David R. Henderson  

Public Radio International Retraction on Apple Working Conditions

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Public Radio International, to its credit, after some digging into claims made against Apple by Mike Daisey, not only found that he told a number of lies but also retracted its previous coverage in which PRI had assumed that he was telling the truth. All of the retraction is one direction: pointing out that the extreme claims that Daisey made about horrible working conditions were untrue.

You can read the transcript and that's normally what I do because I can read so much faster than I can listen.

In this case, though, the interview with Daisey was so revealing that I recommend that you actually listen to it. You'll need about 40 minutes. To listen, go to the retraction and click on "Play."

One excerpt:

Rob Schmitz: Let's talk about the hexane poisoned workers. Cathy says that you did not talk to workers who were poisoned by hexane and were shaking uncontrollably. 

Mike Daisey: That's correct. I met workers in Hong Kong going to Apple protests who had not been poisoned by hexane but had known people who had been, and it was like a constant conversation we were having about those workers. So no, they were not at that meeting.
Rob Schmitz: So you lied about that. That wasn't what you saw.
Mike Daisey: I wouldn't express it that way.
Rob Schmitz: How would you express it?
Mike Daisey: I would say that I wanted to tell a story that captured the totality of my trip. So when I was building the scene of that meeting, I wanted to have the voice of this thing that had been happening that everyone been talking about.
Ira Glass: So you didn't meet any worker who'd been poisoned by hexane?

Mike Daisey: That's correct.

In the last ten minutes, Ira Glass interviews New York Times reporter Charles Duhigg, who gets to the actual facts about working conditions in China. Interestingly, Duhigg points out that long working hours are often what workers in China want because they want to make as much money as possible. So, for example, even though it's against Apple's own rules for subcontractors, some subcontractors have people working for 2 12-hour shifts in a row and some of these workers want to do this. I was reminded of my job in a nickel mine in northern Manitoba in the summer of 1969. I volunteered two different times to work 3 shifts in a row. The first time I did day shift and then night shift. The foreman found it impossible to wake me for the third shift in a row: my next day shift. I was more successful doing night shift, then day shift, then night shift. Why did I do this? Because I wanted to make overtime at time and a half. My base wage in 1969 was $3.00 and hour and time and a half was $4.50, pretty good money in 1969 for an 18-year-old.

Duhigg also gives a fascinating account of labor flexibility and supply-chain flexibility in China. He points out that one reason, besides being able to pay low wages, that Apple does so much production in China is that the firms can turn on a dime and change what they produce so much more quickly than in the United States.

Where Duhigg is incorrect or, at least, misleading, is on two further claims. Here's the first:

And that argument is there were times in this nation when we had harsh working conditions as part of our economic development. We decided as a nation that that was unacceptable. We passed laws in order to prevent those harsh working conditions from ever being inflicted on American workers again.

Those statements are factually correct. But I think Duhigg is saying that the main reason we don't have the kinds of tough working conditions that exist in China is that the U.S. government legislated against such changes. The reality is that safety is a normal good: as we get wealthier, we demand more of it. So it's the increase in real wages that drove the demand for safety. Government came late to the game.

As Kip Viscusi wrote in "Job Safety" in The Concise Encyclopedia of Economics:

Other evidence that the safety market works comes from the decrease in the riskiness of jobs throughout the century. One would predict that, as workers become wealthier, they will be less desperate to earn money and will therefore demand more safety. The historical data show that this is what employees have done and that employers have responded by providing more safety. As per capita disposable income per year rose from $1,085 (in 1970 prices) in 1933 to $3,376 in 1970, death rates on the job dropped from 37 per 100,000 workers to 18 per 100,000.

Why did he choose 1970? Trivia question: when did OSHA begin?

Also, Duhigg adds:

And what has happened today is that rather than exporting that standard of life, which is within our capacity to do, we have exported harsh working conditions to another nation.

What Duhigg misses is what he understood earlier. Chinese people working in those conditions are actually experiencing a better combination of pay and working conditions than they had in their alternative jobs: that's why they're choosing them. So Apple is actually "exporting" better working conditions for Chinese laborers.

HT to Walter Olson.

TRACKBACKS (1 to date)
TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/6189
The author at schonger.com in a related article titled Great Audiocast: This American Life to air retraction of Apple/Foxconn story writes:
    A great audiocast. What a nice way to retract. And it is great radio. Especially the pauses, when Daisey does not know how to justify his behavior. A must listen. Only the last few minutes are weak, as David Henderson points out: “But I think Duh... [Tracked on March 17, 2012 3:33 PM]
COMMENTS (12 to date)
kebko writes:

This reminds me of one way I wish we could change conversational terms. Everyone speaks about exporting jobs to low wage countries. But this is actually not correct at all. We are not moving factories to the Congo. What is happening is that manufacturing jobs are moving to where wages are RISING. This is a much more true representation of what is happening, but because this is not the language we generally use, speaking in this way can leave people dumbfounded.

Ash writes:


I agree with your analysis of the conventional language, but your proposed alternative is also somewhat lacking. Jobs do move to places where wages are presently low. The subsequent negative feedback causes wages to rise. It strikes me as slightly misleading to say that "manufacturing jobs are moving to where wages are RISING", because that suggests that the movement of jobs is caused by rising wages.

However, it's equally possible that I'm reading too much into your claim.

Charlotte writes:

Though I like the article, and this is a small point, I think you should know that This American Life is distributed by Public Radio International and not National Public Radio. Both are public radio formats so they both air on the same channels, but are, indeed, different entities.

David R. Henderson writes:

Thanks. Correction made.

Steve Sailer writes:

Okay, but, say, coal mining in 1885 was more inherently dangerous than assembling iPads in 2012. The cost of making iPad assembly reasonably safe is pretty small potatoes compared to Apple's market cap.

vt writes:

No need to compare to mining in 19th century US, the working conditions in Apple factories in China are 3 times safer than the average US working conditions TODAY, acording to Forbes.

Mark M. writes:

Great post. Thanks.

Safety being a "Normal good" is a strong point. I hadn't thought of it that way.

kebko writes:

I think it would be most appropriate to say that both the rising wages and increasing foreign investment are coincidental outcomes from improving institutions. The causation doesn't run as much in either direction between the two as it does from improving institutions to both of them. So, we can say that if there is a place with increasing foreign investment, it will also be very likely to have increasing wages.
The reason that this distinction is important is that it makes clear that the movement of production is not due to the low wages. And I suggest that any clear-eyed review of international investment would note the overwhelming evidence that this is the case. I am always disappointed when I see economists stating it in the conventional way. And they almost always do.
Put another way, no country has succesfully attracted foreign investment by enacting policies that would cause long term natural wage levels to trend downward.

hanmeng writes:

@Steve Sailer

Coal mining in China today isn't much safer than it was in 1885 in the US. Yes, Apple might have room for improvement, but Chinese companies are probably much worse. We don't hear about it because American reporters aren't interested in bashing Chinese companies, nor is the largely state-controlled media. For instance, recently the State-run CCTV accused McDonald's of selling products past their sell-by windows, as if all Chinese food retailers are without problem.

Steve writes:

Good points. Thank you.

Generally, I liked the retraction show. I think it stumbled at the very end when the host asks, basically, "Why should I be mad?" and Duhigg gives some reasons the host might consider. Then, the show ends. It should have followed with, "Why should I be happy?", the reason being most of the Chinese at Foxconn are better off than they would be in less-desirable jobs.

D writes:

As Kip Viscusi wrote in "Job Safety" in The Concise Encyclopedia of Economics

David, any plans on an Encyclopedia kindle version?

Ken B writes:

To cross-pollinate threads, Ira Glass is implicitly but firmly rejecting Fish here.

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