“I love sweatshops.”
That was how economics professor Benjamin Powell, our Economic Liberty Lecture Series speaker last night, wrapped up his excellent talk on the benefits of sweatshops. An overflow crowd, mostly composed of George Mason University students, was treated to an eloquent exposition of why and how sweatshops help the poor.
This is one of the things that liberals, who are generally steadfast opponents of sweatshops, just don’t get. Their hearts are in the right place. They’re concerned about the plight of those at the bottom of the economic ladder (although their support of immigration controls belies that concern).
But as I have repeatedly pointed out, when it comes to economics, liberals just have a blind spot. They do not understand that the policies that they advocate to help the poor actually do the opposite — they hurt the poor. One of the best examples of this phenomenon relates to sweatshops.
As Powell pointed out, liberals point to the horrific working conditions that exist in sweatshops. And they’re right — such conditions are horrific, especially when compared with standard working conditions here in the United States.
But that’s not the correct comparison. The correct comparison is between the working conditions in the sweatshop and the working conditions in alternative lines of available work.
In other words, what if a Third World sweatshop was closed down? What then would the worker do to sustain his life? Powell pointed out that the worker would end up in a lower-paying job with even worse working conditions than existed in the sweatshop. Doing back-breaking manual labor on a farm at lower pay is just one example Powell pointed to.
So, when people choose to go work in a sweatshop, they’re making a rational choice — they are choosing the best of all the alternatives. When liberals succeed in closing down a sweatshop, they’re condemning the workers to an even worse plight, perhaps even starvation.
Consider, for example, the sweatshops in the United States in the 1800s and early 1900s. Men were sending their wives and children into sweatshops, where they would have to work long hours for low pay under horrible, oftentimes dangerous, conditions.
Liberals suggest that those men hated their wives and their children, as manifested by their sending them to work in sweatshops, and that it was only interventionist laws that saved mothers and children from such enmity.
Nonsense. The reason that men were sending their wives and children into sweatshops was not because they hated them but because this was the only way to enable everyone in the family to survive. If the alternative to working in a sweatshop is death by starvation, what husband and father is going to say to his wife and children, “I just don’t want you working in bad conditions and so I’m going to make you stay home and starve to death”?
Thus, for the Industrial Revolution the proper comparison is not between working conditions in the sweatshops and working conditions today. The proper comparison is between working conditions in the sweatshops and working conditions before the Industrial Revolution. Life preceding the Industrial Revolution was “nasty, brutish, and short” for most people, especially the poor. The Industrial Revolution, as bad as it was, at least provided a means by which people could survive.
How come some nations are wealthier than others? That’s what liberals never ask. They just see a massive amount of wealth in certain societies and assume that it’s a given. Then, they spend their time figuring out ways to confiscate the wealth and give it to the poor, which over time dooms the entire society, especially the poor, to lower standards of living.
Or liberals go into Third World nations and advocate interventionist laws to try to duplicate working conditions that exist in wealthier countries. In other words, they think that the government, just by passing laws that regulate economic activity, can bring into existence a wealthy country.
Nonsense again. As Powell pointed out, the key to economic development and rising standards of living, especially for the poor, lies in economic liberty, free enterprise, and the rising level of productive capital. As people, including the rich, save more money, that money goes into tools and equipment, which makes workers more productive, which means higher real wage rates.
Thus, what took women and children out of the U.S. sweatshops was not interventionist laws but rather rising levels of savings, capital, and wage rates.
So, therein lies the key to raising the standard of living of the poor around the world. To put it simply: To help the poor, stop government from helping the poor. End all governmental wars on poverty. Prevent government from regulating or controlling economic activity. Abolish income taxes and tariffs. Leave people free to engage in economic enterprise free of government control or direction. Leave people free to accumulate unlimited amounts of wealth. Leave charity entirely to the private decisions of individuals.
Within a relatively short period of time, standards of living will begin to soar, and the biggest beneficiaries will be the poor.
Finally, Powell brought up an interesting point regarding immigration. What better way to improve the standard of living of people working in horrific conditions in Third World sweatshops than to leave them free to immigrate to the United States, where they stand to earn much higher income in better working conditions?
Alas, however, it is only us libertarians who call for open borders. For liberals, who profess to love the poor, and conservatives, who profess to love the rich, open immigration is anathema.
Last night was the last segment of this school year’s Economic Liberty Lecture Series, which The Future of Freedom Foundation hosts in conjunction with the George Mason University Economics Society, a student-run group consisting mostly of libertarian students interested in Austrian economics.
The “downside” to working with student groups is that students graduate before too long and move on, which means that we have to regularly say goodbye to students with whom we have become accustomed to working.
Two good examples are Carly Reddig, who is graduating this year, as well as her predecessor Liya Palagashvili, both of whom served as president of the Econ Society. They have both been great to work with. The good news is that both of them will still be around, given that Liya is already in the graduate economics program at GMU and Carly will be there next year. Our best wishes go to both of them and, of course, to all the other members of the GMU Econ Society.