David R. Henderson  

Matt Zwolinski on Sweatshops

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Was Schindler Wrong?

Philosophy professor Matt Zwolinski has an excellent video on sweatshops at LearnLiberty.org. LearnLiberty.org has given me permission to put it here.

I basically like the video, although I have one question and one disagreement. My question is about something he said at the 2:00 point. He says:

So long as sweatshop labor is voluntary, even in the weak sense of being free from physical coercion. . .

That suggests that there is a stronger sense of "voluntary." I don't know what that sense is. Does anyone reading this post know what that strong sense is? Matt?

My disagreement comes at the 3:11 point, where he says, "Now, of course, most anti-sweatshop activists aren't trying to shut down factories." I don't know what his basis is for this claim. My impression is that that is exactly what many of them are trying to do. When I started writing on this issue in 1996, that seemed to be the dominant theme. Remember that much of the movement is funded, or, at least, was funded, by U.S. labor unions that don't like the competition and want to hobble it. I'm open to evidence that this has changed, but I haven't seen much evidence.

Matt Zwolinski has come under attack from, believe it or not, other libertarians. One, philosophy professor Roderick Long, writes:

But even when these corporations [that hire people for low wages in poor countries] don't share culpability for the oppression, they're certainly guilty of exploiting it.

I don't get what he means by the word "exploiting." The corporations come along and give workers a better deal than anyone else was offering them, and not just a better deal, but a substantially better deal. If Professor Long means that offering people a better deal is exploiting them, I think that's a strange use of the word. It's true that the corporations are taking advantage of them. But they're taking advantage of the corporations too. The term for that in economics is "mutual gains from exchange."

Professor Long writes:

In his video Matt refers to workers' being "free to choose within their constrained set of options"; but of course it's analytically true that we are always free to choose within whatever our constrained set of options may be (otherwise they wouldn't be options). If someone puts a gun to your head and demands your money or your life, you have, of course, the Sartrean freedom to choose either way; but this is not what voluntariness means in a political context.

But the key that Professor Long misses with his analogy is: who is holding a gun to the person's head? If person A is holding a gun to person B's head and says, "Your money or your life," then, yes, that's wrong. But the bad situation that people in Third World countries are in was not typically created by the corporations that are hiring the workers. Professor Long admits this possibility, writing: "Cases where corporations actually bring in military support to prop up, or even establish by coup, regimes that clamp down on unions and resist land reform may be the exception." So to make the analogy closer to the reality, the corporation that's not the exception would be like person C coming along in the above case and offering the person not just his life but a better life.

I'm guessing that a lot of readers of this blog have read the book or seen the movie, Schindler's List. When I saw it, I saw Schindler as a hero. What did he do? He hired Jews to work in his factory and did so, at first, solely to maximize his profits. And by doing so, he saved their lives. Here's part of what I wrote about Schindler in The Joy of Freedom: An Economist's Odyssey:

What makes the bigger point--and what ultimately makes the movie so satisfying--is Schindler's transformation into someone who cares intensely about the Jews, enough to put his whole fortune and even his life at risk. But simply by employing them and keeping them out of harm's way, Schindler did them a big favor.

And, by the way, Schindler paid the Jews exactly zero. The Reich made him pay their wages to it, rather than to the Jewish workers. They still begged for those jobs because Schindler saved their lives.

I wonder if Professor Long, who wrote a post titled, "Why Libertarians Should Oppose Sweatshops," would also, had he been an adult in the early 1940s, have been willing to write an article titled, "Why Libertarians Should Oppose Schindler Employing Jews."


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COMMENTS (19 to date)
Bill writes:

Mike Munger's "Euvoluntary Exchange" notion adds an interesting perspective.

http://michaelmunger.com/euvoldiff.pdf

Scott Clark writes:

Munger also talked about it with Russ Roberts on econtalk http://www.econtalk.org/archives/2011/06/munger_on_excha.html

Glen Smith writes:

David,

That suggests that there is a stronger sense of "voluntary." I don't know what that sense is. Does anyone reading this post know what that strong sense is? Matt?

The strong sense of voluntary simply means that I do what I want to do not necessarily what society want me to do. In a market system, society coerces me (via profit, psychological pressure etc.) to do with my resources as it most values which may or may not be what I prefer to do with those same resources. For example, I might prefer to play video games all day but I've also will probably have to get a job so that I can support for my video game habit, sacrifice something else of high value to me (such as giving up my dignity to become a welfare bum) or have access to enough resources to burn.

Sheldon Richman writes:

I think this is unfair to Roderick. He quite clearly says that if the sweatshops were closed and nothing else were done, the poor would be worse off. The larger point he makes is that libertarianism looks shallow and impoverished if all it says about sweatshops is, "Welp, if the people are working there, that must be their best option."

NZ writes:

He misses an opportunity to make another good point, which is that every modern first world country went through a period where its economy was largely dependent upon sweatshops.

MG writes:

I think the issue David raises has broader implications than the extremes of sweatshops and Nazi Germany labor policies. I think Glen Smith exagerates, but he is sadly on to something. If value is dependent on there being a voluntary exchange, prices can be used to measure value creation, etc. Although Munger's "Euvoluntary tweak" relaxes the breadth of what constitutes a "voluntary" exchange, I think it may fail to satisfy those people (especially if they do not appreciate how value is created in free markets) who deem only some exchanges "truly volunatary" and adding value. (I suspect exchanges most likely involving satisfying wants, not needs. To wit: buying oil to heat your freezing house is almost always a rip off; paying top dollar to attend a rock concert or to buy Apple's newest gadget is great.) Although free markets on their own are perfectly capable of clearing amidst all these ideosynchratic utilitiy curves, as soon as government intervention motivated by such "customer failure" kicks in watch out.

James writes:

This is crazy.

When people face bad situations, either someone will offer those people voluntary opportunities to improve their situation or no one will offer those people voluntary opportunities to improve their situation. That's it.

Where you stand on sweatshops is just a matter of whether you favor the former or latter.

What next? Should we all oppose oncologists because they exploit cancer patients' willingness to spend a great deal of money to postpone death?

Sebastian Schwiecker writes:

I tend to agree wit Jeffrey Sachs and his comment "My concern is not that there are too many sweatshops, but that there are too few." but also with Matt Zwolinski that " ...most anti-sweatshop activists aren't trying to shut down factories." At least to my experience that is true at least more often than not.

More important than to increase wages (even further) though might be to increase the safety conditions etc. since these are often very hard for people to estimate and really take into consideration. Since the cost of production won't increase that much, this could probably go a long way until these jobs would be shipped back to the US/Europe or people would stop buying shirts and smartphones because they became to expensive.

Ted Levy writes:

As to what the "stronger" notion of voluntary is, Matt is anticipating the standard response that 3rd world people don't REALLY take these jobs "voluntarily" because of their limited options (being poor, being born in a poor country, etc.). His point is that EVEN IF that's true, it's STILL voluntary in (what he calls the weak) sense of not being coerced via force. In other words, he's taking a standard libertarian distinction (voluntary albeit limited choice /voluntary and abundant choice/involuntary) and rewording it to appeal to non-libertarians (weakly voluntary/strongly voluntary/non-voluntary). He is strengthening his argument by noting it applies even in weakly voluntary situations

As to Prof. Long's point, I took it to suggest that (some) multinational corporations may be in cahoots with (some) 3rd world governments, the corporations suggesting to government authorities that unless anti-market restrictions that reduce people's alternatives are maintained, they will not continue to do business in said 3rd world country. He reminds us that the history, as opposed to the economics, of free trade, can be complex, and virtue less obvious. As an analogy, it is a good thing for a doctor to set broken bones, even if he charges high prices, if the only alternative is to have one's broken bones heal poorly. Yet if the doctor were hiring people to break your bones, this apparently voluntary trade would be difficult to justify.

I am not suggesting that Professor Long clearly succeeded in his argument, merely explaining how I understood it.

David R. Henderson writes:

@Sheldon Richman,
You’re right that Roderick does say, "that if the sweatshops were closed and nothing else were done, the poor would be worse off.” I didn’t deny this. I was focusing on where he and I disagree and pointing out the problems with his exploitation argument and his “your money or your life” argument. Suggesting that I was unfair is a strong statement. Please tell the readers and me specifically where I’m being unfair.

David R. Henderson writes:

@Ted Levy,
As to Prof. Long's point, I took it to suggest that (some) multinational corporations may be in cahoots with (some) 3rd world governments, the corporations suggesting to government authorities that unless anti-market restrictions that reduce people's alternatives are maintained, they will not continue to do business in said 3rd world country.
He did say that. And if that’s all he said, that would have been fine. But he said much more and I quoted some of that “much more.” Look again at his statement, Ted:
But even when these corporations [that hire people for low wages in poor countries] don't share culpability for the oppression, they're certainly guilty of exploiting it.
How could giving these people a better option make them guilty?

AC writes:

It sounds like Roderick Long wants to pressure companies to raise wages as long as they're still profitable, but then in the comments says he's not arguing about any moral obligation on the part of the company. It's not clear what he's saying other than libertarians should frame the issue a little better and that protesting for higher wages is OK. In this attempted appeal to the left, he's reinforcing this idea of employer as inherently exploitative.

collin writes:

Does this post break Godwin's Law?

Ted Levy writes:

David,

You quote Long: "But even when these corporations [that hire people for low wages in poor countries] don't share culpability for the oppression, they're certainly guilty of exploiting it." and ask,
"How could giving these people a better option make them guilty?"

Of course you know that "exploiting it" may be used in a non-normative fashion, simply meaning the companies took advantage of an opportunity, were entrepreneurial. I didn't see anything Prof. Long said that would exclude that interpretation.

David R. Henderson writes:

@Ted Levy,
Of course you know that "exploiting it" may be used in a non-normative fashion, simply meaning the companies took advantage of an opportunity, were entrepreneurial.
If he’s not making a normative judgment, why would he say they’re guilty?

Tom Dougherty writes:

Long writes,

“It may be true that sweatshop employment is preferable to the available alternatives, but we need to ask why these are the available alternatives; and in most case the answer is that these workers live under oppressive regimes that have violently closed off other options – which casts doubt on the description of the workers’ choice as “voluntary.””

I find this sentence by Long to be kookoo. Because sweatshops provide the most preferable alternative it is no longer “voluntary”? Yeah, and if I found a hundred dollars on the ground, Long would say that it is no longer “voluntary” to pick up it because picking it up is preferable to leaving it on the ground. So, according to Long’s logic, anytime anyone chooses their most preferable option that option is no longer voluntary.

Long goes on to say, in agreement with Jeremy Weiland, that libertarians shouldn’t spend time justifying a bad situation, but instead of advocate for an improved set of choices. This is rich. But Long just told us that the sweatshop, which improves one’s choices, isn’t really a choice at all because it wasn’t voluntary. And it wasn’t voluntary because it was a choice that most improved my situation. Does this guy remember what he just wrote two paragraphs earlier?

Finally, anyone who considers strikes as the higgling of the markets is an idiot. Long tells us that the robbery victim doesn’t have a free choice, but suddenly the victim of the union thug who prevents him from obtaining gainful employment is now somehow part of a market of free exchange? What the heck is Long smoking?

Ken B writes:

@DRH:
"why would he say they’re guilty?"
and
"How could giving these people a better option make them guilty?"
have the same answer: keeping -- I bet the word used will be arrogating -- most of the surplus value. The underlying idea being that the entrepeneurs should accept a lower level of return, closer to the long term equilibrium value, and pay the workers more.

I don't endorse this answer. I'm just trying to clarify the claim as I hear it.

Essen writes:

In other words what we are saying to the Third World is this:

Thank God for the small mercies of the First World. Else you would become the nether world.

Ken B writes:

@Essen: Not the 'small mercies'. The rational self-interest of, the existence of, and the markets of the first world.

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