The Ludwig von Mises Institute

The Mises Institute monthly, free with membership

September 1996
Volume 14, Number 9

Media personality Kathie Lee Gifford took quite a pounding when the National Labor Committee, a labor union organization, found that some of the clothes sold under her label in the U.S. were made by children in a Honduran "sweat shop."

Union lobbyists and their paid-for politicians paraded 15-year-old Wendy Diaz around Washington to testify about how badly the factory had treated her: long hours, few bathroom breaks, and 31 cents an hour. The unions then insisted that no more clothing be imported from this factory, or any similar one, until child labor comes to an end.

Gifford, now properly contrite, has devoted her life to ending child labor. She has endorsed the UN's International Labor Organization bid for U.S subsidies to enforce a global ban on employing young people and otherwise implement its socialist charter. Gifford also promises to donate the profits from her clothing line, now made only by adults, to a myriad of liberal causes.

A few days after the Gifford story broke, the unions took advantage of the attention and stepped up their campaign. They said that basketball shoes bearing the name of Michael Jordan were made by overseas children making even less than Kathie Lee's kids.

But the story did not take off like Gifford's. The reason: Nike fought back. It pointed out that the workers in Pakistan who make Nike products earn five times the pay of other workers in that country. Far from exploiting children, Nike is actually doing the workers of Pakistan a great service by importing shoes.

Basic economic logic explains why. If young people and their families in the third world would be better off idle, they would stop working. If they could get higher wages for the same work, they would change jobs. If they could make a better investment in their future in some other way, they would do so. As it stands, however, these supposed "sweat shops" are the best thing that's happened to the third world in decades.

Let's return to the Gifford case. Ten years ago, Honduras had virtually no assembly plants. But with a booming international market for clothing, factories have sprung up all over the country to offer a way out of poverty and disease. Today, the country has 160 assembly plants that employ some 75,000 people.

Those lucky enough to work in them are doing well in a country where per capita income is $600 a year and unemployment is 40 percent. Plants routinely subsidize lunch, offer free medical care to employees, and are air conditioned--benefits unheard of in other lines of employment.

As one worker told the New York Times, "This has been an enormous advance for me, and I give thanks to the maquila [factory] for it. My monthly income is seven times what I made in the countryside, and I've gained 30 pounds since I started working here."

The labor force is extremely fluid, bid from factory to factory at ever higher wages. If a worker doesn't like the terms, he goes elsewhere. The owners try to make their working conditions better to attract the best employees. As workers and factories becomes more productive, they command a higher wage. Already, wages are on the rise in Honduras.

The denunciation of child labor assumes people in Honduras have the option of keeping their children fed and idle for 18 years. But this is fantasy. As Wendy Diaz herself said, she worked long hours to provide food and clothing for her two younger brothers, who might otherwise have starved.

Late in the day, she even urged the U.S. not to cut off trade, for fear the factories would have to shut down and her friends would be forced into prostitution. But the damage was already done: frightened by the U.S. media campaign, the factory started laying off workers under 16 and stopped hiring employees.

The issue of child labor is hardly new. In 1802, the British Parliament passed the first law against child labor in factories. It was the beginning of a legislative process that continues well into this century. Historians usually portray anti-child labor crusaders as humanitarians. On the contrary, they succeeded only in cutting off economic opportunity, and making children less valuable to their parents.

The pre-factory age was not a time of happy, contented kids. >From 1730 to 1740, 75 percent of children in England died before age five. From 1810 to 1829, supposedly the evil age of the factory, infant mortality fell to 32 percent and would continue to drop. Capitalism and the industrial revolution gave youngsters a chance to survive.

Nassau Senior, one of the great British economists of the mid-1800s, noted that most of the agitation for the anti-child labor Factory Acts came not from humanitarians, but from organizations of adults who wanted more textile work for themselves. "They got up therefore a frightful, and (as far as we have heard and seen) an utterly unfounded picture of the ill treatment of the children," Senior wrote.

So it is today. American labor unions and their allies paint a horrific picture. And they offer a theory of economics to back it up: by purchasing products made by exploited youngsters, American consumers are forcing them into a living Hell. Stop buying the products, make them in the U.S. instead, and the children will be free to go to play and go to school.

Factory owners in Bangladesh once faced international sanctions unless they stopped using child labor. Oxfam, the British charity, reported that the factory laid off 30,000 child workers. The children then took more dangerous jobs, with thousands becoming prostitutes or starving.

Like their English counterparts of 150 years ago, the unions who pinned Ms. Gifford to the wall have a dark, hidden agenda. Their goal is not to help children; it is to cut off imports, rip off American consumers, and pad their own wages at everyone else's expense. They have no plans for dealing with the problems of Honduras's children after they've been sent packing. As a union official told the New York Times, "I'm not an economist."

Ironically, when we hear accusations of child labor in Honduras, Pakistan, Bangladesh, it's a sign these country is on the right track. It's suggests they are becoming competitive with monopolistic unions here. But instead of competing fair and square, the unions turn to protectionist politics and media propaganda.

The best way to improve the lot of third-world children is not to boycott but to buy the products of their labors. It is the old Kathie Lee Gifford, not the new and improved one, who is the real humanitarian.

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William Anderson teaches economics at North Greenville College

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