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Source link: http://archive.mises.org/16420/quick-musings-on-sweatshops-and-immigration/

Quick Musings on Sweatshops and Immigration

April 8, 2011 by

Rhodes hosted a speaker from the anti-sweatshop movement on Wednesday night; I wasn’t able to attend because I was giving an Econ 100 exam, but after conversations with a few students, it sounds like the talk was pretty predictable: sweatshop conditions are terrible, the wages are low, isn’t it unconscionable that Nike pays its executives so much and sweatshop workers so little, multinationals earn enormous profits and can afford to pay more, the argument that closing sweatshops will push poor people into starvation or prostitution is crazy*, economists who disagree are morally corrupt, etc., etc.

Indiana University economist Justin Ross has referred to economics as “the art of not killing people with your good intentions.” This is an issue on which the art of economics is especially important because sweatshop opponents are often unintentionally and sometimes defiantly causing unnecessary misery for the people they claim to want to help. Let’s lay aside for a second that the evidence in favor of “sweatshops” is substantial (here’s a suite of resources from Ben Powell, courtesy of The Google) and seek sympathy with the anti-sweatshop crowd. It’s true that sweatshop opponents are making a serious mistake by treating western wages and working conditions as the relevant alternative, and they are making another serious mistake by assuming that western wages and working conditions can be established by pure fiat. Here’s a good passage from one of Ben Powell’s articles explaining why sweatshop wages are so low:

Wages are low in the third world because worker productivity is low (upper bound) and workers’ alternatives are lousy (lower bound). To get sustained improvements in overall compensation, policies must raise worker productivity and/or increase alternatives available to workers. Policies that try to raise compensation but fail to move these two bounds risk raising compensation above a worker’s upper bound resulting in his losing his job and moving to a less-desirable alternative.

Sweatshop workers’ alternatives are lousy in part because of their home-country institutions, but there’s more to it than this. Western countries with restrictive immigration policies also keep those alternatives lousy by refusing potential immigrants (aside: I know Hans Hoppe’s argument about invitations and immigration; my guess is that under an open-border policy there would be a surfeit of invitations for potential migrants from poor countries). The evidence is pretty clear that new immigrants at virtually every skill level are even better than a free lunch: we get more and better lunches than we would get in their absence (for more, here’s…another suite of resources from Ben Powell; his work on the rent-seeking costs of immigration restrictions is especially important). I’ve written a few pieces on immigration for Forbes (1, 2, 3). Lant Pritchett’s $0, downloadable Let Their People Come was a game-changer for me.

Anti-sweatshop groups are fighting the wrong battle. To borrow from the economist David Henderson, we don’t help people by trying to forestall the decisions they actually make. We do much better for them by expanding their options. If you’re part of the anti-sweatshop movement, the most effective thing you can do is work to fight the popular-but-incorrect arguments against immigration in the west.

*-Is it? I quote Jagdish Bhagwati’s In Defense of Globalization, page 71:

…simply proscribing the use of child labor is unlikely to eliminate it; it will only drive poor parents to send their children to work by stealth and often into even worse “occupations” such as prostitution. This happened in Bangladesh, with some young girls falling into prostitution when garment employers who feared the passage of the U.S. Child Labor Deterrence Act (1993)…which would have banned imports of textiles using child labor, dismissed an estimated fifty thousand children from factories.

{ 11 comments }

GSL April 8, 2011 at 2:31 pm

Good piece. It always baffles me that anti-sweatshop people are incapable of considering two things:
1. The Nike executives make a lot more money than the sweatshop workers because it’s much, much harder to find someone with the skill set to run a multinational company effectively than it is to find someone who can stitch shoes together.
2. Maybe American shoe-stitchers make more money than those in developing countries because the labor market is more distorted here (i.e., maybe that labor is a lot more replaceable than they think).

Grant April 8, 2011 at 5:33 pm

Look at the labels on the clothes the anti-sweatshop crowd wears. Guaranteed to find something made in a sweatshop, whether it’s jeans, shirts, socks, underwear, shoes, coats, etc.

Don Lloyd April 8, 2011 at 8:54 pm

Except for the possibility of arbitrary price controls, knowing productivity and skills, etc., is not enough without knowing per capita money supply.

Regards, Don

Makia Efimba April 8, 2011 at 9:32 pm

Child labour is wrong and can never be justified in today’s world for the sake of profit. By the way child prostitution is wrong and it happens in Europe and the West in general, take a look at the case against Italian Prime Minister.

Daniel April 9, 2011 at 12:41 am

It’s not for the sake of profit, it’s for the sake of complementary income, often necessary to the survival of the family.

So “let them eat cake” is the solution in your little liberal mind, eh?

Matthew Swaringen April 10, 2011 at 12:28 am

“Today’s world” for the US, hasn’t come to some places. It sounds like you never considered such a thing.

Gil April 12, 2011 at 12:26 am

Or it the Minimum Age like the Minimum Wage?

Amanojack April 9, 2011 at 5:15 am

“Economics is the art of not killing people with your good intentions.” <— That quote was made for you, Makia. People work in sweatshops because they want to. Not because they want to work in a sweatshop versus not working at all, but because they want to work in a sweatshop versus working at any of the other jobs that are available. By taking that option away, you would literally be killing people, sending others to early deaths, and causing untold misery.

Donald Rowe April 9, 2011 at 9:36 am

Let’s not leave the impression that “economics” passes favorable judgment on child labor or child prostitution.

While the science of economics *is* indifferent, people who happen to be economists are not.

The conditions that force one to make a bad choice because it is the best that is available, are political not economic. And as such, the solution is political not economic.

It is the task of economics to explain how and why an action that obviously benefits one person, or a small group, may not be the best for the whole of society.

P.M.Lawrence April 9, 2011 at 7:00 pm

Michael Kleen recently posted a couple of articles on this theme at Center for a Stateless Society, Do Sweatshops Belong in a Free Market? and More on Sweatshops and Free Markets. He does not quite get to grips with the subject, but many of the comments bring out important aspects. In particular, there is the issue of whether and how those who set up sweatshops also work towards depriving people of alternatives through channels such as conspiring with kleptocrats.

Matthew Swaringen April 10, 2011 at 12:34 am

I think you raise a good point. We aren’t talking about countries where the market follows the non-aggression principle, they conspire and bribe local governments who have no respect for private property rights.

On the other hand, I don’t think it’s deniable that to some degree something that can be described as a sweatshop is just an indication of lower wealth and productivity. It certainly doesn’t help to tell people they can’t work.

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