In (sort of) Defense of Sweatshops

Today was the first day of classes, and my Econometrics professor started the term off with a NYT's letter to the editor, responding to a report on an econometric study that can determine the quality of a wine without any more data than the weather reports from the year.

Basically, the letter to the editor said that wine quality is too difficult to be determined by an economist, who are all cold and out of touch with reality. My class lamented together for a moment, thinking of all the persecution we, as students of the dismal science, have faced.

One persecution I have faced for an argument I could never win, nor any economist ever could, is one on the benefits of sweatshops.

I have only dared to make this argument a few times, and have quickly been silenced by my own sense of guilt and social norms. Yet, anyone who has taken an Intro to Development Economics course knows how the pro-sweatshops argument goes:

Third World countries have a comparative advantage in cheap labor. People in Third World countries need money, and any job is better than no job. Work will be hard, but money start to flow in to the economy and eventually the working conditions will get better. Then same thing happened in the US.

And the counter-argument:

Sweatshops are forced on to people, and the capital injection that they provide are only temporary, as many transnational corporations will pick up and leave when the wages get too high.

And on, and on...

An op-ed piece in the NYT today tallied up one point for the sweatshops. It was written by Dana Thomas, taken from her new book "Deluxe: How Luxury Lost Its Luster," which I am very excited to read, as soon as it comes out in paperback. The op-ed was about the dirty deeds behind counterfeit purses, and it narrated her going and freeing young children in China from sweatshops manufacturing fake purses.

She said that as she left, these children "threw bottles and cans at us. They were now jobless and, because the factory owner housed them, homeless." Sweatshops are in no way sustainable, but this glimpse into one shows that a solution to sweatshop labor is not as easy as shutting them all down.

Another NYT's piece reported yesterday that wages in China (seemingly the poster-child for sweatshop labor, if you want to call it that) have increased by a significant amount in the past few months, in some cases almost doubling. Employers are having a difficult time finding employable people willing to work the hours and at the pace their "factories" require, causing wages to rise. Another point for sweatshops. (To be fair, Thomas mentioned that counterfeit-purse-factory workers make less than half of what normal sweatshop workers make.)

As I said before, sweatshops are in no way sustainable. I do not even think, at the level they are operating currently, they are a stepping stone to bigger and better things for Third World countries. But when reading about those children that threw bottles at their supposed "liberators", I remembered that stopping sweatshops and all the evils they impose is not as easy as knowing where your shirt came from. You need to know why it came from there, why you paid what you did, and what happens if you don't buy a shirt from there again.


Note: Check out this op-ed from Grinnell's own S&B, by the professor I mentioned in the beginning of this post, to hear some more arguments for sweatshops. (You have to get the bottom half first.)