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Thursday, September 28, 2006

The Poverty of Anti-Trade Sentiments

"This is a sweatshop?" asks Bloomberg's Andy Mukherjee as he examines how trade affects poverty in developing nations:

Apple IPod Lifts Generation of China's Workers, by Andy Mukherjee, Bloomberg: Is America's gadget fixation lifting Asians out of poverty or pushing them deeper into it? That has been a question ever since press reports suggested that Apple Computer Inc.'s iPod music players are being assembled in sweatshop conditions in China.

Workers were being forced to toil for as little as $50 a month under Dickensian conditions, one commentator said. Poor Asians, mostly women, were caught in this vicious cycle because Americans are addicted to gizmos, another rued.

Amid the hysteria, Apple began its own audit of the factory... The findings, unveiled last month, are interesting. Air-conditioned hostels, Apple's auditors discovered, are available to workers free of charge; the dorms have TV rooms, free laundry, snooker tables and public telephones; the campus comes with soccer fields, a swimming pool, supermarkets, Internet cafes, banks, 13 restaurants and a hospital.

There's no child labor; no one is paid less than the locally mandated minimum wage; male and female employees are housed in separate dormitories; safety isn't a concern. Everyone has medical coverage.

The biggest complaint of workers: a lack of overtime opportunities during non-peak periods. This is a sweatshop? The assembly-line jobs in export industries may seem dreary, exacting and unrewarding to an analyst in Europe or the U.S., but they are far better than what's available in the domestic sectors of a developing Asian economy. ...

The interdependence of the Asian producer and the American consumer is a mutually beneficial one in a world where labor can't move freely to close the wage arbitrage. Making electronic goods for the U.S. ... has proven to be the shortest route to riches in Asia in the past 50 years. ...

None of this is to contend that Hon Hai workers in Shenzhen are living in a capitalist utopia. Work weeks are often longer than the stipulated 60 hours.

Accommodation is of considerably poorer quality for those workers who are forced to live outside the campus. After Apple published its audit report, Hon Hai said it would hire more workers and build more dormitories. Hon Hai and Apple would surely keep their promises. The Taiwanese company has a market value of $31 billion, almost half that of Apple. That's a lot of corporate reputation at stake.

The biggest winners will be the Chinese workers and their families. Millions of Asians have fed the American craving for consumer goods and crawled out of poverty within one generation, as the Hon Hai workers in China surely will.

    Posted by on Thursday, September 28, 2006 at 01:52 AM in Economics, International Trade | Permalink  TrackBack (0)  Comments (62)

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