IN DEFENCE OF LOBLAW
Political turmoil is what really threatens Bangladesh. Foster,
Loblaw Cos. Ltd. has been hit with two unsavoury packages in the past week or so. One was an order of dumplings of dubious provenance, destined for the head of its Joe Fresh clothing line; the other, a $2 billion class action lawsuit. Both related to the company’s sourcing of clothing from Bangladesh.
The dumplings, which were meant to be delivered last Monday morning, were the result of a scathing segment on cheap clothing by HBO comedian John Oliver on Sunday night. Other dodgy dishes were destined for WalMart Stores Inc., H&M and Gap Inc.
Oliver’s point was that, despite professed concerns about sweatshops and unsafe working conditions that have been around for 20 years, we keep hearing stories of child labour, building collapses and fires. Corporate executives wouldn’t eat a lunch subcontracted out by someone who couldn’t vouch for its ingredients, yet they claim the bad news from factories comes as a surprise.
Oliver’s food fight comes just two years after the collapse of the factory building at Rana Plaza in Bangladesh, where 1,129 people died. The factory contained many companies that manufactured clothing for big name retailers, including Joe Fresh.
“This is going to keep happening as long as we let it,” Oliver concluded, “We need to show them.”
But show them what? And how?
This brings us to Loblaw’s second undesirable delivery: the $2 billion class action lawsuit filed last week by Toronto law firm Rochon Genova on behalf of victims of Rana Plaza.
The claim suggests, essentially, that given the record of previous Bangladeshi workplace tragedies, Joe Fresh should have known that those sewing clothes for it at the Rana Plaza were in mortal danger, and that subcontractors were paying “extremely low wages.”
Moral posturing is easy — and in the case of John Oliver even funny. Litigation can be satisfying — and rewarding — when framed as going after the fat cats and standing up for the dispossessed. But the real issue is whether posturing and litigation might damage the people it is ostensibly designed to help.
The concept of “exploitation,” and the suggestion that low wages are tantamount to “slave labour,” are reflexive responses, but it is important to grasp the longer-term forces that are at work.
The real problem is poverty, and not so much how to solve it, which implies top down imposed solutions, but the institutional circumstances under which it essentially solves itself.
Poor people live in countries with lousy governments, where property is not secure, personal freedoms hang by a thread and where whatever economic policies there are tend to be counterproductive. That applies in spades to Bangladesh.
Two hundred years ago, the mill towns of the British Industrial Revolution presented a similarly disturbing vision of exploitation, but better conditions came about less as a re- sult of Dickensian hand-wringing or ritual condemnation of greed than from within the capitalist class itself — despite propaganda to the contrary. Ultimately, the key to higher wages and better working conditions lies in increased productivity, which is a function both of mechanical and human capital. That is, of investment and education.
The fact that our advanced societies have trodden this path and are now rich, makes it intolerable to think that Bangladeshi workers should wait even decades, let alone centuries, for a better life. But ultimately, the Wealth of Nations depends on accumulation of physical and human capital, which is only possible under stable government and sound policy.
The fact that the Bangladeshi economy is so overwhelmingly dominated by clothing manufacture and exports is a matter not just of cheap labour but domestic policy, which has choked off more diversified natural development, and created a powerful lobby of local clothing manufacturers. It is more fundamentally rooted in the Bangladeshi government pursuing the business diverted by the so-called Multi-Fiber Agreement, in 1974, that was designed to restrain cheap clothing imports from countries such as Japan. The agreement ended 20 years ago but its implications live on.
These are typical failures of mercantilist policy, but the suggestion that the answer to these governmentcreated problems should be corporate social responsibility imposed by the UN from above or NGOs from below is naïve. Or subversive.
What might be termed an industrial “Responsibility to Protect” — like the military R2P promoted by Michael Ignatieff — is at root a form of humanitarian invasion. And it tends to work as badly as the military variety.
Open markets are essential to growth, while foreign investment from advanced Western countries brings with it pressure for higher standards. But pressing too hard always presents the danger of unintended results. Higher standards must ultimately come from within developing countries themselves. They are unlikely to be imposed by clever gimmicks or class action lawsuits.
In fact, Loblaw was among the quickest to respond to the Rana Plaza disaster, but that meant signing on to initiatives fronted by the UN’s International Labour Organization and involving NGOs and others. These have become bogged down, and are always under suspicion of being part of the left’s anti-corporate, anti-development crusade.
What threatens Bangladesh is not factory standards but political turmoil. Significantly, private investment — the lifeblood of development — has stagnated in the past couple of years, and the apparel industry in particular is recording losses. One of the reasons is the cancellation of orders, and the shifting of work to Vietnam, Indonesia, India, Myanmar, China and Pakistan.
As the British journalist Anthony Sampson once said, there’s one thing worse than being exploited by multinational corporations, and that’s not being exploited by them.
What threatens Bangladesh is not factory standards but political turmoil