10: Mardi Gras and China

Mardi Gras Made in China is a documentary that looks at the consequences that consumers create through globalization. The documentary examines how Chinese manufacturing firms produce and bring Mardi Gras beads to markets in the U.S. and how the majority of U.S. consumers are completely oblivious (or just don’t care) about how little offshore workers are paid for these somewhat insignificant beads. In this article I will be discussing why U.S. companies manufacture products overseas, why foreign manufacturing welcomes U.S. firms, why foreign workers work under these conditions, how products are embedded with cultural meaning, and finally the economic impacts of globalization.

Why more and more U.S. firms are moving their product manufacturing operations is simple; massive amounts of labor accompanied with ridiculously low wages. Since the technology revolution companies have realized that products can be produced at a fraction of the cost overseas then here at home. The problem that has come from this is that the labor supply chain has drastically shifted to low wage rate countries such as China, Korea, and Taiwan. As stated in the documentary mentioned above a typical worker is making the equivalent of 75 dollars a month. Compare that to someone in the U.S. making 8 dollars an hour for a similar low-skilled profession and you can start to see why the demand for labor has shifted so drastically to foreign firms. U.S. consumers either don’t know where the products they buy come from, don’t care, or that there are no close substitutes that they can purchase instead.

Overseas manufacturing companies welcome U.S. business because they are like any other private company in the world; their main goal is to make profits. Couple that with U.S.’s high demand for their labor and it is hard for factory owners to turn them down because if they don’t make U.S. companies products someone else will at a similarly low price. Furthermore, because labor costs are so low overseas factory owners are also making huge profits exploiting these wage laws.

Unfortunately factory workers partaking in this exportation have no choice but to take the wage rate they are given. This is mainly due to little or no education and many coming from already low income families. The other reason is the shear size of the labor force in China; If a worker complains about the working conditions or that they are not being paid enough they can simply be replaced with another willing candidate. In low-skilled professions such as bead making I don’t see wage conditions improving for these workers in the foreseeable future without government intervention.

 A great example of how products are embedded with cultural meaning are the Mardi Gras beads that we saw in the documentary. We see that these beads have been marketed and evolved to become a major symbol of sex and partying in this particular celebration. Just like all celebrations however, they come and go, leaving the value consumers have on the beads in the trash. This is why people that participate in Mardi Gras see the beads as disposable because they classify them as inferior goods once the party stops.

There are many economic and social impacts that come with globalization. As stated earlier it shifts the supply of labor away from home countries but it also can affect other things such as lower prices of goods for consumers in the U.S and also specialization between countries where each country produces the goods that it has a comparative advantage in making. I final thoughts are that we will continue to see companies moving their manufacturing operations overseas. While some companies like Apple are starting to create policies such as assembling their products here in the U.S. and while they are still getting all the individual parts from overseas, it is a small step in the right direction.

Sources

Mardi Gras Made in China [YouTube Preview]

Picture of Manufacturing Plant

Other Sources

Foundation Episode 36 with Tony Fadell

08: Gentrification in Silicon Valley

Gentrification by definition is the shift in a community towards wealthier residents, this shift causes benefits such increases in average income, property values, and increase economic development, however, gentrification also causes negatives affects such as increased rent and division of wealth and services between the rich and poor. In this blog post I will be looking at gentrification primarily from an optimistic viewpoint. 

The Google Bus protests that have been going on in San Francisco have shown that part of the community that live there are not happy with the transformation that Silicon Valley has brought to the area. In an article by Julia Carrie Wong, she writes on the topic and in it she quotes, “protesters drove a fake Google Bus in the annual Pride Parade with props linking the shuttles to gentrification, eviction and displacement” [1]. Obviously there are parts of community that don’t believe that they are not being over run by these large tech companies, however, what is the real issue going on here? Many of the activists that have protested about the Google Bus are saying it is driving out poorer individuals, “Housing activists point out that the buses serve people who are driving up rents, displacing lower-income residents.  Pedestrians and bikers complain of the buses clogging narrow streets.” [1]. Personally, I can see their situation and frustration but on the other hand I do not agree with them. I see the busses as a means for Google to benefit their works in a cool and efficient way. Furthermore, the busses allow more people to car pool and keep their cars at home, reducing traffic for people who don’t work at Google’s Campus.

As an Economics Major I strongly believe in the invisible hand where markets for the most part are pretty good at being self-regulating without government intervention. I will say that I do believe that self-regulating markets where individuals and businesses who are trying to maximize their profits and utility do lead to gentrification but in a mostly positive way. I like to believe that Google, Apple, Facebook and other tech giants that are in the valley aren’t trying directly to push the non-techy crowds in the area but that this transformation is happening because the demand for a very high-tech, cool, young atmosphere is wanted by their employees and the people that they are looking to hirer.

Google 1

When you read articles about activists and the communities they are in it can be difficult to get a clear understanding. When the article talks about black communities in the Bay Area for example they only talk about those of low incomes. I understand why they do this when it comes to writing about gentrification; low-income individuals are hurt the most by the shift. As I read I felt that these low-income groups opinions were often generalized and looked at as every low-income person being a victim to these devastating Google busses. Activists are almost always reported on from the same viewpoint I feel; radical or rebellious types that choose to complain about whatever they can because they cannot adapt or just don’t like their surrounding. It’s for this reason that I feel somewhat bad for them for getting generally such a bad rap from the press. However, in this particular situation with the Google Busses and it leading to gentrification, I’m going to have to side with the Google and the tech giants and believe that Silicon Valley should not have to sacrifice the culture that it has built because rent and property values are rising in the area.

Sources:

[1] When Companies Break the Law and People Pay the Scary Lesson

Pictures: Google 2, Google 1

B:06/07: Closer Relationships and The Price of Gadgets

Stefana Broadbent’s TEDTalk, ‘How The Internet Enables Intimacy’ looks at how internet technologies are actually providing closer relationships between users of the internet. She points out that while someone might have 120 to 200 friends on Facebook and other social network sites, the average person will talk to five or fewer each day. This seems completely applicable to my personal life as I rarely message individuals on my Facebook account that I do not talk to already on a daily basis. The biggest hurdle that the internet has overcome is the ability to connect with people over great distances. The example of the Brazilian couple who would once a week Skype with their family allows them to cultivate a deep relationship with their loved ones even though they may be physically far away. Furthermore she brings up examples of people at work who work late-night or odd shifts being able to say good night to their loved ones. This technology that allows us to communicate with people in our lives that we care most about was not a possibility to such a degree for generations before us.

Broadbent’s TEDTalk got me thinking of how social networking and online interaction is progressing on the web. Social networking platform Path is doing exactly what Broadbent is talking about. The service limits connections to only 150 friends and they encourage you to select only your highest-quality connections. The idea behind Path came from psychology research the suggested people have a maximum number of workable social contacts. This limitation allows users to share more personal information with their friends and family while knowing is still safe and secure. Path’s creation of “Inner circles of social contacts” I feel is great step in the right direction to achieve intimacy on the internet.  Broadbent believes that the separation of work and personal connections is not fair for workers. She feels that corporations blocking social media and connections from their employees are greatly discouraging it’s workers.

Today’s technology market is a vast one, with so many products coming to the surface for consumers to choose from, it is a great time to live in but are we ignoring the costs that these services are producing? Corporations like Foxconn are horrifying workplaces where it’s hard to believe that individuals actually work there.  Foxconn manufactures an insane proportion of the world’s electronic devices and their working conditions are appalling. For example, the example from class where they installed suicide nets around their buildings so workers could no longer throw themselves from the tops of them is just absolutely ridiculous. Obviously they’re missing the bigger problem here, that their insane work shift hours and low wages are pushing people far past their limits. The highest paid position is looking at $1.80/hour, and “official” work hours being at 8 hours, which you know if B.S. because they have been caught not paying hundreds of thousands in unpaid overtime payments.

               
As consumers we are part of this problem however. With the need to always have the latest, fastest, and coolest gadgets on the market we are fueling these outrages working conditions. We must ask ourselves, do we really need that new IPhone 5S when we already have an IPhone 5? Do we really get that much gratification from materialistic items as we think we do? Or should we step back and really analyze how we as consumers are shaping these markets. Honestly, If we demanded more accountability from large corporations wouldn’t they have to eventually listen and change?