What Politicians Don't Want You To Know About The Sweatshop Myth

Feb 11, 2004 (Updated Feb 4, 2005)

The Bottom Line Sweatshops; repressive or a natural progression in the economic growth of a country? A counterbalance argument to progressive socialism.

Published in the March 2004 issue of the MBA Association's Monthly Business Journal. http://www.mbaassociation.org/modules.php?name=News&file=print&sid=406

In a recent interview, Presidential candidate John Kerry proposed an international minimum wage, preventing the US from conducting business with any country that does not abide by this regulation. Throughout the country a cheer went up among the progressive crowd that this will guarantee the end of sweatshops around the world. While this, on its face sounds like a noble cause the underlying thing Kerry is telling the world is, we will only do business with rich countries.

The following is written from a devil's advocate perspective on the sweatshop argument. While Kerry may be extreme on one side of the argument, as we will see from viewing the rational behind opposite perspective the best answer must lie somewhere in the middle.

There has been an international movement among progressives to put an end to sweatshops as they are exploiting poor countries and peoples for the sake of rich capitalist nations. Arguments are often backed by citing of numbers that show that employees are often paid less than $1.00 US per day for a job that would net $5.95 US per hour in the United States. Other numbers cite statistics that show that less than $0.15 US would be paid in labor costs on a shirt that would sell for over $40.00 US in New York. Of course, the most heart wrenching moments come when images are shown of the squalor that people in Vietnam, Mexico, Malaysia, and Columbia; all popular locations for the oppressive capitalist sweatshops.

At face value it seems as though sweatshops are nothing more than legalized slavery that oppress the third-world into a state of poverty while the rich continue to get richer. Why is it then that when those in Vietnam who work in the sweatshops are asked they want Nike to expand? Why is it that sweatshops are highly desired among the poorest in the poorest nations?

While the concept of sweatshops seems oppressive the economic reality of those who are employed by the sweatshops, and the countries they are located in, is much different than the Ivy League progressive view portrays.

It is in the title itself that brings the most angst to the opponents of globalization based on capitalism. Sweatshops, by definition are simply business that by first world standards pay substantially low wages for long hours and hard work. Although images are often given of children working in sweatshops, it is not shown that all demographics are equally represented and generally children are less desired as their productivity is not as great as an adult is.

Still, from a compassionate point this provides little relief to the progressive who still sees the fundamental exploitation of the first world on the backs of the third world.

This still makes a fair argument when looked at from a narrow perspective. To expand ones perspective it is important that one moves into the global history of economic growth and how the sweatshop originated.

The first sweatshops in modern history were a result of the industrial revolution as western society moved from an agrarian society to a society based on manufacture. The original sweatshops were common place in Great Britain and the United States; generally employing new immigrants in the US and Irish in Great Britain. As the economics of these countries grew into what we would now consider the first world the demographic of sweatshops moved slowly to post World War I Germany and Italy. As the fascist governments took over in these countries and the government seized all business; the history of the sweatshops fell off of the world’s radar but in reality only shifted toward military expansion. Little was heard about sweatshops again until shortly after World War II when post war Japan became a popular destination for companies looking for cheap labor. In less than half a decade Japan’s economy quickly grew beyond the affordability of most companies for cheap labor and once again the focus was shifted.

Post war South Korea was the next popular target of capitalist greed. For almost two decades South Korea (along with Indonesia) became the sweatshop hotspots. As with all countries before them, their economies grew beyond the affordability of most companies to consider them for cheap labor. With many counties moving out of third world status the greedy capitalist businesses turned their attention to two targets, smaller and poorer farming countries and the Communist markets that were opening up.

For a decade after the Vietnam war, the communist experiment drove that country into abject poverty. In the mid eighties the Vietnamese government, along with Cambodia and Malaysia opened up their borders to Western companies to employee their citizens in these sweatshops. Just as in China a few years before, these became some of the most desired jobs one could get and many people gave up their farming lives for one of manufacture.

In the metropolitan areas of China, specifically Taiwan and Shanghai the concept of sweatshop is slowly becoming unknown. More and more companies are having to move into the poorest and most rural areas as the standards of living in the Chinese metropolitan areas are becoming too high to afford the labor rates that the greedy capitalist companies are offering.

This odd snaking of sweatshops across the world, migrating to poorer and poorer areas is defined by some as the ever-expanding exploitation of capitalism on the third world. Yet an interesting thing happens with this expansion, sweatshops are a precursor of economic growth, moving industry from an agricultural third world economy to a productive first world economy.

According to Johan Norberg in his book In Defense of Global Capitalism we can always look at sweatshops as a natural and needed stage of development in a countries movement into modern society. Every first world country can trace their origins to periods when sweatshops were a part of their society. What sweatshops do is first tap that country’s economics into the competitive field of the world. Secondly sweatshops provide a living wage to thousands who, in the past had to resort to the on again off again irregular world of farming.

$1.00 US per day to the progressive may not translate into a living wage and it comes no where near close to the $4-8 US per hour minimum wages found in most first world countries. What is never taken into account is the relative spending power that that salary brings to the average third world worker far more purchasing power and greater income than they would ever think of producing on a farmer’s salary.

$1.00 US exchanges for 15,709.00 Dong in Vietnam and gives its worker a relative purchasing power of approximately $15 US. Albeit this is still no where near the first world’s minimum wage this does represent a significant increase from a farmer’s salary of 200 Dong per month. The average sweatshop worker in Vietnam can actually expect to bring in close to the national average of $300 US, all in an economy that is still mostly based on farming. No wonder that workers of sweatshops in Vietnam are petitioning Nike to expand and never join the progressive chorus of ending sweatshops.

Another unexpected result of sweatshops is a society that becomes increasingly freer, especially for women and children. Before sweatshops in Vietnam, women and children alike were forced to work their families farms, affording little or no rights beyond what they received from their families. In Vietnam like many other third world countries women are now free to move beyond the farm and have their own careers with out dependence on their family. Literacy rates among children has been increasing exponentially as they can actually receive an education instead of being forced to work on family farms.

Still, the progressive movement feels as though there should be an immediate forced end to sweatshops and the so-called exploitation of the third world by capitalist countries. The anti-globalization movement some how believes that these countries can grow to first world status on their own and the influence of capitalism is more repressive than it promotes growth. In the face of history and the desire of these countries I would have to disagree.

Unlike John Kerry, I feel we should not discriminate what countries we do business with just because they are poor. At the same time, completely ignoring sweatshop conditions and not moving for at least a betterment of business ethics relative to how they treat employees is just as extreme.

As it is, the argument will go on and as such, this article will bring more questions than answers.

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