Friday, November 04, 2011

Bitter Pills from Steve Jobs

Steve Jobs' comments to President Obama have been getting a lot of attention, and most of it seems to be critical. I have to say that if Steve Jobs was half as good at taking blunt criticism from others as he was at giving blunt criticism to others, it's no small wonder he was a good business executive. I also have to say that if I were meeting with somebody like Steve Jobs for ideas on how to improve the nation's economy, I would want to hear his actual opinions, not sugar-coated, eager to please, "everything's coming up roses" nonsense. If you want to know what it would take for Apple to open up a manufacturing plant in the United States, it's helpful to know that the CEO perceives a shortage of people with adequate education to oversee workers, and an educational system that is turning out people who are unprepared to be the workers at the plants he would open. His proposed solutions may have been simplistic, and more reflective of his reported propensity to divide people into two camps (the worthy, who will produce ideas and generate wealth, and everybody else) than of viable reforms, but at least you know where he's coming from.

One of the interesting things about major companies is that they have a lot of opportunity to open factories in relatively undesirable locations, with the locals rolling out the welcome mats and competing to offer the most generous incentives. But as the area in which you want to open a plant or put up a large building or warehouse store becomes more desirable, as a general rule, the offers diminish and the obstacles grow. I'm reminded of a Michigan community which had zoned a large tract of land as "light industrial" in the hope of attracting an industrial park, only to have it sit empty. A major retailer made noises about opening a location there - cheap land, close enough to major roads and population centers to be viable. A local store owner who, having spent decades pulling profits out of his store and putting nothing back in, fought tooth and nail to prevent the rezoning and, when it passed, litigated the issue. By the time the dust settled the land was rezoned, but the big box merchant had moved on. In China? The government was behind the redevelopment plan, so it would have happened. (And if the government wasn't behind it, odds are a 'consultant' could have found a way to bribe convince local officials to change their minds.)

Whatever Jobs thought about environmental regulations, I suspect that his objection was more to the inefficiency of local government and the ability of a local business or citizens group to tie things up for years. I suspect he was speaking from comparative experience opening Apple stores in the U.S. versus other nations. And I suspect he was thinking specifically of why the A6 chip was not going to be manufactured in the United States. For somebody in high tech, a six month delay in opening a chip factory may as well be a lifetime. For somebody in consumer electronics, a relatively small increase in production costs can mean the difference between profit and loss.

Jobs was reportedly 'infuriated' by President Obama's "focus on the reasons that things can't get done". That's what you might expect from a man who didn't have to accept excuses from those under him - "If you can't get it done, I'll put somebody else in charge." That's not even the way most industry works, though, and it's certainly not the way our form of government works.

Would I want to reinvent the country in a way that would have pleased Steve Jobs? From what I've been hearing, no, I would not. I believe China would be better off adopting some of our regulations than we would be in adopting their system of... what's the word for a totalitarian state led by a corrupt oligarchy that will treat you like a king if they expect to profit? There's no easy way to avoid problems and delays in rezoning, development and redevelopment that don't trample somebody's toes, and we know how Steve Jobs reacted when it was his own toes that were being trampled.

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