Tuesday, February 21, 2012



There was a piece in the NYT over the weekend about the wage increases at Foxconn:
Pressures Drive Change at China’s Electronics Giant Foxconn.

In it, there's this section just four paragraphs in, states the following as obvious fact:

For that system to genuinely change, Foxconn, its competitors and their clients — which include Apple, Hewlett-Packard, Dell and the world’s other large electronics firms — must convince consumers in America and elsewhere that improving factories to benefit workers is worth the higher prices of goods.

“This is the way capitalism is supposed to work,” said David Autor, an economist at the Massachusetts Institute of Technology. “As nations develop, wages rise and life theoretically gets better for everyone.

“But in China, for that change to be permanent, consumers have to be willing to bear the consequences. When people read about bad Chinese factories in the paper, they might have a moment of outrage. But then they go to Amazon and are as ruthless as ever about paying the lowest prices.”

There is, of course, another alternative—that the consumer is not alone, and that corporations could realize thinner margins on their devices. Apple makes a 60% gross margin on each device, and as I posted over the weekend from the Bloomberg report, there's a direct correlation between Apple's increasing profit margin and Foxconn's shrinking one, which now has been halved since they started working with Apple and hovers at around 1.5%.

I love that Mr. Autor speaks with such clean authority: This is the way capitalism is supposed to work. The corporations do their part, and then if consumers make the strategic mistake of caring about anything or anyone, the responsibility is entirely and totally theirs.

It also does a really disgusting thing—it transfers the direct responsibility for these conditions from the corporations, whom we naturally have expected to follow the rule of law and have not, and instead blames the users. It equates the public looking for the cheapest electronic at Amazon as being totally morally equivalent with the ethical decisions Apple made when it systematically ignored its own evidence for years and continued to work people to death.

This is presented toward the top of the article in a blase manner, as though it is so obvious it does not require discussion.

I see this again and again, where even organizations like the NYT will give these views a broad foundation, without any dissent presented, despite the fact that the largest pressure that has led to this situation is not a rapacious customer base but the unending hunger of the corporations to increase their profit margins at all costs.

Mr. Duhigg and Mr. Barboza's work in documenting the stories at Foxconn have been admirable. I hope they will apply the same kind of rigor to their analysis—just as responsibility for the creation of this situation did not derive directly and wholly from the public, and even though it is the people who often have the role of cleaning up these messes, it doesn't mean they are culpable in a direct way for the crimes.