The Price of Apple

By James Kwak

Last week, This American Life ran a story about the Chinese factories that produce Apple products (and a lot of the other electronic devices that fill our lives). It featured Mike Daisey, a writer and performer who traveled to Shenzhen, China, to visit the enormous factories (more than 400,000 people work at Foxconn’s, according to the story*) where electronic products are churned out using huge amounts of manual labor.

I’m sure that most of us already realized, on an intellectual level, that the stuff we buy is made by people overseas who, in general, have much less than we do and work harder than we do, under tougher working conditions. It’s harder to ignore, however, listening to Daisey talk about the long shifts (up to thirty-four hours, apparently), the crippling injuries due to repetitive stress or hazardous chemicals, the crammed dormitories, and the authoritarian rules. At one point an interviewee produces a document, produced by the Labor Relations Board (with the name of the Board on it): it’s a list of “troublemakers” who should be fired at once.

The question that Ira Glass asks at the end is how we should feel about all of this. Although Apple is at the center of the story—at one point Daisey shows his iPad to a man whose hand was destroyed by a machine that makes the iPad, and he called it a “thing of magic”—they seem to do a reasonable job of policing their suppliers and insisting on improvements to working conditions, at least compared to other companies. But still the number of violations doesn’t go down from year to year.

Glass quotes Paul Krugman talking about how sweatshops (in Indonesia, I think), though brutal, were still better than the alternative for the people working in them, and how they contributed to economic development. He also interviews Nicholas Kristof, who agrees that working in these factories is often better than working in rice paddies—especially for young women, who can earn more money and thereby improve their bargaining power. But is that enough? Daisey doesn’t think so.

I have a MacBook Pro and an iPad (and an LG phone, and a Samsung monitor, . . .). While I think OS X is far better than Windows (or Linux if, like me, you’re not a power user), I would gladly switch back if I had confidence that my computer’s manufacturer was an appreciably, demonstrably better employer than Foxconn. And I would pay more, too, just like I pay more for free-range eggs and organic food (which I buy for the environmental impact, not the health benefits). But while there are certification programs that provide some confidence that your coffee isn’t the product of imperial exploitation, I’m not aware of such programs for electronics. Maybe there are already, and I just don’t know about them.

Given that anyone buying Apple products is already paying a hefty price premium, you would think at least some of us would rather pay that premium for better labor protections.

* The TAL staff fact-checked everything they could fact-check in the story, and found only one small error (having to do with the size of the cafeterias).

29 responses to “The Price of Apple

  1. Dell has been a relentless hunter of lowest cost components; HP followed suit; Lenovo is also in China, Acer Korea.

    Apple may be the most visible, but the entire industry — all of our electronics — are made in places where cost trumps worker conditions.

    Of course, we could manufacturer these gadgets in the US, but we have seen the American consumer prefers cost over ephemeral issues (like Labor Conditions) as their own wages have been squeezed — in part due to the shipping of Jobs overseas. Its a self-reinforcing cycle.

    Ironic you posted this on the day Kodak filed for bankruptcy protection . . .

  2. The problem with Mike Daisey (and the TAL coverage) is that they make it seem like it is an Apple only problem, when in fact, Apple has probably done the most to improve the work conditions within their suppliers’ factories.

    In fact, Foxconn itself manufactures products for Dell, etc…

    While the “Apple is evil” storyline grabs more headlines, this is in fact an industrywide issue (actually, manufacturing wide). Besides that, it is also a US issue, because now US workers are competing against people whose competitive advantage is their willingness to accept an inhumane work environment. The problem could possibly be solved by mandating minimum labor practices, which, if a country/supplier doesnt meet, then a large penalty import tax is imposed on them.

  3. …..While I think OS X is far better than Windows (or Linux if, like me, you’re not a power user) …..

    My daugther aged 12 and 15 installs and uses Linux.
    The power user is a myth, just like your willingness to pay higher price will get better conditions for workers.

    Try out Linux Mint, Mepis, PCLinuxOS or openSUSE to prove yourself wrong/correct.

  4. Apple could double the wages of factory workers in China withut putting much of a dent in the profits that are allowing it to stockpiling bns in cash offshore. But how do you make sure it gets to the workers and isn’t siphoned off by middle-men/’entrepreneurs’?

    The history of capitalist development suggests intervention in the market through unionisation and regulation ius the only way conditions improve.

  5. Any one working for/under a signed contract/er is always under the gun to produce more, or possibly lose his job to a speeder working man [missing parts or not]. We know how this ends, and it is not well, but you can’t convince him of that, because it puts more money into his pocket. But since its not published proven he disreguards all negative information and races off to the next jamboria.

  6. “hefty price premium” amounts to cost analysis without an eye on quality. I’ve never had an Apple laptop shed its screen or battery in normal use within a year of ownership … unlike HP’s and IBM’s shoddy offerings.

  7. As soon as America (Big Banks, Big Corporations) signed off on a labor arbitrage policy masquerading as a free trade policy this was all inevitable. The result was supposed to be the creation of newer, more well paid, and wonderful jobs here in the U.S. Still waiting.

    In the meantime apparently Cadillac has granted money to the Chinese government to make a propaganda film detailing the glorious history of the Chinese Communist Party.

  8. I think Windows 7 is about on par with OSX. Better in some ways, worse in others. Prior to Win 7, ha, of course not. But the ballgame is different now.

  9. I read the headline on this blog post hoping for more arguments – because that is the great value in this blog.
    For once, I was a little disappointed as you mostly restarted the podcast.

    Does the argument that even crappy overseas factories are better than the alternative hold water? Is it reasonable to expect that eventually the twin pressures from staff demanding better conditions and consumers not wanting to feel guilty will improve the situation?

  10. It seems to me a pretty strong argument for why unions can be valuable. What other pressure can be brought to bear? Imposing working conditions from another country doesn’t seem very enforceable to me, and an invitation for expensive bureaucracy and corruption. Having said that, we should have some minimum standards for imports. But it’d be better if the workers fought for their own standards, and their brethren stood with them (rather than taking the job after the troublemaker got fired).

    This is not to say that unions can’t have negative outcomes, too, but what we have right now is a very negative outcome.

    I try not to replace my shiny gadgets very often, but when I do, this nags at my conscience.

  11. unqtiousrobot

    Cae,

    I use Linux Mint on my laptop at home, but I would not call myself a power user. However, if you’re running a server with Linux, then I would consider you a power user.

  12. “Glass quotes Paul Krugman… especially for young women, who can earn more money and thereby improve their bargaining power. But is that enough? Daisey doesn’t think so.”

    Does anyone have links to either the Krugman or Kristof comments? While the change from rice patties to factories may allow for more income, I question the idea of increased bargaining power.

    Even with increased income, both situations (rice patties and factories) seem to have relative low ceilings in regards to development as long as international corporations are providing the contracts (exporting rice or exporting ipads). I find it difficult to believe that an American-based company would choose to increase the standard of living of any developing world citizen so much so that the citizen is able to take emancipatory action.

    Should self-determination not be a primary factor when considering the value-added components of any change in labor?

  13. isn’t there a rumor floating around out there that the Apple facility being built in North Carolina is not going to be a data center because it is something like 50 times larger than the next largest data center and that it will actually be used as an entirely automated manufacturing facility. Regardless of whether that rumor has any factual basis, Foxconn has publicly announced that they will be acquiring one million manufacturing robots over the next three years. It will be interesting to watch whether these automated manufacturing techniques displace workers or move them up the value chain.

  14. Nice to see some recognition in the comments of the value of collective bargaining. Unionization has the most to do with the emergence of a middle class in the developed world, and globalization of capital to escape high wage labour has the most to do with the disappearance of the middle class in the developed world. Organized labour needs ot go global, and the new union leadership needs to emerge from within the low wage parts of the world.

  15. Slightly off topic –There was a piece this morning on NPR about potentially unfair Chinese subsidies to their solar panel industry (http://www.npr.org/2012/01/19/145403625/cheap-chinese-panels-spark-solar-power-trade-war).

    Aside from the question of working conditions, the complaints seem to be about Chinese suppliers that can sell for below their costs (so, even if workers are treated well, the panels are still cheaper). This seems to be an avenue for the Chinese government to send back all those dollars they have been hoarding. US manufacturers of PV panels might be worse off, but on the whole it should be an improvement in the overall balance of trade.

    (Dollars piling up due to a trade imbalance? No problem! Just send them back layered in PV panels.)

    Or is this too simplistic?

  16. Most people cannot afford the price premium for “for free-range eggs and organic food” or other PC choices. The problem of sweatshop goods is political; it must be addressed at the governmental level. “Sweatshop” goods should either be banned from our marketplace or subject to corrective tariffs. Sadly, these remedies are unlikely to be implemented so long as our elected officials choose to serve their corporate sponsors/bribers rather than the public.

  17. @A. Lewis: it’s not often I agree with everything in a blog comment, but yours was one of those times. Thanks.

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  19. Wow, you just spurred me on to buyin a corn millin machine, thanks fer the boost.

  20. Brenda Vinall-Mogel

    This could also be looked at another way. American companies that make product in China, and in other countries that use Iranian oil, are undermining the effectiveness of the West’s embargo against Iran. If we, as citizens, wish to have an impact on this then we need to start reading labels and be in tune to world events when we buy goods.

    With the internet and social media, the consumer has more power than ever – other companies can be found to buy products from, which do not harm the intent of the embargo. We might even convince American owned companies that with automation the US still has one of the best work forces in the world.

    Suggestion to these companies: If companies need an educated work force for the automated plants, find an area with high unemployment, and give a basic aptitude test like Cray Research did for its assembly workers. While the factory is being built, hire instructors from the local Community College and make the work force you need for the equipment that will be used in the plant. Take your kudos and put it in an ad showing your “good work” and see what profits you make off of your products – helping the economy by putting Americans to work, standing behind the West’s embargo, and doing it without the help or incentive of the Federal Government.

  21. I thought the whole point of outsourcing was for American companies to send their manufacturing capability to countries that have significantly lower labor and regulatory costs than in the US. The TAL story could have been made about virtually any big company that manufactures in 3rd world companies – WalMart, Nike, etc. and so on.

    Not sure why it’s in any way a surprise to anyone that laborers in emerging countries are abused by the companies that hire them. The reason our companies are there are to get labor costs for as little as possible. It costs companies money to provide decent working conditions – and if not regulated to do so, why bother?

    As Ira asks how we feel about this, let’s also wonder how we feel about Pullman’s approach to labor 100 yrs ago – or what we feel after we read Sinclair’s “The Jungle.” Companies will do what they can to squeeze out what they can from their employees. That’s global. What’s not global are regulations protecting workers…..

  22. The NY Times has an excellent article today that is a great follow-up to the TAM podcast: “How U.S. Lost Out on iPhone Work”. http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=1&ref=business

    The article points out that it is not just the low wages, but also: 1) the ability to rapidly respond to changes in production requests, and 2) the fact that so many components are made throughout Asia, that drive manufacturing to China. The article also cites an example in which the Chinese government underwrote the rapid expansion of a factory and supplies in order to better position a factory to just bid on an Apple contract.

    (In contrast, most of our own politicians seem willfully blind to the fact that government can play a role in stimulating job growth and innovation, so the chances of our govt doing the same seem very, very remote.).

    The Chinese factory in this example got the contract because they were pretty much ready ready for it before they even bid on it. The article illustrates how Steve Jobs could say – “I want a glass screen on the iPod, and I want to be selling it in 3 weeks,” and only factories in China could meet such a rush order. The tipping point on all of it seems to be in 2003, when Apple shifted from boasting of its US iMac plant to shifting production to China.

    It all comes down to speed. Do we, as a species, really need a non-essential product to be updated within 3 weeks? No. But market forces put all the emphasis on speed. Just saying we should all slow down will do nothing. There is no easy answer.

  23. As always the problem becomes at what point do the higher wages make automation more economically viable. That would be great for the US, because even the most automated factories need some employees, and it’s better to build those facilities here, since we have more reliable power grids and the labor costs are the only reason the companies are overseas in the first place. So if Apple doubled, or was somehow forced to double, the wages of their workeres in Indonesia or China, do they just say screw it and build an automatied factory, throwing all those people out of work where they then starve to death? It’s just not as simple a problem as having some kind of advocacy group – the US has lost far more factory jobs to machines than it ever did to outsourcing.

  24. Until we ALL agree to take in to consideration the needs of the least among`us the consideration is purely economic, it’s not a broad-based consideration that should not exclude labor and the enviroment, otherwise the costs, as seen from an economic model ARE externalized in terms of the human costs and the enviro. costs.

    These problems can be solved, but only if we form new coalitons (online) that render the oligarchs and strictly market-based ‘reasoning’ defunct. Use the internet and reframe the issues Globally where humans and non-humans matter; rather than limiting the discussion to the narrowness of strictly economic sound bytes. “Everybody All At Once” Adi Da Samraj…..

  25. From the 2nd NY Times article in their new series: “Some former Apple executives say there is an unresolved tension within the company: executives want to improve conditions within factories, but that dedication falters when it conflicts with crucial supplier relationships or the fast delivery of new products. … Executives at other corporations report similar internal pressures. This system may not be pretty, they argue, but a radical overhaul would slow innovation. Customers want amazing new electronics delivered every year.”
    The market has spoken — You can’t slow innovation. There has to be a new model at least every year if not six months so we can throw away the old one, buy the new one, and keep the wheels of capitalist commerce spinning. How, we need to slow don long enough to ask, have we come to be conditioned to believe we really need an amazing new electronic device every year?

  26. How are the conditions reported in China any different from those that were happening in the West during the time of our own industrial revolutions? Not a one of you on this page is going to stop buying your electronic gadgets, you are dependent on them now. Go live in a hut and get rid of your electricity, your running water, and live off the land. This is liberalism at its stupid bull headed worst.

    You can’t want better working conditions for these people — they must want it for themselves. Just as happened in the West when unions arose as a response to abuses by employers, if Chinese workers want improved conditions they will strive for it.

    While we are on this topic, it is very tiresome this constant bashing of China. It almost borders on racism to me. I don’t dispute the conditions in factories in China may not be wonderful. But think on this, when was the last time China had a terrible famine in which millions died? China’s industrialization has done something for its people. Or perhaps you think famines are a better alternative.

  27. “Given that anyone buying Apple products is already paying a hefty price premium, you would think at least some of us would rather pay that premium for better labor protections.”

    Heh, what premium? Your article just demonstrates that Apple products are produced below what standardized, well-regulated and safety monitored labor markets can bear, therefore, we are not paying a premium for Apple stuff, we are underpaying enormously for what those things actually would cost given a labor safety standards which would not cause us to grimace.

    There are no products that compete with iPad and iPhone at the specification level, i.e. these devices aren’t commodities. Apple products are continually re-invented using what the state of the art and labor markets can bear, therefore by definition, there can be no cheap alternatives for usable mobile devices that “even Grandma can use”

  28. It’s not Apple, or anyone else. It’s Capitalism. You all seem smart here, but this is why these conditions against. The Capitalist system just wants us to be machines, sadly we can not be, and you run into these problems that Fox Conn is having with people killing themselves, etc. It also causes someone like Apple to ditch America Manufacturing because there is no way Apple could be as “profitable” without doing what their competition is doing, going to China or where ever they can exploit labor. It’s a vicious cycle, one that is unlikely to last long term. Which means the entire break down of this system as we currently know it.

    Another point about how we experienced similar situations in America, while that is true, you are ignoring something that was very unique in America 120 years ago. You always had the option of going west. China doesn’t have that. That country is massive, and occupied(no empty land like we had then, remember we slaughtered all those Indians). Another important thing to keep in mind IMO is this. The conditions that force people do go work in these shops are created by this system. when work in a factory is the only way to subsist you are in essence being forced into those conditions to survive at all.

    Anyone who questions these things should take a look at Karl Marx, and his work on Surplus Value, and his Opus Capital Vol 1-3(though 2 and 3 are of his notes, and written by Engels) they will shed light on these issues, no matter what some vulgar economists suggests, while he struggles mightily to explain the current crisis we are, as well and this horrible dehumanization of our species we allow when it comes to capitalist mode of production. None of us would tolerate conditions like this here, yet here we are, accepting of it, yet aware of its inhumanity.

  29. The podcast from This American Life linked above is one of the most insightful things I have heard in a while. I’m sitting here, typing away on my Macbook Pro, with my iPhone just inches away, and I have never even considered where they were made until I read this article and listened to the podcast. I commend the author for saying that he would gladly switch back to Windows if he knew that their products had better employment practices than those of Foxconn. However, I think the problem with much of society today is that we are uninformed about where these products are physically made and who they are made by. Before we can even begin to ask the question if society cares or is moral enough to change their loyalties based on employment practices, these employment practices must first be understood and communicated. There is no doubt that the information is out there, but we are so caught up in the magic of products such as iPads and iPhones that we don’t even stop and consider how these products were made in a line by a poorly treated worker in China. Education and information need to come first, how we use and take action with that information comes second.