From Greg Mankiw:
A great John Tierney column in today's NY Times. A brief excerpt:
Has
any organization in the world lifted more people out of poverty than
Wal-Mart?...Making toys or shoes for Wal-Mart in a Chinese or Latin
American factory may sound like hell to American college students --
and some factories should treat their workers much better, as Strong
readily concedes. But there are good reasons that villagers will move
hundreds of miles for a job. Most ''sweatshop'' jobs -- even ones
paying just $2 per day -- provide enough to lift a worker above the
poverty level, and often far above it.
Moreover, they are better than the alternative such workers face. Forcing "sweatshops" to pay higher wages would likely result in some workers getting higher wages, but the least skilled (and the ones most deeply in poverty) are the most likely to lose their jobs. Boycotting their products forces many of their workers out of their jobs. The demand for labor is a derived demand: it depends on the demand for the product produced by labor. A boycott results in a decrease in the demand for the product and, therefore, the workers that produce it.
Both measures forces some workers into their next best alternative line of work... their next best line of work, and they necessarily must be made worse off.
From the comments in Mankiw's post:
My brother is an executive in the clothing business who is responsible
for importing garments from third world countries where they are made
in factories that could be described as sweatshops. One of his
responsibilities is inspecting the factories to ensure that they meet
international standards -- e.g. no padlocks on the fire exits.
He
has explained to his nieces: "Would you rather be working in the
factory, under a roof, getting paid a wage, or spending all day in a
rice paddy covered by leaches."
The Emirates Economist, back from a blogging vacation (?), has more of the Tierney article here.
Update: Division of Labour has more.
