05/28/2013 05:09 pm ET | Updated Jul 28, 2013

The Minimum Wage, Sweatshops, and Escaping the Free-Market Binary

There is a strain of argument for free markets that purports to be on the side of working people. It says that while do-gooder regulations may be nobly intended, ultimately they often hurt the people they are trying to help. The point is applied against various attempts to control extortionate or exploitative corporate practices, whether by raising the minimum wage or reining in debit card fees. The suggestion is that pushing on one part of the system causes movement in another part, an inadvertent effect that those committed to regulation willfully ignore. Raise the minimum wage and you will correspondingly raise unemployment. Cap debit card fees and watch free checking accounts disappear. The argument concludes by implicitly positing a binary: we either allow companies to do as they wish, or we try to control them and in the process do more harm than good.

For some years, Nicholas Kristof has been applying this same pattern of reasoning to the anti-sweatshop movement. Liberals, he says, have their hearts in the right place, but do not understand economics:

Mr. Obama and the Democrats who favor labor standards in trade agreements mean well, for they intend to fight back at oppressive sweatshops abroad. But while it shocks Americans to hear it, the central challenge in the poorest countries is not that sweatshops exploit too many people, but that they don't exploit enough.

Kristof says that without sweatshops, poor countries would suffer even further. And so "anyone who cares about fighting poverty should campaign in favor of sweatshops, demanding that companies set up factories in Africa. If Africa could establish a clothing export industry, that would fight poverty far more effectively than any foreign aid program." Africa will only be competitive if it is able to offer lower wages than anywhere else, and so vigorously enforced labor standards doom any chance for jobs and corresponding economic uplift.

Kristof offers us the binary: either accept the economic reality of sweatshops or attempt to impose restrictions on them and see manufacturers flee elsewhere. Paltry wages and factory fires are unfortunate, but the numbers speak for themselves: people want jobs, and flood to these supposedly abominable employers. Who are Western liberals to try to take away the only source of income in a community?

The argument contains a careful sleight-of-hand, however. By first positing the inevitability that attempts to regulate labor practices will result in the movement of industry, and by second framing such movement as one might speak of the travel of liquid through glass tubes, any idea of free will and moral responsibility is removed from the discussion. The reasoning process thereby slyly exonerates corporations for what would be considered deeply immoral acts if they were evaluated by the standards that the criminal justice system uses for individuals. After all, what does the argument actually say? If it is that employers are purely self-interested, and will wriggle out of any attempt at imposing requirements, this may be correct, but surely if that is true, these employers suffer from a deadly and irredeemable sociopathy.

As another example, take the minimum wage. When the issue of the minimum wage comes up, so does the economic question of whether the minimum wage unintentionally raises unemployment. Left economists argue that it doesn't, that the benefits of putting more money in people's pockets compensate for any slight drop in employment there might be, while the right argues that mass firings will result and counteract any benefits. The truth is that both sides overstate their case, as the studies aren't conclusive. But why are liberals actually invested in the idea that raising the minimum wage has empirically positive consequences for working people? What if it doesn't, and raise-opponents are correct? In fact, the right's case makes more intuitive sense to me. It doesn't actually appear implausible that businesspeople would react to having to pay their workers decently by spitefully and callously firing a bunch of them in order to preserve their own fortunes, which is what the argument that the minimum wage "raises unemployment" is actually saying.

The same familiar reasoning pattern occurs in opponents of the Affordable Care Act. A Heritage Foundation study concludes that the Obama healthcare plan "hurts less skilled workers," thanks to consequences of the Act's mandated increases in coverage for employees:

Employers hiring unskilled workers will respond to these higher costs in two ways. Many employers will forgo providing health benefits and dump workers onto the government health care exchanges...The employer mandate will also encourage employers to replace full-time jobs with part-time positions.

The language used is devoid of moral judgment on employers. Employers "will respond" or "will be encouraged" to behave a certain way. To the extent that the language of responsibility is included, it is directed at "Obamacare," which "hurts" the workers. Not for a moment is the alternate interpretation considered, that employers who deliberately harm their workers' health in order to save money bear the blame for this "hurt," and that forces pressuring them to do so are not nearly strong enough to save them from culpability under the application of ordinary criminal law theories of responsibility (which do not contain a "but I wanted to make a buck" exception).

When it is said that a move will "hurt the economy" or "cost jobs," what is actually being said is that people in certain parts of the economy can be expected to react in a certain way. There is set of actors making individual choices, doing things to people. When Kristof says that corporations will refuse to enter certain countries if wages are too high, what does this mean? It means that corporations hold a knife to the throat of the world's poor, demanding that they either willingly subject themselves to brutality and misery or be left unemployed to starve and die.

An unstated but inescapable conclusion comes from the often persuasive free market arguments about regulation's ineffectiveness: corporations are (as has been suspected) incapable of feeling and acting on moral impulses, or obeying basic human duties to one another. What kind of individual would fire employees to avoid having to pay for their health care? If what the Heritage Foundation say about the facts is true, surely these employers should be treated in the same manner as one would treat kidnappers or blackmailers. They are offering a simple threat, one that should be dealt with criminally. If Evo Morales is warned that by continuing to nationalize industries, he creates a climate inhospitable to foreign investment, he is simply being told that should Bolivia's indigenous people succeed in wresting power, they will be swiftly destroyed by economic actors who have zero regard for Bolivia's or the world's well-being.

Taking the economic case against regulation's effectiveness seriously is crucial, because it recurs from sphere to sphere, and with it come thousands of casual exonerations of the guilty. It is said that affordable housing requirements result in less housing, that unions end up depressing the wages of others, that rent control is a disaster. The left needs to concede that these facts may actually be true, but needs also to see that what free-market advocates therefore appear to be saying when they make these cases is that selfish actors will unflinchingly destroy people's lives when one attempts to rein in their power or profit. They will obey no law, follow no moral code. Of course, this should almost certainly lead not to deregulation but to far, far more of it, and to a righteous venomous thunder against the people and institutions that hold us hostage.

As a matter of fact, if free-market logic is truly followed through to its conclusion, the prescription becomes even more severe. In criminal justice, where capital punishment is concerned, even those who oppose it in nearly all circumstances almost always create an exception: the death penalty is justified in those cases in which it is impossible to restrain the offender from doing more harm without destroying him. If an individual was truly unable to be contained, execution would be the only just option. The Heritage Foundation's helpful empirics showing the impossibility of creating morally healthy corporate actors inexorably lead to the conclusion that capitalism fits that narrow class of cases in which even philosophical opponents of the death penalty would agree that it must be applied.

Yet as far as action goes, this still leaves the binary intact. Say we adopt a Kristofian view, the one that cries tears for working people, and then tells us that while their situation may be tragic, it is unavoidable. If we are sympathetic, but bound, what are we to do but promote free markets? Surely we are inextricably trapped in the binary.

Thankfully, there are several routes out. First, once the implicit premises are drawn from the argument, the binary ceases to matter nearly as much. If we are dealing with amoral sadists, willing to cause others immeasurable suffering in order to serve their own pleasures and pecuniary interests, then is there a meaningful option of surrender? Once the free marketeers have conceded that employers act wholly independent of human values and that they will not stop destroying lives unless they are thoroughly restrained, it doesn't especially matter what unintended consequences there are. Policemen don't cease the quest to capture a murderer if he multiplies his threat or appears unstoppable. If the free-market argument means nothing more than "you are not powerful enough to tame this beast, so if I were you I wouldn't try," fair enough, thank you for the warning, but it's better to die on your feet than to live on your knees.

But second, the binary is offered in bad faith; there is good reason to beware the crocodile tears of those who offer it. If truly they gave a damn about whether workers had health care, or Bangladeshis worked in adequate conditions, if these things really kept them from sleeping, they would acknowledge the massive looming implication in their words -- that those who inflict these conditions are monstrous. If one truly wept at the factory collapse or the plight of the fired worker without medical coverage, it would be very difficult to make flippant jokes like Kristof does* or be so sanguine in one's calls for inaction as the Heritage Foundation is. And if one truly adopted a tragic view of capitalism, one that saw so many bodies being ground to death by it but felt it was unstoppable, one would have had to take alternatives more seriously before dismissing them, so desperate would one be to find a way to stop the machine before resigning oneself to being consumed. This bad faith in which the argument is offered should bring into suspicion their assessments of the possibilities (and, certainly, the necessities) of executing what they admit destroys so many lives. Those who issue these false displays of solidarity should not be trusted to correctly account for working people's interests in their proposed recommendation, since feeling superficial sympathy rather than real pain will distort their calculus of what is worth fighting for and at what cost.

But finally, the binary is less absolute than it appears: there is no strict dichotomy between the A of accepting the intolerable and the B of doing more harm by attempting to control it. There is an option C: building a global working people's movement that refuses to abide suffering.

Recognition of "option C" does mean that opponents are correct that liberals foolishly ignore economics. The left should forget about arguing that existing watery regulations do good, and should quit feigning obliviousness to unintended consequences of their acts on other parts of the system. But the case against a specific regulation's effectiveness is not to be confused for a case against the necessity of assigning responsibility and treating amoral actors accordingly, and acknowledging that conservatives' numbers are correct does not mean resigning oneself to being trapped in the binary.

The left should be perfectly happy to accept the fact that a regulation does no good, but should respond by concluding that corporate power must clearly be put to death at all costs. They should argue that the conclusions about the savage nature of capitalism implied by the free-market argument are exactly what make its public execution a necessity. And they should further argue that the allegedly rigid economic laws that lead to the binary do not have an answer to the question "but what if we all suddenly did something different?" Because they are predicting human behavior, but humans are free, the models that lead to the binary work only so long as people continue to conform with them.

None of this suggests that the right's statistics should automatically be conceded. But even if they're right on the numbers, they're wrong on the limits to action. People are far more free than these arguments allege them to be. Businesspeople are not the helpless subjects of economic forces, but rather are responsible for their decisions and carry moral blameworthiness when their actions carry heinous consequences. And workers do not face the choice between savoring their crumbs and having them taken away if they resist. They can fight, they can win, and they can escape the free-market binary.

* "Africa desperately needs Western help in the form of schools, clinics and sweatshops. Oops, don't spill your coffee." Ha-ha. 1100 people are dead under the rubble in Dhaka.

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