Capitalism 1, United States 0

(Calgary, Alberta) - Here is an uncomfortable truth: America is great at capitalism when there is no competition or weak competitors. After the Second World War, German and Japanese industry were on their knees and for three decades America dominated and prospered.

The fundamental problem with America today, is that its middle class and aspirants have been trained to consume products, like automobiles and electronics, eat the millions of tons of junk food and expect to do better than their parents, while growing up through the decades after the Second World War, when global competition did not exist to any significant degree.

The global failure of the American worker is not news but was described more than 40 years ago by Arthur Hailey in his 1971 novel Wheels. The most egregious example he pointed out, was that people should not buy cars that had been assembled on Fridays or Mondays.

“Mondays and Fridays in auto plants were management’s most harrowing days because of absenteeism. Each Monday, more hourly paid employees failed to report for work than on any other normal workday; Friday ran a close second. It happened because after paychecks were handed out, usually on Thursday, many workers began a long boozy or drugged weekend, and afterward, Monday was a day for catching up on sleep or nursing hangovers.”

“The result was inevitable. Many of Monday’s and Friday’s cars were shoddily put together, with built in legacies of trouble for their owners, and those in the know avoided them like contaminated meat.”

Hailey was later deluged with letters from readers asking how to avoid those cars. He had to reply that there was no publicly known way to avoid such automobiles.

Americans buy and use electronic gadgetry in the tens of millions, but they are unable to make them. Today Apple employs more workers in the United States than ever—about 43,000—and only 20,000 overseas. At the same time, another 700,000 workers engineer, build and assemble iPads, iPhones and other products, most working for companies in Asia, Europe, Brazil and Mexico.

In 1995 Eric Saragoza went to work for Apple at the Elk Grove, California manufacturing plant. He did well for the first few years, started a family and bought a house with a swimming pool.

Through those years, however, the electronics industry was changing, and Apple’s products were declining in popularity. The company struggled to remake itself, focussing on improving manufacturing. Saragoza’s plant stacked up poorly against overseas factories: the cost, not including the materials, of building a $1,500 computer in Elk Grove was $22 a unit; in Singapore, $6, in Taiwan, $4.85. Wages were not the major factor but included costs like inventory and how long it took workers to finish a task.

In 2002 Saragoza was laid off. “We were told we would have to do 12-hour days, and come in on Saturdays. I had a family. I wanted to see my kids play soccer.”

Those are not worker issues in China, Korea or Taiwan or even most of the rest of the world. American workers have had it too soft for too long.

In mid-2007, just over a month before the iPhone was scheduled to be delivered to stores, Steve Jobs presented his senior people with a problem. He had been carrying a prototype around in his pocket for weeks. He pulled it from his pocket at the meeting and showed everyone that the plastic screen was marred by tiny scratches. He then pulled his keys out of his pocket and pointed out that many people would be carrying these two together, and scratches were inevitable. He told the assembled executives that he would not sell a product that became scratched. He wanted a glass screen and he wanted it in six weeks.

Enter Foxconn Technology, which has dozens of facilities in Asia and Eastern Europe, and in Mexico and Brazil, and assembles an estimated 40 percent of the world’s consumer electronics for customers like Amazon, Dell, Hewlett-Packard, Motorola, Nintendo, Nokia, Samsung and Sony.

The Foxconn complex in China has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company dormitories and many workers earn less than $17 a day.

Apple redesigned the iPhone’s screen at the last possible minute, forcing the assembly line to be hurriedly revamped. New screens began arriving at the plant by midnight. A manager immediately alerted 8,000 workers inside the company’s dormitories where each was given a biscuit and a cup of tea, assigned a workstation and within a half hour, began a 12-hour shift fitting glass screens by hand into bevelled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

iPhones contain hundreds of parts, about 90 percent of which are manufactured outside the U.S.. Advanced semiconductors come from Germany and Taiwan, memory from Korea and Japan, display panels and circuitry from Korea and Taiwan, chipsets from Europe and rare metals from Africa and Asia. All of them put together in China.

Apple’s engineers, in mid-2007, finally perfected a method for cutting strengthened glass so it could be used in the iPhone’s screen. The first truckloads of cut glass arrived at Foxconn City and within three months, Apple had sold one million iPhones and Foxconn has since assembled 200 million more.

China had also provided engineers at an unprecedented scale. Apple estimated that about 8,700 industrial engineers would be needed to oversee the 200,000 assembly line workers, estimating it would take up to nine months to find that many qualified engineers in the U.S. In China it took 15 days.

The glass for the iPhones was manufactured by Corning, a 161-year-old company in upstate New York at a factory in Kentucky. James B. Flaws, Corning’s vice chairman and chief financial officer said: “The consumer electronics business has become an Asian business. As an American, I worry about that, but there’s nothing I can do to stop it. Asia has become what the U.S. was for the last 40 years.”

After the iPhone success, Corning began to get orders from other companies. Its strengthened glass sales have grown to more than $700 million a year, and it has hired or continued employing about 1,000 Americans to support the emerging market. But as that market has expanded, the bulk of Corning’s strengthened glass manufacturing has occurred at plants in Japan and Taiwan where the customers are, Flaws said. Making the glass in the U.S, is impractical; it would take 35 days to ship it by boat, and shipping by air is ten times more expensive, so they build their glass factories handy to the assembly plants—in Taiwan, Korea, Japan and China.

Six months before he died, Steve Jobs attended a dinner with President Obama and other key Silicon Valley visionaries. As Jobs was speaking, the president interrupted him, asking what would it take for iPhone manufacturing to return to the U.S. Jobs blunt answer: “Those jobs aren't coming back.” Virtually all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured by non-American workers.

The United States has been the impetus for many technological advances in solar and wind energy as well as semiconductor fabrication and display technologies which have created thousands of jobs. But much of the employment has gone abroad as companies closed here and reopened in China. This is because companies are competing with Apple for investors! If they can’t compete with Apple for growth and profit margins, they won’t get the shareholders and their survival is threatened. In 2011 Apple earned $400,000 per employee.

Innovations have always meant labour dislocations, the most well known reference being to the fate of the buggy whip factories! G.M. used to go as long as five years between major automobile designs. Apple, on the other hand, released five iPhones in four years, doubling their speed and memory which dropping prices.

The Roman Empire took more than a thousand years to decline and collapse. The U.S. will likely not even make it to a third century of dominance.

Daniel Johnson was born near the midpoint of the twentieth century in Calgary, Alberta. In his teens he knew he was going to be a writer, which is why he was one of only a handful of boys in his high school typing class — a skill he knew was going to be necessary. He defines himself as a social reformer, not a left winger, the latter being an ideological label which, he says, is why he is not an ideologue. From 1975 to 1981 he was reporter, photographer, then editor of the weekly Airdrie Echo. For more than ten years after that he worked with Peter C. Newman, Canada’s top business writer (notably on a series of books, The Canadian Establishment). Through this period Daniel also did some national radio and TV broadcasting. He gave up journalism in the early 1980s because he had no interest in being a hack writer for the mainstream media and became a software developer and programmer. He retired from computers last year and is now back to doing what he loves — writing and trying to make the world a better place

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Anonymous January 26, 2012 12:43 pm (Pacific time)

Hi Dan. My name is also Dan Johnson. I live on Centre NW, also in Calgary. Small world. Where do you live? I have a wife of 37 years, Carline, and four adult children. Where did you go to school? Here in Calgary? Sure not the same place I grew up in, oh well, maybe we'll get things back to normal when Harper messes up.

January 25, 2012 6:25 pm (Pacific time)

Where does canada get the majority of their medical equipment and rx supplies from? What is a positive is your entrenched conservative government. Have you seen how much ownership americans have of canadian assets? Weare closely tied on a socio/econ level. America is omnipresent in canadian culture as the dominant force.

Anonymous January 25, 2012 8:53 am (Pacific time)

Another weak opinion by this writer. Are you doing this on purpose as a gag? Actually if our economy goes into deep distress, we have the capability to survive and come back. Just look at America historically as having done that many times in the past. In addition, Canada is quite dependent on trade with us, so Canada would also enter tough times and it would take much longer for them to recover. A good analogy is what happened to our residential housing market collapse because of subprime loans. Our commercial property market was untouched for quite some time because they followed sound business principals. Eventually they were impacted as more and more revenue became diminished. likewise for Canada, Mexico, and any of our large trading partners. Methinks the writer here simply wants America's downfall, too bad for you. You should come here to Oregon and see for yourself about what's happening. Considerable
business funds are being held back until the next election, for we are hoping a new national tax program that allows for long term certainty will allow for our funds to be invested without having to worry about the dangerous clowns in power changing the rules constantly. California and New York provide excellent examples of what happens when liberals run the government. Look at Detroit. Here's a horrible place that conservatives abandoned years ago, and see what happened when liberals run something unfettered by those with common sense. Those who have run successful business operations know exactly of what I speak. Those on the dole could care less, and they are the ones liberals cause the most pain for.

I have another gag piece coming up in the next day or so. Just wanted to hear what O would have to say in the SOTU. What you're saying about American comebacks was true in the past. In those days the U.S. had no significant global competition. China, India and Brazil, for example, are no longer going to roll over for the American hegemony. Same with Canada, as you will discover in the next piece, tentatively titled: "Canada Steps out".

Natalie January 24, 2012 5:46 pm (Pacific time)

Adding my 2 cents: "American workers have had it too soft for too long" and
"The Foxconn complex in China has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company dormitories and many workers earn less than $17 a day."
Is it just me or somebody else also thinks that workers in China, Korea, and Taiwan had it too hard for too long? It must be pretty exciting to work like a horse for 12 hours and get a bisquit and a cup of boiled colored water on your way back to the fashionable company's dormitories better known as coffins.

Thanks for your comment. The reference was that when the glass arrived, they were awakened, given tea and a biscuit and sent off to begin their shift.

There's definitely a cultural disconnect. And it's not just Americans who have had it soft, Canadians and Europeans to a large extent as well. W've ended up creating middle-class entitlement cultures, whereas, in Asia such a thing was never even possible and is now starting to appear there.

COLLI January 24, 2012 1:42 pm (Pacific time)

Dan:

I sounds as if you believe individuals should not be compensated for taking on risk or for providing more of what the public wants or needs. Is it simply one's existence that justifies an equal share in the productivity of a country? Who determines what constitutes fair and equitable? Why is it you seem so angered when someone holds an opinion that differs from yours? Is it simply to generate "X" number of comments? I understand what you say and for the most part, I disagree with you as to the supremacy of Socialism over Capitalism. To believe that someone should not be able to provide a better life for them self or their family in payment for taking more risk or working harder is, to me a strange way of encouraging productivity, creativity, or even the simple desire for self-actualization. These are all things most U.S. citizens want Dan and we are in no way evil for desiring these things.

You're so far off the topic of my article that I don't know what you're trying to prove. If you want to go offline and discuss this, email me at salem-news@shaw.ca

COLLI January 24, 2012 7:05 am (Pacific time)

Dan:
Here is another way to explain why Socialism cannot work for a truly extended period and ultimately does itself in:

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama's socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, "OK, we will have an experiment in this class on Obama's plan". All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A.... (substituting grades for dollars - something closer to home and more readily understood by all).
After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little..
The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F. As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else. To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. It could not be any simpler than that.
Remember, there IS a test coming up. The 2012 elections.

These are possibly the 5 best sentences you'll ever read and all applicable to this experiment:
1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.
3. The government cannot give to anybody anything that the government does not first take from somebody else.
4. You cannot multiply wealth by dividing it!
5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

The beginning of the end of the US began long ago and it has nothing to do with socialism, but everthing to do with a Darwinian approach to life. As conservative columnist David Brooks recently wrote: “We are a democratic, egalitarian people who spend our days desperately trying to climb over each other.”
Two comments: The idea of socialism you're describing ia an American prejudice George Bernard Shaw had this exchange in his 1898 play Caesar and Cleopatra which echoes your explication of socialism.

Britannus [shocked] Caesar: this is not proper

Theodotus: [outraged] How!

Caesar [recovering his self-possession] Pardon him. Theodotus: he is a barbarian, and thinks that the customs of his tribe and island are the laws of nature.

Second: Without some verificatiion, I doubt that the economics professor you cite exists.

Anonymous January 24, 2012 6:37 am (Pacific time)

Dan:

Consider the following:

A Socialistic vs. Capitalistic view of Tax Cuts

Let’s put tax cuts in terms everyone can relate to and understand.

Suppose that every day, ten make acquaintences go out for dinner. The bill for all ten comes to $100.00. If they pay their bill the way we pay our taxes, it would go something like this:

• The first four men (the poorest) would pay nothing.

• The fifth would pay $1.

• The sixth would pay $3.

• The seventh would pay $7.

• The eighth would pay $12.

• The ninth would pay $18.

• The tenth man (the wealthiest) would pay $59.

So, that’s what they decided to do.

The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers”, he said, “I’m going to reduce the cost of your daily meal by $20”.
So now the dinner for the ten men only costs $80.

The group still wanted to pay their bill the way we pay our taxes. So, the first four men were unaffected. They would still eat for free. But what about the other six, the paying customers? How could they divvy up the $20 windfall so that everyone would get his ‘fair share’? The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth and sixth man would each end up being “paid” to eat their meal. So the restaurant owner suggested it would be fair to reduce each man’s bill by roughly the same amount percentage wise, and proceeded to work out the amounts each should pay.

And so:

• The fifth man, like the first four, now paid nothing (100% savings).

• The sixth now paid $2 instead of $3 (33% savings).

• The seventh now paid $5 instead of $7 (28% savings).

• The eighth now paid $9 instead of $12 (25% savings).

• The ninth now paid $14 instead of $18 (22% savings).

• The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the four continued eating for free.

But once outside the restaurant, the men began to compare their savings.

“I only got a dollar out of the $20”, declared the sixth man. He pointed to the tenth. “But he got $10”!

“Yeah, that’s right”, exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more than me”.

“That’s true!”, shouted the seventh man. “Why should he get $10 back when I only got $2? The wealthy get all the breaks”!

“Wait a minute”, yelled the first four in unison. “We didn’t get anything at all. The system exploits the poor”!

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that folks is how our tax system works. The people who pay the highest taxes get the most benefits from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.

Sounds like fun but that is not how the tax system works. I’ve seen this floating around the internet for at least 15 years and the simple-minded keep falling for it, thinking it tells them something. You’re comparing apples and oranges. The parable is about consumption and the presumption is that all the men have fixed amounts of money before they go into the restaurant. How did they get that money? That’s how the tax system works. In the current GOP race, Mitt Romney is advocating that capital gains taxes be reduced to zero which means he would pay no taxes at all so he really would eat for free!

Douglas Benson January 23, 2012 4:03 pm (Pacific time)
I dont see the problem Dan. If you dont make it here you cant sell it here.

I understand the point you're making, but consider the constitutionality of telling a U.S. company that they can't sell their products in the U.S. A more complicated aspect is that you would have to allow for products that are made with parts or components made elsewhere. I understand your concern, Doug, but it would be a real can of worms where the cure would be worse than the disease. You'd probably end up with a global trade war.
Anonymous January 23, 2012 1:24 pm (Pacific time)
American Capitalism

Ad hominem comments will not be approved.
Anonymous January 23, 2012 8:01 am (Pacific time)
Better luck next time Daniel.

Ad hominem comments will not be approved.
Ralph E. Stone January 23, 2012 7:59 am (Pacific time)
During an economic downturn, the very rich give up their personal yachts, the upper middle class cut back on private fitness classes, the middle class give up vacations and evenings at Chevys. What about the already poor, the estimated 20 percent to 30 percent of the population who struggle to get by in the best of times? This demographic, the working poor, have already been living in an economic depression of their own. The recession of the '80s transformed the working class into the working poor as manufacturing jobs fled to the third world, forcing American workers into the low-paying service and retail sector. The current recession is pushing the working poor down another notch - from low-wage employment and inadequate housing toward erratic employment and no housing at all. They have become the long-term poor. We have long thought that American poverty is much better than the third world variety, but the difference is rapidly narrowing.
Stephen January 23, 2012 6:48 am (Pacific time)
I think it is an illusion to think Canada is a country. Canada is one of the 50+ states.

Canada is no different than the state of Massachusetes, except Canada gave up their firearms. There is really nothing Canada does that is different. They have a huge defecit, poor education, high taxes, and poor health care. Altho, Canada is an extreme welfare state, where writers can suck off the government while pretending to be a journalist. And to keep their lazy, live off the government status, they write things that support their reliance on others to support them. Welcome to the most welfare state on the planet..Canada.

By the way, research it yourself, Canada is a MAJOR supporter of israhell.

What I find amusing, Stephen is that you write that Canada has a "huge defecit" and the next two words are "poor education". If you knew how to spell, your point would make sense. But... You also misspelled Massachusets. Pretty pathetic.

BTW. Canada did not "give up" its firearms. We never had them and we don't miss them.
Amanda Black January 22, 2012 7:42 pm (Pacific time)
Editor's comment above could not be more precise. Everything has gone to Port - or never even existed in this rich country -such as free health care or inalienable rights, regardless of social status.
MaineHiker January 22, 2012 10:54 am (Pacific time)
As the US takes it's proper size and shape, what will we dith all the guns?

Give them to the poor?
Douglas Benson January 22, 2012 1:27 pm (Pacific time)
How about if those jobs arent coming back ,you cant sell your product here?

Bearing in mind that we're talking about American companies for the most part, your suggestion if extremely problematic.
Anonymous January 22, 2012 11:52 am (Pacific time)
As Obama is stuck back under the rocks

You're wasting your time, here. Give it up.
Anonymous January 22, 2012 10:52 am (Pacific time)
This fantasy nonsense...

I'm only approving comments that make sense...

As for the mythology of American Exceptionalism

The high number of its prison inmates is exceptional. The quality of its health care is exceptionally bad. The degree of its social inequality is exceptionally acute. Public education has gone into exceptional decline. The Americanization of the Holocaust and uncritical support for Israel have demonstrated an exceptional ability to gloss over uncomfortable truths, including broad American indifference to Hitler’s genocide as it happened.
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