More Genius from George W. Kucera! The Sweatshop Myth The most common example is Nike in Indonesia a couple of decades ago. However, the same argument applies to the workers who fled to the cities searching for better lifestyle during the industrial revolution, or any other class envy based argument. I am going to use a hypothetical sweatshop started by Fred in Grinding Povertia (GP), a country where there is little accumulated capital and thus poor living conditions. Fred, the “greedy capitalist”, sees an opportunity to produce shoes cheaper in GP, so he invests to build a simple factory there and puts up signs for the locals to see offering $1/ day to work in his factory making shoes. People line up for miles and there is 3 month waiting list for openings at his factory after it starts operations. Back in the US, people accustomed a much higher standard of living, start complaining that $1/day is outrageous and that the working environment is “inhumane”. What are the facts? The population there has made it clear by their actions that Freds job offer is better than all of the alternatives available to the people. If Fred has not deceived them, then they all know that the working conditions are Spartan, the work hard, and the wages low. This combined with the fact they still in mass wish to work there can only mean that ALL alternatives available to these people are worse. Put differently, if Fred had never come, those he ultimately hired would have been worse off. Meanwhile, if permitted to stay and “exploit” the workers, what will happen over time is more businesses like Fred’s, once aware of his success there, will show up and more or less repeat what he did. This will eventually drive the wage rate up and, as competition increases for the waning supply of labor, lead to better working conditions. Over time, capital will accumulate; causing living standards to rise across all socio-economic groups in GP so that GP will have to change its name as the mass of the population will no longer be living in grinding poverty. BTW: This is exactly what happened with Korea, Malaysia, Singapore, and with different details, every single country in history where the masses have escaped “Grinding Poverty”.
Posted on: Sat, 03 Jan 2015 18:59:18 +0000
Trending Topics
Recently Viewed Topics
© 2015