The New Republic

Nicholas Kristof has some counterintuitive (and changed) opinions about "sweatshops". This issue has more sides than a polygon. Raising the living standards of less developed countries is a laudable goal, both for humanitarian reasons (raising people up from poverty) and for practical reasons (with prosperity comes social and political stability). The issue, which I believe Cohn is expressing, is whether that laudable goal should be achieved on the backs of the American middle class. We tend to look at the issue of inequality through the lens of shared prosperity, but here the issue is one of shared sacrifice. If shared sacrifice is the right answer, then how? As an example, should profitable American companies which move jobs overseas pay a tax for the privilege of doing so, a tax that comes out of the profits derived from doing so, with the proceeds of such a tax used for (re)educating American workers? In Schmitt's review (in the NYT) of Thomas Edsall's new book (The Age of Austerity), Schmitt criticised the book for failure to address the single most important economic issue of our time, which is how the vast (semi-skilled) middle class that made the American Century possible is to be assimilated into the 21st century global economy. I criticised Kagan's recent TNR essay (on the decline (or not) of America) for the same reason. It's good that some opinion leaders, such as Cohn, care about this issue, but it's troubling that so few do.

- rayward

January 23, 2012 at 12:53pm

Apple is lying through it's teeth when they dispute the Foxconn account. It's well known in tech circles how brutal Foxconn is on it's workforce and the incident described was well known. Recently an entire plant of workers at a Foxconn plant protested by threatening mass-suicide if things don't improve. And to top it all off, the CEO of Hon Hai (parent co. of Foxconn) considers their workers as animals. Literally: http://www.globalpost.com/dispatch/news/regions/asia-pacific/china/120119/business-insider-china-foxconn-ceo-managing-animals Hiring a zoo keeper as a consultant? Wow. Even the GOP wouldn't go that far. There's not a shortage of skilled talent in the US, period. There's a shortage of CEO intelligence but there's plenty of bluster and arrogance. As for the jobs moving off-shore and not a supply chain here to do what Apple et. al. want, they were the cause of it. They (the tech companies) started the trend in the 70s and killed the domestic supply chain. I got to witness it first hand in my 25 yr. career as a design engineer in the semiconductor industry. If you ever wonder why your tech gizmo doesn't work as advertised, you can thank the short-sighted management at tech firms.

- tmmats

January 23, 2012 at 1:46pm

http://www.thisamericanlife.org/radio-archives/episode/454/mr-daisey-and-the-apple-factory Here is a first hand account of life at Foxconn. I heard it last weekend, and it was chilling.

- zardoz67

January 23, 2012 at 1:57pm

I have a simple test: if the CEO is willing to do what his bottom line workers do, then it's a great idea. Example: if a retail CEO is willing to work on Thanksgiving or Christmas, then it's a great idea. If the Apple execs are willing to work like Foxconn employees, then things are good. Don't see many good ideas using that simple test. It's one reason I never worshiped at the altar of the CEO (especially Jobs).

- tmmats

January 23, 2012 at 2:08pm

"China, offered Apple something not available here: A cheaper, more compliant workforce" What does it say about intelligent, enlightened consumers willing to look past this issue with regards to Apple? The anecdote that Cohn gives about compliant workers speaks volumes to how far China has to go before it's Party Leaders see its population as something more than simply factor fodder. U.S. companies used to have "compliant" workers too and they too were housed in company towns where workers lived in company shacks, shopped at the company store and owed the company for their very subsistence existence. Pundits like Kristoff and others can make the claim that, yes, while sweatshops are bad from a workplace ethical sense, they've lifted millions out of poverty. But at what cost? As rayward has brought up in other posts, and it's something that I've noted too. At what cost to American workers? Should US tax & trade policy reward companies like Apple that outsource high tech manufacturing to China vs. training and employing the vast pool of underemployed or unemployed workers in America? Can anyone honestly tell me that a peasant farmer from China is more skilled at high-tech assembly than say a recent college graduate or high-school graduate with 10 years as a machinist? They can't. But what they won't say is that the Chinese peasant will be 'compliant' whereas the American will actually request something in return for them signing away their life to the company. The key phrase here for most of these companies is "compliant workforce." One in which the employee lives, breathes and literally dies making stuff so the company can meet its stock holder expectations. Forget about paying a living wage, providing clean and safe working conditions, or forget having a job (any job) that brings meaning and value to the undervalued millions of Americans here that have no work but want to. IF BMW can locate a manufacturing plant in the Southern U.S., train and employ the local population to put together their high-end SUV, then surely Apple could find some way of doing the same in America.

- singlspeed

January 23, 2012 at 2:09pm

Product may be cheaper (that's debateable) when outsourced to lower-cost/compliant labor, but what happens in that developed market where those goods are sold? Too often the consumers are eventually priced out of the market. The auto industry is facing that dilemma now. Too many of their products, no matter who builds them, are out of reach for most consumers. It's Henry Ford's idea put in reverse. As for the supply base: the domestic auto industry lost a lot of jobs but the supply base didn't hollow out since final assembly still happens here. For industry execs in the tech business to bemoan the lack of supply chain, it's their own doing.

- tmmats

January 23, 2012 at 2:42pm

The free-trade fundamentalism that insists that we will gain in low-prices for goods what we lose in income/output is completely bonkers. Best case would be only if you net the gains of our wealthiest against the losses incurred by everyone else. What do people think is going to happen when free-trade fundamentalism forces American workers to compete head to head with workers who earn a fraction of what they do? It is perfectly possible for the US to break up functionally into two distinct nations, one, a Third-World country that consists of workers competing directly with workers in other Third-World countries. The benefits flow to the top tier that either works in non-tradeable goods and services or has goods and services that command a premium in world markets. Then they are essentially indifferent to whether they buy their stuff from low-paid workers in China or low-paid workers in the US. If US workers won't cut their wages to world-market levels, then the high-end shops elsewhere. This split has been going on for 30 years and accounts for a good part (maybe most) of the growing income spread between the highest earners and everyone else. The answer, at the minimum, is to rein in free-trade fundamentalists who are often well-intentioned but none-the-less unwitting tools of our rapacious capitalist class and manage our trade, as every other nation but this one does, in order to ensure trade balance. Without trade deficits, we can have full-employment, and with full-employment we have the biggest possible pie (GDP) to distribute between workers and "Others." It does mean that everyone will not get their goods at the lowest possible world price, but then workers will enjoy much more income with a net gain to them.

- roidubouloi

January 23, 2012 at 3:09pm

tnmats gets an awful lot right in his commentary here. The US does not lack skilled, or semi-skilled labor. Apple and the rest of the tech industry has chased the absolute lowest cost and most compliant labor for manufacturing with no thought whatever to maintaining a viable supply chain here. They have as a result lost their supply chain, and are very close to losing the design chain as well. This is already happening in the lower levels of the system - chip design, mechanical design, etc, where the talent definitely follows the factories. It has to do so because of the feedback from factory into manufacturability and from design into tooling, which are key elements in continuing to drive down the cost of goods. It will follow at all levels as surely as the sun rises in the East. Many of the best, and certainly the most ambitious, engineers I work with today are in China, and they are ravenously hungry to master their field. Those late 20s and early 30s hot shot engineers today, will be calling the shots on product design in a decade. As a society, we are training the people who are going to be selling expertise we could easily have "in house," but increasingly won't. Of course, once the Republicans have broken American labor into their proper position as cheap, compliant engines for generating profit and taxes so that the capitalists amongst us can get richer and pay less tax, we'll likely be seeing Chinese owned factories assembling Chinese designed goods here. That'll turn the tables!!!!

- IowaBeauty

January 23, 2012 at 4:04pm

Yes, and it is about assessing and forcing companies to pay worldwide taxes on worldwide profits that reflect the true cost of what they do. CEOs, top managers, and those elusive "shareholders" must be pay for the privilege of NOT living in China.

- Claris

January 23, 2012 at 4:44pm

I have seen places far worse than Foxxconn, of course these were more in the hinterlands of China, but compared to a Chinese coal mine, Foxxconn is paradise. In 10 or 20 years most of these types of production will be automated so I have no idea what the hell we can do to forestall that. At least then most of that type of production will then be done by American robots, our land prices are in reality much cheaper. The Chinese government will also be far more averse to implementing this type of economy out of fear of the hordes of unemployed, it is why so many SOE's hemmorhage cash but stay on perpetual life support.

- blackton

January 23, 2012 at 5:46pm

This is what I enjoy about TNR. There is such a depth of knowledge on these threads. TNMATS with his Chip Design and Electronics Background and Blackie and his China Adventrues. I thought the New Your Times piece was excellent reporting and had no bias. Mr. Cohn boils this down to a Compliant workforce, but really the NYT Piece was not about that. What Steve Jobs told Obama, and what was clear from reading the article is that China is benefiting from a compliant 'Middle Management' that gets things done. They avoided the usual complaints about Unions and Government Regulation and talked to results. I thought it was incredible that Corning Built a glass plant in China in 3 months for iPhones, before they even knew if the product would be successful. First they needed investment and a business plan to justify it, then they needed government and labor approvals, then they needed raw materials and energy. I've never seen anything like that in 25 uears in the auto industry. What I really found interesting is how much the NYT Piece was consistent with my experience. The Auto Business is buying as many parts from China as they can. And the Chinese Manufacturers are doing a better job with Design & Development than long established American manufacturers. Why, because they have Middle Managers that can spend money and make decision and get things done. The only thing preventing China from shipping cars and other high end finsihed product right now is that the Chinese don't drive cars, and don't know how to make those decisions about what a customer wants. Once they start driving and using iPhones, they won't need our 'Design Capabilities'. This piece should be a wake up call to Washington and our corporate chiefs. We're in deep trouble.

- CRS9TNR

January 23, 2012 at 6:34pm

Blackie, a little acknowldgement of your position. About 2-3 years ago I saw a story on the MSN (MSNBC Maybe) News about an industrial accident in China. In a Steel Mill a ladle of molten steel fell off the carrier. A couple of tons of molten steel hit the ground and flowed into a room full of workers. The workers were trapped with no exit and molten metal. I think it was about 100 workers that burned in a horrible death. The latest on the internet is Foxxconn is the nets they put up over their sidewalks to keep people from killing themselves from hurting innocent bystanders. For the Worker's Paradise of Communist China they may want to be a little bit careful that these workers of the world don't overthrow their Communist Oppresors. It's just a short detour from killing yourself to killing your Plant Manager.

- CRS9TNR

January 23, 2012 at 6:40pm

I second zardoz67's recommendation on the "This American Life" piece, which is an excerpt from "The Agony & Ecstacy of Steve Jobs," plus the follow-up analysis/commentary by Ira Glass and his team. The long hours are only half of it; it's also things like repetitive motion injuries crippling workers in their mid-20s; blacklisting workers who dare to complain about on the job injuries (and try to unionize). Truly depressing, especially since it's not just Apple, but all (or nearly) of the electronic manufacturers, so swearing off Apple's products won't save you.

- shellski

January 23, 2012 at 6:40pm

Reading the above one wonders why we just don't go back to the days of the plantation. Plenty of cheap compliant workers back then too.

- Sophia

January 23, 2012 at 6:57pm

"How do we stop corporations from relocating, when it means not just higher profits for executives but also cheaper goods for consumers?" That about sums up the debate you see in America on this. American workers must look on in disbelief as they're told by their elites that globalisation is good for them because they save 5 dollars on their new toaster as they lose their jobs to off shoring.

- IggyPop

January 23, 2012 at 7:23pm