Saturday, May 30, 2015

True Cost as Compared to What?

Don Boudreaux writes to the Los Angeles Times:
Fashion critic Booth Moore is clearly moved by Andrew Morgan’s new documentary, “The True Cost,” which highlights the terrible work conditions and pay in third-world factories that manufacture the inexpensive clothing now enjoyed by denizens of rich countries (“’The True Cost’ documentary tallies global effect of cheap clothes,” May 28).  Yet not once in her review of “The True Cost” does Ms. Moore ask the key question that is asked by those scholars who, above all others, think most deeply and consistently about true costs: economists.  That question is “As compared to what?”
Compared to work conditions and pay today in rich countries such as the U.S. and Sweden, work conditions and pay today in developing countries are indeed awful.  But despite being the one comparison that apparently is central to the film, this comparison is inappropriate and misleading.  Instead, the relevant comparison is of third-world workers’ current pay and work conditions with these workers’ realistic alternatives.  The fact that so many third-world workers willingly endure the harsh conditions and low pay that now prevail in third-world garment factories is powerful evidence that these workers’ alternatives are even worse.  Therefore, if Mr. Morgan and other activists succeed in their efforts to reduce the rich-world’s demand for clothing produced in the third world, many third-world factory workers will personally suffer the true cost of rich-world-activists’ economically ignorant concern for them – namely, being obliged to toil at jobs that pay even less and in conditions that are even dirtier and more dangerous.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

The above originally appeared at Cafe Hayek.


  1. In the mid ‘90’s I and three partners had clothing produced in China. At that time I traveled China a bit. I encountered Chinese in the countryside that had such little experience with Caucasians that the amount of hair we have on our arms was a point of interest (some Chinese have very little arm and leg hair compared to Caucasians).

    I realize that there is some chance that what was revealed to me in factories that produced our product was the nicer side of the facilities, but my opinion is that very little was hidden from me. Based on this I can say that the workers in the factories had good jobs relative to other workers I observed.

    My observations were limited in time and access but I saw work ranging from farming in the countryside to road workers in the city. I was informed that the road workers were directly employed by the government. The conditions they worked in and the tools they used would have been comical if it were a cartoon rather than their reality.

    Comparing the conditions and tools the Chinese factories producing our clothes to shops in the USA producing our clothes, the Chinese facilities appeared to be older and or had less upkeep. I say appeared mainly related to the sewing machines. The Chinese factories used what I assumed to be Chinese made machines. These may have been the latest and greatest in China but like a lot of communist products appear to be something from a bygone era of the west.

    The Chinese factories were also dirtier than those in the USA. Keep in mind that outside the factories in streets and waterways of these Chinese cities the filth was disgusting. Relative to the outside the inside of the factories were very clean. While the factories were a big part of the pollution, the filth of the commons has everything to do with the government especially when it is communist.

    My opinion is for that time and place, the garment workers, relative to the country they lived in (the government they lived under), were in the same conditions as garment workers in the USA. The main differences were outside the factories.

  2. The seen and the unseen...
    Great observations, Alex. Thanks.