The cost of poverty?

Guest post by Dr Anna Notaro, Duncan of Jordanstone College of Art and Design, University of Dundee

While I’m writing this lives are still at stake in the Rana Plaza in Dhaka, the collapsed building which housed one of the many garments factories providing Western customers with low cost clothes. Three hundred workers are believed to have died and six hundred are still missing, with very little chance of being pulled out alive. As often is the case after such tragedies a debate is now raging in the media touching upon the familiar issues of globalization and global capital, with some very powerful ethical overtones. David Blair in the Daily Telegraph  has convincingly argued that ‘all of us are linked to this tragedy in some way’, retailers and consumers alike; moreover we, as consumers, should use our purchasing power to force retailers to sign up to local tougher workplace safety agreements.

On this particular issue Matthew Yglesias writing in the online magazine Slate has claimed:

‘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. … Bangladesh is a lot poorer than the United States, and there are very good reasons for Bangladeshi people to make different choices in this regard than Americans… 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’.

In a similar vein Tom Chivers in the Daily Telegraph  has warned:

‘If you force Bangladesh to run its sweatshops at much higher safety standards, labour costs will go up. The only advantage Bangladesh has over other countries is that their labour costs are cheap; without that advantage, the companies may go elsewhere. Then Bangladesh will lose the source of income that is currently making its poor people better off. It is perfectly possible that well-intentioned efforts to improve the lot of workers in the developing world will backfire, and make things worse. For instance, one study found that a law in Brazil banning under-16s from working reduced their school attendance.’

So here are some moral questions for us all to ponder: is poverty a good reason to justify the lowering of safety standards in particular parts of the world? Can workers in poor countries exercise any free choice as implied by Yglesias in his Slate piece above? Retailers like Primark and Bonmarché have a strikingly successful business model, in that by outsourcing production to developing countries they can sell clothes so cheaply that Western consumers regard them as disposable items. What are the consequences of such a business model not only in the clothing industry, but in the food industry and, of particular interests to readers of this blog, in (higher) education?

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20 Comments on “The cost of poverty?”

  1. V.H Says:

    Neither of those statements work. Collectivizing responsibility and especially blaming the end user is tantamount to blaming the big ship used to carry the stuff.
    Stores and designers go to Asia with a price in their heads. If it cannot be done for that price then it cannot be done. The store lifts it. It will not impinge in any way with the price the end user will pay.
    We cannot keep moaning about the Mom&Pop stores nor can we keep moaning about the loss of tweed. If tweed and the M&P’s priced themselves for the mass market the still couldn’t compete, they couldn’t generate the volumes margin of the big-box stores. And for what it’s worth the big boys/girls could move home and still generate margin. They are quite simply more efficient.
    As to education, it will depend. I expect the lucrative post grad market will vanish and in their place you’ll find on-line courses. More like the way the professional bodies play the game right now. Shifting it back to the garment, we’ll get the expensive core item and embellish it with accessories as needed.

  2. Al Says:

    First let me pay my respects to those deceased and those who have lost loved ones.
    There hasnt been enough details yet.
    There could be a decent safety culture in operation there with regard to the normal operations. Presumably fire would be a textile specific hazard and so on. Building failure may not be an explicit hazard.
    Details may come out.
    One that may be of interest is whether the three storey extension which seemed to be the cause of the failure was constructed to deal with a specific individual or set of contracts with identifiable first world parties.


  3. Anna, your question: ” is poverty a good reason to justify the lowering of safety standards in particular parts of the world?” does not seem to address the argument in the Slate and Daily Telegraph which I read as follows: “Is the argument that requiring higher safety standards in developing countries will lead to a loss of jobs and increased poverty, a good argument for tolerating lower safety standards?”

    • Anna Notaro Says:

      Thanks Brian for rephrasing the question, I guess yours approaches the issue from a slightly different angle, also it is a matter of emphasis and for me the emphasis in discussing such a tragedy rests firmly on the issue of the *existing* poverty and social inequality in developing countries, before any other consideration of its possible increase following higher safety standards. By the same fact that they live in such a condition of poverty such workers have no choice but to accept working 18 hours a day for 35$ a month. As recently as June 2012, thousands of workers outside Dhaka protested for higher wages and better working conditions.The government sent in three thousand policemen, a committee was set up, but nothing came of it. Also, the Rana Plaza is only the latest in a long list of ‘accidents’. It is disheartening to think that nothing has changed much since the infamous Triangle Shirtwaist Factory fire in New York City of 1911 (one hundred and forty six mostly women workers, just like in Dhaka, died) but the geographical location of where the tragedy occurs. A global market should be an enormous source of wealth on a global scale, but that is only possible if with it come also global rules!


      • Global rules may be of value, but what will those rules be and could those rules be such that we make things worse for developing countries. There is currently anti-globalisation arguments being put forward in developing countries (by unions as among others) advising industry not to “offshore” activities. In creasing the cost of manufacturing in developing countries will reduce jobs in those countries and possibly the potential for them to work their way out of poverty as many Asian countries have done in the last 40 years. It is not really a matter of emphasis but a matter of predicting outcomes of decisions.

        • V.H Says:

          But that’s a serious miss-stating of what occurred in the Tiger Economies. It wasn’t driven by cheap and ever cheaper production of traditional product in traditional ways but in deploying new methods or even developing new products entirely like with Taiwan and silicon chips


          • To be honest, VH, I’m thinking of earlier on. I think that the development of those higher level activities are more recent. I stand to be corrected. However, that does not remove the necessity of accurately predicting what the actual outcome will be of imposing western style labour laws on a very low level developing country. I’m all for it if it works.

          • V.H Says:

            If we take the area between Calcutta and Dhaka at one stage you might as well call it Little Dundee so many of the upper echelon of that town were working and living there. It was centered on the Jute industry. At first the land was devoted to growing the stuff which was then shipped to Dundee for spinning. Soon enough, about 1920, that industry was consolidated and very rapidly afterwards the majority of spinning was transferred to Calcutta. Then came Independence. But by then the industry was majority owned by Indians. In a bit of a border drawing oops the growers (Muslim) were in East Pakistan and the factories, up to date factories at that, were run by Hindu’s in India.
            Thing is the reason why Dundee in the first place was that there was a ready supply of cheap bodies coming out of the Highlands that continued long after the industry was drastically reduced after 1920. In fact you might say the years between 1920 and 1955 were the golden years of Jute. So why did they move in ’20, and why didn’t they move back after independence in 1949-50. Well, even with the bit of border bother and even with ultra cheap labour from the Highlands the profit margin derived from the Calcutta factories was huge.
            And then came NYLON 1939 and the other synthetic fibers after WW2. Eventually killing the Scottish wing of the industry stone dead by 1980.


  4. Hi Anna

    Do you know Kwame Anthony Appiah’s Cosmopolitanism: ethics in a world of strangers? The final chapter addresses this challenge head on, looking at where consumer responsibility lies in the perpetuation of global poverty while appreciating the reluctance of the privileged simply to give up their privilege—which is also at some level the source of their power to confront poverty. It’s a complicated and ambivalent read, I find.

    Appiah is a follower of Adam Smith, and argues that what’s needed now is the exercise of reason, not “explosions of feeling”. Like you, he suggests that intervening in local employment opportunities can do harm as well as good. In Australia we’ve recently seen an “explosion of feeling” about the circumstances under which children in India came to be stitching branded league footballs rather than attending school. But is the answer to remove that precarious livelihood, without thinking ahead about what can replace it in a sustainable way?

    I really appreciated this post.

    • Anna Notaro Says:

      Yes, I find Appiah’s use of the old idea of cosmopolitanism convincing, being about how all of us live together in our increasingly interconnected era. The sense of belonging to a single human *community* (albeit a hugely diversified one) brings us to the question of a *shared* morality and to the one of universal human rights. I am all for rationally ‘predicting outcomes of decisions’ as Brian puts it above, also I cannot ignore blatant social injustice when I see it though. That is intolerable.
      Bangladesh is one of 49 Least Developed Countries that pay no duty on exports to the EU (http://trade.ec.europa.eu/doclib/docs/2013/april/tradoc_150983.pdf) threatening to withdraw Bangladesh’s preferential trade arrangements is useless unless all the other 48 countries are put under similar pressure, should working conditions not improve. Also, rather than pulling out of Bangladesh, Western retailers – and governments – would do better to support the rights of the workers in loco, this would mean making smaller profits and for us to pay a bit more that 5£ for a t-shirt. The alternative is to measure the cost of poverty in human lives lost to greed.


  5. This post has sparked a really fascinating debate, not least because the issues are so complex.

    Back in the 1980s I was a Lecturer in Industrial Relations, at a time when outsourcing manufacturing to Asia was beginning to speed up. At that time the trade unions in the UK saw this mainly as a matter of tariffs; if Bangladeshi workers were undercutting British labour costs, then the answer had to be to remove the advantage by taxing imports. But the perspective was that of protecting manufacturing jobs in Britain, and the debate was principally about the economic acceptability or otherwise of tariffs. The argument then was that it was not acceptable to make jobs in Europe insecure by accepting lower wages in Asia.

    That argument rightly did not prevail. African and Asian countries could never lift themselves out of poverty if we did not allow them to supply us at prices reflecting their (rather than our) cost of living. And we need to accept that certain types of production will search for the places where they can be most efficiently carried out.

    There is of course a big gap between that approach to global markets, and the drive to push labour costs down to such an extent that workers become slaves and that the affordability of our clothes and electronic gadgets is achieved on the back of exploitation and cruelty. But whether we can ever address this effectively remains to be seen. One corporate executive in a relevant industry told me recently that at moments such as this there is an outcry, but within minutes consumers return to hunting for the very cheapest t-shirts and gadgets and punish companies that don’t deliver. He said that he knew of several ethical companies that had been destroyed by consumers simply not caring and going for the cheaper and unethical alternative.

    We also seem to lack a sense of balance and judgement. I listened recently to an outraged African commentator who pointed out that affluent western commentators had destroyed the livelihoods of wholly proper African vegetable growers by arguing against importing their products on environmental (carbon footprint) grounds, while not caring a bit about the conditions in which some Asian clothing products were produced. He may have a point. Our ethics are sometimes remarkably narrowly focused, and often self-indulgent.

    • Anna Notaro Says:

      The corporate executive who mentions consumers’ ‘death wish’ (I would call it!) for the cheapest t-shirt, gadget and, one could add, meal or for the ‘best deal’ university course is indicative of what I was hinting at with my conclusive question. The market model (based on outsourcing but not just) implemented by most corporations has become so pervasive to the point that it has become a ‘culture’, a ‘whole way of life’ (Williams). All that is cheap is also disposable. All that is quantifiable has a price.

      The UUK 2011 Report “Efficiency and Effectiveness in Higher Education”, which recommended outsourcing is a case in point of how the commendable desire to run educational establishments efficiently can (inadvertently?) work as a conduit for major (not necessarily positive) cultural shifts. Universities are institutions of their time and as such they cannot but reflect society’s contradictions and struggles, but they are also the best terrain to critical question the ethical (and economic) validity of what is proposed.

  6. Eddie Says:

    Very fashionable sitting in the first world to argue about the problems of the third world in simplistic terms. What is ignored is the elephant in the room-the almighty corruption!! Having worked in that part of the world for a few years, it is clear to me that because of the endemic corruption, safety is very often the victim.

    Whilst we are in the blame game, pointing finger at Primark, it often escapes to us, rather conveniently, that our universities visit these countries to pull out their best young men and women impoverishing the countries of their good brains, to keep us secure in our jobs and our performance bonuses. These brains are permanently lost, particularly in countries like Bangladesh.

    • Eddie Says:

      I should clarify that a country like Bangladesh is impoverished when their bright young men and women who can make a difference are lost.

  7. Anna Notaro Says:

    Thanks Eddie for mentioning the issue of corruption, one does not need to live in developing countries to be aware that corruption is another of the costs of poverty.
    A bit surprising that as a defender of English HE policies (judging from previous comments) you lament universities’ recruitment strategies towards developing countries, strategies brought about exactly by the policies you support.

    • V.H Says:

      Corruption of itself is less of a problem than the infrastructure needed to support it. It presupposes two or even three hidden economies running simultaneously. But that’s Italy. the UK, Spain or Ireland in a nutshell. We just don’t call it that. But any time that the Law of One Price is distorted, as it is daily, someone is playing with extra cards. But the truth in economic terms for Bangladesh is not so much the corruption, the multi-track economy or that much is hidden but that the economy is designed like a siphon permanently sucking out uncountable amounts of wealth. It is still being treated as a colony, but by itself.

      • Anna Notaro Says:

        Personally V.H. I would give more importance to the issue of corruption in developing countries since it characterizes the relationship between the citizen & the state at every level, it is a mafia-style behavior which permeates any activity, business or otherwise. Also, one should mention the complexities of a global supply chain in which Western retailers assemble sprawling networks of subcontractors and middlemen, who do much of the work and over which they have little control. Meaningful labor safety reform in Bangladesh is impossible if the giant retailers are unwilling to embrace change, but the EU and we, as customers, have also a role to play, loss of revenue and brand damage can be very persuasive arguments.

        • V.H Says:

          True enough, but we’re looking at what’s occurring as if it’s new. You mention the Mafia, they thrive where there are vast unregulated transfers, in and out. And where there is a huge disparity between the local economy and that of a select group.

    • Eddie Says:

      More than English universities, it is Scottish universities who are sending more and more agents to recruit these students ( as English universities can charge home students tuition fees , and are hence are well funded) to enable Scottish students to give free university education-just find out what your own universities does in this area. Not long ago, U of St Andrews VC grasping this problem was suggesting tuition fees for Scottish students. One has to only closely examine the work of the agents of Scottish universities in third world countries. Ask Russell , how he proposed an year ago to plug the yawning funding gap.

  8. Eddie Says:

    So many are commenting here as arm chair critics without knowing these countries. Corruption is the origin of all their problems, and my experience in working in these countries. Any Bangladeshi would tell you this for free.


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