The Cost of Our Shiny Gadgets

[Jason Dunn]

<div class='os_post_top_link'><a href='http://www.engadget.com/2010/05/21/editorial-thoughts-on-foxconn/' target='_blank'>http://www.engadget.com/2010/05/21/...hts-on-foxconn/</a><br /><br /></div><p><em>"It's obvious, by now -- or it should be -- that something's going on at Foxconn -- the owners of massive factories in China which most famously assembles Apple products (though it's also responsible for many, many others). There have been several suicide attempts this year -- at least a few of them successful (though it's been pointed out that the number is pretty much on par with the rest of China) -- and over the past few days we've seen what can only be called a shocking expose by a worker who went undercover there."</em></p><p><img src="http://images.thoughtsmedia.com/resizer/thumbs/size/600/dht/auto/1274461935.usr1.jpg" style="border: 1px solid #d2d2bb;" /></p><p>Engadget's Laura June shares her thoughts on the real cost of the gadgets we know and love - because this Foxconn issue isn't just about Apple; they make products for HP and other big OEMs. I share June's thoughts that I'm not an economist; I know enough about wages to know that they need to be appropriate for the country the workers are in...you can't just take a North American minimum wage figure and use that. On the other hand, I support the concept of a "living wage" no matter what country we're talking about - if someone can't make a reasonable living working 40 hours a week, then they're not getting paid enough (and that applies to my own country as well).</p><p>I'd be a hypocrite if I said that the plight of the workers making my gadgets was at the forefront of my mind when I opened the package on a new device, but it's definitely something I've been thinking about more lately. Do I like cheap gadgets? Yes. But would I be willing to pay 10% more, knowing that money would make its way back to the workers in the form of better pay (which would be hard to do, but possible)? Yes, I absolutely would. Would you?</p>

[Bob Anderson]

While I wish I could support this idea, I can't. The noble idea that somehow the higher price would somehow "trickle" down to the actual workers would never work in practicality. Middle-men, governments, and everyone else in the chain would keep chunks of the increased revenue, leaving, by the end of the chain, a mere pittance for the average worker.

Also - we need to be careful and respect the origin country's situation and needs. First off, many of these workers are coming from rural areas and making significant money to send back home and support their families. In China, these are prized jobs - not unlike what happened in the US during the industrial revolution - and is part of their growth and emergence in the world market place. To interfere is to project our ideals and goals on a society, economy and belief structure that is not ready for it.

China has come a long way since 1972 when the US began the process of normalizing relations and laying some of the ground work to bring China into the modern economy. Let's let them deal with their problems without thinking we could sove their problems when we have enough of our own...

[Hooch Tan]

While the conditions that some of these factory workers live in might seem poor by our standards, I do think that overall, it is a good thing. Would I be willing to pay more for gadgets? Slightly. It would more likely just slow down my buying patterns. However, I do think that the raising of the quality of life in China needs to be done slowly and it has to be very carefully monitored.

A nation with over a billion people has to consider what it is doing or it could find itself sent into ruin very easily. It is like their one child policy. It really sucked, but I could see the reasoning behind it. If China did not have something to that effect, it probably would have grown so much in population that it could not support itself. Of course, there were other side effects like the "Little Emperor" syndrome.

Back on topic, I think what is more important than just price, is how the money is distributed. While I could pay more for gadgets, if I were to, I would want some sort of assurance that the additional money was going to the right place, and not just to increased profits.

[gdoerr56]

Back on topic, I think what is more important than just price, is how the money is distributed. While I could pay more for gadgets, if I were to, I would want some sort of assurance that the additional money was going to the right place, and not just to increased profits.

That works as long as there are enough people like you buying gadgets only form the companies that pay their workers better.

The reality for everyone is that this factor is but one of many data points we all use when making a buying decision. For most people, functionality, visual appeal and price are far higher up on the priority scale that workers wages.

Back in the 1830s and 40s and migration from rural comunities to the cities started here in the US. People moved from wide open spaces to the crowded cites seeking a better life. The point is that it's all relative. While we may view conditions in the chinese factories as deplorable, compared to their previous lifestyle, I'll bet most see it as an improvement.

Wages in China will most certainly rise when the pool of people willing to work for the current wages / in the conditions drys up. The laws of supply and demand are alive and well.

[Hooch Tan]

That works as long as there are enough people like you buying gadgets only form the companies that pay their workers better.

In addition, to ensure that companies are paying their workers better, there would need to be much more thorough and effective auditing and inspections. The recent case with Microsoft and its hardware manufacturing is an indicator of that. They perform audits and inspections, but apparently, that is not enough to prevent questionable factories from finding ways to exploit the system. And with that increased auditing comes increased cost, which means less money for the workers.

Back in the 1830s and 40s and migration from rural comunities to the cities started here in the US. People moved from wide open spaces to the crowded cites seeking a better life. The point is that it's all relative. While we may view conditions in the chinese factories as deplorable, compared to their previous lifestyle, I'll bet most see it as an improvement.

Wages in China will most certainly rise when the pool of people willing to work for the current wages / in the conditions drys up. The laws of supply and demand are alive and well.

I tend to agree with you on this. Overall, this process does serve to improve the quality of life, and it is definitely something that will take years or decades to truly see the effects. Especially considering the huge population that China has, I do not imagine the wealth of the theoretical average citizen will go up for a long, long time.

[Fritzly]

At the time when the "Industrial revolution" started in Europe and in the US there were 13 years old children working 12 hours a day, six days a week...... average.
Protocapitalism is a stage; do not be so eager to see them evolve: the day it will happen we will see the end of another empire here in the West.....

[gdoerr56]

At the time when the "Industrial revolution" started in Europe and in the US there were 13 years old children working 12 hours a day, six days a week...... average.
Protocapitalism is a stage; do not be so eager to see them evolve: the day it will happen we will see the end of another empire here in the West.....

Quite true. Once people achive a standard of living, experiencing that standard going DOWN is a horrible, gut wretching experience for the Individual. Once the US economy peaked in the 60s and 70s (from a TRUE, non-borrowing inflated GDP perspective) society started doing anything it could to maintain that accoustomed standard. A developed society then does what ever it can to legally and morally legislate how the markets work to maintain that current, point-in-time standard of living.

The problem is that there is no way to have the innovation and growth aspects of capitalism without the destructive aspects, no matter how hard we try. The end result is typically some degree of socialism to try to soften the impact of capitalisms' dark side.

There's nothing inherently wrong with this, it just means that the collapse of "empires" is inevitable...

[Nurhisham Hussein]

Reading between the lines:

http://www.digitimes.com/news/a20100521PB201.html

"Another death reported at Foxconn China plant

yicai.com, May 21; Joseph Tsai, DIGITIMES [Friday 21 May 2010]

Another male employee has fallen to his death from the roof of Foxconn Electronics' (Hon Hai Precision Industry's) employee dorm at its Shenzhen plant in China, the tenth incident involving falls from the roof of the plant in 2010, according to a Chinese-language yicai.com report. Of the 10 cases only two of the victims survived.

The incident is also the fifth death by falling at the plant this month (May 2010), added the report."

Notice that the report is very carefully not ascribing motivation.

[maxnix]

Only 10%? Why not 20%? Or 100%? Or 1000%

See the problem?

I don't like what happens to these workeres either, but for them, most chose these jobs as preferable over their other alternatives. Remotely managing economics is dangerous. Interfering with markets, even labor markets, results in unforseen negative consequences when the intentions are otherwise.

Market equilibrium is always the best. How much equilibrium can be achieved in the Chinese or any other economy is certainly open to debate. The unintended negative consequences can be debated also, but seldom controlled sucessfully. Freedom is best when it is truly free.

[Jason Dunn]

Some interesting thoughts; makes me wish I knew more about economics. :)

Worth noting: Foxcomm is raising worker salaries by 30%...

Foxconn increases wages by 30 percent as deaths continue to mount -- Engadget (http://www.engadget.com/2010/06/02/foxconn-increases-wages-by-30-percent-as-deaths-continue-to-moun/)

So it seems it's do-able that, with enough negative pressure, Foxcomm can raise the standard of living for their workers. If a 30% raise means they can maintain a reasonable standard of living without having to work crazy overtime hours, I think that's a very good thing.

[Hooch Tan]

So it seems it's do-able that, with enough negative pressure, Foxcomm can raise the standard of living for their workers. If a 30% raise means they can maintain a reasonable standard of living without having to work crazy overtime hours, I think that's a very good thing.

I'm not sure if raising the wage will help with their suicide rate, or the overtime hours. I'm sure that they have certain production commitments that will continue to require workers to work heavy overtime. Alternately, if the raise helps bring in more workers, that would be preferred, I'm sure. Either way, it is more money that will flow to the countryside, as that is where I suspect a large part of the salaries go.

[Jason Dunn]

I'm not sure if raising the wage will help with their suicide rate, or the overtime hours.

Well, it sure as heck can't hurt, right?