Washington, DC, April 23, 2013 --  

Deadly conditions in a Bangladeshi sweatshop should make Western consumers think twice. For Bangladeshis' sake, they had better keep buying.

Stamped on the bottom of the plastic trucks and action figures filling my 1970s toy closet was a ubiquitous phrase:  "Made in Hong Kong."  To those accustomed to a rich city known for its gleaming high rises, financial service companies, and soaring real-estate prices, the thought of the former British Colony as a center of sweatshop industries making cheap and sometimes shoddy products may come as a surprise.  But from 1960 to 1980, when Hong Kong's GDP nearly quadrupled in real terms¹, it was manufacturing that drove the original Asian Tiger.


That kind of manufacturing can now be found in Bangladesh, where a desperately poor workforce toils for wages far lower than emerging China.  The horrific collapse of a Bangladeshi garment factory complex last month, killing 705 workers at last count², has re-ignited the debate in Western countries about the ethics of making cheap goods in very poor places.

By all accounts, the tragedy in Bangladesh was a case of horrible abuse.  Cracks appeared in the walls of the building in the days before the disaster and a consulting engineer warned that it was not safe.  Yet workers were ordered to continue to do their jobs.³

How can saving a few dollars on a pair of blue jeans be worth this kind of tragedy?

Of course it cannot.  But two of the main alternatives offered by Western activists are of little help for the poor masses.

On the one hand are American labor advocates who seek to retain manufacturing in the United States with relatively high union-negotiated wages and well-regulated safety conditions.  To these folks, the problem of exploitation of poor workers in other countries is just one side of the coin that also features a loss of union jobs and living wages in the united States  From their perspective, outsourced manufacturing is a large-scale union-busing scheme, and the solution is to keep jobs in America.  Clearly, this solution would be bad news for foreign workers making export products because they would be left with even less desirable jobs.

Another movement, the Fair Trade movement, is led by non-profit organizations that help promote ethically made products from the developing world.  Chief among their goals are living wages and an end to forced and child labor, but they also pursue sustainable environmental practices.  German-based Fairtrade International leads standards and certifications, while charities like Oxfam and its glitzy North American cousin Ten Thousand Villages run stores selling fair trade products directly to the public.

The goals of the fair trade movement are good -- it helps people who are lucky enough to be part of their network selling to socially conscious Western customers.  The main problem is one of scale -- they simply cannot generate enough revenue selling overpriced tea and candles to the world's well-healed progressives.  Ten Thousand Villages, for example, has 79 stores in some of the toniest neighborhoods in America, yet it only made $28 million in sales in 2012. Of this, less than $8 million went to overseas purchases for fair trade products.  That's just not enough to feed 150 million hungry Bangladeshis (in fact, Bangladesh's share of the purchases was only $580,000).⁴ 

Fair trade purchases by large multinational corporations are also minor.  Starbucks, for example, brags to its rich customers on its website that it bought 8 percent of its coffee (44 million pounds) in 2012 from fair trade sources⁵, yet at market prices, this is only about $80 million dollars.⁶  Even if all of that went to Bangladesh (unlikely since the low-lying country doesn't grow coffee), it would only amount to 0.4 percent of the country's $20 billion garment industry⁷ or 0.007 percent of the entire $111 billion economy.⁸

The bottom line is that if Bangladeshis are to ever have a rich, glitzy future like Hong Kong, it is not going to come from rich liberals buying fair trade coffee and handicrafts as a charitable gesture -- it's going to come from the ordinary working people of the world buying factory-made products by the billions of dollars because they are the best deal for the money.

This doesn't mean workers need to die in factory accidents or that children need to toil under a forced system.  Western activists and consumers are right to hold brand names accountable for abuses by their foreign subcontractors (like Benetton whose garments were manufactured at the collapsed plant⁹.)  Bangladeshis and foreign diplomats must pressure the corrupt and weak government in Dhaka to hold abusive employers accountable, and create credible penalties for bad behavior that serve as an effective deterrent.

This won't change the meager status quo for Bangladeshi workers, who will still face long hours for low pay.  But given time, and enough mass market exports, a future like Hong Kong's could become more than a distant fantasy.

Notes:

1. Center for Economic and Policy Research, Per Capita GDP Growth, 1960-2000, as posted May 7, 2013

2. BBC, Bangladesh Building Collapse Death Toll Passes 700, May 7, 2013

3. The Guardian, Bangladesh Factory Collapse Death Toll Reaches 580, May 5, 2013

4. Ten Thousand Villages Annual Report, March 2013

5. Starbucks, Ethically Sourced Coffee Goals and Progress, as posted May 7, 2013

6. Trading Economics, Coffee Commodity Chart, as posted May 7, 2013

7. the Guardian, Ibid

8. World Bank, Bangladesh at a Glance, March 7, 2013

9. The Daily Beast, Is Your Shirt From Here? April 13, 2013