http://www.slate.com/articles/business/the_dismal_science/19...
His argument is summed up thus:
"And as long as you have no realistic alternative to industrialization based on low wages, to oppose it means that you are willing to deny desperately poor people the best chance they have of progress for the sake of what amounts to an aesthetic standard--that is, the fact that you don't like the idea of workers being paid a pittance to supply rich Westerners with fashion items."
In the Western world this gave rise to the biggest social movement in a century, with demands to assure workers all kind of rights.
Krugman needs to motivate why we should deny third world children the same rights we demanded for our own a hundred and forty years ago, if he really wants to make that argument.
If Cambodian labourers unionize and become more expensive, the business could easily move to the next third-world country, leaving them economically worse off than before.
The problem is that the suppliers they work for are as dependent on the international companies paying them as their workers are dependent on them.
Basically, either the international companies have to act against their immediate economical interests and invest money in improving the working conditions and pay at their suppliers, or the suppliers in different countries would have to "unionize", too.
Alternatively, all labourers in all countries would have to unionize in the same timeframe (so the business can't just keep country-hopping) or the businesses would have to be forced to act against their own interests.
I think the most realistic sequence of events is that as the national economy in each country improves their workers begin to unionize and within a few decades the conditions may have improved universally. But that won't be an easy process and will likely result in a lot more protests and violence than the alternatives.
The naive ideal would be that customers force the businesses to pressure the suppliers to improve the situation, but outside a few marketing stunts I don't think that is very likely. All previous calls for boycotts have been unsuccessful and the average citizen doesn't care enough about these issues to do anything politically (aside from the obvious difficulty of out-lobbying the established lobbies).
We'll see.
> Having, at the same time, ample opportunity to watch the middle-classes, your opponents, I soon came to the conclusion that you are right, perfectly right in expecting no support whatever from them. Their interest is diametrically opposed to yours, though they always will try to maintain the contrary and to make you believe in their most hearty sympathy with your fates. Their doings give them the lie. I hope to have collected more than sufficient evidence of the fact, that -- be their words what they please -- the middle-classes intend in reality nothing else but to enrich themselves by your labour while they can sell its produce, and to abandon you to starvation as soon as they cannot make a profit by this indirect trade in human flesh. What have they done to prove their professed goodwill towards you? Have they ever paid any serious attention to your grievances? Have they done more than paying the expenses of half-a-dozen commissions of inquiry, whose voluminous reports are damned to everlasting slumber among heaps of waste paper on the shelves of the Home Office? Have they even done as much as to compile from those rotting blue-books a single readable book from which everybody might easily get some information on the condition of the great majority of "free-born Britons"? Not they indeed, those are things they do not like to speak of -- they have left it to a foreigner to inform the civilised world of the degrading situation you have to live in.
I think it makes sense to ask ourselves: why did a Western company move production from the West to this country in the first place? Probably because of lower wages.
Increasing the minimum wage is not a solution if the reason these workers have a job in the first place is that their labor is cheap.
you mean how cheap it can be. T-shirts range anywhere from $1 to $100 and probably more, but that money doesn't trickle down to the people making those shirts in the end.
What strikes me is how comforting the idea is for us as the wealthy; if the companies have an agenda to have us believe this (which they do) and the idea is very comforting (which it is), it only really matters whether we can be convinced that it's true.
Free labour is one of the things which led to the fall of the Roman empire. Nobody needs technology when you have slaves. And there are a lot of slaves in the world, just read the latest UN report on it.
One big problem with it is that it's such a cheap target for PR. It's cheaper to build an "artisan trademark" that people associate with quality in other ways than to actually sell high quality products. And even if you do manage it the hard way, your trademark would become a very valuable acquisition target, with obvious consequences.
I forget the title, but the series is essentially how they design a T-Shirt for the show, then follow how it's made; from the cotton harvesting up to the final shipping container hitting the US. It should be easy to locate.
What makes things worse (at least short term) it's automation. In 10 years robots will do this kind of job.
Historically, all nations developed with this brutal process. Many without minimum wage.
The problem isn't automation, it's that our economy is designed to make automation a bad thing. In a better system, automation would give us higher productivity and more free time. But we designed our system so that free time is a bad thing unless you're rich. People need jobs to eat, so there has to be enough work, so anything that reduces the amount of work, threatens people's livelihood.
That's the problem of our society in a nutshell. The gains of automation only go to the people at the top. They should be going to the people at the bottom.
Automation reduces the requirement of human labour. It increases our productivity. That should be a good thing. I'm in the business of putting people out of their job[0] -- that should be something we strive for. A few decades ago we believed that technology would create a utopia by doing this because we would barely ever have to work yet be as productive as ever.
Sadly our culture has this perverse fetish for needless work. You must have a job to make money because you need to make money to survive. And if your job becomes easier and you have to work less to achieve the same levels of productivity, either your work must expand to fill the gap or your pay gets reduced to reflect the reduction in work.
If we paid by productivity, even unskilled labour would guarantee ample pay.
[0]: Anyone working in the tech industry is, ultimately. Although many products result in the creation of "non-jobs" (essentially, the commercial equivalent of bureaucracy), that's merely a stepping stone and at least partially a byproduct of the mentality that more jobs are a good thing.
A change in cost for suppliers of these products doesn't move business from one country to another. And the margin a supplier makes varies greatly.
A lot of products sourced in high-street brands comes from a variety of the same global suppliers (some of which sub-contract, some do in-house, and some sub-sub contract). One month from one supplier, and another month from another (varying by continent, country, to in-country location), for a pretty much identical product. One supplier may make 10% margin, and another 25%. It is of concern to the purchaser that a supplier doesn't make much of a margin, as they're feared as being pushed under, but puzzlement that these suppliers stay in business for decades. What is more important is turn-around time. A high-street brand needs a design idea to go from cat-walk to hanger in weeks, not months. That means logistics have to be extremely tight - design sent (electronically), prototypes mocked and air-mailed back, BOM sourced and often imported (at least in part), and the super-price sensitive suppliers just can't deliver here, whatever the margin, let alone the Q+A. A day turnaround and assurance of delivery time can make a difference more important than 5-15% on the quote.
When it comes to cheap textile production, or production of the lowest quality product then yes, price sensitivity is important. But when it comes to delivering mid-level textile products logistics trump jumping to the lowest margin location (where lack of logistical facilities, bribes, un-predictable delays).
I agree things can often improve, but minimum wage has little to do with it. A functional port and road to a factory are far more important in being competitive than how much a worker costs (except for the cheapest of cheapest textile products).
Automation isn't the boogey man, we are.
>In 10 years robots will do this kind of job.
That may not be true if there is a willing supply of practically free labor.
The more jobs we automate, the more we devalue unskilled labour. I wished we would live in a world where this could universally be agreed upon to be a good thing.
Some commenters mentioned that sweatshops are a necessary evil for developing nations. It's better to have a shitty job than to have the alternative of being jobless and resorting to theft/prostitution for sustenance.
How true is such an argument?