NextBillion.net - Development Through Enterprise - Low-Wage Jobs Alleviate Poverty - Comments

I don't see how this is True...

Ian — Thu, 06 Mar 2008 12:34:52 -0500

Quote "economist Willliam Easterly, who explains somewhat rhetorically that, “To put it in the baldest possible terms, the more sweatshops the better. As you increase the number of factories demanding labor, wages will be driven up.”" I don't see how this can be true. For example what happens when a product floods the market? The price of drops. When more sweatshops open up, the market will be flooded with sweatshops, so won't the sweat shops lower there prices to compete with all the other shops trying to get business? Just my thought.... Ian

That is, I am somewhat

Fred — Wed, 08 Nov 2006 09:19:57 -0500

That is, I am somewhat concerned that these factories will have a much more sweeping effect than many expect. When the United States industrialized, for example, the government had to step in and create a more expansive public education system.

Re: Sanman

Ethan Arpi — Wed, 19 Jul 2006 10:19:32 -0400

Thanks for the comment, Sanman. On the other hand, I'm tempted to think that the model of rational choice--ie workers do what is in their rational self-interest (think higher paying jobs)--is too narrow to be applied here. That is, I am somewhat concerned that these factories will have a much more sweeping effect than many expect. When the United States industrialized, for example, the government had to step in and create a more expansive public education system. As it turned out, factory workers spent so much time in the factory that they were neglecting their children. Accordingly, the structure of the family shifted, and the state took on a greater responsibility when in came to childrearing. Home Economics, sex education, and other courses were added to the school curriculum because they were no longer being taught in the home.

In many cases, building factories that pay low wages is a good thing. But the debate shouldn't stop there. The more important question is how can a society, which is in the process of industrializing, ease the inevitable transformation of social structures beyond the workplace.

agreed

sanman — Wed, 19 Jul 2006 00:20:24 -0400

I think that some kind of job is better than having nothing and starving. We shouldn't pretend that sweatshops are taking people away from a life of leisure and picnicking. People are in sweatshops due to lack of economic alternatives, and so at least if the number of sweatshops increases, then the forces of reality will compel their wages and working conditions to improve.

Re: The inscrutable (or is it inconsistent ?) Mr. Easterly

Ethan Arpi — Tue, 18 Jul 2006 09:28:52 -0400

I think you are right to be a little perturbed by Mr. Easterly's comments. However, it seems like he is a little prone to rhetorical flair. When he says that there should be more sweat shops I don't think that he suggests that locking workers in factories is a good idea. Take away the contrarian tone of his comment and I think that he is saying that low-paying jobs are not as bad as people often believe. In certain cases, they may actually be a good thing.

The inscrutable (or is it inconsistent ?) Mr. Easterly

Anonymous — Mon, 17 Jul 2006 17:49:27 -0400

Kind of an odd comment from an author who just wrote a book entitled "The White Man's Burden," in which he lambasts the West for its cynical policies toward the rest over the years. If Mr. Easterly now believes in a clear-eyed pragmatism regarding sweatshop wages, wouldn' the same morally-steeled attitude apply equally to the kind of political issues he bashed in his recent book? And if such reasoning does apply to political issues, and not just to economic issues, doesn't that throw the thesis of his recent work into doubt? Would the real Prof. Easterly please stand up?

Low-Wage Jobs Alleviate Poverty

Ethan Arpi — Mon, 17 Jul 2006 10:43:28 -0400

In this Sunday’s Business section of the New York Times, Daniel Gross from Slate Magazine writes about the latest trend in international development: the $2 a day job. He begins his article discussing A to Z Manufacturing, a mosquito bed-netting business from Tanzania that pays its 2,000 female employees $1.80 a day. (At Nextbillion, we have blogged about A to Z here and here.) Gross explains that many of the women who have low-paying jobs at this Tanzanian manufacturer earn almost twice as much as they did as street vendors and domestic employees.

By American standards, a $1.80 a day job would be outright exploitation. But in a country where 80% of the population earns less than $2 a day, A to Z’s wages actually place their workers in the top quartile of earners. In his article, Gross quotes the New York University economist Willliam Easterly, who explains somewhat rhetorically that, “To put it in the baldest possible terms, the more sweatshops the better. As you increase the number of factories demanding labor, wages will be driven up.”

You can check out Mark Thoma’s post at the Economist’s View for commentary on Gross's article. The Acumen Fund, which has invested in A to Z, also has a blog worth checking out.