News Desk

Notes on Washington and the world by the staff of The New Yorker.

January 25, 2012

Apple and Obama

Yesterday afternoon, Apple released its quarterly earnings. They were good! The company’s quarterly profit of thirteen billion dollars exceeded the annual G.D.P. of Iceland. To put it another way: the market cap of one company based in Cupertino, California, is now equal to the G.D.P. of Iran. If, as Rick Santorum says, jihadists in alliance with Tehran are really massing in Nicaragua, Cuba, and Venezuela, maybe we could just buy them off with iPads instead of blowing them up?

laurene-jobs-hp.jpg

A few hours later, Barack Obama gave his State of the Union address. Steve Jobs’s widow, Laurene Powell Jobs, a philanthropist, was there as a guest of the First Lady, and the speech centered on the rebirth of American manufacturing. Her cameo seemed appropriate. The two companies that Apple’s surge has hurt the most are foreign: Research in Motion, in Canada, and Nokia, in Finland. The company Apple sues the most aggressively—Samsung—is South Korean. People are rioting in China over iPhones; when they buy them, it helps our trade deficit. Vladimir Putin gave free iPads to stripping female supporters this summer. What company could be a better example of Obama’s vision: “An economy that’s built to last—an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values”?

However, as Charles Duhigg and Keith Bradsher reported Saturday, in my favorite New York Times story of the year so far, Apple doesn’t manufacture here and it doesn’t expect ever to do so. “Those jobs aren’t coming back,” Jobs reportedly told Obama at a dinner when the President asked whether it would be possible to make iPhones in America. The wages in Shenzhen are lower, yes, and the factories are brutally efficient. There is also deep intelligence built into Chinese sweatshops. The iPhone manufacturer Foxconn, Duhigg and Bradsher report, “employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks.” Everyone knows that Asia pumps out our gadgets; the story makes plain why it will do so for a long, long time.

Still, there’s a reason for optimism about America’s workforce, and a good lesson to be learned from Apple’s surge. What really makes the iPhone work isn’t the hardware. Sure, the glass—designed by Corning in upstate New York and manufactured in China—is beautiful. But the transformative part of the phone is the software. The code behind the touch-screen was written here; the iOS operating system was written here; most of the apps that we use are written here. Thousands of companies, in fact, have been started here to write apps for Apple’s iOS and Google’s Android. Software remains a great American expertise, and it’s only becoming more important as processors shrink into ever more powerful forms. As Marc Andreessen argued in the Wall Street Journal this summer, “software is eating the world.” Computer code is transforming industry after industry, and writing code is something that Americans are very good at. It’s also something that requires creativity, which isn’t fostered in giant factories with guards guiding people through crowded doorways and a central kitchen that roasts three tons of pork and thirteen tons of rice a day.

So perhaps there’s a different insight from Apple for Obama. Yes, there are industries where manufacturing jobs can be brought back to America through proper tax incentives and training programs. But maybe he should have talked more about the things that he could do to keep software jobs here. He spoke of federal funding for university and scientific research. But a real pro-software agenda would also include reforming patent law to stop trolling (and perhaps eliminating software patents altogether); increasing H-1B visas for highly skilled coders; stopping Congress from defunding DARPA, whose research helped create Siri, the iPhone’s talking assistant; and opening up the unused, federally owned wireless spectrum.

That agenda wouldn’t bring Apple’s manufacturing jobs back, but it would help to keep the company’s coding jobs here. And it would certainly help develop “an economy that’s built to last.”

POSTED IN

Comments

21 comments | Add your comments

Yes, well.. I would expect that if the USPTO was still granting software patents when, in a decade or three, Asia had become just as good at software as it has at electronics (and, of course, it will), the US would be forced even sooner to abandon that sector too. I must admit the Amish way of life is very appealing (I saw a lovely documentary about it on TV here in the UK recently).

Posted 1/27/2012, 7:52:03pm by phayes

Yes there is a future in software, and americans generally have been good at it, but it is certainly not for everyone. Especially not the kind of people that used to work in the once thriving manufacturing sector. No amount of training and education will make someone into a good software developer if they don't have the knack and the interest. Manufacturing may return to the US, but it will never employ lots of low-skill worker the way it did. In the future it will be all about automation, and software and design are how to make that work. China has been able to take advantage of their biggest asset, an eager and large low-skill work force willing to work for what the developed, consumer world views as peanuts. This labor advantage won't last forever, and I don't know where it's going to go. As it is we are getting our cheap goods at the expense of the workers and environment in China. This cannot last forever.

Posted 1/27/2012, 7:39:20pm by PeteB

Manufacturing's exodus is inexorable. As each decade passes, more and more manufacturing will be automated. The endpoint is that it will require few workers to make anything. What matters is the intellectual property in a manufacturable design. In a few decades, companies will only care about that intellectual property: manufacturing will be a commodity. Here is the future: http://video.google.com/videoplay?docid=-2022170440316254003 And yes, we will see increasing unemployment. Eventually automation will start to encroach on the segments of the economy that today are considered immune: jobs that require intelligence, such as medicine. Yet, IBM is already developing computerized doctors: http://www.forbes.com/sites/rogerkay/2011/12/09/cognitive-computing-when-computers-become-brains/

Posted 1/27/2012, 3:14:57pm by cliffbdf

I love these comments and even the line in the article about opening up immigration. As a recent Engineering grad, I shudder when I see recent L1 tech visa immigrants at the office -- they need the tiny (often half the traditional local salary) so badly that they live in "dorms" of 4 to 5 workers, often 80 miles away (for affordability.) Having these workers is a boon to companies who want to compress payrolls, but terrible for Americans who simply arent willing to live in such conditions -- but were unfortunately recent Engineering grads. No folks, it is not poor education that drives people away from Engineering degrees, it is just viewing the competition. I simply refuse to work for $35k where i'd need to have family live in a 1br apartment. I'm sure all you stock brokers, publishers, lawyers and mortgage agents would agree.

Posted 1/27/2012, 12:17:47pm by rez2

I don't know about software as the future. I agree that DARPA should be funded and software patents should be done away with, but most of programming is tedious, not very skilled, work that requires no creativity and can easily be sent abroad. You cannot make an economy out of the creative part because people who can do it and choose to do it are few and far between. It is almost like suggesting that are economy should be based on creating art work of the quality and complexity of the ceiling of the Sistine Chapel. Not a lot of work for people who don't have the painting abilities of Michelangelo.

Posted 1/27/2012, 11:48:29am by CaliLiz

The lament of the CEO I didn't complain when we sent the assembly jobs overseas because I'm not an assembly worker. I wasn't concerned when we sent the tech support to India because I'm not in tech support. I didn't sweat when we sent the R&D overseas because I'm not a scientist. I wasn't worried when we sent finance, legal, and marketing overseas because I'm not a marketer, or a lawyer, or a finance person. Now one of my former suppliers is selling a new product just like mine, but for half what I can sell it for. I won't complain now, either, because I'm too busy looking for a new job.

Posted 1/26/2012, 11:24:06pm by duglarri

You may call it "pinnacle of capitalism", but it makes perfect sense to me on why those jobs can't be brought back. Obama is knocking wrong doors when he mentioned about manufacturing iPhone in the United States. It ain't plausible. Now if you want to build a strong market for Software jobs in the United States, you need to build strong foundation in the US education system. US has the best universities, but they need to motivate youngsters to study engineering.

Posted 1/26/2012, 1:55:28pm by sganji
Welcome Log in | Help | Register
Subscribe to The New Yorker

Follow Us

Follow The New Yorker on Facebook, Twitter, Tumblr, Google + iTunes, Foursquare, RSS Facebook Twitter Tumblr Google+ iTunes Foursquare RSS