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In Defence of Sweatshops – “The Undercover Economist” – Tim Harford

August 4th, 2011 · No Comments · Economics, Policy, Politics, Progressive Politics

Hours are long. Wages are pitiful. But sweatshops are the symptom,not the cause, of shocking global poverty. Workers go therevoluntarily, which means—hard as it is to believe—that whatevertheir alternatives are, they are worse. They stay there, too; turnoverrates of multinational-owned factories are low, because conditionsand pay, while bad, are better than those in factories run by localfirms. And even a local company is likely to pay better than trying toearn money without a job: running an illegal street stall, working as aprostitute, or combing reeking landfills in cities like Manila to findrecyclable goods.

… [NYC’s resolution banning sweatshop-made products] can onlyharm sweatshop laborers: they’ll be out of a job and—literally, forthose in Manila—back on the trash heap. Of course, it will be goodnews for textile workers in rich countries, who’ll get the businessinstead….
We need to understand that narrowly focused initiatives on “fairtrade coffee” or “sweatshop-free clothes” will never make asubstantial improvement to the lives of millions. Some, like thecampaign to prevent New York City from buying uniforms frompoor countries, will actively cause damage. Others, like thenumerous brands of fair trade coffee, are likely to improve theincome of a few coffee producers without causing a great deal ofharm. But they cannot fix the basic problem: too much coffee isbeing produced. At the slightest hint that coffee farming will becomean attractive profession, it will always be swamped with desperatepeople who have no alternative. The truth of the matter is that only broad-based development of poor countries will ever lift the livingstandards of the very poor, increase coffee prices, and improvewages and labor standards in shoe factories.

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