October 7, 2011

Apple: Creating the 1%

There are two things that I have been following today, the Occupy Wall Street protests, and peripherally, the death of Steve Jobs.

Occupy Wall Street is a beautiful, organic protest, with no precedent, and one that just by existing has hope stamped all over it. There have been many images circulated online, and the this is one of them.

It says : "If you have food in your fridge, clothes on your back, a roof over your head and a place to sleep you are richer than 75% of the world. If you have money in the bank or in your wallet, you are among the top 80 percent of the world’s wealthy. If you woke up this morning with more health than illness, you are more blessed than the million who will not survive the week. If you have never experienced the danger of battle, the loneliness of imprisonment, the agony of torture, or the pangs of starvation; you are ahead of 500 million people in the world. If you can read this message, you are more fortunate than 3 billion people in the world who cannot read at all."

While these generic statistics are cited as 'author unknown’ and are technically unverifiable, a google search reveals that this is a popular poster, has a quantum of reblogs on tumblr and is quoted on christmas blessings/inspirational sayings websites. However, there is no dearth of verifiable facts and figures on inequality, cross country regressions, and measuring tools for the same, as it remains a core module in any development economics course. The gist of the poster message though, conveys what most academic papers on inequality are unable to. One can say that Occupy Wall Street, for whatever it may not be, is against the centralisation of capital and influence and deteriorating social safety nets, and generally accepts that the economic policies have done little to reduce inequality.

Steve Jobs was no doubt brilliant and a revolutionary, and ‘changed things’. However, I am wondering, does the story of his career and work, of benefiting from capitalism and monopoly protection laws, of being in a fortunate economy at the right time, does it not necessarily link up with the story of the increasing inequality in America, and is it not in some part, responsible?

There are two points I’d like to make to flesh this out. The first is in terms of technology and the global economy. The evolution of a firm, in the past decades is such that manufacturing can be separated from management, and the entire production process can be separated from technology conceptualisation. The core that develops and designs technology, and deals with innovation are the people who use their brain and probably have the more satisfying jobs (as opposed to being on an assembly line and doing the mind numbing aspect of the process). This core also controls Learning Rents (as framed by Mushtaq Khan) or in other words, the ability to use this to make productivity gains, which translates into financial gains and economic development. So behind every Apple product, there is the driver of the new technology, and then a manufacturing firm that assembles the product and a corresponding distribution of profit between the two. My ipod nano confirms this, “Designed by Apple in California, Assembled in China”. Or in other terms, California = 1%, Rest = 99%.

This is how, for the hypothetical 100 dollars the consumer pays for an Apple product, one dollar accrues to the manufacturing company (to be spilt with its own management, workers, and running costs) 5 dollars to ancillary services (marketing, customer care, advertising, human resources) and the remaining bulk goes to the people who conceptualise and develop the technology. Whether this is equitable or justifiable, or a brilliant business model, is constantly contested in economics. To me, its bollocks.

Secondly, the protesters at Occupy Wall Street have been rallying under the slogan of “we are the 99%”. In relation to the structure described of the production of an apple product, this 99% are not just Americans, but the international working class as well, who are denied rights and work for severely depressed wages.

My facebook news feed exploded with people feeling "sad" and paying tribute to Jobs’s death. I understand this as a method of passing information and to me; his death is just a piece of information, devoid of any sentiment. Therefore I am trying to understand, why for the first time, I have one overwhelming theme on facebook (which is usually a happy mess of Wasted Pictured from Last Nights Epic Party and Support the Arab Spring). What further confused me was that several musician/graphic-designer/animator friends have said things like - thank you for the software, for the livelihood. In this context, the recurring statement of Arundhati Roy seemed to offer a tempting explanation, that “the most successful secession movement in India is the secession of the middle and upper classes.” Could it be that these friends of mine and myself, who are all in the same broad socioeconomic class, with access to information and purchasing power of apple products, is symptomatic of this secession? Could it be that we are now part of that 1%?

Obviously, it's not that simple. There are of course many sluice gates and movement and fluidity within the subgroups of that 99% and possibly between that 1 and 99%. In America and the developed world, there might be information about products to consume, (apple among others) but there is a diminishing ability for an average person (who fits in somewhere in that 99%) to purchase them. In developing or emerging markets, there is again this bombardment of advertisement, to a certain class that can purchase and consume them, who may or may not be the 1%, either globally, but certainly are the top percentile domestically. I’m thinking of the other billions who will not hear or register or care or be affected by this mans’ death. Even if they aren't the 99% in America, they definitely exist. The great thing though, is that they will find solidarity with the 99% in America, and the Occupy Wall Street movement, and that collusion can potentially be so powerful.

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