PHIL 270 Lecture 17: BE 3.31 (L) Sweatshops
4 May 2018
School
Department
Course
Professor
Business Ethics
3.31 Lecture Notes – Sweatshops
- Multiplier effect: a phenomenon whereby a given change in a particular input, such as government
spending, causes a larger change in an output, such as gross domestic product
- Redistribution between the worst off and the really badly off – who are subjecting to the worst
conditions?
- Signals of whether any product is made in sweatshops or not
o Meaningful labels – government or private sector?
o Private sector has a reputation cost to worry about – market-based labeling has feedback
mechanisms that government doesn’t
o But consumers are rationally ignorant
o Sweatshop label = below $4/hour (different for each country’s relative conditions)
o The sweatshop label (if the company cannot pay $4/hour) will either automate or move to
another country
- Skype with Michael Kates
o Is the bystander morally worse than the sweatshop worker? Is the person who boycotts
sweatshop stuff is the worst of the worst?
o Moral implications of boycotts of sweatshops
▪ Most workers themselves think it’s a bad idea
▪ Boycotts less sales for the sweatshops bad for the workers economic harm
▪ Raising the minimize raise, regulate, etc. would be better targeted for the workers
welfare
o Explicit signals for sweatshop products
▪ Instead of directly regulating sweatshops, would label standards be effective?
▪ Currently there are fair trade standards that allow consumers to know whether things
are made in sweatshops
▪ Having labels would be an improvement
▪ Experiment evidence on the impact – the rich customers will be more sensitive to these
issues than those who are less well off
▪ Not a good solution to the problem because most people are not well off enough
▪ Anomaly: distributive effects – we are buying coffee or T-shirts from the workers who
are better paid
• This money is being taken away from those who are the worst off
• Not so much the total welfare effects, but the distributive effects
o Equal weight to everyone’s welfare thinks that was a mistake
▪ Focus exclusively on the welfare of the sweatshop worker because they are generally
worse off in conditions
▪ We should care about the group that is worse off – the community or the worker
o Regulation changes the population of the workers – the unemployed if we increase wages
▪ If we take the # of people who are working in sweatshops now
• Increase wages (for those employed)
• Decrease employment
▪ Take into account both of the groups – more people whose welfare is improved than
there are people whose welfare is made worse off
▪ Cost-benefit analysis
▪ Upshot of the paper is that we have to focus on both the costs and benefits
