Sweatshops all in one post

To wrap up the series I wrote on sweatshops, here are all of the relevant links:

• Sweatshops - Introduction
• Sweatshop Definitions - an attempt to define sweatshops
• Sweatshops and Pay - a discussion of pay, living wage, evidence, questions
• Average wages and average consumers: a mistake - how critics can go off the rails
• My solution to sweatshops - certify quality, not compassion

I believe that the term sweatshop is thrown around far too frequently, that bad assumptions are made, that much of the relevant discussion hides an agenda. The informal definition of sweatshop seems to be, "Any domestic factory that hires foreign labor, any factory operated outside the US, any apparel factory, or any factory used by one of the non-PC companies (Nike, Gap, etc.)." This is disingenuous and does not reflect any deep thinking or research by the speaker/writer. A slightly deeper, yet still not very serious definition seems to be commonly expressed as, "Any factory in which people work long hours in bad conditions for low pay." I don't believe this is serious because it poses more questions than it answers, since "long hours", "low pay", and "bad conditions" are not defined. Long, bad, and low ... relative to what? Certainly not to the next best alternative for many of the laborers; certainly not relative to what was thought to be long, bad, and low just a few years in the past; and certainly not relative to some non-apparel industries in the present. Therefore, I proposed to separate factories (whose hours, conditions, and pay may yet be unacceptable to present day, average Americans who have better alternatives) from sweatshops by this definition:

Any factory where the workers are legally prevented from quitting, striking, or organizing, and/or where the employers have perpetrated a fraud upon the workers by successfully misrepresenting the conditions of work.

My definition assumes that workers are in the best position to make judgements about their alternatives. Under this definition, prison factories, factories staffed by humans smuggled and held captive by organized crime, and other such factories qualify as sweatshops. Factories that you turn your nose up at, but which locals line up to work in, should simply be called factories, and the workers that work there should be able to retain their dignity rather than be wept over as victims by average Americans with a strong urge to treat everyone else as a child.

The next point I wished to make was that it is a mistake to think about the effects of paternalist policies in terms of how they effect the average prices, average laborers, or average consumers. It isn't the average that matters: it's the marginal price, marginal laborer, and marginal consumer that matter. This was the essential insight that broke economic price theory away from the cost-of-production misunderstanding that kept the classical economists from piercing some apparent paradoxes that riddled their explanations. Today, it keeps social critics from understanding why their theories seem to result in unintended consequences and perverse outcomes that need to be swept under the rug in the interest of not being confused by facts.

One solution suggested for sweatshops was to force everyone to pay higher prices because this would force factory owners to increase their workers' productivity. I believe the thinking on this was backwards, not only because it was based on average workers and average consumers, but because the evidence suggests that this will have one of those perverse outcomes. I think it's always more constructive to provide a solution in addition to a criticism instead of just a bare criticism, so I suggested my own solution to the problem of sweatshops. Rather than insisting on raising wages and prices with no compensation to consumers, I think that activists and others should insist on improved quality in their apparel and footwear.

Companies that make good quality manufactured goods should use management techniques that guarantee continuous improvement, standardized and documented processes, and flow. The production system developed by Toyota, whose family background was in textile manufacture, is now known as Lean Manufacturing. Experience shows that workers immersed in this type of factory management are more satisfied with their jobs, that they are more productive, and that they learn more about the craft of design, development, and production. There is a reason that the Toyota factories in the US have resisted unionization: the workers are already satisfied with their pay, work environment, and hours. Consumers are happy with the results. Toyota is preparing to challenge GM for leadership in world production.

sweatshops