Of Particular Significance

An Old NY Times Article on New China

POSTED BY Matt Strassler

POSTED BY Matt Strassler

ON 06/24/2013

A perfect storm of computer trouble (ok, maybe not perfect, but pretty darn good) has kept me from finishing any new articles, though this should come to an end this week. But while waiting for things to improve, I’ve been pointing your attention (here and here) to various signs that China, which is investing heavily in science and engineering, is catching up to the U.S. and its political and economic allies. The course I taught earlier this month, in which I gave an introduction to particle physics and to the Higgs field and particle, was followed by a couple of lectures by an economist teaching at Williams College, and he pointed me to one other article that I had not been aware of. This one is from the New York Times; I can’t vouch for its accuracy, and I don’t know anything about the main authors (Charles Duhigg and Keith Bradsher), so… buyer beware. The article has to do with the quintessential modern company: Apple.

Let me quote from the article, to pique your interest:

It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.

Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.

In China, it took 15 days.

Companies like Apple “say the challenge in setting up U.S. plants is finding a technical work force,” said Martin Schmidt, associate provost at the Massachusetts Institute of Technology. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand,” Mr. Schmidt said.

“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”

Of course, I’m cherry-picking out of a long article.  While these quotations do capture its dominant thread, that thread is woven together with several others.  I certainly don’t pretend to have the solution to the multi-faceted problems that it explores.  But I do think it is important that citizens of the U.S. and its friends  not have their heads in the sand, pretending nothing  is changing.   China isn’t just a huge, cheap, unskilled labor force; it also has a growing, highly-skilled labor pool, able already to out-compete its U.S. counterparts.  This is not an accident.  The Chinese government is making good choices.  Perhaps the experts in China have learned from South Korea; anyone ever heard of Samsung?  If you think all Samsung does is copy Apple’s phones, your head is in the sand.  Look it up.

We live in a world dominated by science, engineering and technology.  If we lose our edge in these areas, we may, in the long term, find ourselves no longer important players in that world, with economic and political costs that could be very high indeed.

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30 Responses

  1. The freedom of human beings to do what their heart tells them they should do is what America should be about. If we worry about how many “stem” people we produce, then I think our priorities are kind out of whack.

    I know logically there’s an argument to be made that we need more people going into science and engineering, but really I just don’t care. We need people going into what they’re passionate about. If that’s parks and tourism instead of chemistry, then I’m fine with that. If we lose our dominance in technology, I’m fine with that too. It doesn’t matter to me how many engineers can be summoned in 15 days to do something. The only thing that matters to me is that in this country, people are allowed to purse what their heart tells them to.

  2. I think that Mr. Gong is not being wholly honest with those whom he chooses to lecture on Chinese history and culture when he fails to mention that China’s “five thousand years” (sic: Chinese history does not actually extend back much more than about 3200 years, though this is still a very long time) of ‘stability’ includes multiple cycles of dynastic decline, internal disintegration, civil war, foreign invasion, and division of the country; the end of the last such cycle being still within living memory. Nothing exempts China from the usual economic and political trends that affect other countries, and to pretend otherwise is simply nationalistic mythmaking.

  3. Matt,
    I am curious about what the economist from Williams said about funding for science. Can you give us a summary?

  4. squeezing the middle class, and their happiness. Only zombies can survive – Plutocrats with brain full of numerical and pieceworkers in assembly lines – both had left their control to automation of mathematics ?

  5. Another article on just who is winning the value added for Apple products (spoiler alert, it ain’t China): http://www.forbes.com/sites/timworstall/2011/12/24/china-makes-almost-nothing-out-of-apples-ipads-and-i/

    The high value added parts of these products are coming from the US and other countries. These are the high paying jobs that don’t require you to work 12 hours a day 6 days a week and breath clean air.

    We could have more, but alas, the President has told Apple that he wants them to keep profits in other countries and not bring them back here. Apple, being good corporate citizens, dos what the President wants and spends the money in other countries.

    1. You aren’t seriously blaming the President for macro-economic conditions, are you? You’re undermining your credibility by aiming at a prominent individual over something that he can’t possibly control.

      1. The President supports tax policies that tell Apple, Google, and a host of other companies that it should not invest profits made in other countries here. I blame him for that. The President has refused to address unsustainable entitlements and has walked away from deals that would begin to address them. I blame him for that. The President pushed for and got trillions of new debt that my children and grandkids are stuck with that was wasted. I blame him for that.

        The Republicans have refused to negotiate in good faith. I blame them for that. When it suited their purposes, they supported the same entitlements. I blame them for that. They insist on wasting hundreds of billions on weapons that are not needed. I blame them for that. They support a state of fear that does not make us safer. I blame them for that.

        China is going the way of Japan (read the Barrons article). They have huge problems with corruption, malinvestment, and an aging population due to the one child policy.

        Your point above: “fear complacency” is absolutely on target. Your fear about lack of basic science funding and overall interest are completely correct.

        But our fate is in or hands and our problems are of our own making.

        Until we address the long term fiscal situation, entitlements will squeeze out science as it has for the past 15 years. Until we change our education system to support learning and not unions we will not have educated and interested children.

  6. Is this the same Apple who lobbied the Chinese government not to raise basic working conditions because then they might have to move some operations to less regulated countries? The same Apple who nonchalantly exposes its employes to industrial solvents, carcinogens and wretched working conditions?

    From all I’ve seen China is less a source of intellect and more a place where everything, from science to brute force, is cheap. It all reminds me somewhat of the panic over Japan where we were told their pernicious competitiveness and strong work ethic would crush us all.

    1. There’s no need for panic, nor am I advocating that. However, people also said (during the Japan analogy) that the Japanese were just copying the US, that labor was cheap there, etc. That wasn’t any more accurate than the panicked “Japan will rule the world” scare-mongerers.

      I think people are over-emphasizing China and under-emphasizing the United States in this discussion. My point is not “fear China”. My point is “fear complacency in the United States.” Other countries are much more dedicated to science and engineering than we are.

  7. China is a raising power for sure. In many levels it’s the greatest already. But so what? They earn it. If other nations select poor leaders they must live up the consequences.

  8. I think a more pertinent excerpt from the article is the following:

    “A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames.”

    I remember being appalled when the article first came out that this statement was treated with such nonchalance. Thousands of workers sleeping in company dorms, on call to work 12-hr shifts at a moment’s notice? I don’t believe this is a model that we should be striving to emulate.

    1. Indeed, this is part of what I meant by “multiple threads” in the article. Working conditions in China are about a century behind those in the U.S., which were pretty awful not that long ago. China’s no paradise.

      But China’s only half of this discussion. Why does the U.S. have so few engineers?

  9. Matt:”Apple’s executives had estimated that about 8,700 industrial engineers were needed … . The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.
    In China, it took 15 days.”

    This is not the point. Every those 8,700 engineers are semi-literate in English and know the most advanced knowledge about what is going on in the America in their field. Yet, most of American engineers know not single Chinese word and not know what is their counterparts in China is doing. This is the difference.

    SomeGuy: “In the longer term, the very serious demographic and malinvestment problems will manifest themselves and China will look more like Japan.”

    There is a significant difference between the culture heritage, the natural resource, the size of population and zillions other differences. Your analogy is simply wrong.
    One example is about the currency. While Japanese Yen was played as a toy by Fed, Chinese dollar has stood the pressure from America.

  10. I taught high school physics for my career, the last fifteen were in the community of Iowa City. Support for STEM is strong here, and in many other parts of Iowa. A regional center to support STEM education is being built near me with completion expected in 2015.
    It is a ray of hope for this continuing and important problem. Sadly, the support we see here is not reflected nationwide.

  11. Back in the 90’s the worry was Japan. Just like in China today (so we were told) their government was making good choices. Like China today, they had experts managing their economy. The Japanese government experts knew the correct industries to invest in and shelter. The feeling was that the US was headed down to the bottom because we didn’t follow those policies. History repeats itself.

    If you do nothing else this week, buy the current copy of Barrons and read the cover story. It may make you feel better, but it scares the hell out of me.

    You did cherry pick that article. China can do those things because they have a population poor and desperate enough that they will work 12 hours a day, six days a week. You have friends who spend time in Beijing. Ask them how often they skip jogging because of the pollution.
    Without these things, the positives the article mentions simply wouldn’t happen.

    Matt, we live in an integrated world economy. This is an area where China has a comparative advantage and will over the US for the foreseeable future. In the longer term, the very serious demographic and malinvestment problems will manifest themselves and China will look more like Japan.

    1. I really think SomeGuy hit it on the head and eventually even workers in China will become like us and demand an 8 hour day and 40 hour work week and pay similar to ours. Every economy has stages it goes through. It would not be correct to say the problem with the U.S. is simply that we don’t invest in enough scientists and engineers and therefore companies like Apple can’t make their products affordably made and marketed here. We have built up a standard of living and environmental conditions no one should desire to go backwards on in order to compete with others to the bottom of labor and environmental conditions. The integrated economy and China and other countries desire to be the workshops of the world has opened up many jobs to Americans and others that would not have happened otherwise. For example, before there was an iPhone there were no American jobs creating apps for it. Now there are hundreds of thousands of good clean jobs for software engineers/designers in America and around the world. Even construction jobs here, which I recently retired from, benefited from all the tech companies that opened up a business that had to do with trade from Asia. A significant amount of my hours worked in construction in the San Francisco Bay Area were the result indirectly of trade with Asia. Apple’s new planned fancy campus will provide many local good paying construction and service jobs to our region. Something to think about and not to bemoan.

      1. I’m certainly not arguing that China isn’t going through a classic developing-country upward trajectory, quite similar in some ways to the one that Japan and Korea went through. This is a good thing. This is not what bothers me.

        I am much more concerned about the possibility that the United States is starting on a downward trajectory.

    2. I’m not going to argue with most of your points; generally I agree with them, and I think you’re overinterpreting my position. China is no paradise; far from it. And I’m not making a “prediction” here that the U.S. is headed for ruin. What we saw with Japan is that when a country succeeds, a lot of unexpected things can happen (such as population decline, permanent deflation, etc.), so it is impossible to predict what will happen with China, or the U.S.

      In any case, the real point of my posting these articles is not China; it is the United States. I don’t think the U.S. is in serious trouble yet. But I do think complacency, focus on the wrong issues, and sometimes a lack of focus, are becoming themes; we’ve been talking about them for over a decade now.

      Other countries are perfectly capable of catching up to the U.S. — Japan did it, Korea is close — and we should expect China to do so too, if it doesn’t undergo an implosion along the way. Economically, this could be a good thing, as long as the US and its allies remain co-leaders. The main political difference is that China is not an ally of the U.S. And that means we’d better not fall behind.

      1. Matt: “Other countries are perfectly capable of catching up to the U.S. — Japan did it, Korea is close — and we should expect China to do so too, if it doesn’t undergo an implosion along the way. “

        No, no, no. Both Japan and Korea did not develop their own cultures. They are the offshoots of Chinese culture. Even every Korean is 5 times more productive than every American, Korea as a nation still amounts to not much. Japan is a bit better than Korea but still is in the same category.

        Genetically, there is no chance of any kind for both Japan and Korea to surpass America.
        There is another great Western fantasy, thinking about that China is on the verge of having a “implosion” always. Those dreamers do simply not know any of Chinese history and the “mentality” of Chinese people while acting as great prophets. They are simply wrong. The Chinese “culture” is very, very, very stable, after all being the “only” and longest continually lasting culture in the world for over five thousand years.

        Being not knowing what the exact weight that the West amounts to in the long history of our humanity is one of the biggest issue that the West must face. Being not give a damn about the other part of the world because of the biggest ego will be the final killer. Big head alone can no longer win the game of today. America is now bottled up in a self-indulgent big-ego-cocoon and not seeking the best any more.

          1. Kudzu:” … according to Ro Khanna, former deputy assistant secretary of commerce, American workers are six times as productive as Chinese …”

            How sad this is for reading this type of nonsense. “Ro Khanna, former deputy assistant secretary of commerce”, a big wheel, so his statement cannot be wrong!!!

            Matt is a theoretical physicist who believes only the test data. And, this issue can be easily tested. Randomly select 10 workers from each country. And, they are sent to the other country sitting right beside the other country’s 10 workers (in whatever type of production situation). One month will be long enough to know which group of workers is more productive. My guess is that the two groups will be about the same.

            There are some cultures which do not promote the quality of diligence, but not the Chinese culture. Chinese workers can be much less productive if they are given much less productive system to work with. Thus, if the report said that American “system (not worker)” is six times more productive than Chinese “system”, it can possibly very true. Yet, this possibility is easily crushed by the Apple case. Was Apple either stupid or as a traitor for intentionally giving other country with huge amount of money from its “own packet”, that is, intentionally losing the profit.

            How can any smart reader of this blog lost all the common sense while reading those nonsense report?

    3. Of course China’s economy will drift toward parity and global equilibrium: standards of living will bring millions of its citizens out of poverty over time. The problem is–and this is the unprecedented thing about China–moving about 800 million people into the global working class takes a little while if you do it one or ten million people at a time. From the perspective of our lifetimes, that’s essentially infinity people willing to work 12-hour shifts.

    1. Sir Roger Penrose has made many great contributions to science; and like all scientists, including the best ones, he has made many wrong statements.

      As for Chinese science; in the previous generation, the three great contributors to our understanding of the weak nuclear force (Tsung-Dao Lee, Chen-Ning Yang, Chien-Shiung Wu) all chose to work in the United States. This may not happen in the next generation.

      1. If you want scientists from China to keep coming to the US to become US scientists, make sure to keep the levels of bureacrazy as low as possible. Also for economy reasons: in the Netherlands only about 50% of the total Education budget is spent on direct costs.

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