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Quick Musings on Sweatshops and Immigration

  • Factory Sewing Floor

Rhodes hosted a speaker from the anti-sweatshop movement on Wednesday night; I wasn’t able to attend because I was giving an Econ 100 exam, but after conversations with a few students, it sounds like the talk was pretty predictable: sweatshop conditions are terrible, the wages are low, isn’t it unconscionable that Nike pays its executives so much and sweatshop workers so little, multinationals earn enormous profits and can afford to pay more, the argument that closing sweatshops will push poor people into starvation or prostitution is crazy*, economists who disagree are morally corrupt, etc., etc.

Indiana University economist Justin Ross has referred to economics as “the art of not killing people with your good intentions.” This is an issue on which the art of economics is especially important because sweatshop opponents are often unintentionally and sometimes defiantly causing unnecessary misery for the people they claim to want to help. Let’s lay aside for a second that the evidence in favor of “sweatshops” is substantial (here’s a suite of resources from Ben Powell, courtesy of The Google) and seek sympathy with the anti-sweatshop crowd. It’s true that sweatshop opponents are making a serious mistake by treating western wages and working conditions as the relevant alternative, and they are making another serious mistake by assuming that western wages and working conditions can be established by pure fiat. Here’s a good passage from one of Ben Powell’s articles explaining why sweatshop wages are so low:

Wages are low in the third world because worker productivity is low (upper bound) and workers’ alternatives are lousy (lower bound). To get sustained improvements in overall compensation, policies must raise worker productivity and/or increase alternatives available to workers. Policies that try to raise compensation but fail to move these two bounds risk raising compensation above a worker’s upper bound resulting in his losing his job and moving to a less-desirable alternative.

Sweatshop workers’ alternatives are lousy in part because of their home-country institutions, but there’s more to it than this. Western countries with restrictive immigration policies also keep those alternatives lousy by refusing potential immigrants (aside: I know Hans Hoppe’s argument about invitations and immigration; my guess is that under an open-border policy there would be a surfeit of invitations for potential migrants from poor countries). The evidence is pretty clear that new immigrants at virtually every skill level are even better than a free lunch: we get more and better lunches than we would get in their absence (for more, here’s…another suite of resources from Ben Powell; his work on the rent-seeking costs of immigration restrictions is especially important). I’ve written a few pieces on immigration for Forbes (1, 2, 3). Lant Pritchett’s $0, downloadable Let Their People Come was a game-changer for me.

Anti-sweatshop groups are fighting the wrong battle. To borrow from the economist David Henderson, we don’t help people by trying to forestall the decisions they actually make. We do much better for them by expanding their options. If you’re part of the anti-sweatshop movement, the most effective thing you can do is work to fight the popular-but-incorrect arguments against immigration in the west.

*-Is it? I quote Jagdish Bhagwati’s In Defense of Globalization, page 71:

…simply proscribing the use of child labor is unlikely to eliminate it; it will only drive poor parents to send their children to work by stealth and often into even worse “occupations” such as prostitution. This happened in Bangladesh, with some young girls falling into prostitution when garment employers who feared the passage of the U.S. Child Labor Deterrence Act (1993)…which would have banned imports of textiles using child labor, dismissed an estimated fifty thousand children from factories.

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