Our beloved smartphones
and iPads hide a dirty little secret. Low labor costs combined with an efficient supplier
infrastructure make particular Asian factories the economic choice for
electronics manufacturers. Many smartphones,
most Apple products, and many other technology products are manufactured at
Foxconn, headquartered in Taiwan. Unfortunately labor conditions at Foxconn are
oppressive, almost barbaric by Western standards. Pitiful wages, long hours, tedious
work, bans on organized labor, abusive management, and even suicides are prevalent
at the massive plant. While American-designed iPhones are manufactured in
oppressive Asian factories, Americans face high unemployment and a troubling
decline in manufacturing jobs at home. What can be done?
Perhaps working
conditions will improve if we begin to tax oppression.
It might work like this. A panel including human rights experts, labor representatives,
manufacturing executives, economists, and government trade analysts would begin
by creating a reference standard and index for quantifying oppressive working conditions.
Let’s call it the sweatshop index. The
most worker-friendly factories would score zero; the worst factories would have
high scores. Next a team of independent auditors and examiners would visit factories
around the world and score individual factories on this index. If examiners
were barred from visiting the factory or hindered in their examination, they
would assume the worst and assign a high score. No doubt the Foxconn factory would
receive a high sweatshop index score, unless of course it was reformed. Finally, the United States would impose an
import tariff on products based on the weighted sweatshop index of the
factories used in their manufacture, regardless of the host country. Smartphones and
other products manufactured at worker-friendly plants are subject to little or
no tariff. Products manufactured in
sweatshops pay a high tariff. This would provide a direct financial incentive for
factories around the world to improve working conditions. Work would begin to
flow out of sweatshops into the worker-friendly factories, including American
factories, because they now have an economic advantage. Workers around the
world would all benefit.
While a
traditional import tariff diverts money away from workers, this sweatshop tariff
would shift money toward the benefit of the workers. Factory managers would have a clear financial
incentive to improve working conditions because the better working conditions would
decrease the final cost of their product to the American market. For a smooth transition to this system, the tariff
could increase gradually over time. It might begin at zero while the index is being
created and factories are being assessed. This will give adequate time for
factory managers to plan reforms before any financial penalty is assessed. The tariff
can then be systematically increased to drive reform at a managed rate.
Perhaps this concept could be extended to include oil imports. Here an import tariff based on human rights violations in the supplying country is added to each barrel of oil imported. This would provide a financial incentive for the exporting country to eliminate these violations and improve life for its people.
Perhaps this concept could be extended to include oil imports. Here an import tariff based on human rights violations in the supplying country is added to each barrel of oil imported. This would provide a financial incentive for the exporting country to eliminate these violations and improve life for its people.
Choosing to
internalize these externalities—transaction costs not fully reflected in the
product price—can leverage free market mechanisms to improve
human wellbeing.
No comments:
Post a Comment