The Recession

I believe that our standard of living will continue decreasing no matter what the politicians say. They will never do what have to be done to get out of this recession.

Cheap Labor, Taxes, Location: Why Apple Doesn't Build Products in the U.S.
Forbes
By Micheline Maynard
1/24/2012

He [Jeffrey Liker - University of Michigan professor and author] gave three main reasons why he believes Apple won’t build in America.

Cheap labor. Apple executives may not want to admit it, but Liker says one of the biggest advantages of going overseas is that workers there are much, much cheaper. This is really an obvious reason, and we all know it. But it’s worth remembering whenever someone tries to claim that the actual reason is because our workers don’t have the right skills. “Right now is the worst time to make that statement since the recession has put so many people out of work,” Liker says. “There are all kinds of skilled workers right now.”

We can’t compete with worker who don’t get any benefits at all, no vacations, no sick time, no minimum wages, no overtime, nothing and that only earn a few dollars a day. The only way we can even come close is to lower our standard of living down to theirs.

Taxes. Liker says another big reason Apple and other manufacturers do work in Asia is because taxes are cheaper there. Usually, if a company makes profits from something built overseas, they have to pay American taxes when they “repatriate” those profits back to their headquarters here. But if a company spends money at lots of overseas factories, it just re-invests the profits over there, and it never pays the higher tax. Liker estimates this could make a 20-30 percent difference in profits for a company like Apple.

Again, the only way we can complete is to go back to the sweatshops of the 1800’s, no EPA… go back to the days of smog and pollution. I remember watching the Naugatuck River turn all colors from the pollutions from the chemical companies. I remember see a cloud of smog over the city. No OSHA… let’s return to era of one arm workers and of missing fingers, of black lung disease. Go back to the era of child labor. The Republicans have proposed all of these.

They’re there because they’re there. Once the decision to make products overseas has been made, it becomes incredibly difficult to reverse, Liker says. “Apple is not a manufacturing company,” he says. “They’re a design and marketing company.” All of Apple’s manufacturing plants in Asia are owned by suppliers, not by Apple. If Apple executives suddenly decided they wanted their products built in the U.S., they’d have to invest billions of dollars in new factories. In China, the infrastructure is already there. “They made that decision decades ago,” Liker says. “I don’t think they’re revisiting it.”

This is why I took early retirement, the company I worked for decided that they wanted to farm out manufacturing and they closed down our shop. They didn’t close our shop because we were not profitable or productive, we were the only division in the company that made the profit goals each year and we were never late on any order in the 28 years that I worked there. They closed our shop because they just didn’t want to make anything, they just wanted to design them.

What can be done to end this cycle? I believe that one of the things that can be done is to end free trade with countries that do not protect the environment and its workers. Work to bring others countries up to our standard of living, not down to theirs.