The World Needs More Sweatshops, Not Fewer

The teaser for the New York Times article "Where Sweatshops Are a Dream" read:

What the world's most impoverished people need isn't fewer sweatshops, but more of them.

The article introduced readers to the rather complex economy which has grown up around a trash dump in the Philippines.  It's too expensive for businesses which generate trash to pay regular employees to sort the trash, so hundreds of people pick through the dump looking for items of value.

Their finds are sold to middlemen who sell to organizations which realize value by recycling.  As with most such informal economies, the bulk of the revenue accrues to the middlemen, but the people at the bottom of the (trash) heap scrape out a meager existence.

The scavengers are completely off the government radar.  They receive no water, electricity, sewage, or public services.  They squat in hovels thrown together from dump salvage.

They aren't served by the education system either, so there's little opportunity to learn skills which might lead to better jobs outside the dump.

Talk to these families in the dump, and a job in a sweatshop is a cherished dream, an escalator out of poverty, the kind of gauzy if probably unrealistic ambition that parents everywhere often have for their children.

The Times understands that these people would be far better off if an international firm would open a sweatshop nearby so they could get better jobs.

Vath Sam Oeun hopes her 10-year-old boy, scavenging beside her, grows up to get a factory job, partly because she has seen other children run over by garbage trucks.  Her boy has never been to a doctor or a dentist, and last bathed when he was 2, so a sweatshop job by comparison would be far more pleasant and less dangerous.

Do-gooders who excoriate Nike for operating sweatshops forget that most sweatshop workers choose to sweat there because they're better off than they would be without the sweatshop.

There are exceptions, of course.  The government of China operates factories in prison camps where inmates work for no wages.  Some Chinese businessmen have attempted to enslave workers to avoid paying wages, but this has resulted in jail time when it's been found out.

Such aberrations aside, the Times wrote that most sweatshop employees are better off than if the jobs were not available.

My views on sweatshops are shaped by years living in East Asia, watching as living standards soared - including those in my wife's ancestral village in southern China - because of sweatshop jobs.

It's A Matter of Productivity

Do-gooders who crusade against sweatshops forget that before people can consume food and clothes, the goods must first be produced.  Taking the entire world as a whole, it is impossible for the average person to consume more goods than are produced by the average person.

A portion of the population such as children, retirees, prisoners, police, and other government employees consume without producing anything of economic value.  Economists pay close attention to the overall national productivity because the more goods are produced by whatever fraction of the population actually produces, the higher average consumption can be.

The United States has the highest percentage of jail inmates in the world; this takes a lot of people out of production.  We have a large and growing welfare population who don't produce anything, and a large and growing government bureaucracy who not only don't produce, they write rules making it more expensive for others to produce.

We've been able to provide goods for all these nonproductive people to consume because our productivity is so high that the amount of goods produced by our workers is great enough to supply goods to all these people who don't produce.

Even considering the tremendous (and quite probably world-beating) percentage of Americans who produce nothing useful whatsoever, American national per capita productivity as a whole is still the highest in the world.  Economists bicker over fine details, but it's generally recognized that our workers are productive because a) they're well educated and b) employers supply machinery which makes them more productive.

Both the machinery and education inputs to productivity require investment.  Students spend unproductive years learning how to be productive taxpayers; businesses have to save up money or take out loans to buy machinery.

Absent these inputs, we're left with hand-manufactured goods as in the days before sewing machines.  In that day, people were lucky to have two sets of garments.  What a contrast to the overflowing closets in the modern developed world!

What has this to do with sweatshops?  The dump-pickers haven't been to school.  They're pretty good at estimating the value of a piece of plastic by feeling it, but they have no skills which are worth anything to employers.

If the do-gooders restrict business' ability to hire them through such laws as minimum wage, restricted hours, mandatory health care, unionization, or any other measures which push up the cost of employing them, people who aren't worth much due to lack of skills won't have jobs at all - just as the Filipino trash pickers have no formal jobs nor hope of ever having one.

Among people who work in development, many strongly believe (but few dare say very loudly) that one of the best hopes for the poorest countries would be to build their manufacturing industries.  But global campaigns against sweatshops make that less likely. [emphasis added]

Look, I know that Americans have a hard time accepting that sweatshops can help people.  But take it from 13-year-old Neuo Chanthou, who earns a bit less than $1 a day scavenging in the dump. She's wearing a "Playboy" shirt and hat that she found amid the filth, and she worries about her sister, who lost part of her hand when a garbage truck ran over her.

"It's dirty, hot and smelly here," she said wistfully. "A factory is better."

Sweatshop jobs, like the jobs Democrats love to eliminate by increasing the minimum wage every few years, are the very first step up the economic ladder.  As we've pointed out, words that make people feel good can be helpful, but results are what count.  If well-meaning but misguided liberals raise the first step of the job ladder too high, people whose skills won't take them that high spend the rest of their lives sorting trash outside the regular economy, just as low-cost illegals work outside the regular American economy and inner-city hoodlums often turn to the informal economy and end up selling illegal drugs.

At least locking people into trash sorting increases recycling, reduces carbon footprint, and helps save the planet.  Al Gore must be pleased.

As the Times says, the world needs more sweatshops, not fewer.