Bangladesh Tragedy

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The Bangladeshi people have suffered from a spate of fires and building collapses in textile factories. In the first few months of 2013, these tragedies have killed some 1100 garment workers. The victims were in Dhaka, Bangladesh, in the Rana Plaza building in Savar, an industrial suburb. Five garment factories in the building were involved.

It is one thing, and par for the course, that our left wing friends would blame these horrid events on their usual suspects: greed, capitalism, free enterprise, entrepreneurship, economic freedom. Nor is it too surprising that these charges come coupled with demands for socialism, regulation, government oversight.

But it is indeed shocking, shocking, that the Wall (War) Street Journal, noted for at least some slight devotion to free markets (at least on its editorial pages) would echo these charges. This periodical even goes the “progressives” one better, by dragging into the indictment a totally new economic actor, the consumer.

Yes, according to a War Street Journal headline, the Bangladeshi tragedy is indeed the American consumers’ fault: “Rushing to Satisfy Hunger for Cheap Clothes: Americans’ Taste for ‘Fast Fashion’ Spurred Bangladesh, Site of Factory Tragedies, to Add Capacity” (Zimmerman and Shah. 2013).

The consumer is king, according to Keynes and the Keynesians. But it would appear there are clay feet all over the place with regard to these majesties. The WSJ goes so far as to single out a shopper at a Zaro store in Dallas who purchases more “$16 bejeweled T-shirts and $10 ruffled tops” than she should have (Zimmerman and Shah. 2013). Nor are low prices a good thing in this case as they usually are: “Americans’ appetite for cheap clothes is one of the strongest of the economic forces that led to a boom in Bangladesh, with the resulting race to add manufacturing capacity setting the stage for the series of horrific accidents. U.S. consumers have become accustomed to spending relatively little on clothing compared with other items – and getting a lot for their money” (Zimmerman and Shah. 2013).

The greedy consumer? It would appear that this is indeed the case, at least to the economic savants who write for this yellow journalistic rag. According to Wikipedia, “Yellow journalism, or the yellow press, is a type of journalism that presents little or no legitimate well-researched news and instead uses eye-catching headlines to sell more newspapers.” This sick excuse for an article would appear to fit that description to a “T.”

In actual point of fact the proper analysis of this awful event is far different. It is not at all the fault of the any of the economic actors’ in the capitalist system; certainly not consumers and not even factory owners. Rather, the blame should be cast in an entirely different direction. Yes, you guessed it, the government in general, and its building codes in particular, are the villain in this case.

What are building codes? These are mandates from our masters in the “public sector” that homes, offices, factories, mills, must comply with minimum safety and other standards. If not, it is illicit to construct them at all.

These pronunciamentos have two deleterious effects. First, if they are pitched too high as they often are in underdeveloped countries, edifices will not be built at all if the law is obeyed. But which is better, no housing at all, or very little of it, and vast numbers of people suffering from homelessness, or inferior construction? Obviously the latter, as demonstrated by the fact that people choose to take advantage of these shelters; they always had the choice of remaining outside. They “vote with their feet” preferring to occupy buildings known to be not quite the right thing, rather than avoid them. Those who died in these tragic fires, building collapses, were not drafted to occupy them; they were not compelled to live in those premises. (Of course, if there was fraud involved, then all bets are off in this regard.) The implication here is that more people would have died of exposure, or starvation, had these inferior buildings not come into being.

If people do not obey the law, housing is then constructed illegally, in defiance of the rules. But then we enter the black market, which is always inferior to the legal market if for no other reason than that the criminal element becomes involved.

When the government gives its imprimatur to construction, as it did in the Bangladesh case, it and it alone must bear the responsibility for any subsequent disaster. It and it alone certified these structures with its warrant of occupancy. (When the FDA approves of a drug which later turns out to be harmful, does it ever man up and take responsibility? Of course not. But it bears it in any case. The same is true here.)

Instead, that state, along with a media pile-on, is holding responsible the building’s owner, Sohel Rana. So much so that he tried to flee for his very life from an angry mob.

Why is it that fires, building collapses, are far more rare in the developed world than in the underdeveloped one? Is it because the former have better, stricter, more intrusive building codes? Not a bit of it. Those written in the third world can be as obnoxious as any enacted in the first. No, it is because the former are far wealthier than the latter and can afford to construct more safely. “Wealthier is healthier.” And why are some countries richer than others? This is due to more investment in both human and physical capital. What accounts for this divergence, pray tell? Some nations are safer for investments than others; they have less regulation, bribery, fewer nationalizations. And what accounts for that in turn? Economic freedom; it varies from place to place. So, gentle reader, if you really want to safeguard workers from fires, cave-ins, embrace laissez faire capitalism, and ignore the Wall Street Journal for the socialist rag that it is (at least in this one case).

Zimmerman, Ann and Neil Shah. 2013. “Rushing to Satisfy Hunger for Cheap Clothes: Americans’ Taste for ‘Fast Fashion’ Spurred Bangladesh, Site of Factory Tragedies, to Add Capacity.” Wall Street Journal, May 13.

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