Outsourcing Jobs

  • The Agony and the Ecstasy of Steve Jobs. Written and performed by Mike Daisey. The Public Theater, New York, Fall 2011.
  • Walter Isaacson. Steve Jobs. Simon & Schuster, 2011.

It takes confidence to sit in front of an audience, armed with a few pages of notes and one glass of water, wearing clothes you may have slept in, using your rubbery face as your primary prop, to discuss warmly but ultimately damningly, for nearly two hours, a man you never met. A man thought of as a rare contemporary hero. A man who died five weeks earlier. What gives Mike Daisey, a veteran monologist, the confidence and endurance to perform The Agony and the Ecstasy of Steve Jobs daily is, I suspect, justice. The jumpy, chilling, riotous monologue has the expected: scenes from the life of Steve Jobs and Apple; hilarious set pieces about Daisey’s technology geekishness. But its heart lies in Daisey’s disillusionment from his “religion” of Apple after years researching how Apple products are made, most upsettingly by interviewing workers outside the Shenzhen, China factory of Foxconn, a major manufacturer of Apple products. Daisey witnessed the company that produced his objects of identity be ruthlessly indifferent to the lives of the workers making them. His indictment is personal, directed at Jobs, but it leaves no one innocent. After the performance, I needed to run an errand, to buy a toaster. But the stores—buying and selling—sickened me. Toast would have to wait.

I went home and began reading Walter Isaacson’s Steve Jobs. Daisey’s words haunted the biography before I opened the cover. The most horrifying and moving passages in Daisey’s monologue are about hands: hands of the Foxconn workers he spoke to, which were ruined by fifteen-hour shifts (or a thirty-four-hour shift, in one case); hands of Foxconn workers who were put to work at age 12 or 13 and deformed by repetitive motion and carpal tunnel; hands destroyed by exposure to hexane, a chemical that accelerates the cleaning of iPhone screens with the slight drawback of being a neurotoxin. The front cover of Steve Jobs has a photograph of Jobs with sturdy, healthy fingers on his chin. It is a studied, anachronistic pose meant to convey Jobs not only as a master of all he surveys but as a 19th-century thinker and a Renaissance craftsman, a doer who created products with his hands.

Isaacson’s book is long, dull, often flat-footed, and humorless. It hammers on one nail, incessantly: that Steve Jobs was an awful man, but awful in the service of products people really liked (and eventually bought lots of) and so in the end his awfulness was probably OK. It is not Isaacson’s fault that Jobs from early on had a “admixture of sensitivity and insensitivity, bristliness and detachment,” as Isaacson describes it, or that Jobs abandoned friends, thought almost everyone else was a shithead, showed little interest in his daughters, and made life generally miserable for anyone who had to provide a good or service to him. But it is Isaacson’s fault that the biography is so narrowly focused on one moral theme. The reader is left to judge, with plenty of evidence both ways—and a clear idea of where Isaacson’s sympathies lie—whether Jobs deserves the Artist’s Exemption. “Ode on a Grecian Urn” may be worth any number of old ladies, as Faulkner said, but is the iPad worth the mistreatment of junior Apple employees? This is a moderately interesting question. Yet Isaacson, unlike Daisey, seems uninterested in the three larger questions beneath it, questions about the specific nature of Jobs’s accomplishment and the pain he caused. First, how exactly did Apple recently and rapidly become the largest publicly traded company, by market capitalization, in the world? Second, is it OK to buy Apple products given how they are made? And, underneath both questions, how much of the triumphs and abuses of Apple are of Steve Jobs, caused by him? Steve Jobs never seems interested in the first question, with Apple’s products, especially the ones of the last decade, prima facie desirable and thus magically money-making. While the biography mentions China a few times—for instance, Jobs once lectured President Obama on how much easier it is to open a factory there than in the United States—it never discusses the conditions in Chinese factories. Isaacson does, however, spend five pages on “antennagate” of the iPhone 4 and four pages on Jobs’s negotiation with Bono to develop a special U2 iPod. It is that kind of book.

Listening to Mike Daisey, I suspected that he might have bought the U2 iPod and almost certainly an iPhone 1, 2, 3, and 4. The enthusiasm of “fanboys” like Daisey helps explain how Apple has become the most valuable company in the world: the lust for its products; the awe of true believers for each new release; the physical pleasure in great design. Yet looking at Apple’s financial history, the most startling fact is not how big the company is now but how small it was until recently. Isaacson concludes that Jobs is the “greatest business executive of his era, the one most certain to be remembered a century from now. History will place him in the pantheon right next to Edison and Ford. More than anyone else of his time, he made products that were completely innovative, combining the power of poetry and processors.” This may turn out to be true, but the path to the pantheon wasn’t straight. Jobs co-founded Apple in 1976. He left the company after a feud with the board in 1985. He became CEO again, in a Churchillian restoration, in 1997, and led it until his liver cancer became too debilitating in January 2011. In 2003, six years into Jobs’s second reign, the company’s revenue was $6.2 billion. This was $800 million less than the year Jobs took over. Indeed, the revenue was less than it was twelve years earlier. Had Steve Jobs died in 2003, he would have been known as a pioneer of the personal computer industry, but not the Henry Ford of his era. Rather, he would have been remembered as the CEO of a niche, intermittently profitable consumer product company selling well designed, high-end gadgets to rich people and people really into design, a company like Bose or Miele. At the end of 2003, you could have bought Apple, from core to stem, for $7.6 billion.

You would now need forty-seven times that amount. Apple’s revenue is not $6 billion per year, as it was only eight years ago, but $6 billion every three weeks. (The company made $26 billion in net income in fiscal 2011.) The four i’s—the iPod, iPhone, iPad, and iTunes—have driven this, of course. But what has caused these products to become so popular? There is always—and it should not be underestimated, whatever must be added—the good product thesis. In fiscal 2011 people spent $108 billion on Apple products and accessories because the products work well and iTunes is a convenient place to shop for Rihanna’s latest hits. Isaacson is fond of citing Jobs’s disdain for focus groups, indeed for any input into his products, and praises Apple as a visionary company. It builds products that people didn’t know that they wanted. Yet few people needed or wanted Apple products in 2003, when Apple had been around for twenty-six years. Starting in 2003, Apple was able to grow revenue exponentially not due to a mass craze for its computers but by being the first company to build self-contained, smartly designed products that leveraged three technological advances well beyond Apple’s invention: the easy digitization of artistic content, the mass availability of the internet, and the spread of wireless broadband. One of the ironies of the present Age of Apple is that the company, a product developer, finally reached the pinnacle of global industry in an era of dematerialization, when the giddy-up in the technology sector has moved towards the internet, ways to communicate, and content itself. The design of the iPod was marvelous, but people bought the iPod to play music they bought (or stole). The iPhone still delights with each new advance, but users are not using them to interact with Apple creations: about half of the time spent on smart phones is for phone calls and text messaging and the other half for web browsing and apps. And now, as other companies are catching up with Apple, Apple is forced to compete on its products’ design and features and the promise—and appeal—of its brand, not by offering the only smart phone or tablet around.

Steve Jobs clearly was not irrelevant to Apple’s success. Unlike other computer pioneers, who built only hardware (Michael Dell) or software (Bill Gates), Jobs created a company focused on both. He established a culture of perfectionism that put design before technology. He micromanaged every Apple ad. Yet Isaacson’s biography never stretches to answer how different the iPad would have been had, say, the current CEO of Apple led the company during its development? Human agency, the decisiveness of leadership, the ultimate difference any of us makes to anyone are philosophical conundrums more difficult than wondering who gets credit for the Macbook Pro. But as far as the particular facts of the case, Steve Jobs contains as many moments of Jobs’s making Apple products more popular (such as his insistence on using multi-touch finger control technology on the iPhone or his ordering the iTunes store to sell single songs at a modest price) as examples of Jobs’s poor business judgment (he pushed to name the Mac the “Bicycle”; the original Macintosh was glitchy; before there was the iPhone there was the ROKR collaboration with Motorola). After reading through enough evidence on both sides and after pondering the correlation of Apple’s recent rise more to the spread of high-speed wireless internet than to a suddenly smarter Steve Jobs, I was tempted to see Jobs in Cupertino as Tolstoy saw Napoleon at Borodino, “worthily fulfill[ing] his role of seeming to command.” But Jony Ive, the head of design at Apple, saw Jobs’s accomplishments as both more subtle and more substantial.

“ [Jobs] will go through a process of looking at my ideas and say, ‘That’s not good. That’s very good. I like that one,’” Ive said. “And later I will be sitting in an audience and he will be talking about it as if it was his idea. I pay maniacal attention to where an idea comes from, and I even keep notebooks filled with my ideas. So it hurts when he takes credit for one of my designs.” Ive also has bristled when outsiders portrayed Jobs as the only ideas guy at Apple. “That makes us vulnerable as a company,” Ive said, earnestly, his voice soft. But he paused to recognize the role Jobs in fact played. “In so many other companies, ideas and great design get lost in the process,” he said. “The ideas that come from me and my team would have been completely irrelevant, nowhere, if Steve hadn’t been here to push us, work with us, and drive through all the resistance to turn our ideas into products.”

Steve Jobs made a difference. He was a fantastically innovative and successful businessman. Answering whether he was just at the right place at the right time, whether there were two Jobs (a immature visionary in 1997 who launched an industry and a mature leader in 2003 who created a giant corporation), or whether all his accomplishments are of a piece leads you into loops of counterfactual consumer product history, all of which is as boring as it sounds. But what seems inarguable is that all the credit you give Steve Jobs for the ecstasy must be equal to the blame for the agony. For there is one other reason for the mass popularity of Apple products in the last eight years: they are no longer out of reach of average consumers. The Macintosh was a commercial flop because it was underpowered and because it cost $2,500 in 1984, equivalent to $5,500 today. When the iPhone first came out in 2007, it cost about $500. You can now get an iPhone 4, with a telephone contract, for $99. Some of this price drop is natural for consumer electronics. Yet Apple’s ability to drive down prices also has to do with the almost total outsourcing of its manufacturing function, most of it to China.

Steve Jobs didn’t invent sweatshop labor, of course. The Agony and Ecstasy of the CEO of the Company That Made My Toaster would have been just as unsettling about the misery of Chinese factory work, even if it likely would have sold fewer tickets. Yet there is something understandable about everyday products being built in low-cost labor markets; it is odd, though, that some of the most technically advanced products in the history of the world are manufactured in a country quite recently known for poverty and bicycle transport. We should not gloss over the strangeness of this. The match that lit the explosion of Chinese manufacturing was China’s joining the World Trade Organization in December 2001. But the fuel was entrance into the global economy of hundreds of millions of underproductive rural workers. Seventy-four percent of Chinese lived in rural areas in 1990 compared to 50 percent today, a migration roughly the size of the entire US population. Three factors made China more likely to succeed than other impoverished, populous countries like India or Indonesia: the massive scale of the country; a capitalist Chinese diaspora in Taiwan, Hong Kong, and elsewhere; and a powerful state that sought both to unleash the power of market capitalism and manipulate it to China’s advantage.

I spoke about Chinese outsourcing with a friend who used to run global manufacturing at one of the world’s largest oilfield services companies. “Why China?” I asked. It was not a particular ease of doing business there, he said, contrary to Jobs’s lecture to President Obama. The cultural and logistical barriers are immense. He also didn’t attribute the advantages of manufacturing in China to low salaries per se: shipping costs and the lengthening of supply and inventory lines negate most of the hourly worker salary advantages. What startled him over the first five years of his experience manufacturing in China were other advantages: the sheer volume of potential workers, compared to the difficulty in finding medium-skilled workers like machinists in the United States; the massive availability of an educated supervisory work force, so that one could, for instance, hire a floor superintendent with a PhD in mechanical engineering for a Chinese factory; and the crucial cost advantages of cheap raw materials obtainable from Chinese state-affiliated companies, as a result of Chinese government policies. China’s rise feels like Apple’s rise, in a way: there were always a lot of people and a manipulative state; there were always great designs and innovative technology. But a rapid, head-spinning confluence of factors—none of which seem wholly inevitable—turned the latent advantages of China and Apple into the economy that is the primary source of global growth and the company that is the largest in the world.

Mike Daisey isn’t concerned with causality, per se; he’s an artist, talking about what it means to be alive today for those buying and those making Apple’s products. In Jobs’s first reign at Apple, they were manufactured at company plants in California. Jobs tormented his underlings by making sure that the factory walls were repainted a certain shade of white. There seemed to be no similar obsession with the insides of current supplier factories. Daisey stood outside the gates of the largest of them, Foxconn’s 450,000-worker factory in Shenzhen, interviewing workers coming off their shifts. Men and women lined up to speak to him, to tell them how they had crippled themselves making Apple products without ever having seen one turned on. Daisey contemplates the nets ringing the eaves of the roof to catch jumpers after an epidemic of suicides at Foxconn became global news. He reminds us that in this age of the locavore and the ethical high-end consumer, there is no better praise than something being handmade. But, grimly, all Apple products are handmade, through the repetitive, numbing, and crushing efficiency of hundreds of thousands of pairs of Chinese hands.

Apple issues an annual Supplier Responsibility Progress Report. The 2010 report describes audits undertaken by Apple on its suppliers and lists actions taken against some of them, including a factory that used hexane. (They were banned from using it again.) Daisey, however, is not persuaded. He argues that we shouldn’t be, either, because, “I’m not telling you anything that you didn’t on some level already know.” He relates comical and damning stories of Apple suppliers getting tipped off on the timing of the audits (there were only 127 of them in 2010, equivalent to about one for each $513 million in Apple revenue), temporarily replacing child workers with older Potemkin workers as if iPhones were assembled by retirees. He challenges us to call the man who told him that he started working at Foxconn at the age of 12 a liar.

Daisey had a fantasy about how this all would end: Steve Jobs would wake up one day and put an end to the labor abuses with a stroke of his finger. Daisey knows that a lot of companies outsource jobs, but he holds Apple to a higher standard. He does so first because Apple can afford to treat its outsourced workers better. In fiscal 2011, its gross margin was $44 billion, or 40 percent of revenue, compared to 24 percent at Hewlett-Packard and 13 percent at General Motors. More unfathomable, even as business strategy, Apple is hoarding $82 billion in cash and marketable securities, enough to give every worker in the Foxconn factory nearly $200,000. But Daisey’s disappointment doesn’t come from looking at balance sheets; it comes from looking at his iPhone and iPad and Macbook—the products he loves. He doesn’t try to resolve that love and heartbreak (who does, who can, about anything?). Yet, after reading Isaacson’s biography, I sensed that Apple’s manufacturing strategies are not just another fact about it. They are wholly consistent with a view of humanity and technology that also forms a core element of Apple’s appeal. And that view comes directly from the personality of Steve Jobs.

Jobs seems to have attended the Joseph Stalin Charm School: his world was one of clear good and evil; he was a constant liar, in what came to be known among his underlings as his “reality distortion field”; he was “anti-loyal,” abandoning people he was close to; he used silences and unblinking stares to shame people; he held show trials, bringing employees of a failed project into an auditorium, telling them they should hate each other, and firing the leader on the spot. Thus, when I read about Jobs’s praising China to President Obama, I suspected that Jobs liked outsourcing, not just as a profitable business decision but also on a deeper level. Contemporary China has found a way to combine, for outcomes positive and devastating, some of the most abysmal features of 19th century laissez-faire capitalism and 20th century totalitarian dictatorships. This is a combination that would seem to have felt very comfortable for Steve Jobs, as long as he was in charge. Apple has long been infamous for opposing open access and more collaborative computing cultures. Its hardware and software have always been untouchable, unmodifiable, and manufactured for each other alone. Apple tells consumers what they want and what they will get. Its design aesthetic is stark, minimalist, white. Apple’s massive growth in the last eight years to becoming the single most valuable publicly traded company in the world is not entirely explained by the thesis that Apple products are great, or that the company was early to take advantage of wireless broadband, or that Apple’s time had come when we all began to see computers as lifestyle accessories. For every era gets the companies it deserves. A brand of cleanness and simplicity, of chipperly trading control for efficiency, seems particularly well suited for a time when people have lost faith in an incompetent, messy, gridlocked, shallow democracy and in our fragilely recovering economy. Better an iPhone than Il Duce, of course, to make the trains run on time—or at least to tell you how to get to Penn Station—but totalitarian shadows probably should not fall over the products we crave, in how they are made or why we love them. Nor should the manufacture and the appeal of our most desired products reach the same conclusion: that people are much less than our machines.

So what should we do? Mike Daisey’s printed-out suggestions distributed after the show—talk to Apple, be aware, spread the word—conclude with a limp suggestion that is slightly less than storm-the-barricades: upgrade less often. Yet there aren’t a lot of other obvious answers. For there is a paradox of virtue, a cousin to Keynes’s paradox of thrift (where spending less and saving more is individually a good thing but bad for general economic health). Refusing to spend money on any product unless it is ethically manufactured is indisputably right. However, refusing to spend money—or feeling guilty for doing so—traps us both backward and forward. The backward trap comes from wishing that the Foxconn factories did not exist. In 1980, China’s GDP per capita was near the bottom of any country in the world—half the level of Sudan, for instance. By 2010, China’s GDP per capita had increased thirteen times and is now three times higher than Sudan’s. The teenagers coming to Foxconn factories to be dehumanized into machine parts often started their lives in rural villages where life is arguably worse. China’s suicide rate is the highest in the world, 287,000 people each year. But the rate in rural areas is three times higher than in urban ones. However ugly and unforgivable the conditions of factories in China, however frightening and potentially fatal China’s environmental and foreign policies, basic economic development there—and the increased human happiness—is hard to wish away.

The other trap comes when we think about the future. If we stop buying Chinese products unless workers there are immediately treated and paid better, Chinese exports will fall, Chinese people will lose their quality of life gains, and the US government spending (paid for by debt bought by the Chinese) will have to be drastically cut. Is there any way out of the trap of wanting to buy ethically? One solution, at least to the specific issues of the conditions in Chinese factories, will be time. Eventually, the surplus of Chinese workers willing to work under brutal conditions will dry up. Chinese wages will rise, workers will organize, conditions will improve, or the Chinese currency will inflate, and Chinese exports will lose some of their price competitiveness. This is starting to happen now. However, the likely result of is only that outsourced factories will move to other countries and find other workers for whom factory life is better than, well, subsistence rural life. A solution that we can participate in is to be willing to pay more for products that are manufactured or sold ethically. This happens all the time, at farmer’s markets and independent bookstores. But most people don’t have the luxury of paying more for everything.

Certain corporate leaders, who’ve been making 40 percent gross margins, do have that luxury. We are back to Mike Daisey’s fantasy. Had Steve Jobs never lived, there would probably be the same number of workers in Foxconn factories and their treatment would likely have been no better or worse. But Daisey is right that Jobs was in a unique position to make a difference had he decided that it was OK to be slightly less profitable by being significantly more humane. Jobs’s legacy as the lovably jerky Edison of our time ignores that he wanted us to believe that there is an escape from life into cleanly designed and efficient technology, and that only a ruthless dictator could show it to us. It ignores that many of his products were manufactured with child labor in brutally efficient factories. “Out of the crooked timber of humanity,” Kant wrote, “no straight thing was ever made.” Not even an iPad.

Postscript (March 19, 2012):  On March 16, after an investigation by This American Life questioned facts in  “The Agony and the Ecstasy of Steve Jobs,” Mike Daisey wrote that his play uses “a combination of fact, memoir, and dramatic license” to tell its story.  There is now considerable doubt as to whom Mike Daisey talked to and what he personally saw, and it now seems that the labor abuses in Apple’s supplier factories are less plain-to-see and widespread than the play—and my review—would have one believe.  That being said, This American Life did not call into question the harsh conditions in Apple’s supplier factories, and the play and Mike Daisey have done a great deal of good in calling attention to the working conditions in those factories and helping to spur Apple to improve the labor practices in them.  Thus while the ethics and achievements of Mike Daisey are now being argued about, that debate will probably not detract from the fundamental and complicated issues of the ethics of Apple and Steve Jobs discussed above.

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