This New York Times story, telling ugly stories of human suffering at Chinese outsourcers, isn’t about Apple. It’s pure politics and economics.

It’s Simple · The management of well-connected Chinese companies needn’t worry much about regulation or law enforcement, because China is governed by a corrupt autocracy. They needn’t worry much about unions or other worker activism because that government has as a matter of industrial policy disempowered labor, making real unionism impossible.

We’ve seen this movie before. The description of 21st-century Chinese political reality applies pretty well to 19th-century Europe. Not surprisingly, so do the descriptions of the sufferings of industrial laborers.

History says: The systemic pressures of capitalism will always, in the absence of countervailing forces, lead to brutal exploitation. Fortunately, history also teaches that capitalism can still create prosperity even when fenced in with safety, environmental, and labor-law regulation.

Some will push back, pointing out that China’s policies have lifted the best part of a billion people out of grinding rural poverty; also that people take Foxconn jobs eagerly because they are an escape from the village.

I stand by my point; Europe’s industrial revolution’s backdrop was a mass migration out of the countryside, and people lined up for jobs in Dickens’ dark satanic mills because it was better than starving down on the farm.

That’s not good enough. It seems to me that it should hardly need saying that just because there are worse alternatives, it’s not OK to brutalize people so that people in my timezone can pay less for electronic lifestyle baubles.

Something’s Gotta Give · In the short term, the most likely outcome is: no change. In a society where there’s no transparency and no rule of law, it will remain possible, and immensely profitable, to sweep the problems under the rug, dodge accountability, and continue with Business As Usual.

But not for long, where “long” is measured in generations. I suspect that the longer we go on with Business As Usual, the more violent will be the inevitable breakthrough to modernity.

But I’m optimistic. Europe figured out that messy, petty, parliamentary politics leading to a messy, petty, regulatory framework are sort of optimal, if by “optimal” you mean “we haven’t been able to figure out anything better”. I haven’t seen any evidence that the Chinese aren’t as smart or courageous as my ethnic group; given the same opportunities, there’s no good reason they shouldn’t get the same or better results.

Prediction · I totally guarantee this one: Eventually, the cost of buying anything that requires human intervention in the manufacturing process is going up. The sooner the better.



Contributions

Comment feed for ongoing:Comments feed

From: Sophie (Jan 26 2012, at 02:06)

The story is also about Apple when profits are tallied. If you read the NY Times story while remembering figures released by Apple yesterday, you know where pressure is applied. The cheapest and fastest way to produce is strongly encouraged in order to fill coffers at 1, infinite loop.

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From: Firas (Jan 26 2012, at 02:41)

I think I'd be happy to pay more for products that involve better production practices (as masses of people already do for fair trade coffee, free-range eggs and so forth.) If you think about it people already spend $200 on a cotton T-Shirt because it has a brand on it; you might as well drop that amount for something that cost more than a few dollars to make. I'm not sure that I'd spend 5 times more for a kindle but if it's what's required then it's what's required. We're all better off with fewer, better things.

I'm not even sure I agree with this Wal-Mart style idea of squeezing everyone so the end consumer saves money. In the end the end consumer gets squeezed too because they're employed in some other respect that has to kowtow to the lower prices struggle. Lower prices is not the best way to align consumption or production choices.

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From: Ian Sollars (Jan 26 2012, at 02:41)

A nitpick: the dark satanic mills are of William Blake, not Dickens :-)

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From: Miguel (Jan 26 2012, at 05:29)

What you missed is natural resources. There are not enough resources on the planet to raise all of China and India to our living standards, even without thinking about global warming and other pollution effects.

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From: Ted Wise (Jan 26 2012, at 05:46)

I have a much more blasé attitude toward this situation since I see it as transitory. China and India have growing economies that will, eventually, result in a social and political landscape that resembles the West. It's not an overnight process and you don't get to skip the intervening steps because it's a "wiser, more mature" world. People don't fundamentally change quickly and the drives of greed and need and want are much stronger then a nebulous, we are the world, vision.

You can wring your hands all you like, single out one company or another all you like, but in a few decades those "exploited" workers will be demanding better working conditions and much higher pay. Stop applying the mores and views of the 1st world against an evolving community and economy. They aren't at a point where it makes sense for them yet.

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From: Tom Welsh (Jan 26 2012, at 07:49)

'Europe figured out that messy, petty, parliamentary politics leading to a messy, petty, regulatory framework are sort of optimal, if by “optimal” you mean “we haven’t been able to figure out anything better”'.

But the Chinese have - otherwise they wouldn't be massively undercutting European and North American industry. The most successful (indeed, quite possibly the only successful) Western corporations are those that, like Apple, get all their manufacturing done in low-cost nations like China.

From where I'm sitting, that looks like an advantage for China, not a disadvantage.

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From: Michael Zajac (Jan 26 2012, at 09:11)

If the immediate, obvious human problems are often being swept under the rug, think about how this economy's carbon release must be way below the radar, and what this means for a world that may be on the brink of runaway global warming.

Optimism about “China will be catching up to the West in accountability” should be tempered. This is Western technology, being built by Western companies, mainly for a Western market. When China has “caught up,” where will they be assembling their iPads and xBoxes?

Sorry to be so glum, but it is SO important that our corporations actively raise their operations above Victorian standards of labour and environmental damage, today.

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From: Andrew (Jan 26 2012, at 09:28)

You say that there is no transparency but clearly it exists at some level because you are blogging about it and you had to look no further than the NYT for source material. It's exactly this type of transparency that will force change. Change will come quicker to the Foxconns of the world who are too big to hide but it'll work its way down to the smaller players as well.

I heard an interview with the CEO of the Keen footware company on NPR last night. They opened a new shoe factory in Portland, OR in part because they can already see labor costs going up in China and it has no signs of stopping. There were other reasons as well to do with protecting intellectual property, innovation, supplier flexibility and made-in-America branding but it was interesting to hear that labor costs no longer trumped all those other concerns.

I think this is probably about the first real disadvantage that Apple has of being vertically integrated. Companies like Microsoft and to a large extent Google can shield their brands from these issues by not making hardware.

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From: guo (Jan 26 2012, at 09:44)

I like the commenter who thinks china is at an advantage because its people are poor, work harder and are treated badly. Jobs are a fine mechanism for distributing money and all, but its a weirdworldview that believes the 1% are disadvantaged because they don't work.

Also agree with Tim; we need to focus on building robots to replace chinese workers.

Likewise, anybody laughing at people spending $200 on a shirt, is not thinking through their resource/$ ratio. If everybody could live on video games and porn, the world would be a much more sustainable place.

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From: Anton McConville (Jan 26 2012, at 10:52)

I've been struggling with this too, especially after listening to this podcast from Mike Daisey: http://goo.gl/GbGWi

I've been thinking about it quite a bit, with no conclusions ...

I think that it is an age old pattern - maybe think of construction of the pyramids, the mining natural resources, even the farming of coffee beans ...

... and I think that there are still many other countries where workers could be paid low wages, and asked to work in uncaring conditions, if/when Chinese workers gain more salary and rights - so it seems a pattern that will be around for a long time.

I'm not economist. And I don't want to give up using the devices. So, for me, in the end it comes down to resolving some kind of personal balance with it.

What can I influence? Well it doesn't feel like much - but in my own time, I'm working to give back - using my software skills, and by utilizing these devices for an international charity.

I agree about a prior comment though - in particular for Apple - do they need to make so much profit on the backs of these workers? I suppose they do, because they can ... we as end users support them in doing so.

It continues to challenge me. Thanks for writing about it.

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From: Tom Welsh (Jan 26 2012, at 12:05)

"I'm not economist".

Congratulations. That's a great start if you want to understand the world.

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From: Anton McConville (Jan 26 2012, at 12:37)

Oops - I'm not 'an' economist - sorry my writing wasn't great in my post - wrote it too quickly.

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From: Paul Boddie (Jan 26 2012, at 14:38)

I've more or less come to the same conclusion myself: it's all very well people trotting out the same excuses that, say, China should be able to make all the mistakes of the worst of the Industrial Revolution, or asking everyone to just defocus a bit and take a 100000ft view of the economics, or whatever, but it does a great number of people a huge disservice to allow others to repeat the mistakes of history because those others - those who wield the power and influence - either cannot be bothered to learn from that history or actively seek to become obscenely wealthy at the expense of people who may once have been offered opportunities, but who are now actually being exploited.

Frequently, this undercurrent of ignorance and greed - in whichever combination - is dressed up in nationalism, with those who criticise it (internally and externally) denounced as "interfering" with sovereign matters. People should remember that a country name on a scorecard is not more important than the right of every person to experience a decent life, nor should they only focus on the hand that supposedly gives and not the hand that takes as much away if not more.

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From: Tom Welsh (Jan 29 2012, at 10:37)

Sorry, Anton. I didn't mean to poke fun at your typo. What I meant is that economists all over-abstract, and hence oversimplify their models of the world. That's why they never agree in their predictions.

So not being an economist is a promising start if you do want to understand the world - just as not wearing a ball and chain is helpful if you want to win the Olympic 100 metres.

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From: len (Feb 01 2012, at 10:43)

Or...

This and similar examples are proving that openness is not a viable model of survival. The more control one can keep behind a garden wall, the longer one can sustain growth in profitability.

For example, Time is reporting the imminent decline of Google given competitors such as Apple, Facebook and Apple who are quickly dividing up the Internet commerce domains for themselves and refusing to give Google access to their data while simultaneously free-riding on Android development. Apple has long been a master of let's you and him fight combined with what's mine is mine and what's yours is mine too. And what did that get them? They are poised to be the most profitable company in the world.

Are these short term advantages or advantages that set locks in place over the long term? Nothing lasts forever but some terms are long enough.

A lot of digital and real print has been dedicated to evangelizing the principles of openness? Anyone care to check the test results in the real world?

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From: Mark Levison (Feb 13 2012, at 06:54)

Tim - This idea has been going around a lot recently. Doug Saunders of the Globe and Mail has even written a book on the subject called arrival city.

We will quickly run out of shores to send our manufacturing too. Instead I'm interested in things that will up end traditional manufacturing completely. Look into the the 3-D printing movement which is starting to make one off items reasonably priced. A good article on the phenom is by Steve Denning at Forbes: http://www.forbes.com/sites/merrillmatthews/2012/02/07/the-future-is-gasp-manufacturing/

At this stage I would be looking to ask what industries can one off manufacturing disrupt?

Cheers

Mark Levison

Agile Pain Relief Consulting

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