Dr. Vedder Justifies the Existence of Sweatshops

by Chris Duerr

In the long run, we’re not all dead,” reasoned Dr. Richard Vedder, distinguished professor of economics at Ohio University. Vedder intended this comment as a somewhat cynical response to Keynes’s insistence that government policy focus only on the short-run. However, it also served as the deep-rooted justification for the pro-sweatshop labor arguments Vedder made in his recent speech at the Union. “The way to help the poor of the world is to let them work. Don’t put restrictions on them by regulating their hours, their wages, or their working conditions. So-called ‘sweatshops’ make people rich in the long run,” argued Vedder.

The symposium, entitled “Sweating Their Way to Prosperity: Sweatshops and the Wealth of Nations,” took place on Nov. 10 before a crowd of about 45 people. Funded by the Institute for Humane Studies and the Michigan Student Assembly, the talk was presented by SPEED and the College Libertarians to combat the argument used by the anti-sweatshop protesters on campus. Much to nobody’s surprise, the event attracted a large contingency of SOLE members and sympathizers, who went above and beyond contributing their two cents worth. To their credit, however, SOLE kept their outbursts to a minimum and managed to wait for the appropriate time to pose questions.

Over the course of two hours Prof. Vedder articulated a very logical and economically-based argument and responded to many attacks by the opposition. Vedder’s argument centered around the notion that alleged “sweatshops” are integral in the process of influencing positive economic change in underdeveloped countries. Additionally, any government-mandated programs that would interfere with “sweatshop” labor would diminish gains from and the benefits of the international division of labor.

A proponent of examining economic history, Vedder discussed the past role “sweatshop” labor played in today’s industrialized and wealthy nations. According to Vedder, “America had ‘sweatshops’ and got rich. Japan had ‘sweatshops’ and got rich. South Korea had ‘sweatshops’ and got rich. The same is going on today in Indonesia, Honduras, and other poor countries,” reasoned Vedder. The textile industry is one of the largest employers of “sweatshop” labor and, as history has shown, its movement has played a significant role in helping to industrialize nations. From England in the late eighteenth century, to the US in the early nineteenth century, to Japan in the early twentieth, to Korea and Taiwan in the mid-twentieth, most wealthy nations have benefited from the textile industry and sweatshop labor. In Vedder’s opinion, no successful, industrialized nation has achieved wealth without, at some point along the way, employing the current definition of “sweatshop” labor.

The key to allowing underdeveloped nations to grow, said Vedder, is to allow uninhibited movement of goods, services, labor, and most of all, capital. As capital moves in a way so as to take advantage of low-cost wages, nations grow. This growth results in increased savings, which leads to capital accumulation. Nations become richer and more capital intensive, which allows technological innovation. The geographic movement of technological innovation is coupled with economic movement as well. As technology finally makes its way into previously underdeveloped nations, the comparative advantage of these nations shift, labor moves to other areas of production, and economic conditions improve.

Regardless of the motives of the firms that initially moved to these once underdeveloped nations to take advantage of low-cost labor, the end result is that wages and working conditions improve as more industries develop.

There remains tremendous opposition to sweatshop labor. According to Vedder, those who have something to gain by ending sweatshop labor practices (i.e. American textile workers) are ultimately the ones behind the opposition. Specifically, he feels that these opponents have wisely crafted their views to appear as a human-rights issue, and thus “take advantage of idealistic and economically naïve college students.” Some audience members noticed a slight breeze in the room from all of the subsequent gasps of SOLE members, reacting to what they perceived as a personal insult from Vedder.

In the end, nothing was resolved by the night’s lecture. Still, it served as a spirited forum for expressing divergent views on this controversial subject. Further, to the credit of both Dr. Vedder and SOLE, the discussion remained well-mannered throughout the night, while retaining a healthy spark of respectful conflict.