naked capitalism

Cal says:

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.

propertius says:

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.

Jeff says:

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?

Xan says:

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.

Hugh says:

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.

john says:

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!

jcb says:

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.

Frank Speaking says:

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.”

lb says:

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.

Chris Rogers says:

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!!!!

run75441 says:

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.