In Defense of Sweatshops

Roderick Long has written a rebuttal over at Bleeding Heart Libertarians to the LearnLiberty video Matt Zwolinski did on how sweatshops can help the poor escape poverty. Long’s argument is short on specifics, but his conclusion (sweatshops are bad and we should try to find ways of getting rid of them) is highly appealing, even to economically literate libertarians.

I can’t respond to all of it, but I’d like to address two points he makes.

It may be true that sweatshop employment is preferable to the available alternatives, but we need to ask why these are the available alternatives; and in most case the answer is that these workers live under oppressive regimes that have violently closed off other options – which casts doubt on the description of the workers’ choice as “voluntary.”

First, notice the vast concession that sweatshops are the best option for the extremely poor in economically undeveloped countries. But what of the grand why? question–surely we libertarians can point the finger squarely on their corrupt governments, can’t we? This may be true, in some greater historical sense, but even if those evil regimes were immediately moderated or done away with, the people of those countries would still be living in destitution, without infrastructure, capital, or skilled labor.

He refers to the “other things” we should be doing to help get the poor out of horrific sweatshops, arguing that libertarians like Matt are ignoring steps to make life better (rather than merely not worse) for the poor. But he fails to discuss how economic development actually happens. How does a country go from poverty to wealth? It works its way there. Growth works like a ratchet, not a skyhook; you cannot skip squares 1 through 99 on your path to prosperity. Every move must be made from the starting position to the next best option. There are no shortcuts or panaceas.  In developing economies, you must work with the material you have available, perpetually improving it, growing it, and refining it.

Sweatshops are important to the well-being of the world’s poor not merely because shutting them all down would send the workers back to even worse jobs. Sweatshops are themselves a method of ratcheting an economy out of dirt poverty and towards a modern industrial economy. These factories are economically useful because they promote foreign capital investment in countries with little native capital and shaky capital markets. They prompt improvements to local infrastructure, like bigger ports, better roads, safer sewage systems, and more reliable electrical power. They generally offer much higher wages than other labor opportunities, increasing workers’ purchasing power and allowing for personal savings. They improve human capital by training workers. All of these things are vital assets to a developing economy.

Consider the cases of India and China, arguably the last 20 years’ biggest success stories in terms of both poverty alleviation and economic growth generally. Over a billion people have moved out of poverty in these countries as a result of economic liberalization that reduced their corrupt governments’ incessant and dangerous meddling with the economy. The result was a miraculous and rapid ascent from 3rd world stagnation to economic superpower. While no steps can be skipped, as workers’ salaries rise, factories will move to adapt to the wealthier and higher skilled labor market. Capital equipment begins to replace labor intensive production, as it long since has in the United States. Sweatshops are just a first step for countries evolving from rural agriculture towards an industrial market economy.

As Jeremy Weiland asks, why should libertarians expend “so much precious time, energy, and money on justifying” a bad situation, rather than investing that same “time, energy, and money into advocating for an improvement in the set of choices,” so that sweatshop workers have “better options that are not demeaning, dangerous, and unjust?”

This is facile. The only reason we are talking about sweatshops at all is because there is a large, politically active group of agitators trying to make a difficult situation worse. Libertarians are standing in the way of death and destitution for millions–that’s not a fruitless effort to “justify” a bad situation. We want poor people to be free to improve their own lives, by expanding the choices available to them, rather than coming up with some high-handed plan for their society, half a world away, and foisting it on them.

Weiland and Long ignore that if workers earn a higher wage at a sweatshop, working there vastly increases their options, by allowing them to afford a higher standard of living. As any decent economist recognizes, improvements to working conditions are benefits to workers, just like wages or dental, that are paid for by workers. This is why as societies become wealthier they can afford safer and better workplaces (it is also why environmental quality tends to improve as societies grow richer–countries can start to afford basic things like cleaning up water and air quality that would have been luxuries in poorer times. As anyone who has seen China’s industrial cities knows, they are unfortunately not there yet).

If you care about working conditions in the 3rd world, you ought to be trying to make the poor richer! Workers choose their compensation–wages, vacation time, fringe benefits, or workplace safety–in the proportions that seem best to them. You could indeed make sweatshops safer if you also reduced wages, and vice versa. While it’s not obvious to me whether more wages or better working conditions would be more valuable to sweatshop workers, it is grotesque western arrogance to override their choices and tell them what they should value or where they should work. Nor do I think that respecting their right to work out that problem for themselves qualifies as callous indifference.

Workers in the developing world are engaged in a monumental personal and social struggle to claw their way out of poverty, and their path is not eased by western elites insisting that their professions be as comfortable as the UAW in Detroit before they have our permission to seek a better life. No sober evaluation of the facts (as opposed to hand-wringing over anecdotes) lends support to the notion that jacking up the cost of doing business in the developing world will help anyone, nor does it lend credence to the idea that the best the world’s poor can hope for is to have their economic decisions overridden by the West’s armchair “experts” on development economics.

We should always be very careful that we are not judging policies by their intentions rather than their results. What you desire to be true cannot necessarily be mapped onto reality, even with the most extreme applications of force. In this case, the “moral principle” behind the opposition to sweatshops appears to be that it is better for you to feel good about where your iPhone is made than to actually do good for those who make it. We should know better.