by Jacob Maichel
It is no secret that exploitation has run rampant in the world since the
fall of man. People exploit each other everyday for one reason or
another but some things seem exponentially more evil than others, right?
One thing I have noticed while discussing capitalism with friends is a
well intentioned distaste for sweatshops and child labor in third world
countries. Though it sounds backwards,should we re-evaluate our views on
It is easy here in the United States to reflect on these jobs, often in
the garment industry, and feel pity for those who work them.
Unfortunately this sympathy replaces rational thought and leads to
activists calling for an end to sweatshops. What actually happens when
those sweatshops are closed?
If you are working in a sweatshop it is likely because it is your best
opportunity. In these developing countries like Vietnam, Nicaragua,
Indonesia, Honduras, El Salvador, etc. many of the workers are moving
from poor agricultural farm lives with no skills to industrial cities.
Likely this sweatshop labor is better than farm life and many people in
the country desire these jobs. Though the pay may be low by our
standards it is often double or triple the national average. The labor
may be hard but the workers are often much better off than their fellow
countrymen. As long as the exchange of work is voluntary (not abhorrent
slave labor) than we should enable people to make choices regarding
their financial stability.
We have even seen the negative effects of domestic legislation that
targets sweatshops in developing countries and have not learned our
lesson. A particularly convincing example of this is in 1993 Senator Tom
Harkin banned imports from countries using child labor in response
factories in Bangladesh fired 50,000 children. The children’s best
alternative for work? According to a study by Oxfam, a British charity,
the majority went into child prostitution or starved to death.
To further illustrate this Ben Powell and David Skarbek, both of whom
have written extensively on this subject, published an article in the
Journal of Labor research and were the first to quantify alternatives
for sweatshop laborers. In 11 countries where there are active
accusations of exploitation, the typical factory worker makes
significantly more than the average working age adult. When we force
improvements on these factories such as a mandatory minimum wage or
safety standards, it may end up worse overall for workers. Higher wages
or workplace improvements will likely cause profit-maximizing firms to
lay people off or reduce wages where they can - again hurting the people
we seek to help. Instead, allowing for competition is likely the best
way out of impoverished conditions. If competing factories move into the
same market people with skills applicable in those factories will be
able to choose where to work. This will drive wages and quality up as
companies attempt to capture the best workforce.
It took the United States over 150 years to industrialize and one of the
wealthiest countries in the world, Hong Kong, had sweatshops just 30
years ago. Factory work makes employees more skilled and creates a
competitive market place critical for healthy economies and living lives
of fulfillment. The good news for sweatshops today is the abundance of
new technology and high amount human capital. If we do not undermine
these countries right to develop then they will industrialize much
faster than the United States or Hong Kong. As long as exchanges are
voluntary, you don’t make someone better off by taking their best
solution to a serious problem.