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No sweat
By Dr Madsen Pirie

At the Globalisation Institute, Alex Singleton draws attention to a piece on sweatshops in the Christian Science Monitor. It covers a survey by Benjamin Powell and David Skarbek of places which have, by Western standards, "abhorrently low wages and poor working conditions." Despite this, they find that sweatshops often lift people out of poverty, and are far superior to the alternatives available in the countries concerned.

We examined the apparel industry in 10 Asian and Latin American countries often accused of having sweatshops and then we looked at 43 specific accusations of unfair wages in 11 countries in the same regions. Our findings may seem surprising. Not only were sweatshops superior to the dire alternatives economists usually mentioned, but they often provided a better-than-average standard of living for their workers.
The apparel industry, which is often accused of unsafe working conditions and poor wages, actually pays its foreign workers well enough for them to rise above the poverty in their countries. While more than half of the population in most of the countries we studied lived on less than $2 per day, in 90 percent of the countries, working a 10-hour day in the apparel industry would lift a worker above - often far above - that standard. For example, in Honduras, the site of the infamous Kathy Lee Gifford sweatshop scandal, the average apparel worker earns $13.10 per day, yet 44 percent of the country's population lives on less than $2 per day.

In 9 of the 11 countries they examined, the average reported sweatshop wages equalled or exceeded the average incomes for those countries, in some cases by a large margin. The facts seem to support the notion that, far from exploiting people in poorer countries, outsourcing by Western companies offers them opportunities to better themselves and move up the economic ladder. Instead of boycotting such goods, we should be buying more of them.



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Adam Smith (1723-1790)
Adam Smith was the great Scottish philosopher and economist best known for "The Wealth of Nations", his pioneering book on free trade and market economics.

A wide selection of material about Adam Smith is now available on the Adam Smith website. This includes the full text of his two major works, The Theory of Moral Sentiments and The Wealth of Nations.