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Eric Ehrmann

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Cultural Revolution Redux... Little Red Book and Little Grey Apple Hook Up

Posted: 10/20/11 03:53 PM ET

Apple's first quarterly downturn in five years is being spun by analysts as a one time event linked to planned obsolescence of an iPhone and the death of co-founder Steve Jobs. But while Jobs envisioned a mobile lifestyle people are willing to pay more for, his outsourcing-dependent business model is recycling 1960s-style class warfare politics into a bread and circuses world of oligopoly competition where greedy corporations reduce the human condition to human capital.

In an effort to accommodate Western businesses, China tolerates Taiwanese companies like Foxconn who assemble Apple products and enforce working conditions that drive assemblers to jump out of buildings in iPod City. Apple CEO Tim Cook even flew over to China and helped install anti-suicide nets on some of the facilities. But that didn't stop Apple's outsourcing policies from being buzzed up by protesters on Wall Street and in major world capitals.

The cult of personality that has been manufactured around Steve Jobs and Apple glosses over the fact that unlike Bill Gates, who had a passion for using computer science to solve global problems, Jobs was the embodiment of what new journalism pioneer Tom Wolfe called "the me decade." Jobs stayed close to the entertainment industry, working with Atari founder Nolan Bushnell, George Lucas, Pixar and became the largest shareholder and power behind Disney. After giving Jobs a big opportunity, University of Utah grad Bushnell also gave Foxconn's founder, Taiwanese entrepreneur Terry Gou, his start, outsourcing the manufacture of electrical components for Atari to him in 1974.

Like Jann Wenner, Jobs was influenced by Max Palevsky, a founder of Intel and chairman of Xerox who died last year. Powered by an investment from Palevsky, Rolling Stone provided the launchpad for the MTV generation, which was the market base for all things Apple until Sculley forced Jobs out. And the concepts behind Apple's original graphical interface are quite similar to systems that were developed by Palevsky's minions at Xerox.

Leaving Apple in a power struggle with Sculley, Jobs found a new partner for his NeXT venture, Ross Perot. Both men shared a fondness for the profitability of outsourcing computer industry jobs to China and India. Thanks to outsourcing dollars earned by manufacturing smart phones and computers and consumer electronics, China is now a digital and financial superpower with a defense infrastructure to back up its economic strategy in the currency war.

Through its own engineering, international cooperation and ruthless industrial espionage, China now possesses stealth avionics and black program technologies that have strained relations between the Pentagon and Beijing's Defense Ministry on more than one occasion. Major US software companies have no qualms working around Washington's weak export control regime to provide China with the tools to maintain the national security state that western nations are moving toward.

China has also banked on developing and manufacturing the world's fastest fully operational supercomputer and runs it on Linux. Huge dollar holdings now enable Beijing bankers to finance Italy's latest financial bailout and could help even more in France and Germany if certain conditions are met.

Apple plays a pivotal role in China's great leap forward from the old cultural revolution to being a superpower in the world economic order. It would have been a much longer march if John Sculley had rejected Steve Jobs offer to come aboard and "change the world."

Sculley joined Apple from PepsiCo at the height of the fabled "Reagan Revolution" when China was getting mixed messages from Washington as part of the Great Communicator's "Evil Empire" strategy.

Beijing could have deepened high tech and military cooperation with the Kremlin since many high level officials were educated in the Soviet Union. Boris Babaian was developing supercomputers for Soviet defense applications that were more advanced than those in the West at the time and would later help land him a senior position at Intel.

But Sculley chose Apple, bringing along his close ties to ex-boss PepsiCo chairman Don Kendall and other powerful China policy influencers George H.W. Bush, Richard Nixon and Henry Kissinger. That sent the right message to Beijing where premier Zhou Ziyang was creating an opening for free market experimentation to generate growth and jobs.

When Sculley was named president of Apple in 1983, China's Vice-Premier Li Peng was head of the State Council Group to develop the computer and electronics industry and was eager to meet with him. In his Machiavellian approach to corporate governance, Steve Jobs was even enthusiastic enough to organize the event.

A year after Sculley took over as Apple CEO Zhou Ziyang visited northern California and China Daily ran a series of features highlighting Silicon Valley.

China then made development of a national computer infrastructure the centerpiece of its Seventh Five Year Plan (1986-91). A year into the plan, Li Peng became premier and Terry Gou's Foxconn, which assembles Apple-designed products, opened its first manufacturing plant in Mainland China.

Foxconn is now the largest exporter of goods from Mainland China, assembling product outsourced by Apple, Acer, Amazon, Dell, HP, Intel, Microsoft and Motorola, among others. About 600,000 workers earning less than $1.00 an hour work 60 hours a week on these projects.

Now, four decades after San Francisco's Summer of Love and Mao's Cultural Revolution, the economic crisis has helped the two worlds come together with the socialist regime in China poised to refinance the excesses of the United States and its capitalist allies. But to make this happen China makes no secret of the fact that it wants a bigger share of the global defense market, still dominated by the United States.

China's military chief-of-staff, General Chen Bingde, visited Israel in August, meeting with his counterpart Lt. General Benny Gantz and defense cooperation was discussed. Chinese financial participation and production arrangements with France's Dassault Aviation, the EADS European defense consortium, major vendors to the Pentagon and Brazil's Embraer would incentivize China to recycle more dollars to help the West out of the crisis.

To make this happen, China seeks to create high value jobs that pay the equivalent of $10,000 a year, the gateway salary for entry into the middle class. Not the $3000 annual wages assemblers get fabricating Apple products in Ipod City.

Steve Jobs left Apple with $76 billion in cash in the bank to develop new technology that makes people feel good about themselves in the midst of a depression. China has over a trillion dollars to recycle and help rescue the world economic order. Mao said "let a hundred schools of thought contend." Apple ally Terry Gou says a million robots will replace a million workers in three years. Which cultural revolution do you want?