Understanding the Debate Surrounding Sweatshops

Estefanía Campos  | 14 de septiembre de 2017  | Vistas: 493

Understand the debate surrounding sweatshops with Benjamin Powell, who was the first one to find a way to empirically measure the working conditions and wages of sweatshops to compare them with other working scenarios, to analyze with evidence the timeless scholar debate against sweatshops.

Scholars have debated against so called sweatshops throughout time, which commonly refer to factories with bad working conditions. However, there’s no empirical evidence of such thing, or a good economic defense that proves that the role of sweatshops isn’t beneficial for society. Powell divides the conversation into the common arguments discussed about the topic:

  • Cost cutting in other areas
  • Accepting a lower rate of return
  • Passing costs on to consumers
  • Lack of competitive markets
  • Efficiency wages
  • Demand curves slope downWelfare standard

Powell concludes about them:

Ultimately I don’t find any of them persuasive, but some I think, are more appreciative of economic theory than others.”

Powell later discusses the Indonesian example, in which he concluded interesting things about the minimum wage in the footwear industry in this country. He shares the long-run tradeoffs, such as less investment due to higher costs, less technology transfer and less economic freedom because of the regulations.

This debate is not just on economic efficiency.”

Finally he describes the welfare judgements about sweatshops and the “art” of welfare comparisons. Does everyone count equally? When and where do people count? Powell answers to these questions to create policy on minimum wage and welfare of workers in sweatshops.

Now watch more from Benjamin Powell: Is Anarchy Possible?


Professor of economics and director, Free Market Institute