The Morality of Power and Wealth

As one of the godfathers of modern neoliberalism, it would be interesting to get Columbia University Professor Jeffery Sachs’ take on the recent government crackdown on protesting garment factory workers in Cambodia. The former Harvard economist once said “my concern is not that there are too many sweatshops, but that there are too few.” The rationale behind such an audacious postulation being that sweatshop labor, as the much respected Paul Krugman has put it, invariably lifts people out of “abject poverty to something still awful but nonetheless significantly better.”

Fair point. Most of the protesting workers are uneducated and have few skills beyond menial labor. Moreover, there are other industries in Cambodia, education for instance, which pay just as poorly. But even the most casual observers of global political economy could adduce that earning $80/month to make clothing is, at best, a miserable existence. Such a picayune salary is the major selling point to multinational corporations (MNCs) when determining where in the world to invest their capital. Labor’s race to the bottom often pits workers in one poor, Third World country against the workers in another in so-called regional economic communities, fighting for foreign direct investment from companies like Puma who, according to these publicly available financial reports, record annual earnings in the billions.

So it should come as no shock to Dr. Sachs when the proletariat in these poor countries rise up and demand to live with more dignity. In Cambodia, garment industry workers have been promised a doubling of their salary by opposition leader Sam Rainsy, whose motives for making such a pledge are no doubt politically calculated. Doing so, according to neoliberals like Sachs,  might cause MNCs to reevaluate their investment in Cambodia and seek cheaper labor in other countries. This phenomenon “in southern China [has] in recent years driven manufacturers to set up shop elsewhere” like Cambodia and its neighbors.

Cambodia’s neighbor to the west provides an interesting dichotomy. Juxtapose the recent demonstrations in Phnom Penh, in which four people died and dozens more were injured, with Thailand’s implementation of a mandatory minimum wage policy of 300 baht (roughly $10) per day on its businesses at the beginning of 2013. Thai business leaders, most of which are aligned with the opposition Democrat Party, pontificated the same fears we hear in the United States from commentators on the right: businesses will be forced to cut hours, jobs, and/or benefits to cover the losses they anticipate from a meager raise of the bare minimum salary they are allowed to pay their workers. But one cannot possibly support maintaining the current minimum wage and support less government handouts at the same time. Additionally, as James Parker points out:

Minimum wages exist in many economies, notably in the so-called bastions of free market capitalism: the U.S., the UK and Hong Kong. Better paid workers will have more money to buy goods and assets and to invest in their families’ education and life quality.  In this sense, the minimum wage could boost Thailand’s domestic demand and real estate sales.

Inequality has been a problem for quite a long time, and the modest gains achieved by the ruling (for now) Pheu Thai Party for the lower classes have resulted in a major backlash from Thailand’s elite, hitherto the biggest beneficiaries of the country’s impressive growth whilst farmers from the hinterland survived on subsistence levels.

That disparity was the end result of a near decade long economic model suggested by the International Monetary Fund (IMF) following the Asian Financial Crisis of the late 1990s. The structural adjustment package offered by the IMF was conditioned with the expectations that Thailand would adhere to the principles which underscore neoliberalism: privatization, deregulation, and trade liberalization. This is despite the prevailing dogma of the era which was that there were virtually no restrictions on capital flows during the run up to the crisis, as the IMF’s economists had previously recommended.

To be sure, there are myriad factors contributing to Thailand’s current political chaos. However, the ongoing conflict is arguably the most poignant example of class warfare being waged currently and the nexus for where politics meets economics. Despite the minimum wage policy, Thai workers are only slightly better off. Perhaps Thailand’s economic progress vis-à-vis Cambodia can be described as “something still awful but nonetheless significantly better.”

In a recent and unrelated incident in Vietnam, workers at a Samsung plant clashed with security personnel in a dispute about labor conditions.

The point is that just maybe the underpaid, overexploited workers in Southeast Asia have had enough. Just maybe the prevailing narrative of corporate globalization can shift slightly away from the thinking of writers like Slate’s Matthew Yglesias, who argued that if more than 300 workers are killed in an unsafe sweatshop, it’s better that they be citizens of a country far away from America’s teeming shores like Bangladesh.

Safety rules that are appropriate for the United States would be unnecessarily immiserating in much poorer Bangladesh. Rules that are appropriate in Bangladesh would be far too flimsy for the richer and more risk-averse United States. Split the difference and you’ll get rules that are appropriate for nobody. The current system of letting different countries have different rules is working fine. American jobs have gotten much safer over the past 20 years, and Bangladesh has gotten a lot richer.

According to such commentators the lives of the working poor in Third World countries are somehow worth less. Just maybe the workers of this poor region are coming to the rationalization that we are not separated as much by state borders today, as we are by class.

Photo: Reuters