Art Carden  

On Sweatshops: They're Better Than the Alternative

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I just answered an email from some seventh-grade students who were asking about my Forbes.com article "Immigrants, Sweatshops, and Standards of Living." I suggested they look up Benjamin Powell's work, particularly this article on sweatshops that he wrote for the Library of Economics and Liberty a few years ago. Here's some of what I wrote them specifically:

Sweatshops are an important exercise in appreciating the difference between what we see (people in sweatshops) and what we don't see (the jobs they would have if they didn't have sweatshop opportunities). Sweatshops employ children because the children are available for work and because their next-best opportunities (agriculture or, in some cases, prostitution) are usually worse than sweatshop labor. It is definitely good that the workers at least have opportunities to work in sweatshops because, as research by Powell and others has shown, their other alternatives are even worse. I don't have the numbers in front of me, but sweatshop earnings are better than they are in other lines of employment.

Perhaps I'm reading uncharitably, but I think a lot of sweatshop critics misunderstand the economist's argument. The argument isn't that sweatshop conditions and wages are good in some cosmic sense. Rather, they are better than the available alternatives. By passing laws to regulate and restrict sweatshops, we take away from people the best of a lot of bad alternatives. If we genuinely care about people, we should work to give them more and better options, not fewer and worse.



COMMENTS (8 to date)
Mark V Anderson writes:

The benefits of third-world sweatshops is one of the best libertarian arguments logically, and yet it has little resonance even amongst those who consider themselves educated. Logic does not rule the world.

Charley Hooper writes:

As David Henderson and I pointed out in our book, Making Great Decisions in Business and Life, sweatshop employees sweat less than other workers and they have better jobs.

In June 2002, Nicholas D. Kristof of the New York Times reported:

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.

Kristof pointed out that those in the so-called sweatshops had better jobs than their brethren in agricultural pursuits, a typical story in third-world countries.

Paul Krugman has a nice synopsis of sweatshops (March 1997):

The benefits of export-led economic growth to the mass of people in the newly industrializing economies are not a matter of conjecture. A country like Indonesia is still so poor that progress can be measured in terms of how much the average person gets to eat; since 1970, per capita intake has risen from less than 2,100 to more than 2,800 calories a day. A shocking one-third of young children are still malnourished—but in 1975, the fraction was more than half. Similar improvements can be seen throughout the Pacific Rim, and even in places like Bangladesh. These improvements have not taken place because well-meaning people in the West have done anything to help—foreign aid, never large, has lately shrunk to virtually nothing. Nor is it the result of the benign policies of national governments, which are as callous and corrupt as ever. It is the indirect and unintended result of the actions of soulless multinationals and rapacious local entrepreneurs, whose only concern was to take advantage of the profit opportunities offered by cheap labor.
Pajser writes:

Even orthodox Marxist will typically agree that sweatshops are better alternative to nothing. You need anarcho-primitivist or radical anti-western nationalist to deny that. However, there is more than one alternative to sweatshops. For instance, wealthy state (say USA) can protect the workers in poor countries from USA employers on the similar way it does at home.

Shane L writes:

Sympathetic to your arguments, I still feel uneasy about people working in desperate conditions in other countries to shave a few cents off the cost of clothing in mine. I wonder what Art or readers think about consumer-level attempts to improve the conditions of such factories? That is, would it make sense as a consumer to consider the working conditions in foreign factories when choosing a product? I guess many people would be willing to spend a little more on products if they thought they would reduce the suffering of fellow humans elsewhere. Should they?

JVA writes:

@Shane

Perhaps David Henderson has an answer http://econlog.econlib.org/archives/2012/04/gains_from_exch.html

Tyler Cowen also gives insight http://marginalrevolution.com/marginalrevolution/2005/12/who_benefits_fr.html

Short answer - it depends.

RPLong writes:

The whole matter is a classic "loaded question" fallacy, and economists and libertarians should refuse to play along.

The meaning of the word sweatshop is "any working environment considered to be unacceptably difficult or dangerous." We are talking about something that is defined to be unacceptable. So long as that is the definition of "sweatshop," then there is no good argument against sweatshops.

Compare to the minimum wage debate: No economist goes around "making a case for low wages." Opposing minimum wage laws is not even remotely an endorsement of low wages. It's a pro-employment, pro-liberty argument, not a theoretical basis for paying people less.

Similarly, no economist or libertarian has ever made an argument for sweatshops. It's not about justifying sweatshops. It's about legitimizing labor that pays less than the US minimum wage, but a lot more than subsistence farming. Everyone is "pro" that. We need to stop calling textile factories "sweatshops." They're not.

In talking to 7th Graders I suggest remembering when you were that age. Since it is illegal for them to work in a sweat shop, they are restricted to mowing their neighbors' lawns, weeding their flower beds, washing their cars...in order to earn 'spending money'.

I don't know what today's 7th Graders buy, but my generation liked the latest Top 40 hits (45 RPM), movies, the latest fashions in clothing. The question being, is having some options proscribed by law a benefit?

Tom West writes:

Rather, they are better than the available alternatives. By passing laws to regulate and restrict sweatshops, we take away from people the best of a lot of bad alternatives.

Agreed, but let us also remember that exactly the same argument can be applied to allowing sex tourism and people selling their body parts (perhaps even vital ones).

While some extreme Libertarians may be okay with this, I think most would acknowledge that there are certain offers that while being a net benefit to the provider (more or less by definition, if they freely accepted the offer), it is immoral to *make* the offer.

Whether sweatshops fall into that category is another question, but just because someone would accept an offer does not free us from the moral culpability of making it.

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