Exploitation—Part IV (b), Exploiting Exploitation−The “Arguments”

“Exploitation Part IV (a), Exploiting Exploitation−The Cause” described how do-gooder activists exposed the abominable working and living conditions of low-skilled workers in poor country “sweatshops” (starting with “Behind the Swoosh” about Nike’s sweatshop in Indonesia) and the derision, boycotts, and bad press they heaped on Western sweatshop owners. The activists’ tactics described in “The Cause” presented what the activists apparently believed were logical arguments as to what to do about the supposed evil that Nike and others were committing. Sadly, those “arguments” not only convinced the activists of their own righteousness (the dopamine hits from which induced them to do more of it), the “arguments” resonated with a large portion of the American public. What was illogical about those “arguments” needs to be sorted out. Let’s do that now.

Let’s review the activists’ tactics/“arguments” (described in “Exploitation Part IV (a), Exploiting Exploitation−The Cause”).

(1) Publish videos of working conditions in the rich companies’ sweatshops. As viewed through Western lenses, the conditions living and working conditions presented in “Behind the Swoosh” were invidious. The video was quite useful in raising awareness of the importance of improving the lives of desperately poor people around the world. Note, however, that the working conditions of a sweatshop are poor is a fact. The closest it comes to being an argument would be that it implies that something should be done by someone. However, showing that fact makes no case about what should be done or by whom.

Yet, the activists seem to think that they have made an argument that because Nike owns the sweatshop and the working conditions are, by Western standards, unacceptably low, that Nike should improve working conditions. Because achieving that result would be in the best interest of Jim Keady, Leslie Kretzu, and other activists—because that result was their goal (another unstated goal appears to have been achieving the joy of defaming big companies)—they likely found the “argument” to be compelling (as did lots of people who were just as uninformed as the activists). Sadly, however, their “argument” omitted all the fact necessary to an understanding of what would help the poor people of the world (the goal that they claimed to be pursuing). An “argument” founded on a tiny fraction of the relevant facts, however, is not an argument.

When it comes to helping those desperately poor people, what was shown made matters worse and had action been taken in response to what the video did not show would have actually helped the desperately poor people of the world.

Most important, while succumbing to the activists’ tactics resulted in improvements in the working conditions and pay (lives) of the relatively few poor Indonesians who won the job lottery of being employed by Nike, the “success” for those few Indonesians resulted in the unnecessary continuation of misery for millions of other desperately poor people in Indonesia—and hundreds of millions elsewhere. Moreover, the least skilled of the Nike employees at the time of the video (perhaps even some shown in the videos) would have lost their jobs to higher skilled Indonesians enticed away from their former job to enjoy the higher pay and better working conditions at Nike.

The videos did not reveal those negative consequences. The fact that the activists filmed and published their videos while oblivious to the consequences of their actions should have brought them infamy. Sadly (especially for the poor of the world), due to the equal obliviousness of the general public in America, they were esteemed instead.

Another instance of Keady or Kretzu serving their own interests at the expense of the poor was that they advocated for things that Keady and Kretzu thought would be best for the Nike workers rather than what Nike workers thought would have been best for the Nike workers. Had Keady and Kretzu asked sweatshop workers whether they would have preferred better working conditions or more pay with the same (or even somewhat worse working conditions), the vast majority would have said “more pay.” Why? As the videos showed, the poor Indonesians were continually malnourished and hungry. The reason poor Indonesians would choose more pay over better working conditions is simple: No one can nourish her starving family with better working conditions. So, even had the activists’ “arguments” actually been arguments, those arguments would not have been tilted in favor of the activists’ interests rather than the best interests of the poor they sought to help.

(2) Show how little the workers were paid. Showing a factoid out of context can cause emotional, knee-jerk reactions, but it is often of little help in understanding a problem—which is essential to effectively addressing the problem. For example, showing a clueless mother the advantages to herself and her children if they were to successfully rob a bank might induce her to give that plan a go. Obviously, the fact that the factoid is true, does not mean that there were no other facts that should be considered before executing the plan. Such is the nature of the “logic” underlying the activists’ plan to improve working conditions and pay.

A very important fact omitted from the video is the fact that every one of the depicted workers was much better off than they would have been absent the Nike job—despite the poor working conditions and pay. Everyone who accepted Nike’s job offer was fully aware of the pay and working conditions being offered and, not only did workers voluntarily agree to the deal, they felt lucky that they were near enough to the front of the long line^[i] of job applicants that they, unlike the woeful applicants remaining in the line when the window closed, got a job before all the positions were filled. Such pertinent information could not be included in the videos because it would have been too much of a buzzkill to their demonization of Nike.

Another important factor misleadingly omitted from the video is the reason workers were paid so little in Indonesia at the time. The primary reason workers in poor countries are paid so little is that the number of low-skilled workers greatly exceeded the number of low-skilled jobs (i.e., the supply of low-skilled workers greatly exceeded the demand for low-skilled workers). As I explained in “Tax Cuts and Employee Compensation,” the best approach to increase wages at any pay level is to increase the number of jobs at that level of pay. In short, workers’ pay at any pay level rises when qualified workers for a job are scarce and such jobs are plentiful.^[ii] The ripple effect of more people having jobs, more money, and prosperity helps everyone, not just the Nike workers. Slowing the pace of job growth has precisely the opposite effects, which are bad for everyone.

Keady or Kretzu were obviously oblivious to the fact that as the cost of labor increases, the demand for labor decreases. Consequently, Keady or Kretzu were illogically advocating policies that would reduce the number of jobs, thereby putting downward pressure on pay for low-skilled workers in Indonesia (with the possible exception of those lucky few who landed a job at a sweatshop owned by a rich country company).

(3) Show how little the pay will buy. How little can be bought with sweatshop pay says nothing about the pay that would best serve the interest of all the poor people in a country. Consequently, showing how little can be purchased is not an argument as to what sweatshops should pay. They made no logical economic argument that paying the people they filmed more would be in the best interest of poor Indonesians as a whole. With what the activists chose to show, the only honest and logical argument the activists could have attempted would have been that arbitrarily paying Nike’s sweatshop workers above-market wages and working conditions created enough good to offset the extension of misery that would be inflicted on the millions of other poor people in the country as a result. An honest and logical argument, however, was likely impossible. Apparently more important to the activists, attempting an honest and logical argument would have undermined their efforts to gin up the emotional fever for their ill-founded cause.

(4) Show the workers’ destitution. Showing destitution provides no hint as to how best to alleviate destitution or who should pay the cost of such alleviation. Is anything more illogical than activists insisting that people or companies that are actually helping the poor should be condemned for not helping them even more?^[iii] To be logically consistent, shouldn’t activists be patrolling the streets of big cities screaming at people who put only $5 in a homeless person’s tin cup because the homeless person really needs $10K to get back on his feet?

(5) Reveal the high-profit Western sweatshop owners made each year. The wealth of an employer has nothing to do with either what employees should be paid or what pay is in the best interest of the poor people of the world. Neither does reporting the wealth of an employer reveal anything about whether the profit made from its poor country operations is inappropriately high, nor whether its operations are exploitative. It especially does not show how much less poor country workers would be paid by poorer domestic sweatshop owners (or how many fewer of such owners there would be if the income from foreign owners were not rippling through the economy) if rich companies were to abandon their operations in poor countries because of the derision and infamy that activists heap upon them. That activists routinely pick on companies that are making job opportunities available to people who would not otherwise have a job is illogical and exasperating.

As can be seen from the above, “Behind the Swoosh” and the other anti-sweatshop activists’ tactics approached 100% emotional appeal and 0% logical soundness.

As we shall see in the following post, if the anti-activists would have paid attention to sound economic reasoning instead of their emotions (or what was in their personal best interest), they would have gotten out of the way of rich businesses that were helping poor countries take a shorter and sustainable trip to prosperity. Instead, the activists have exploited the public’s economic illiteracy to make matters worse for the people they believed they were helping.

^[i]     “Workers in Indonesia line up by the thousands to make Converse shoes for Nike. The wages paid make even the terribly poor— in the terribly poor’s judgment— better off than they would be with under the even more terrible alternatives, such as begging in the street.” McCloskey, Deirdre N. Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World (Kindle Locations 11154-11156). University of Chicago Press. Kindle Edition.

^[ii]     See “The world economy as we know it is about to be turned on its head.”

^[iii]    The companies listed in “The 20 Companies With The Most Low-Wage Workers” (which hire about 2 million minimum wage workers) are hounded the most.