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Reconciling the Good and Evil of Sweatshops

Kathie Lee Gifford was shocked and appalled when her clothing line was accused of using sweatshop companies abroad in 1996. Gifford burst into tears and apologized on the air after meeting Wendy Diaz, a 15-year-old Honduran worker in her sweatshop (flight courtesy of Charles Kernaghan of the National Labor Committee). In his piece titled In Defense of “Sweatshops”, Benjamin Powell, assistant professor of economics at Suffolk University, asks, “Should Kathie Lee have cried?” Her Honduran workers earned about $3 per day while nearly half of Hondurans earn less than $2 per day. Is this heartbreaking? Powell suggests:

Wendy Diaz’s message should have been, ‘Don’t cry for me, Kath[ie] Lee. Cry for the Hondurans not fortunate enough to work for you.’ Instead the U.S. media compared $3.10 per day to U.S. alternatives, not Honduran alternatives. But U.S. alternatives are irrelevant. No one is offering these workers green cards.

The anti-sweatshop movement includes celebrities, unions, politicians, student groups, and religious organizations claiming sweatshops abuse and exploit workers. However, the definition of “exploit” is very broad. Often times this rhetoric is code for low wages, long hours and bad working conditions. A common solution in the anti-sweatshop movement is to boycott sweatshops, but even Mick Duncan, the founder and secretary of the campaign group No Sweat, knows that boycotting sweatshops isn’t the best way to fight sweatshop “injustice.” In a 2005 article, he told The Independent:

Boycotts just meant that people don’t buy the goods, companies close down factories and people lose their jobs. What we have switched to doing is working on the ground with the workers and local unions, and working with the companies to improve conditions and pay.

However, Duncan doesn’t realize that working with the local unions to improve conditions and pay also kills jobs. These changes are still costs, and sweatshop owners often respond to costs by laying off workers. Ironically, even the most well-intentioned efforts of the anti-sweatshop movement hurt the people they intend to help. According to Powell, sweatshops are a necessary stage in the economic development of a country in transition from subsistence agriculture to industrializationCountries like Japan, South Korea, Taiwan and Hong Kong are examples Powell uses to prove sweatshops will ultimately raise living standards. He highlights one key point in his argument: if someone chooses to work in a sweatshop, it must be better than their alternative. He uses a tragic example to illustrate:

“In one famous 1993 case U.S. senator Tom Harkin proposed banning imports from countries that employed children in sweatshops. In response a factory in Bangladesh laid off 50,000 children. What was their next best alternative? According to the British charity Oxfam a large number of them became prostitutes.”

OK, so I’m happy Hondurans are working in sweatshops rather than roaming the streets as prostitutes, but I’m not ready to write “I love sweatshops” all over my notebook. What about withheld wages, violent force and rape occurring on the job? This is exploitation. When asked about sweatshop violence during a Students for Liberty webinar last Tuesday, Powell followed through with his sweatshop philosophy and said something along the lines of: “Laborers rationally bundle their costs and benefits and voluntarily choose to work in those sorts of risky environments because it is better than their alternative.” Following that argument, one might suggest that workers are better off making two dollars a day and facing violent force or sexual abuse on the job than having no work at all. This explanation is difficult to accept. When it comes to human rights, the classically liberal argument sounds a bit heartless to me, even with my degree in economics and love for free markets. The purely economic approach attempts to commodify the uncommodifiable: violence is now just another cost. No one can accurately assess the probability of their boss pointing a gun at their head to work overtime. A rational human being would not take a job expecting a high probability of violent sexual abuse (and it doesn’t take an economist to figure that one out). How might a good economist reconcile the goods and evils of sweatshops? “Labor injustice” must be clearly defined. Low wages, long hours and less-than-desirable conditions should not be considered unjust, assuming this information is available to workers before they choose to work at a given sweatshop. This is a voluntary decision and as Powell makes clear in his analysis, it is better than their alternatives. The definition of “labor injustice” should be more narrowly defined as coercion and violation of human rights. When sweatshop employers use any force, violence or breach a contract with employees, then we have a problem. Understanding the relationship between sweatshops and human rights is key. There is sometimes a correlation between sweatshops and violation of human rights, but this relationship is not causal because violence occurs everywhere—on the streets, at school and at home. Any perpetuating injustice existing in sweatshops may instead be a symptom of a corrupt government and law enforcement. Rather than demonizing all sweatshops for the evils committed by certain individuals in a few sweatshops, economists and human-rights activists must fight side-by-side for human rights without destroying the opportunities sweatshops provide for the poor. Earlier this year, my mother joined a medical mission trip to Haiti with a group from our church. Their translator, Tito, gave their group a tour around Ounaminthe, Haiti, near the border of the Dominican Republic. He expressed the devastation the earthquake brought, surging unemployment to an estimated 90% and leaving Haitians desperate for work. However, he positively pointed to a bridge that many Haitians crossed into the Dominican Republic every morning to work at a Levi Strauss sweatshop. Levi’s built the bridge funneling straight from the town into the sweatshop, allowing workers to avoid the required bribes of corrupt border patrol agents. Tito expressed his excitement and gratitude to be one of the few fortunate enough to work part time at the sweatshop. Let us not punish hard workers like Tito for the crimes of the few.