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Friday, February 17, 2012

World: Hell Is Cheap: China, Apple, And The Economics Of Horror

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Hell Is Cheap: China, Apple, And The Economics Of Horror by Richard RJ Eskow

I hate what I've learned about Apple's outsourcing to China. I hate knowing that Steve Jobs, who I admired very much in some ways, ignored repeated reports that employees were being cheated and endangered. I hate knowing that his business practices are destroying the kind of good middle-class job his adoptive father had.

I hate watching this week's news stories about China, knowing most of them ignore the fact that American companies who outsource to China have employee fraud and death built into their business plans.

In the words of the old Bob Seger song: Wish I didn't know now what I didn't know then. But I do.

Where the Blame Belongs

China and trade are back in the news, thanks to the trade visit of Chinese Vice President (and future President, by most reports) Xi Jinping. Last week on The Breakdown radio show I interviewed William K. Black, Jr., the former regulator who is now a Professor of Law and Economics at the University of Missouri in Kansas City.

Prof. Black, who describes himself as a "white collar criminologist," makes a compelling argument that the cruelty and cynicism of both Chinese authorities and American companies like Apple are far worse than most people can imagine. He identifies Apple's greatest misdeed - one that may be shared by most of its competitors - as "anti-employee control fraud" which it tolerated despite repeated reports.

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Before the interview, Bill Black and I shared stories of the working conditions we'd both seen in other countries. Sometimes it isn't pretty at all. So let's not kid ourselves any longer: Companies like Apple don't outsource to China because the workforce is better-educated or more highly motivated. They don't even outsource just because the labor is cheaper there. They outsource because employers who defraud their workers can make products more cheaply, and those who ignore their safety can produce them more quickly.

"I won't sell a product that gets scratched," Steve Jobs said in a famous anecdote. "I want a glass screen, and I want it perfect in six weeks."As Prof. Black noted in our interview (audio here), "Imagine what would have happened if Steve Jobs cared as much about the health of his workers as he did about the quality of an iPhone screen."

As someone who has admired both Jobs and Apple - and who just bought a new MacBook Pro - the issue strikes close to home. Because the worst moral depravity doesn't belong to the Chinese authorities, although they're shockingly heartless toward their own workers - and, as Prof. Black notes in this audio clip, don't even hesitate to tolerate fraud that kills infants. Even companies like Apple who, as Prof. Black says, knowingly create the environment that makes fraud and employee danger unavoidable, aren't the guiltiest among us.

The greatest moral failing isn't theirs: It's ours. We buy products from manufacturers like Apple. We ignore the reports that we hear. We read newspapers and watch television without ever demanding that their reporters ask companies like Apple at every press conference: What are you doing to protect workers overseas?

Shame on them, all of them: the Chinese government, the reporters, executives at Apple. But most of all, shame on us.

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