Genius Is Its Own Reward

I was away at sea for awhile and just got back. I was tuned in to the stock market channel and the pundits were saying that Apple stock was cheap and could go as high as $1,000 a share. So the first thing is that nobody in the financial community cares about any of this awful news coming out of China. Neither do the Apple stockholders. I would say the users of these products don't care either. It would be great if there was a new "app" that would subject iPad users to searing pain periodically so they would have some inkling of what goes into making these important gadgets that are ruining our society.

These are not petty allegations. Children forced to spray screens with neurotoxins. If you're hand gets crushed they fire you. If you complain you are blacklisted.

The other great thing about this is that apparently it will not put a dent in Steve Jobs' reputation as a genius. Is it genius to generate huge profit margins by using child labor? If Apple made its products outside of China and they made less money would Steve Jobs still be a genius? Could Apple squeak by on a little less money? All depends on who you ask. If you ask ME, I'd say using child labor is a crime. If you ask your broker, he'd probably say "buy Apple you dunce." This is part of why I'm not rich.

In addition to "genius is its own reward" I'm reminded of the great quote by Balzac.

"Behind every great fortune is a crime."

I'm sponsoring another contest. Send in an example of someone who has amassed a great fortune without at least touching on criminal activity, in their own work or in the manufacturing or sales process.

If this goes anything like my other contests I don't think I have to name a prize, because nobody ever sends in an entry, which is a DOWNER for me, on top of the downer lifestyle these workers are subjected to. Today is a double downer to make up for my time off at sea. Enjoy!

We love our iPhones and iPads.

We love the prices of our iPhones and iPads.

We love the super-high profit margins of Apple, Inc., the maker of our iPhones and iPads.

And that's why it's disconcerting to remember that the low prices of our iPhones and iPads — and the super-high profit margins of Apple — are only possible because our iPhones and iPads are made with labor practices that would be illegal in the United States.

And it's also disconcerting to realize that the folks who make our iPhones and iPads not only don't have iPhones and iPads (because they can't afford them), but, in some cases, have never even seen them.

This is a complex issue. But it's also an important one. And it's only going to get more important as the world's economies continue to become more intertwined.

Last week, PRI's "This American Life" did a special on Apple's manufacturing. The show featured (among others) the reporting of Mike Daisey, the man who does the one-man stage show "The Agony and the Ecstasy of Steve Jobs," and The NYT's Nicholas Kristof, whose wife's family is from China.

You can read a transcript of the whole show here. Here are some details:

The Chinese city of Shenzhen is where most of our "crap" is made. 30 years ago, Shenzhen was a little village on a river. Now it's a city of 13 million people — bigger than New York.

Foxconn, one of the companies that builds iPhones and iPads (and products for many other electronics companies), has a factory in Shenzhen that employs 430,000 people.

There are 20 cafeterias at the Foxconn Shenzhen plant. They each serve 10,000 people.

One Foxconn worker Mike Daisey interviewed, outside factory gates manned by guards with guns, was a 13-year old girl. She polished the glass of thousands of new iPhones a day.

The 13-year old said Foxconn doesn't really check ages. There are on-site inspections, from time to time, but Foxconn always knows when they're happening. And before the inspectors arrive, Foxconn just replaces the young-looking workers with older ones.

In the first two hours outside the factory gates, Daisey meets workers who say they are 14, 13, and 12 years old (along with plenty of older ones). Daisey estimates that about 5% of the workers he talked to were underage.

Daisey assumes that Apple, obsessed as it is with details, must know this. Or, if they don't, it's because they don't want to know.

Daisey visits other Shenzhen factories, posing as a potential customer. He discovers that most of the factory floors are vast rooms filled with 20,000-30,000 workers apiece. The rooms are quiet: There's no machinery, and there's no talking allowed. When labor costs so little, there's no reason to build anything other than by hand.

A Chinese working "hour" is 60 minutes — unlike an American "hour," which generally includes breaks for Facebook, the bathroom, a phone call, and some conversation. The official work day in China is 8 hours long, but the standard shift is 12 hours. Generally, these shifts extend to 14-16 hours, especially when there's a hot new gadget to build. While Daisey is in Shenzhen, a Foxconn worker dies after working a 34-hour shift.

Assembly lines can only move as fast as their slowest worker, so all the workers are watched (with cameras). Most people stand.

The workers stay in dormitories. In a 12-by-12 cement cube of a room, Daisey counts 15 beds, stacked like drawers up to the ceiling. Normal-sized Americans would not fit in them.

Unions are illegal in China. Anyone found trying to unionize is sent to prison.

Daisey interviews dozens of (former) workers who are secretly supporting a union. One group talked about using "hexane," an iPhone screen cleaner. Hexane evaporates faster than other screen cleaners, which allows the production line to go faster. Hexane is also a neuro-toxin. The hands of the workers who tell him about it shake uncontrollably.

Some workers can no longer work because their hands have been destroyed by doing the same thing hundreds of thousands of times over many years (mega-carpal-tunnel). This could have been avoided if the workers had merely shifted jobs. Once the workers' hands no longer work, obviously, they're canned.

One former worker had asked her company to pay her overtime, and when her company refused, she went to the labor board. The labor board put her on a black list that was circulated to every company in the area. The workers on the black list are branded "troublemakers" and companies won't hire them.

One man got his hand crushed in a metal press at Foxconn. Foxconn did not give him medical attention. When the man's hand healed, it no longer worked. So they fired him. (Fortunately, the man was able to get a new job, at a wood-working plant. The hours are much better there, he says — only 70 hours a week).

The man, by the way, made the metal casings of iPads at Foxconn. Daisey showed him his iPad. The man had never seen one before. He held it and played with it. He said it was "magic."

[yahoo! finance]