In Praise of Sweatshops
By Greg Mankiw
A former ec 10 student calls to my attention a great article in today's NY Times by columnist Nicholas Kristof. An excerpt:
Well-meaning American university students regularly campaign against sweatshops. But instead, anyone who cares about fighting poverty should campaign in favor of sweatshops, demanding that companies set up factories in Africa. If Africa could establish a clothing export industry, that would fight poverty far more effectively than any foreign aid program....
The problem is that it's still costly to manufacture in Africa. The headaches across much of the continent include red tape, corruption, political instability, unreliable electricity and ports, and an inexperienced labor force that leads to low productivity and quality. The anti-sweatshop movement isn't a prime obstacle, but it's one more reason not to manufacture in Africa.
Imagine that a Nike vice president proposed manufacturing cheap T-shirts in Ethiopia: ''Look, boss, it would be tough to operate there, but a factory would be a godsend to one of the poorest countries in the world. And if we kept a tight eye on costs and paid 25 cents an hour, we might be able to make a go of it.''
The boss would reply: ''You're crazy! We'd be boycotted on every campus in the country.''
So companies like Nike, itself once a target of sweatshop critics, tend not to have highly labor-intensive factories in the very poorest countries, but rather more capital-intensive factories (in which machines do more of the work) in better-off nations like Malaysia or Indonesia. And the real losers are the world's poorest people.
Some of those who campaign against sweatshops respond to my arguments by noting that they aren't against factories in Africa, but only demand a ''living wage'' in them. After all, if labor costs amount to only $1 per shirt, then doubling wages would barely make a difference in the final cost.
One problem -- as the closure of the Namibian factories suggests -- is that it already isn't profitable to pay respectable salaries, and so any pressure to raise them becomes one more reason to avoid Africa altogether. |
