Sweatshops the ‘best available alternative?’

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Of all the self-styled libertarian commentaries attempting to put the Bangladesh garment factory tragedy in “perspective,” Benjamin Powell’s is probably the worst (“Sweatshops In Bangladesh Improve The Lives Of Their Workers, And Boost Growth,” Forbes, May 2). In Bangladesh, Powell writes:

“Some 4,500 garment factories employ approximately 4 million workers. In the grand scheme of things, they are better off with the factories than they would be without them; the benefits outweigh the risks. In fact, compared to other opportunities in Bangladesh, the garment industry pays reasonably well.”

If U.S. companies like Nike reduce their footprint in Bangladesh and abandon factories there out of fear of bad publicity, “hundreds of thousands of garment workers could lose their jobs and be thrust into worse alternatives.”

Well, yeah – true as far as it goes. When a mugger says, “Your money or your life,” I’m better off handing over the money, but it’s the guy with the gun who artificially set the range of alternatives. The question you should be asking yourself, and people like Powell and the people in the C-suite at Nike don’t want you asking, is who decides what alternatives are available in Bangladesh?

It isn’t some faceless, inevitable fact of nature that is forced on the sweatshops – or on Nike – by an anonymous market. Thanks to international trademark and patent law, Nike and a few other companies are the only game in town. They can take Nike’s price or leave it. And the same “intellectual property” gives them power in the United States to sell the sneakers at a retail price thousands of percent above the actual cost of production.

Nike would rather maximize the margin it makes on its sneakers, even at the cost of people working hundreds of hours a week for a few dollars a day – and sometimes dying slow, horrible deaths by the hundreds in the rubble of their factories.

The global corporations of the 21st century are as dependent on “intellectual property” for their profits as the old national industrial corporations of the early 20th century were on tariffs.

Unlike the corporations of a hundred years ago, companies like Nike don’t actually make things. They use artificial property rights like “intellectual property” to control the conditions under which other people can make things, and to set up toll gates between the people who make things and the people who consume things. The really, really big money isn’t the ability to produce, but the ability to collect tribute for allowing production to take place.

Without “intellectual property,” those factories in Bangladesh could ignore Nike’s trademark and market identical shoes at a tiny fraction of the price. And without Nike to impose uniform pricing across the industry, they’d have to compete for local workers. It wouldn’t matter if Nike decided to pull out of Bangladesh. The workers’ livelihoods would no longer be held hostage to what Nike did or didn’t do.