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Go Home Steve Jobs, Jobs-Creator

TIMOTHY NOAH OCTOBER 6, 2011

Steve Jobs, Jobs-Creator

Steve Jobs was the greatest manufacturer of consumer products of his age. His marketing vision put him on par with Henry Ford, and his grasp of the aesthetic component to industrial design far surpassed Ford’s. But Jobs differed from Ford in one significant way. His surname to the contrary, he did not create a lot of American jobs.

I raise this point not to single out Jobs, whose tendency to “offshore” manufacturing jobs followed economic imperatives not of his making. He did what his contemporaries in America’s younger and more flexible manufacturing companies did. Rather, my purpose is to illustrate the perplexing failure even of one of America’s most stunningly successful companies to provide domestic employment on anything like the scale that America was once able to take for granted.

During the 1930s more than 100,000 people worked at Ford’s River Rouge plant. That’s more than twice as many people as Apple today employs in the entire world.

In 2006, according to the University of California Irvine's Personal Computing industry Center, the number of people worldwide involved in making and selling Apple’s iPod (which includes Apple employees and non-Apple employees) totaled a mere 41,170. Of those, only 13,920 were employed within the United States. The portion of that 13,920 consisting of production workers was paid decently: the U.S.-based production workers made $47,640 on average. (For production jobs in all U.S. business sectors, the average wage that year was $30,480.) But would you like to guess how many U.S.-based production workers Apple actually had building iPods in 2006, the year the total number of iPods sold jumped from 42 million to 88 million?

Oh, c’mon, guess.

A thousand? Nope, that’s too high.

Five hundred? Still too high.

One hundred? Still too high.

The U.S.-based production workers numbered 30. None of them actually worked for Apple. (They were all chip fabricators.) The iPod production workers were mainly concentrated in China (11,715) and the Philippines (4,500).

Who were those 13,920 American workers? A little less than half were professionals (mainly engineers), who made on average $85,000, and a little more than half were nonprofessionals (mainly retail clerks) who made on average $25,580. In the aggregate, Apple paid more in wages to the U.S.-based workers than it paid to its entire foreign supply chain, even though the latter constituted about two-thirds of all the workers involved in making and selling the iPod. That, of course, mainly reflects how cheap Chinese and Filipino labor is.

Again, my point is not to condemn Jobs or Apple. But I don’t mind condemning sanctimonious Republicans who insist that raising taxes on incomes above $250,000 or $1 million constitutes an assault on “job creators.” Even the most creative of America’s cutting-edge entrepreneurs simply don’t create all that many jobs anymore. If you shelter this group from paying their fair share of taxes you aren’t going to do much (if anything) to create jobs.

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35 comments

Thank you for another fine post, Timothy.

- liberalref

October 6, 2011 at 3:38pm

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Yeah.......Lets not forget Jobs lack of philanthropy. Oh yeah.....Most of what he sold was someone else's idea. I'm tired of this outpouring for Steve Jesus.....I mean Jobs. The guy was a total control freak jerk that only cared about Steve Jobs.

- PlanetScot

October 6, 2011 at 4:52pm

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In many ways, the reliance on relatively inexpensive foreign labor for manufacturing is a short term blip in the real story about manufacturing - the jobs are going away because of automation. Unfortunately, because we outsourced first, even the fewer automated and design jobs are going to be in China, as we lose the skills to build and maintain automated factories, and even, since design follows manufacturing for efficiency reasons, design factories and products.

- IowaBeauty

October 6, 2011 at 4:53pm

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Steve Jobs, Mark Zuckerberg and Bill Gates have made much money from the interrelationship between computers and the internet, the latter without which they would have made far less. The taxpayers had paid for Arpanet from which the technology of the internet was born. Why do they say that we are penalizing success when we propose getting compensation for the use of our collectively owned ideas so we can do more of same?

- Nusholtz

October 6, 2011 at 5:02pm

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Another oddity. Jobs didn't make his fortune from Apple; he made it from Pixar, a digital animation company. And digital animation? It eliminated thousands of high paying jobs for real people animators (i.e., the artists who used to provide the animation until digital made them obsolete). Of course, most all of today's "high tech" companies don't make their fortunes by actually making things. Not Apple. Not Microsoft. Not IBM. And soon, not HP. As for Apple, I've never owned any of their products (other than a little iPod), and had no idea Apple had become such a marketing force until I went to an Apple Store (which I didn't know existed) last year to purchase an iPad for my Godson. Maybe a hundred people packed into the place. Amazing! All there to buy products that I found to be nothing more than toys for people with obsessive personalities worrying about keeping their jobs with companies that don't produce anything either.

- rayward

October 6, 2011 at 5:21pm

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There was a recent thread on Andrew Sullivan's blog about how iPads are made in China, enabling apple to earn very high profits -- something like 51% profit margin, and that if they moved the production to the U.S., their profits would drop. I don't have the figures off hand (and apologize for not having the time to hunt down a link) but the difference was something like 51% profit using Chinese suppliers/labor, compared to 47% if made here. So it's only a huge profit margin instead of extremely huge if made here vs China?* The view that 47% isn't enough is a symptom of one of the big problems in American capitalism today, where profit is the only acceptable goal (because it translates directly into shareholder value). Once upon a time, it was viewed as acceptable -- even a good thing! -- to forego some profits for the sake of another value, like worker safety, employee satisfaction, helping the community (buying local), etc. Why did that mentality almost vanish and is there a way to turn things around? (One of the reasons my family shops at Costco is that their CEO is somewhat old-fashioned and has at least a remnant of these values, hence offers somewhat decent healthcare (compared to other retail stores), and closes the store on many major holidays that would otherwise be big shopping days, so the employees can spend time with their family.) *Note: Even if I'm slightly mis-remembering the figures and the source quoted was wrong (not factoring in some costs, or something that would drastically change the profit margin calculations), so the iPad does not illustrate my point, there are many other examples that would.

- shellski

October 6, 2011 at 5:25pm

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Thank you PlanetScot. I'm sorry the man passed away but enough with the praise already. He made himself and some investors/Apple employees wealthy but showed that innovation alone won't generate many jobs in the US. And unlike Bill Gates, I never heard of big philanthropic endeavors from Jobs nor any foundation associated with him.

- tmmats

October 6, 2011 at 5:43pm

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C'mon, rayward, you Luddite. The iPhone is pretty goddamn cool AND useful. Here are a few of the things I do with my iPhone (besides typing this post): -Maintain a personal and professional calendar with reminder alarms years into the future (I have a reminder for the total solar eclipse visible in northern Australia in 2013, so I can plan a trip) -treat the night sky as my own personal annotated planetarium (can you find Cygnus or Scorpio? Neither could I--before I got an iPhone) -use a motion-sensing alarm clock that alarms only at the most wakeful part of my sleep cycle using gentle ambient music that most if the time wakes me alone and not my wife -make paintings using a truly beautiful and ectremely versatile art app called Brushes (painter David Hockney has largely abandoned actual painting for Brushes--he can do more in more unusual circumstances on the digital device) -have an instantly accessible library of the world's classic literature in my poket thanks to another elegant app called Eucalyptus -have an instantly accessible bookstore in my poket thanks to Kindle for iPhone (thanks to the above two apps my extracurricular reading has gone through the roof. This week I'm reading Paradise Lost--on the phone. I guarantee that without it I wouldn't be lugging my volume of Milton to read in my spare moments) -keep a real-time record of my runs with distance traveled and both instant and average pace -have in my pocket an electronic chress platform that is WAY better than me and comes equipped with an encyclopedia of named openings with all their permutations -keep my entire record library in my pocket -an electronic guitar tuner cheaper by far than any stand-alone -a clinometer that allows me to measure slopes and angles at a distance and estimate the height of tall objects -a spirit level -a flashlight -a portable library of medical journal articles I've downloaded from the Internet and anywhere search engine for finding more (very useful when I need to answer a question on the fly in the hospital) -a fully functional multitrack audio recorder And much more

- AaronW

October 6, 2011 at 6:12pm

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Would have bet this post had something to do with that preposterous piece in HBR (http://blogs.hbr.org/pallotta/2011/09/steve-jobs-worlds-greatest-phi.html) when I clicked on it. Wildly exceeds my Ayn-Rand-hackbashing imaginations.

- SEBASTIANSALING@HOTMAIL.COM

October 6, 2011 at 6:13pm

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A question on the fly in the hospital? If you are a physician, please be so kind as to inform TNR readers of the name of the hospital where you practice. Thanks.

- rayward

October 6, 2011 at 6:35pm

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It's uncharacteristically clueless of this writer to say that the force behind Apple, which invented an entire industry (mobile apps) and reinvented retail computing, didn't create many jobs. People who use the term "job creators" to refer to the affluent, to the extent that mean anything at all, are not pining for the return of Henry Ford.

- Krogerfoot

October 6, 2011 at 6:48pm

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Rayward, with that snide comment you reveal your ignorance about the practice of medicine. Medicine is a process of continuous learning. Any doctor who claims he already knows all he ever needs to know is either a liar or a fool. When I'm rounding on twenty patients the residents have admitted the night before, it is a guarantee that one of them will stimulate a question to which neither I nor the junior doctors on my team know the answer. When I was a student it was exactly the same. The difference is that then the attendings would send the students off to the library.

- AaronW

October 6, 2011 at 6:52pm

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In fact, Apple Computer. forerunner of the present day Apple Corp., began production of the original Macintosh with great fanfare typical of each Jobs-inspired new thing -- at a specifically designed and built factory in Fremont, Calif. I don't know how long it produced or what cause(s) led to shifting component assembly overseas. But failing to attribute initial, 28-year old, American-made intentions to Apple on the occasion of Steve Jobs passing is not according him all due respect.

- lespin

October 6, 2011 at 7:09pm

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How is Steve Jobs like Henry Ford? That both paid their workers $5 a day.

- CRS9TNR

October 6, 2011 at 7:12pm

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A little comment here on Steve Jobs and Apple Off-Shoring of thier manufacturing. It was a week or two ago in the Sunday New York Times, maybe Saturday, the editorial was on the Solar Panel Company, Solyandra. The columnist was defending the now bankrupt company and the Administrations gauranteed loans to this company. This liberal writer and supporter of the administration was pointing out that Solar Energy Companies needed support and the decision was a valid one. But what he was reporting was a scathing critique on doing business in the United States. He pointed out that Chinese Companies were getting all the investment, that domestic companies couldn't compete, and that the high cost technology was not appreciated by the US consumer. Exactly. That's what the US Auto Business has been saying for years. This liberal writer was completely oblivious to the fact that all Manufacturers are facing these pressures. So their solution is to raise taxes on these bad corporations. Complete silliness.

- CRS9TNR

October 6, 2011 at 7:19pm

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So the lesson is American government should engage in industrial planning, erect trade barriers to protect our industry, demand technology transfer from foreign companies to do business on our shorts and manipulate our currency. Yes, complete silliness. But from whom?

- tmmats

October 6, 2011 at 7:48pm

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Argh. I need to proof read before hitting send. I meant "shores". Should be humorous do to business on our "shorts" though.

- tmmats

October 6, 2011 at 7:49pm

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One doesn't learn on the fly, with a hand held device while making rounds. Any arrogant ass who believes he can find the answer to a complex medical question by looking into an Apple hand-held device while making rounds is a danger to his patients. And so is the arrogant banker who thinks he is a master of the universe while peeping into his hand held device while having a power lunch with other masters of the universe and trading billions of dollars with OPM. Both need to go to the the library to think before they act so we don't have so many medical mistakes and bankers imploding the economy.

- rayward

October 6, 2011 at 9:40pm

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It is an illusion of knowledge, the flawed belief that because information is available with a click that knowledge somehow will necessarily follow. It won't. Information is easily accessible. Knowledge is not. Woe be the patient whose doctor doesn't know the difference.

- rayward

October 6, 2011 at 9:55pm

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I would have been the biggest fan of Apple if Jobs took a leadership position starting with the iPod and brought production to the US. Apple makes a killing in profits. In fact, looking at the profit margins of its products, you wonder exactly how all its fans shield themselves from the fact that there is some minor price gouging going on. I would have been ecstatic if they acted like a German company and justified their price premium by showing that American workers could get paid decent wages making stuff to technically exacting standards. Instead, those profits are split between enriching shareholders and boosting product development.

- chaitless

October 6, 2011 at 9:57pm

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Rayward, I do not claim and never did clai that the iPhone is a substitute for a medical education or for the clinical acumen that comes with years of treating patients. Nevertheless a component of medical learning has always been to search the published literature for answers to questions that arise all the time--"What's the dosing recommendation for enoxaparin in this patient with renal failure and would unfractionated heparin be safer?" "Is malaria a possibility in this febrile returned traveler from Nepal?" Thirty years ago you needed a hard copy of Index Medicus and a well-stocked library. Fifteen years ago you needed a desktop computer and still needed a library. Today, a lot of the time you can access the best evidence on your phone outside the patient's room. If you choose to pompously discount the obvious advantages of such convenience, do so by all means. But don't try to sell us on the idea that doctors a generation ago who were unable to ready access the peer-reviewed literature practiced better, smarter medicine as a result. To suggest such a thing is just willfully stupid.

- AaronW

October 6, 2011 at 10:39pm

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The doctors to be afraid of are those who don't read and rely on what they were taught twenty years ago.

- AaronW

October 6, 2011 at 10:49pm

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Of course, I didn't suggest anything like that. What I said is that "It is an illusion of knowledge, the flawed belief that because information is available with a click that knowledge somehow will necessarily follow. It won't." Almost all of my clients are physicians, and I both admire them and will go to my grave defending them. Electronic medical records is a huge development in medicine, and wouldn't be possible without advancements in computing. And with electronic medical records and more integration in the industry, which will give physicians access not only to the specific patient but all patients in the integrated group, will come better results. That's real progress. Enormous progress. And has nothing to do with the toys that Apple developed and sells. What's frightening is the suggestion that in just a few short minutes a physician can research the latest advances in diagnosis and treatment from the patient's bedside, with distractions all around and with enormous potential for mistakes. The reality is that it's the very unusual case, the rare case, that an immediate diagnosis or treatment is necessary for the patient. Indeed, a little study and reflection greatly increases the likelihood of a good outcome for the patient. What's not stated but implict in the doctor's comments is the preference for speed. And why is that? Must I provide the obvious answer.

- rayward

October 7, 2011 at 7:27am

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American workers would go mad assembling ipods. The work is mind-numbingly repetitive and tedious. It is worse than working the cash register at McDonalds. There are quotas. There's no talking. Computers keep track of who assembled each device, and if you happen to the be the person responsible for a slight increase in warranty returns, you are fired. The reason Asia is such a great place to manufacture is: 1) Nobody complains about doing menial tasks 2) Enormous workforces can be found and built in weeks, and dismantled just as quickly 3) Every part maker in the world is here. The LCD you need is made 30 minutes away. The silicon you want is fabbed 60 minutes to the south. Wages are not the issue. It's all the ancillary stuff. PS. I type this from the back of a car on the way to Taoyuan from Taipei city in Taiwan. And yes, I've spent my time on factory floors all over the world, including US and Asia.

- seattleeng

October 7, 2011 at 8:43am

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Aaron writes: "Today, a lot of the time you can access the best evidence on your phone outside the room. " Here's something I've always wondered: Why can we not go to a clinic, enter a few top level symptoms, have a computer spit out the required tests, and then go home and on the computer walk through a more involved set of questions that take the results of the test into account. Adn then have next steps proposed automatically. I'd guess that 95% of the time it'd mean I wouldn't need to see the doctor at all. Medical costs keep going up because it's still requires a rather lengthy interview process, and the doctor needs to spend at least a few minutes reviewing history. In other words, a doctor today can treat the same number of patients in a day (maybe even less given the increased diagnostics and complexity). With that ratio unchanging, it means that like a plumber or electrician, the cost of medical care will never drop. Can a dozen doctors not codify the procedure for diagnosing a patient? If you are relying on computers anyway for the really hard stuff (have you ever been to Nepal?) why not put the entire diagnostic tree on the web. I note my doctor charges $50 to do a rapid strep throat test, but I can buy 25 of the tests myself for about $1.50/test. Silly what I have to go through to get treated. It shoudl be a $1.50 test followed by $4 coarse of antibiotics. And I'd never have to see a doctor. Right? Instead, it's $105 when all is said and done.

- seattleeng

October 7, 2011 at 9:33am

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The reason you can't do that, Seattle, is that there isn't a computer fast enough to separate the relevant from the irrelevant and ask the right questions. Are your swollen ankles important to the problem at hand or a distraction. How about the fact that your mother has diabetes (type 2, diet-controlled)? Or that you drink six beers a day but will only admit to two? Or how about that last month you visited your Australian cousins at their beach house in Point Londsdale, Victoria? (If your complaint was chest pain, the latter would be beside the point, whereas if you had a nodular swelling over your elbow with the beginnings of a scab, it would be of central importance since Point Lonsdale has the highest prevalence of Mycobacterium ulcerans infection outside of Africa.)

- AaronW

October 7, 2011 at 10:59am

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Thank you for making this important point so clearly and concisely. These are realities that the political conversation, most especially the conversation about tax and spend, simply ignores. But they are the realities that we have to address when we ask the question, which is the question most Americans are asking right now; how to create a society, in the context of the last 50 years of massive change and technological revolution, in which the majority of people can both productively participate and enjoy decent, middle class prosperity?

- esmense

October 7, 2011 at 11:07am

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The comments here are mostly ignoring the glaring flaw in Noah's argument: that Steve Jobs didn't create many U.S. jobs. That, of course, is simply preposterous. Steve Jobs invented entire industries: online music sales and the mobile phone application system. He spawned numerous competitors in the realm of portable audio, smartphones, and tablets and galvanized sales for cell-phone carriers. He really was an extraordinary innovator who ushered in a new age of pocket-sized personal computing--something so many of us take for granted now.

- polcereal

October 7, 2011 at 11:32am

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And what would that "fair share" be, Timmy, as those making over $1 mill pay 20% of federal income taxes, and the top 10% of filers pays 70%. But then, that's all well known.

- butchie b

October 7, 2011 at 2:33pm

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the number of people worldwide involved in making and selling Apple’s iPod... totaled a mere 41,170. Of those, only 13,920 were employed within the United States Am I to infer that people living outside our borders are somehow not worthy of employment? Are they less human because they live on the other side of the line? Is one un-American if he trades with non-Americans? Is this national socialism?

- karlwk

October 7, 2011 at 7:37pm

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Aaron writes: "The reason you can't do that, Seattle, is that there isn't a computer fast enough to separate the relevant from the irrelevant and ask the right questions. " Isn't fast enough? You are kidding, right? The cellphone in my pocket is capable of performing almost 10 billion operations per second, while concurrently decoding 1080p video at 60 frames per second. If a human can think to ask it, a computer can be programmed to ask it. Are you saying that if you got 20 doctors together, and had them completely write out the diagnoses tree for strep that it'd be too complicated? Repeat that for our 50 other top ailments, and you've covered probably 95% of all non-emergency doctor visits.

- seattleeng

October 8, 2011 at 2:54am

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esmense writes: "how to create a society, in the context of the last 50 years of massive change and technological revolution, in which the majority of people can both productively participate and enjoy decent, middle class prosperity?" Go back a bit further. You have one 10th grade kid that sits on the couch all day playing video games, never doing homework. He's failing many of his classes, mostly because he and his parents don't care. He dabbles in weed, enjoys an occasional hand job from the girls, and he's getting ready to lose his virginity, and maybe even become a father. You've got another kid in 10th grade high school earning $180/hour doing contract programming for local businesses, has already knocked out the first semester of college through AP course work, and will certainly get hired at Microsoft or Google and make $100K his first year out of college. The first kid will only work about 20 hours a week tops. Any more cuts into the other things he likes. The second kid will work 80 hours a week. More if his body permits. There is no way to give these kids anywhere close to the same things in life. There is nothing you can do in high school to turn the first kid into the second kid. The first kid is not that uncommon. Neither is the second kid. If you can't inflate the aspirations of the first kid, does it make sense to drag down the aspirations of the second kid?

- seattleeng

October 8, 2011 at 3:06am

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karlwk: "Am I to infer that people living outside our borders are somehow not worthy of employment? " What you need to understand about TNR readers is that when they say they want to take from the rich and give the poor, what they really mean is they want to take from the top 0.1% in this world, and give to the top 2% in this world: Themselves. A great example here is the Occupy Wall Street protest. Here we see a bunch of college kids with $500 iPads and $500 cellphones complaining they don't have enough money and that the loans they voluntarily took out are too onerous. And they hope to get this more money from those that are working long hours so that they can continue their youthful ways. But under NO circumstances would these college kid be willing to give up with the aforementioned material possessions so that someone could have clean water in another part of the world. That is just crazy talk. So, you are right: The fact that Jobs provided jobs to others in China doesn't count.

- seattleeng

October 8, 2011 at 3:18am

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An economy does not exist to provide jobs. Only a Stalinist would think that way. An economy exists to fulfill human needs. Employment is actually only a byproduct of fulfilling the needs of the consumer. He doesn't care if his needs are fulfilled by a neighbor, an foreigner, a machine or a software program. Nor should she. Apple products increase my productivity, and joy, as a businessman, as an artist, as an educated human being. We customers are the commissars that Apple has to report to, not some meliorist who knows nothing about any of these things. Steve Jobs provided employment to many knowledge workers, in many industries, in many countries, who are actually making the world better for other people One would have to be blind not to see it. (In fact, I periodically test my vision on an eye chart app, which works quite well.)

- homeros

October 8, 2011 at 3:55am

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I spent half my working life working for technical start-up companies and entrepreneurs. None of the entrepreneurs I worked for were Bill Gates or Steve Jobs, though I have been in a room with each of these gentlemen. There is a particular type of personality for such people and a particular type of culture for such organizations. Most such enterprises fail; a few succeed. As people and as organizations they are both wonderful and hideous, both when they succeed and when they fail. Homeros' comment makes some good points. Technology is useful if it makes our lives better. A few years ago I was rushed to a hospital with a (never identified) life threatening illness. The doctors saved my life with sophisticated floundering. A few decades earlier I would have been dead. There is nothing wonderful in that much of the world lives in poverty and scarcity; there is nothing wonderful that much of our technology is produced by people doing deadening work that is not much different than slave labor. As Shellski's excellent comment points out, the “cost” (ethical and moral) of producing our American standard of living is far too high until we can find a way for all humans no matter where they live to have lives of decent standard of living and meaningful activity. Jobs was a brilliant man, though in some ways a horrible person and a kind of idiot savant who had spectacular failures as well as great successes, and probably was very unpleasant to work for and to be around.

- skahn

October 8, 2011 at 6:27am

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