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Why America Doesn't Need More Tech Giants Like Apple
Hugh Pickens writes "Optimists says that if only America produced more companies like Apple and Amazon and Google and Facebook, the country's economic problems would be fixed — America could retrain its vast, idle construction-and-manufacturing workforce, and our unemployment and inequality problems would be solved. But Apple's $1 billion new data center in North Carolina has been a disappointing development for many residents, who can't comprehend how expensive facilities stretching across hundreds of acres can create only 50 new jobs, especially after thousands of positions in the region have been lost to cheaper foreign competition. In fact, Apple actually exemplifies some of the reasons why the U.S. has such huge unemployment and inequality problems: 'Digital' businesses like Apple employ far fewer people than traditional manufacturing businesses, Apple's 60,000+ jobs are not just in the U.S. — they're spread around the world. Companies like Apple 'create amazing products and vast shareholder wealth, but they don't spread this wealth around as much as earlier industrial giants did,' writes Henry Blodget. 'So, yes, we should celebrate the success of Apple, Google, Facebook, and Amazon. But we shouldn't delude ourselves into thinking they're going to solve our unemployment or inequality problems.'"
What we need is small, independent, companies competing directly in the same way Linux distros compete with each other. That will encourage innovation.
To offset political mods, replace Flamebait with Insightful.
It is interesting how many people seem to see big businesses and major corporations. They have huge advertising budgets, and thanks to that, you see their logo EVERYWHERE. And they do employ a lot of people, at home and abroad, and support the development of great products (be they actual tangible products like the iPhone or Kindle, or more of a service, like Facebook. That being said, the backbone of any modern economy still lies in small businesses. And the big ones do support the little guys. Look at Apple's App Store, for example. Of the thousands of apps on there, how many of those apps were created and marketed by a small company of less than 100-200 people (or even how many apps were put out by a one-man-shop)? Remember also, that many of these big corporate giants started as small businesses -- Apple and HP both started in a garage in silicon valley.
Those 50 jobs aren't the only benefits that came out of the data center.
If it costs $1billion to build that data center, then that's $1billion added to the economy, affecting a lot more people than 50 direct employees.
(How many people did it take to actually construct the place? to handle permits for construction? To deliver food for people that handle permits? To handle mail to deliver food to the people that handle permits for construction, etc..)
Jobs created don't provide the overall picture of an economic effect. Actual spending does.
who can't comprehend how expensive facilities stretching across hundreds of acres can create only 50 new jobs
Yup! Its amazing that the whole project was actually completed with only 50 local people... who now have posh jobs running the place. Actually, it would have taken far less people, but curious onlookers kept getting too close to the packed ACME Instant Data Center (tm), so Apple had to hire 49 more people to make sure the crowd stood back while a single drop of water was added to the ACME package and it expanded instantly into the glorious data center that stands there today.
The Admin and the Engineer
All the talk of how manufacturing will create jobs is just that, talk. In case you haven't noticed modern day manufacturing is automated to a very high degree and requires a lot fewer people to do the job. Robots kill jobs not only in manufacturing, but in pretty much every other employment field. Even scientific research is affected heavily by this and requires fewer people to do the same job. In one week I can do experiments that 5 years ago would have taken 10 people a full year to perform. With such throughput it isn't necessary even to formulate a hypothesis. You just test every possible variation and let the data speak for itself. Machines are more consistent than people, don't get tired, if the make mistakes the mistakes are systematic and easy to troubleshoot. Oh and recently even advanced robots have become very affordable (way cheaper than hiring humans). It is the 19th century industrial revolution all over again but this time it is affecting everybody, except politicians. Although I suspect lying can also be automated. Now this rises the problem what to do when 30-50% of working age adults become unemployed. I can imagine how this will work in the much hated in the US 'welfare states', but the US society itself is in a lot of trouble the way it is set now.
Maybe that comes from the fact that Asians are not as lazy and against "stupid jobs" (when they are in fact the most useful ones) as Americans?
So many citations needed here. Okay so you say "the fact" and I'm asking you where you get your "facts."
You say that Asians have this awesome work ethic and will do all the dirty work? How do you prove that? If you go by GDP per capita, I think the US is doing alright comparatively.
Could you please prove that Americans are against "stupid jobs?" I used to pick rock, bail hay, bus tables, work at a parking booth, etc. Now I code computers. There's my pitiful sample set of "one" please send me your numbers that prove it is applicable to all Americans. I think a lot of Americans working in the middle of nowhere get overlooked by people like you.
When you say "(when they are in fact the most useful ones)" I question how objective the superlative "most useful" is here. The factory worker, the quality control worker, the designer, the investors, etc. They all have a use. Which is "most useful" is totally a matter of opinion. The question I have for you is, do you think that Apple would just stop making iPhones if they were suddenly not allowed to import them from China? I highly doubt it.
I challenge you to grow up and to stop relying on tired stereotypes.
It applies to work, woman and everything. Everyone is selfish and looking for their own good, in a way or another.
So what you're saying is that you've learned that there is no place for love or satisfaction of a job well done? Just money? I'm really really sad you find yourself in that position ... keep manipulating your wife based on her greed. You know what else Americans are good at? Divorce.
My work here is dung.
The problem here is the same thing that is effecting all our decisions. We look at the top 1% (people, companies, whatever) and get angry because they have everything, and then look at the bottom 1% and get angry because they have nothing and think one must cause the other. And we completely overlook the middle.
Its the middle thats important. Because from there you can fall to the bottom too easily. Only from there can you typically rise to the top. The middle is the backbone. As mentioned already, that $1 billion spent on Apple's data center employed thousands of people directly and indirectly for at least a period of time. And those people and companies are probably all from the middle.
You can argue that our economic system is broken (or flawed by design) but so is our society. We pay attention only to the top and bottom and ignore the middle. We have brains and brawn but no backbone. We have the tools but no wisdom to use them correctly.
-- Senior Software Engineer, Attorney appearance services, locallawyerapp.com.
Data centers have always created very few jobs due to the high level of automation in these facilities. As a result, they don't appear to be a compelling candidate for economic development incentives, which have traditionally been all about job creation. But there's a political component to this. Data centers represent far more than jobs or bricks & mortar. They have become symbols of the new economy, a tangible sign that a community is making a successful transition to the digital economy. Governors and local legislators understand the value of a press conference to announce a new project from Google, Facebook or Apple. That's why North Carolina has hit the data center trifecta with projects for all three of those companies, and continues to offer aggressive incentives for new projects. We've been tracking this trend for years, and there are more states than ever before offering incentives for data centers. That competition will intensify as the Internet continues to transform our economy, and ensure that tax incentives for data center projects are here to stay.
RichM
Data Center Knowledge
Increased automation was supposed to bring more leisure time and higher pay --- instead it's been used to prop up corporate profits:
http://www.cbpp.org/cms/index.cfm?fa=view&id=1345
I want a politician to stand up and demand a shorter work week --- force companies to either hire more workers or pay more overtime.
Sphinx of black quartz, judge my vow.
How about if people crying about "there are no jobs for me" would either make new products or services people want or improve themselves to be more useful to employers? But nooo, now they're crying how no one is giving money for what they think they want to do.
Actually, the people Google sent be interviewed for the one article did just that, but unlike you, they recognize that asking a 50 year old guy who's been working in Furniture manufacturing to learn computers so he can get a new job is pretty futile. Most companies won't hire him because he's too old with too little experience.
It becomes an interesting question of what percentile of people do we allow to become permanently unemployed. Is it the bottom 10%? 20%? And what do we do with the least useful people? Do we give them enough money to survive or do we do as the Libertarians suggest and let them die from the crime of not being useful enough?
The point of the article is that the U.S. would need more Apples than it could possibly sustain to fix it's employment problems. The U.S. needs to have some manufacturing jobs because there a lot of people who are more suited to that work than to other jobs. This might seem like a problem of not adapting, but it's just a problem of numbers. Why would anyone want to hire someone from the bottom 50% of applicants for any job? The way to deal with this is to have a robust and diversified field of employers. The U.S. has failed to protect most of it's manufacturing industry from MBA idiocy that considers a hiring a Chinese company to do work inherently superior to employing Americans.
Fanatically anti-fanatical
"In fact, Apple actually exemplifies some of the reasons why the U.S. has such huge unemployment and inequality problems: 'Digital' businesses like Apple employ far fewer people than traditional manufacturing businesses" That's quite a reach, to say Apple only needs X people, therefore this is a contributing factor to unemployment and inequality.
This posting is provided 'AS IS' without warranty of any kind, implied or otherwise.
'Digital' businesses like Apple employ far fewer people than traditional manufacturing businesses, Apple's 60,000+ jobs are not just in the U.S. — they're spread around the world.
Maybe that comes from the fact that Asians are not as lazy and against "stupid jobs" (when they are in fact the most useful ones) as Americans?
Perhaps.
However, Americans also would not pay $700 for an iPod either, but that's likely how much it would cost if it were manufactured in the US. Kind of a double-edged sword here that's been going on for a long time. Create more US manufacturing and triple the costs(or more)...or continue to fabricate it overseas to appease the Wal-Mart price point masses. Choose.
Even worse for many companies like Apple you have to actually sell the stock to realize any benefits from it, because Apple doesn't pay dividends. So unless you have a lot of money, you can only be a temporary owner and hope that you can stay an owner until other people want to be an owner more than you do.
Fanatically anti-fanatical
Who hurt you man, why so jaded?
Maybe that comes from the fact that Asians are not as lazy and against "stupid jobs" (when they are in fact the most useful ones) as Americans?
A quick google search reveals the average manufacturing job in China pays $134 per month. It has little to do with laziness or stupid jobs, its simple economics.
Exactly. People are so quick to comment on "lazy" Americans, and yet fail to realize that unless you're willing to bring manufacturing to the US and increase the price of everything at least 300%, manufacturing will likely stay in parts of the world where it can be done the cheapest. Even if you found a willing worker, you'd be hard-pressed to survive anywhere in the US on $134 per month.
How much stock do you have to own before it generates enough revenue to actually live on (never mind getting rich on)?
What are the currently unemployed and / or in debt going to buy that stock with?
How many companies / governments with excellent ratings have tanked, taking the investor's money with them?
How much of that investment then goes towards exorbitant executive pay?
Most people don't want to gamble on making a living. They want to work and make a living.
blindly antisocialist = antisocial
What diseases and cancers does the pollution addresses by the Kyoto protocol cause?
None? So how is that applicable to the point in the slightest?
Take away the patents and innovation will sprout once again. The small startups simply don't have the deep pockets required to defend against the private monopolies riding on patents.
Patents divide us. Free ideas unite us.
The diversity and expression of human opinion is essential to human survival.
Nike Premium Shoes. Cost to make £4 materials $6 labour. Sale price (USA) $200.
Now how much more does labour cost in the USA than China? Tenfold increase? That'd be a $260 trainer, then. Or £60 less profit.
I absolutely agree.. Full disclosure: I am an Indian.
The management of businesses in the US and the first world make it seem like the Asians are all hardworking geniuses and that is why all the work is being outsourced to Asia - but the truth is that the work is only being farmed out because the salaries in Asia are much lower than in the first world.
The truth be told, for the most part, the Asians aren't as skilled or as educated as their western counterparts. Not to say that Asians don't have degrees - there may in fact be more Asians with postgraduate degrees than the first world.. and not that Asians are stupid or lazy either.
It is just that the educational institutions in most Asian nations are there simply to hand out degrees not an education. In the west, a lot of students take up courses because they enjoy the subject - but most Asian students take up courses with a view of getting a high paying job - with very little interest in the subject. And this impacts the quality of their skill and also their overall understanding of the subject.
By the way, when I say Asians, I am also including Indians into this - we are also part of Asia.
They'd be far more likely to buy a $700 iPod if they had a job that afforded them that kind of disposable income.
The whole "we can't afford to manufacture in the United States" idea is completely contrary to our own history. For decades we made most of our shit here, and consequently there were decent paying jobs to be had by most anyone with any skill level. Those jobs afforded those employees to buy the shit they were making, which is the fundamental problem we have today...wages have completely stagnated. People can't afford to buy the shit, even when it's made in China for pennies on the dollar. The race to the bottom has finally trickled up to the point where they're killing off their own customers.
Back in then 60's, my grandfather drove a truck for a living and supported himself, his wife, their four children, paid off a modest home for them to live in, had a new car in the driveway every few years, had enough scratch to pile the kids into said car every year to take them around the country on vacation, as well as put money aside for retirement and the kids college fund. The man barely had a high school education due to running off to fight in Korea and do his duty like those that had just a few years earlier in World War II.
This was possible because he wasn't competing with people on the other side of the world living in 3rd world conditions for his job. This was also possible because his boss was also a vet, as were all of his co-workers, and they would not tolerate one of their own being fucked over that way. He brought the boss home for dinner, the boss came to visit him when he was in the hospital. Point is, they actually gave a shit about each other beyond their ability to profit off of the labors of each other.
That $700 iPod isn't scary to someone that has a decent job. Paying the guys on the factory floor a decent wage allows them to buy the shit they're making, which leads to more demand for the product, which leads to more decent-paying jobs. This leads to a stronger economy, which increases the value of a dollar, which leads to lower prices. What it doesn't lead to, though, is ridiculous lopsided bonuses and salaries for the handful of people running things at the top.
In our grandfather's day, if their employer had brought in illegals or foreigners to work their line, paying them less in order to pad their own paychecks, there would have been a shit storm. They would have been shunned in the community, their products boycotted, and they likely would have had investigations into their business practices. But more importantly, most of those employers wouldn't have done it anyway, because they cared just as much about their country as their employees. That's something we lost in the drive for globalization and ever increasing profit margins.
The fallacy of trickle-down economics is why our country is sitting on the edge of a cliff right now. It took 30 years to fully flower, but we're finally hitting the point where even making shit in China isn't cheap enough due to inflation and the ridiculously stagnated wages we've been suffering under since this voodoo economics bullshit started. When less and less of us are able to justify the expense of an iPod at any price, where does that leave Apple (or any other manufacturer)?
A quick google search reveals the average manufacturing job in China pays $134 per month. It has little to do with laziness or stupid jobs, its simple economics.
I think it's important to point out how US-centric this article is. People in China need jobs too. They apparently need them so badly, they are willing to work for $134 per month. The jobs go to those that need them the most, those that will take the lowest pay. Americans simply don't need those jobs bad enough, even if they are unemployed. Our standard of living is too high.
I only see a few ways out of this situation:
1. Return to protectionist policies.
2. Create enough growth to saturate the economies of the third world and raise their standard of living. (The ultimate goal IMHO)
3. Reduce the standard of living in the US to remain competitive with the third world. (Hint: this plan will not be popular)
One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
Note: What I am about to say remains true even for other companies, I just present things specific to Apple....
You only see 50 jobs from Apple for a data center. But what about:
* All of the construction jobs when building out the center.
* All of the revenue from shippers going through nearby towns to and from the data center with supplies and equipment.
* More abstractly, the side benefits of helping Apple grow. If you are helping a large company like Apple gain something, leverage that - you could put together incentives to convince iOS app developers to live in your town, or offer free training to those interested to learn iPhone development. Then you can help ride the tide of a rising Apple.
* Also did they bargain to have Apple put in an Apple store locally (don't know if they have one already or not). That helps local revenue and residents alike.
Basically I think it's short-sighted to complain about a low number of jobs when you can derive other benefits, plus as noted get the one-time benefits of construction related revenue.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
That's not an apples-to-apples comparison, though (hardy-har), You would have to compare Foxconn suicides to suicides in similar manufacturing jobs. Comparing across the whole country only says that being employed is less depressing than being a homeless bum.
This is why I'm so amused when people say the reason jobs are moving to Chine is because of "the unions". As if a union bringing wages from $16/hr to $19/hr is going to matter when you've got people in China making $134/month.
Plus, in China nobody's going to mind if you pour the toxic waste from your fabricating plant into the water supply.
It's going to be interesting to see what China looks like as it becomes the ultimate corporate state. Let's see what they look like after all the "John Galts" have their way with it for another decade.
You are welcome on my lawn.
The US has *much* better beer than Germany (or anywhere in the world for that matter, with the possible exception of Belgium).
Have you actually been to Germany?? There are hundreds, maybe thousands, of regional beers. There are monasteries that have unique brews. There are many brands that are found only in a single city! There are more styles of beer than you can possibly name.
There are definitely some great beers in the US and there is a lot more choice than there used to be. I'd still say that if you walked into a bar and ordered a beer at random that the odds of getting something really enjoyable are much higher in Germany than in the US.
That being said, my favorite beer is from Denmark.