Monday, April 29, 2013

Sadly, Bangladesh Simply Cannot Afford Rich World Safety And Working Standards

People rescue garment workers trapped at a building outside Dhaka, Bangladesh, on Thursday, April 25.


The horrible disaster in Bangladesh, where hundreds lost their lives as a shoddy building collapsed onto the various workforces, forces us to face an unpleasant truth. Bangladesh simply isn’t rich enough to be able to have the same safety and working standards as those we enjoy in the rich countries.

There are many who disagree with this of course. Reuters has a report on some of them:
Kalpona Akter, the executive director of the Bangladesh Center for Worker Solidarity, is traveling with Abedin on a 12-state tour in the United States. They are demanding fair compensation from Wal-Mart and a legally binding agreement from manufacturers to ensure fire and building safety and worker rights. “This is a pattern of gross negligence on the part of multinational corporations,” Akter said. “They know what is happening, but they are not stopping it.”
The proposed answer seems to be that the buyers of the goods from these factories must make sure that said factories are safe, that everyone is properly paid, that they’re enforcing high standards and so on.

To which there are two responses I’d make. The first is that this is all a bit colonial really, isn’t it? Bangladesh does have a government, they do have laws about who can work where, for how long, how much they should be paid and so on. They also have building codes, building inspectors and all the rest. It really is a colonial attitude to insist that the locals cannot work these things out for themselves and that they must have some set of foreign rules imposed upon them. In a certain light we can even say that it appears racist to some extent. Poor brown people just aren’t good enough at this governance stuff so we enlightened ones will have to do it for them.

However, whatever your opinion of that idea, there’s another much stronger argument. Bangladesh just isn’t rich enough to support the sort of worker safety laws that we have ourselves. As Kindred Winecoff points out here:

But neither is this the best time to completely denounce neoliberalism or engage in the sort of extreme wishful thinking through which it is suggested that Bangladesh could (or even should) have levels of labor protection equivalent to the U.S. That is quite literally impossible: Bangladesh’s GDP per capita is about $2,000 per year. Taken together, U.S.-level unemployment protections, retirement accounts, safety regulations, and other programs which benefit labor are more costly than that. So it’s impossible.
Even if the entire economy were devoted to nothing but providing equal labour provisions, the US standards to Bangladeshi workers, there still wouldn’t be enough money to actually bring Bangladeshi standards up to US ones. And that’s even if the entire economy were devoted to it: no one gets any income or food or anything else while we do so. So clearly it’s impossible for there to be equal standards currently.

The sad truth of it all is that such standards will improve in Bangladesh for exactly the same reasons they did in the UK and US a century and more ago. For exactly the same reason they are improving in China right now. As people become richer they take some of that new wealth not in pure cash. But in all those other things like shorter working hours (and thus more leisure), safer workplaces, unemployment protections and the rest. These are the products of wealth.

Which means that all of us who would like to see those conditions improve, and yes of course I include myself in that number, should be cheering on the export led growth of that Bangladeshi economy. For it is indeed that which will lead to those better working conditions that all desire.

Which leads us to the question of how to aid that economy in growing: the most obvious would be to deliberately go and buy those textile products made in that economy. The more that sector sells the richer the country and the workers will be. The richer the country and the workers the better working conditions will become. For as my boss at the Adam Smith Institute, Madsen Pirie, repeatedly points out, the best way of alleviating poverty is to buy things made by poor people in poor countries.

First appeared on Forbes.com, 28 April 2013

Tim Worstall, a Forbes contributor and writes on business and technology. Fellow at the Adam Smith Institute in London.