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. 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.

  2. 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

  3. 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.

  4. 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.

  5. 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.

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

  7. 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.

  8. 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

  9. 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.)

  10. 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!)

  11. 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]

  12. (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)

  13. 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.

  14. 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?

  15. 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”?)

  16. 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.

  17. 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.

  18. 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)

  19. 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.)

  20. 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.

  21. Kathy,

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

  22. 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.

  23. 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.

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