The Case for Sweatshops

A recent discussion I had motivated me to try to coherently summarize my thoughts on ‘sweatshops’ (I don’t like the rhetoric associated with that term, but for lack of a better word I’ll use it), and why I don’t think they’re necessarily evil.

I’m sure there are situations where the working conditions are pretty terrible in many factories in the third world. But if people are not forced to work there (which would make this another issue entirely - slavery), then I see no reason to object to their wages or working conditions on principle, just because they are below our standards. These people are choosing to work there because it is a better option than their next-best alternative. And it’s not just libertarian economists who see this. Nicholas Kristof had a long article in the NY Times ($ req'd) (which is not exactly a bastion of conservative perspectives) on sweatshops in southeast Asia:

Indeed, talk to third world factory workers and the whole idea of "sweatshops" seems a misnomer. It is farmers and brick-makers who really sweat under the broiling sun, while sweatshop workers merely glow. … Nhep Chanda averages 75 cents a day for her efforts. For her, the idea of being exploited in a garment factory - working only six days a week, inside instead of in the broiling sun, for up to $2 a day - is a dream.

If this is what workers in the third world think, isn’t that what really matters? It’s not whether or not YOU would want to work there, it’s whether or not they want to. And in surveys on the subject of multinational corporations, people in the third world have a more favorable opinion than those in the west. And to throw a wrench into the view that these sweatshops really offer such appalling wages, look to evidence like that of the University of Michigan professor who studied wage rates in Nike factories in Vietnam and Indonesia and found that workers there earned on average five times each country’s respective minimum wage.

And if these sweatshops are indeed a positive economic choice for the workers, pressure to raise wages in these third-world operations is not in the best interests of those employees. What would happen if companies were forced to pay wages equal to those in the developed world? The answer is that they would shut down the factories and go back to making clothes in North America or Europe where workers are more productive and the increased labor costs are therefore more justified. And we’d all pay more for goods and services because the cost of labor that went into an item would increase. So third-world workers would be out of a job and back to doing whatever it was they were doing before (you know, what they left to take the job in a sweatshop, presumably because it was a better option), and we’d all be poorer because the cost of goods and services would increase – and this would hit the poor people in the developed world the hardest. So in the efforts to “do something” about the low wages and/or poor working conditions in sweatshops, activists in the west are doing a disservice to poor people around the globe.

So what can we do to help people who are obviously living lives we don’t feel are at a level of economic development we would wish upon anyone? Choosing not to buy products from companies that have “sweatshops” is not the answer: campaigns against companies end up forcing people to take options that are even worse than working in a sweatshop. For example, boycotts of these companies in Nepal have forced young workers into the sex trade. Of these types of negative unintended consequences, I’d say we should do our best to avoid them. The best thing to do for workers in the third world is to buy, buy, buy from those companies – that way, they can afford to raise wages for workers and open new factories. (More importantly, if we want to help people in the third world we should stop subsidies to industries, especially agriculture, in the developed world. But that’s another argument). Countries will develop as the people obtain wealth. Hong Kong was until relatively recently primarily based on manufacturing as its economic base – using what we would call sweatshop labor – and is now one of the richest, most vibrant economies in the world.

One caveat – the key to all of this is that the employees are willing to work. Coercion or slavery isn’t free trade, and should be condemned on all ethical legal grounds. But as Radly Balko puts it:

But if people living in poverty are willing to work the wages multinationals want to pay them, we shouldn't stand in the way. Corporations get cheaper labor. The world's poorest people can begin to inch their way out of poverty. Western consumers get cheaper goods. And we begin the process of moving the world's poorest economies down the road to prosperity, which benefits all of us.

I’m open to criticism about this, but I feel that the evidence leads to the conclusion that 'sweatshops' do more good than harm to people in the third world, and for that reason (as well as the cheap goods they provide) they should be embraced, not demonized, by the wealthiest people in the world.

Will the supply of economic security ever meet the demand?

Paul Krugman had an op-ed in the NY Times recently that first came out in support of legislation that is a clear attack on big business:

Then, under the watchful gaze of Wal-Mart's chief operating officer, Maryland's governor vetoed a bill that would have obliged large businesses to spend more on employee health care.

The news here isn't that some politicians wrap their deference to corporate interests in the flag. The news, instead, is that Maryland's State Legislature passed a pro-worker bill in the first place. In fact, the bill passed by a veto-proof majority in the Maryland Senate, and fell just short of that margin in the House.

After November's election, the victors claimed a mandate to unravel the welfare state. But the national election was about who would best defend us from gay married terrorists. At the state level, where elections were fought on bread-and-butter issues, voters sent a message that they wanted a stronger, not weaker, social safety net.

Notice that this is targeted at "big business". Never mind people who work for small businesses. What is also funny is that this is a "pro-worker" bill - but one that will raise the costs of doing business (hiring workers) for large corporations, which could result in cutting back on the workforce. Which doesn't strike me as being good for workers (unless you're one of the lucky one that keeps their job).

The main focus of the article is that people are demanding more and more economic security in the form of the social safety net. Which probably is true, because as the overall conditions improve across society, people will want to retain those gains. Krugman, however, feels that the government can and should play an increasing role in this and it will actually make a difference. As usual, Will Wilkinson can spot the problem with his claims. Specifically, he asks a couple of questions of Krugman: first, would a rational person who knew all the economic data rather live in 1980 or 2005? (because Krugman claims that worker security has gone so far downhill in the past 25 years). And he also makes a great final point: if governments do such a great job at protecting economic security, why do people living under socialism have so little economic security?

Hybrids and the Rebound Effect

Futurepundit discusses the future of the market for hybrid cars and also considers how the rebound effect will decrease the impact of improved efficiency. Glenn Reynolds has also weighed in on the issue:

I'm deeply skeptical of the claim that most increases in fuel economy are simply "consumed" as people drive more miles. Most people I know drive as much as they want to already, and I don't think a decline in fuel prices would make much of a difference. I'm sure it would make some difference overall, but I doubt it's as substantial as claimed.

I agree that not ALL improvements are consumed as the cost of using fuel decreases with increased efficiency, but I think Glenn is missing the fact that "most people he knows" may not be the marginal case. There are a lot of people that may actually be limited in their driving by the costs (or the leisure time they have to drive, which should increase with wealth increases of improved efficiency in the economy) and will increase their mileage as the costs of driving go down.

The Liberals survive, barely

The governing Liberal party in Canada has narrowly escaped being forced to call an election because of a vote of non-confidence by the House of Commons. They were aided by the defection from the Conservatives by Belinda Stronach, who crossed the house to become a member of the Liberal caucus. I'm glad to see we avoided having to go to the polls for a second time in a year, but the government is still in a (rightfully) precarious position. For more analysis, check out Ed Morrisey's post at Captain's Quarters.

Fixing the Bucket

Why does our school system cost so much? And what are we getting for that money? And how else could the money be spent to provide education? California state senator Tom McClintock has some answers. Or at least, a pretty witty commentary:

...The school I have just described is the school we're paying for. Maybe it's time to ask why it's not the school we're getting.

Other, wiser, governors have made the prudent decision not to ask such embarrassing questions of the education-industrial complex because it makes them very angry. Apparently the unions believe that with enough of a beating, Gov. Schwarzenegger will see things the same way.

Perhaps. But there's an old saying that you can't fill a broken bucket by pouring more water into it. Maybe it's time to fix the bucket.

Read the whole thing.

The Nuclear Option

John Tierney has an op-ed in today's NY Times discussing the potential for nuclear power to be a fuel of the future, with support from environmentalists who were once completely opposed to nuclear energy. There are downsides to pretty much any energy source that's realistically available to us at this point, and I'm inclined to offer tentative support for nuclear, provided it can be done economically. For an energy source that was going to be "too cheap to meter", it hasn't really come through at all. The intial capital costs of building massive nuclear power plants are difficult to make back, and the risk of meltdown meant the government had to write laws to protect producers from excessive liability. If nucelar producers can convince the private sector to insure their plants and the spent fuel (which they should also be accountable for), this might be the lesser of many evils that would help combate the potential for global warming. Tierney also makes the case for a carbon tax, which I have long supported as a positive policy option that would stimulate innovation in less-carbon intensive fuels. The important thing is to not make the tax too large, and likely, to ramp it up slowly over time. I was surprised to see Tierney supporing a carbon tax, which must mean that this idea is gaining favor across political lines.

Arming Wardens

The Federal Court of Appeals has sided with park wardens in their battle to be allowed to carry guns while on duty. This battle had just begun back in 2001 when I worked for Parks Canada, and I have to say that I'm with the wardens on this one. They're asked to do a lot of law-enforcement type duties, and contracting those duties out to the RCMP just wasn't effective.

Class and Politics

Left2Right has an interesting post about class divisions and support for the major political parties. Incidentally, as someone relatively new to the US, I would definitely say that it is a more "classed" society than my previous experience in Canada. The jury is still out on whether I think the obvious drawbacks of this are in any way balanced by the (likely) additional opportunities that those in the priveledged classes have.

More on the topic of the article, I have long been bothered by the Democratic line that Republicans have somehow duped the lower classes into "voting against their economic interests". This means two things to me: First, that they are saying that voting on principles you may support isn't as important as being selfish (not that I have a problem with rationally voting selfishly, but it's the kind of thing Democrats are usually moralizing about). There may be any number of reasons besides economic interests why someone would want to vote for either party (their stance on "moral" issues, for one). The second, more symbolic aspect of this argument that bothers me is that it just shows how the major political parties are really only out to buy the votes of whoever they can in order to get power. The "we''ll give you more than the other guys, so vote for us" mentality. Which is exactly what we don't want more of in politics, and I wish Democrats would stop using this argument. Besides, I don't think it's doing them any favors/favours with those work class people that they are telling them how stupid they are to be voting Republican.

UPATE: I also wanted to add that despite the supposedly-growing gaps between the rich and poor in America, I would still say it's probably better than any other country as far as socio-economic mobility. It may be tougher to raise your economic standards than it was a generation ago, but I'd rather be trying to do it here than almost anywhere else. The power of having that dream is important, too: the mentality is still out there that you can pull yourself up by your bootstraps, and I the benefits of that optimism on people's lives shouldn't be overlooked.

UPDATE II: Also, check out these from Ron Bailey at Reason and Russ Roberts at Cafe Hayek for more on this issue. I'll be watching Russ's posts over the next week as he looks at the topic of inequality in more depth.

DEA vs. Doctors

As I commented on earlier, law enforcement-types can stepped up the war on doctors who prescribe drugs (aka medication), when those drugs are either abused or then sold for recreational purposes. Today, Radley Balko has it out with DEA administrator Karen Tandy over this issue. This whole trend is pretty sad, and we really need to look at what the costs and benefits of such a policy will be on patients. The toll from the war on drugs continues...by likely ruining more lives than drugs ever have.

Raise a glass!

Sure, it's a pretty small case, but it's still a victory for freedom. The Supreme Court declared in a 5-4 decision that states cannot bar out-of-state wine sales from wineries that sell directly to consumers. I'm sure I'd care a bit more if I even liked wine, but it's still good to see this happening. Congratulations to the Institute for Justice, who argued this case before the court.

Dominant Assurance Contracts

Pure public goods (like lighthouses) are difficult to provide through the market because of the free-rider problem - it is almost impossible to exclude someone from the benefits of the good. Many environmental services fall into this same category, and are therefore either undersupplied or require heavy government intervention. But is another way possible? Alex Tabarrok at Marginal Revolution has a post about assurance contracts which can overcome the coordination problems that come with getting individuals to fund public goods. In short, investors get their money back (or their money back plus a bonus) if the funds raised do not meet the required amount to complete the project. It's an interesting idea, and I will be thinking about how this concept can be applied to the provision of environmentally-beneficial projects and other public goods.

Co-habitation Violation

Appropriately, Nobody's Business reports on the legality (or lack thereof) of unmarried couples living together in North Carolina.

The power of postive...role-playing video games

An interesting debate over at Slate that looks at whether today's pop culture is actually making us smarter (based on the idea put forth by the book Everything Bad is Good for You, by Steven Johnson)

UPDATE: I touched on a somewhat similar topic here.

Gotta Blame Someone

How's this for ridiculous: a Florida doctor is on trial for first degree murder because he prescribed OxyCotin to a patient who then snorted the pills after drinking a dozen beers and a bunch of Xanax. First degree murder! Like he somehow premeditated this occurrence. Another casualty (if it doesn't get thrown out of court, which it should) of the war on drugs...which has morphed into a war on pain control, too.

Social Security and Political Advantage

Charles Krauthammer writes in the Washington Post about how Democrats are using the latest Bush proposal to work towards the 2006 elections. Not surprising, and the Republicans would be doing the same thing if they were in a similar situation.

Tax Reform Proposal

Tigerhawk has what is, to my mind, a fairly reasonable tax reform proposal. There's a lot to like in it, including abolishing the corporate income tax (which ends up getting passed on to consumers anyway, so don't give me any BS about this being some corporate welfare scheme), getting rid of the home mortgage deduction (why buying a house should be tax-deductible I have no idea), a gradual introduction of a fossil-fuel tax (which will especially encourage long term capital reinvestment in more environmentally benign sources of energy), and eliminating the benefits of marriage on tax filing (this has always really bothered me from an ethical perspective - why should single people face a tougher tax code?). Many of these ideas, coupled with some others that would reduce the size of the government, would go a long way to create a more dynamic economy that is less dependent on the government. One thing that really needs to start happening is the gradual phase-out of pretty much ALL industrial subsidies.

A Sign of Things to Come?

The pension fiasco at United Airlines might be a valuable lesson to those who think that the status quo is a reasonable option for social security.

Parliamentary Procedure?

The Members of Parliament in Ottawa yesterday voted (153-150) for the governing Liberal party to step down and call an election. Thus far, the Liberals have indicated that they will ignore this request.

I'm not keen on seeing an election right away, despite my disgust with the Liberals and the ad scandal. The lack of a palatable alternative is of course part of this resistance to any changes right now. I suppose I'm prepared to give the Conservatives a chance, but only if I'm assured they won't push a social policy agenda that will undo the wonderful progress we've made over the past decade. Thus far my fears have not been quelled by anything Stephen Harper has said.

The issue at hand, though, is whether the Liberals should be ignoring a majority vote in the House of Commons. You know that they would be screaming their little heads off if the Conservatives tried a stunt like this. And this vote probably just means they are delaying the inevitable, so why put themselves (and the country) through more rigmarole?

Donkeys and Elephants and the Economy

Kevin Drum has a rather curious article in the Washington Monthly. It compares the economic performance of groups with different amounts of wealth under Democratic and Republican presidents over the last 50 years. I'm suspicious about reading too much into it, but it could be good for a discussion. Find it here.

Play Taboo

Here's a fun and interesting little quiz on moral taboos. As I expected, I score in the lower left corner of the chart, because I have a moral problem with almost nothing that doesn't effect an uninvolved party, and just because something grosses me out doesn't mean I think it should be illegal.

Death by Pot

Over at Nobody's Business, the recent claim by UK scientists that smoking pot could contribute to 30,000 deaths per year in the UK is rightfully picked apart.

Technology and progress

I was having a discussion the other night about the role technology is playing in changing the way people comsume media/entertainment. Clearly, people are getting more active (and less passive) in terms of this - role-playing video games vs. watching television; guiding your way through the internet vs. watching TV news - and technological progress is fuelling our ability to do this. In addition, our ability to communicate very easily with people around the world makes the notion of "it's a small world after all" actually seem like it might really be true. And, if I may be glowingly optimistic for a minute, this might make world peace a little easier to come by in the future. To young people today, those living on the other side of the world are less of an "other" and more like a neighbour. And presumably, it's harder to want to bomb (or, for that matter, pollute or cause hardship to) your neighbour than it is to do it to some group of people you've never had any contact with. The not-in-my-backyard idea could become pretty powerful when people start thinking of the whole world as their backyard. And lowering barriers to communication and the flow of information, primarily through technology, is going to be the horse than pulls that cart.

The Source of Laws

Don Boudreaux has a thoughtful post over at Cafe Hayek on where laws should, ideally, originate. There is a lot of debate these days about how the judiciary is "making laws" and overstepping its boundaries - into powers reserved for elected officials (who always, much to my anger, get referred to as "lawmakers"). He makes the point that the most important laws are much more organically developed - a natural product of social evolution, rather than a creation of some politician or judge.

As they say, read the whole thing.

Libertarian Rant

Galen has this little rant on his blog today. The overall point is essentially that if you allow the government to grow in areas you think are useful (i.e. the welfare state), it gets much more difficult to stop it from intruding in areas you don't want it involved (i.e. regulating cable television). As he says:

Each bit of personal responsibility given up to the state is another link in the chain that will bind you.

Sadly, I think this is basically true. Which has caused me a great deal of thought over the past couple of years as I try to reconcile my environmentalist leanings with my ever-expanding libertarian philosophy. Which is why I think that if we really want to get serious about protecting things about the environment that we value, then we need to start taking personal responsibility for it, instead of relying on the government. Although I do believe that most environmental indicators are improving over time, as we become wealthier as a society.