In Defense of Sweatshops and Child Labor: A Response to the “Sweat Free” Activists

Wage > Slavery

Wage > Slavery

 

Critics of sweatshop labor often accuse sweatshops of providing inhumane conditions and inadequate pay to the workers. Anti-sweatshop activists take several different modes of action in order to try and end sweatshop labor practices. Boycotts, petitioning for legislation, and buying “fair-trade” products are the typical paths that these activists pursue.

To be concerned with what the real world effects of any policy will be rather than just the intention behind it is crucial to accurate appraisal of policy. Indeed, when Henry Hazlitt condensed all of economics into a single lesson, it was that “the art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”(1) It is this type of analysis that leads me to type the following. The anti-sweatshop movement has done more harm than good and has harmed the very people that it claims to try and help. Examining the theory and real world results enables an understanding as to why this is the case.

When a person voluntarily chooses to work in a sweatshop, it is because that person views that option as their best choice among alternatives. This is a truth known a priori, and it is based on the fact that they chose to do so. This a priori theory is confirmed with empirical data from real world analysis. Oxford University published economist Benjamin Powell’s book, Out of Poverty: Sweatshops in the Global Economy, last month. Dr. Powell devoted an entire chapter to the alternative jobs that sweatshop workers would have if they lost their jobs in the sweatshops. He found that “in countries where sweatshops tend to be located large portions of the population work in agriculture.”(2) Furthermore, these agricultural workers tend to be subsistence farmers. In the poorest of these countries, other alternatives include prostitution and sifting through garbage dumps. How do these alternatives compare to sweatshop labor? In Bangladesh, over 80% of the population live with a daily income under $2 a day. In India, it’s 60% of the population. For China, just over half the population earns under $2 a day. The average daily income of a sweatshop worker in Bangladesh is just over $2. For the Chinese sweatshop worker, it’s over $4 a day. The average Indian sweatshop worker earns $8 a day.(3) There’s a reason that people choose to work in sweat shops. As Paul Krugman noted in his article, aptly titled “In Praise of Cheap Labor: Bad Jobs at Bad Wages Are Better than No Jobs at All,” “while wages and working conditions in the new export industries of the Third World are appalling, they are a big improvement over the previous, less visible rural poverty.”(4) These countries are countries with little capital. Thus, these countries are countries with little productivity. Wages rise as productivity rises. But the productivity must rise first.

The relationship between productivity and pay has been demonstrated countless times. But let’s look at the productivity of sweatshop labor and the productivity of subsistence farming. In Bangladesh, agriculture only accounts for 23% of the GDP, even though 58% of Bangladeshis are employed in agriculture. In China, almost half the population is employed in agriculture, yet agriculture only accounts for around 13% of the GDP.(5) There is a reason why sweatshop labor gets paid, on average, higher than the alternatives. Sweatshops are more productive and employ more capital than the agricultural alternatives. As more people invest in these companies, wages will rise. However, legally raising the wages of these workers higher than the value they produce will not result in higher productivity. It will result in unemployment. Productivity must rise before wages rise. Wages respond to productivity but productivity does not respond to artificially mandated wages.

It’s not just the pay that anti-sweatshop activists protest. They also protest working conditions, building codes, and safety standards. Powell also devoted an entire chapter to the consequences of legally mandating that sweatshops follow certain safety standards. He argued that “firms are indifferent about whether to pay monetary wages or in-kind benefits after adjusting for those benefits that improve productivity. Workers do care about the mix.”(6) He also argued that

when overall compensation goes up, workers are more likely to desire more nonmonetary benefits. Comfort and safety are what economists call “normal goods” for most people. Workers demand more of these goods as their income increases. Unfortunately, many workers have low productivity, so their overall compensation is level is low. As such, they demand most of their compensation in wages and little in health or safety improvements.(7)

This makes sense, seeing as the law of diminishing marginal utility states that the previous unit of consumption of a good or service yields more utility than the following unit of that same good. In other words, sweatshop workers prefer direct pay over health and safety improvements because they have such little wealth that their other needs take precedent over workplace safety. A law that directly raises the workplace safety of sweatshop workers, but indirectly reduces their pay, comes at the opportunity cost of the preferred purchases of the sweatshop workers (purchases like food and shelter).

Now that the fundamentals have been covered, let’s look at the real world consequences of anti-sweatshop activism. First let’s look at the forsaking of sweatshop goods for products labeled as fair trade. The “Shop with a Conscience Consumer Guide” lists forty-one different factories that produce products deemed “sweat free.” This guide states that “these sweat-free sources are either unionized or run as worker cooperatives, have healthy and safe working conditions, offer wages and benefits that will ‘lift workers’ families out of poverty,’ and treat the workers with ‘respect, dignity, and justice.’”(8) However,

Twenty-nine of these factories are located in the United States and Canada; only eleven are located in Latin and South America; and a single factory is in Asia. Although consumers might feel they are ‘shopping with a conscience,’ they are mostly buying products made by wealthy First World union workers, decreasing the demand for products made in poorer countries and harming the employment prospects of the poorer Third World workers.(9)

By abandoning sweatshop goods for “sweat free” goods, the buyer actually benefits the wealthier First World workers at the expense of the poorer Third World workers. This product swap effectively puts the sweatshop worker in a worse position.

Public pressure is another tool that anti-sweatshop activists use to try and help the sweatshop workers. Just like the boycott, this tool also backfires. In 2003, for example, public pressure led the Yupoong owned BJ&B factory into an agreement that gave “workers a 10 percent wage increase, educational scholarships, paid holidays, and the establishment of a workers’ committee to deal with health and safety concerns at the factory.”(10) The anti-sweatshop activists praised this moment as a victory against the war on sweatshops. Public pressure kept the sweatshop from going back on this deal, even as the factory lost profit. By 2007, the BJ&B labor pool had shrunk from 2,000 workers to just 234. Later that year, the factory shut down.(11) 2,000 workers were thrown into their less desirable alternatives due to activism. Today, that factory is operated under The Altagracia Project, which “was set up to operate as a model factory, showcasing that a factory could pay a living wage, respect workers’ rights to join a union, and at the same time turn a profit.”(12) This project is praised as one of the latest successes of the anti-sweatshop activists. However, this project employs only 120 people. It baffles my mind how anyone could think that this movement (which cost 2,000 people the best job they could get and then reemployed only 6% of them) can be thought of anything other than a disaster.

The last, and perhaps most dangerous, tool at the anti-sweatshop movement’s disposal is government regulation. For example, “in 1993, U.S. Senator Tom Harkin introduced the Child Labor Deterrence Act, which would have banned imports from countries employing children.”(13) This promptly led to Bangladeshi garment companies firing “50,000 children that fall.”(14) At first, this might seem like another victory for the anti-sweatshop movement. However, children choose to work in sweat shops for the same reason that adults do. It is their best choice among alternatives. It is dangerous to assume that alternatives for children in these countries include things such as schooling and leisure time. Subsistence farming is one of the best case scenarios for the children who are banned from working in factories in these countries. Let’s look at what happened to the 50,000 children who lost their jobs. According to Paul Krugman, “the direct result was that Bangladeshi textile factories stopped employing children. But did the children go back to school? Did they return to happy homes? Not according to Oxfam, which found that the displaced child workers ended up in even worse jobs, or on the streets – and that a significant number were forced into prostitution [emphasis mine].”(15) It would be irresponsible for me to say that anti-sweatshop activists advocate increased child prostitution. However, I have no issues with pointing out that many of these activists advocate policies that would lead to such an increase. To paraphrase Murray Rothbard, it is totally reckless to have loud and vocal opinions on economic affairs without understanding the economic consequences of such opinions.

If we really want to help sweatshop laborers get out of sweatshop labor and into better situations, we need to increase their alternatives and not take away what they have chosen among their current alternatives. As such, I propose starting a pro-sweatshop worker movement. Historically speaking, almost every modernized country had a period of development in which the population switched from agriculture to sweatshop factory work. This transition is necessary to build the capital that can increase productivity. After all, “economists have found that approximately 70-80 percent in the variation in wages across nations can be attributed to differences in productivity.”(16) Therefore, this pro-sweatshop worker movement should focus on raising the productivity of the sweatshop workers. It can do this by encouraging governments to repeal restrictions to trade and foreign markets, especially in those countries where sweatshop labor is prevalent. This movement should also put public pressure on sweatshop countries to adopt sound monetary policy and protect private property rights. Money goes to where it is welcome. By following these freed market policies, investment becomes more appealing and capital will be able to accumulate. This, of course, will increase worker productivity. One only needs to look at the success stories of Hong Kong, Singapore, and South Korea to see that this is the case. In these countries, “the process of moving from sweatshops to a wealthy First World nation took less than two generations rather than the more than 100 years in Great Britain and the United States.”(17)

For the sake of these workers, do not support anti-sweatshop measures that only limit these workers abilities or price them out of the market. Support policies that will speed up the process of development and give these workers more alternatives rather than less.

 

(If you would like to learn more about well-intentioned policies that hurt the people they try to help, read my debate with Tom Engelhart on the Minimum Wage. http://www.breakingapathy.com/category/call-response-an-informed-debate/)

— Will Shanahan (@Will_Shanahan)

Contributing Editor, the Humane Condition

Notes:

1. Henry Hazlitt, Economics in One Lesson (Auburn, Alabama: Ludwig von Mises Institute, 2008) 5.

2. Benjamin Powell, Out of Poverty: Sweatshops in the Global Economy (New York, NY: Cambridge University Press, 2014) 53.

3. Powell, Out of Poverty, 55.

4. Paul Krugman, “In Praise of Cheap Labor: Bad Jobs at Bad Wages Are Better Than No Jobs at All,” Slate, March 21, 1997. http://www.slate.com/articles/business/the_dismal_science/1997/03/in_praise_of_cheap_labor.html (Accessed April 15, 2014).

5. Powell, Out of Poverty, 54.

6. Powell, Out of Poverty, 66.

7. Powell, Out of Poverty, 66.

8. Powell, Out of Poverty, 33.

9. Powell, Out of Poverty, 33.

10. Powell, Out of Poverty, 35.

11. Powell, Out of Poverty, 35.

12. Powell, Out of Poverty, 35.

13. Powell, Out of Poverty, 84.

14. Powell, Out of Poverty, 84.

15. Paul Krugman, “Reckonings; Hearts and Heads,” New York Times, April 22, 2001, 17.

16. Out of Poverty, 25.

17. Powell, Out of Poverty, 120

 

The Essence of Liberty: Property Rights and Non Aggression

It is a sad truth that many Westerners have never critically investigated libertarian political theory. Volumes upon volumes have been written explaining, describing, arguing, and expanding on libertarianism. This article is simply meant to highlight the most important implications of this political theory.  The following is a basic introduction to the philosophy of liberty. Liberty is a philosophy of nonviolence and private property.

                There are so many intellectual giants upon which these two foundations of libertarianism rest that I cannot adequately cite the ideas represented here. Instead I will provide a list of texts in which to explore the philosophical foundations in depth at the end of this post, including Locke, Mises, Rothbard, Hoppe and others.

                Property rights might not be self-evident but are easily understood. To put it simply, property ownership begins with the concept of self-ownership. Libertarianism champions the sovereignty of every individual. This ownership extends to the fruits of one’s labor and their justly accumulated wealth through trade, entrepreneurship, etc… To own something, one must be able to do with the object whatever he or she sees fit, provided the owner does not infringe upon another individual’s right to exercise their personal self-ownership.  The old saying holds true, “Your right to swing your fist ends at my nose”.

                In correlation with the foundational principle of self-ownership, libertarianism recognizes any infringement of this right as criminal, or illegitimate. Theft and murder are both forms of criminal aggression no matter if they are euphemistically referred to as taxation, or preemptive war. A libertarian does not grant an agent of the State extra rights. If it is illegal for you or I to do, it is illegal for a law enforcement officer as well.

                Some have attempted to refute the validity of the self-ownership principle, on several different grounds. Rather than discussing the details of every refutation that I am familiar with I will begin and end with what Economist and Philosopher Hans-Hermann Hoppe calls argumentation ethics. Hoppe derived this a priori theory from similar logic that libertarian standard bearer Dr. Murray Rothbard employed in his Ethics of Liberty, based in argumentation. Hoppe said:

                “Only because the protected borders of property are objective (i.e., fixed and recognizable as fixed prior to any conventional agreement), can there be argumentation and possibly agreement of and between independent decision-making units. Nobody could argue in favor of a property system defining borders of property in subjective, evaluative terms because simply to be able to say so presupposes that, contrary to what theory says, one must in fact be a physically independent unit saying it.”[1]

As Hoppe implies, if the body is not an independent unit owned by its occupier, then argumentation against such a belief would be impossible. If one does not own the fruits of his or her labor, how would an argument distinct and in opposition to self-ownership be proposed?

                Therefore, the first truth of libertarianism is self-ownership. From here a philosophy of peaceful interaction and cooperation amongst individuals can be derived. These are the traits of a sound political philosophy, and libertarianism is just that. The emphasis on peaceful interaction is a result of the non-aggression principle. In order for the concepts of property and ownership to hold true, the initiation of a violence, or aggression must be illegitimate. Aggression can take many forms, and circumstance is an important variable when considering what constitutes aggression. For instance, the act of killing in self-defense is legitimate, as one has the right to defend his or her own property, in this case, their body. Murder is an entirely different story and is the antithesis of libertarian law, or social code. To murder is also to steal the life of which another individual has ownership.

                Involuntary slavery is as well an affront to the libertarian social code. As was noted so famously in a recent NYT hit piece, Dr. Walter Block pointed out that it was not the labor per se that made American slavery so despicable, but it was the compulsory nature of such a system. The involuntary binding of one individual to another is a criminal act constituting aggression. There is disagreement amongst libertarians concerning the legitimacy of a voluntarily entered contract of slavery, but that is not to be confused with an ambiguity on the practice of slavery as we have seen it on a global scale throughout human history.

                A difference between libertarian law and law as it exists in the Western world today is the constitution of a crime. There are countless laws and regulations that are based in no certain principle, rather only the majority vote or corrupt politicians and bureaucrats. Running afoul of the millions of laws and regulations is a seemingly unavoidable incident. We see this today because the concept of a crime has lost its true meaning. A crime is initiatory aggression upon the property of others, no more and no less. For an in depth defense of certain “crimes” and immoral laws in America today from a libertarian morality, see Defending the Undefendable by Dr. Walter Block of the University of Loyola New Orleans and the Mises Institute.

                If true liberty promises full property rights in an individual’s body and his or her justly acquired properties and possessions, than the criminalization of certain drugs and substances is unjust and arbitrarily dictatorial. In the United States’ War on Drugs the true aggressors are the agents of government who arrest, murder, and imprison peaceful people acting within their right to own themselves. The same analysis holds true of those who voluntarily buy and sell “illegal” drugs, engage in prostitution, enjoy gambling, partake in moonshining, or any other victimless action that is against the law in the United States and most of the Western world. Governments across the world appeal to the morality of its subjects to gain control. The outlawing of these morally questionable activities has never been successful by any meaningful measure excepting the growth of government control and the loss of liberty.

                The final step in grasping the essence of liberty is applying the libertarian ethic to government itself. There are many grounds upon which agents of government break the libertarian social code, but a select few represent the pervasiveness of lawlessness and tyranny. For instance, in the United States the central bank called the Federal Reserve claims and exercises the power to inflate the only money supply that the government recognizes as legal tender. This inflation sends hundreds of billions of US dollars to large banks and lending companies creating a corresponding rise in nominal values reflected by Wall Street, and decreasing the value of what each individual earns and has saved. Understandably, there is debate within libertarianism about the legitimacy of fractional reserve banking, but what is agreed upon by most is that it must be contractual, or voluntary. Alternatively, within the current and mandatory system of increased inflation and legal tender laws, theft is perpetuated by the government onto its subjects.

                Most damning to the legitimacy of the State is its sole means of existence, taxation. Libertarians view taxation as no more than theft on a massive scale. Theft on a scale such as exists today is not only grossly immoral, but harmful to the economy as a whole. Government taxing and spending creates misallocations of resources, aides in the creation of the business cycle[2], and discourages development, innovation, and opportunity. Due to the inevitability of government to grow, the ever increasing rates of taxation, regulation, and inflation leads down what F.A. Hayek called The Road to Serfdom.

                In conclusion, the degree to which libertarians believe that the principles of liberty can be applied varies greatly amongst respected libertarians. The range varies from anarchy to minimal and limited government. Many believe that a small government is needed to protect the principles of liberty. It is certainly true that the human race would advance dramatically with a correspondingly dramatic decrease in the amount of government in, but it is also true that government cannot exist without taxation, and theft is a violation of the principles government is supposed to protect.

                However far each individual libertarian wishes to see the principles of liberty advanced does not have to be a divisive issue. The world today is a Statist paradise that will most certainly lead to death and destruction, the only real specialty of government. Merely expressing agreement and engaging in productive discussion about libertarian theory is essential today.

                I hope this short introduction created enough interest in libertarian political theory to further research any questions and refutations you have. The following is a list of texts that have laid the foundation for the modern movement of peace, freedom, and prosperity.

The Ethics of Liberty – Murray N. Rothbard
Man, Economy, and State with Power and Market – Murray N. Rothbard
For A New Liberty – Murray N. Rothbard
Human Action – Ludwig von Mises
The Economics and Ethics of Private Property – Hans-Hermann Hoppe
The Second Treatise of Government – John Locke
The Left, The Right and The State – Lew Rockwell
The Philosophical Origins of Austrian Economics – David Gordon
Prices and Production and Other Works – Freidrich Hayek
–  Adam Alcorn
Founder/Editor The Humane Condition
@AdamBlacksburg
Adam Alcorn

Adam Alcorn


[1] http://mises.org/daily/4641 Excerpted from Hoppe, Hans-Hermann The Economics and Ethics of Private Property.

Freedom and Democracy: Oil and Water

Democracy Most western states have some type of a democratic republican form of a government.  These types of governments rely on democratic elections to appoint the leaders of the republic.  Few people take the time to weigh the benefits and costs of such a system.  However, if we are to live in a system such as this, it is of the upmost importance to understand the efficiency and effects of such a system.

First, let’s look at the supposed benefits of a purely democratic system.  Power is dispersed among the entirety of the population.  The larger the population, the less power any one person has over everyone else.  Furthermore, this system allows each person to have some minute say in how the state governs their lives.  A democratic republic is slightly different.  Here, each person has an equal say, should they choose to vote, in electing a group of people who run the government.  Therefore, the power to choose these individuals is dispersed among the entire population.  However, these elected “officials,” are far less constrained in “serving” the “needs” of the public.  This is a very basic outline of the common arguments in favor of such a system.  However, there are some very glaring problems that must be addressed.

The first problem of such a system is economic in nature.  It produces a phenomenon known as rational ignorance.  In other words, a democratic system dis-incentivizes citizens from researching and being informed about both the political system and the issues that are to be addressed through this system.  Rational ignorance springs forth from the fact that time is scarce.  Every hour, every minute, every second is constrained by scarcity.  People do not have an infinite amount of time and since time is scarce, individuals must economize their time in ways that best serves their personal interests.  The problem with any democratic system is what is commonly perceived as its main benefit.  The dispersal of power means that no one person has any real say in the outcome of an election.  Rational people, people looking to economize their scarce resources, will employ their resources only if they think that doing so can accomplish a goal or task.  Taking the ten minutes to vote can certainly fall within the purview of rational people.  It is very little time and it fulfills that nationalistic desire that “good” citizens and brought up with.  However, they are much less likely to take the time to research every issue, every topic, and every political matter that their vote weighs in on.  After all, one vote among millions is statistically insignificant.  Because each individual has a scarce amount of time and an insignificant contribution to the democratic process, they don’t reap any benefits from spending the necessary time needed to become informed on the very issue they are voting on.  In other words, the rational individual in a democratic society is the individual who disregards politics altogether in order to spend his or her time on actions that can actually affect his or her life.  The result of rational ignorance is that bad laws and incompetent leaders infect the democratic system.

The second problem with democracy has to do with how individuals treat and perceive each other.  The one defining feature of every government is coercion.  Every government claims a monopoly on the production of law and how that law is to be enforced.  To clarify, coercion is the instrument through which the state establishes and maintains the laws that it produces.  This is no different in a democratic system of government.  Because of this defining feature, voters are attempting to enforce their political views on every person that falls within the territory of the state.  Interpersonal relationships are not affected by certain political views that individuals hold and vote on.  Certainly, you’d be hard pressed to find opposition to the outlawing of murder.  However, most political topics are little more than divisive opinions.  Topics such as the minimum wage, war policy, foreign policy, budgets, health care, and civil liberties are all issues with multiple sides.  Because coercion is the instrument by which political change is enacted, all democratically decided policies are enforced on everyone.  To elaborate, let’s look at the vitriol that Democrats and Republicans have for each other.  Each party vehemently opposes the other and rightfully so.  After all, each party is attempting to force the other party to live in their ideal government.  Another example is the typical Facebook feed, littered with conservatives trashing liberals and their positions, and liberals ridiculing conservatives and their positions.  There is this great myth that democracy is the process that brings together a diverse populace to collectively decide the laws of society.  In reality, it only polarizes and divides the society it pretends to bring together.  There already is a process for bringing diverse groups of people together.  It is called the market.  Even the bitterest enemies might be brought together through trade, each person only trying to make themselves better off.  The difference between the market and democracy is the decisions of democracy are coercively imposed whereas the decisions on the market occur through voluntary trade and agreement.

What are the implications of such conclusions?  If a society is to live under democratic rule, it must do so with extreme caution.  Every time an individual has a chance to vote to bring another good or service out of the market and into the power of the state, they must ask themselves if they are ready for that good or service to suffer the lower quality that will result from rational ignorance and if they are ready for the bitterness that will spring forth from the individuals opposed to the newly coerced measure.

– Will Shanahan, Contributing Editor, the Humane Condition

Check out Will’s blog at thefuriouslibertarian.com

The Joe Rogan Experience with Peter Schiff

I’m really impressed with Rogan’s questions, he debated Schiff pretty well. If Schiff had a better understanding of property rights he would have been better at refuting some of Joe’s environmental concerns. You can tell these two guys live on different planets. Well worth skimming through because it’s Long.

– the Humane Condition