Common Sense in Sweatshop Cents

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Exploitation!
Exploitation! Exploitation! That's all one hears these days in arguments
made by anti-sweatshop proponents, based on the common assumption
that a sweatshop is the only choice for most workers in the third
world.

It does not
take an economist to logically think through these statements and
find obvious fallacies. How can a sweatshop be the only source of
employment? What did people do before the sweatshop arrived?

People pushing
the idea of a sweatshop as the only choice for employment are missing
the common sense in sweatshop cents: Suppose, I want to open a sweatshop
in a third world country. I'm trying to make as much money as possible
so I pick a place with low wages. But I can't pick a place where
people are absolutely starving. I can't run a factory if all my
workers weigh sixty pounds and might die on the spot.

The factory
must locate in a place where adequate workers can be found. Before
a sweatshop comes to a location, people must have been surviving
somehow beforehand. If they were not surviving beforehand, there
would be no people. If there were no people, the sweatshop could
not open.

Some may say
that these individuals were scrounging for food in dumpsters or
were involved in prostitution before the factory arrived. This has
to be looked at logically as well. If I'm scrounging for food in
a dumpster, someone must be eating the food that ends up in the
dumpster. Someone must have a job producing wages to buy food. All
food in the dumpster comes from food on plates. If this was not
true, the food would not be in the dumpster in the first place.

The same argument
applies to prostitution. When no one has money to pay, you can't
be a prostitute. The prostitute must get money. Where is that money
coming from? There must be jobs producing money somewhere in the
local economy. One must logically conclude that some sort of economy
is operating long before the sweatshop factory ever arrives. If
this was not true, there would be no people alive to work in the
sweatshop.

A closer examination
of impoverished countries reveals the facts. These countries do
have other sources of employment, most of which is agricultural.
Agricultural work is extremely difficult with few rewards in third
world countries. Compared to working the earth, weaving textiles
can be considered light manual labor.

This truth
on the diversity of labor
by occupation
can be found in the CIA Factbook list of labor
force occupations by percentage.

Upon examining
a few impoverished countries, one immediately realizes that the
countries supposedly most "exploited" by sweat shops are
in fact mostly "exploited" by farm life. Here are a few
examples:

Labor
By Occupation Percentage

`
China
India
Thailand
Mozambique

agriculture
49%
60%
49%
81%

industry
22%
17%
14%
6%

services
29%
23%
37%
13%

Sweatshops
fall into the "industry" section of labor force percentages.
China is one of the most notorious locations for sweatshops, yet
49% of citizens are involved in agriculture and another 29% in services.

Sweatshops
are not the only option to those seeking labor. Sweatshops are the
best option available to many workers. Anti-sweatshop advocates
claim that it’s either a sweatshop or starvation. Even free market
writers make claims that it’s either sweatshops or prostitution.

A more clear
picture is one similar to the Industrial Revolution: It’s either
sweatshops or farm life. Finding employment in sweatshops more gainful,
people are abandoning the farm in pursuit of factory work.

Certainly,
the free market writers are somewhat correct. The people who get
hurt the most by closing sweatshops are children. Why? Most children
do not have the option of working on a farm. Most of the time their
only option is prostitution.

How could this
be? Why do children rely on prostitution instead of working on a
farm? Remember the productivity of a ten-year old child. A ten-year
old child is extremely capable of making textiles. A small child
could perhaps perform the task better than an adult. However, a
ten-year old child cannot do the extremely intense labor that farm
life involves.

For farming,
employers will hire strong adults. If they do hire children, these
children will be paid according to their productivity which is much
less than their potential productivity in a sweatshop.

As mentioned
earlier, the presence of massive prostitution leads to one of two
logical conclusions.
Prostitution cannot exist without paying customers. Someone has
to have the money to be patronizing this degrading profession.

The first conclusion
is that the living standards of everyone in the area are exaggerated.
People have some extra money which they spend on prostitution. If
workers do have more money than they need, this would disprove some
of the supposed "exploitation."

The second
option is the presence of sex tourism, which most certainly exists
in many parts of the world. If sex tourism exists, other services
must exist as well. Similarly with prostitution itself, supply will
be created by the demand of sex tourists.

Therefore with
sex tourism present, other jobs must be present as well. There are
many prostitutes surviving. They must be getting money from a large
demand that keeps so many alive. This sex tourism also creates demand
for other services such as taxis, hotels, and restaurants.

This shows
that even something as despicable as sex tourism creates other jobs
which are preferable to farming and probably preferable to working
in a sweatshop. The occupational percentages clearly show that all
of these countries have sizable service industries. In some cases,
the service industry is larger than the manufacturing industry.

Any larger
third-world city must have many occupations. Can someone
really believe that Mexico City or Mogadishu only run on sweatshops
and that sweatshops are the only option for workers? Any city runs
on a diverse economy. Merchants sell food, people bring goods to
the market, still others load ships destined for other parts of
the world, etc.

There are obviously
options other than sweatshops for third world country workers. These
options are far worse. The common assumption that workers are abused
and face no other options is clearly false. It’s not either "sweatshops
or starvation." Workers have evaluated options and chosen the
best choice that suits their current needs.

One must remember
that labor is a finite resource while demands and desires of the
market are virtually infinite. If the market is allowed to continue
its current path, these countries will be greatly improved as companies
will begin to compete over labor.

The solution
to this problem is not to buy less sweatshop goods but, in fact,
to buy more!

There is nothing
more wicked than to see anti-sweatshop proponents advocating boycotts.
The future of sweatshop workers relies on the market expanding its
operations into impoverished areas.

We have seen
this phenomenon during the Industrial Revolution in Europe and the
U.S. Recently, we have seen good results in South Korea and Taiwan.
These countries did not lift themselves out of poverty through laws
regulating wages and working conditions. These areas have, through
market competition, driven out the lowest forms of poverty. To eliminate
this natural progression is to eliminate all hope for the future
in the third world.

July
22, 2006

Vedran
Vuk [send him mail] is a student
of Economics at Loyola University of New Orleans, and a 2006 Summer
Fellow at the Mises Institute.

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