- Steve Jobs ... has abandoned nonprofessional American workers. It wasn’t always thus. In his first stint at Apple, in the mid-’80s, he built, with Jobsian attention to form and function, a heavily automated factory in Fremont, Calif., that employed hundreds of workers to turn out personal computers. But the Macs didn’t sell fast enough, Jobs was fired, and, in 1992, the factory was closed. ... [Apple now] employs no U.S.-based production workers. Which is why Jobs’s elevation to our national pantheon is premature. Bringing some of those production jobs home while holding down the price of his products probably would require devising factories so automated that they wouldn’t employ all that many workers. Then again, Apple is sitting on $76 billion in cash, and Jobs is still Apple’s chairman. Devoting a few billion to reshape and restart American manufacturing, even if it employs fewer people than in Henry Ford’s time and narrows Apple’s profit margins, could work wonders for exports and, just possibly, lead to Jobs’s most amazing invention of all: a newly vibrant American working-class.
Well, in the very same city of Fremont where Jobs once built his Mac factory, we found out once again this week why it is a very bad idea to locate MA jobs in expensive Silicon Valley.
Solyndra manufactures and sells solar panels. Solyndra was given a $535M loan guarantee by the Obama administration as part of its policy to promote green technologies. Solyndra used a large part of that money to build an enormous, state-of-the-art manufacturing facility in Fremont. Real estate is very expensive in Fremont. Construction costs are very high in Fremont. The wages for high-tech workers, even for MA workers, are very high in Fremont. Because of these and other factors, Solyndra's products were simply too expensive to compete in the global marketplace. As a result, Solyndra declared bankruptcy. In sum, Solyndra, with the support of taxpayer money dished out by the Obama administration, did everything Harold Meyerson is recommending that Steve Jobs and Apple do. And the result was economic disaster.
It has been well known for decades by all operators in Silicon Valley that it makes no economic sense whatsoever to locate MA jobs onshore in the United States. The main reason for this is because offshore workers are as well or better qualified than American workers and will work for substantially less. Any business that refuses to acknowledge this reality will be eaten alive by its global competitors. And any columnist who encourages Apple, the crown jewel of America's high tech industry, to engage in such self-destructive behavior simply reveals his complete ignorance of the way high-tech businesses operate in the global marketplace.
The self-avowed socialist, Mr. Meyerson, actually has the audacity to presume (like all too many other so-called progressives) that he knows better how to spend Apple's "$76B of cash" than Apple itself. He advises Apple to "devot[e] a few billion" to relocating Apple's MA operations back to the US. "Waste a few billion" might be a more apt description. He encourages Mr. Jobs, the chairman of Apple, to ignore the fact that doing MA work in the United States could "narrow Apple's profit margins." Apple shareholders would be aghast if Mr. Jobs were to follow Mr. Meyerson's advice. It was precisely by engaging in such non-economic practices that Solyndra went belly up.
The fate of Solyndra reminds us why it is such a bad idea to listen to socialist political activists like Mr. Meyerson or the former community organizer Barack Obama when it comes to running the American economy. Although these activists start from good intentions, they simply cannot get it through their heads that the main purpose of any business is to turn a profit. Instead, these activists view businesses as nothing more than tools that the government may manipulate to advance its own social policy agenda. And, in doing so, they encourage government sponsored entities to engage in the kind of uneconomic behavior that often results in financial disaster, with the costs then being borne by the American taxpayer.
Solyndra is not an isolated phenomenon, but part of a pattern. Over the last decade we have seen many examples of the government encouraging government sponsored entities to engage in uneconomic behavior to advance social policies. The government encouraged Fannie Mae to guarantee junky subprime loans in the name of promoting low cost housing. The government is now encouraging General Motors to manufacture the Chevy Volt, in spite of the fact that the Volt is an utter failure in the automotive marketplace. Until the government stops trying to manipulate American businesses for the purpose of advancing its social policies, we will continue to see government waste, corruption, and failure on a monumental scale, with the American taxpayer picking up the tab.
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