Nerve Endings Firing Away

Last week, an article in the NY Times on how the U.S. lost out on iPhone work made the rounds on the Internet; so much so that it was posted on Reddit at least a dozen times with different excerpts depending on your tech ideology. Spoiler: it is not just low labor cost but also expedient labor and manufacturing due to fierce competition in Shenzen, China complemented with China’s favorable yet centralized manufacturing-oriented policies. The article is a fascinating read into the machinations of 21st century manufacturing to fulfill the instant gratification needs of the electronics consumer market.

However, the way it is written, it pits American labor class against the Chinese labor force, although unfairly in my opinion. Although there are several layers and aspects to the article, the typical reaction among the American blogosphere and young idealists at Reddit is how Apple is taking advantage of the desperate Chinese worker who is slaving away long hours to make the iPhone that you use to compose frivolous tweets. The fact that FoxConn, the primary company described in the article, also manufactures/assembles XBoxes, Kindles, Nooks, and other electronics from Samsung, Nokia, etc. is often lost in the din.

But that’s not the troubling reaction the article elicits. The primary complaint is, how China enslaves its people and forces them into working long hours for minimal pay to make goods for the Western world. People often are distressed not just by what they consider unfair labor and trade practices but also the unfair advantage China enjoys by having the ability to dictate policy from top down. While China’s autocratic rule making might be a factor, the complaint that these workers are slaves in the FoxConn behemoth is often exaggerated. The case of suicides makes the news and makes us believe that people are desperately trying to kill themselves rather than work in the factories. However, the fact that the suicide rate per capita at FoxConn is significantly less than the suicide rate at American universities but we aren’t worried that our colleges are killing us.

FoxConn has offered hundreds of thousands of Chinese people a shot at earning a livelihood which otherwise wasn’t possible in their rural hometowns. It has lifted several million people out of poverty. Of course, they live 10 to a dorm on bunk beds and work long hours but often Americans think their suburban life with a house and a backyard with two cars, kids, and a dog is the norm when in fact it is the exception. Most of the world works and lives in comparatively abject conditions. The fact that the one person in a 10-dorm room might be sending money to his village to support a whole family is often not told. I’m sure, FoxConn is not shackling the workers to the assembly line and the turnover rate is high. However deplorable conditions at FoxConn may seem compared to the luxurious working conditions from where I type this blog post, the workers have made a conscious choice and are working hard. Imagine thriving businesses within Dharavi and then look at the conditions that they live in but people there have similarly made a choice to leave their poverty behind and earn a honest living in the city. We are in no position to judge what conditions someone in a foreign country in an alien culture should live and work in.

The other argument is that Apple and other companies shouldn’t mind pricing their products a little higher if it means manufacturing them in the U.S. Unfortunately, that is not how the free market works. People optimize their benefits by seeking a balance between the price of the product and their willingness to pay that price. A few dollars here and there would mean gigantic shifts in manufacturing costs, profits, and even quality of products. The factories in China adhere to the strict quality guidelines laid down by Apple and yet are able to deliver a product that many in the U.S. can afford ($199 + $15-20 per month is a pretty sweet deal for the Internet in your pocket). Also, the U.S. has moved past the rigors of manufacturing and moved toward services that require a higher skill set (hence the tag – Designed in California. Assembled in China). By seeking to forcefully bring back the jobs from China to the U.S., you would cause a net increase in poverty in the world as millions would be laid off. Now that would be a grave injustice, economically and socially.

So before getting all pissy about doing here what they exactly doing in China for less and just as good, we are not making any progress. Obviously, there are caveats about leveling the playing field for competition but more often than not, it is not a level field at any given time. We just have to keep seeking the higher ground. That’s how the world goes around.

Update: NY Times is on a roll and really doesn’t want you to buy an iPad. However, they wait until the 11th paragraph to mention this:

Apple is not the only electronics company doing business within a troubling supply system. Bleak working conditions have been documented at factories manufacturing products for Dell, Hewlett-Packard, I.B.M., Lenovo, Motorola, Nokia, Sony, Toshiba and others.

And then never mention them again.