June 7, 2020

Sweatshops: Thinking Beyond Stage One

posted on: Thursday September 30, 2010

Arman Organisian ’13/Guest Commentary

It is heart-wrenching to imagine how there could still be sweatshops around the world. It is difficult to make sense of how some people work so much for so little. After pondering these elements of society, the instinctive response of any person is, and should be, to boycott these actions. Immediately, the tendency to jump out and show opposition springs forth from the solidarity we share with our fellow man. This is stage one. It is a stage in which people ignorantly, yet with good intention, remain.

In 1993, the United States boycotted child labor in Bangladesh. U.S. citizens were horrified that companies abroad could treat their workers so deplorably. They fervently boycotted, and it worked. Threatened with a U.S. ban on their imports, companies in Bangladesh were forced to eliminate their use of child labor.

Now, let us move beyond stage one. First, consider why these children were working in these factories. They were not legally bound to work there and the laws were not on the side of the laborers, yet they chose to work there anyway. They worked in these conditions because it was their best alternative. Their situation was one in which they could not receive an education nor could they find better-paying jobs. This is tragic. But was the boycott truly successful? Actually, with their best alternative removed, most children were forced into worse conditions such as prostitution and drug industries. Here, liberal policy-makers might stare dumbfounded and mutter “oops.” Yes, it is a very big “oops.” The well-intentioned plan to make these children better off actually plunged them into poverty. This is no joke.

Well-intentioned liberal policy-makers who did not think beyond stage one ruined the lives of these children. Nicholas Kristof and Sheryl WuDunn, winners of the Pulitzer Prize in 1991, recounted several incidents when Chinese sweatshop workers were shocked and confused upon hearing that Westerners were boycotting “for their rights.” They commented that they were deliberately taking these jobs over other jobs that paid less and were thankful that the factory allowed them to work such long hours.

Now, let us consider the more efficient, yet socially unacceptable, remedy. The statement about the actual choice reveals an important economic principle that liberals tend to ignore: competition. More of these “low paying factories” would mean more competition for the best workers. Thus, higher wages and better working conditions will develop. This market approach, though it will take longer, will actually work.

Of course, this doesn’t sit well with many people. “How can you sit by while this happens?” they ask. “How can you be so cold and logical about this?” I counter that a general approach to any social issue is one in which emotions are set aside to allow decisions to be rational and benefits are maximized. In effect, this allows one to think beyond stage one. It allows one to think about the long run instead of the short run. Economics is not conservative and it is not liberal. Economics is not moral or immoral. Economics just is.

Do not take away the best alternative for these people. It is not in their best interest and they don’t like it. It is undeniable that excessive intervention in the form of boycotting is worse for everyone. It means job loss for people overseas and more expensive goods for domestic consumers. Sure, it will take time, but the best strategy is to simply let these nations develop independently.

Roughly 1.2 million Chinese citizens increase their income to a higher-than-poverty level every month by beginning work in Wal-Mart factories for 2 dollars USD. In fact, 2 dollars USD is more than half of what the average worker earns in China! With this in mind, it is easy to argue that Wal-Mart has done more for the third world than the World Bank and IMF combined. For example, between 1975 and 1995, foreign aid (as a percentage of government expenditure) was above 50 percent. During this same period, per capita GDP decreased and, for many years, was even in the negatives!

Of course, to those who have no idea how currency exchange, inflation, deflation, or competition work, this will be seen as uncompassionate and cold. I counter that at least I will not be responsible for millions of people losing jobs they depend on. Less is more. Think beyond stage one.

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