2013-06-28

Making Bangladesh Suffer

I'll take a break from philosophy today and focus on the Obama Administration's recent decision to cut "trade benefits" (whatever those are) to Bangladesh. Reuters called the decision "mostly symbolic," but I wonder how symbolic Bangladeshi factory workers will feel that it is when their work decreases and they start to make less money.

Well, there are many false and idiotic reasons to restrict trade. I was curious which one Obama would decide to cite. He said, according to Reuters, "I have determined that it is appropriate to suspend Bangladesh ... because it is not taking steps to afford internationally recognized worker rights to workers in the country."

People who subscribe to this viewpoint believe that two countries must not trade with each other unless the poorer country pays its workers "decent" wages under "decent" conditions, and so on. The question is, what is "decent?" In Italy, for example, workers earn lower wages than in the United States, but are they "decent" wages? At $14,000 per year, an Italian garment worker is at or below the US poverty line. Shall we eliminate trade benefits to Italy? And if not, what is the appropriate line to draw?

This argument does not end at the Bangladeshi or Italian borders. Factory workers in Kansas, after all, make lower wages than factory workers in New Jersey. If Obama cared about the wages and working conditions of factory workers, then he should also cut all trade benefits between Kansas and New Jersey unless and until factories in Kansas set their working conditions exactly in line with those in New Jersey. Does anyone actually believe reducing trade between US states would equalize wages and working conditions between them? Does anyone believe that we can make Mississippi a more wealthy state by doing less business with them?

Garments are produced in Bangladesh precisely because wages are lower there. If wages increase, there is no longer any reason for an international garment company to manufacture garments in Bangladesh at all; it would be cheaper to do it at home. It is not merely the cost of wages that goes into factory work, but also the shipping costs, the political costs (money paid to foreign governments to "grease the wheels" enough to clear the regulatory hurdles), the higher taxes paid to the foreign countries, and so on. Increase the total cost of business, and the dynamic changes for the company. They will simply close the factory doors and do their business elsewhere.

Considering the reality of the situation, which do you think is better for Bangladesh: Factories in which there may be questionable working conditions, or no factories at all?