, as the Times article under discussions illustrates. Weird, not dysfunctional. Gates is known to rock back and forth in his chair when in intense discussions. Gates is not unimaginative, just imaginative in a way Jobs did not recognize. Jobs’ innovations were industrial design oriented, Gates innovations were in business strategy and marketing. Neither stands alone.

      Finally, M$ has recently moved work off shore, but I believe its workforce is still largely US. Apple’s manufacturing is largely outsourced and that appears to be off shore. Apple has always had a hardware arm and hardware has a much larger impact on its bottom line. M$ is primarily about service – writing software.

      Please, pardon the digressions.

  27. Klassy!

    The US is going to have enough trouble rebuilding its industrial base as it is. Not understanding why and how the middle class is being sold out will only make that task more difficult.

    But you are not implying that the NYT is in the business of helping Americans understand why and how the middle class is being sold out, are you?

    As far as I can tell they have a well paid stable of writers who are in the business of promoting insecurity in the American worker. That some are deemed liberal and some deemed conservative matters not a bit. They all appear to have the same mission.

  28. john

    Thanks, Yves. A couple of seemingly simple questions came up as I was reading this story:

    1) Re: The guy who was told that only 12/hr day, 6 day/week would make his job competitive. Why couldn’t they add a third shift? Happens in the auto industry all the time.

    2) Re: grouping of suppliers within blocks (gasp) of eachother not being possible in this country. Again, doesn’t Toyota/Honda have this set up in the South? Or the Big 3 in Michigan?

    The whole thing struck me as complete/utter BS. Bah!

    1. alex

      “grouping of suppliers within blocks (gasp) of each other not being possible in this country”

      Self-fulfilling prophecy. If you ship all the manufacturing out of the country, it may be harder to find suppliers in America. What a surprise.

  29. alex

    From the article: It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts …

    “flexibility, diligence and industrial skills”. Double talk. You can get all the flexibility you want in America, but you’ve got to pay better than Foxconn. So that still boils down to cheap labor. I’m sure Apple execs put in heroic hours, but how much do they get paid for it?

    “Diligence” is utterly unsupported by the article, but who cares? It buys into the stereotype of lazy sloppy American workers. +1 for the propaganda mill.

    “Industrial skills” is a self-fulfilling prophecy (as are many of the issues regarding supply chains in Asia). Of course you can’t find them as readily in America anymore – you clowns shipped all the jobs overseas! It’s like the old joke defining chutzpah as killing your parents and then throwing yourself on the mercy of the court because you’re an orphan.

    Did Apple write this article? Was it a cooperative effort by the Outsourcers Association of America? Did some editor at the NYT get his palm greased for publishing this? I certainly hope so, because otherwise my opinion of the NYT just dropped even lower than it already was for publishing this uncritical and unthinking propaganda. Do they even think of publishing countervailing opinions? (hint: Yves or Dean Baker would be happy to comment).

    And tell me again why they fired Judith Miller. Her style of being an uncritical mouthpiece and propagandist for TPTB fits in perfectly with the NYT style. They should have made her editor-in-chief.

  30. curmudgeonly troll

    I dunno…. if all those workers were still growing rice at one quarter the wages, would that be ‘slave labor?’ And then if you buy rice in the global market, does that make you an exploiter of slave labor?

    It seems to me, either you believe that global trade is good for humanity or you don’t. My belief is most Chinese would not choose to go back to the old closed economy. They are certainly very eager to take those jobs.

    Not to excuse abusive practices, underage labor, health and safety abuses, which Apple and other multinationals should be leaders in stamping out.

    The simple truth is the global gadget economy does not work without the scale and flexibility and cost of global manufacturing. Try to bring it back to the US, and you double the price, which shrinks volumes, which doubles the price again. Think back to the 80s, when the latest 386 PC would come out at $10,000 in current dollars.

    We should look at places like Germany that still find high value added specialty manufacturing jobs, and where we can achieve scale. No policy is going to change the fact that we can’t compete with China right now in the largest scale, lowest cost manufacturing.

    1. sleeper

      Let’s see if the price is doubled in bringing a manufacturing process to the US – why aren’t we seeing continued low low low prices in the stores ?

      I mean if it is cheaper from China why don’t we see much lower prices ? This ought to be easy to see on a macro economic level don’t you think ?

      And to be absurd since offshore resources and offshore labor provide much of the gasoline for the US why aren’t prices for motor fuel much lower ?

  31. o.jeff

    I would put a 30% sales tax on imported good and services tomorrow. It would work like this: iPad made in Texas is $300. iPad made in Foxconn City China is $300 + $90 tax = $390.

    I would make the imported goods sales tax revenue neutral, meaning that if this tax brings in $400 billion annually, then the corporate and personal income tax rates would be reduced sufficiently to offset the new tax revenue.

    If we do not do something like this, the CEOs and managers might be surprised to wake up in a world where they live in constant fear of their families being kidnapped and held for ransom. What good will those stock options be if you live in a gated neighborhood with 20 foot concrete walls around it?

    I would much rather pay a bit more for imported goods and have more jobs in the USA. The net effect of reducing the welfare roles, having a stable society, etc. trumps any other concerns.

    1. Tyla

      Hilarious, but I think you deeply underestimate the depth US manufacturing has been destroyd.

      1. foxxconn owns a lot of patent, manufacturing, process, etc. (Yes, US patents.)

      2. US does not have supply chain to compete with major chines cities. Good luck trying to manufacture a device with several hundreds different specially made parts.

      3. US transportation system is completely unsuitable for global export/import. Even if the product cost the same to manufacture in the US, it will cost a lot more to move around from within US cities, let alone world wide export, than from city like senzen, Hong-kong. (US workers has to commute at ever higher gaslonie price)

      4. Display, CPU, DRAM are all made in asia. With inter asia free trade agreement.

      5. What makes you think china cannot retaliate and start banning export of all difficult to manufacture parts? including rare earth. Nobody else in the world makes a lot of those ipod parts. Apple has to build factories for everything from scratch.

      6. Good luck doing all that for high volume short production run. (say, few tens of millions only a year.)

      7. You still have to compete with the best integrated manufacuterer. Samsung, HTC. (while you are struggling to build entire ecosystem from scrath and spending billions, next product will come out already. )

      Hence why apple lost the smartphone wars against android players by wide margin.

      Basically, you will have to pay $1200 iphone that is 2 years behind technologically. (Remember how Japan destroyed US consumer electronic in the 80′s?)

      1. spacecabooie

        Who cares about iPhones ?!!!

        As an object of great importance, along with social media which has as it’s greates fans the Security state and Ultra marketeers, it ranks as an simple impliment.

        It’s like talking about mass-manfuacturing a dress design, purse, or lipstick/fragrances, as a substitute for an appreciation of actual art and design. And the models continue to involve extraction and commodifcation of labor rather than the uplifting of a society.

        Funny that, as U.S. experience in actually designing / producing things wanes with greater acceleration, that people become more enamored with the products of such design. Watching the typical person fumble around ecstacially with their new gadget, before learnign enough to progress to ful-time naval gazing, is a reflection of this new stupidity of which I, unhappily, am also guilty.

      2. alex

        “foxxconn owns a lot of patent, manufacturing, process, etc.”

        Yawn. Who doesn’t own a lot of patents? Name one key manufacturing tech that Foxconn has locked up w/ patents.

        “US does not have supply chain to compete with major chines cities.”

        What a surprise. Destroy US manufacturing and you destroy US supply chains too. Of course not that long ago Chinese supply chains were a joke, so your argument that the current situation permanently prevents manufacturing in the US is absurd.

        “US transportation system is completely unsuitable for global export/import.”

        If the US transportation system is so unsuitable for global importation, then how do all those global imports get moved around the US?

        And here’s a hint about exporting: the same transportation system that imports can also export.

        “CPU, DRAM are all made in asia.”

        Semis are one of the few areas where the US runs a trade surplus. Companies like Intel and Micron still have most of their fabs in the US. To the extent that China is strong-arming Intel to put fab capacity in China, it’s time to put a stop to it.

        “What makes you think china cannot retaliate and start banning export of all difficult to manufacture parts? including rare earth.”

        What makes you think they won’t do it anyway? They’re already playing games w/ rare earths (in blatant violation of their WTO obligations, but when has China cared about that).

        As far as “difficult to manufacture parts”, they don’t come from China. Try Japan, S. Korea, etc. If you think those countries will ban their exports to the US you’re crazy.

        “Hence why apple lost the smartphone wars against android players by wide margin.”

        WTF? You tout the virtues of Asian manufacturing and use that as a reason that Apple “lost”, despite the fact that they also use Asian manufacturing? Oh, please, please, please explain the logic behind your reasoning.

        1. Tyla1

          “foxxconn owns a lot of patent, manufacturing, process, etc.”

          Yawn. Who doesn’t own a lot of patents? Name one key manufacturing tech that Foxconn has locked up w/ patents.

          see here:

          http://www.google.com/search?q=foxconn&hl=en&tbo=1&gbv=1&tbm=pts&ei=nZgcT4bnKcaltweM0ZGSCw&start=10&sa=N

          (I don’t think you realize how big and powerful foxxconn is. They have nearly monopoly of electronic assembly in the world.)

          —————-

          What a surprise. Destroy US manufacturing and you destroy US supply chains too. Of course not that long ago Chinese supply chains were a joke, so your argument that the current situation permanently prevents manufacturing in the US is absurd.

          some example: Plasma TV. several companies tries to bring the manfacturing into US, because they have all the patents, and production isn’t all that labor intensive. Plasma TV dies. LCD wins the day. WHY?

          Building supply chain ecosystem is much more difficult than you think. Legal, policy, where people lives, human resources, market, infrastructure… cost.

          Do you really think Detroit will be back as world automobile center? (It has all the requirements)

          ————————-

          If the US transportation system is so unsuitable for global importation, then how do all those global imports get moved around the US? And here’s a hint about exporting: the same transportation system that imports can also export.

          United states does not export meaningful quantity of consumer products anymore. It’s all bulk raw materials or high tech industrial output There is almost nothing in the middle. A company in US cannot keep up if they want to play global space. NYCity or LA consuming product has different logistic than detroit or Socal exporting machines. Everw onder what all those highspeed trains are for in China? Exporting soybean or Boeing jumbo jet is not the same as importing vacuum cleaner or iPhone.

          —————-

          “CPU, DRAM are all made in asia.” Semis are one of the few areas where the US runs a trade surplus.

          One company: Intel, the rest is TI, evrybody else is puny. Intel is PC only. It has failed to penetrate anything else thus far. (We are talking about iPhone afterall.)

          ———————

          What makes you think they won’t do it anyway? They’re already playing games w/ rare earths (in blatant violation of their WTO obligations, but when has China cared about that). As far as “difficult to manufacture parts”, they don’t come from China. Try Japan, S. Korea, etc. If you think those countries will ban their exports to the US you’re crazy.

          Care to guess who Japan and Korea will side in rare earth trade war? (Guess who they side in the first round. Nissan, Samsung.) China is much more important market than US. BY FAR.

          ————-

          “Hence why apple lost the smartphone wars against android players by wide margin.” WTF? You tout the virtues of Asian manufacturing and use that as a reason that Apple “lost”, despite the fact that they also use Asian manufacturing? Oh, please, please, please explain the logic behind your reasoning.

          Globally speaking, Apple is 60m out of 460m smartphones produced. By 2015 it will be 1billion device. Apple global growth is relatively flat. The other big players are Samsung, HTC, LG,Huawei, ZTE. In term of technology, they are much bigger players. much bigger.

          1. alex

            “see here:”

            Thanks for proving my point. All you did was google a list of patents. Meaningless, as I said. What are the key ones? You obviously don’t know, and simply regurgitate propaganda.

            “foxxconn is. They have nearly monopoly of electronic assembly in the world.”

            Near monopoly? What a joke. Tell me what percentage of worldwide electronic assembly they do.

            “Building supply chain ecosystem is much more difficult than you think.”

            Well China certainly did it quickly, which demonstrates it can be done.

            “United states does not export meaningful quantity of consumer products anymore.”

            You completely missed the point (unsurprising, since regurgitation of propaganda doesn’t inculcate the habit of critical thought). Why can’t the same transportation system that imports also export? Hint: ships, truck, trains, etc. can travel in more than one direction.

            “One company: Intel, the rest is TI, evrybody else is puny.”

            Once again: the US runs a trade surplus in semis. The distribution of manufacturers is irrelevant. And if Samsung makes more DRAM’s than Micron, don’t worry, Samsung is happy to sell directly to the US (in fact some of their fabs are here).

            “Intel is PC only. It has failed to penetrate anything else thus far. (We are talking about iPhone afterall.)”

            Guess you haven’t heard of the Atom series processors. Do try to keep up (Lenovo likes them). Prefer ARM? No problem, the UK’s ARM Ltd. licenses their designs to anyone (many US companies fab them).

            “Globally speaking, Apple is 60m out of 460m smartphones produced.”

            Again, you completely fail to explain your “logic” that Apple is less successful because it doesn’t use Asian assembly, when in fact it does.

          2. Tyla2

            I would like to see anybody building consumer electronic supply chain ecosystem in the US. (I would like to see anybody match the spending for next generation assembly line. Foxxconn is spending nearly $1B to create robotic lines.)

            Intel keeps failing to enter portable electronic is the exact point. It keeps running to DELL/HP which ultimately run back to chinese OEM/ODM. Smartphone and tablet moves too fast for intel to keep up. DELL/HP is not making any money in PC. bleeding hard. They make money on large item and government contract. Intel has near zero presence outside PC & server.

            apple is only part of the asian ecosystem. It cannot exist without asian OEM/ODM, while the asian can life without apple. In fact Huawei and ZTE are going to eat apple alive, just like samsung did. Apple now is what Palm. Inc was in the 20000. high in the mountain, but hollow, it cannot adapt fast enough on next generation device. (ever wonder why iphone all has same look, no color casing? because all the color patents are owned by somebody else. or how about next generation wireless)

            Apple does not have fab or control any wireless technology. It’s all style no substance. (eg. the type of patent used in actual making process instead of futuristic fantasy.)

            If you want to talk PC, all PC is made in china, taiwan, or korea. (minute quantity elsewhere) only intel supply intel made CPU, AMD has TSMC fab agreement. This is out of hundreds computer parts, albeit core. So as you can see, a good chunk of CPU is not even fabbed in the US anymore.

  32. jcb

    What you say, YS, is not wrong, in regards to the facts allegedly surrounding the manufacture of the Iphone. But it is you who frames the story incorrectly as merely a case study in “selling out the middle class.”

    There is such a thing as comparative labor costs.
    There is such a thing as useful government-directed economic intervention.
    China benefits from both.

    This is not a defense of free trade.
    This is not a defense of Chinese sweatshop labor.
    This is not a defense of American trade policy, which is flagrantly hypocritical.

    This is a defense of economic common sense which says that there is no certainty that the post-WW2 American standard of living can be replicated within our lifetime throughout the globe.

    No particular economic policy follows from this cautionary note. But if redistribution of wealth is high on the agenda of necessary national policies, it may also be high on the agenda of international ones. Equity may be a superior value to “my-standard-of-living-for-all-or-be-damned.”

    We all have a stake in clarifying the real costs and benefits of economic policy.

    1. Baz

      +100.

      This story is really about the fact that there are a virtually unlimited cadre of people willing to work harder for less, because they are used to not being able to attain that standard of living, period, through other means.

      The jobs might come back, but not until there are Americans begging to live at the standard of living those workers are getting now. We have exploited (and I mean this non-perjoratively) the rest of the planet for our standard of living, and that train has reached the ends of its tracks.

      Toot, toot. Hope you enjoyed the free ride, because it’s over. American standards of living are going down, iPhones, Apple, Jobs, or no.

    2. Yves Smith Post author

      Wrong. Better propaganda please.

      Direct factory labor is under 15% of most manufactured goods, and even less in consumer electronics. Any savings in direct factory labor costs are offset by increased managerial costs (those guys are much more costly) AND increased fragility created by complex supply chains.

      The article stressed REPEATEDLY that labor costs were not the issue, it was the ability to change manufacturing processes quickly. This was directly from Apple and other consumer electronics execs.

      1. jcb

        Better propaganda for what, Yves?

        How does your correction affect the underlying argument? “…increased managerial costs (those guys are much more costly) AND increased fragility created by complex supply chains.” ? Higher paid than American managers? More fragile than American supply chains? Then by your accounting it should be cheaper to manufacture stuff in the U.S. So there should be no problem. But there is…

        Look, the fact that increasing amounts of American manufacturing are being out-sourced to other countries means that there must be some economic explanation. Do you really want to argue that the only reason is that labor in other countries is more exploitable? Then why are wages rising in China? And why is manufacturing being increasingly outsourced to other Asian countries from China?

  33. Lambert Strether

    How about a slave labor app? Would Apple censor it from the Apple store?

    That would be an interesting little public relations nightmare for Apple’s new CEO….

    I’m envisioning an interactive map of China highlighting the various labor camps — Oh, I’m sorry, “dorms” — for the various Apple suppliers, possibly with a pop-up giving suicide numbers.

    I don’t have the technical chops to write it, but could help propagate the story….

    1. Frank Speaking

      I’d like to suggest you do a bit of reading, googling, wikiing about the term “wage slave” and then look around our own economy here in the US and our own labor history.

  34. AT

    Slave labor is awful, but has been the basis of civilization since day 1 and is still the basis of US civilization. Don’t want to buy products made by slaves – go live off the grid – if you can.

    As a moral aside, I find it astonishing how US people get all worked up about slaves in China who do have some basic rights, while not caring one little bit about the slaves in our own backyard. We call them “illegal immigrants” and justify our cruelty and abuse (including the gulag system called ICE we use to control them) by that little word – “illegal”

    There is no quick and easy fix. Slavery in the field and factory in theUS was only abolished after centuries of internal wars, and then the elites found crafty ways to bring back the slaves (ok, maybe serfs is a better word).

    I don’t have the answer, but certainly the solution requires we see the ENTIRE picture and not just focus on one company or product. And that includes the fact hat nearly everyone in the US, including tose who make a living wage, are essentially serfs.

  35. Kelly

    Like all profitable capitalistic enterprises, government (tax payer) is providing a huge subsidy. The Chinese government builds the factory, the US government assures cheap oil prices so the goods can be shipped, zero interest rates, ‘Right to work” laws preventing unionization, the force (police, national guard,) to keep the people in line, etc.

  36. alex

    Anybody read the comments on the NYT site? There are 500, and (judging from the first 100 or so) overwhelmingly negative. Apparently NC readers aren’t the only people who don’t have their heads up their posteriors.

    Meanwhile, nothing is done about such practices. So much for the idea of representative government. That’s where the problem is, not what most people think about these issues.

  37. RichardB

    Foxconn recently announced it will replace much of its human workforce with 1,000,000 robots. Sounds to me like we are at the beginning of a new, guilt-free “slave” based economy. So much for a middle class supported by manufacturing.

  38. Frank Speaking

    I was curious as to how long it would take to get to this window on the US’s version of capitalism and what ankle of attack you would use to turn it into an assault on President Obama.

    I never thought you would resort to the base lie approach.

    The New York Times “news” desk is three months late to the party on this one—their drama critic reviewed the one man play this tempest was created by back in October.

    http://www.thisamericanlife.org/radio-archives/episode/454/mr-daisey-and-the-apple-factory

    The story of China’s technique of using human labor instead of machines was first told back in 2005 in Ted Fishman’s “China, Inc.: How the Rise of the Next Superpower Challenges America and the World”

    The story’s author is the Clinton Adminstration. What do you all think Ron Brown was up to?

    In Fishman’s book—among the many jaw dropping (at the time) revelations—is a reference to a Chinese automaker building Explores knock-offs by hand the same way Rolls Royce builds its cars with one team of workers building a single auto from the frame up—no assembly line.

    The vast and talented Chinese work force is so vast human labor it is cheaper than robots and most mechanization.

    Chicago Public Media and PRI’s “This American Life” did a program based on Mike Daisey’s one man show that has the technorati and OWS mainstream squirming with guilt.

    It seems their glittering iPads and iPhones are made in a distopic industrial nightmare one part the movie “Brazil”; one part “Hudsucker Proxy”; and one part mash-up of Orwell’s “1984″ and Upton Sinclair’s “The Jungle”; and finally one part “the future of man kind”—still in production.

    The most telling portion of This American Life’s broadcast was host Ira Glass whom you could hear squirming and twisting as he spoke the words;

    “Should we feel weird about the computers and phones we use, all the clothes that we wear that are made in faraway factories in Asia under harsh working conditions?”

    How telling that when the those who embody OWS are confronted with the fact that in the global economy THEY are the 1 percent they have to hesitate to consider if they might have blood on their own hands.

    Had Mike Daisy been reporting on the manufacturing of say genetically modified foods, or guns or nuclear reactors there would be no shilly shallying about as to whether “feeling weird”—weird…really…weired…in Ira Glass’s much demonstrated vocabulary all he could muster was the word “weired.”

    Not outrage; not appoplectic; not sickened; not betrayed. No call for a boycott of Apple’s products. No discussion of an economic fight back strategy—”should we feel weird.”

      1. Frank Speaking

        NC is late to the story.

        Yves nakedly and dishonestly uses the NYTs story—equally late to the party—as hammer against the Obama administration.

        OWS are posers with as much blood on their hands as the 1 percent they decry.

        Today’s reality was brought to you by the Clinton Administration and our nation’s population doesn’t give a rat’s ass as long as the beer is cold, the video games are realistic and iPads look cool.

        1. F. Beard

          He who despises his neighbor lacks sense, but a man of understanding keeps silent. Proverbs 11:12

          1. Frank Speaking

            “…but a man of understanding keeps silent.”

            and yet you can’t seem to restrain your hands from descending on the keyboard F.

        2. Foppe

          Re 1. a. Why doesn’t ‘better late than never’ apply?
          b. some stories, if they don’t catch on, catch on when they are told a second time. Why blame Yves for the book you mention being largely ignored? It seems a bit silly to blame her for that.

          2. Yves nowhere mentions Obama here. The story mostly strikes me as an indictment of neoliberalism.

          3. Is this survivor’s guilt talking, or do you just feel a really strong need to make original sin-type accusations that cannot be defended against? It is still better to criticize the system while living in it (due to a fact that you had no control over — namely that you were born in it), than to not do so, right? Or do you really believe that only those who are blameless may judge others? Learn from each other, and point out the others flaws to him, I’d say.. But who am I.

          4. That’s really amazingly cynical and defeatist, &c., but really. Recommend you pick up David Graeber’s Revolutions in Reverse, after you’ve read (if you haven’t) Mark Ames’s Going Postal

          1. Frank Speaking

            better late than never doesn’t apply because the reference to this particular chapter in US manufacturing moving to China, a story twenty years in the writing of now, on this blog was done as a device to cheap shot the Obama administration.

            Perhaps you didn’t read the post.

            “A New York Times story, “How U.S. Lost Out on iPhone Work,” uses an Obama dinner with Silicon Valley titans to frame its tale of why the US middle class should roll over and die.”

            as far as the rest of your fatuos comment I can only suggest you take a remedial course in comprehensive reading.

            http://www.floridatechnet.org/inservice/abe/reading/

          2. Doug Terpstra

            “fatuos”? Oh, you meant fatuous: “Foolish or inane, especially in a complacent and smug manner.” I suggest you consult a dictionary and a mirror.

            Foppe is right. Yves’s article is as timely as it gets, on an NYT article posted just yesterday, and on an issue that only gets worse. And how is this explicitly a “hit piece” on Obama? This is mostly about Jobs and lack of jobs, in the wake of Jobs’ wake, who went to answer to his maker just last year. I think you inferred something not in evidence from one mention of Obama (though I do quite agree Obama is as guilty as sin, after recently proposing three new rigged trade pacts after breaking his promise to renegotiate NAFTA.)

          3. Foppe

            Ah, so you not only have a superiority complex, you also deliberately misinterpret in order to score points. You’re a bore, “frank speaking”.

        3. Yves Smith Post author

          No, you are the one who is late. I’ve been writing critical pieces on offshoring and outsourcing since 2007, long before it was fashionable. Get your facts straight before making criticisms.

    1. craazyman

      boycott them yourself!

      what are you waiting for, an announcement over the public address system?

      bowwahahahahahaahah

      Look at it this way, without the silly distractions of an iPhone and iPad, you won’t waste as much precious time and you’ll get real stuff done — like laying around just thinking of things or staring out the bus window channeling.

      You can also go back to a dial telephone if you want to get serious. That way it takes so long to call somebody that half way through you’ll think twice about whether it’s worth it. Think of all the useless conversations you can avoid.

          1. Frank Speaking

            you mean like keypads to enter a phone number on a phone that drops the call three times forcing you to reenter the number again, and again, and again.

            land lines had keypads and just how much time savings are there in entering a phone number on a key pad versus a rotary phone?

            if that is your idea of change you’ve been short changed by your academy of higher learning

    2. Up the Ante

      “It seems their glittering iPads and iPhones are made in a distopic [dystopic] industrial nightmare one part the movie “Brazil”; one part “Hudsucker Proxy”; and one part mash-up of Orwell’s “1984″ and Upton Sinclair’s “The Jungle”; and finally one part “the future of man kind”—still in production. ”

      Gotta work on that spelling, otherwise a good paragraph.

      This woman’s face is what inspired that paragraph, right ?

      http://i569.photobucket.com/albums/ss134/joeshwingding/500x_3foxconn-workers.jpg

      http://www.dailykos.com/story/2012/01/21/1056826/-Apple-and-Unbridled-Capitalism?via=siderec

      1. Frank Speaking

        I’ve always needed an editor.

        As George Bernard Shaw would say go “ghoti”.

        It ain’t my fault it is the English language’s.

      2. Frank Speaking

        the inspiration—more like despair—was inspired by living through the last fifty years and Ted Fishman’s “China, Inc.: How the Rise of the Next Superpower Challenges America and the World” published in 2005.

        1. Up the Ante

          Dystopic industrial nightmares will do that to you. Once again, ask that woman making 70 cents an hour, if that.

          She will know about the work in progress.

    3. JTFaraday

      “The story of China’s technique of using human labor instead of machines was first told back in 2005 in Ted Fishman’s “China, Inc.: How the Rise of the Next Superpower Challenges America and the World””

      Yeah, I think I saw the 3-part TV documentary. That’s when it dawned on me that nothing China exports actually comes from China. I continue to find this deplorable.

      Who do I call out on the carpet for this? Chairman Mao?

      Regardless, it is most certainly not, as you suggest, Occupy Wall Street. (But you already know that).

  39. Michael C

    So the Chinese government doesn’t even bother to pretend it’s not supplying slave labor and workhouses to lure foreign capitalists who will sell the dazling products to middle class foreigners.

    Jobs may have been a genius of design. He acted as rational capitalist (and capitalsim has no moral dimension yadda yadda, so he’s pure) The moral and ethical failing is with the Chinese gov’t. and by extension the US governement in facilitating the sellout of their own citizens on behalf of the US corporations who exploit other gov’ts contempt for their own citizens.

    That’s Job’s legacy.

    His extraodinary design genius seems like pure myth to me since he dominated a space with such high barriers to entry, competing design skill never had a chance.

    How can private businesses anywhere compete with that?
    Tarrifs or confiscatory taxes on US firms receiving the benefit of these subsidies (i.e Walmart, Apple, …)
    Tax should be based on wage differential between chinese worker and US/Euro wage earner in similar industry. Resulting wage diffential tax should be treated as an operating cost at the US firm and directly reduce earnings and dividend distrubutions.

    1. MichaelC

      The article helpfully provides the figures, $65 per Iphone.

      “It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.

      I’m pretty sure its more fact than teory.

      So every time someone buys an Iphone they are conttributing to Apples bottom line. No problem, Apple deserves to make a profit on the product. Since they’re very profitable most folks realize their paying a hefty reward to Apple anyway for that genius design. Lets assume its 2 hundreds.

      Apple’s typical customer might be surprised to realize that 65 of that 200 is being transferred from their pocket to Apples shareholders and execs thanks to the 12 hour shift dorm workers who assembled the phone.

      Imagine if every Iphone purchaser was made aware when they bought the phone that $65 of the price could be going into the workers pocket, but its not.

      Is there an app for that?

  40. Lambert Strether

    Black frames this in terms of control fraud against workers. He concludes:

    A final caution is in order because each of the major articles on the Apple report failed to mention it. CEOs who are willing to routinely defraud their workers and expose them to grave threats to their health are exceptionally likely to commit other forms of control fraud.

    Hmmm….

  41. jimmyj

    Am I the only one here that thinks that the Times article is a hit piece on Apple? I mean sure they mention that Apple moved to China mostly out of desperation, but its more like the beginning of any decent horror movie where we see a sympathetic innocent turned into the bloodthirsty monster that, by the end of the movie we are all ready to see die spectacularly. And the Times, in one of the best articles I’ve ever read from them (and only cause its the official Deluxe Establishment Takedown of one of my personal favorite bogeymen) not only manages to portray Jobs at every possible opportunity as capricious and uncaring, they actually give the thinking person the opportunity to craft a fairly accurate,if not sanitized, picture in their minds of the situation, at least vis-a-vis the situation of a laborer in China or the mind blowing profits that Apple reaps from this arrangement. Sure the Times takes its mandatory shots at US labor and education, but the damning stuff is directed at Apple. They even keep a running juxtaposition going between the guy at Apple who pushed through the outsourcing strategy and the Apple middle manager which ends with the middle mananger making 10 bucks an hour testing repaired iphones and the outsourcing bigwig being, if I’m not mistaken, worth half a billion in stock options alone. Damning stuff indeed.
    The article, to me, seems like part of a larger salvo in this chapter of the media vs. tech war, with fellow establishment mouth pieces NPR and Daily Kos singing backup.

  42. propertius

    It will be interesting to see how this all plays out in the long run. History tells us that slave revolts are particularly messy affairs.

      1. propertius

        You’re right, of course. Foxconn has no capital investment tied up in acquiring their workers, so they’re not technically “slaves”. The point still holds – eventually (as I said above) the suicidal Foxconn workers will realize that they’re trying to kill the wrong people.

    1. Frank Speaking

      I’d like to suggest you do a bit of reading, googling, wikiing about the term “wage slave”

  43. lb

    Am I the only person who read this article, saw the Times’ writers ginning up reader sympathy by carefully selecting Apple quotes, and then saw them spending that sympathy (pretending to be muckraking and blazing trails) by peddling an inevitability narrative?

    We have an admission that Apple could afford to pay American wages from their vast war chest while maintaining iPhone profitability, then a quick hand-wave that to do so would require reformation of the “global” and “national” economies? Apple and other companies built this infrastructure in other countries (at times, as Yves pointed out, with state subsidies) but the idea that they could build such infrastructure in the U.S. is dismissed out of hand.

    So the writers tell us they sourced this article so superbly well on page two, with salicious tidbits from anonymized ex-Apple folks and various others. Whither anyone who frames any of this in terms of the evolution of labor in industrialized nations, past and present? Whither folks knowledgeable about trade, the capacities we have to manage it, and all of the alternatives to throwing our hands in the air and accepting another subparagraph of the giant book on the race to the bottom?

    I don’t think this is simple narrative journalism, I think it’s advanced narrative journalism that allows the naive (wantonly or not) to be angry at Apple, feel well-informed, and do nothing. The sins of omission of the writers are what disqualify them to be called journalists.

    I guess this is what I get for reading a NYT article. At least they threw in the passing, absurd and needless reference to the current tech company darlings, Facebook and Twitter. I’m sure the wink and nod earned them their weekly brownie points with their establishment media cohorts and college buddies.

    1. propertius

      I don’t think the typical Izvestia stenographer is bright enough to commit irony. I think they honestly believe this corporate crap.

  44. kravitz

    Girlfriend!!! Thank you for this headline. I read that whole thang, and my head exploded. Apple in four words? Foreign Slaves Are Plentiful. Nowhere does it discuss the hazardous chemical residue used in production of the phone (of that glass) and why the U.S. regulations actually impede Apple’s ability to use some processes China doesn’t seem to care about. If Apple made the iPhone in the U.S., it would also have to clean up after itself. Something it seems to prefer others doing for it. (And that’s coming from an owner of several Apple products. No iPhones or iPads, though.)

    1. pws

      China is using human sacrifice to steal our industrial base, and looking forward to the day they can stop taking orders from Demonic Western corporations.

      Now, when that day comes, they will likely just replace foreign demons with local demons, but it won’t matter anyway…

      No one in the US will have any say.

      1. Blissex

        One of the better summaries I have seen. The Chinese government have indeed decided to bribe foreign elite demons into exporting their industrial base to China.

        Despite the enormous human suffering I think that is the lesser evil for the Chinese. Countries that had rapid development have always gone through a brutally exploitative phase of “primitive capital accumulation” so far.

  45. Susan the other

    Also, Chris Whalen posted on Barry Ritholz: “Sol Sanders’ Follow the Money Number 102 – America’s Love Affair With China.”

  46. sgt_doom

    Since MLK Day was so recently celebrated, one cannot help point out the obvious: each of the following superlative individuals was murdered just after they had focused specifically on workers’ rights.

    President John F. Kennedy
    Rev. Martin Luther King
    Bobbie Kennedy
    Sen. Paul Wellstone (working on federal-level labor law to guarantee collective bargaining rights for all)

    The conclusion should be obvious…..

  47. KR

    What this amounts to is that Apple Inc. has slave labor farms that produce, not cotton, but iPhones – except that Apple is cleverly avoided accusation of being a slave trader by locating its manufacturing to a communist state – where slave labor conditions are the norm – and outsourcing it, so that Apple can’t be accused of owning the slaves. But the end effect is the same: Apple is relying on slaves, even if it technically does not own the slaves. And by “slaves”, I don’t mean a person owned by someone else, but a person working under slave-like conditions.

  48. WorldisMorphing

    ["...as the product of American industry are increasingly displaced by others both in America and in foreign markets...Maintaining prosperity requires ever-rising budgetary and balance of payments deficits, which makes it steadily less attractive as a method of economic management.
    If continued long enough it would involve transforming a nation of creative producers into a community of 'rentiers' increasingly living on others, seeking gratification in ever more useless consumption with all the debilitating effects of the bread and circuses of Imperial Rome."]

    -Nicolas Kaldor 1971.

    In Capitalism, ‘Progress’ is not a goal in itself, it’s an incidence brought about by the interplay between necessity\constraints and greed.
    The idea that labor intensive products were to be made where labor is cheapest and most abundant makes sense…up to point. It’s true that losing line assembly jobs of the worst kind (damaging for the body and asphyxiating for the soul) is not the greatest of loss. But having a population losing touch and knowledge of how thing are made (not just conceived) is never a good idea.
    Furthermore, knowingly using sub-contractors that are abusive to ALREADY dirt cheap labor is morally wrong….but it is a byproduct of COMPETITION,… nothing new under the sun.
    In the end, SOMEONE HAS TO DO THE DIRTY FUCKING WORK !
    This said, changing design at the last minute prompting the contractor to prod workers in the middle of the night is a rather prickish thing to do…

    In other words…what is happening was and has been foreseen. It’s just that an intellectually sodomized population was told by an intellectually sodomized academia that subordinating everything to property rights and not caring how one becomes a ‘rentier’ is called “Freedom”….the rest is history…

  49. rotter

    Stop buying cheap asian made products. Stop buying as many as you possibly can. If you cant manage that than stop buying as many as you can find a North American or Mexican made subsitute for. Most Americans wouldnt stop buying IAsian OEM garbage even if a better American Made option were widely available and cheaper. Americans are Lazy and culturally degenerate.

  50. Joseph Browning

    ““Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”

    The belief that supporting American workers is some form of “generosity” is what’s killing our country’s ability to create demand via a large and wealthy middle-class. “Supporting” American workers is what creates a broad middle class and helps make sure that there will continue to be *customers* for $300 playthings.

  51. JerryDenim

    The fawning tone of the NYT article, the unquestioned finality of China’s manufacturing superiority were a little hard to stomach, and of course Yves is right the NYT piece ignores or misrepresents some very obvious unfair advantages like huge government subsidies etc, but the main thrust of the article; that the  Chinese are quicker, cheaper and more efficent manufacters than Americans really can’t be disputed even though it is an ugly and unfair truth.  The real question is what to do about it, but unfortunately there are only two painful options: Compete with the Chinese on their terms (subsidize manufacturing, outlaw unions, abolish the minimum wage, allow child labor, dissolve all governnent agencies that regulate labor or the environment, allow industry to pollute prodigously) which I think most readers of this blog would agree is insane, or we can move on to solution number two which is to completely revamp American trade and tax policy.  If it is unfeasible to compete with the Chinese on their terms why not win on ours? The world’s largest sweatshop economy cannot not continue to exist without access to the world’s biggest, richest consumer market so let’s tax away the unfair Chinese manufacturing advantage by placing a tariff equal to the differential gained by the regulatory and wage arbitrage on goods manufactured in any sweatshop country that doesn’t meet the floor of a international standard of lifestyle decency, which could be drafted after Congress votes in the tariff. There could be a conference of wealthy countries with a social safety net where the particpants could draft a set of minimum requirements for democracy, labor union and work rules, wages, healthcare access, and polution standards. Any country who wanted access to the markets of countries signatory to the treaty would then have to meet the standards or allow themselves to be examined and have a tariff accessed to compensate for any unfair cost   advantage they gain by not meeting the “human decency” standards set forth in the treaty. Of course this would mean the end of the WTO and every free trade agreement the US has ever signed would need to be renegotiated, but our current one-sided treaties are completely unsustainable. Even Americans can’t buy iPads on credit indefinitely without jobs.

  52. Hugh

    Apple published a list of its suppliers a few days ago. So the NYT puff piece could be seen as an attempt to neutralize the bad PR from that.

  53. Xan

    Does anyone else find it ironic that the Chinese were clawing each other and rioting to get their hands on an iphone? They didn’t seem too worried how they were made.

  54. piamrc

    What was also very telling was that Apple never attempted to build the industrial base to construct their product in the U.S. They immediately went to the lowest cost, most malleable, labor force they could find. How much of the inputs that compose their products have to be imported into China? Also, what knowledge of the production process does Apple lose by always hiring third parties to build their products? At some point will the lose of numerous stage of production impact Apple’s to still lead the field in consumer electronic products?

  55. Chris Rogers

    A huge amount of breast beating from many posters today about this NYT story.

    Personally, I see little to worry about – well, apart from the fact that if these deplorable ‘off-shoring’ practices continue in both the USA and Europe within another generation there will be no one left in most of the West to actually purchase any of these products, never mind the actual essentials of life.

    One is often drawn back to Karl Marx and his dire warnings about capitalism and finance, eventually it would consume itself due to its own inherent contradictions and these contradictions are clearly visible in the NYT article and numerous NC responses to it.

    Now, Marx was a economic determinist who was probably about 200 years ahead of his time, he knew full well what would happen in a truly globalised productive world, i.e., money goes to the cheapest manufacturing option to guarantee the highest return – Apple is an excellent example of this.

    Now folks, we are not on an equal level playing field, in Asia huge swathes of government money, i.e., peoples taxes are directed towards manufacturing and currently global corporations are milking this for all its worth.

    Unfortunately, and as China and India demonstrate clearly, capitalism is highly reliant on both a cheap source of labour and large number of consumers (you and i) to purchase these manufactured goods – I note neither China, India or for that matter, the majority of nations in Asia are consumer societies, quite the reverse, they are reliant on exporting goods to the West.

    As witnessed in late 2008/ early 2009 when this market for exports vanishes unemployment rises at breakneck speed, in China alone during said timeframe more than 20 million lost their employment, and fearing riots, the Chinese authorities pumped some US$2 trillion into the economy basically overnight to maintain an illusion of growth.

    Now, given those nations with the World’s largest populations are no where near ‘consumer societies’, and given the fact that as matters deteriorate further in the West as austerity and outsourcing reduce the bulk of the working population to pauperisation, what exactly do you think is going to happen?

    My best guess is we shall have some kind of violent revolution to remove the Kleptocracy that exists in the West, and trust me, the Asian economies won’t be far behind.

    Capitalism, particularly unfettered capitalism will always destroy itself due to its greed and crassness to actual human suffering, while large Western corporations have thus far benefitted, its only a matter of time until they have no one actually to sell massed produced goods to, when this happens, you may have change from the inside – I’m referring here to a Roosevelt moment – or the corrupt rotten edifice will continue on its merry way until the mass of the population begins parading ‘Heads on Pikes’, and we know who’s heads these will be.

    I’ll be blunt, currently many in the West are fearful of the arbitrary power of the state, once this fear vanishes – which it usually does when you are starving and homeless – you will see violent change whereby the needs of the majority are put before the needs of the minority.

    Indeed, it is the ultimate failure of Western Liberal Democracy, and by that, I mean trying to protect the rights of a small minority from the will of the majority that is the root cause of the problem and the US Constitutions and talks surrounding the framing of the Constitution sum this dichotomy up well.

    To sum up, I believe meaningful change will come, unfortunately this will not be in my lifetime and when it does eventually come, it certainly will not be without bloodshed – still, the ruling 1% deserve all they are going to get and only once this happens can we reorganise society along different lines that actually guards the interests of the current 99% who are effectively slaves whether they like the comparison or not!!!!

    1. Foppe

      Marx a determinist? You give yourself away. But i can see why you would want to say that: because you, at least, are one. In other words, a very lengthy bit of status quo apologia.

      1. Chris Rogers

        Froppe,

        Not too sure why you infer I support the Status Quo, and as for being a ‘determinist’, well, its clear as day light that on its current trajectory what we have as ‘Capitalism’ today is in for a mighty fall one way or the other.

        If, on the other hand you are inferring that I’m opposed to violent revolutionary charge, you’d be correct.

        Now usually, many American’s I discuss politics with accuse me of being a ‘Communist’, whilst in fact I’m a democratic Socialist, one who’s utterly disgusted by the lies and theft perpetuated by a very small minority supposedly in the interests of the majority.

        Now sir, if I find myself at odds with Issiah Berlin’s ‘Four Essays on Liberty’ and believe historical evidence since that essays publication very well backs up my grave concerns, that is, a complete and utter failure of Western Liberal idealism since the 1850′s, for in protecting the rights and liberties of in essence, a very small minority – the 1% of the 1% – we have damned ourselves and our planet.

        Still, and unlike many a leftwing and rightwing mouth foamer, I cannot countenance bloodshed – I am after all a moral being and find it immoral to advocate killing, even if in the interest of the majority.

        Luckily, the historical and economic determinism found in much of Marx’s writings, and indeed many others, suggests that our so called ‘Masters’ will hang themselves without any help from the majority.

        If this constitutes an apology for the Status Quo, so be it, but at least I get to sleep at night knowing full well that none of my own personal beliefs or actions have resulted in needless death or impoverishment – a statement that cannot be said for many of those who believe the current state we find ourselves in is perfect and in requirement of no change.

        Yes we need change, and yes we need to hold those responsible for our current economic condition guilty of crimes against humanity, but, we can only do this by being actual superior moral beings to those that inflict their rotten economic beliefs upon us. I may not be a person of religion, but I’m confident that Jesus, had he lived today, would have sided with the vast bulk of the global population that finds itself under the ‘Iron Heel’ of a monstrous minority full of greed and utter contempt for human life and existence.

  56. Doug Terpstra

    Dylan Ratigan, MSNBC host and author of “Greedy Bastards”, shows how US stimulus money for infrastructure, public funding, is also going to China. A $7.8 billion renovation of SF’s bay bridge, was awarded to China — 3,000 jobs to Chinese workers, Chinese steel, etc. Worse, the Chinese company lowballed the bid and is now sticking price hikes to the state, so perceived savings from slave labor and “Communist” govt subsidies have evaporated.

    http://www.bing.com/videos/watch/video/pushing-for-more-made-in-america-projects/6y8mwnz?cpkey=ab594973-d741-4481-82b5-a221db17d722%7C%7C%7C%7C

    This whole experiment in outsourcing and rigged trade, loss of sovereignty thru WTO, is criminal. And it is premeditated with malice aforethought. The 1% must eventually be made to pay a very painful price for such crimes.

    Andrew Sullivan recently wrote that Obama admin has suffered no significant scandals, when in fact, there have been hundreds and they are unrelenting. His best friend now is Newt.

  57. run75441

    yves:

    Pardon my words; but, “no shit!”

    Been in the US COA and I am tired; but, isn’t this what I have been preaching for a couple of years now?

    “It is the responsiveness of the supply chain, which among other things means ability to recruit factory labor and engineers quickly (and to get the factory workers to put in Foxconn like hours). Thus the savings is in inventory costs rather than labor per se.”

    Whacking Labor costs is a joke and superficial. The big costs are in Overhead and Materials. Laor cost whacking is short term.

    1. Up the Ante

      To play upon the word Overhead, now that cost is substantially reduced, “overhead” meaning the apparatus required to keep labor in line. They take care of that now.

      Convert former media centers into troll labs, and you get the picture.

      Employ other trolls to refer to those media who understand as “stupid” and “lazy”, and the trolls have done a day’s work.

      simulacra

  58. makarov

    Like many things the NYT prints, there is a mixture of truth and bullshit in the article.

    What’s true is for about the last 5-10 years, electronic component costs are generally cheaper in Asia than in the Americas. A Canadian company I used to work with sells RF amplifiers to cable television operators. When they finally decided to get a bid from a Taiwan-based contract manufacturer, it came in below their own parts cost.

    Yep, they could get it fully built and tested for less than they could purchase the parts. This shouldn’t be surprising because many contract manufacturers are quite large in size, and unless a particular part is unique to one product, can benefit from their own economy of scale.

    Put more simply, you produce 100K of something a year. However, by farming out production to a contractor, you get to utilize their purchasing power which produces millions of things a year.

    Some of the things in the NYT are correct, you can source parts for less, generally, in Asia. That is only true, though, because the scale of North American electronics manufacturing is only a fraction of what it was 15 years ago. In the mid-1990s, many electronic components were still made in the USA, because their customers are here. It’s really a classic “chicken and the egg” problem.

    However, the solution to restore high tech manufacturing to the USA isn’t that complicated. In a word, it’s tariffs. Pick an industry you want to manufacture products for, announce a phased in tariff, and the factories and jobs will come back.

    It could be specific, like “smart phones, tablet PCs, and other portable computing devices” or, more general, like “consumer electronics”. The tariff on all products in that category starts in 18 months at 50%. At 30 months it rises to 100%. QED.

    We can choose to continue to profligate “free trade” deals with other countries with no strings attached – no need to pay your workers a living or even minimum wage, provide a 40 hour work week, etc – or, we can return to bilateral trade, and wield the power of the tariff to insure our country produces things and provides jobs in manufacturing. We can’t have, both, unlimited free job and manufacturing jobs; not while foreigners are willing to work for $1/hour, and certainly not while parts industries have matured in their countries.

    Consumer electronics is actually an ideal industry to target. As unit costs have fallen dramatically from decades past, transportation costs become a greater and greater factor. This will work in America’s favor as items become less expensive, and the cost and time to ship a product becomes a greater percentage of the total.

  59. FreeWave

    How tragic, as a species, we experience such interconnectedness internationally through technological mediums which are completely tainted by slave labour-misery, suffering and corruption. Self regulation in regards to consumerism is so very needed. It is so very important that we critically evaluate all that is out there in that market of desire and assess our needs and our wants, for these too are tainted and defined by the societal perspective of capitalism-greed and acquisition. Increasing self-sufficiency and shrewd deduction are invaluable always, especially now. The I-Phone is a perfect example of vicious capitalism. It is very expensive (“status symbol/class symbol”), made by suffering peoples who are not considered or credited, AND last but not least, how about that inner GPS device, that negative big brother monitor that proves just how bad it is to buy in. Laissez Faire is cannabalistic at its height and peak, a true downturn in human consciousness.

  60. bob

    The Chinese workers are taking these jobs as a stepping stone to a better life, for themselves and their children. They are obviously willing to do so, even under the extremely difficult circumstances.

    If Americans were as desperate to get ahead, I don’t think we would be in our current situation.

    I think the only way forward for Americans is to be proactive and create our own jobs. Start companies and create a product or service that others require. Waiting for a factory to open in your town doesn’t seem realistic anymore.

    1. Foppe

      “willing” my ass. They are first displaced by the chinese govt who is reorganizing the landscape at a huge scale, to then only be able to turn to factory work such as this.. There’s nothing voluntary about that.

  61. donut

    long time reader, first time commenter

    1. People love to demonize Apple because they are so profitable and so big of a target. But how many realize they are the only major commercial electronics company that still does design in the US? Sure, boycot Apple and buy Android and kill US design and have less transparency into how Koreans make their products… Think Samsung is in the business of improving labor laws in China? I’ll take Apple over Samsung any day.

    2. As Steve Job’s biography points out, nobody “loves working at Apple”, but it’s the end result that makes the journey worthwhile. You know what else fits that description? A very good college. Anyone who believes Intel is successful because they have a great work-life-balance program is dilusional. It’s all from the hard work of engineers, who willingly slave away for 60+ hour weeks, some of whom dies on the job. I know 2 engineering managers in the past 6 months who died of cancer and was working on the job until a month or less before they passed away… So demanding similar devotion from manufacturing isn’t a stretch, and if it can’t be done in the US, boo hoo…

    3. Consumer electronics engineering is about bringing the best products to the consumer at the earliest opportunity. Multi-year delays like the 787 can only be tolerated in a world where the only competition is a bunch of Europeans who can’t even figure out who’s in control? Germans or French. Do that in electronics, someone else will eat your lunch. Last minute design changes is a fact of life, not poor design! If US manufactures can’t accomondate, someone else will.

    4. Competition is global, competition is real. Software industry is built on top of hardware knowledge. Once we lose all hardware design capability, software will be beholden to hardware firm’s drivers, and that gives them a leg up on the next generation of consumer electronics. Go to a top university’s CS department in the US, you’ll see 30% chinese, 50% indian, and maybe 10% caucasian. Without a good Visa program, it’s a matter of when, not if, US will lose the software competitiveness entirely. If you are not approaching this as war, you are too relaxed and don’t have the right mentality.

    1. Hugh

      You have constructed a strawman. It is either Apple’s way or no way. There are however alternatives using tax and tariff law to make it economic for high tech companies including Apple to repatriate jobs and technologies to this country.

      1. donut

        Name another billion dollar consumer electronics company that still designs in the US, let alone manufacture. I’m not talking about the lower-level design companies like Intel or Qualcomm, I’m talking about the end product maker like Apple or Samsung. Motorola? would they still exist without a Google buyout?

        Apple is doing what Walmart did, and if it’s not invented here, someone else will. Old empires die for the same reason old companies die – they get complacent and slow to evolve and compete with the new kid on the block.

        Tax and tariff laws… so you are advocating protectionism instead of free trade? I admit that China is cheating on free trade (but not through currency manipulation… that’s balony), but I don’t see protectionism as the right approach.

    2. F. Beard

      One hand full of rest is better than two fists full of labor and striving after wind. Ecclesiastes 4:6

  62. xenadu

    You know the real key piece to all this is the massive free money subsidies the Chinese government hands out like candy… the only reason an empty glass factory was sitting there (complete with idle employees and a huge inventory of un-used glass) was due to the Chinese government printing money and giving it away on bad loans that need never be repaid.

    If you think about that for a moment and the fact that we bailed out the banks…. I wonder where American manufacturing could be if the government were instead giving that free money to them. Sure, it’s a waste and inefficient… but at least we would get jobs out of it (instead of Wall St billionaires).

  63. Kunst

    Underlying all of this is human population. As modern industry becomes more and more efficient, the amount of human labor needed by the system decreases. At the same time, we just passed 7 billion people, supposedly heading for 9 billion or more. At some point, there simply isn’t an economic need for all the potential workers on this planet. Before that, competition between workers will drive incomes, especially for the unspecialized, to a subsistence level, which is more or less what this article is about.

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