Sweatshops make poor people better off
Sweatshops are awful places to work. But they are often less awful than other jobs sweatshop workers could take. And this is the basic argument in defence of sweatshops. When people argue against them, the question we should ask is: “Compared to what?”. Most evidence suggests that sweatshops pay better than the alternatives. It’s hard to collect reliable data in many poor countries, but Ben Powell and David Skarbek’s 2006 paper “Sweatshops and Third World Living Standards” uses wage data given by anti-sweatshop campaigners to estimate wages for sweatshop workers in ten countries compared to average National Income. This, if anything, should underestimate sweatshop workers’ earnings.
Again, it’s difficult to know how many hours the average sweatshop worker does every week, but most anti-sweatshop campaigners suggest that it is more than 70 hours per week. The results should be taken with a pinch of salt, but Powell and Skarbek found that sweatshop wages exceed average income in between eight and ten out of ten countries surveyed, depending on how many hours were worked.
In nine out of ten countries, “working ten-hour days in the apparel industry lifts employees above (and often far above) the $2 per day threshold.” And “in half of the countries it results in earning more than three times the national average”! (Powell's defence of sweatshops, here, is excellent. His book on the topic is self-recommending.)
Critics of sweatshops point to the 1,000+ people killed and 2,500+ people injured by the collapse of the Rana Plaza sweatshop in Bangladesh in 2013. This was indeed grotesque, and evidence of the poor conditions that many sweatshop workers have to work in.
But what is their next-best alternative? Subsistence farming still dominates many of the countries that sweatshops operate in – in Vietnam, 59% of workers are self-employed in farming; 1.5% work for businesses owned partially or fully by foreign firms. And farming – particularly subsistence farming – is one of the most dangerous occupations in the world.
The International Labour Organisation estimates that agricultural workers suffer 250 million accidents every year, and say that in some countries the fatal accident rate is twice as common in agriculture as in other industries. “Out of a total of 335,000 fatal workplace accidents worldwide,” say the ILO, “there are some 170,000 deaths among agricultural workers.” As horrendous as the Rana Plaza incident was, anti-sweatshop campaigners have not shown that sweatshops are more dangerous than sweatshop workers’ next-best alternative.
Sweatshops seem to have good impacts on women in particular. A study by researchers at the Universities of Washington and Yalethat I blogged about last year looked at different villages in Bangladesh – some close to sweatshops, some not.
In the villages close to sweatshops, girls were substantially less likely to get pregnant or be married off (28% and 29% respectively, and this effect was strongest among 12-18 year olds) and girls’ school enrolment rates were 38.6% higher. The authors say that these effects were likely due to a combination of wealth effects (richer families need to marry off their daughters less early, and can afford to send their daughters to school for longer) and the fact that garment factory jobs reward skills, increasing the value of education.
And what do workers themselves think of sweatshops, given not just wages but other non-monetary compensation as well? Using field interviews with thirty-one sweatshop workers in El Salvador, David, Emily, Brian and Erin Skarbek found that “workers perceive factory employment to provide more desirable compensation along several margins.”
This is not to condemn all work done ‘against’ sweatshops. Using data from Indonesia, the World Bank's Ann Harrison and Jason Scorse found that 1990s campaigns to improve conditions for sweatshop workers in the developing world seem to have led to real wage increases without significant unemployment effects, though some smaller factories did close.
The lesson here may be that work that focuses on improving wages and conditions for sweatshop workers, not closing down sweatshops and trying to wash our hands altogether, may be the best approach. Persuading consumers to continue buying things from sweatshops, but to pay a higher price to give those workers a better wage, might be a decent way of essentially 'bundling' a charitable donation into a normal purchase. Unfortunately, most campaigns in Britain seem to be straightforwardly anti-sweatshop.
And even the most noble-seeming campaigns can backfire. UNICEF argues that early 1990s campaigns to reduce child labour in Bangladesh’s formal economy led to children looking for income in much worse places: stone-crushing, street hustling, and prostitution.
It is understandable that anti-poverty campaigners find sweatshops appalling, and work done to improve conditions in sweatshops might be valuable, but too often people forget that blunt campaigns against sweatshops probably end up hurting people. Instead, people should use the awfulness of sweatshops – and even greater awfulness of other jobs – as proof that we need to do more, much more, to give better options to poor people in other countries.
One option might be guest worker programmes, targeted at people from the poorest countries in the world, to allow them to come and work in the developed world so that they can send more money back home for investment. And lower trade barriers to goods from poor countries would help them grow, too.
Sweatshops are particularly horrifying because they make us feel complicit in the suffering of the poor. They are not a good option, but they are the least bad option currently available to many people. Washing our hands of the situation and just closing the sweatshops would make their workers worse off, potentially much worse off. If we want to help people, we should give them new options, not take away existing ones.
A difficult problem but we'd really better try and find a solution
Disturbing news about social mobility in the UK. To he point that something really must be done:
Well-off parents create a “glass floor” for their less academically inclined children ensuring they “hoard the best opportunities” over poorer peers, a study has suggested.
Children from wealthier families but with less academic ability are 35% more likely to become high earners than their more gifted counterparts from poor families, according to findings from the Social Mobility and Child Poverty Commission.
Clearly something just must be done. The report itself is here and commenting upon it we get:
Study author Dr Abigail McKnight from the London School of Economics said: “The fact that middle class families are successful in hoarding the best opportunities in the education system and in the labour market is a real barrier to the upward social mobility of less advantaged children.”
“Children from less advantaged families who show high potential at age five are struggling to convert this potential into later labour market success.”
“Schools could do much more to help children from less advantaged families build on high early potential.”
Difficult to know what to do really. Perhaps some system could be devised whereby we identified those bright but poor children and then gave them the academic, specialist, education which would enable them to make the best use of those talents? Would it be too, too, odd to suggest that they might even be sent to separate schools?
The value of remittances
When it comes to doing development properly, the role of remittances in helping the poorest in other nations plays a pivotal role and yet is considered by many to be a cost to the UK economy - a resource that would otherwise have been spent in the UK, being diverted elsewhere. The efficacy of remittances is also questioned: developing countries have been receiving remittances for years, and what do they have to show for it? These are all false questions and positions.
First, the net cost of remittances to the UK is negligible. In 2013, remittances from people in the UK to people outside of it totalled $2.2bn (outflows). Inflows (remittances into the UK from people outside of the UK) totalled $1.7bn. The net impact on the UK from remittances is $510m, which represents 0.0195% of the UK’s nominal GDP in the same year. Hence, the impact of belonging to a world where remittances are possible, and belonging to one where remittances are condemned, is “negligible” by my reading.
Bearing in mind it is low-cost to us, the only other plausible objection is that it doesn’t do any good. One example of how this criticism is levelled is when it is argued that all remittances do is increase consumption amongst recipients, and is not invested in such a way as to create long-term opportunities for growth.
It’s not clear to me that this is a proper criticism. For one, increasing the amount of resource that is available to an otherwise poor family may result in more consumption, and potentially better consumption. Imagine if the consumption takes the form of food stuffs: although the immediate effect of remittances is on non-investment purposes, these can be seen as an investment in the individuals’ long-term health. And, ultimately, a world in which people eat until they are full rather than going to bed hungry is a better world to live in. But lots of other types of consumption are also effective at improving people’s quality of life - for example, if a family has more resources with which to buy more sources of light, they may be able to work longer in the day and avoid health risks associated with working in more dangerous (i.e. unlit) conditions. Even if there are no such gains, increased consumption is associated with increased welfare - which is in itself good, particularly since the welfare gain is enjoyed by people on the lower end of the income spectrum. It’s not evident a priori that spending remittances on consumption is a bad thing.
But the evidence indicates that remittances have significant supply-side effects, and aren't solely consumption-affecting. A study in Ghana found that remittances were spent in the same way as any other income - split between investment and consumption, rather than focused on consumption. In Mexico, households without healthcare insurance spend on average 10% of remittances on healthcare. Remittances substantially lower the likelihood that children in El Salvador do not enroll into school at all, or leave before the 6th grade. A study of 11 Latin American nations showed that in households with relatively low levels of schooling and healthcare, households receiving remittances had higher health outcomes and were more likely to keep their children in schools.
When it comes to poverty reduction, current studies may, in fact, overplay the impact. The study of Latin American nations argues that many research papers assume a higher impact on poverty than is really plausible, because they do not factor in the fact that the emigrant who is sending their remittances back to the home country would likely have been working had they not left. Nevertheless, even when controlling for this, they find a modest positive effect of remittances on poverty reduction.
The fact that remittances cost the UK relatively little in net terms, combined with the improvements in lifestyle metrics in recipient nations, is a convincing case for them. If we want to do good for those in need, on a global level, we must be committed to permitting remittances and avoid the rhetoric that posits them as being ‘bad’ for the UK. They enable us, as the source nation, to benefit from the skills of the migrants coming to the UK to work, whilst providing welfare and investment opportunities elsewhere. Remittances earn developing nations three times as much as they are sent in aid - rather than forcing transfers via tax, they enable workers to make their own spending decisions with their own earnings from their own labour.
What an excellent argument against the BBC licence fee this is
Not that Ms. Reynolds means it this way of course, she thinks she is producing the concluding argument for the retention of the BBC's licence fee:
Anne McElvoy makes several sound points (“‘The Beeb is not facing involuntary euthanasia’”, Comment). Her easy assumption, however, that BBC radio operates with an unfair advantage – “a serious radio competitor, for example, has never got off the ground…” – must not pass unchallenged. Commercial radio in the UK competes seriously and successfully wherever there is a mass audience to be attracted. It does not, however, compete in “serious radio” because the audience it would attract (for features, documentaries, drama, comedy, etc) is not sufficient to justify the higher costs entailed. What “serious radio” commercial competitor would, for instance, underwrite her regular Radio 3 arts review, Free Thinking, or her Radio 4 series on Charlemagne and his legacy, or even the show where she has now also become a regular, Radio 4’s Moral Maze? Meanwhile, as a frequent visitor to New Broadcasting House, it cannot have escaped her eagle eye that further cuts to BBC radio budgets will seriously threaten the continued existence of any kind of “serious radio”.
Gillian Reynolds
Radio critic, Daily Telegraph
London W2
The point being that there really are things that must be done and can only be done by government and the power to tax. Radio not being one of those of course. There's also a weaker argument that there's things it would be nice to have and where it's worth taxing the masses to produce a benefit to said masses. But what there isn't is a space for the argument that the proles must be taxed in order to provide something of only minority interest. For if something does not justify the costs then we should not be doing it. If producing "serious" radio costs more than can be gained from doing so then this is an activity which makes us all poorer.
The BBC licence fee is a tax of course. And we're really sorry to have to point this out but the point of mass taxation is not so as to provide sweeties for some small section of the metropolitan intelligentsia.
That not many people are interested in "serious" radio is an argument against the tax funding of it: that it doesn't, as claimed, cover the costs of its production is an argument against doing it at all, not in favour of taxing those who are uninterested in it.
Subverting the urge to regulate
Two golf clubs on the Costa Geriatrica north of London play by different rules. Club A pours out regulations and spreads little instructional notices around the course. The new health and safety leaflet is only picked up because it looks like a score card. No one ever reads it. The club even specifies the socks gentlemen are allowed to wear. Club B has none of that. If their Captain suggests a new rule, he is quietly taken to one side and urged to lie down in a dark room until the urge passes. No prizes for guessing which club is the more harmonious. Brussels and Whitehall both trumpet the need for deregulation and then do the opposite. Last week’s Research Note “EUtopian Regulation” discusses whether total regulation could be reduced by competition between the three factories, global, EU, and member states, and concludes that competition might decrease or increase total regulation. It is not the mechanism that matters, i.e. who regulates, but the will to deregulate. We need to take a hard look at the fundamental causes of the urge to regulate and then consider how the vice can be cured.
Yes, it is a vice. For example, complaints about the NHS have grown proportionately to the increase in its “management”, while malpractice in the City has grown in proportion to the number of regulators. I’m not suggesting that correlation is causality, merely that rule-making has improved satisfaction neither in the NHS nor in the banks, nor in golf clubs.
The drivers of regulation are at least threefold:
Cause One is the rise of the lobby group. Unions, NGOs and save-the-worlders all claim to represent ordinary people in pressing for additional regulations. Alongside all those telling government how to spend other people’s money, are those telling government to stop us doing whatever we happen to be doing. In a democracy, we should be free to express our opinions but that is not the same as getting the law changed to remove our freedoms. We should be governed by those we elect, not by those who think they know better. They should be taxed, for a start, on their gross income in order to compensate society for the amount of governmental time they waste.
Cause Two is the excessive number of levels of law-making and law-makers at each level. Every single one of them, like the Captain of a golf club, wants to leave his or her mark on society, to be famous for some Anti-X Act. We even hand out CBEs to these controllistas. Much better would be to reserve medals and pensions for those civil servants who can show that they have simplified and improved our lives. Performance should be measured by outcomes, not activity, i.e. the net reduction of regulation they have achieved.
Cause Three is the excessive number of supposedly independent regulators who have become arms of government. Margaret Thatcher introduced regulators to provide proxy-markets where competition did not exist, e.g. telecoms. The idea was to benefit consumers. Some still push prices down from time to time but too many are now working against consumers, e.g. imposing “compliance” costs, in order to carry out the wishes of government. As government in other colours, we should insist that regulators are funded not by levies on the private sector, but transparently by the government they represent. The squeeze on public expenditure to balance the books would then help bring sanity to regulation.
How can we subvert the urge to regulate? These three solutions should help but we need a much bigger change in the establishment mindset than that. It happened when nationalisation was found to fail and it will happen one day when we recognise the dangers to innovation, entrepreneurship and competition created by these factories of regulation. Bring it on.
Time for Time Limits
A new ASI report, Time for Time Limits: Why we should end permanent welfare, finds that a 5-year limit on Jobseekers’ Allowance (JSA) across workers’ lifetimes could save the Treasury £300-350m per year, as well as boosting labour markets and putting a break on self-fulfilling cycles of dependency. The paper, authored by Peter Hill, a lecturer at the University of Roehampton, reviews President Bill Clinton's 'Personal Responsibility and Work Opportunity Reconciliation Act' (PRWORA) which coincided with a massive decline in welfare rolls from 5 million to less than 2 million families by 2006. The act is credited for saving the US government over $50bn between 1996 and 2002.
In some states, there was a decrease in benefits caseloads of 96%, as well as an unprecedented drop in female unemployment and improvement in their financial status even in low paying jobs, and a drop in child poverty. Furthermore, comprehensive econometric analyses suggest that 6-7% of decreases in unemployment counts (and 12–13% of those in female-headed families) are as a result of the introduction of time limits. Although difficult to estimate the exact impact on the UK labour market ex ante, a similar effect on Claimant Count Unemployment could be expected; this translates to an estimated reduction in the benefit bill of £300–350 million based on current spending.
Though Universal Credit is innovative in tackling benefit withdrawal cliffs that make working very unattractive to some households, it does not put any limits on its unemployment insurance provisions. More radical reform like time limits has potential beyond the government's current schemes.
Just as the US ended welfare as an entitlement programme, the paper argues that the UK should also take the radical step of ending JSA being funded from general taxation and instead return to a form of ‘Unemployment Insurance’ funding from NICs. This would mean operating the welfare system as a genuine self-funding insurance scheme managed through the UK Government Actuary’s Department.
Why do rich parents give birth to rich kids?
The kids and grandkids of the wealthy tend to be wealthy. Well: that's not quite true. Kids of American football players and lottery winners and those who get wealthy through luck often squander their inheritance. And while giving your kids money makes them richer, it doesn't tend to make their kids (i.e. your grandkids) richer.
This little paradox has driven researchers to wonder why wealth is persistent, if it's not purely handing down the cash. Traditionally, scholars have divided into two camps: nature and nurture.
Families stay rich because they have prudent genes that stop their ancestors from squandering their fortunes, and because they have genes that make them good at earning more money. Or families stay rich because they give their kids skills through schooling, speaking lots of words at home, having books around for them to read, pushing them into high prestige careers, and linking them up with connections.
Lots of research points in the direction of genetics, finding that genetics explains about 50% of every important human trait, while the other 50% is largely down to 'nonshared environment'—rather than 'shared environment' (i.e. family upbringing).
For example, the gold standard meta-analysis, recently published in Nature Genetics, looked at 17,804 traits over 2,784 publications studying 14,558,903 twin pairs, and found that the average genetic contribution to a trait was 49%.
This extends to complex facts about a person, like lifetime income and wealth. For example, among Swedish twins wealth was found to be about 20-40% heritable (i.e. down to genetic factors), while 20-year average income in men was about 60% heritable.
But comparing identical and non-identical twins isn't the only valid study design for dissecting the differing impacts of nurture and nature (though it is valid). You can also look at twins reared apart and you can look what happens when a child is adopted into another family—do they end up looking like their biological or adoptive parents?
We know that adoption can temporarily boost IQ but other evidence suggests this may be driven by non-randomness in the study design or peter out once the child leaves the family environment. What's more the gains might boost measured IQ but not intelligence.
But a new study suggests that adoptive parents are the main drivers of children's wealth, with biological parents unimportant by comparison. However, this new study finds that the result is not through transmitting human capital down the line or even through children earning higher income, but simply through transferring cash or learned prudence—i.e. kids investing better.
The paper (pdf), from Sandra E. Black, Paul J. Devereux, Petter Lundborg, Kaveh Majlesi, looks at a sample of 2,519 Swedish adoptees born between 1950 and 1970, and finds that the rank of a child's wealth is correlated 0.23 with their adoptive parents' wealth (and 0.65 when bequests are taken into account). By contrast it correlates only 0.12 with the rank of their biological parents. The results for levels of wealth, rather than ranks in the wealth distribution, are very similar.
So does this tell us that the rich buy private school, tutor their kids, make them learn violin, and help them with connections and so on? No! The authors rule out this possibility, and suggest only two possible options: financial gifts (which they cannot track) and learned prudence (which they provide evidence for in another paper).
(Note, the authors tell us that income is more biological than adoptive. Human capital is not being driven by upbringing. We might reasonably guess that a couple of generations down the line nature is driving wealth more than nurture.)
I work for a think tank so I think about policy conclusions and I think this fits pretty nicely with Adam Smith Institute ideas. What can you do to raise people's wealth? None of the things that pushy parents do seem to help their kids be rich except two: give them cash, and teach them to save more and save better.
The latter seems a bit more politically practicable, but the problem is that most financial education schemes seem to have no impact. Maybe the only way you can teach this stuff is something as long-lasting and comprehensive as being adopted. (I'm open to being wrong here—it would be great if there were doable financial literacy interventions that had lasting impacts.)
But we can give people cash. And funnily enough that is ASI house policy.
A certain disconnect from reality here
The idea that prisoners should be banned from smoking in their cells has reared its ugly head again. The true reason that such a ban is not in place is that, for the time of their sentence, their cell is their home. We do not ban people smoking in their own homes: we therefore do not ban prisoners smoking in their cells. We also do not want to give the government, any government, the power to ban people doing something entirely legal in their own homes: thus we do not want to grant this power to ban prisoners smoking in their cells. However, even given all of that, this does show a certain disconnect from reality, doesn't it?
Deborah Arnott, chief executive of charity Action on Smoking and Health, said there was no evidence to support claims that depriving prisoners of tobacco could lead to riots.
“Prisons all around the world have gone smoke-free with few problems and, in the UK, all high-security psychiatric facilities have already gone smoke-free, as have prisons in the Isle of Man and Guernsey, without any trouble,” she said.
Not paying much attention to the news, is she?
On Tuesday, hundreds of prisoners lit fires, broke walls and smashed windows in a 15-hour riot at a Melbourne prison in what authorities believe may have been a reaction to a smoking ban at the remand facility. It was one of the worst prison riots in recent memory and authorities and commentators moved quickly to either condemn or support the state-wide prison smoking ban.
No, she's not:
Police armed with tear gas and water cannons were on Tuesday evening still attempting to contain a riot that broke out at a maximum security prison in Victoria earlier in the day, after prisoners became angered by the introduction of a smoking ban.
All staff were evacuated from the prison in Ravenhall, Victoria, after several hundred prisoners rioted.
This happened only a few weeks ago.....at the end of June.
This will put the cat among the pigeons
Disturbing findings for a central tenet of the prevailing left wing educational ideology:
Teenagers facing the ire of parents over their exam results may have found the perfect excuse after a new study concluded that exam success is largely inherited. Scientists at King’s College London discovered that up to 65 per cent of the difference in pupil’s GCSEs grades was down to genetics. Previous research found that genetics could influence core subjects like English, mathematics and science but it now appears that they also play the same role in humanities, languages and art. It suggests that if parents have struggled to draw, learn a second language or understand algebra, their children are also likely to find those subjects difficult.
For that prevailing ideology is that it is entirely the environment and education itself which determine such things. Danny Dorling once put it as anyone could grow up to be professor of social geography at Sheffield University: something which prompted us to comment that obviously anyone had. The implications of this blank slate idea being that differences in outcome must be due to differences in access to resources. Thus poor people do badly because they are poor, deprived even simply be inequality.
That 65% of academic success (to the point that passing exams is that success) blows rather a hole in this idea.
We should not, of course, immediately lurch over into the errors of social darwinism though. For this is just a restatement of what should be blindingly obvious about a mammalian species. There are indeed mutations, there's a shuffling of the genes in every generation. We should therefore be assuming that there will be variance other than simple and direct inheritance of intelligence, just as with any other genetically determined characteristic. Thus all should have access to the same opportunities but we just shouldn't be surprised when outcomes are not equal.
Let's call a thing what it is shall we, a spade is a spade after all
It's not so much the pettifogging that annoys, although there is a tinge of that, it's the hijacking of an honourable description that really irks:
A typical household has 40 plastic carrier bags stashed away at home, ministers have claimed, as new figures showed the number of bags used by shoppers rose for the fifth year running. British shoppers took home more than 8.5 billion single-use carrier bags from supermarkets in 2014, 200 million more than in the previous year, figures from charity WRAP show.
Charity: the giving of money to aid mariners in peril on the seas perhaps. Or alms to house the destitute. But the most important part of the description is voluntary.
Following the review we worked closely with Defra to develop a programme of work, in line with sharpening our strategic focus, that will make a significant contribution to helping the UK achieve its environmental objectives and obligations, such as achieving the 50% household recycling rates by 2020, but at less cost. As a result grant funding from Defra for 2014/15 has been confirmed at £17.6m (2013/14: £25.7m), expected to reduce to £15.5m in 2015/16.
Financial Results for 2013/14
WRAP‟s total income for 2013/14 was £65.4m (2012/13: £63.2m) of which the majority (98.9%) was grant funding from government and EU sources. Although the underlying grant funding from Defra reduced compared to the previous year, the addition of the Resource Efficient Scotland programme and the timing of activity in EU funded grant schemes, notably the ARID capital grant scheme in Wales, resulted in a marginal increase in total income.
This is not a charity. This is a tax funded arm of the central bureaucracy. As such it most certainly isn't voluntary.
It has to be said that a caring society would indeed have a place in it for those who get their kicks counting plastic bag hoarding by household. But it's not entirely obvious that those working hard on the minimum wage should be charged tax to pay for it. Perhaps it should be paid for, voluntarily, in a charitable manner, by those who share this minority taste?
At which point we are going to revert to calling a spade a spade. WRAP is not a charity, it is a collection of tax leeches.