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Gilded Age Conceptions Of Labor Contracts: Wrong Then, Wrong Now

[ 69 ] April 25, 2013 |

Many of you will be familiar with the first Justice Harlan’s response to the bare majority of the Supreme Court’s conclusions that maximum hours laws violated the 14th Amendment:

It is plain that this statute was enacted in order to protect the physical wellbeing of those who work in bakery and confectionery establishments. It may be that the statute had its origin, in part, in the belief that employers and employees in such establishments were not upon an equal footing, and that the necessities of the latter often compelled them to submit to such exactions as unduly taxed their strength.

I think Yglesias’s response to Erik, which suggests that trying to apply more stringent labor standards to American corporations abroad is undesirable even in principle, makes the same basic mistake the Lochner majority did:

I think that’s wrong. Bangladesh may or may not need tougher workplace safety rules, but it’s entirely appropriate for Bangladesh to have different—and, indeed, lower—workplace safety standards than the United States.

The reason is that while having a safe job is good, money is also good.

Ygelsias, admittedly, does concede that there are areas where collective choices to interfere with labor contracts are justifiable — as, for that matter, the Lochner majority did — but he nonetheless simply assumes that the safety conditions that led to the death of at least 194 people represented free choices made by the Bangladeshi state and Bangledeshi workers. The problem is that I see no basis for this assumption. Without endorsing everything in the Mr. Destructo critique, this is right at the heart of the question:

The building, which housed 5,000 workers laboring in four clothing sweatshops, churning out low-cost exports for retail stores like DressBarn and Benneton, had been closed by government inspectors on Tuesday, following reports of cracks in the building’s foundations and walls. Though engineers warned of a collapse, the building’s owner, the politically connected Mohammed Sohel Rana, assured a Bangladeshi newspaper that the cracks were not serious, while his tenants ordered their workers back into the listing building. As hospitalized laborer Nurul Islam stated, “None of us wanted to enter the building. Our bosses forced us.”

A fairly open-and-shut case of criminal negligence, inflicted on a horrifying scale against hundreds of the most vulnerable people on Earth—all of them impoverished, half of them women, and at least some of them children, crushed in day-care centers on the building’s ground floor. The crooked owner, Sohel, had flouted the law over the past five years by illegally adding three stories on top of the building, likely causing the cracks. In contravention of the law, the sweatshop foremen coerced hundreds of people fearful of losing their jobs into dying instead.

This is the key problem: I don’t see who’s making the “choice” to ignore the basic safety of workers except for the rapacious employer and, by extension, the companies using his exploitative services while looking the other way. This certainly wasn’t the choice of the Bangladeshi state, since the practices of the factory that lead to the deadly collapse were illegal. The workers made a “choice” put their lives at risk in conditions that were known to be appallingly unsafe only according to the kind of logic that led hack Gilded Age jurists to conclude that minimum wage and maximum hours violated the due process rights of not only employers but of workers. The argument for greater intervention on the part of richer liberal democracies to enforce tougher labor standards is not an argument that we should be imposing “our” values on Bangladeshi citizens who don’t value worker safety the way we do. It’s argument that we should be using the greater enforcement capacity and leverage of richer liberal democratic states to enforce values that all evidence suggests are shared between richer and poorer nations. (Hobbes didn’t have an explicit section in Leviathan that we have a universal shared interest in not being crushed by collapsing building so that a well-connected scumbag could employ more people in his sweatshop and American retailers could save a few pennies a unit, but I think his general logic applies here.)

If you want to say that Erik’s solution is politically impractical, as I’m sure he’d be the first to agree you’re probably right. I don’t have any immediately feasible policy solution to present you. But I don’t see any objection in principle to the idea that the American government should be doing more to prevent gross abuses of workers being employed on behalf of American corporate interests and consumers. If there are problems with any given policy solution, it’s certainly not that such policies interfere with the free choices of Bangladeshi workers to work in buildings that are illegally unsafe.

Comments (69)

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  1. cpinva says:

    and this is why all those jobs get outsourced to these countries. not just the obscenely low wages, but the practical lack of any real enforcement mechanism, by the host state, to horrific, unsafe work environments, along with the environmental destruction many of the these companies cause. of course it’s going to be cheaper per unit, even including freight-in, when you have nearly slave labor, working in an environment that dickens would appreciate.

    • Jeff Olson says:

      Dickens is an appropriate choice here. An active and independent fourth estate – with a clear sense of justice, interested in illustrating the plight of the weak and the maltreated in an affluent society, confronting power and wealth as fonts of injustice – AND clearly showing alternatives – at home and abroad.

      Well, I guess I don’t have to go much further.

      Absent a press which keeps pressure on – engaging in a real way the real questions of our shared humanity, and refusing to hide behind the facades of capitalistic relativism – this will only continue.

      But the American media, owned and operated as it is, has no interest in kicking the ass of power when so many rewards await for those who kiss it so affectionately.

  2. Murc says:

    I’d like to note that Yglesias seems to think Erik is calling for some sort of intervention in Bangladesh when he is not.

    Bangladesh, as a country, may set and enforce any sort of workplace standards it wishes.

    We, as a country, can decide we find them appalling, and enjoin all the companies and citizens based here or wishing to do business here that they may not take advantage of said appalling standards.

    • EH says:

      Back to the ivory tower with you!

    • mpowell says:

      Well, Erik is calling for US regulation of factories owned by American companies in Bangladesh from the sound of it. Which is frankly ridiculous. You can argue whether or not MY is ignoring the collective action problem, but I read his post as arguing that Bangladesh should decide what the appropriate safety standards are for factories operating there and they should enforce them. Which certainly does not preclude democratic control.

      It is awfully difficult, in my opinion, to argue that American owned factories in Bangladesh should be operated with different safety standards then local ones.

      • Erik Loomis says:

        Why is it ridiculous? If capital can move, why can’t labor standards move?

        • burnspbesq says:

          Because Bangladesh is a sovereign country, with a somewhat functioning democratic system.

          If you want higher standards to apply in Bangladesh, your job is to convince the relevant actors in Bangldeshi politics that those higher standards are in their interest.

          There is no Plan B.

          That’s what sovereignty entails.

          • Murc says:

            The people running those factories are American citizens. We can damn well legislate how Americans conduct themselves abroad without infringing on the sovereignty of others, and we can also refuse to accept into this country goods or wealth they obtain by methods we deem criminal or negligent.

            • MIke D. says:

              Not really. If you move to another country and do something legal there that that’s illegal here, you’re not going to hear word one from any American government about it, unless it involves harming another American there (or here). There’s no way for the U.S. to enforce laws that have no effect in America; hence it doesn’t make such laws.

          • the_melvinator says:

            You’re misinterpreting the position a bit. Of course Bangladesh is free to enforce whatever standards they choose. They’re free to use lead-based paint, to pay starvation wages, to use child labor, or to make sewing machine needles out of the leg bones of endangered White Tigers (This is hyperbole. I don’t claim that endangered species bones are being used as sewing machine needles. I’m sure they use metal. It makes a much better needle.).

            Similarly, the US should be free to enforce whatever standard we choose on goods sold within out borders. If we should decide that goods made using lead paint cannot be sold in our country, that’s our right. Similarly, we should have the right to choose to ban sales of goods that have any of the other attributes as well.

            • mpowell says:

              This is a fair point, and with certain kinds of labor abuse I certainly agree. What I absolutely do not agree with is the idea that local owned factories should be operating under different rules than US owned ones. Factories located in Bangladesh should operate under the relevant laws there as enforced by Bangladesh. Whether they are American owned, contracted out by American companies or entirely owned and operated by Bangladesh. There’s just no rationale to holding otherwise.

          • Erik Loomis says:

            I guess we can say the same for child slavery.

        • Doug K says:

          because capital has power and labor has none..
          we can’t even get our government to care about its own citizens, how are we going to get it to care about Bangladesh ?

  3. J. Otto Pohl says:

    I think there is a good argument for punitive tariffs on goods produced by labor subjected to conditions below an accepted minimum. This would destroy the competitive edge US companies gain by establishing sweat shops overseas. They could not sell their goods cheap enough to be competitive and still maintain extremely high profit margins if the amount they saved by avoiding decent labor conditions was eaten up by tariffs.

    • Data Tutashkhia says:

      If I was that CEO, I would have created (by giving some figurehead a loan) a local subsidiary that is, officially, an independent company. And some middle-men, in Hong Kong, to hide my connection to it.

      Your move.

      • sharculese says:

        My move is to point out that you’re an emotional toddler and nobody would be stupid enough to give you control of their company.

      • cpinva says:

        “If I was that CEO, I would have created (by giving some figurehead a loan) a local subsidiary that is, officially, an independent company.”

        you clearly have no concept of the term “audit trail”. any halfway competent cpa firm, auditing any publicly held company (which all of them are required to be, per SEC rules), would immediately sniff this out, as it would be on top of the balance sheet list for items to review. the board of directors, who would be advised of this, would tend to frown on it, since their personal butts are now on the line, for the accuracy of those audited financial statements.

        geez, come up with something actually complicated, would you.

        • Malaclypse says:

          Come on, it is kind of cute the way he uses terms like subsidiary, loan, figurehead, and middle-men without understanding a single one of them.

          Protip, Data: Subsidiaries consolidate*. You’re welcome.

          * Yes, I’m aware that sometimes they don’t. I’m confident that Data is not vaguely capable of understanding when they do and when they don’t.

        • Data Tutashkhia says:

          Yes dear, of course. The SEC rules, the “audit trail”. Thank you so much for enlightening me.

      • Scott Lemieux says:

        That could get you around the application of health and safety standards,but I’m not sure how it would allow you to avoid tarrifs.

        • Data Tutashkhia says:

          Well, I think it would probably make more sense to impose tariffs on the country itself, as long as its government doesn’t enforce the basic requirements for safety, pollution, wages, etc.

          But even that is not going to work. They are going to ship their product to another third-world country, and there a respectable label will be slapped on it, and it’ll be exported from there. It’s really quite hopeless.

          • Malaclypse says:

            Best to not even try. That’s Pretend Marxism we can believe in!

            • J. Otto Pohl says:

              There is nothing pretend about it. Data is the real deal.

              • Malaclypse says:

                No, Data just thinks he is the real deal. You know what real Marxists do, at least sometimes? Use actual writings by Marx or Marxists to illustrate an argument. Data does that exactly never.

                If Data were an actual Marxist, he might discuss the parts of Capital dealing with primitive capital accumulation. That would be both interesting and relevant. But Data can’t do that, because his understanding of Marx is about as thorough as a Liberty University sophomore.

                • J. Otto Pohl says:

                  He is from the USSR. The people I have met from the former USSR with degree (Kandidat and Doktor Nauk) in Marxism-Leninism knew very little Marx. They instead knew Lenin and Brezhnev. Their understanding of Marx came through that filter not directly from a rigorous reading of Marx himself.

                • Malaclypse says:

                  So, as I said, a Pretend Marxist.

                  And I’ve never seen him discuss Leninism either. Brezhnev I know little enough of that I wouldn’t recognize it.

                  But honestly, if you are discussing this topic, and you don’t bother to discuss this, then you are not a Marxist. Full stop.

            • DrDick says:

              I love it when obvious glibertarians pretend to be what they imagine (without any actual knowledge of the subject) Marxists to be.

    • Kurzleg says:

      This would destroy the competitive edge US companies gain by establishing sweat shops overseas.

      You think that only US companies do this? Uh, yeah.

    • Coastsider says:

      Byron Dorgan in the Senate and Sherrod Brown in the House tried to do this in 2006 and it didn’t even get out of committee – Decent Working Conditions and Fair Competition Act I think most companies would push hard against this and you most reps/Senators would do the same. Non-tariff barriers focused on occupational H&S issues could work, but then you’d get the countries affected to petition the WTO or retaliate in some way. Pushing companies to have global standards based on US regulations is the best way to gets something done(speaking as someone who’s working on these issues in the IT industry.)

  4. [...] ….I see Scott has also written a response below, which covers some of the same ground. [...]

  5. Captain Bringdown says:

    The title of this post is pithy and says virtually all that needs to be said.

  6. Sly says:

    The reason is that while having a safe job is good, money is also good.

    You know who would appreciate a lecture on the value of money a lot right now? The 194 families in Bangladesh who just lost a breadwinner. Maybe Yglesias should hop on a flight to Bangladesh and share this wisdom with them.

  7. ChrisS says:

    There is nothing inherently wrong in making a profit by exploiting the poor and desperate.

    Helluva civilization ya got here …

  8. Anon21 says:

    From the story Scott quotes, it kind of seems like both Erik and Matt wandered off the point? This building violated Bangladeshi safety standards, so this tragedy is not a result, first and foremost, of standards that are too low, but rather inadequate enforcement mechanisms. Forcing U.S. corporations and their subsidiaries to agree to maintain higher safety standards will not solve the problem if the corporations feel they can flout the safety standards without being caught or penalized. (I take it Erik’s not proposing a global network of U.S. safety inspectors?)

  9. Beth says:

    Using the DOL’s information on Child/Forced labor http://1.usa.gov/14dSFl8 I think we should institute import bans on types of items from certain countries that we *know* are made by children/forced labor. For example there is a publication called: Child Labor in the Informal Garment Production in Bangladesh http://1.usa.gov/11nCHz5 We could ban all clothing imports from Bangaldesh until the bad companies cleaned up their acts. I imagine the good companies would pressure the bad companies to act appropriately. Or, for the good of their economies, the governments in these places would step up their own enforcement of workplace standards. Of course we would never do such a thing because it would “kill jobs” and kill campaign funding and golf trips for our esteemed elected officials.

  10. John Glover says:

    It’s not only in foreign countries that we have these kinds of issues going on. There was that little incident in West Texas last week. Funny thing is, our government seems to be just as helpless in preventing them as Bangladesh….

  11. DrDick says:

    On what planet are the choices of Bangladeshi workers actually “free”? When you are in a situation where your choices are take what the owners offer or starve, there is no free choice, but only economic coercion. He also assumes that this is informed choice, while there is a very high probability that many or most of the workers cannot meaningfully assess the risks involved (which is often true in the US as well).

    • EH says:

      Planet Walmart, that’s where.

    • A Different John says:

      What, you mean that workers aren’t omniscient and omnipotent? There aren’t thousands of companies offering them the complete range of incomes and safety standards? Huh? Obviously you need to spend more time in the reeducation camps run by the University of Chicago econ department, if that’s the level of ignorance to which you’ve sunk! :)

  12. T.R. Donoghue says:

    He’s gone full glibertarian on these issues. Insufferable arrogance, wrapped in total ignorance of life outside his own very life. I’m glad some people still have the energy to respond to him and rebut his nonsense, I find it exhausting.

    I’d rather be forced to read Glenn Greenwald’s twitter feed for the rest of time than read another Yglesias piece pontificating on workers issues.

  13. DonnaFaye says:

    There’s no kind of monstrosity that Yglesias couldn’t justify with his argument. Child prostitution: “While not being raped repeatedly on a daily basis as a seven year old is good, money is also good.”

  14. MIke D. says:

    Yglesias doesn’t assume that Bangladeshis’ choices to work in these places are fully free. All he is saying is that you’re actually denying them something if you say that their workplace safety laws have to be as stringent as ours – namely, a non-trivial number of jobs in a country where people are much more in need of money than we are. He’s saying that making some degree of choice for workers to work in riskier factories than what we would allow here is something they should be allowed to have.

    Now, if(!) ALL Erik was ever proposing was extraterritorial enforcement of U.S. safety laws on all U.S.-firm-owned facilities in the world, and not any change to Bangladeshi law (or enforcement practices), then Yglesias missed his point. Still, Yglesias only did what he did say, not anythign he didn’t. And he didn’t say that all these choices are fully free (or fully informed). He just said that room to make such choices is something Bangladeshis should be allowed.

    • MIke D. says:

      …I should say, allowed by the rest of the world, not “allowed” as in Bangladesh should understand something about its political constitution should prevent instituting whatever standards it chooses, a la Lochner.

  15. [...] Guns and Money’s Erik Loomis finds rhetoric that makes the health and safety of workers anywhere a secondary concern, or grants them [...]

  16. Nils says:

    Yglesias’s attitude is entirely of a piece with his mentor Larry Summers’s view that environmental regulations are also a fury world luxury that poor countries shoud be allowed to arbitrage: http://en.wikipedia.org/wiki/Summers_memo

  17. Lurking Canadian says:

    It is not an imposition on the sovereignty of Bamgladesh to say to them, “You can have whatever workplace safety standards you like in producing goods for local consumption. If you want to sell goods in our country, though, you will comply with the following standards…”

    It is impossible to do this in practice, of course. OSHA has a hard enough time keeping up with safety standards in American plants, Congress would never go for it, and probably it violates some WTO rule, but that does not affect the principle.

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