Inside the ‘stolen iPhone' building
But like many of the electronics markets in the labyrinthine malls of Huaqiangbei, the fourth floor of the building has its own specialism: selling second-hand iPhones from Europe and the US.
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The Advertiser
25-06-2025
- The Advertiser
We desperately want productivity growth. But granting that wish has a huge cost
How do you define a failed generation? Surely, it's this: it's when you knowingly pass on to your children a worse standard of living than what you enjoyed yourself. If that definition sounds fair to you, I've got bad news for you. The long-term growth in living standards in Australia comes from productivity growth, and productivity growth has been dying a slow death under our watch for decades now. This decline in productivity growth, combined with climate change, a policy-induced housing crisis, and rampant destruction of the environment and biodiversity means that Baby Boomers and Millennials are poised to be failed generations: we are giving our children a worse standard of living. And we know it. Who or what will turn this around? For most, including yours truly, we've got a lot of eggs in a single basket: the hope that rapidly evolving new technologies and the increased adoption of new and existing technologies will save the day. Productivity growth is about doing more with less, and this is exactly what new and existing technologies offer. But where does this productivity growth actually come from? This is where its dark side becomes clearer. A lot of productivity growth comes from what economists call "allocative efficiency", which basically means having economic resources (think: workers and capital) reallocated towards their most effective use. Take trade as an example. Australia would be dirt poor if we manufactured everything we consume here in Australia. Openness to trade makes us rich because it lets us focus our scarce workers and capital on the things that earn us lots of money (mining, agriculture, services) so that we can import the stuff we can't make as cheaply as other countries (iPhones, cars, TVs). In short, trade reallocates labour and capital away from unproductive industries towards productive ones. Domestic competition does the same thing, and so does technology. In my job, generative AI means I spend less time on mindless tasks like organising data, searching for studies, and preparing repetitive documents, and more time on creative tasks like helping clients solve problems, teaching students and writing op eds like this. It has reallocated my time from unproductive tasks to productive ones. What's the dark side? The dark side is that this reallocation is not painless for everyone. Technology changes the nature of my job in a positive way. But, for a small minority, it changes their job in a negative way, or wipes out their job and business altogether. The overall result is a big collective benefit - since the vast majority of Australians are big winners - while a minority suffers a big cost. The solution to this inequity is not rocket science: the majority who benefit should compensate the minority that suffers. This isn't about stopping the technology change or putting up trade barriers or putting a stop to pro-competition measures. That would be crazy given the huge benefits on the table. Rather, it is about using some of the benefits which accrue from these changes to help affected people retrain, reskill, find new jobs and be compensated for losses. Sadly, this is not our current strategy. Our current strategy is to hope that technology, trade and other transitions deliver big productivity improvements through allocative efficiency gains while pretending that there is no dark side to this story. READ MORE: The payment received by unemployed people (JobSeeker) is woefully inadequate. Retraining and reskilling programs are inadequate and inconsistent: fragmented across federal, state and territory governments. Our insolvency laws make it hard to wind-up a business and redeploy capital elsewhere. Countless regulations and taxes, often inconsistent between states and territories, turn the dream of starting a new business into a nightmare. All these shortcomings make the dark side of productivity growth worse. If you want an example of the consequences of this, look at the United States. The social safety net is thin in the United States. It provides very little support to the unemployed through payments, retraining or reskilling. The consequence is that the costs and benefits of disruptions like trade and technology have more unequal outcomes. Getting more of the good stuff with less of the bad stuff means fixing these problems before they start. This isn't just good economics, it's good politics. Although the beneficiaries of technology are a silent majority, the losers from technology are a very loud minority who could very well stop the drive for productivity dead in its tracks. This is why the Prime Minister's Productivity Summit in August is well timed. The summit is the perfect opportunity to get everyone on the same page - governments, businesses, unions, civil society - on the big benefits that technology, trade and other transitions will have for productivity and how we can collectively manage their costs and build confidence. We want productivity growth, we hope technology delivers it. But we can't pretend it's costless. We need to acknowledge the dark side of productivity growth and have a plan to manage it. If we want to get this right, we need to get our head in the game, and out of the sand. How do you define a failed generation? Surely, it's this: it's when you knowingly pass on to your children a worse standard of living than what you enjoyed yourself. If that definition sounds fair to you, I've got bad news for you. The long-term growth in living standards in Australia comes from productivity growth, and productivity growth has been dying a slow death under our watch for decades now. This decline in productivity growth, combined with climate change, a policy-induced housing crisis, and rampant destruction of the environment and biodiversity means that Baby Boomers and Millennials are poised to be failed generations: we are giving our children a worse standard of living. And we know it. Who or what will turn this around? For most, including yours truly, we've got a lot of eggs in a single basket: the hope that rapidly evolving new technologies and the increased adoption of new and existing technologies will save the day. Productivity growth is about doing more with less, and this is exactly what new and existing technologies offer. But where does this productivity growth actually come from? This is where its dark side becomes clearer. A lot of productivity growth comes from what economists call "allocative efficiency", which basically means having economic resources (think: workers and capital) reallocated towards their most effective use. Take trade as an example. Australia would be dirt poor if we manufactured everything we consume here in Australia. Openness to trade makes us rich because it lets us focus our scarce workers and capital on the things that earn us lots of money (mining, agriculture, services) so that we can import the stuff we can't make as cheaply as other countries (iPhones, cars, TVs). In short, trade reallocates labour and capital away from unproductive industries towards productive ones. Domestic competition does the same thing, and so does technology. In my job, generative AI means I spend less time on mindless tasks like organising data, searching for studies, and preparing repetitive documents, and more time on creative tasks like helping clients solve problems, teaching students and writing op eds like this. It has reallocated my time from unproductive tasks to productive ones. What's the dark side? The dark side is that this reallocation is not painless for everyone. Technology changes the nature of my job in a positive way. But, for a small minority, it changes their job in a negative way, or wipes out their job and business altogether. The overall result is a big collective benefit - since the vast majority of Australians are big winners - while a minority suffers a big cost. The solution to this inequity is not rocket science: the majority who benefit should compensate the minority that suffers. This isn't about stopping the technology change or putting up trade barriers or putting a stop to pro-competition measures. That would be crazy given the huge benefits on the table. Rather, it is about using some of the benefits which accrue from these changes to help affected people retrain, reskill, find new jobs and be compensated for losses. Sadly, this is not our current strategy. Our current strategy is to hope that technology, trade and other transitions deliver big productivity improvements through allocative efficiency gains while pretending that there is no dark side to this story. READ MORE: The payment received by unemployed people (JobSeeker) is woefully inadequate. Retraining and reskilling programs are inadequate and inconsistent: fragmented across federal, state and territory governments. Our insolvency laws make it hard to wind-up a business and redeploy capital elsewhere. Countless regulations and taxes, often inconsistent between states and territories, turn the dream of starting a new business into a nightmare. All these shortcomings make the dark side of productivity growth worse. If you want an example of the consequences of this, look at the United States. The social safety net is thin in the United States. It provides very little support to the unemployed through payments, retraining or reskilling. The consequence is that the costs and benefits of disruptions like trade and technology have more unequal outcomes. Getting more of the good stuff with less of the bad stuff means fixing these problems before they start. This isn't just good economics, it's good politics. Although the beneficiaries of technology are a silent majority, the losers from technology are a very loud minority who could very well stop the drive for productivity dead in its tracks. This is why the Prime Minister's Productivity Summit in August is well timed. The summit is the perfect opportunity to get everyone on the same page - governments, businesses, unions, civil society - on the big benefits that technology, trade and other transitions will have for productivity and how we can collectively manage their costs and build confidence. We want productivity growth, we hope technology delivers it. But we can't pretend it's costless. We need to acknowledge the dark side of productivity growth and have a plan to manage it. If we want to get this right, we need to get our head in the game, and out of the sand. How do you define a failed generation? Surely, it's this: it's when you knowingly pass on to your children a worse standard of living than what you enjoyed yourself. If that definition sounds fair to you, I've got bad news for you. The long-term growth in living standards in Australia comes from productivity growth, and productivity growth has been dying a slow death under our watch for decades now. This decline in productivity growth, combined with climate change, a policy-induced housing crisis, and rampant destruction of the environment and biodiversity means that Baby Boomers and Millennials are poised to be failed generations: we are giving our children a worse standard of living. And we know it. Who or what will turn this around? For most, including yours truly, we've got a lot of eggs in a single basket: the hope that rapidly evolving new technologies and the increased adoption of new and existing technologies will save the day. Productivity growth is about doing more with less, and this is exactly what new and existing technologies offer. But where does this productivity growth actually come from? This is where its dark side becomes clearer. A lot of productivity growth comes from what economists call "allocative efficiency", which basically means having economic resources (think: workers and capital) reallocated towards their most effective use. Take trade as an example. Australia would be dirt poor if we manufactured everything we consume here in Australia. Openness to trade makes us rich because it lets us focus our scarce workers and capital on the things that earn us lots of money (mining, agriculture, services) so that we can import the stuff we can't make as cheaply as other countries (iPhones, cars, TVs). In short, trade reallocates labour and capital away from unproductive industries towards productive ones. Domestic competition does the same thing, and so does technology. In my job, generative AI means I spend less time on mindless tasks like organising data, searching for studies, and preparing repetitive documents, and more time on creative tasks like helping clients solve problems, teaching students and writing op eds like this. It has reallocated my time from unproductive tasks to productive ones. What's the dark side? The dark side is that this reallocation is not painless for everyone. Technology changes the nature of my job in a positive way. But, for a small minority, it changes their job in a negative way, or wipes out their job and business altogether. The overall result is a big collective benefit - since the vast majority of Australians are big winners - while a minority suffers a big cost. The solution to this inequity is not rocket science: the majority who benefit should compensate the minority that suffers. This isn't about stopping the technology change or putting up trade barriers or putting a stop to pro-competition measures. That would be crazy given the huge benefits on the table. Rather, it is about using some of the benefits which accrue from these changes to help affected people retrain, reskill, find new jobs and be compensated for losses. Sadly, this is not our current strategy. Our current strategy is to hope that technology, trade and other transitions deliver big productivity improvements through allocative efficiency gains while pretending that there is no dark side to this story. READ MORE: The payment received by unemployed people (JobSeeker) is woefully inadequate. Retraining and reskilling programs are inadequate and inconsistent: fragmented across federal, state and territory governments. Our insolvency laws make it hard to wind-up a business and redeploy capital elsewhere. Countless regulations and taxes, often inconsistent between states and territories, turn the dream of starting a new business into a nightmare. All these shortcomings make the dark side of productivity growth worse. If you want an example of the consequences of this, look at the United States. The social safety net is thin in the United States. It provides very little support to the unemployed through payments, retraining or reskilling. The consequence is that the costs and benefits of disruptions like trade and technology have more unequal outcomes. Getting more of the good stuff with less of the bad stuff means fixing these problems before they start. This isn't just good economics, it's good politics. Although the beneficiaries of technology are a silent majority, the losers from technology are a very loud minority who could very well stop the drive for productivity dead in its tracks. This is why the Prime Minister's Productivity Summit in August is well timed. The summit is the perfect opportunity to get everyone on the same page - governments, businesses, unions, civil society - on the big benefits that technology, trade and other transitions will have for productivity and how we can collectively manage their costs and build confidence. We want productivity growth, we hope technology delivers it. But we can't pretend it's costless. We need to acknowledge the dark side of productivity growth and have a plan to manage it. If we want to get this right, we need to get our head in the game, and out of the sand. How do you define a failed generation? Surely, it's this: it's when you knowingly pass on to your children a worse standard of living than what you enjoyed yourself. If that definition sounds fair to you, I've got bad news for you. The long-term growth in living standards in Australia comes from productivity growth, and productivity growth has been dying a slow death under our watch for decades now. This decline in productivity growth, combined with climate change, a policy-induced housing crisis, and rampant destruction of the environment and biodiversity means that Baby Boomers and Millennials are poised to be failed generations: we are giving our children a worse standard of living. And we know it. Who or what will turn this around? For most, including yours truly, we've got a lot of eggs in a single basket: the hope that rapidly evolving new technologies and the increased adoption of new and existing technologies will save the day. Productivity growth is about doing more with less, and this is exactly what new and existing technologies offer. But where does this productivity growth actually come from? This is where its dark side becomes clearer. A lot of productivity growth comes from what economists call "allocative efficiency", which basically means having economic resources (think: workers and capital) reallocated towards their most effective use. Take trade as an example. Australia would be dirt poor if we manufactured everything we consume here in Australia. Openness to trade makes us rich because it lets us focus our scarce workers and capital on the things that earn us lots of money (mining, agriculture, services) so that we can import the stuff we can't make as cheaply as other countries (iPhones, cars, TVs). In short, trade reallocates labour and capital away from unproductive industries towards productive ones. Domestic competition does the same thing, and so does technology. In my job, generative AI means I spend less time on mindless tasks like organising data, searching for studies, and preparing repetitive documents, and more time on creative tasks like helping clients solve problems, teaching students and writing op eds like this. It has reallocated my time from unproductive tasks to productive ones. What's the dark side? The dark side is that this reallocation is not painless for everyone. Technology changes the nature of my job in a positive way. But, for a small minority, it changes their job in a negative way, or wipes out their job and business altogether. The overall result is a big collective benefit - since the vast majority of Australians are big winners - while a minority suffers a big cost. The solution to this inequity is not rocket science: the majority who benefit should compensate the minority that suffers. This isn't about stopping the technology change or putting up trade barriers or putting a stop to pro-competition measures. That would be crazy given the huge benefits on the table. Rather, it is about using some of the benefits which accrue from these changes to help affected people retrain, reskill, find new jobs and be compensated for losses. Sadly, this is not our current strategy. Our current strategy is to hope that technology, trade and other transitions deliver big productivity improvements through allocative efficiency gains while pretending that there is no dark side to this story. READ MORE: The payment received by unemployed people (JobSeeker) is woefully inadequate. Retraining and reskilling programs are inadequate and inconsistent: fragmented across federal, state and territory governments. Our insolvency laws make it hard to wind-up a business and redeploy capital elsewhere. Countless regulations and taxes, often inconsistent between states and territories, turn the dream of starting a new business into a nightmare. All these shortcomings make the dark side of productivity growth worse. If you want an example of the consequences of this, look at the United States. The social safety net is thin in the United States. It provides very little support to the unemployed through payments, retraining or reskilling. The consequence is that the costs and benefits of disruptions like trade and technology have more unequal outcomes. Getting more of the good stuff with less of the bad stuff means fixing these problems before they start. This isn't just good economics, it's good politics. Although the beneficiaries of technology are a silent majority, the losers from technology are a very loud minority who could very well stop the drive for productivity dead in its tracks. This is why the Prime Minister's Productivity Summit in August is well timed. The summit is the perfect opportunity to get everyone on the same page - governments, businesses, unions, civil society - on the big benefits that technology, trade and other transitions will have for productivity and how we can collectively manage their costs and build confidence. We want productivity growth, we hope technology delivers it. But we can't pretend it's costless. We need to acknowledge the dark side of productivity growth and have a plan to manage it. If we want to get this right, we need to get our head in the game, and out of the sand.
Canberra Times
25-06-2025
- Canberra Times
We desperately want productivity growth. But granting that wish has a huge cost
Take trade as an example. Australia would be dirt poor if we manufactured everything we consume here in Australia. Openness to trade makes us rich because it lets us focus our scarce workers and capital on the things that earn us lots of money (mining, agriculture, services) so that we can import the stuff we can't make as cheaply as other countries (iPhones, cars, TVs).
The Age
13-06-2025
- The Age
‘China has Apple by the balls': How the rising superpower captured the tech giant
This story is part of the June 14 edition of Good Weekend. See all 14 stories. Investigative journalist Patrick McGee describes it as the biggest untold story of technology in the 21st century: how, over decades of jaw-dropping investment in China, Apple became one of the world's biggest companies – but in the process helped China become a technology and manufacturing superpower. That power is now being used to challenge the West. You've said that Apple wouldn't be Apple today without China. And China wouldn't be China without Apple. How so? By 2015, Apple was investing $55 billion a year into China, and a lot of that was in training people to assemble iPhones, iMacs and other Apple products – by [Apple CEO] Tim Cook's public estimate, 3 million people were trained. Apple sent planeloads of its best engineers – from MIT, Caltech and Stanford – to train the Chinese on how to produce their products. Overall, it has trained 28 million people in its supply chain since 2008. That's bigger than the labour force of California or the population of Australia. It has had more impact on China than the Marshall Plan on Europe after World War II. In 1999, none of Apple's products was made in mainland China; by 2009, virtually all were, and company profits shot into the stratosphere as a result. Apple was on the brink of bankruptcy in 1996 but within a decade became the richest company on Earth, thanks to sales of its iPhone and iPad. What did China offer that no other country could? China has policies and a population base tailor-made for the electronics industry. They created bonded zones [places offering generous tax breaks and streamlined customs procedures to attract foreign investment] in cities like Shenzhen. Back in the 1980s, Shenzhen was a series of fishing villages. Today, it's a city of 18 million people. We in the West don't understand how easy it is to build a factory in an area like Shenzhen. The government provides you with the labour from the western part of the country, where literally millions are leaving backbreaking agricultural jobs to work 12-hour shifts in factories. Businesses get free land and cutting-edge machinery. Local cadres in the political system are incentivised to build factories and get growth from their region. The bureaucracy is shaped to be more like a venture capitalist. China has invented a new form of capitalism, where instead of having dynamism in the private sector, it's on the public side. 'Apple provided China with the Ivy League equivalent of a hardware engineering education.' You write that Apple essentially cracked the code on how to manufacture the world's best products without doing it itself. In the early 2000s, Apple was figuring out how to manufacture their products in China without owning any of the factories. It was about orchestrating the production of the products rather than building them themselves. But the orchestration they've done is just phenomenally obsessive. This isn't normal outsourcing. They're not just saying, 'Here's a blueprint of what we need; let us know when it's ready.' They're inventing the processes, the components. So by bringing all its technological expertise and sophisticated production methods to China, Apple taught the Chinese how to develop high-level manufacturing … Indeed. Jony Ive [instrumental in the design of the iPhone, iPad, iMac and Apple Watch] came up with some spectacular-looking products. But the only way those designs came into large-scale reality was that China was investing massively in supply chains, in infrastructure and in ports. And as one engineer told me, Apple provided China with the Ivy League equivalent of a hardware engineering education. Because Apple is epic, the technology transfer is also epic. Loading US Vice President J.D. Vance has very patronisingly reduced the Chinese competitive advantage to its having 'millions of peasants' available to work in factories. But its economy has moved far beyond just low-cost labour producing cheaper products, hasn't it? Yes and no. China has robotics and automation on a scale we [the United States] completely lack. But hundreds of millions of people still live in impoverishment, and go to cities like Shenzhen and Guangzhou to work in factories. China has the capacity to move an entire Western city's worth of people, say, up to 500,000, who are willing to relocate for a few months at a time to assemble iPhones and then go someplace else. We have nothing like that. Even if it could, we in the West wouldn't want that to change, because that's not what anybody really wants to do with their life.
