In a class I am teaching, we were reading Diane Wolf’s Factory Daughters, and so much about the op-ed by Chris Blattman and Stefan Dercon “Everything We Knew About Sweatshops Was Wrong” seemed to echo what Wolf had to say about Indonesia’s industrialization in the 1980s, that I assigned the op-ed for discussion. And that discussion is tomorrow. So I decided I would write down my thoughts in the form of a paragraph-by-paragraph commentary on the op-ed.
- The op-ed starts with the context. In the late 1990s, sweatshops were an issue because of Nike’s prominent endorsement deals with Michael Jordan. (I actually wrote a short reflection on the ethical issues back then.)
- The op-ed sets up the straw man. That is the op-ed way. “Some economists pushed back.” Sweatshops were better than the alternative. Somehow this “some” got turned into “Everything we knew about sweatshops.”
- The op-ed reinforces the straw man. “Textbook economics offers two reasons factory jobs..” Notice the next two words… “can be” So “may not be” is also part of the textbooks? Notice the “should,” “might,” “might,” and “may” walking through the paragraph. The textbooks apparently are not very sure about the straw man.
- The straw man is now plural “experts.” Nice alliteration though, “Expecting to prove the experts right…”
- Good storytelling in an op-ed requires a dramatic turn. A comeuppance. A final twist. Economists are fond of “anticipating” the result. So “everything we believed would turn out to be wrong.” Except that experts would expect that we would not be wrong or right if the belief was, “At some points in time and some places, investments made in factories may or may not improve by much the life of the average factory worker or person in the factory worker’s household or person applying for a factory job or his or her household.” Instead we would learn, “In this place at this time, with this sample of factories, some people were better off and other people were not better off, and some people may have been worse off and possibly not even aware of just how worse off they were, and our findings suggest some steps that factory owners could take to enhance both profits and worker well-being, and other steps public policy could take, and other hypotheses about human behavior other researchers could investigate.” By now you would no longer be reading the op-ed, of course.
- The data and findings: A good fraction of applicants who got jobs (that were randomly assigned to applicants) quit after a few months. Wages were not that attractive given the relatively hard working conditions, and negative health effects were apparently noticeable after a few weeks. “The people who stayed longer had few alternatives.” Sounds like any fast-food restaurant in the United States. What, exactly, have we learned?
- For the op-ed, there is something to learn: “Industrialization is not a quick fix.” We are back to a straw man wearing different clothes.
- The op-ed touts some lessons. “Companies need better middle management.” OK…. hmmm… so the World Bank should loan more money to governments to train middle managers and less on primary education in rural villages. Or more of both. Sure why not. The Bank (and governments) already do this (Better Work program, joint WB-ILO), so nothing new. Efficacy in these projects is, I venture, pretty poor, although I have no doubt there are many excellent programs. It’s just that there are probably also many bad programs. I teach in an MBA program, after all! One of the good ones, one of the good ones! I would bet that management consultants make a lot of money training middle managers in developing countries, when the program is funded by international organizations. Probably more than education consultants make training primary school teachers. (Because the management consultants have market alternatives, and the education consultants are leeches feeding at the public trough.) But now I have become a bit snarky… sorry! But I wonder if the op-ed would have been so sanguine about training if it had mentioned the economics and politics of research on the costs and benefits of middle management training.
- The op-ed signals the authors are not necessarily beholden to the politically correct police, and therefore are indeed credible economists: “‘Better human resource management’ is not the sexiest economic development strategy, but it is definitely an effective one.” “Sexiest”? As one writing maven noted: “When it comes to describing the appeal of advertising and merchandise [or development policy… ], writers may want to explore other words that convey the idea of appealing to human craving and covetousness.”
- Another lesson touted. “A second possible solution is social welfare systems and safety nets. With those, desperate people are not forced to risk their health at poorly managed factories.” Except that, as their research suggested, desperate people were apparently not forced to risk their health. They just quit. Is it even interesting to suggest this as a “solution”? Or just trite?
- Then the WTF moment. “We offered some applicants who did not get the factory job a business start-up package of training and cash. Those people expanded their agricultural or market selling, raised their earnings by a third.” Wait… you raised per capita GDP by 30%? What!!!!! And you are not going to qualify that or explain that? Tell us how much it cost! If the cost was low, why is this not the point of the op-ed?
- Then a moment of real confusion. “For poor countries to develop, we simply do not know of any alternative to industrialization.” Wait!!!!! You just said your training and cash grant raised incomes by 30%. That sure sounds like an alternative. Forget the factory, can I invest in some of those 30% bonds? Is this a case of “It works in practice, but it cannot work in theory”?
- Finally, more bona-fides to establish credentials as hard-nosed economists and not starry-eyed idealists: “we also worry that regulating or improving the jobs too much too quickly will keep that industrial boom from happening.” Some people think this is code for “Do not support social movements that struggle against authoritarian regimes that use police and military power to repress workers seeking to engage in voluntary transactions because factory owners cannot make very high profits when they cannot hire workers at really low wages which they can do if workers are arrested and beaten anytime they protest working conditions.” Does the current government of Ethiopia do that? Or not? Oh, the op-ed doesn’t say. Quiet as a church-mouse.
Dude, I’m not in the habit of picking on an op-ed, really I’m not. Op-eds don’t usually need analysis. They just are. Noticing them is like noticing a mileage post on the side of the road. You say, “Huh. So that’s where we are.” But here, on this road, we turned out to be not nearly as far away from the start as I thought we were. And so my comments turned out to be more negative than I thought they would be when I started. I know, right? Not really fair. Would you like someone to do that to you? Let’s just do it, then, and risk some blowback? Because really, this isn’t a big deal. It’s just a contrarian take of an op-ed. Who could possibly care?