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Addendum to the Russell Debate

I went to last night’s Senate meeting, but I had to leave before the they got to to the sweatshop and Russell Athletics resolutions. (Hey, Senate, it would be great if you could spend less than an hour flapping your jaws about¬†every single point on the agenda. Just a thought.) From my extensive Twitter analysis, it appears both of the resolutions failed.

Anyway, Vincent’s post below pretty much nails it, but I’d like to add this 2004 article in Reason, which cites a study by the National Bureau of Economic Research.

[W]hen economists looked at reams of economic data on wages and workers’ rights in developing countries, they found that multinationals generally paid more — often a lot more — than the wages offered by locally owned companies. The study cites evidence that affiliates of U.S. multinationals “pay a wage premium that ranges from 40 percent in high-income countries to 100 percent, or double the local average wage, in low-income countries.”

Vietnamese workers in foreign-owned apparel and footwear factories rank in the top 20 percent of the population by household expenditure. Indonesian workers in Nike subcontractor factories earned $670 per year, compared to the average minimum wage of $134. In Mexico firms that exported more than 80 percent of their output paid wages that were 58 percent to 67 percent higher than wages paid by domestic firms.

If Russell is truly acting in an illegal and unethical way, then the university should not renew its contract with the company. However, a broad, “anti-sweatshop” resolution would be (a) less effective and (b) naive and somewhat ignorant¬†given the great benefits of foreign direct investment in third-world countries.

Also, Alex “Tomcat” Scott has a good post over on the ODE news blog with many links for and against Russel.

  1. nike urbanism duk says:

    That is it ! If the ASUO continues its current path the executives are both liable to end up with skull and swoosh bones t shirts being presented to them at a future meeting. You have been warned. Stop resisting. Drink the Stepup Koolaid !

  2. Timothy says:

    Depends what crime. Tax fraud? Nope. Using slave labor? Yeah.

  3. Matt says:

    But of course this leads me to wonder, if Russell were convicted of a crime, would you support a decision to suspend their contract?

  4. Andy says:

    To all of you interested in this topic of multinational corporations and the economics behind it, the U of O actually offers a Multinational Corporation Economics class about once a year. I took it and can vouch that after many hours of reading and homework that the workers involved on the “unfair” side actually are better off. In addition, because of multinational involvement, it’s been shown that child labor actually drops because families that have no qualms about making their children work can now afford to keep their kids from working.

  5. Bryan says:

    “…Russel hasn

  6. Gsim says:

    I do.

  7. Matt says:

    I don’t personally hate globalization.

  8. Timothy says:

    Or if you’re some fucking hippie who doesn’t know the first goddamned thing about development economics but sure as hell hates “globalization”.

  9. Matt says:

    I guess the basic point is just to suggest that the right to use the University’s intellectual property is a privilege, not a right; and it is not unreasonable to advocate conditions on that privilege, if you care about the integrity of that trademark and the institution it represents.

  10. Matt says:

    Yeah, well, we’re not really presuming to know what people in the countries want. Or at least, I’m not. This whole thing got started mainly because the local workers at this one individual factory tried to organize, and were blocked from doing so in a way that may have violated local laws.

    I don’t think it’s imperialist to argue that companies doing business in foreign countries should have to follow – and more importantly, respect – the laws of those countries. And I do think there is a way they can provide to those countries that they, as you argue, desperately need, and still operate within the confines of the local law. (Further, ‘unemployment’ is hard to define in countries where pre-industrial economies are still largely commonplace.)

    I think the argument that they can either flaunt the local labor code and pay workers something or they can follow it and pay them nothing is a false dichotomy. That being said, it is going to be very hard to “prove” a violation of law that’s barely even enforced in the first place, but I don’t think it’s totally unreasonable to ask that the institution on my degree not be associated with illegal activities, or that that institution make clear to licensees that it will support the rule of law and remediation.

    Finally, the whole effort of this is, to me, an effort at true efficiency, where individuals can equally enjoy a basic right to associate and petition their governments without fear of persecution or retribution. As this becomes more the case, free trade can move toward generating surpluses based on the actual market conditions of the involved countries rather than on the greatest latitude to externalize costs. Here, I of course have to admit to a degree of “imperialism”: the belief that all people are endowed by their creator to basic, inalienable rights. This belief is by no means universal, nor clearly is it uncontroversial, and I’ll admit that.

    As for Ed’s comments, it’s so half-sensical I’d rather not even go there. There are some good arguments underlying the otherwise unintelligible comment, and I’ll try, hesitantly, to address those. I don’t think anyone is asking for something for nothing, Honduran workers do plan to continue working for pay, as far as I can tell. But it’s also my view that consumers have the right to boycott whoever they want, but yes, this will result in consequences for some producers. It may also result in new niche markets for ethically-produced products and eventually the creation of supply chains to serve them, but whatever.

  11. Ed says:

    When the last factory opened up for Nike in these 3rd world countries, it provided a little over 1000 jobs for the economy. There were well over 30,000 applicants. Man, that job making shoes must really suck for them!!! 30K applying for 1K jobs. That sounds like a very undesirable job in their local economy. When in doubt, look at supply and demand. It’s amazing what a littel common sense will do for you!
    Also realize folks that most of the world doesn’t want to rely on living off the government like the socialist student body wants you to think! They work, or starve! That fact is a terrible one…”but” it does bring light to the idea that the none of the college students living in Eugene have ever or will ever live at the level of poverty that these people consider “middle class” or “blue collar” living. We look at their situation from Red, White, and Blue colored glasses and pretend to think we know what’s best for them. We “boycott” Russell, and they sell less clothes. What next??? They close down a factory in Honduras, or where ever, and then those people starve. You ask the 29,000+ who didn’t get the Nike job if they’d rather “work hard for what we consider little” or rely on their government to “provide something to them for nothing” ANSWER?…we’ll do it in scoreboard format, since this came from a sports blog…
    Worker Hard 29,000
    Rely on the government 0.

  12. Vincent says:

    Finally, the argument that $670/year is a

  13. Matt says:

    And also: Jeff is right, the primary way these increases in wages and improvements in treatment have come about through agitation. But CJ is also right, in that the investment of foreign capital is a powerful force for lifting third-world communities out of poverty.

    I feel the two positions should not be seen as opposing forces, though, which I think they often are. The truth is that companies will continue to operate in foreign countries so long as it’s cheaper for them to do so, even if as a result of agitation they have to pay twice as much. I feel the call for fairer trade – trade with fewer externalized costs – is often perceived as a call for less trade, which it simply is not.

  14. Matt says:

    Yeah, I actually do think that sweatshop laborers in their home countries might make slightly higher wages than those not working in sweatshops, a position I didn’t really hold a couple weeks ago. While the evidence one way or another is sketchy at best, it’s likely that the easiest way to quell agitation about workplace conditions would be to raise wages slightly.

    Additionally, many companies are legally required to pay out overtime for extended hours. While enforcement of this law is very poor in most countries, I think this factor does play a role. Given that sweatshop hours are, by definition, unusually long, this would result in a higher average pay for each of those hours.

    Finally, the argument that $670/year is a “fair” wage is, to me, not really sound. But the only way that can reasonably change is if individual consumers are informed about what some of the difference between price points are and make their decisions accordingly, and one – but not all – of the ways they gain that information is through workers making a lot of noise.

  15. jeff says:

    There is, of course, a lot of misinformation circulating, in addition to our common lack of information. Nearly all the academic literature on the subject claims that foreign investors pay better wages than local firms. How to explain, then, the fact that 85 percent of the 720 strikes in Vietnam last year were at foreign-investment factories? My talks with workers there in early 2008 confirmed my long-held suspicion that local firms were less abusive and less likely to cheat workers. Another example of misinformation is the work of Columbia University

  16. Sean says:

    Keep in mind that the workers are not forced to work for the multinationals. I’m not saying they have the same amount of liberty that we have here, but if those people were to be coerced into doing anything, it would be local gov’t work or work for domestic firms.
    These people choose to work for multinationals because they get paid more than they normally could.
    Having perspective is important here. They work in conditions that we may consider appalling, but that’s from our point of view. Isn’t liberalism about understanding others’ from their own circumstances and context?

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