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Friday, June 09, 2006

Are Sweatshops Bad? Always? Everywhere?

Greg Mankiw quotes the NYT's Nicholas Kristof at http://gregmankiw.blogspot.com/2006/06/in-praise-of-sweatshops.html:

Imagine that a Nike vice president proposed manufacturing cheap T-shirts in Ethiopia: ''Look, boss, it would be tough to operate there, but a factory would be a godsend to one of the poorest countries in the world. And if we kept a tight eye on costs and paid 25 cents an hour, we might be able to make a go of it.''

The boss would reply: ''You're crazy! We'd be boycotted on every campus in the country.''

So companies like Nike, itself once a target of sweatshop critics, tend not to have highly labor-intensive factories in the very poorest countries, but rather more capital-intensive factories (in which machines do more of the work) in better-off nations like Malaysia or Indonesia. And the real losers are the world's poorest people.

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