Discussions raised by the recent NYT and Atlantic articles about manufacturing all seem to arrive at the same question: Why couldn't American companies either (1) bring jobs home or (2) improve the treatment of workers overseas by asking the consumer to pay a little more? AlterNet's Robert Cruickshank quotes an estimate that all-American iPhones would cost $65 more, and says:
I would personally pay $65 more per iPhone if I knew it was going to American workers.
So why doesn't that happen? Let's think it through.
[a longer version of this article was in today's Weekly Sift]
Picture it: Apple offers an alternative all-American iPhone or even a no-workers-abused Chinese iPhone, and sells it right next to the current iPhone for a bit more money.
Now everyone who buys the original feels like a scumbag. Worse, as you stand there dithering about whether workers' rights or American jobs are worth $65 to you, you're not having the retail experience the Apple Store is trying to create. The whole joy of Apple products is that they are magic. Picturing the real process that creates them breaks the spell.
Up and down the supply chain, everyone is happier not knowing the extent to which they benefit from the mistreatment of Chinese workers. The market -- which just wants to make consumers happy -- has been very efficient at providing that ignorance.
"Until now," you might be thinking. Yes, the recent publicity has brought attention back to the responsibility we shoulder when we buy things: Everyone in the supply chain justifies their actions by claiming that they just want to please the consumer. So when you plunk down your Visa, you're signing your name to the whole process. If enough of us now decide we want to deal with that responsibility, surely the market will provide some way for us to do it. Won't it?
Here's the problem: The market responds to consumers' true desires, the ones that motivate our purchases, not the desires we claim to have or wish we had. And in our heart-of-hearts, don't we really just want this responsibility to go away? Don't we want the Apple Store to go back to being a high-tech Eden, where everything appears by magic?
If that's what we really want, that's what the market will provide. Some tiny improvements will happen in the factories, and each link of the chain will exaggerate that change, until the nerd at the Genius Bar can swear up-and-down that it's all fine now. The workers in Shenzhen are all happy little Oompa-Loompas.
The mechanisms are already in place. Apple already has a shiny code of conduct for its suppliers. Foxconn already has a statement of workers' rights that satisfies Apple. Supervisors on the factory floor already claim they adhere to that statement. And still workers are maimed or die or commit suicide. The NYT covers it:
“We’ve spent years telling Apple there are serious problems and recommending changes,” said a consultant at BSR — also known as Business for Social Responsibility — which has been twice retained by Apple to provide advice on labor issues. “They don’t want to pre-empt problems, they just want to avoid embarrassments.”
And like all global manufacturers, Apple is constantly squeezing its suppliers' profit margins.
“You can set all the rules you want, but they’re meaningless if you don’t give suppliers enough profit to treat workers well,” said one former Apple executive with firsthand knowledge of the supplier responsibility group. “If you squeeze margins, you’re forcing them to cut safety.”
How exactly is that going to stop?
Degrees of moral separation. Atlantic's Making It In America by Adam Davidson starts by comparing Maddy and Luke, two workers making fuel injectors in a Standard Motor Parts factory in South Carolina. Both are dedicated and hard-working, but Luke is skilled and Maddy is not.
Luke's job, the article claims, is relatively secure, but Maddy will be let go as soon as machinery costs drop far enough to make replacing her worthwhile. In the meantime, machine costs put a lid on her wages, and she has nowhere to go.
A decade ago, a smart, hard-working Level 1 might have persuaded management to provide on-the-job training in Level-2 skills. But these days, the gap between a Level 1 and a 2 is so wide that it doesn’t make financial sense for Standard to spend years training someone who might not be able to pick up the skills or might take that training to a competing factory.
But Standard is profitable, so Davidson raises the same question Apple faces: Why couldn't the company charge a little more or make a little less money and show some loyalty to its people and to America?
(NYT quotes an Apple executive saying: "We don’t have an obligation to solve America’s problems." To which Foreign Policy's Clyde Prestowitz replies: "Apple's products still have a large U.S. government R&D content and I'll bet that the guy who says Apple has no obligation to help Uncle Sam does strongly believe that Uncle Sam has an obligation to stop foreign pirating of Apple's intellectual property and to maintain the deployments of the U.S. Seventh Fleet and of the 100,000 U.S. troops in the Asia-Pacific region that make it safe for Apple to use supply chains that stretch through a number of countries such as China and Japan between which there are long standing and bitter animosities.")
So Davidson talks to the guy he thinks could make that decision: Standard's CEO Larry Sills, grandson of the founder.
It turns out that Sills doesn't believe he has the power to do Maddy any favors. Sills sees himself as the slave of two masters: the consumer, who looks for price and quality, but doesn't seem to know or care how the auto parts are made; and the stockholder, who likewise just wants earnings to rise and doesn't seem to care how it happens.
Once again, we're seeing one of the major structural problems of the modern economy: We all live many degrees of separation away from the moral consequences of our decisions.
If you had to go down to a Shenzhen-style sweatshop to buy your iPhone, or if owning mutual fund shares meant that you occasionally had to fire somebody like Maddy face-to-face, you might think twice about it. But instead you are wowed at the Apple Store and every month you get a nice clean IRA statement in the mail.
You're happier that way, and the Powers That Be are happier. And that's why nothing changes.