Apple (and America’s) Chinese Slave Labor Problem
If you have not read this article, you need to. It is presented as a "why the middle class is squeezed" in America piece, with the premise being that we were once great enough to be the world's manufacturing powerhouse but we no longer are and this is our fault.
Let's start with this:
Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.
Why can’t that work come home? Mr. Obama asked.
Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.
Ok, so why not?
Is it because the Chinese are smarter?
Is it because we lack the ability to perform the manufacturing?
Is it our tax structure?
In short, is it our fault?
In a word: NO.
This, my friends, is why:
Apple executives say that going overseas, at this point, is their only option. 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.”
It's easy to be "speedy" and "flexible" when you effectively own your "employees" as slaves!
How many of you caught the paragraph up there? At midnight, without warning, the factory foreman went into dormitories in which the workers were sleeping, roused them and effectively compelled them to work a 12-hour shift with nothing more than a biscuit and cup of tea.
Did you get that? These are not employees, they're slaves.
After all, were they employees they'd be working for great wages, right? Uh, maybe not.
The facility (Foxconn) has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he said.
The unimaginable part is that these employees are slaves. A communist nation can get away with this sort of thing. They can, and do, prevent the organization of those employees into a consolidated negotiating block, imprisoning or simply "disappearing" anyone who tries. A coordinated strike is impossible, meaning that labor has no balance of power with capital.
This power does not come from natural economic forces. It literally comes from the barrel of a gun.
Companies like Apple “say the challenge in setting up U.S. plants is finding a technical work force,” said Martin Schmidt, associate provost at the Massachusetts Institute of Technology. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand,” Mr. Schmidt said.
Are you reading this America? How do you square college costs escalating at double or more the rate of inflation and crushing levels of debt with the premise of a technically-trained workforce? You can't.
....in the last two decades, something more fundamental has changed, economists say. Midwage jobs started disappearing. Particularly among Americans without college degrees, today’s new jobs are disproportionately in service occupations — at restaurants or call centers, or as hospital attendants or temporary workers — that offer fewer opportunities for reaching the middle class.
Free market principles are fine right up until people start using slave labor on an effective basis, along with environmental arbitrage, as the means of "progress." And let's not mince words: That is exactly what has happened.
Absent intentional interference in our monetary and economic system on both sides of the Pacific what happened can't be sustained. Americans cannot buy iPhones without money to spend on them and they cannot have those funds absent "free credit" and ponzi bubbles without good jobs.
In other words, absent the intentional distortion that is generated by massive deficit spending by state, local and federal governments what happened can't as it immediately self-corrects. Henry Ford understood this -- which is why he paid his employees enough so they could buy one of his cars! He not only drove down the cost of building a car he increased the modestly-skilled laborer's wage so he could afford one. He took the efficiencies he found in automation and manufacturing and allocated some of it to labor so that the total economic surplus would be recycled back into the purchase of his, and others, products.
That's what productivity improvement is, it's what powers the natural deflation that is the ordinary state of all economies over time, and it brings common improvement in the standard of living for the majority of the people.
“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”
What Apple (and other companies) want are employees that are housed in dormitories, can be roused at midnight to work a 12-hour shift on demand fueled with only a cup of tea and a ten cent biscuit, paying them $17/day.
THAT is what Apple and these other firms demand.
It is absolutely true that America cannot fill that demand, because at one dollar an hour you can't manage to put the food on your table for a family of four, say much less pay rent, electricity or gasoline for your car to get there and back!
“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”
That's absolutely true. But America remains a monstrously-large market and America has no obligation to let you bring products into this nation without tariff or impost while you exploit the existence of authoritarian governments and environmental arbitrage.
A 100% tariff on all of Apple's foreign-produced or assembled products should make the decision easy -- is this really about the availability of a workforce, in which case it would not matter to Apple, or is it really about state-sponsored enslavement and exploitation?
Source: Market Ticker
About Karl Denninger
Karl Denninger Archive
|06/26/2013||Did Italy Lie Its Way Into the Euro (Also)?||story|
|05/07/2013||The Faux Battle Over Online Sales Taxes||story|
|04/24/2013||Maybe Felonious, But Not Erroneous||story|
|10/19/2012||Capital Account With Nanex HFT Hunter||story|
|10/02/2012||HFT: Still Dancing Around the Issue||story|
|09/26/2012||The Speech that Wins the Election||story|
|05/21/2012||The JPMorgan Story Gets Worse||story|
|02/24/2012||Wall Street Journal Blames High Oil Prices on U.S. Monetary Policy||story|
|02/08/2012||Dispelling Mainstream Media Pro-Fed Hype and Non-Inflation Myths||story|
|01/18/2012||Karl Denninger, Leverage||bcast|