In Praise of Sweatshops

Nicolas D. Kristof has written a fabulous piece for the New York Times entitled "In Praise of the Maligned Sweatshop." He argues that sweatshops are a natural step in the economic progression of developing countries. They raise the demand for labor which in turn raises wages. George Reisman has reviewed the article at Lewrockwell.com. That review can be found here.

The subject of sweatshops, "fair" or "living" wages, "exploitation" etc is an extremely popular one especially among young people on college campuses. It goes hand in hand with the economic ignorance that seems to be all the rage these days. Companies like American Apparel have capitalized on this ignorance in their marketing campaigns and have been very successful doing so.

American Apparel's website states, "We don't outsource to local or developing-nation sweatshops..." and then goes on to list all the benefits it provides its employees. This is followed by the statement, "Not to suggest that we are more ethical than the next business. We're just out to try something different..."

Right. I don't sense any insinuation of ethical superiority. Do you? Now I don't have a problem with AA's marketing techniques, the way it runs its company or the fact that it doesn't outsource. They seem to have been very successful and they make a high quality product. What's frustrating is the fact that ignorance of the way labor and capital markets work is hurting the very people that those who hold these ideas are trying to help. People in developing countries will be worse off if American or European companies are unwilling to hire them for the prevailing regional wage. That's the way it is and no amount of self-righteous activism (no matter how genuine) can make it otherwise.

I've half a mind to start an apparel company and make the fact that we outsource to sweatshops a centerpiece of my marketing campaign. I know that seems counterintuitive from a business standpoint but I don't think it necessarily would be. If it's presented just right... Hmmm... well, now that that's got my creative juices flowing I'm done here. Read the Rockwell article. Reisman says it better than I can anyways.