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New Statesman
6 days ago
- Business
- New Statesman
The People's Republic of iPhone
Photo by In Pictures Ltd./Corbis via Getty Images On Friday 23 May, Donald Trump threatened to impose a 25 per cent tariff on what is arguably the world's most successful consumer product, the iPhone. This would be a historic tax hike on American consumers, because Apple currently sells around 70 million iPhones in the US for about $1,000 each; the US government would ask for $17.5bn in additional taxes on a single product line from a single company. But what Trump wants is actually more extreme: he believes that in order to escape his punitive tariff, Apple might bring production of the iPhone back to America. There are two reasons that this is wishful thinking. The first is that the iPhone is the apex product of globalisation. It would be impossible to make something as complex as a smartphone with the resources of a single country. Apple's supplier list runs to 27 pages of companies, many of which are themselves multinationals with long lists of their own subsidiaries. It is not the product of one country – more like 50. It will never be the case that the iPhone can be described as a purely American product. As Patrick McGee explains in Apple in China, in light of the company's long history of contract manufacturing, the vast sums it has invested in China, the knowledge and skills it has imparted to Chinese workers and the Chinese factories it has developed, it makes more sense to describe it as Chinese. Trump's discomfort with Americans using Chinese phones is not without foundation. What Apple has achieved in China is a spectacular example of industrial strategy. Apple's investment in China for a single year, 2015, was $55bn – greater than the combined research and development spending of every business in the UK. Around the same time, Apple's engineers were working in 1,600 Chinese factories. 'We were unwittingly tooling them up,' a former Apple executive told McGee, 'with… incredible know-how and experience.' It is unclear how other countries can loosen China's grip on technological manufacturing; an American iPhone would cost more than three times the price of current models, according to one analyst. But this is a power that China has been helped to acquire by the Western capitalists who rushed to exploit its people for cheap labour, and who never stopped to consider the long-term implications. A former Apple vice-president told McGee: 'We weren't thinking about geopolitics at all.' For all the Silicon Valley rhetoric about changing the world, Apple does not appear to have understood how successfully it was doing just that. We're reminded to question the information we see on our screens, but the screen itself is also an illusion. The devices of digital modernity are made, we are told, by companies that are American, German, Japanese and Korean. The brightest minds compete in an unending race to make the displays ever more crisp, the computers ever more intelligent. We choose between phones and laptops made by Google, Microsoft, Apple or Amazon, televisions made by Philips or Samsung, games consoles made by Sony or Nintendo. But there is only really one company. It makes products for all of these companies, and hundreds of other businesses around the world. It is called Hon Hai Precision Industry. Hon Hai began in 1974, in a shed in a suburb of Taipei called Tucheng ('dirt city', in Mandarin), in which ten people moulded knobs and dials for televisions from molten plastic. Their boss was Terry Gou, the 24-year-old son of a police officer, and recently released from national service. As personal computers began to proliferate, Gou moved to making components, mostly sockets and connectors; the trading name for the company, Foxconn, refers to connectors. The 'fox' part is simply an animal Gou admires. He also admires Ghengis Khan, and wears a bracelet from a temple dedicated to the Mongol emperor. Gou was instrumental in Apple's return from the brink of defeat. In 1997, Steve Jobs and Jony Ive had created the iMac, which offered to replaced the complicated and boring world of personal computing with an aspirational consumer product that connected easily to the internet. Apple quickly realised why everyone else made beige boxes – making anything else was expensive and difficult – but the company's designers and executives had an additional problem, which was that if they didn't do exactly what Steve Jobs told them to do, he would scream at them and then sack them. Every engineer who doubted the design eventually left and the 'unmanufacturable' iMac was finally manufactured by the Korean company LG. When Apple's exacting demands became too much for LG, it began looking for another company to build its products, and in Taiwan it found Terry Gou. Subscribe to The New Statesman today from only £8.99 per month Subscribe In Gou's factory at the end of the 1990s, the roof was made from corrugated metal and the air conditioning was reserved for equipment, not people. Around the building, banners reminded workers of the wisdom of 'Uncle Terry', which included such aphorisms as 'work hard on the job today or work hard to find a job tomorrow' and 'hungry people have especially clear minds'. Gou, more than anyone else, took advantage of the opportunities offered by the special economic zone that had been established around Shenzhen, in Guangdong province on the east coast of mainland China, in 1980. At the time the zone was created, Shenzhen was a town of around 70,000 people; by 2020, it had a population of 17.5 million. This accelerated growth was the result of the 'Guangdong model', in which local government and private businesses (often led by Taiwanese entrepreneurs such as Gou) collaborated to produce growth. Gou's factory was subsidised and outfitted by the state; the advanced machines on which he began making Apple's designs had been paid for by the Chinese Communist Party. China also provided its people, in vast numbers. Among the sources that McGee has obtained for Apple in China are documents showing that when Apple needed to increase production – in the weeks before a new iPhone went on sale, for example – the Chinese state would be able to secure an additional 800,000 workers for its production lines. This would be done by government-backed companies, which would send buses into rural areas to draw workers from China's 'floating population' of internal migrants. These migrant workers numbered in the hundreds of millions, a larger workforce than that of the European Union. Apple was an exceptionally demanding client, led first by Steve Jobs and then, after his death, by his trusted lieutenant, Tim Cook, whose forensic eye for detail was even more exacting than his predecessor's temper. On his first day as CEO, Cook presided over an operations meeting that lasted for nearly 13 hours. But this was also what China needed: a company that would push its factories to ever greater standards and quantities of production. Jobs, Cook and Gou helped to make China the global factory. By 2010, the executives of Silicon Valley joked that within 20 years, there would be two companies left. Wal-Mart would be the only shop, and everything it sold would be made by Foxconn. As the Guangdong Model brought economic growth to China, Apple discovered that the country was also becoming its most important new market. Despite the role the company had played in China's industrial development, access to this market still came at a price. In 2016, Cook and two of his top executives visited the headquarters of the Chinese Communist Party, where they promised to invest $275bn in the country over the following five years. McGee points out that this sum is more than twice the amount (in real terms) that America had invested through the Marshall Plan in rebuilding Europe after the Second World War. The effects of this investment can be seen on government buildings around the UK. The technology transfer enabled by Apple and others enabled the rise of a new generation of native Chinese companies, such as Huawei. China ceased to be a taker of foreign technology and began pushing its own technology into other states, including Britain. Huawei equipment was installed in the UK's mobile networks, and cameras made by companies such as Hikvision (of which the Chinese state is the largest shareholder, and which human rights organisations have alleged supplies equipment used in the mass surveillance of Uyghur people) appeared at sensitive sites in the UK. Some were worn by our own police officers. Attempts have been made to ban Chinese technology from our infrastructure, but it will be years before it is removed, if it ever is. The trade policy of the Trump administration is an erratic series of pronouncements made via social media, which are almost always delayed and abandoned. And if Trump does persist in battling Apple, he will be abruptly reminded that trillions of dollars of American savings are invested in the company. Xi Jinping has no such concerns. Apple must appease him or lose access to the world's largest group of consumers. As the trade war between America and China grows, then, it must be asked if the world's most influential technology company can avoid picking a side – and to what extent it already has. Apple in China: The Capture of the World's Greatest Company Patrick McGee Simon & Schuster, 448pp, £25 Purchasing a book may earn the NS a commission from who support independent bookshops [See also: The lost futures of Stereolab] Related This article appears in the 04 Jun 2025 issue of the New Statesman, The Housing Trap
New Statesman
22-05-2025
- Politics
- New Statesman
The prisons crisis demands a new era of reform
Photo by In Pictures Ltd./Corbis via Getty Images We have a prison population crisis that must be addressed urgently. Our prisons are close to being full (with 88,087 inmates) and the demand for places is growing faster than it is possible to build new cells. Unless action is taken to reduce demand in the next few months, we will either have to undertake a programme of emergency early releases or be unable to place new offenders in custody. That was the bleak context when I was approached last September by the government to chair an independent review on sentencing policy, assisted by a panel of experts from across the criminal justice system. At the time, the expectation was that prison capacity would be reached in spring 2026. Since then, matters have become more acute as the prison population has risen even faster than anticipated. Last week, the Ministry of Justice revealed that the adult male estate will be full by November. Considering the need for a precautionary buffer, by early 2028 demand for prison places needs to be reduced by 9,500 compared to current projections. There is no uncontentious way to do this, although some argue that there are two relatively easy ways of doing this. The first is to deport foreign national offenders (FNOs), of whom there are approximately 10,800 in our prisons. More could be deported, it is argued. We agree and have set out proposals on how to do so. But claims that this can solve the problem entirely are unfortunately very wide of the mark. For a start, approximately a third of FNOs are on remand awaiting trial. For some nationalities, we have no functioning relationship with an FNO's home state, so they will not accept them back. Even where we can deport someone, unless we have a prisoner exchange agreement, there is no guarantee that an offender would be sent to prison in their home country. For serious offenders, it would be wrong for them to escape time in prison altogether. The second suggestion is that if only we accelerated the courts process, we could reduce the remand population, which currently stands at over 17,000. Again, there is a very good case for reducing the courts backlog. Current waiting times are too long for defendants and complainants and doing so would reduce the remand population. But although some on remand will be acquitted or have already served their time, a large majority ultimately will be convicted and have more time to serve. Furthermore, tens of thousands of defendants are currently on bail. Some of those defendants will eventually be convicted and sentenced to prison. The point here is not that we should ignore the courts backlog (Brian Leveson will be reporting on this shortly), but that it is not the solution to the prison capacity crisis in the short term. Instead, we have focused on what can make a significant difference to the numbers. The reoffending rates for those receiving short custodial sentences are very high. A better approach to continuing to use short sentences as frequently as we do would be to strengthen community sentences (both by widening the use of sanctions available to the courts and enhancing the capacity of the probation service) and only using short sentences in exceptional circumstances. One area of the sentencing regime that works well is suspended sentences – compliance with conditions is relatively high and reoffending is relatively low. We recommend allowing them to be used more widely. Subscribe to The New Statesman today from only £8.99 per month Subscribe For those who do go to prison, we need a change of approach. We recommend a progression model that means that well-behaving prisoners can be released earlier than is currently the case, but that there is also a second stage in the sentence where offenders are monitored much more closely in the community. Technology creates new opportunities to do that. A significant cause of the surging prison population has been the increased use of recall, when an offender out on licence is returned to prison as a consequence of breaching the terms of that licence. In 1993, there were fewer than a hundred recalled prisoners and even in my time as justice secretary in 2018-19 it was just 6,000. There are now over 13,000. We recommend a fundamental reform of this system to ensure that recall is only used when necessary. All of these measures should be sufficient to prevent our prisons from overflowing. But a successful long-term approach means they need to be accompanied by measures to ensure that we can adequately deal with offenders in the community. The probation service, third sector organisations that assist in rehabilitation, drug and mental health treatment, and approved premises for ex-prisoners reintegrating into society are all vital to bring down reoffending and can be neglected if resources are diverted into supporting an ever larger prison population. In the longer term, the best way to reduce the prison population is to cut reoffending, and these areas can play an important part. There is an opportunity to move in a more positive direction in which prison continues to play an important part in our system but that we make better use of the alternatives to custody, bringing down reoffending and reducing the number of victims. Necessity has created an opportunity to deliver important and meaningful reform. I hope it is an opportunity that the government will take. David Gauke is the former justice secretary and chaired the government's independent sentencing review. Related
New Statesman
21-05-2025
- Business
- New Statesman
The cost of austerity
Photo by In Pictures Ltd./Corbis via Getty Images One of the most revealing statistics about the UK economy is that young people in their early twenties are more likely to be out of work due to ill health than people in their early forties. This phenomenon, reported by the Resolution Foundation, is a new one. Previously, 20-somethings have been among the healthiest and most energetic workers in the labour market. The young people now struggling to make a start at work endured the disruption of school, university and their first jobs by a global pandemic, but they are also a generation that came of age in an era when economic growth, wages and quality of life were on hold. The young adults of the 2020s were the children of austerity. The choices a government makes when a person is a small child are evident in their health and happiness as they grow. As Gordon Brown writes, introducing his New Statesman guest edit on the theme of child poverty, 'decisions taken ten years ago by past Conservative ministers still cast a long shadow'. Austerity's effects were evident from the early years of the coalition government. In 2012, Unicef found that across 30 European countries, 44 per cent of children living in conditions of severe material deprivation lived in three nations. One was Romania, which had been badly hit by the 2008 crisis and was bailed out by the International Monetary Fund. The others were G7 economies – Italy and the UK – which had pursued aggressive programmes of cuts to welfare and public services to reduce the deficits incurred by the 2008 bailout. In Britain, a social safety net had been provided for the young by local government, in the form of children's social care, sports and culture facilities, public health services, social housing and other services such as Sure Start. These services were needed most in the poorest areas. But it was also the poorest areas that relied most upon funding from central government grants, and therefore experienced the deepest cuts. Given the correlation between wealth and voting intention, this also meant the councils that experienced the deepest cuts were more than four times as likely to be under Labour control. During the 2010s around 800 libraries in Britain closed, along with hundreds of swimming pools and leisure centres, more than 700 local football pitches and 1,342 children's centres. In pursuit of the Conservative project, the children of austerity were excluded from the municipal Britain their parents had known. In 2018 the UN special rapporteur's analysis of poverty in the UK reported that 'drastic changes in government economic policy beginning in 2010' had started to unravel decades of progress on child poverty, which it predicted would continue to rise, creating 'a social calamity and an economic disaster'. That disaster is now becoming evident. Between 2016 and 2023, the number of people aged 18-24 claiming the personal independence payment disability benefit for psychiatric conditions almost trebled. This trend is concentrated in more deprived areas – in which, as the Child Welfare Inequalities Project reported in 2020, children are ten times as likely to be separated from their families as those in the wealthiest areas. Subscribe to The New Statesman today from only £8.99 per month Subscribe The underlying logic of austerity is flawed. While spending cuts can appear fiscally prudent in the short term, they take from those who can least afford it. The problems of those most in need do not go away when the government decides not to pay for them; they only become more complex and, in the long run, more expensive. Investments in areas such as education and health, on the other hand, can generate exceptional returns. Public health interventions such as tobacco control in children can save the state £15 for every £1 invested. The long and variable results of public spending are carefully modelled when the government wishes to justify an infrastructure investment such as a new airport runway. When it comes to cutting disability benefits or maintaining the two-child limit on Universal Credit, however, there is an admission that some people will lose out, but no real picture of the greater costs this implies in the long term. Keir Starmer's government has inherited the unenviable result of more than a decade of political opportunism. It must now decide if the children of Conservative austerity are also to become Labour's legacy. [See also: What's the point of a Labour government that allows child poverty?] Related
