The Cost of an IPhone

Before you buy another IPhone, or any IPhone if you are a first purchaser, read this article about almost a dozen suicides at the company in China that makes IPhones. The article is dated September 9, 2010, and the horror it describes happened in August 2010, but this is the first I’ve heard of it. And the only reason I heard about it now is because I am on TechRepublic‘s mailing list. The company’s initial public response to the events of August 2010 was, in the words of the author of the TechRepublic piece, “perhaps the most shocking, reactionary corporate act” I have ever heard about (the even earlier internal responses were equally shocking). The company has now responded more appropriately, but it’s still shocking because, as Toni Bowers writes:

Now, here’s where I get cynical. Why was the public relations strategy needed? Because Foxconn’s partners–Apple, IBM, Cisco, Microsoft–might try to distance themselves from Foxconn in light of the suicides? And by “distance” I mean take their business elsewhere? Absolutely.

Obviously, one of the takeaways from this story is that it’s almost certainly not limited to this one company, in China or in any other of the many countries that provide dirt cheap labor for U.S. corporations. What am I suggesting? I’m suggesting that you think about it. What conclusions you reach after that are up to you.

Author: KATHY KATTENBURG

73 Comments

  1. A very compelling story.

    Personally I’ve never had the income to afford an iPhone but this does remind of the cost of slave labor in China.

  2. Kathy,

    It is an interesting article (I admit to skipping over the biographical parts to focus on the issue at hand). I haven’t reached any conclusions yet, but here are the questions that it raises for me:

    1) I’m not sure how we reconcile our labor standards with our import policy. It seems inconsistent to say to companies that they must pay a certain amount and give certain benefits and working conditions if their product is made in the US, but if they import their product, then the working conditions are just determined by apparently loosely enforced company policies. Now, we’ve had our disagreements in the past regarding issues such as minimum wage, but it seems to me that whatever we decide are appropriate minimum standards for American workers should apply to imports also.

    (That would almost necessarily mean that our employment standards would have to be lowered even as we raise our import standards, but I won’t focus on that point to avoid loosing your good will.)

    That said, naturally compensation will differ between countries, depending on the supply and demand of labor, but that doesn’t mean our minimum standards should.

    2) I’m a pretty strong Adam Smith-style free marketer. However, it seems to me that while the concept of division of labor has been immensely beneficial to society over the past centuries, there does appear to me to be a practical limit to the theory. The idea of spending the majority of every day performing some mindless, trivial, and repetitive task seems almost inhuman to me, although maybe that is an elitist thought. People have been doing menial labor since the beginning of time, after all.

    Again, just questions, not conclusions from me.

  3. It’s not as awful as what’s happening in China*, but also take a look, if you haven’t already (this was news in 2010), at what some companies are doing here in the USA — stuff they couldn’t get away with in Europe.

    http://www.hrw.org/en/news/201.....-hypocrisy

    Ikea’s Factory Churns Out Unhappy Workers

    A union-organizing battle hangs over the Ikea plant in Virginia. Workers complain of eliminated raises, a frenzied pace, mandatory overtime and racial discrimination.

    http://www.latimes.com/busines.....1610.story

    Ikea Not Alone In Its Labor Troubles in the U.S.

    http://latimesblogs.latimes.co.....ubles.html

    * which is why I was reluctant to agree with Ron Beasley about the growth of wages in China and consequent loss of the labor (low cost and poor working conditions) advantage China currently has.

  4. AD,

    I don’t know. To me, it doesn’t seem as complicated or difficult an issue as you appear to be making it. Don’t exploit people. Don’t violate their rights as human beings.

    A while back, we had a post here on TMV (don’t remember the author) on the occasion of the anniversary of the Triangle Shirtwaist fire. Someone (again, don’t remember who) commented to the effect that this is why we need government to make and enforce regulations. I am remembering (and I could definitely be misremembering) that you responded to that comment to the effect that just because conservatives want less government regulation, that does not and should not imply that they don’t want ANY government regulation. In other words, just because a person is an Adam Smith free marketer, that does not and should not suggest that they want or support the kind of working conditions that led to over 100 workers leaping to their death or being burned to death in the Triangle Shirtwaist Fire. We are told this is an unfair and unwarranted leap to make.

    So if this is such an obvious and clear line that everyone agrees should not be crossed, then why the angst and the qualifications and the if this then that stuff? Why make it so complicated? Is it really that complicated and difficult to treat employees in such a fashion that 11 of them don’t kill themselves in one month?

    Kathy

  5. Adeline’s Dad wrote:

    1) It seems inconsistent to say to companies that they must pay a certain amount and give certain benefits and working conditions if their product is made in the US, but if they import their product, then the working conditions are just determined by apparently loosely enforced company policies. [...I]t seems to me that whatever we decide are appropriate minimum standards for American workers should apply to imports also.

    2) The idea of spending the majority of every day performing some mindless, trivial, and repetitive task seems almost inhuman to me, although maybe that is an elitist thought.

    1.The typical resort we have, sought frequently by the farther Left, is to use tariffs as a political tool (or weapon), for example adding a tariff that corresponds to the difference between slave wages and acceptable minimum wages for the jobs being done in the other countries, or (more frequently) a tariff just to punish the other country for things including poor pay or working conditions or other labor criteria, or for lax environmental laws, etc. Often it’s not a precise “adjustment” that the tariff is meant to do, but rather to punish the miscreant countries of note. (Such a tariff can be viewed as a sumptuary or “sin” tax on the imports.)

    2. People have long believed that eventually robots would do most or all of this work. That day hasn’t come yet, but it could. In the meantime, one thing being done is to bring in immigrants to do this work. (Much non-physical work in this category is automated already, using computers.)

    The same sentiment you express here (and you could add, “for low pay”) was one topic of discussion and argument in favor of the guaranteed minimum income – that it would free most or all one day, when computers and robots take over the almost human work, freeing people to do what they’d prefer to do (giving us more artists, e.g.). (Back then, in the 1960s, there was the fear that computers and robots would make great numbers of people superfluous and no longer employed doing this kind of work and many, many more jobs, requiring more skills, too.)

  6. Don’t have an iphone and don’t want one. Definitely wouldn’t get one knowing what I do about working conditions where the displays are made. I agree with you Kathy, there isn’t anything particularly complicated about human rights. Either it matters to you or it doesn’t. All the parsing and rationalizing misses the greater point.

  7. Kathy,

    The hesitancy of my response is a result of your admonition that we think about this, which I interpreted that to be as opposed to reaching a knee-jerk conclusion. There is no qualification to the question I raised. I do believe that there is a minimum standard that should be applied to working conditions (compensation I believe is a separate matter, but I don’t know if we want to get into that). My question is why do we apply a different standard to the workers behind products that we import? It seems to me that we shouldn’t, but if my wording is not strong enough for you, it’s only because I try to be cautious about assuming I know and understand all of the consequences to the policy stands I take.

  8. DLS,

    Imposing a tariff I don’t think addresses the problem for several reasons:

    1) It doesn’t distinguish between companies that have better working conditions than others. If all imports from that country are charged the same tariff, what’s the incentive for one company to improve conditions?

    2) It can be used as a justification to keep conditions the way they are: “If you’re going to charge us a tariff, we have to keep labor costs low to make up for it.”

    3) I don’t see why we can’t do the more straight-forward approach: If you are a company that imports something, it is your responsibility to make sure the workers that produced it adhere to US working condition standards. If they don’t and you are found in violation, the law will treat you the same as if you they were your workers in the US.

  9. In theory, I am obviously in the camp of labor rights. However, I’m not sure if I missed it, but I read the whole article, and I really didn’t see anything that bad in there, with the exception of the one production team that was looking for better protection from the fumes. One person complained about the water being turned off at her company-provided housing, but I don’t think I’ve ever lived anywhere where that never happened. I couldn’t tell from the article if that was a regular thing, but it seemed like it just happened once. 12 hour days suck, but hell, I generally put in 12 hours myself; the article indicated that most workers liked that, because they got paid more.

    Suicide is a rought thing, but if we look at the stats, for a workforce of about 920,000, particularly given the most common age-group working there (18-25 yo), 11 in one month is certainly a little higher than average, but not that high. It looks like, as the article states, there was a grouping of these suicides, and that before and after the numbers were nowhere near that. In any case, there was obviously a slow uptake on the corrective actions, but it looks like they did make some real attempts at righting wrongs, and continue to work on improvement.

    Maybe I missed something fundamental in the article, but auditing factories is part of my job, and this didn’t actually look all that bad to me, and it doesn’t actually surprise me that people are constantly lining up to get these jobs. Really: what am I missing here?

  10. My question is why do we apply a different standard to the workers behind products that we import?

    Because those workers will accept vastly lower wages than workers here will accept. It’s not something that just sort of happens. It’s deliberate corporate policy.

    Also, although I understand you don’t want to get into it, I feel I have to point out that when we talk about basic human rights and exploitative working conditions, compensation is part of that.

    Kathy

  11. Certainly agreed compensation is a big issue.

    But there is an argument to be made regarding wages and living costs.

    Here in the US you will find wages in NYC to be higher in general than wages in Omaha because the cost of living is higher.

    If you paid a worker in Omaha the same as NYC that worker would be by local standards wealthier than the one in NYC

    And of course that extends to an even greater degree in NYC vs 3rd world.

    So to what degree should that be factored in ?

  12. Roro,

    Having read the entire article (it’s quite long), it sounds to me like there is a LOT that isn’t being said. The article reads like a p.r. flack wrote it. And in fact, the article says that FoxConn hired Burson-Marsteller to do their p.r. after the uproar over the suicides, and Burson-Marsteller has a reputation for representing the worst dirtbags and showing very little if any concern over the methods they use to improve their clients’ image. One example: Burson-Marsteller was the p.r. firm that came up with those stories, later completely debunked, about Kuwaiti infants being killed in their incubators (if that’s the term) in ICU units. This was during the lead-up to the Persian Gulf War, when the Clinton administration was trying to drum up support for invading Kuwait. They (Burson=Marsteller) had a woman who I think was a hospital employee come and testify before Congress about how Iraqi soldiers were murdering these newborns, and none of it was true.

    I also think it’s important to keep in mind that emotional or psychological stress could be a significant part of the adverse conditions, as opposed to just low wages and/or poor working conditions alone. These employees are housed in dormitories in vast corporate campuses as large as an actual town in some cases, long distances from home, thus creating extreme isolation and dependence on their corporate employer for everything. To me, it sounds feudal.

    Kathy

  13. When I read the Bloomberg article…and I thank Kathy for bringing it our attention…my response was very similar to Roro’s. As a percentage of total workforce, the suicide numbers aren’t all that steep, though there was a spike in one month. I also found little in the unsupervised interviews that really caused me to jump up and say “Oh, my god.” The fact that unsupervised interviews were allowed/encouraged tells me this is not sweat shop, slave labor.

    To asses this realistically, it seems to me we need to have the vision to put it in the context of China. In that context, workers were paying about 25% of their wages for off site housing. While we don’t know other numbers, 25% for housing isn’t that unusual.

    Please don’t misunderstand this comment. I’m absolutely opposed to sweat shop slave labor conditions. I just didn’t see this as a strong example of that. If there’s something in the article [other than the face mask reference], someone please point it out.

  14. How could you possibly enforce any law regarding how workers are treated in China? Please remember that when we are talking about international trade, like the deficit and whatnot, we are talking about purchases made by free citizens, not the US gov’t. People seem to talk about the flow of goods like its a check written by the country as a whole. Its not, its so and so ordering stuff, Wal-mart may fill a container ship with cheap desk fans but a lot of small businesses buy stuff from overseas too. How do you regulate whether something was produced according to our standards or not? You don’t. You can tariff it but that is pretty much all.

    What needs to happen in China and other slave labor countries is they need to unionize. I don’t like unions but frankly without them you have 12 year olds working 16 hour days for just enough to feed and cloth themselves. They are the democracy of labor, the worst form of its kind but better than all the rest. Till that happens, everything else is just wishful thinking.

  15. Patrick,

    In Omaha, the standard of living, overall, is much higher than in China or other third-world countries. In other words, even though, yes, the COST of living is lower in Omaha than in NYC, the way that most people are able to live at those lower wages in Omaha is far better than is the case in the types of countries that multinational corporations use for labor. I am talking about fundamental living conditions here, not just salaries being in proportion to local prices.

    Kathy

  16. The fact that unsupervised interviews were allowed/encouraged tells me this is not sweat shop, slave labor.

    Tidbits, those interviews were arranged through FoxConn’s new public relations firm, Burson-Marsteller. Reporters didn’t just go to China and show up at the factories unannounced.

    Kathy

  17. What needs to happen in China and other slave labor countries is they need to unionize.

    Slamfu, how do you think contractors like FoxConn and the U.S. corporations that pay them to make their products using cheap labor would respond to attempts to unionize on the part of employees?

    Are you perhaps being a little naive?

    Kathy

  18. Kathy,

    I know, and as I indicated these kinds of conditions are deplorable and I’m not excusing them.

    I was merely opening a 2nd line of debate, as to what degree they would need to improve conditions/wages/etc to be up to a level we would generally consider acceptable.

    I have had debates where people insist that the workers in 3rd world should get US living wage salaries so I thought I’d toss the topic out.

    Believe it or not we are close on this topic.

    Pat

  19. Kathy, almost every large company has a PR firm. That doesn’t mean that they are automatically bad. If the company is imposing awful working conditions, then yes, absolutely we — the consumer, the customer — should do everything in our power to insist on better conditions. But failing evidence that that is actually happening, I can’t really say…

  20. My Dear Ms. Kattenburg,

    Unfortunately, this new comment system and the way it times out prevents expounding in depth, thus my prior comment was abbreviated. It was not simply the unsupervised interviews, but a number of factors.

    People sought jobs there when other jobs were available. People could make enough money (by Chinese standards) to save for purpose of opening their own businesses within a few years, $44 off site housing out of $176 take home pay is a ratio equivalent to many American households.

    I did see that some supervisors and managers were poorly trained and yelled at employees. Not nice, but not slave labor.
    Overtime – for which people were paid and which they sought as a benefit. On time payment of wages.

    There are sweat shops. There is slave labor. This just didn’t seem like an example of it to me. I’ll post before I time out & maybe come back in a bit.

  21. Lots of questions to address and so little time.

    slamfu, I’ll attempt to address your question when I have more time, but yes obviously the US can’t dictate Chinese labor conditions. I’m suggesting that when a company like Apple buys parts from a Chinese company, Apply should be legally responsible that the working conditions at that company meet US standards. The US can apply that standard to Apple and doesn’t need to try to regulate Chinese labor directly, which it can’t of course. As for products bought from China by consumers directly, that is still an import and the US government has authority to regulate that transaction and ban it from companies that don’t meet labor standards. I’m not an import expert, but I would think there would already have been certain laws that must be conformed to regarding such transactions.

    And there I’ve gone and answered it in detail like I said I wouldn’t. Oh well.

    Kathy, I will attempt to address the compensation vs. working conditions as human rights if I have time later, since it is a tangent. Even our compensation standards, though I generally disagree with them, should be applied consistently to imports also to level the playing field for the market. To address the cost of living issue, we could use purchasing parity or some other internationally accepted metric for determining minimum compensation.

    Roro and tidbits, I also had the same reaction when I read the article, but I chose to address the broader issue rather than this particular instance, since as a right-leaning commenter I’m sure I would have been painted as justifying child labor and sweat shops if I were to point out that this particular instance doesn’t seem that bad. I’m glad you brought that up though.

  22. This new comment system also impedes editing. “of site housing” in my prior comment would have been edited to “off site housing” had the system allowed.

  23. tidbits, just an aside, I think those $44 were *given* to the workers in liue of providing the free-onsite housing that others were receiving. I could be wrong in how I read that, but I know that certain companies do provide housing for their workers so as to attract workers away from their rural hometowns, for example.

  24. You’re correct, roro. If I may, I amend my prior comments to reflect your clarification. Thank you for pointing that out.

  25. AD, your ethical nobility is admirable, but pragmatically unworkable. There have been a number of studies on how to deal with this (University of Maryland being the last one I read) and some common conclusions usually emerge.

    The studies always find demand to be inelastic over the issue of poor working conditions (as evidenced by the mournful comments above), but highly elastic relative to any increase in price. Simple translation, everyone bemoans the conditions, but not enough will pay the price increase to remediate.

    The example above is also poor because relatively few US companies fully control the food chain anymore. Sure, Apple might be able to exert some leverage in this one case due to product uniqueness and Samsung hasn’t stolen all the technology yet. There are a couple of other easy examples where there is a high margin, low materials cost product like Nike, Timberland and Aedidas….they can throw their US weight around still.

    But the vast majority of products are easily copied or the US brand does not dominate the world market.

    Your nobility as CEO will likely bankrupt your shareholders faster than you can change worldwide working conditions, but good luck to your endeavor.

  26. Well Kathy, I’m not being naive. I know exactly what they would do, the same thing companies did when we unionized here. They would bring in thugs to kill, beat and terrorize the union organizers. I’m not trying to imply it would be easy, it would be bloody as hell, and its also very unlikely to happen anytime soon, but until they do it nothing is really going to change. Just stating the fact.

    I do find it funny that conditions for workers in China are very similar to the conditions that spawned communism in the first place. The next decade is going to be interesting.

  27. I have had debates where people insist that the workers in 3rd world should get US living wage salaries so I thought I’d toss the topic out.

    I understand, Patrick. We’re good. :-)

    Kathy

  28. Kathy, almost every large company has a PR firm.

    I am aware of that, Roro. FoxConn hired Burson-Marsteller AFTER the uproar over the suicides, AND the uproar over the company’s initial callous reaction.

    These two facts: the timing, and the particular p.r. firm chosen, were my point.

    Kathy

  29. Not nice, but not slave labor.

    Not my point. I did not say it was slave labor that caused the suicides. Read my comment to Roro (the first one in response to her first).

    Something led to those suicides, and it seems probable that it was something related to the conditions in the workplace where these individuals were employed. Obviously, 11 suicides in one month is what caused this story to surface, and also obviously it’s what makes the problem in general at this company so serious, but I do not think there is any acceptable number of suicides in a workplace that can be traced to conditions in that workplace. Obviously, people commit suicide, but if the suicide that is committed is caused by the conditions of employment, that is really not acceptable in my view.

    Kathy

  30. Well Kathy, I’m not being naive. I know exactly what they would do, the same thing companies did when we unionized here.

    Alright then, slamfu. Thanks for the clarification.

    Kathy

  31. Fair enough, Kathy. If employment conditions are the cause of suicide, there is a problem that demands correction.

    It’s just been so long since I’ve had the opportunity to call you My Dear Ms. Kattenburg. :)

    Whatever our interpretations [and I note that you did not call it slave labor], I applaud you for opening a lively discussion on a worthy topic.

  32. Your nobility as CEO will likely bankrupt your shareholders faster than you can change worldwide working conditions, but good luck to your endeavor.

    Oh for goodness sake casual. When my company can’t sell a product at a price people will pay without subjecting our workers and our subcontractor’s and vendor’s workers to substandard conditions, we don’t make the product. If you have laws in place, and you have ethical standards of supply chain, there’s nothing that says that you can’t just *not* make the product. It sucks to do that, as it generally means that your company eats all the R&D costs and reaps none of the benefits. But if you’ve engineered your product in such a way that it can’t be made for the price you’re willing to pay, that’s your fault, and should be taken out of your paycheck, not the paycheck or the quality of life of the people building your product or part.

  33. CO,

    As I told Kathy, I’m talking about government policy here, not corporate policy. Aside from some niche markets, I don’t expect corporations to voluntarily adhere to the standard that I’m suggesting.

    You are correct to say that we, as consumers, don’t like poor working conditions but are generally averse to paying extra to solve the problem. That’s why there does seem to be a need for government intervention to address the issue that we agree needs to be addressed but are unwilling to assume the cost for individually. That’s the whole point of working condition laws to begin with, even within the US.

    Also, I’m not saying my suggestion would be a political winner or would be easy to implement. I’m stating a position of principle. I’m open to suggestions on how best to implement it in practice. The supply-chain complexity argument is valid, but I don’t think it’s a deal breaker.

  34. It’s just been so long since I’ve had the opportunity to call you My Dear Ms. Kattenburg. :)

    And I love it when you do. :-)

    Kathy

  35. But if you’ve engineered your product in such a way that it can’t be made for the price you’re willing to pay, that’s your fault, and should be taken out of your paycheck, not the paycheck or the quality of life of the people building your product or part.

    This, I can agree with. :-)

    Kathy

  36. Adeline’s Dad wrote:

    If you are a company that imports something, it is your responsibility to make sure the workers that produced it adhere to US working condition standards. If they don’t and you are found in violation, the law will treat you the same as if you they were your workers in the US.

    How do the employers here ensure compliance there with US law?

  37. How do the employers here ensure compliance there with US law?

    Supplier audits. 3rd party audits. Self-audits. If your supplier won’t let you audit, or won’t show you the audit a third party did, and won’t even self-audit for compliance to whatever are the industry standards, my suggestion is not to buy from them.

  38. dear tidbits, I fixed the of to off for you in your comment.

    archangel/ dr.e

  39. BTW, there are many smaller companies that can’t really afford to conduct these sorts of audits, or only use off-the-shelf parts, or are too small a buyer from the supplier such that the supplier would have a compelling reason to allow auditors. Companies like Apple and Dell are not among them. Lots of cash, plus tons of custom-made, customer-specific parts, and huge volume. There’s no reason on Earth that they should not be auditing their suppliers for at least 5 different types of compliance already; if they aren’t auditing for adherence to some standard of working conditions, I’d actually be really surprised.

  40. Thanks, Archangel.

    Z

  41. This, I can agree with

    We might not agree that this article shows a clear case of poor working conditions, but the idea that the only way to keep from going bankrupt is to lead your company to buying from companies that employ crappy work standards or a dangerous work environment is just silly, and goes against every good business ethic. Not only is such a stance unethical, but it’s also just plain wrong. Labor is really not a very big portion of your cost in almost all products if you set your line up right. There are reasons to go to low-cost regions anyway — for example, if your materials or your customers are closer to where the product is being manufactured — but the idea that the only way to make a product profitably is using underpaid, overworked, and poorly treated workers is a problem in the attitude and the ethical fiber of the leadership of the company. Period.

  42. And if you could offer more facts than theories, I might be more impressed. But, it ain’t happening in the real world to any significant degree or it would be evident. For every pair of sneakers Tom ‘s Shoes sells, Florscheim sells 500 made somewhere south of New Mexico. For every dress Kathy Lee Gifford moves out of a sweatshop, Macy’s sells 1000 from an Indonesian garment factory. It may not be slave labor, but it is low cost labor and the workers aren’t complaining. I haven’t read any annual reports where investment in world social policy is offered as the reason for the drop in EPS.

    AD, ok let’s take on your government policy solution. You’re President Obama and Dr. Roro Urbote, MSE: Cal Polytechnic, MBA: Wharton, PhD Econ: U of Chi is your Sec Comm. You guys decide you will fine US companies that have supply contracts with foreign companies that don’t comply with US Fair Labor Act. How are you going to know? Send IRS agents to some province in China? How many congress members are going to vote for this anyway? Tariffs and import quotas you say? Don’t you have enough wars going on without declaring war on your largest couple of bondholders? Does DoJ employ more lawyers than the private
    sector?

    Pie in the sky works only in the blogosphere.

  43. CO,

    I never made any claim about the politics of my suggestion, and I just conceded they may not be favorable and also that practically speaking there would be some complications to implementing my suggestion. I also never suggested tariffs and in fact argued against them in an earlier comment. If you’re not going to bother reading my comments, I’m not going to bother responding to your hypotheticals.

    What is your solution to the uneven labor requirements between US and our trading partners?

  44. Kathy,

    Since the thread has slowed down a little I’ll try to address the issue of compensation vs. workplace conditions as human rights issues. I don’t expect to convince you, of course. To restate: I do believe providing for minimum workplace conditions is a human rights issue, but compensation is not. Here’s why I draw the distinction:

    1) To say that someone has a right to a certain compensation implies that they also have the right to be employed. I don’t think such a right can be extended in a free society. We would either need to create an unlimited guaranteed government work program or else we would need to give every unemployed person the right to sue an company that will not hire them. Either way is unacceptable to a free society. People do have a right, however, to not be knowingly put in harms way by others, whether they are employed or not.

    2) Minimum workplace conditions laws can be justified within a free market system on grounds that the parties to the labor agreement are not omniscient. The potential employee cannot fully know the workplace conditions until he is in the job. Therefore, he must trust that the workplace conditions are reasonable. Therefore, there is a need for the government to ensure that they are reasonable to facilitate the mutually beneficial agreement. The same argument doesn’t apply to compensation since wages and, for the most part, benefits are easily explained and understood before-hand so the potential employee can make an informed decision. I trust that a potential employee is able to make the decision that will benefit him without needing the government to stand in his way. I know you have objected to the assertion that the potential employee has a choice in the matter, but of course he does and people make those choices all the time.

    Current law also implies that there is a distinction between minimum compensation laws and workplace safety laws. There are some exceptions carved out of minimum wage laws, such as for volunteer work, unpaid internships, and jobs that involve tips. Waivers have been granted to many employers that exempt them from the new health insurance requirements. It’s difficult to imagine similar exceptions being made with regards to standards for workplace safety.

  45. And if you could offer more facts than theories, I might be more impressed.

    You assume I can’t? Well, CO, I’ve got a graduate degree in the subject, and am part of a company that does it better than maybe anywhere in the world (including Toyota, thank you very much), so facts I got. When I do consulting work for my suppliers, my company charges just astronimical prices for me to do so. And no, it’s not being done to the extent that it should. The companies whose CEOs go to exploitation instead of going through the work to set up a production system correctly are unethical and also stupid and wasting money, which is *exactly* what I was saying in my earlier comment.

  46. I know you have objected to the assertion that the potential employee has a choice in the matter, but of course he does and people make those choices all the time.

    Yes, but they are not meaningful choices in the situations we are discussing. So I have to disagree with your “but of course he does.” There is really no “of course” about it.

    Kathy

  47. Kathy,

    So, are you saying that the people who work in the factory in the article are essentially forced to work there (in the sense that they don’t have a meaningful choice not to). In that case, I better buy some iPhones because if I don’t and that company goes out of business, what will those workers do if they had no other options to choose from.

    (My question mark key is not working, but I trust you can figure out where they would have gone.)

  48. I know this comment is a bit out of the current debate, but…

    It isn’t just iPhones…it is everything. And not just mass production, but also standard of living for everyone in China. This is part of a much much larger problem in China. The ruling class has been using the slave class to become billionaires for quite some time now. 95% of China is still a third world country.

    Anytime you buy anything made in China…you are contributing to the problem.

  49. ShannonLee — that’s not really true. There are lots of really good, modern factories in China that treat their workers well. There are a lot that don’t, of course, and we should be all over being more diligent about our imports, but just because something is made in China doesn’t mean it’s made by slave labor. Same goes for Indonesia.

  50. Casual Observer wrote:

    For every pair of sneakers Tom ‘s Shoes sells, Florscheim sells 500 made somewhere south of New Mexico.

    It’s amusing you wrote this, because I was keeping quiet earlier about it, but I was thinking –

    Will Steve Jobs face as much criticism as Phil Knight has faced?

    (i.e., Apple joins Nike in notoriety)

  51. DLS — I didn’t see anything in the article to indicate that the conditions at Foxconn are anywhere near as bad as they were in the Nike factories Indonesia. (If my memory serves.) I’ve not seen commentary from Jobs on the issue, but if I remember correctly, Knight basically made the same (specious) argument as casual does above — that being ethical means he can’t make a profit. Of course, there’s nothing in the rulebook of life that says he is entitled to a profit even if he can’t figure out how to make his product economically without exploiting a workforce unfairly.

  52. So, are you saying that the people who work in the factory in the article are essentially forced to work there (in the sense that they don’t have a meaningful choice not to).

    Yep, that’s what I’m saying. But your offer to buy IPhones so the company won’t go out of business doesn’t make a lot of sense, because the company is making huge amounts of money. Umongous, massive. The article I linked to provided that information. And of course Apple is in no danger of going out of business, either.

    Another point, which I neglected to make yesterday. Your reasoning for the exception you make for workplace safety conditions (i.e., in regard to requiring companies to meet certain conditions, as opposed to compensation, for which you do not think companies should be held to any requirements) does not work. You say that employers should be required to meet minimum safety standards because employees cannot fully know the conditions until after they are hired, but once they ARE working at the company and know what the safety issues are and whether those are appropriately addressed, they have the choice to leave, or to stay. If they stay, then according to your reasoning they have made a choice to risk their health, safety, or lives. So why should the company have to comply with government safety regulations?

    Kathy

  53. That rulebook you are referring to must have been a limited edition printing because I see no evidence of the correlation between the amount of ethics and the amount of profit.

    You can jawbone here until the cows come home, but there are only two things that can actually effect any change.

    1. Join the Kattenburg Boycott or 2. Head over to China and organize a strike.

    But based on Los Angeles giving Arizona Honeywell a $106M contract, liberal perseverance at boycotting doesn’t exactly strike fear into hearts. As far as organizing the Chinese population, the workers will likely weigh the pro/con of working at the factory with the pro/con of working the streets.

  54. So, are you saying that the people who work in the factory in the article are essentially forced to work there (in the sense that they don’t have a meaningful choice not to).

    Yep, that’s what I’m saying. But your offer to buy IPhones so the company won’t go out of business doesn’t make a lot of sense, because the company is making huge amounts of money. Umongous, massive. The article I linked to provided that information. And of course Apple is in no danger of going out of business, either.

    If I don’t buy iPhones or other products of China, Apple won’t go out of business of course. But if everyone follows your advice then of course it would, or at least it wouldn’t produce iPhones anymore, or wouldn’t produce them in China. In that case the factory wouldn’t exist, at least at it exists now, and many or all of those workers wouldn’t be working there. If what you say is true, then those people would be much worse off. In that case, I don’t see how I’m helping them by not buying their product. I certainly wouldn’t say that I could explain to them, and still sleep at night afterwards, how not buying their product so they can’t be employed is actually beneficial to them.

    I suspect, however, that a majority of them would pursue other paths, just as similar people did before the factory existed, which implies that they do have a meaningful choice to work there or not.

    You say that employers should be required to meet minimum safety standards because employees cannot fully know the conditions until after they are hired, but once they ARE working at the company and know what the safety issues are and whether those are appropriately addressed, they have the choice to leave, or to stay. If they stay, then according to your reasoning they have made a choice to risk their health, safety, or lives. So why should the company have to comply with government safety regulations?

    Firstly, in some cases the worker may not be aware of safety issues even after they begin employment. They cannot measure the toxins in the air, for example, to ensure that they are at safe levels. Secondly, there is the problem of momentum. Once you’ve started a job, gone through training (which may or may not be paid), relocated, quit your prior job if you had one, you’re now invested in that job. You do have the choice to leave, but then you will have wasted that investment. If workers had to worry about this, that would add friction to the mutually beneficial agreement that I described earlier. Therefore, it is important in a free market that parties of a transaction understand the terms and can make reasonable assumptions about the things that cannot be known beforehand.

  55. casual, I know you’re smarter than the stupid you’re spewing right now. I really don’t know what you’re talking about. I am not calling for a strike or a boycott. I was in fact the first to question Kathy on whether what was depicted in the article was really all that bad.

    But let’s get one thing clear here, yet again: if you cannot make your product profitable by any means except exploitation, you should not be making that product. Go to something else, redesign, renegotiate material costs, find new sources, find a different place to put your factory, differentiate your product some other way than price, take a margin hit. It is NOT an overall good for you to make a ton of money off the backs of foreign slave labor even if that means extra jobs or cheaper stuff for people here .

    You have said over and over that the American people are not “owed” things like healthcare or proper nutrition or whatever. Well corporations are not OWED profit unless they can do it in a manner consistent with the rules of playing at capitalism. There are barriers to enter any market, and being capable of manufacturing a product at the price people will pay while playing by all the legal rules is one of the most basic of these prices. You do not just get to choose which rules you will live by and which rules you will ignore because you want higher profits. Just like I cannot legally bid on the contract to build a large piece of infrastructure with the knowledge that I can ONLY deliver that price to my customer if I use substandard materials that may cause people harm, neither can I agree to sell a product if the ONLY way I can make a profit is by subjecting those who make it to unsafe or unfair working conditions. You are not owed a profit. The world will not fall apart if the piece of crap doohicky product doesn’t make it to market.

    I don’t know what you do for a living, but I sure as hell hope you never make it into my company or any company we do business with. Your business ethics SUCK, and should, quite frankly, be criminal.

    Your logic also sucks, casual. “Correlation between profit and ethics”? What in the world are you talking about? You can make a profit ethically. You can make a profit unethically. You can go bankrupt ethically. You can go bankrupt unethically. I’ll repeat again: if the only way to make a profit on your product is to be unethical, you are not doing business correctly, and you do not belong anywhere near the leadership of any company.

  56. Thanks for the sermon. I’ll save it in my “The Best of JSpencer” collection.

  57. As adorable as it is for you to pretend that you’re just flip about the whole subject, totally uninvested in it, you might want to remember that you’ve already tripled down on your own point of view here. When you know you’ve been beaten, I guess it makes sense for you to lash out in order to avoid admitting that you’re full of crap. (Or, if you’re not, by all means try and counter any single one of my points.)

    This whole argument you’re trying to make is so so typical of the wool that Republicans try to pull over the eyes of the rest of the country — whining about business being forced into using slave labor, as if you’re owed a place in the US market without following the rules. It’s pathetic, and it’s a shame more people don’t know better than to listen to this crap.

  58. But if everyone follows your advice then of course it would, or at least it wouldn’t produce iPhones anymore, or wouldn’t produce them in China. In that case the factory wouldn’t exist, at least at it exists now, and many or all of those workers wouldn’t be working there. If what you say is true, then those people would be much worse off. In that case, I don’t see how I’m helping them by not buying their product. I certainly wouldn’t say that I could explain to them, and still sleep at night afterwards, how not buying their product so they can’t be employed is actually beneficial to them.

    Here’s the thing, though. I didn’t say anything about not buying an IPhone. You did. And other people here did. But I didn’t. I responded to your question about what would happen if you didn’t buy lots of IPhones, or if you stopped buying any IPhone, but I did not at any point suggest that anyone boycott Apple or IPhones.

    I did, of course, direct to the reader of my post, in my post, the opening line, “Before you buy another IPhone, or before you purchase one for the first time…,” but that was not intended to be a call to boycott IPhones. *I* certainly would not buy an IPhone after reading this article unless I was sure that the conditions that led 11 employees to take their own lives had been effectively and appropriately addressed, but then I have to admit I had already decided not to buy an IPhone after the news came out that Apple had placed a tracking device in their IPhones that could not be removed. And actually, I even have to admit that I had not been considering or thinking about or planning to buy an IPhone even *before* the news about the tracking function came out — the immediate reason being that my cell phone service provider is CredoMobile, and CredoMobile does not sell the IPhone. It sells Blackberry smartphones and it sells smartphones powered by Google Android, but it does not sell the IPhone.

    Kathy

  59. Kathy,

    By urging readers to consider the article before buying an iPhone, your clearly are implying that not buying an iPhone would an appropriate response to this story. The only reason it would be is if you believed that your non-purchase would have a positive effect on the workers. I don’t necessarily disagree with you, but I’m pointing out that this view isn’t consistent with your view that the workers have no other meaningful options than to work at this factory. But I suppose we’ll have to agree to disagree on that. This line of debate started with my assertion that compensation is not a human right like workplace safety is, which is tangential to my original point that all employment rules, including compensation rules, should apply to imports. So, I’m willing to drop the subject if you are.

    (For the record, after Apple made my 3G unusably slow after their OS4 “upgrade”, I decided to go with a different smart phone brand recently. Although I can’t say I know where it was manufactured or what the employment conditions were.)

  60. There’s also the harsh fact to consider (there are no ethics rules, Roro; we choose to adhere to them), that conditions in the sweatshops are better than conditions in rural China. People are streaming to the cities there, just as in the undeveloped world, because conditions there are seen as better than in rural areas. I’m actually surprised that there’s not a widespread prediction yet that one or two of China’s coastal cities might become megacities.

    (And what happens when China modernizes its interior farms? Think “anarchy or revolution in Mexico” for our Southwest in terms of the increase the Chinese coast would see in migrants!)

  61. To be competitive with China, perhaps we should end basic labor laws, not only the minimum wage (GOP politicians bark about that from time to time; it shouldn’t be a surprise to anybody here), but say, child labor laws, mine safety regulations, etc.. (GOP politicians could say with a straight face that it “teaches children and young adults the reality about the work world,” while miners, for example, would then look back at the old Massey days with pleased nostalgia.)

    [grin]

  62. (the foregoing reads as awful, but it’s true — pure economics isn’t underpinned by ethics rules; we choose to practice good ethics and it’s presumed normally that most follow these chosen or contrived rules)

  63. To be competitive with China, perhaps we should end basic labor laws

    The thing is, this would not only decidedly not be ethical, but it’s almost certain that neither would it make us the least bit more competitive with China.

    And yes, there are ethics rules.

    I thought at least *you* DLS might have some cursory knowledge of manufacturing practices and how to do it well. Oh well.

    God, no wonder people think Republicans are evil. Even when the ethical coincides with common sense good business practices, the Republicans choose to defend the unethical positions. Wow.

  64. By urging readers to consider the article before buying an iPhone, your clearly are implying that not buying an iPhone would an appropriate response to this story.

    Yes, I am. That’s not the same as calling for a boycott. I also asked readers to just think about it and whatever conclusions they reach after that are up to them. Is that a call for a boycott, too?

    This is a big world and there are many people in it, AD — including some who appreciate knowing how companies and/or those companies’ subcontractors treat their employees before making buying decisions.

    There are also people who don’t really concern themselves with how companies treat employees before buying their products. There are people for whom price is a consideration, or product design, or how many bells and whistles the product has, or how good the customer support is, or whether the company supports our men and women in the military. Is urging people to read an article that strongly addresses one or more of those other considerations before buying a product, also a call to boycott the product?

  65. I was trying to illustrate a lack of ethics behind perfectly sound economic decisions in a vacuum, Roro — as would be paying desperate people to donate (sell) a kidney, then selling (for much more) the kidney to whoever was willing to pay (without checking for things like health of the donor or genetic compatibility, of course).

    The illustration was clear; I’m sorry you missed the obvious point.

    (Was I supposed to say “In a libertarian wonderland” instead of “To compete with China”?)

  66. It was written:

    (To compete with China, if we were unethical, we could dispense with labor laws, environmental laws, intellectual rights laws, etc., which is unethical but improves the chance of self-enrichment, something our nation doesn’t do and which I obviously don’t want)

    God, no wonder people think Republicans are evil. Even when the ethical coincides with common sense good business practices, the Republicans choose to defend the unethical positions. Wow.

    Non sequitur. [scowl] I’ve been more critical of the Dems than of the GOP, but haven’t failed to criticize the latter, and am not any kind of partisan myself, obviously.

    Maybe reading what I said more slowly, or more than once, might help, as it does with books that are too challenging at first glance.

  67. DLS, considering you did not explicitly state that you disagree with your own suggestions, and considering that others that you do occasionally agree with have, in fact, been suggesting exactly your implications, and, frankly, considering that you often make suggestions in earnest that come off as unethical to your audience (me), it was indeed quite unclear that you were making the suggestions as an example of what you believe is unethical.

    If you meant “libertarian wonderland”, yes, I think you should have stated that. I do not think that a libertarian wonderland would make us competitive with China, so the connection was not obvious to me.

    If I misread, I apologize. No need to scowl, but your point was not clear. I am glad to see that I was incorrect in what I thought you were saying.

    My point is that even if we did lower our safety standards to what is legal in China, it would be unlikely to raise our competitiveness with them. That is one of the big ol’ flaws in the whole “libertarian wonderland” to begin with. Treating workers like slaves is not actually a good way to make money. Hire and treat well fewer who will do more, be loyal, and do their work quickly and well. Set up your line to accomodate this.

    I’d like to add that assuming incorrectly that your point was totally clear and that I am merely an idiot is not exactly to be read as a sign of good faith.

  68. Roro wrote:

    My point is that even if we did lower our safety standards to what is legal in China, it would be unlikely to raise our competitiveness with them.

    Not with an ocean-sized work force available in China.

    If wages ever went up or it otherwise was no longer to produce things in China and ship them here, I suspect business would look first, as a new work site, at … Latin America.

    (Q: Why are so many people here from Mexico and Central America? A: Their jobs got relocated to China.)

    (the foregoing was sad humor, but I wouldn’t be surprised were it real)

  69. Kathy,

    Now review this (a more timely) article, also about Foxconn. (I’m unsure if you’ve read this as well as the Business Week article.)

    In addition to considering suicide, worry about being blown up.

    http://www.nytimes.com/2011/05.....xconn.html

    Note also from the article that Foxconn is shifting production from the more expensive south into the interior. (Consider what the situation could be like in several years if agriculture in China becomes modern and many people now working the land must do something else. It probably would keep wages low.)

  70. DLS, you miss my point entirely. If you set up your flow correctly, labor doesn’t cost that much even if you’re paying American wages.

  71. Kathy,

    Understood. You aren’t talking about a boycott, but rather your own personal preference. My last comment still applies.

  72. Roro — apparently most companies in China haven’t set up their flow correctly, then, for they are locating in China, in large part to reduce labor costs (and other costs), the real point of this thread.

  73. I suppose you’re trying to be sarcastic, but that’s exactly what i’m saying. Of course, If you’re a Chinese company, there are other reasons to be in China besides cheap labor. It’s the American companies who are using Chinese companies to do their manufacturing only for labor costs who are doing it wrong.

Submit a Comment