Are American jobs going to China? No. Try Japan.

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planetxan
planetxan's picture

As talk of the iphone controversy heated up, many lamented that our jobs were being offshored to China. This struck me as short sighted as anyone can look at the back of the iphone to see it is 'assembled' in China, and upon opening the thing up, if one dared, a world of Japanese gadgets and technology would be exposed – gadgets and technology manufactured in Japan. In fact there would be no iphone without Japanese technology and manufacturing expertise. This is the same Japan whose wages are higher than those in America, the same Japan who supposedly suffered through a 'lost decade'.

So since no one will, nor should, listen to some schmuck on a talk radio show's message board, I give you Eamonn Fingleton, frequent guest of Thom's, expert and resident of Japan. Fingleton wrote a piece back in January that appeared in the New York Times entitled, The Myth of Japan’s Failure. In it he goes over the signs of Japan's surprisingly vibrant economy. But what struck me was his reaction in his blog to one of his critics after the piece was publish. In it he gets to the heart of the iphone matter:

 

Eamonn Fingleton wrote:
He shows pictures of Japanese consumers lining up to buy the new Apple iPhone. This supposedly is evidence that the United States, not Japan, leads in cellphone technology. He omits to mention — something well known to anyone who follows global competition in that industry — that Apple is an outsourcer. Its manufacturing is done in East Asia, particularly in Japan and to a lesser extent Korea and Taiwan, with final assembly in China. Essentially most of the jobs are East Asian.

More generally Japan is by far the largest manufacturer of the key components in all cellphones. And the real technological magic is in these highly miniaturized components (they are why your cellphone doesn’t look like a walkie-talkie). A survey by Deutsche Bank some years ago identified nine key components in cellphones. Of the 36 manufacturers worldwide of these, 29 were Japanese — and just one was American. Japan indeed monopolizes the world supply of many such components and without them Apple, Motorola, Nokia, and so on would not have a business. An example is  capacitors, formerly the size of light-bulbs but now, using tantalum technology, no larger than a grain of salt. They are essential in virtually all electronic devices and a typical cellphone requires half a dozen of them —  all made in Japan, mainly by Kyoto-based Murata. According to the Asian Development Bank Institute, Tokyo-based Toshiba Corporation alone contributes 33 percent of the manufacturing content in the iPhone (in particular its superb touch-sensitive screen). Such manufacturing not only requires far greater per-capita capital investment than U.S. corporations can afford these days but vast amounts of secret manufacturing knowhow, typically built up over decades.

This is where the real quality jobs have gone. Corporate America is not inclined to put up the capital to reëstablish the technology to compete with this. Instead that money goes to bonuses and foreign investment. Nor is the federal government willing to take up the slack. Instead, the powers that be seem satisfied that American workers will fight over the scraps of the manufacturing process, demanding the low wage jobs that will never arrive until Americans are willing to accept the lowest wages in the world, and will ignore the capital intensive jobs that lead to livable wages, benefits and job stability. When we demand the jobs that are now being performed in China, what we are saying, whether we realize it or not, is that minimum wage is too good for us. It is time we recognize where our jobs really went, and why they are not coming back. We must change the way business is done in this country, not demand low skill, low wage jobs from less developed countries.

 

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mdhess
mdhess's picture
If you are indeed a follower

If you are indeed a follower of Thom then you know that he advocates for tariffs.  ABC recently did a story on their "Nightline" show about the Foxconn factory in China. It was a soft-pedaling of Apple's contract with the Chinese factory; probably done to try and counter some of the bad publicity the factory (and Apple) had been getting.  At any rate, the interesting thing that was mentioned, only in passing, is the fact that China invested billions to develop the incredible manufacturing infrastructure that makes it possible for Apple to outsource to there.  So socialism is subsidizing Apple while American workers are told that we need to out-innovate to compete in the global marketplace. Its just not realistic to imagine that we can build an entire economy on R&D. Especially since, as you point out, we're being out-competed for that distinction already.

The problem goes back to the capture of government by business. Specifically the National Chamber of Commerce which has no concern for the well-being of the nation but only for the well-being of its multinational corporate clients.  We've seen for two decades already that the result of "free trade" agreements is the mass exodus of manufacturing to cheap foreign labor markets and still Washington stands squarely behind "free trade" and just passes more agreements.  This is true with both Republicans and Democrats. The Democrats have at least tried to end the tax write-off that businesses are allowed when they move a factory overseas but Republicans filibustered even that. The idea that international trade is something new to the World is an absurdity. The only thing new is better communication and easier shipping but those things should have just made us more cautious about protecting our industrial base, not less. Not only did our sell-out politicians not protect American workers, they instituted the kind of "free-for-all" trade policy that is a wet dream for the big multinationals and a big wet kiss from the politicians to their benefactors. And once the multinationals have sucked all the wealth out of the U.S. they'll just move on to the next plumb marketplace and leave behind a desperate, compliant work force.

The demonstrators at the "Battle of Seattle" had it right.  Conservatives freak out about the U.N. but the U.N. is just a rather impotent peacekeeping organization. What they should be freaked out about is the WTO because when we ceded our trade policy to that organization was when we actually did give up our sovereignty.

smilingcat
smilingcat's picture
Japan's hi-tech know how is

Japan's hi-tech know how is losing its steam. If you want a HDTV, you are better off with Samsung instead of Sony, Toshiba, Panasonic.Samsung semiconductor is very competitive to the Japanese. In both cases, the S. Koreans have outperformed the Japanese.

The difference between S. Korea, Japan and US is education. Both S. Korea and Japan, a child is expected to perform to best of their ability and to learn. School is not a place where child learns proper behavior and discipline. Parents are very involved with childs education. Here, parents tell the teacher, "its your d%$n job to baby sit my kid while I go to work". What ever happened to the primary function of school?

This is start of the problem here in US.

I was not only expected to go to an university. That was given. I was expected to go to a top university. I was expected to be top of the class. And I was expected to finish graduate work at a top university. That too was given. How many children in US are expected of such demand by the family and how many parents make such demands?

Yes I did get my undergraduate degree and graduate degree from an Ivy League School. I also skipped senior year of high school since the high school had nothing to offer me. I left high school in my junior year to attend classes at an Ivy league school.

For Japanese, Korean and Chinese children, failure is not an option!

And of course there is this systemic problem of out sourcing, a quick buck and lack of 5 year plan, 10 year plan or 100 year plan in business. The three Asian countries have these long term plan. Don't laugh, Toyota I believe have a 100 year plan. We are too concerned with things like Mission Statement. It sounds good and feel good but does it have any strategic value or long term value? Most Mission statement is: we will do our best, we will treat customer in their best interest. If you had any common sense, these Mission Statements are self evident and doesn't require to be written on gold tablet!