The ethical dilemma in your holiday stocking

[Editor’s note: Silicon Sweatshops is a five-part investigation of the supply chains that produce many of the world’s most popular technology products, from Apple iPhones, to Nokia cell phones, Dell keyboards and more. The series examines the scope of the problem, including its effects on workers in the Philippines, Taiwan and China. It also looks at a novel factory program that may be a blueprint for solving this perennial industry problem.]

BOSTON — You won’t hear Bing Crosby singing this year about the ethical dilemmas of shopping.

This holiday season most Americans will spare little thought for the faraway factories, sprawling transportation networks and faceless workers that churn out many of the gifts we'll give and get this year.

That’s especially true of the $172 billion U.S. consumer electronics industry that produces the world's favorite high-tech gadgets: our cherished iPhones, Dell computer monitors and other glowing goodies that we all love and depend upon.

So we race to the nearest Apple Store, Best Buy outlet or shopping website and quickly plop down a credit card. Who made all this cool stuff? Steve Jobs and his brainy engineers, of course. Michael Dell’s geeks. Those efficient Finns at Nokia.

But as the GlobalPost special report Silicon Sweatshops uncovered, that’s only part of the story.

The truth is that many of the holiday gifts you’ll buy or receive — and according to the Consumer Electronics Association, U.S. consumers will spend $222 each on electronics gifts this season — were likely made and assembled by Asian workers with few rights, while toiling under sweatshop-like conditions.

As GlobalPost correspondents Jonathan Adams and Kathleen E. McLaughlin documented over the past six months, your holiday gift may have passed through the hands of a heavily indebted Filipina migrant working the graveyard shift, a Taiwanese factory worker who'll soon be fired without warning or a young Chinese laborer clocking 80-hour weeks on a final assembly line.

Of course, the big brands are aware of the problem. To police Asian suppliers they’ve crafted “codes of conduct” and hold snap factory audits — a complex management challenge, as these production lines stretch across thousands of factories, multiple countries and numerous legal frameworks.

"Our audits are done across all our suppliers," Apple spokesperson Jill Tan said. "It's a pretty rigorous process, and we take corrective actions as and when required. We audit aggressively, and post all results on our website."

But labor rights activists — and many workers — counter that these codes and spot checks simply let big brands off the hook, while abuses continue.

So who’s right in this 21st century battle between management and labor? Everyone. And no one.

That’s because there are no easy solutions to this ethical dilemma. There are no black-and-white answers at the bottom of your holiday stocking.

Instead, this complex issue springs from the cold calculus of economics, and the powerful incentives that reach from your holiday shopping list, to Silicon Valley cubicles, to the factory dormitories of Dongguan, China:

• Few consumers would spend thousands of dollars for an iPhone or similar product. So big brands have a strong incentive to drive these retail prices lower.
• That means Asian suppliers — the companies that make the flood of parts that go into a single gadget including  flash memory chips, touch screen glass, GPS antennas and the like — win big orders by competing on price. As a result, they have incentive to churn out as much as possible for as little cost as possible.
• These pricing pressures, in turn, fall upon the backs of workers who also have strong incentive to accept these jobs. While earning a dollar an hour sounds low to American ears that’s a good wage for many migrant workers, particularly those who come from places where economic opportunities are scarce such as rural China or the slums of Manila. So they also have a powerful incentive to keep quiet when abuses do occur.

Notice where this incentives chain begins: with you, me and everyone else who pulls out a credit card to buy this stuff. And, oh, we want it.

But here’s where the ethical dilemma gets thornier. Our growing demand for these high-tech products triggers some labor abuses. But it also creates economic opportunities for people trying to feed their families, escape poverty, boost their living standards and perhaps one day make the same buying decisions that many Americans will consider this holiday season.

Enter a consumer Catch 22: buying more gadgets may exploit some workers. But a boycott of those same products could also harm those it was trying to protect.

To get a better grip on this conundrum, the Australian Graduate School of Management examined consumer attitudes in eight countries (the U.S., China, India, Australia, Sweden, Germany, Turkey and Spain) and their justifications for making "unethical" buying decisions — in this case, purchasing sneakers made in sweatshops, products that harm the environment and counterfeit goods.

The 2004 study showed that most global consumers either were 1) not aware of the ethical issues, 2) simply didn’t care about them, or 3) felt powerless to change the situation. Price and brand — not ethics — were the critical factors in their buying decisions.

Moreover, the research found cultural differences over what is "ethical" when it comes to labor practices. “Chinese respondents who had been taught about capitalism from a communist perspective did not view the use of cheap labor as exploiting workers," senior researcher Giana Eckhardt said. "They saw no ethical breach because to them that was the way capitalism works."

So as you tick off your holiday shopping list this year, remember this: for right or wrong, and for ill and good, we are all connected in this churning global economy. The texting teen in Manhattan. The soccer Mom in Chicago. The high-tech marketer in Cupertino, Calif. The sons and daughters of a poor rice farmer in Hubei province.

And while there's both darkness and light in this global economic interdependence, the common humanity that underlies it all is, at least, a sentiment that’s worthy of a holiday song or two.

What do you think about the issues raised in Silicon Sweatshops? Take our poll.

Silicon Sweatshops: The series

Special Report: Silicon Sweatshops

Shattered dreams

Disposable workforce

The China connection

A promising model

More Dispatches:

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