You took a long old time to reply to that one Vimothy.
Various less interesting tasks to do...
So fucking what? They are merely an intermediary so that the exploiter doesn't have to get its hands dirty and they act as a smokescreen so that the western companies can pretend that they didn't know. The profits of the western companies are larger because they are paying a very small amount to people in sweatshops (too small to live on). Do you think that's exploitation?
So fucking what? So that's what I thought we were discussing,
whether or not foreign firms pay higher wages than local firms. It's pretty clear that they do, for a variety of reasons.
Local firms are not intermediaries, they are a source of goods. They produce according to their abilities and the demands of the market place. They pay very little in places like Bangladesh because in places like Bangladesh the cost of labour is very cheap. That's not the fault of MNCs, it's the "fault" of geopolitical contingencies that have created disparities in wealth, which are also the reasons why places like Bangladesh have a comparative advantage in low-skilled industries. Don't worry, it won't last forever.
The profits of MNCs are naturally increased when they can outsource the non-essential "vanilla" aspects of their business to places that can do it for less (China, India, East Asia, etc) to focus on the higher value, differentiating aspects of their production process. If they go to the third world to increase their margins (something they
have to do, because the same opportunities are available to all their competitors), then yes, in a sense they can be said to be "exploiting" the developing world's comparative advantage. However, it is also the case that the developing world is "exploiting" the very same advantage: their cheap labour, which allows them to undercut producers in the west and in the rest of the developing world, to bring foreign buyers to their markets, to buy their produce and to increase their wealth. Is that really so different from what the MNCs are doing? You remember that famous quip - "The only thing worse than being exploited by a capitalist is not being exploited by a capitalist."
Well that's a very nice idea filled with lots of "mays" and "mights" - and yet despite your theory it seems that right now, this very day, a number of large western clothing suppliers are (indirectly you might say but so what) giving the lie to that by paying the very minimum they possibly can to increase their profits exactly as I described on Friday and in exactly the way that you said would be bad for business.
All they are doing is finding the goods the need at the best prices (including those less obvious costs relating to things like security and speed of supply). Would the workers affected be earning more money if H&M went elsewhere? I really can't see how it would make any difference, except to reduce the number of jobs available, and the average local wage, by reducing demand.
Yes, but in at least a few cases they are not paying higher wages are they?
In the cases highlighted in your report, local export-led industries are not paying high wages. I do not know what the average wage is in Bangladesh, although it seems, from the article, that the factories are paying the
legal minimum wage. Without an international market for their goods, there is simply no reason to expect that workers would earn more money from their labour. Do workers working in industries that only serve the national market in Bangladesh have better pay and working conditions? I very much doubt it. The conditions and pay of workers in Bangladesh are set internally, by its labour market, not by malicious MNCs using Bangladeshi factories as proxies in a nefarious system of exploitation and abuse.
Well, something that takes account of human rights would be a start.
Come on, you're sounding like Gek - something such as...?
No it wouldn't be. But that's not what happened in the case that I am thinking of, let me find the details and come back to you on that one.
Ok, fine.
We also need to consider how representative vs. exceptional these cases are.
Who knows what companies would fill the vacuum available? If it was any company they couldn't legally be worse off and they might well be better off.
Eh? Why would they be better off, if we remove buyers from the market? There would be less competition for the goods produced and so less demand pressing price upwards. That's just being silly. In any case, it is not the foreign firm that is paying garment workers in India, but the Indian firm going by what it considers normal, acceptable or even (like you say) "what it can get away with".
Well, it's caused by the market. Mr Mothercare or whatever is using the market to justify paying people less than they need to live on. That's the point I was making earlier, presumably he would rather pay them a living wage but he feels that the market is telling him that he can't.
Mr Mothercare isn't paying him. His boss in Bangladesh is. The amount he gets paid is decided by the amount said factory can afford vs the amount the worker is prepared to stick the job for, i.e. at the intersection of supply and demand curves.
These are points that are worth discussing. My point is that multinational companies acting according to the law of the market are not automatically a force for good and the solution to all the world's ills. This is pretty clear.
Not automatically, no. But broadly, yes (obviously with the support of sensible policies and governments), and certainly to a greater extent than conceded by the various protectionist, populist, pro-autarky voices on this board.
Neither did I say that. However most deals made with corrupt leaders are likely to be corrupt. What I have a problem with is when a company not only makes a deal with a corrupt leader but also sees it as advantage "oh we can just move this village out of the way, they dont' have human rights here".
This is all a bit complicated. I can't see into corporate boardrooms and so have no idea about the extent of anti-native sentiment or plain disregarding disinterest from corporate executives. I do know that "corrupt" is likely to be a difficult one. Should we stop buying goods from China? Should we stop buying oil from Russia? What will benefit the developing world most?
But that is what arms companies do isn't it? And it would be unrealistic to expect otherwise, after all the market demands that they make profits.
So what? I think that there are solid geostrategic arguments against selling arms to totalitarian dictators, to say nothing of moral arguments.
I did once but ok. Suppose there is a call centre in India. For a graduate in, say, medicine it pays more than that graduate could earn as a doctor. That means that the country loses a doctor and gains a guy who answers phones. Good for the guy perhaps (though maybe ultimately not so rewarding) but not so good for India.
So, the country "looses" a doctor, but gains a worker on a higher wage, in an entry level job into the global economy. The country grows its wealth in this way. It increases tax revenue, reduces poverty levels, and creates an environment where ultra-educated, highly driven Indian youth can succeed without having to fuck-off to the west (i.e. the system that preceded the current one).
And does it really loose a doctor? Bear in mind that a third of all call centre workers leave after one year, that the call centre industry is located principally in Bangalore and New Dehli (two cities in a country with a population of over a billion), that Indian call centres only employ something like 120,000 people in total, and that India's main problem for years has been losing its most educated for good, from the whole country and not just witnessing them job-hop to find the best salary and I think you'll see that it's not really much of a problem - and that's without even examining the figures (I doubt that actual numbers of doctors working in call centres in Bangalore are that large).
