Friday, January 27, 2012

So-called sweatshops, Good or bad? or both?

Image representing Apple as depicted in CrunchBaseImage via CrunchBaseChinese Readers on the 'iEconomy' -

By now you probably have seen the series of articles the NY Times is running on China and Apples. If not, I HIGHLY recommend you read them and realize why so many jobs went overseas (pun intended). The first article sets the stage by recounting a conversation with President Obama and the late Steve Jobs where Jobs basically said the jobs the US lost are not coming back.

Here is a flavor from the New Republic:

"The article, by Charles Duhigg and Keith Bradsher, is difficult to summarize. If you care at all about the economy and future of the American workforce, you should read it for yourself. But the main takeaway is that other countries, particularly China, offered Apple something not available here: A cheaper, more compliant workforce. This anecdote captured the situation well:
"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.”"

What you may not know (at least I didn't) that the articles were also posted in China. The comments are very interesting and on both sides of the issue.

Those attacking Apple (and China for allowing such conditions to exist):

"It’s ridiculous that the local government is trying to promote the city’s image while horrible accidents are still happening like this. If what is prohibited in the U.S. is highly protected here by the local authorities, we will never be treated with dignity. — 安吉丽娜朱莉的男朋友"

"...everything is driven only by G.D.P., so which government official would dare supervise those companies? They (the governments) have long reduced themselves to the servant of the giant enterprises. — Occasional Think"
But on the other hand:
"Without Apple, Chinese workers will be worse off. I hope China can some day soon have dozens of its own companies like Apple, who (only) work on high-end research and development and send manufacturing lines to Africa. — Anonymous"
"If more rigorous labor protection standards and 8-5 working time protocol are being strictly executed, we can expect a plunge of the workers’ wages. If labor organizations with monopoly rights are established, those rural migrant workers who cannot find a position in the organization will be forced back to their hopeless villages.....  — YeyeGem"
"If people saw what kind of life workers lived before they found a job at Foxconn, they would come to an opposite conclusion of this story: that Apple is such a philanthropist. — Zhengchu1982"

Which reminds me of this clip from Milton Friedman (the entire thing is an excellent defense of Capitalism) but the part that begins at 1:00 is totally apt for this discussion. (HT Susan A)

Who is right? Who is wrong? There are no easy answers. In a free society with no information asymmetries, by definition if someone takes a job FREELY, and can leave FREELY, then it must be that the employee is better off with the job than without.  And clearly factories like these (and by no means is it only Apple) do lift the standard of living.  But if the people are not working there freely or are working under false auspices and can not quit, then all bets are off.  
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