Work in sweatshops? No sweat!

To westerners and other citizens of industrialized nations, the conditions in sweatshops are horrid. How can we, as compassionate human beings, sit back and enjoy our flat-screen TV's, high-end cars, and gigantic houses, when young children no older than 14 spend 12 hours a day, 6 days a week toiling away in working conditions we wouldn't wish upon our worst enemies? I mean, these kids are denied bathroom breaks, exposed to dangerous chemicals, and subjected to numerous safety hazards. Any factory in the United States that did this would be immediately shut down.

But these sweatshops are not in the United States, Canada, England, Germany, or other high-income economies. Would these children work in such heart-wrenching conditions if they had better options? Put simply, no they wouldn't.

In outrage, Americans often enact policies that punish firms profiting off the cheap labor of sweatshops. However, ask any family whose children are working in a sweatshop, and they would be aghast at the thought of people purchasing less from these sweatshops.

Princeton economist Paul Krugman offers a [true] grisly tale about the effects of limiting imports from sweatshops:
"[Could] anything be worse than having children work in sweatshops? Alas, yes. In 1993, child workers in Bangladesh were found to be producing clothing for Wal-Mart, and Senator Tom Harkin proposed legislation banning imports from countries employing underage workers. The direct result was that Bangladeshi textile factories stopped employing children. But did the children go back to school? Did they return to happy homes? Not according to Oxfam, which found that the displaced child workers ended up in even worse jobs, or on the streets -- and that a significant number were forced into prostitution."
 (The full New York Times article can be found by clicking here.)


If the road to hell is paved with good intentions, surely any such legislation such as the import ban mentioned above is a guaranteed path to eternal doom.


On the contrary, sweatshops are the path out of economic bust for most lesser-developed countries. As stated by Nicholas Kristof and Sheryl Wudunn, "The simplest way to help the poorest Asians would be to buy more from sweatshops, not less."
"Read the article at: Two Cheers for Sweatshops."

According to a 2006 article in The Economist magazine, "No matter how awful we might consider the sweatshops of the developing world, if hundreds of people are queuing to get those jobs, it is obvious that whatever the alternatives are must be worse.   For many people in poor countries, factory jobs replace things like subsistence farming or prostitution; it would be no kindness to them to insist on wages or working conditions that would price their labour out of the global marketplace.  And as countries get richer, thanks to the gains from trade, they generally do adopt stricter labour regulations and more environmentally friendly practices."


Click here to read the full article. 


For a more in-depth analysis of the benefits sweatshops provide, read Chapter 12 of Charles Wheelan's Naked Economics,  Trade and Globalization.

Why should I give a sh** about economics?

Hey everyone!
     So this is our first post. Before we explore other topics of interest more in depth, we thought we should shed light on the relevance and practicality of having economics knowledge. Economics is not the "dismal science," but takes part every day in our lives.
     Imagine this: it's a hot summer's day, and you're outside. You have plenty of liquid asset on you (liquid asset=cash), but the nearest grocery store to buy a drink from is a mile away, and you're on foot. Looks like you'll probably dehydrate before you even turn the street corner...
     But wait! Could it be??? Out of the corner of your eye, you glimpse a young entrepreneur. Yes, it is an elementary school student selling lemonade! Your dehydration problems are solved!
     "How much for a cup of lemonade?", you inquire of the future economist.
    "Just 25 cents," he responds.
     You open up your wallet, remove a quarter, and hand it to the boy. In exchange, he hands you a delicious cup of homemade lemonade. This transaction maximizes utility (utility=satisfaction derived from consumption) for both of you: you get to quench your thirst, the budding entrepreneur makes a profit. You value the lemonade more than the quarter, and the young lemonade salesman values the quarter more than his cup of lemonade. Mmmmmm delicious.
     This is not a hypothetical scenario-it's probably not hard to believe that I actually had this experience, as I am sure many of you out there have as well.
     Right as I was about to leave, the kid informed me that "refills are fifteen cents." When I heard this statement, I chuckled sheepishly to myself. This is the Law of Diminishing Marginal Utility in action, demonstrated by  a child who is half my age!
    Economists like to think in marginal turns, which is, we like to think of the costs and benefits associated with each additional unit consumed. Perhaps I wasn't thirsty enough to pay another whole quarter for a cup of lemonade, but when the price was lowered, I found that the benefit, or enjoyment, I get from that new cup of lemonade exceeds the price I had to pay.
     Economics does not just apply to lemonade. Pretty much any decision you make, whether to eat another hamburger at McDonald's, whether to take an additional class this term in college, or whether or not to buy a new car, involves the analysis of the cost you have to pay, and the benefit you receive. It should be noted that cost is not always monetary-something that is "free" could take up a lot of your time, which you could have used to do something else.
     So now you see how economics has applications in even the most trivial of daily occurences. Hopefully you found it somewhat enlightening, or at the at least interesting. In future posts, we will continue to explore more intriguing topics.
-Kelly Tian