Smart Phone Ethics

by on August 8, 2013 at 7:25 am in Economics, Web/Tech | Permalink

Here is David Pogue, an excellent technology reporter but a lousy economist, reviewing the Moto X in the NYTimes:

You get your customized phone within four days, courtesy of Feature 2: it’s assembled right here in these United States. The components are still made in Asia, but they’re put together in Texas — you can lose less sleep worrying about underpaid Chinese workers.

David does not explain how a decrease in the demand for Chinese workers increases Chinese wages. Hint: It doesn’t. Perhaps, however, I have done David a disservice; although his argument fails as economics it succeeds as psychology. People who buy American probably will worry less about underpaid Chinese workers. Out of sight, out of mind.

Addendum: Adam Smith’s thoughts on China and ethics, most notably the importance of using reason not emotion to make ethical decisions, remain relevant.

Luis Pedro Coelho August 8, 2013 at 7:41 am

What is the minimal amount of work that needs to be done in the US so that people get over their xenophobia?

Assembled? Does that mean it came in two pieces from China and someone in South Carolina snapped them together?

It’s like the “just add an egg” story (http://www.90percentofeverything.com/2009/10/20/just-add-an-egg-usability-user-experience-and-dramaturgy/).

albert magnus August 8, 2013 at 8:11 am

He’s not being overtly xenophobic, he’s actually concerned for the iPhone assemblers being treated like near-slaves.

If the US only traded with countries with certain labor law standards, would that more or less xenophobic?

John Thacker August 8, 2013 at 10:07 am

I suppose he is concerned, but if he’s actually making things worse off for the Chinese works, well, the road to hell and all that.

mulp August 8, 2013 at 1:04 pm

When selling into the US, you don’t care what you pay your workers, but if your access to the US is cut off and you need to find a way to sell to your native population.

You need to get other employers to pay their workers a lot more so they can afford to buy your products.

Henry Ford game theorized that problem and raised the wages of his workers.

Was he wrong? Is there a better solution?

Bert August 8, 2013 at 4:23 pm

This whole line of reasoning is ludicrous. Henry Ford paid his workers more than normal so he could hire and retain the best labor possible, which he needed because he was in a young industry where things were happening fast, not unlike Silicon Valley today.

90 years from now are my grandchildren going to be hearing that Zynga paid wages higher than the degree-holder average so that the workers would buy more recipe ingredients on Chefville?

C’mon.

Cliff August 8, 2013 at 11:58 am

Yes, that would be xenophobic and racist as well as unethical

MD August 8, 2013 at 12:11 pm

How would it be xenophobic and racist? What do you think those words mean?

Z August 8, 2013 at 9:07 am

Xenophobic does not mean what you think it means. “Buy American” movements are always pitched as benefiting you, your neighbors, your community and your country. They are independent of one’s feeling toward outsiders. Further, xenophobia is merely fear of the foreign. It is irrational fear of the foreign. The Poles in 1930 had a reasonable fear of their neighbors, thus they were not xenophobic.

It would appear you are guilty of the emotionalism you are ascribing to others.

Frederic Mari August 8, 2013 at 9:21 am

+1.

Also Alex is assuming that David doesn’t understand the economics but it might be that David meant it exactly in a “Buy American” kind of way i.e. that’s that much less competition for our jobs and livelihoods.

Luis Pedro Coelho August 8, 2013 at 10:01 am

I should have used the word “nationalism”.

What is the minimal amount of work that needs to be done in the US so that people get over their nationalism?

Z August 8, 2013 at 6:25 pm

And you would still be wrong. The argument here is that buying a locally produced product is morally superior to the foreign sourced product. The former has fewer negative consequences than the latter. Surprisingly, humans are not just moist robots in their economic decisions.

Emil August 9, 2013 at 2:38 am

Why does it have fewer negative consequences?

bob August 14, 2013 at 5:12 pm

So, growing corn in the Sahara desert, regardless of the cost to water it, is superior to shipping it from further away?

And then there’s the problem of defining what local is. Texas is as local to Seattle as Romania and Lybia are to a Spaniard. If we went by fuel costs, the fuel needed to send something in a boat full of containers from China is no worse than crossing the US by truck.

asdf August 8, 2013 at 11:50 pm

One would assume that if the trade deficit were closer to neutral then Americans would feel that foreign trade was not negatively impacting their national interests.

Cliff August 8, 2013 at 11:59 am

Buy Americans movements are xenophobic and are not independent of one’s feelings towards outsiders, but to the contrary are driven by irrational fear of mutually beneficial trade with outsiders.

Z August 8, 2013 at 6:25 pm

At least you did not call me a doo-doo head.

Aidian August 9, 2013 at 9:40 pm

I like mutually beneficial trade, except the distribution of the benefits aren’t going to me and mine. If my community sees all the downside and none of the benefits of such trade, why should I favor it?

Jan August 8, 2013 at 7:56 am

It’s like IKEA. I assemble my own Janfrokborgsen couch here in the US, so I take no responsibility for supporting overpaid socialist vikings.

F. Lynx Pardinus August 8, 2013 at 8:39 am

Overpaid socialist vikings?
“A report by auditors at Ernst & Young concluded that Ikea, a Swedish company, knowingly benefited from forced labor in the former East Germany to manufacture some of its products in the 1980s. ”
http://www.nytimes.com/2012/11/17/business/global/ikea-to-report-on-allegations-of-using-forced-labor-during-cold-war.html

Jan August 8, 2013 at 8:56 am

Hence, not supporting the socialist vikings. That is terrible though, I hope they’ve cleaned up their act.

F. Lynx Pardinus August 8, 2013 at 9:05 am

That was the 80′s. Nowadays, they’re into byzantine corporate structures:
“What emerges is an outfit that ingeniously exploits the quirks of different jurisdictions to create a charity, dedicated to a somewhat banal cause, that is not only the world’s richest foundation, but is at the moment also one of its least generous. The overall set-up of IKEA minimises tax and disclosure, handsomely rewards the founding Kamprad family and makes IKEA immune to a takeover. ”
http://www.economist.com/node/6919139

mulp August 8, 2013 at 1:22 pm

That was what Howard Hughes did to avoid paying taxes.

Thanks to Howard Hughes efforts to avoid paying taxes, we have a lot more medical research. At some point, the laws governing such foundations will force change, or the turnover of trustees will lead to trustees wanting to be known for their good works by spending other people’s money instead being known as tax dodgers for dead people.

Mercantilism is a dead end because it is ultimately pointless and offers diminishing returns. When all the IKEAs of the world have joined with the WalMarts to create 90% working poor with only 10% with money and mobility, the profits must fall, or they must turn the 10% into working poor, at which point, profits must fall.

Labor income = consumption spending — long run economics is zero sum.

marris August 8, 2013 at 3:08 pm

> long run economics is zero sum

And that’s why, even though your life is much better than that of a medieval peasant, someone else’s life is much worse.

Oh wait. That’s not true at all.

derek August 8, 2013 at 8:31 am

Maybe it is gauche in those circles to state concern about american unemployed.

James Cox August 8, 2013 at 8:43 am

I’m guessing that Pogue was not making an economic statement but one about personal responsibility. By buying a phone assembled in the U.S., I’m not raising wages in China, but at least I’m not personally benefiting from any underpaid labor.

Rahul August 8, 2013 at 9:02 am

I wonder whether Pogue was being facetious. I think he was.

Paul August 8, 2013 at 10:34 pm

Yes! I’m glad some readers get it.

Gosh, so many people take his off the cuff joke as a dead serious philosophical statement on the ethics of international trade.

Erick August 8, 2013 at 9:14 am

So it’s about assuaging your feelings of guilt, not about actually helping that underpaid labor.

Returning to Alex’s statement, does anyone think moving manufacturing from China to the U.S. actually helps those “underpaid” workers? Do you think it bothers them that you benefit from their labor?

asdf August 8, 2013 at 11:48 pm

If your really concerned about Chinese laborers you should send them money without asking for goods in return. Certainly paying Chinese people to build a school in their home country helps them more then paying them to manufacture your Ipod.

It’s funny how people benefiting from slave labor like to say they are humanitarians when the true humanitarian response would require real charity on their part.

Emil August 9, 2013 at 2:37 am

No it doesn’t. It’s been tried through decades of aid spending and it does not work as good as trade

asdf August 9, 2013 at 3:52 pm

It has failed in African hell holes, but those are full of Africans and will always be hell holes.

However, when aid has been given to Whites and Asians they used it to build successful societies (see Marshall Plan, rebuilding of Japan).

John Thacker August 8, 2013 at 10:09 am

It’s an odd statement about personal responsibility that says that you’d rather have the poorest be worse off, then feel like both of you mutually benefited.

Dan Weber August 8, 2013 at 11:33 am

Why, then, the outrage of my correspondents? Why does the image of an Indonesian sewing sneakers for 60 cents an hour evoke so much more feeling than the image of another Indonesian earning the equivalent of 30 cents an hour trying to feed his family on a tiny plot of land–or of a Filipino scavenging on a garbage heap?

The main answer, I think, is a sort of fastidiousness. Unlike the starving subsistence farmer, the women and children in the sneaker factory are working at slave wages for our benefit–and this makes us feel unclean. And so there are self-righteous demands for international labor standards: We should not, the opponents of globalization insist, be willing to buy those sneakers and shirts unless the people who make them receive decent wages and work under decent conditions.

This sounds only fair–but is it? Let’s think through the consequences.

Paul Krugman

Gene Callahan August 8, 2013 at 8:57 am

“It is a stronger love, a more powerful affection, which generally takes place upon such occasions; the love of what is honourable and noble”

That someone could read this passage, by the author of The Theory of Moral SENTIMENTS, as meaning that emotion should be banned from ethical decisions, is mind boggling.

Cliff August 8, 2013 at 12:01 pm

Who said emotion should be banned from ethical decisions?

mulp August 8, 2013 at 1:40 pm

So, you endorse strikes over low wages and poor working conditions, and support laws that provide free health care to the poor, disabled, working poor?

Those all address the emotional sense of natural unfairness.

Bernard Guerrero August 8, 2013 at 2:10 pm

Nope. I just don’t happen to feel the same emotions you do. :^)

asdf August 8, 2013 at 9:14 am

Slavery had this kind of economic utilitarian argument as well. Slavery was the alternative to killing conquered peoples. It’s humane don’t you know.

Even looking at the African slave trade coming to America its obvious that this was good for the Africans. Living standards in the USA, both now and then, were higher then in Africa. Most of the slaves sold to white people were sold by other Africans, so it stands to reason things wouldn’t have been so great for them if they stayed there. American slaves were, given the terrible alternatives, the lucky ones. Even the ghetto banger in America is vastly better off then his never enslaved African counterpart.

Yet, do we make this kind of argument today? No. Slavery is repugnant. And its still repugnant even if the stars align to make it beneficial in a utilitarian sense for both parties. It is precisely this argument from repugnance that ended slavery. Slavers used these utilitarian arguments all the time.

If you believe that the conditions in China amount to slavery then to support such commerce is to buy from slavers. Maybe you are OK with that. After all, plenty of people throughout history who probably aren’t as evil as you think made such arguments. But lets not pretend its not about slavery.

dan1111 August 8, 2013 at 9:34 am

“lets not pretend its not about slavery.” But it’s not about slavery. It’s about voluntarily employment.

If you believe factory conditions in China amount to slavery, then by all means, go ahead and make that argument. I do believe an intellectually consistent position along the lines you describe is possible. But I don’t hear people actually making such an argument. They’re just saying “low wages=bad, ergo buying from China=bad”.

Emil August 8, 2013 at 10:49 am

The low wage stuff is often just an excuse. What they really don’t want is to allow the chinese to make any money. The low wages stuff just gives them an elegant argument that avoids them being seen as evil

Aidian August 9, 2013 at 9:44 pm

I’ve got nothing against the Chinese making money. Good on them. I don’t like how we’ve destroyed the working class in America for the benefit of the affluent. I personally try to contribute to that process as little as possible, hence I try and limit the amount of cheap plastic crap I buy that’s made in China.

Cliff August 8, 2013 at 12:05 pm

Slavery might very well be better than murder, but still be wrong. You can also argue the African slaves were better off, but if that’s true you wouldn’t need to enslave them, right? You could say well, you are free to go back to Africa at any time at our expense. I’m sure many would have chosen to return.

asdf August 8, 2013 at 11:44 pm

They did go back to Africa. In fact there is an entire country founded by them. Result…not so good.

John Thacker August 8, 2013 at 10:12 am

The Northeast and Midwest made the same complaints about the American South when textile factories (and then automobile factories, and lately an airplane factory in Charleston) started moving down. I’ve never really heard the actual workers in those plants in the South agree with that those complaints about the “low compared to the Northeast and Midwest but high compared to the other jobs in the South.” Most view it as a bit of concern trolling.

There is, certainly, a consistent view if you just don’t care about Chinese people as much as Americans, but I don’t think that’s what the New York Times likes to explicitly endorse.

prior probability August 8, 2013 at 11:33 am

Tyler notes that “Adam Smith’s thoughts on China and ethics, most notably the importance of using reason not emotion to make ethical decisions, remain relevant.” Maybe, but I still think Hume and emotivism generally are more on point, since people tend to use “reason” to justify their emotional priors …

Marie August 8, 2013 at 11:40 am

Our choice not to buy from China is not about wages, but about freedom. If I become convinced workers in a Chinese dictatorship with a controlled market have reasonable freedom of choice (which goes to the slavery issue), I won’t care how little they choose to work for.

Unfortunately, this does get very cloudy, since there is so much less control than you might think in the economy, since our consumption of goods from China may have actually lowered the degree of control, since standing on my principles about freedom might mean a bigger hit on the factory worker in China than on my consumer choices, etc. So it seems likely good people can make different calls on this one.

Nikki August 8, 2013 at 12:44 pm

You may have misinterpreted the idea of worrying about underpaid Chinese workers, professor. Perhaps it was shorthand for “worrying about owning stuff made by underpaid Chinese workers.” While hefty prices are not necessarily indicative of high quality, cheap is cheap for a reason.

Contemplationist August 8, 2013 at 2:57 pm

Does anyone have a graph of chinese wage growth (or decline/stagnation) over time, say 10-20 years? That would be illuminating.
I read somewhere that factory wages have been going up > 5% per year but I can’t seem to find it. If so it refutes the nonsensical arguments against chinese factory labor even more comprehensively than econ 101.

Steve Sailer August 8, 2013 at 5:46 pm

Obviously, it’s morally illegitimate for Americans to worry about underpaid and underemployed American workers.

Andy August 8, 2013 at 10:30 pm

I find it odd that there appears to be some sort of moral obligation to make decisions based on the perceived morality of the person you purchase from.

My view is that any attempt to sort out global societal effects is going to be shaded by my own imperfect perceptions and biases and likely to have unintended consequences as well. On the other hand, I can do a pretty good job of evaluating whether the seller in question is providing a valuable product or service to me, and tend to make decisions based on that.

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