Trade Sequence Part 5 – The Rich Man’s Burden
Hey everyone, I thought the brief lull between the April Fools’ listicles and the Education Symposium was a good time for the next part of my trade sequence.
Here’s the current contents page.
- Introductions and Definitions
- They took our Jobs!
- The Tribulations of the Working Class
- The Race to the Bottom
- The Rich Man’s Burden (you are here)
- Getting Strategic
- You will be Assimilated
If you have any suggestions, let me know.
As I mentioned in my last post, today I’m going to be talking to you about “sweatshops”, which I’m going to use as a catch-all term for poor labour conditions, low pay long hours and a paucity of safety protocols at work.
Exploitation is a tricky word, and one with no universally-accepted definition. Because of this innate ambiguity, I can’t say as a definite fact that there is no exploitation in sweatshops, that up to your own conscience. But my firm conviction is that sweatshops per se are not exploitation for the following reasons:
- As much as we may recoil from sweatshop labour, we do so from the privileged position of having better alternatives. Sweatshop jobs are highly sought after in poor countries, because the alternatives – such as prostitution or picking through landfills for salvage (yes, even for children) are far less pleasant and pay far worse. It’s true that the popularity of sweatshop jobs are driven by desperation. But you know what doesn’t help desperate people? Making them more desperate by taking their best option away.
- The main reason we are in a privileged position economically is that we went through a period of growth that included a sweatshop stage. There is a progression countries go through to get richer – agriculture to labour-intensive industry to capital-intensive industry to post-industrial. Labour-intensive industry is no fun – productivity is low and therefore so are wages, but it’s a lot more fun than being stuck doing pre-industrial agriculture forever, where the work is just as brutal and one bad harvest can mean the death of your family.
- The low productivity of labour-intensive industry explains the low pay its workers receive. This means that employers aren’t going to pay their workers more because the value of the workers’ work isn’t high enough to justify higher wages. This applies to a lot of safety equipment, and in fact anything that increases the cost of employing a worker. Employers will not put more into a worker than they get out (that’s a loose way of putting it, but the more robust version is that a worker’s wage will settle at their net marginal product of labour, or the output they can produce (less costs of employing them) with one more unit of work, e.g. an hour). That’s not a big deal in wealthy countries since the cost of routine safety equipment, is small relative to worker productivity. But in a poor country, it’s entirely possible to force a worker’s net marginal productivity below 0, and if that happens no one will hire them.
I know some people still oppose sweatshops on more of a deontological basis, arguing that no one should be treated that way, even if its an improvement over what came before and even if it leads to greater prosperity in the future. All I can say to that is:
- Just Price Theory makes no economic sense because value is inherently subjective, nothing is “really worth” anything, and that includes people’s time. If a person considers themselves adequately compensated, the burden of proof is on you to demonstrate otherwise.
- I firmly believe that forcing an end to sweatshops would result in millions of poor people, now and in the future, being trapped in abject poverty indefinitely. Consider what abolishing the sweatshops would look like from the perspective of the people who are actually being affected. A group of entitled, rich westerners rush in and destroy their livelihood and sabotage their country’s economy and call it justice. It’s the global 1% coming in to kick them in the teeth in order to feel better about themselves. From that perspective its not just wrong, it’s evil.
Now that’s much harsher language than I normally use, and I only do it now because I’m trying to shake people out of their preconceptions. I realise the opponents of sweatshops have only the best of intentions, but good intentions don’t feed starving families, and the multinationals do. If you want to improve the lives of people in poor countries you have to come up with something that works better than the status quo (or at least get out of the way), otherwise you’re part of the problem.
Now, if social movements within these countries starting pushing for better pay and conditions, then it might be time for some worker solidarity, if that’s your thing. But until then you’re just making the same mistake Bush the Younger did – jumping into a foreign country with a poor understanding of the facts on the ground. Don’t expect it to end any better for you than it did for him.
The other side of the question is the environment. Many object to exploiting the low environmental of poor countries for the sake of cheaper goods. My answer to this is broadly similar to the one I gave above. Ultimately they are the stewards of their environment, not you and when you are on the subsistence line, food for your family is a lot more valuable than clean air for your grandchildren who may not even exist without that food. It is likely that the high-polluting stage is a necessary stepping stone to becoming rich enough to make the environment a priority. The exception is when their pollution causes you problems directly (see change, climate). In that case you do have some claim to redress, though at that point you’re acting in your best interests, not theirs.
I hope this has laid out why I feel attempting to get rid of sweatshops is deeply misguided. Even if you don’t agree, I at least hope you understand my position, and realise it is not some form of moral derangement that leads me to support one of the bettes noire of the 21st Century.
In my next post, I’ll be moving on to (hopefully) less controversial topics, and explain why Japan does not prove free trade is an economic dead-end.