Blessed are the rich exploiters

During a mass last week at the Vatican, Pope Francis lambasted rich employers who pay low wages to poor workers. These employers, the Pope said, are “true bloodsuckers” who “live by spilling the blood of the people who they make slaves of labour.” It seems that unless employers are offering living wages, possibly with a health-care plan, pension, and paid vacation, they are committing a “mortal sin,” to use the Pope’s words.

Throughout the Pope’s remarks, one theme frequently popped up: exploitation. By paying low wages, the Pope repeatedly said, the rich are “exploiting” the poor. He recounted an incident in which a young woman told him she found a job working 11 hours a day for 650 euros a month. This girl, the Pope seems to believe, is being exploited. Her bosses, whom the Pope likened to slave owners, informed her that if the wages were unsatisfactory, she could easily be replaced by somebody from the “line of people waiting to take the job.”

Why would the Pope condemn this “exploitation” of the poor, if by his own admission, people are lining up, hoping to be “exploited” by the rich? If poor people are clamouring to be exploited wouldn’t they be best served if there was more of it happening, not less?

Indeed, in some countries, the poor are desperate for Pope Francis the opportunity to get in on this so-called exploitation. In Cambodia, for example, young children scavenge smoking piles of garbage, earning less than a dollar a day. “Talk to these families in the dump,” wrote Nicholas Kristof of The New York Times in 2009, “and a job in a sweatshop is a cherished of expanding economic opportunity to women” since more than four in five workers in this sector are female. The report notes that poverty rates in Cambodia plunged from 53.3 per cent in 2004 to 20.5 per cent in 2011.

The rich factory owners are doing the poor no wrong — indeed, they are doing a need them — those people most desperate for employment.

This is the same mechanism, only reversed, that we see at work when an area hit by a natural disaster like a flood or a forest fire faces rising prices for scarce supplies, like canned food and bottled water. The Pope might call that “gouging” (many people do). Uber calls it surge pricing. In any case, what it does is get scarce goods to the people most willing to pay the highest prices, typically because they need them more than anyone else does.

By paying market prices for labour, employers attract job seekers with the lowest reservation wages. In other words, if factory owners inflated wages past market prices, suddenly those garbage scavengers would face a lot more competition for the sweatshop jobs, this time from people with better alternatives than foraging for trash.

The fact that paying minimum market wages can also boost profits for employers doesn’t make it sinful. The wealthy can, should, and very often do use those profits to donate to social causes, such as helping the poor. Those are donations that can help those people still in line at the sweatshop door, stuck waiting and hoping to one day find themselves lucky enough to be exploited.