Should Apple Investors Be Scared Over Foxconn Riots?

And more importantly, should their consciences bother them?

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Should Apple Investors Be Scared Over Foxconn Riots?

Consider this 2009 column from liberal activist Nicholas Kristof, where he refers to the “dream” of working in a sweatshop for those who live in even worse squalor. Kristof has long championed against human rights abuses and social injustices, and his causes include the conflict in Darfur and human trafficking.

It’s a stark and wrenching read, but here’s the gist: In Phnom Penh, Cambodia, there is a literal mountain of festering garbage and human waste that takes a half-hour to hike across — and some families actually live on top of the filth, sifting through the trash to survive. Kristof says for these unfortunates, life in an urban sweatshop would be salvation.

Here’s an excerpt:

“Talk to these families in the dump, and a job in a sweatshop is a cherished dream, an escalator out of poverty, the kind of gauzy if probably unrealistic ambition that parents everywhere often have for their children.

‘I’d love to get a job in a factory,’ said Pim Srey Rath, a 19-year-old woman scavenging for plastic. ‘At least that work is in the shade. Here is where it’s hot.’”

In short: It’s a matter of perspective. And the slow march of progress, while not fast enough for some in the West, is indeed raising standards of living in emerging markets like Cambodia — or, more to the point, China.

Could the march of progress be faster? Maybe. But if you think Apple dishing out 100% raises to its staff fixes the command-and-control nonsense in Beijing or a Chinese information superhighway stuck in second gear thanks to blocked websites and censorship … well, it’s just not that simple.

Perhaps this is self-justification, a way for me to sleep well at night despite my investment.

Maybe.

After all, you can’t always make the argument of sweatshop vs. garbage heap. The situation becomes stickier when you talk about companies like Caterpillar (NYSE:CAT), which is notorious for union-busting and demanding big concessions even as it turns big profits. Or Boeing (NYSE:BA), which tried to move a production facility simply to avoid unionization. These are companies operating in America, after all, not a cesspool in Phnom Penh.

But that’s the thing — in this complex global economy, in many ways the situations are closely related. Because cheap labor overseas is precisely what’s driving down the wages of manufacturers at home. And one could argue that’s “fair.”

The days of a UAW assembly-line worker making $75,000 a year and retiring at 80% pay are long gone, and should be in this global economy. The reason auto workers in South Carolina get $10 an hour nowadays is because they need jobs and will work for the wage — and if they refuse, BMW can take its plant to Mexico or South America where costs are cheaper.

After all, one man’s sweatshop is another man’s salvation.

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via@JeffReevesIP. As of this writing, he owned a long position in Apple.


Article printed from InvestorPlace Media, http://investorplace.com/2012/09/should-apple-investors-be-scared-over-foxconn-riots-aapl/.

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