In the Times Sunday Review Jesse Kornbluth writes (2/12/12):
There are things that do not happen in the real world. Noam Chomsky becoming president. Unflattering photos of Jennifer Aniston. Apple doubling the price of iPhones so its Chinese assemblers can work a 40-hour week.
OK, I know he’s being cheeky (Chomsky hasn’t declared as a presidential candidate yet), but there is still something that should be said about this idea that Apple products simply have to be manufactured in sweatshops.
Last week, the Times tech writer David Pogue (2/9/12) made a similarly flawed argument:
Bringing workplace standards and pay in Chinese factories up to American levels would, of course, raise the price of our electronics. How much is hard to say, but a financial analyst for an outsourcing company figures a $200 iPhone might cost $350 if it were built here.
Pogue added:
The issue is complicated. It’s upsetting. We, the consumers, want our shiny electronics. We want them cheap, yet we want them built by well-paid, healthy workers. But apparently, we can’t have both.
Luckily, Ryan Chittum at CJR (2/10/12) looked at the math here, and he makes a pretty convincing case that Pogue’s got it wrong. Even if you accept—which you shouldn’t—Pogue’s $150 price differential, there are plenty of questions to raise:
For one, iPhones have super-high profit margins. A teardown analysis by IHS iSuppli pegs the cost of that $649 iPhone at $188, giving Apple stunning gross margins of more than 71 percent. Making the phone here would presumably force Apple to transfer much of the increased cost to shareholders, rather than boosting prices for consumers. Put another way, even accepting this $150 figure, Apple would still have gross margins on the iPhone of about 50 percent without raising the price one penny. Which would reverse somewhat the flow of money from the middle and working classes to the capital holders concentrated in the top 1 percent.
Chittum adds, more directly, that Pogue needn’t rely on “a financial analyst for an outsourcing company.” He could, as his Chittum noted, read his own paper, which reported it this way:
However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense.
In other words, Pogue’s “upsetting” dilemma doesn’t really have anything to do with the impossibility of having the best of both worlds: cheap gadgets and well-paid workers. Consumers could almost certainly have something close to both—but it would mean making Apple a very profitable company instead of a massively profitable one.
Here’s another alternative.
How about a world where money doesn’t exist, where we don’t work for bosses but with each other, and where we receive what we need to live a dignified life, and contribute whatever our abilities allow?
To the contention that “These are things that do not happen in the real world”, I’d only say that that “real world” is falling apart with each passing day, and we can either work for the justice of the above, or descend into the nightmare being planned and implemented by those desperate to keep control.
The odds are against us. They always have been.
But it’s the only game in town, so let’s play it till the place closes for keeps.
I don’t want to hear any reasoning on this, American products should be made in America..period!
“Bringing workplace standards and pay in Chinese factories up to American levels would, of course, raise the price of our electronics. How much is hard to say, but a financial analyst for an outsourcing company figures a $200 iPhone might cost $350 if it were built here.”
A few of my friends were willing to run out and pay around $500 for the iphone when it was brand new… and do we really need $35 ipods? Why not pay more for things and keep them, instead of tossing everything in the trash. Or better yet, why don’t we stop buying so much junk to begin with and put apple, etc. out of business? They don’t employ many Americans in manufacturing anyway.
Two options – make stuff in a way that follows humane, legally-enforced labor standards worldwide. Or stop buying crap made in communist gulag sweatshops, period. China is not a democracy.
China may not be a democracy, but neither is the USA. (For those who doubt, look up “republic” why don’t you.) And unlike the USA, which is not becoming more like China, China is in fact becoming more like America every day. Just stroll down the busy retail lanes and see the high end American Brand shops filled with American clones buying, buying, buying. Look who is now outsourcing to Bangladesh and India because labor costs are too high! I predict, the China bubble will burst, like all bubbles ultimately do. Patience Friends. Patience. Perhaps we may not need to learn Chinese after all.
I like Apple a lot. I sympathize with their desire to run as efficiently as possible. However, I would like to see them use their clout to improve working conditions in the factories they hire. They don’t have to pay American wades, just good local wages. It would be great to see them move some of these jobs back to America as well, but that is not going to happen until we have a rational advantage. That might be either energy costs going through the roof, or we are reduced to Chinese wages as a country…or the rest of the world gets as rich as us (if we still have a planet to live on…)
To Doug Latimer (above): That economic system was tried, it was called Communism. I would not call it evil, but it failed in practice, and led to evil results. Neither it or undiluted capitalism works.
Thank you, Doug Latimer, for trying to expand the options. Britt Griswold-Communism always used (and uses) money, as well as other concepts like Taylorist scientific managerialism (breaking a job down into specific component procedures and force the worker to perform the job according to exact procedures). Non-Communists (utopian and not) fought against and are fighting against it for very practical abuses and not for excessive idealism.
Out of work people are not going to buy more. CorporatioÂns will have to make the first move. That’s why the grass roots idea of a National Hiring Day. When Apple is sitting on 76 billion dollars in reserve, who has the money to hire one person!
Time for corporatioÂns to step up and help their country. This is really such a small request of a corporatioÂn for all they’ve been given by this country. Really is it that big a deal? Really?â┚¬Ã‚Â
National Hiring Day – This is a day that corporations are encouraged to hire new employees. Corporations are called on to put patriotism first and help their country in
hard times. Those corporations that cannot hire, are asked to stop firing for that month.
http://wp.me/p5S9X-nv
There’s only one jobs program that doesn’t need government involvement at all.
There’s only one jobs program that makes every corporation in the US part of the solution
There’s only one jobs program that costs nothing.
There’s only one jobs program that works in one day.
The global world and the citizens of developed countries are crying out for some kind of predictable uniformity. We probably cannot make things perfect, but why not have some global standards for human rights and the environment?
The answer might be that they cannot be enforced. Maybe that is true. We grow up in a kind of virtual TV world mentality where we think our products come from the store and everything behind the scenes, but the way our stuff” gets made is always to make the maximum money for someone, which seems to mean minimizing wages and maximizing externalities, and regulation of anything is difficult. Either it’s difficult or we cannot get it done or it is expensive to do when everyone is cheating.
I think we have to be pragmatic and realistic. What needs to happen globally is the same thing that happened in the developed world around 1900 when labor unions and labor standards and some rights of citizens were affirmed and extended.
I think the place to start has always been the new Freedoms that FDR espoused.
Britt and tishado
I’m not a communist, although I don’t view the term an epithet.
And I wouldn’t call myself a socialist, because I consider the label limiting.
I try to focus on our species’ greatest, and most profoundly underutilized, asset – the ability to empathize.
If we can envision ourselves in each other’s circumstances, and act according to the dictates of our humanity, I believe we can find the path that leads to the end of exploitation, and the realization of justice for all.
That we have failed to do that for millenia gives me no pause, for if the cause is worthy, the outcome is immaterial.
The journey defines our purpose, not its completion.
Hey Doug, if you don’t like money, will you give me yours? I’ve got some debts that need paying, and I’m sure you can emphathize.
By the way, that IHS breakdown analysis Peter Hart cites includes the disclaimer:
“Please note that these teardown assessments are preliminary in nature, and account only for hardware costs and do not include other expenses such as software, licensing, royalties or other expenditures.”
So from this we only know the cost of the physical components, not the other costs, such as the costs of paying the software engineers who develop the phone’s operating system and basic applications. It doesn’t really tell us much about Apple’s actual profit margin on iPhones.
But a quick look at the Yahoo! Finance page for Apple Inc. does tell us that in the last quarter of 2011 Apple made a 25.8 percent profit for the whole company, which is pretty darn healthy, but not nearly as dramatic as the “stunning gross margins of more than 61 percent” you estimate for the phones.
Doug I think you are talking about a kibbutz, or a communal lifestyle.I like what you said about the journey.
The article above is good though I think its numbers too low in considering the cost of manufacture here,and too high on apples side.But basically the moral dilemma they underline is what we see happening.And it is damn sad.We need a national conscience,and consciousness of what these gadgets are costing us.We are hurting American workers and tax base.We are funding Chinese nuclear subs.We are running sweatshops.in foreign lands. Want to gain competitive control of the world economy as we impact it.Cut taxes and Capital gains on Corporations.You won’t need jokey hiring days ,or begging at the feet of corporate leaders not to fire for a month.Be competitive to some degree and johnny will come marching home dragging his corporations with him.Keep the highest punitive attacks on Corporations(except for Japan)and exactly as predicted -this is what will transpire.
It’s simple. Don’t buy stuff made in sweatshops. Whenever you do, you are participating in and promoting evil. In earlier times, people were willing to give up their lives for a righteous cause. Now we hear arguments that we can’t even give up a shiny metal toy. Pathetic.
” Apple doubling the price of iPhones so its Chinese assemblers can work a 40-hour week.”
This Misses The Point!
There is MORE than enough money being made within the full economic ecosystem of such products to insure the fair payment to labor. Look to the astronomical profits of all those industries and services, including Apple, for the obvious Clue here! Where does that Profit (after huge upper level management compensation) Come From? Money spent by us and NOT being used for labor costs! When there are $Billions in profits, After Huge Levels of Compensation to upper level management, then there is More than enough money to have Paid Workers Fairly.
It is NOT necessary to increase the cost to us to make this happen. (Not for Apple products, not for Nike Products, not for Coffee and on and on) There is more than enough money generated already.
That line of thought, that it is mid level consumers fault that business have to resort to unfair labor practices because we aren’t willing to shoulder the cost of the increase labor cost is BS!
In fact when Apple is marking up such INCREDIBLE profits it means that for the amount currently sold those products if manufactured here, or any other 1st world country, with a labor force making living wages, WOULD still make a fair profit!
What is necessary? Establishing world wide standards for the definition of legitimate business model to include compensation for workers that has a living wage at a 20 hour work week/ 1000 hour work year as an anchoring point to the economic system.
Human labor IS the Gold Standard.
Patricia Hoffman Says: “I don’t want to hear any reasoning on this, American products should be made in America..period!”
Stephen Colbert Says: “I don’t want a tomato picked by a Mexican. I want it picked by an American, then sliced by a Guatemalan and served by a Venezuelan in a spa where a Chilean gives me a Brazilian.”
Any real difference here?
If Apple pays the Chinese more for the assembly, will the Chinese authoritarians in power REALLY PASS IT ON TO THE WORKERS ?
Come on , get realistic !!
The workers will not get the proportional rise in salary increases. Those in power will get the money & still abuse the workers. Giving those particular workers a raise “would be disharmonious to the workers of other factories”.
Chairman Mao is rolling in his grave.
I have had an inside look on how products get sold to China.
The province leaders “consider if accepting the product will be harmonious to the people” — which means “give me a really good BRIBE and I’ll let you sell it here” !!!
Westerners are really naive on how China works. Do your own research.
Blame the First: Who gives a fuck what steven colbert says. Hes a comedian. Heres the truth-money isnt wealth. The slide from a manufacturing economy(which produced real wealth) to a finance economy (which produces debt and extracts wealth)is going to ruin our country. Probably already has.. The legions of middle men buck flippers/rain makers/share holders and thier bottomless greed are what is driving cost…not the paltry cost of paying 2 or 3 hundred fatory workers 30 or 35 grand per year for an honets days work…give me a fucking break…the scum-bag financiers expect to make 20 grand per deal. Why do so many Americans bend over backwards (or just plain bend over) to defend these lice.
No! Slightly less (or, gods forbid, significantly less) profit is exactly the same as a loss!