The Article
I’ve just about gotten around to catching up on a lot of reading, and I finally got a chance to read this Scroll article:
“A few days later, Radha walked into a sprawling, glistening factory in Sriperumbudur, on the outskirts of Chennai. It had rows and rows of workers, most of them young women like Radha, bent over work tables on which were laid out tiny, metal parts. They were assembling iPhones – the most expensive and coveted mobile phones in the world – made by Apple, the second-richest tech company in the world.
The factory was run by Foxconn, a Taiwanese company that is the world’s largest contract manufacturer of electronics. For long, most of its phone production for Apple was done out of China. But in recent years, with the relationship between the United States and China coming under strain, Foxconn had been scouting for new locations for its manufacturing units. The town of Sriperumbudur, situated in Tamil Nadu, one of India’s most literate states, seemed like a natural choice. Home to over 500 companies, including manufacturers of electronics, auto components and chemicals, it has grown into an industrial hub in the past two decades.”
https://scroll.in/article/1064027/indias-iphone-factory-is-keeping-women-workers-isolated
As always, please read the whole thing. In fact, an especial plea this around – please take the time out, and go read the entire article, and then come back and read this. If you’ll allow me to be greedy, take even more time out and have a contemplative cup of coffee before coming back here.
The Chart
This is one of my favorite charts to stare at, and often endlessly. It’s outdated now, of course, because it is from well over a decade ago. But even so, this chart tells a powerful story. The story it tells us is that we have failed to generate manufacturing based employment in our country. That is a problem because without a significant increase in the share of manufacturing in our GDP, it is unlikely that we will be able to meaningfully reduce poverty in our country.
The Blogpost
I’ve written about it already in the previous week, but just in case you haven’t already, please do go and read the whole thing. I know I’m assigning a lot of homework today, but if you can spare the time, rinse and repeat the whole contemplative cup of coffee routine too, after you finish reading the whole thing. Here’s one of the key paragraphs (to me) from the blogpost:
“One of the things we often argue about on these pages is that growth is the single biggest moral imperative for India at its stage of development. We can try to optimise for many other ideals and virtues, but if they come to us at the cost of growth, we must learn to ignore them. Because lack of growth will make even those ideals worse than where they are today. To illustrate this point, somewhat provocatively, I have made the point that we shouldn’t get rich at the cost of our environment, but we must also consider that staying poor doesn’t do any good for the environment either in the medium to long run. At our stage of development, we should only ask if our today is better than our yesterday. It is possible that our today isn’t ideal or it may be far from what the developed world might have at this moment. But that should be of limited concern to us. Because in trying to aspire for that ideal state or in trying to make that quantum leap to what a developed economy already has, we will put at risk the gradual increment that we can make every day.”
https://publicpolicy.substack.com/p/248-the-budget-line-is-real
RSJ here is arguing for not making the perfect the enemy of the good. The good, in this case, is the fact that more women are getting employed than before, at least at the margin. The perfect, in this case, refers to the fact that working conditions at the Foxconn factory are, well, less than perfect:
“The activist said that often women would not use the toilets at the hostel and would instead wait until they reached the factory. “This obviously took a toll on their health,” he said.
The problem of health has boiled over into a crisis in the past. In 2021, hundreds of workers from the Foxconn factory went on protest and blocked traffic on the Chennai-Bengaluru highway after a food poisoning incident that resulted in 250 workers falling ill, of which 159 were admitted to a hospital. The workers also complained that their living conditions were unhygienic and demanded that their employers take immediate steps to improve them.
After the protests, the factory stayed closed for a few days, until the administration promised to make improvements in the hostels and ensure hygiene in food preparation.
Since then, the situation has improved, workers said. But some women still do not see the living conditions and the restrictions as satisfactory.”
https://scroll.in/article/1064027/indias-iphone-factory-is-keeping-women-workers-isolated
So what should we as a society choose? Should we choose the good and sacrifice the perfect, as RSJ and Pranay suggest? Or should we choose the perfect and give up on the good, as the Scroll article might imply to some?
Leave aside for now the question of how society should choose, because figuring out effective preference aggregation mechanisms is, er, impossible. What is your preference if you have to choose between the good and the perfect? What should be your preference, and why?
Far be it from me to tell you what your answer should be, of course, because as far as I’m concerned, you should read the Scroll article, RSJ and Pranay’s newsletter, this blogpost and a hajjar other sources and come to your own conclusion. I’m old fashioned that way.
My job today is to help you build out a framework for you to arrive at an answer, and to provide you with a lot of different perspectives. If you end up agreeing with my framework, end up using it, and end up with an answer different from mine, all is good with the world, for we can then debate our disagreements and arrive at some sort of a synthesis, and what could possibly be better, eh? Like I said, I’m old fashioned that way.
The Book
“The first time I met Wu Chunming, she was working for a foreign company, making a thousand dollars a month, and living in a three-bedroom apartment in downtown Dongguan. The last time I saw her, two and a half years later, she was working for a Chinese company, making $150 a month, and living in a single room in a part of the city known for small shoe factories with poor working conditions. By every calculus that mattered, she had fallen a long way. But she was more serene than I had ever seen her. In a city where a Mercedes was the measure of all things, Chunming had somehow broken free and developed her own personal morality.
Chang, Leslie T.. Factory Girls: Voices from the Heart of Modern China . Pan Macmillan. Kindle Edition.
“Before I was always hungry,” she told me. “If I saw a sweater I liked, I would have to get it immediately. Now if I don’t eat the best things or buy the nicest things, it doesn’t matter so much. If I see a friend or a family member happy, then that is meaningful.” She was no longer panicked about being single at the age of thirty-two, and she had stopped having affairs with men she met online. “I believe I’ll become more and more beautiful, and more and more healthy, and my economic circumstances will get better and better,” she said.
Chunming hoped to have children someday, and she often asked me about American attitudes toward child-raising. “I would like a child to grow up to have a happy life and make a contribution to society,” she said.
“A contribution to society?” I asked her, startled. “What do you mean?”
“I don’t mean to be a big scientist or something like that,” Chunming said. “How many people can do that? I think if you live a happy life and are a good person, that is a contribution to society.”
TMKK?
Factory Girls is a book worth reading because it talks not about the industrial policy of China, but about the resultant sociology of China’s industrial policy. To the extent that you agree with the notion that the economic growth of a nation is the means to an end, it is a book worth reading. It is possible, of course, that you are of the opinion that economic growth is an end in itself. The book is still worth a read, because it is important to read books that offer perspectives which differ from your worldview. (My Twitter feed, for example, is absolute torture for me, but I force myself through it on a daily basis.)
Image Source: https://en.wikipedia.org/wiki/Snakes_and_ladders
Think of India (or any country, for that matter) as a player on a board of snakes and ladders. Industrial policy, when done well, acts as a ladder. But unintended outcomes of industrial policy act as snakes, pulling the country back down to problematic parts. In this framework, it is hard for me to not think of China as having taken ladder after ladder over the last thirty years or so, only to fall a fair way back in the last two years or so.
And so yes, it becomes important for India to replicate the high growth eras that China and some of the East Asian countries accomplished. But it becomes as important, if not more important, for us to avoid the metaphorical snakes on the latter stages of the board.
One should absolutely aspire to match (and inshallah, exceed!) China’s growth rates from twenty years ago. But one should also aspire to avoid India’s youth going all tang ping on us twenty years from now.
Easy to say, I hear you say, and I can guess what’s coming next. How exactly, you ask, do we go about doing this?
Should our takeaway from the Scroll article be that we should ask Foxconn to four-letter-word-beginning-with-f off? Should our takeaway from Pranay and RSJ’s blog post be to ask Scroll to four-letter-word-beginning-with-f off?
Regular readers should be rolling their eyes round about now, for they know what’s coming. All together now…
- How about offering workers who have completed three years of work at Foxconn fully subsidized vocational training? Not three, but two instead, I hear the left liberals say? Not three but five, I hear the libertarians say? Well, have at it, ladies and gentlemen – figure out what the right time frame should be. Why, I might even go so far as to say that development economists should run RCTs to figure out the appropriate time frame.
- How about offering soft loans to folks who want to build hostels near Sriperumbudur? Or offer timely transport? Or other mechanisms to ensure a thriving housing market that allows women workers to make their own choices about freedom, perceived safety, food quality, and other parameters?
- How about offering additional tax breaks to companies like Foxconn contingent upon them (companies such as Foxconn) offering better working/living conditions to the workers? Or linking PLI payments to Foxconn’s customers to incentivize such compliance? After all, Apple is one of the world’s best when it comes to sustainability, recycling, and other initiatives, and as we all know, can press its suppliers.
I’ll happily confess to not knowing if these suggestions make any sense, or go too far, or not far enough. I’m a beanbag economist, let alone the armchair variety. I’ve never worked in a factory, or regulated one, or designed regulations for labor policies in one. So if you are going to say that I don’t know what I’m talking about, I’ll be the first to agree with you.
But I will say, and defend vigorously, this much:
Asking Foxconn to eff off is a bad idea, because god knows we need more manufacturing, more employment and more women’s participation in our labor force. Asking Scroll to eff off is an equally bad idea, because we’re missing the point if we ignore those in our society who point out the excesses of our new industrialization.
This is an ongoing process that will never stop, but updating and simplifying labor regulations to reflect the modern factory is crucial. We need to do this to encourage larger-sized, better run firms that are globally competitive and can offer labor protections. We need reforms that will make India a competitive manufacturing destination without, eventually, the twin crutches of PLI or treatment of labor that ignores globally hard-won rights. The working class women of Tamil Nadu featured in the Scroll article are shouldering enough of a burden in contributing to growth; it is time we step up too. And when I say we, I don’t mean just the government. I’d include economists, policy-makers, think-tanks, the media and yes, society at large.
What the bazaar cannot provide by itself, sarkaar and samaaj must.
Don’t dilute the dialectic, dial it up!
Let differing opinions and ground reportage be offered up in the media, let’s all of us read/listen/see ‘em, and let’s figure out a middle ground by participating in the market for ideas.
India needs, like it or not, Foxconn to teach us how China did it. India also needs, like it or not, Scroll articles to help us realize that Foxconn may well be pushing the boundaries of what is acceptable working conditions for labor.
Personally, I’m on team RSJ/Pranay on this one, because what India needs right now is a lot of industrialization. But I also worry about where this path might end up, and I’d like to keep an eye on what might go wrong in the years to come. And so I’ll disagree with Scroll for now, but I’ll celebrate the fact that I live in a country where Scroll publishes articles such as these.
It’s fashionable these days to say that labels are out of fashion, but I’m going to call this the liberal position.
And finally, if you disagree with either the label or what I think it stands for, let’s have a debate! That’s my job da, and I’m very much up for it.
EconForEverybody 