Tag: Apple

Krugman’s (Probably) Wrong about Apple and Network Externalities

Paul Krugman has an op-ed in today’s New York Times in which he likens the rise and decline of technology companies to Ibn Khaldun’s account of the rise and decline of dynasties: success breeds complacency and soon the barbarians are running the show. This happened, he argues, to Microsoft, which once upon a time dominated the computer industry thanks to network externalities:

The odd thing was that nobody seemed to like Microsoft’s products. By all accounts, Apple computers were better than PCs using Windows as their operating system. Yet the vast majority of desktop and laptop computers ran Windows. Why?

The answer, basically, is that everyone used Windows because everyone used Windows. If you had a Windows PC and wanted help, you could ask the guy in the next cubicle, or the tech people downstairs, and have a very good chance of getting the answer you needed. Software was designed to run on PCs; peripheral devices were designed to work with PCs.

This state of affairs bred complacency and Microsoft failed to anticipate the shift to mobile devices. Now Apple risks the same fate.

Anyway, the funny thing is that Apple’s position in mobile devices now bears a strong resemblance to Microsoft’s former position in operating systems. True, Apple produces high-quality products. But they are, by most accounts, little if any better than those of rivals, while selling at premium prices.

So why do people buy them? Network externalities: lots of other people use iWhatevers, there are more apps for iOS than for other systems, so Apple becomes the safe and easy choice. Meet the new boss, same as the old boss.

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The ethics of buying an iPad

This is not an iPad. It is also not an
ethical statement.

Globalization is no longer the Western world’s ethical quandary.

The biggest story in globalization this week has been the saga of Mike Daisey, the storyteller who posed as a journalist in a theatrical monologue about working conditions in Apple’s factories in the People’s Republic of China. Daisey, who has now been outed as a fabulist, lied about his visits to China and what he saw there, greatly exaggerating the misery in the places that manufacture iPhones, iPads, and the other accoutrements of the smart set.

The discovery of Daisey’s fabrications prompted This American Life to retract a segment of the show that Daisey had based on his monologue. Yet most of the debate in the Mac blogosphere (yes, there is such a thing, and many, many people read Mac blogs as avidly as sports blogs) has focused over the question of whether Daisey got to the essential truth about Apple products. Ira Glass put it best in his discussion with New York Times correspondent Charles Duhigg:

Ira Glass: But to get to the normative question that’s kind of underlying all the  reporting and all the discussion of this, the thing that we all want to know when  we hear this is like, “Wait, should I feel bad about [conditions in Apple’s factories]?”  As somebody who owns these products, should I feel bad?  And I don’t know that I feel so bad when, when I hear this.

Charles Duhig: … 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.

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.
So should you feel bad that someone is working 12 to 24 hours a day in order to produce the iPhone that you’re carrying in your pocket—

Ira Glass: Well, now like, when you say it like that, suddenly I feel bad again, but okay, yeah.  [laughter]

This isn’t the place to reprise the arguments in praise of cheap labor. Instead, what I want to do is dispense with the notion that the alleged exploitation of Chinese workers is an ethical problem uniquely for Westerners.

The hidden assumption in ethical debates over globalization has always been that Westerners export crappy jobs to poor countries and benefit from those laws. But that’s an outmoded, 1990s way of thinking about the problem. In the 21st century, the key insight is that Chinese consumers are benefitting just as much or more from the displacement of Western manufacturing to China.

The prompt for this is a report that new activations of devices running the iOS operating system (which powers the iPod, iPhone, and iPad) is now taking place at a greater pace in China than in the USA. MacNewsNetwork has the story. It’s a simple reminder of the fact that Ira Glass is not the only person to have an iPhone in his pocket. Now, in fact, it’s more likely that the iPad sold last week was activated in China by a Chinese owner than in America by an American.

That’s a real shift in the ethical debate over globalization. No longer are working conditions in factories the sole concern of Western activists. Quite the contrary. Transnational activism is now likely to be much less important in determining labor standards in “Third World” countries than domestic activism. Given that increasing wealth means that there will be increasing resources to fund reform movements within developing countries, transnational activism is now more likely to be a simple exercise in paternalism. After all, if the manufacturing and the consumption of these goods are both taking place within one country, then the international dimension of ethical debate is now much less important.

(Let’s take a second to remind ourselves just how much richer individual Chinese are now than they were even 20 years ago:


This is the growth curve for a country that will soon be able to sustain its own ethical activism.)

So, enough with the ethical solipsism. It’s time for a more robust framework of ethical debate over globalization that takes into account the manifold complications of an incompletely developed world, one in which many Shanghainese are wealthier than many Londoners. To pretend that this is an issue of the “West” and the “Rest” is to dismiss the ethical agency (and perhaps responsibility) of developing-country consumers and governments.

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