How can I not respond to the “former Deputy Assistant and Acting Assistant Secretary of the U.S. Department of Commerce“? From Harvard no less!
Via the Huffington Post:
Let’s Move the iPad Back to America
by Gilbert B. Kaplan
Corporate citizens like Apple have a greater responsibility than just making money for their shareholders. They have a responsibility to the future of this country. Given the problems that are occurring at the Foxconn plant where they have been subcontracting iPad production, they should fulfill their responsibilities and move the production of the iPad back to the United States.
Note: You may want to read Gilbert’s article entirely at least once before diving into my responses below.
Right off the bat, we’ve humanized a corporation into a “corporate citizen” that has a responsibility to its country of citizenship and “the future” of that country. What responsibility? The responsibility to provide jobs manufacturing the iPad to the United States. Since there happen to be some problems at Foxconn in the news right now, it is especially a good time for Apple to bring those jobs back home to America, and fulfill “their responsibilities”.
I have no qualms with humanizing companies, organizations, or governments. They are made of people and people make their decisions, so I’m totally fine with that. Like others, I just enjoy pointing out how humanizing or dehumanizing something can manipulate people’s receptivity to subsequent suggestions about that thing. It’s easier to agree that someone owes you something when you see them as supposedly being one of your own, who should be on your side, who should share your interests.
Do I have an issue with what corporations owe their shareholders or home countries? Not really. I do want to ask people to imagine how differently — if at all — they’d feel if this were written by a Chinese government official about a Chinese company and what responsibilities that company owes the future of their home country. Would any of you decry the political and nationalistic overtones?
What role do the recent Foxconn “problems” play here? Looking at how that sentence is written, should Apple fulfill its “responsibilities” because of them? Or should Apple fulfill them anyway, regardless of them?
Let’s first look at what’s gone wrong at Foxconn, the sprawling subcontracting plant where iPads and other high tech products are made in Shenzhen, north of Hong Kong. Let’s look at the most fundamental point first, at least as it relates to the United States. That is that the workers at Foxconn’s plant are paid $130 a month. Assuming that they work four fifty hour weeks a month, this translates to a wage of 65 cents an hour. [...]
Come on, Gilbert, you’re the “Acting Assistant Secretary of the U.S. Department of Commerce”!
This is where Gilbert B. Kaplan works. Maybe.
Don’t tell me you don’t understand differences in wages and cost of living across different markets. Are you serious? Are you really going down this route?
That is basically a slave labor wage, [...]
Oh my god, yes, you are.
[...] at least as compared to the wages in western markets where the iPad is sold. [...]
Yeah, no shit, right? What is this? A pre-emptive “yes, I know the cost of living is different there for a reason, but I’m just comparing them to us here in the West anyway. Who cares if the comparison is inappropriate, right?”
How can we continue to tolerate a trading system that not only allows this, but in fact encourages it? [...]
Uh, because that’s the free-trade capitalism the United States of America is founded upon?
[...] It is true that workers in China seem to want these jobs because the alternative is even worse, but even that conclusion has now been thrown into doubt. If it’s such an ideal career path, why have ten workers thrown themselves off buildings at the Foxconn plant (nine died and the other suffered severe injuries), why have their been reports of security guards abusing workers, and why has the work been described as relentless, as “making people numb,” as turning them into machines?
No, it is true that many workers in China want these jobs because the alternative is even worse just as it is true that some don’t. No valid or reasonable conclusion has been thrown into doubt, now or ever. You’re just suggesting a false conclusion. No one ever said it was “an ideal career path“. Since no one did, there shouldn’t be any surprise that some workers (a dozen out of about 450,000) have thrown themselves off buildings, that there are reports of abuse, and that the work has been described as “relentless, as ‘making people numb,’ as turning them into machines”.
It is true that Gilbert B. Kaplan seems to be making a tone of disingenuous arguments here.
It is a scandal that this is where the high tech goods that people across America are enjoying are being made. [...]
I am shocked! Shocked, I tell you!
[...] And Apple does not need to make them there. The classic economic argument that the very low wages are economically necessary for a product like the iPad simply makes no sense at all. [...]
Wait, what? That’s not the OR a classic economic argument at all. You work for the American Department of Commerce?!?
A classic economic argument for Apple making the iPad in any place that offers lower costs is that doing so allows the iPad to be sold at cheaper prices. A class economic argument for Apple making the iPad at a cheaper cost to sell at a cheaper price is that doing so allows more people to purchase it and increase Apple’s revenues and profits. A classic economic argument is that society’s demand for ever-cheaper goods make it a competitive strategy for producers to seek ever-lower costs. The classic economic argument is that prices will always gravitate towards what the market will bear.
[...] iSuppli, a well respected international economics firm, estimates that the cost of manufacturing including labor in the iPad, is about $10 in a product that retails for about $600, in other words less than 2% of the price. And the profit Apple makes on the iPad is over $300 an item. [...]
That’s clever. The iPad cost breakdown estimate by iSuppli does indeed estimate the manufacturing cost (which excludes the prices of the components) as being $10 to $11.20. However, does Apple make over $300 in profit per item? As explicitly cautioned by iSuppli:
Please note these cost estimates account only for hardware and manufacturing costs and do not include other expenses such as software, royalties and licensing fees.
These estimates also do not include the costs of Apple being Apple, of all the R&D behind dreaming up, designing, prototyping, developing, marketing, advertising, and servicing a product like the iPad.
Back to you, Gilbert…
[...] Even if this $10 manufacturing cost (which includes such other things as factory overhead and energy costs) were doubled or tripled or quadrupled by paying a U.S. worker a reasonable wage and helping restore the U.S. economy, Apple’s profits would still be enormous.
Maybe, but maybe not enormous enough for them and their shareholders. Moreover, Gilbert, have you stopped to wonder how all those components that make up most of the costs broken down by iSuppli, are so cheap? Have you ever wondered why the A4 computer processor costs only 17 bucks? How much do you spend on lunch on average?
And what’s a “reasonable wage” anyway? Do you have any ideas? Can we get some input from the manufacturing unions? Will this reasonable wage include benefits like health insurance?
Foxconn pays their assembly line workers a base monthly wage of 900 RMB, or about 132 USD. Granted, these people work tons of overtime to make more money to save and send home, with the oft-toted figure being 2000 RMB total per month after adding overtime pay. That’s 294 USD. Without calculating in the fact that Foxconn provides room and board for their employees, let’s quadruple that to a round 1,200 USD per month. Is $1,200 per month for 80 hours a week a “reasonable wage” for Americans?
Will there be 450,000 Americans chomping at the bit to do such assembly line work? Will there be 450,000 Americans willing to meet the productivity of the Chinese worker in this regard, working as much overtime as necessary to earn that $1,200? Will they accept such a wage as long as they get daily meals and a dorm bed to crash in each night? How much will the land for the factory in America cost? The energy an maintenance costs for the factory? The costs of recruiting those 450,000 workers1? Let’s say American workers are far more productive than their Chinese counterparts because, you know, they’re Americans. Let’s say we’d only need 1/4th of the labor force to make just as many iPads and whatever other widgets Apple has Foxconn making for it. What are the costs and probabilities of recruiting 112,500 Americans to do the job?
Maybe it could work?
Come on, Gilbert, don’t just tell us it would work, show us how it would work.
About 100 years ago Henry Ford realized you cannot have a sustained industrial economy if the people who make goods don’t have enough money to buy them. So he paid his workers enough money that over time they could buy his cars, buy their homes and move into the middle class. [...]
100 years ago, we didn’t have the globalized economy we have today. In fact, the globalized economy we have today is largely thanks to Henry Ford, who popularized the shared components, division of labor, and assembly line manufacturing required for mass industrial production. He paid his workers more money than was common at the time only in part so they could one day afford his cars but buying homes and social mobility was not on his “profit-sharing” agenda. Gilbert, you do remember Henry Ford was against unions, right? You also know that it is entirely possible for the Chinese Foxconn workers to afford the iPad with their wages over time as well, right? Apple’s own employees definitely make enough to buy their own products.
A Ford assembly line, circa 1913.
Yes, I know your point is to say workers should be paid more, but my point is to chafe at the horrible and horribly exploitative and misleading arguments you’re making.
[...] Apple, now the largest technology company in America, is trying to squeeze every penny it can out of the U.S. consumers, and give nothing back, not even a manufacturing job in Silicon Valley or somewhere else in the United States for people making the iPad. [...]
Oh come now, you’re just being dramatic here. Squeezing every penny? So what should Apple do? Pay Foxconn more so Foxconn can pay its workers an amount that isn’t a “slave labor wage”? No, wait, they should bring those jobs back home to America for American workers, right? And pay them a “reasonable wage”? Which probably isn’t $1200 a month, right? Increase the prices of their products to accommodate their now increased costs? But wait, that’s still “squeezing every penny” out of American consumers, right? So it should soak up the costs and accept a profit margin smaller than the $300 profits it doesn’t make on each iPad?
On one hand, you’re griping about Apple paying too little to its workers. On the other, you’re accusing them of fleecing its customers. Sure, they’re not mutually exclusive, but you’re still somewhat sending mixed messages, encouraging people to pay more but also demand to pay less.
And really now, Apple gives plenty back to U.S. consumers! It is both revolutionizing entire markets, and creating them. It is challenging and competing with other computer, technology, and consumer electronics giants, driving innovation. If nothing else, Apple is giving immeasurable amounts of smug hipness to all of its consumers. How do you put a price on “cool“?
[...] 65 cents an hour is a better wage from their point of view. I’m a lawyer and I like to make a good income. I guess I should try and figure out how to pay my employees 65 cents an hour too.
Or you can stop trying to squeeze every penny you can out of U.S. consumers. See how that works?
One of the saddest footnotes, to me, in the whole Foxconn suicide story came from a nonchalant comment made by one of the Foxconn employees who an AP reporter interviewed next to the company swimming pool. The pool was supposedly built for the workers. But the worker commented that the pool closes at 9 pm, and she gets off too late to ever use it. It was sad both because this is just part of the whole Foxconn picture, unending routine, depersonalization, and migrant workers coming to Shenzhen with no way out. But it was also sad because it appears that Foxconn has built a Potemkin village, a fake façade, to appeal to U. S. outsourcers and U. S. journalists, and until recently, we all bought it.
No, you idiot, she couldn’t use the pool because she chooses to work overtime shifts to make more money because making more money is worth more to her than a dip in that pool. She can forgo a shift and a few dozen RMB if she really wants to take a swim. It’s up to her. To the extent that she feels compelled to work rather than swim, it sucks that the Chinese market for unskilled labor is so competitive but that’s life. Who do you want to blame? The government for not mandating higher minimum wages? The international globalized economy for making higher minimum wages a competitive disadvantage? The over-consuming Westerners who believe they are entitled to such over-consumption? All of them? Take your pick.
Foxconn didn’t build a Potemkin village, they built what you wanted to see. Let’s drop your fake facade, your feigned ignorance, your false outrage of what manufacturing at such a low price point is like. You have only bought what you wanted to buy. Neither you nor U.S. outsourcers and U.S. journalists were tricked or deceived. You either turned a blind eye because you didn’t care or you’re playing stupid.
Now, I have to ask: Are you really this stupid or are you simply dumbing down your message so much in an effort to please your target audience that you only “seem” to be this stupid to anyone with a modicum of critical thinking?
Everyone, I get it that Gilbert here is the consummate politician, playing to the American constituent, pandering to their self-interests, their ignorance, their emotions with this sort of fake heart-to-heart, everyman “straight talk”. Hell, even as a lawyer, I know it’s all about convincing your audience of your message, not about having the “right” message, position, facts or truth. I get it.
He’s still a dick for contributing to both American and global stupidity. There are problems in this world, problems that can be improved upon, even solved…but not with this kind of opportunistic stupidity.
- I know, not all 450,000 workers are involved in manufacturing for Apple. [↩]
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