Tag: Capitalism

  • Star Parker campaigns in Wichita

    In a campaign stop yesterday in Wichita noted conservative figure Star Parker told an audience that she works for market-based solutions to fight poverty, and that the answer to poverty is freedom and personal responsibility, not a welfare state.

    Parker appeared in Wichita at a fundraising event hosted by Wichita businessman Johnny Stevens. Parker is running for Congress as a Republican from the 37th district of California, which includes the cities of Compton, Long Beach, and Carson, south of the City of Los Angeles. Her campaign website is Star Parker for Congress.

    Parker described her efforts working on welfare reform at the federal level during the 1990s, which she described as successful in terms of helping poor people recover their lives. But the momentum that was started — moving poor people from socialism towards capitalism and economic freedom — has not continued, she said. What we have today, she told the audience, is moving in the opposite direction.

    Parker said that a critical factor in helping her to decide whether to run for Congress was when President Barack Obama chose to use Abraham Lincoln’s Bible as part of the swearing-in ceremony during his inauguration. Lincoln — although a complicated man and her hero, Parker said — confronted the moral problem of his day by deciding that the country should remain together and with everyone as free people. She contrasted this with Obama, who avoided a moral question by saying it was “above his pay grade.”

    Then when she saw bankers and Wall Street executives lining up to go on welfare she was furious, and seriously considered responding positively when asked to run for Congress.

    Democrat Laura Richardson, the two-term incumbent in the district Parker is seeking to represent in Congress, has had trouble with homes she owns falling into foreclosure, even being criticized by the Los Angeles Times for that and for falling behind on property tax payments. Richardson had been charged with an ethics violation in conjunction one of her three homes that has been in foreclosure. In July the House Ethics Committee cleared her of misconduct in that matter.

    Parker said that Richardson’s main accomplishment has been bringing stimulus money into the district. She described it as a union district, and that unions do not want to see this seat in conservative hands.

    Parker criticized campaign finance laws that allow those with personal wealth to spend all they want on their campaigns — we saw this in the Kansas fourth district with one candidate spending about $2 million of his own funds — but limit outside contributions to $2,400 per election cycle. This limits the ability of challengers to mount effective campaigns against incumbents, she said.

    Parker said it is critical to take Congress back from the control of Democrats, and that for a black conservative to win a seat currently held by the Congressional Black Caucus would be “extremely sweet.”

    She told the audience that if we fail to take Congress this fall, “you think you’ve seen arrogance now, you think you’ve seen elitism, you think you’ve seen how aggressively they can spend other peoples’ money and how close to the edge of danger they will allow us to go — we’ve seen nothing if on November third we wake up and they still have the Congress.”

    Even if Republicans take Congress, she said since over half of them are not conservative, there will still be a challenge.

    She mentioned that she will be part of an upcoming John Stossel feature on Fox News Network.

    Parker spoke about the importance of schools and described the difficulties that parents face trying to get their children in good schools. Answering a question about the lack of reform such as charter schools and school choice in Kansas, Parker said that lack of these limits the opportunity for the underclass to get a quality education. In public schools, Parker said that children are taught secular humanism, and the cycle of the entitlement mentality is passed down from one generation to the next. School choice is the way to break this cycle and give schoolchildren an opportunity to attend schools that have a moral framework.

    Answering another question about what caused the transformation in her thinking — Parker is not shy about talking about her past life living on welfare — she said that she “just got born again” and decided to adopt a Biblical world view.

    As to what spurred her to become a free-market activist and adopting a libertarian economic thought, she said that it was her experience in business. “Government is harsh,” she said, with many agencies that stand in the way of prosperity.

    The ideas of socialism are inconsistent with a free country, she said, telling them that the rules of welfare are “don’t work, don’t save, and don’t get married.” These rules work against people breaking out of poverty.

    Parker has been endorsed by many national conservative figures, including Sarah Palin, Newt Gingrich, Michele Bachmann, and Mike Huckabee.

  • Private enterprise does it better

    While some believe that government is the best provider of services, John Stossel, in the following article, shows us that this is not always the case. In fact, it is rare that government is able to do a better job at lower cost than the private sector.

    One motivating factor that private business has that government does not is profit. Liberals view profit as an extra expense that must be paid to private sector businesses. They say that profit is a cost that can be avoided if government — which has no need for profit — provides a service.

    But as Stossel explains, profit is a powerful motivating factor. It makes private businesses provide products and services that people want, and efficiently, too: “Because if private companies don’t do things efficiently, they lose money and die. Unlike government, they cannot compel payment through the power to tax.”

    We hear, as we do in Wichita now, that government should be operated more like a business. Our city manager speaks of a business model he is developing. But it is folly to speak of operating government like a business. The goal of business is profit — the signal that the business is providing things that customers value.

    But government, as Mises and others have shown, has no ability to calculate profit. It can’t be guided by the same signals that guide the private sector.

    Even streets and highways could be provided in a better way than government does, as Stossel explains.

    Private Enterprise Does It Better

    Why freedom and responsibility triumph over regulation and central planning
    By John Stossel

    In Myths, Lies and Downright Stupidity, I bet my readers $1,000 that they couldn’t name one thing that government does better than the private sector.

    I am yet to pay.

    Free enterprise does everything better.

    Why? Because if private companies don’t do things efficiently, they lose money and die. Unlike government, they cannot compel payment through the power to tax.

    Even when a private company operates a public facility under contract to government, it must perform. If it doesn’t, it will be “fired”—its contract won’t be renewed. Government is never fired.

    Continue reading at Reason Magazine

  • Charles and David Koch, supporters of free markets and economic freedom

    Economic freedom and market-based policies create the most opportunity and prosperity for everyone, including the poor and the environment, says Richard Fink, and that’s why Charles and David Koch of Wichita-based Koch Industries, Inc. support these principles and public policy organizations that work to advance them.

    In the following article, Mark Tapscott of The Washington Examiner interviews Richard Fink, president of the Charles G. Koch Charitable Foundation and an executive vice president of Koch Industries, Inc.

    In the article, Tapscott explains that economic freedom and free markets are not the same as big business. Fink explains the role of the Kochs in supporting institutions that promote economic freedom and free markets. He says that the tea party is a positive development of citizens concerned about government growth and spending, and that accusations that it is an “astroturf” movement controlled by corporate sponsorship is nonsense.

    What if all businessmen were as dedicated to free markets as the Kochs?

    By Mark Tapscott

    Among the biggest obstacles to restoring American freedom and prosperity is the fact too many corporate executives are all too happy to play footsie with government bureaucrats, usually in an attempt to gain a competitive advantage over competitors.

    Consumers — and taxpayers — are always the biggest losers when Big Government and Big Business get in bed together.

    One result is that instead of having to put consumers first, the corporations put the bureaucrats first. Prices go up, the quality of service goes down, and not infrequently corruption eventually results (See Enron and cap-and-trade, for example).

    But there are honest leaders in the corporate world who go a different way. Charles and David Koch of the Wichita-based Koch Industries are among the preeminent examples of such men and women.

    They’ve built one of the world’s largest private corporations based on the principles of free markets and competition.

    For more than 40 years, the Kochs have also been aggressive supporters of those principles in the public policy arena, a fact that always flusters critics of economic freedom.

    Continue reading at The Washington Examiner.

  • Goody Clancy: public subsidy required for Wichita downtown plan

    The recent presentation of the draft master plan for the revitalization of downtown Wichita gave Wichitans a preview of the forms of public assistance that Goody Clancy recommends the city use. The plan may be viewed at the Wichita Downtown Development Corporation website.

    It is a given, according to Goody Clancy, that downtown development will require public subsidy. Here’s an example as to why it is necessary: One of the issues with downtown development, especially in Wichita according to Goody Clancy, is “land acquisition & land lease issues.” It is contended that land ownership is fragmented, and assembling parcels for development is difficult. Therefore, public assistance is required.

    The shakiness of this argument can be seen by examining recent events in Wichita. Earlier this year, a developer wanted to build a hotel in the downtown WaterWalk area. There are no land acquisition issues there. The city assembled that property — using eminent domain as a tool — some years ago. There is one owner. Yet, the hotel still required massive subsidy to make it economically feasible, according to the developer and Wichita city staff.

    In a Wednesday morning workshop on the issue of public funding, a Goody Clancy consultant hinted at a legislative solution to the land acquisition problem. No more details were given, but solutions to problems like this usually involve the use of eminent domain.

    Public assistance is proposed to be used only for those items that have a public purpose. The primary use is likely to be public parking. According to the logic of Goody Clancy consultants, if public funds pay for a parking garage located between an apartment building and an office building, that really doesn’t benefit just those two properties. Instead, it benefits everyone. It’s a public amenity. It’s infrastructure.

    Nevermind that anywhere but downtown, people have to pay for their own parking. Homeowners build garages and driveways at their own expense. Developers build parking lots on their own.

    While “structured parking” — that’s planner-speak for multi-story parking garages — is more expensive to build per parking spot than surface lots, that’s no reason for the public to pay.

    The forms of public assistance mentioned as available for use include, at the state and national level: historic preservation tax credits, low income housing tax credits, new market tax credits, STAR bonds, brownfield grants, livable city grants, and transportation funds.

    At the local level, programs mentioned include capital investment, tax increment financing (TIF), community improvement districts (CID), facade loans/grants, low interest loan pools, and land.

    The last item refers to the fact that Goody Clancy considers it an advantage that the City of Wichita owns a lot of land downtown, as it can control the timing and features of development.

    Missing from this list is any mention of a direct tax to fund downtown redevelopment. But downtown leaders admire the city sales tax used to fund development in downtown Oklahoma City, and some have privately told me that a sales tax would be good for downtown Wichita. I expect to see a sales tax proposed in Wichita, as I don’t believe there is enough funding available through the sources mentioned above to do all that downtown boosters will want to do.

    Supporters of a sales tax for downtown subsidies will use the Intrust Bank Arena as an example of a successful project funded through a sales tax. They’ll say, as did Kansas Governor Mark Parkinson this year, that people didn’t even notice the one cent per dollar sales tax. It’s harmless, they will contend, despite evidence to the contrary. Not to mention that pronouncement of the arena as a sustainable success story is premature.

    Goody Clancy proposes that projects qualify for public assistance through a point system, which is reported on in a Wichita Business Journal article. By meeting established criteria, developers would earn — or not earn — points. Earning a certain level of points would be necessary for the city to consider the application for public assistance, and the number of points earned would help the city justify pouring public assistance into a project. Presumably the point system could help the city rank and prioritize projects that are competing for limited funds.

    Further considerations the city would use in deciding which projects to subsidize include, according to the presentation: team experience, financial qualifications, references, project economics, and public/private leverage ratio.

    The problem is that any point system the city would use would be a system that meets political criteria, not market criteria. We must realize that the incentives and motivations of politicians and city hall bureaucrats are very different from the incentives and constraints that control behavior in markets. As Gene Callahan explains:

    The Public Choice School has pointed out another force … Strong incentives exist for politicians to favor special-interest groups at the expense of the general public. Those upon whom benefits are concentrated are motivated to campaign hard for those benefits.

    Specifically, for downtown redevelopment to be successful, we need to have development that is profitable for the private sector, considering all costs. By subsidizing certain developers according to political criteria the city ignores and distorts the dictates of markets, and capital is misapplied. People make decisions for wrong reasons using incorrect information.

    While some city council members openly speak of the “free market” with disdain and other members pay it lip service only, we must remember that the free market consists of, in Wichita’s case, hundreds of thousands of consumers making decisions every day about where they want to live, work, and play. These decisions are made based on the individual preferences of each person, supplemented by the information the price system supplies.

    The price system is the best way we have to communicate the relative value of things. Hayek explains its importance:

    Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coordinate the separate actions of different people in the same way as subjective values help the individual to coordinate the parts of his plan.

    The price system is a wonderful, almost miraculous system that, as Hayek writes, coordinates the actions of millions. It allows for the process of economic calculation which is at the heart of capitalism. The lack of economic calculation based on a price system is the reason why socialism fails everywhere it is tried. Callahan summarizes what Mises showed the world:

    Mises showed that socialism is incapable of achieving an efficient use of society’s resources, because its economic planners have no means by which to perform economic calculation.

    The point system that Goody Clancy proposes to dish out subsidy is a bypass of the price system and economic calculation. It substitutes the judgment of central planners for free people coordinating activities through the price system. Wichitans should reject this idea.

  • More Stossel video to be shown in Wichita

    This Tuesday the Kansas chapter of Americans for Prosperity is sponsoring an event titled “Stossel in the Classroom.” The event will feature a DVD video presentation by John Stossel, followed by group discussion. This is a follow-on to a similar event held last month.

    Stossel’s most recent book is Myths, Lies and Downright Stupidity: Get Out the Shovel — Why Everything You Know is Wrong. His appearance in Wichita last year was reported on by me in John Stossel urges reliance on freedom, not government, in Wichita.

    The event is from 7:00 pm to 8:30 pm on Tuesday, June 15, at the Central Branch Wichita Public Library at 223 S. Main. The event will be held in the patio meeting room.

    For more information, contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

  • Europeans fear crisis threatens liberal benefits

    As the United States moves to a social welfare state emulating many European countries, this cautionary article from the New York Times ought to be read.

    PARIS – Across Western Europe, the “lifestyle superpower,” the assumptions and gains of a lifetime are suddenly in doubt. The deficit crisis that threatens the euro has also undermined the sustainability of the European standard of social welfare, built by left-leaning governments since the end of World War II.

    Europeans have boasted about their social model, with its generous vacations and early retirements, its national health care systems and extensive welfare benefits, contrasting it with the comparative harshness of American capitalism.

    Continue reading at the New York Times.

  • Primer on Mises and Austrian economics published

    If you’ve heard of Ludwig von Mises and wondered why his ideas are important to freedom, here’s a chance to easily and quickly gain understanding of this important thinker and the field of Austrian economics.

    Or if you’ve not heard of or read about Mises and Austrian economics, here’s your chance. The Institute for Economic Affairs, a free-market think-tank based in London, has just published a short book titled Ludwig von Mises — A Primer. The author is Eamonn Butler.

    Butler explains why Mises is important: “Ludwig von Mises was one of the greatest economists and political scientists of the twentieth century. He revolutionised the understanding of money, inflation and recessions; comprehensively refuted the arguments for socialism; and provided a devastating critique of the methodologies of mainstream economics. His contributions to the Austrian School laid the intellectual groundwork for thinkers such as F. A. Hayek, Murray Rothbard and Israel Kirzner.”

    The book’s summary gives several points that show why Mises and his ideas are important:

    • The market system is much more efficient at allocating resources than political elections, where people get the opportunity to vote only every few years and have to choose between packages of disparate policies. Every penny spent by consumers, in countless daily transactions, acts like a vote in a continual ballot, determining how much of each and every good should be produced and drawing production to where it is most urgently required.
    • Free markets have no natural tendency to monopoly or monopoly prices; on the contrary, they have a powerful tendency towards diversity and differentiation, which bid quality up and prices down. Few cartels and monopolies would ever have come into being had it not been for government and the efforts of those with political power to stifle competition. Monopoly would be at its zenith under socialism, where all production is in state hands.
    • Policies that are intended to “improve” the market economy may in fact strangle it. Intervention may lead to unwelcome side effects that are then wrongly used to justify further interference, which in turn creates new problems, and so on. Eventually, although the economy still looks capitalist, it ends up being completely controlled by the authorities.
    • The belief that state institutions can improve on the market by taking what it does and somehow doing it better is a dangerous conceit. In the absence of the profit motive, there is no obvious way of measuring the success of public agencies in delivering their objectives. Incentives for entrepreneurship are weak, and managers are likely to become risk-averse and bureaucratic.

    One of the greatest contributions of Mises was explaining that under socialism, the lack of prices and profits lead mean there is no efficient way of allocating resources. Without markets, he said, economic calculation is impossible.

    The book may be purchased or downloaded on this page.

  • Wichita proposed tax increment financing district subject of news

    Today’s Wichita Eagle carries two news stories regarding the proposed expansion of a downtown Wichita tax increment financing (TIF) district. The front-page story Condo vote key to downtown Wichita growth and the additional story Owners report mixed views of developers provided background on the vote the Wichita City Council may make at Tuesday’s 9:00 am meeting.

    The second article provides insight into Real Development’s track record in Wichita. While success in any real estate venture is not guaranteed, certain types of arrangements seem to have a high likelihood of problems, and these are reported on in the article.

    Not mentioned is the problems at the Lofts at St. Francis, a Real Development residential condominium project. Last summer I reported on how this building’s facade needed repair, and the city needed to intervene in order to finance the repairs. I wrote, and testified in front of the city council, that the inability of the homeowners association to deal on its own with such a simple matter indicated a defect somewhere: “While the homeowners association and the condominium owners might not have anticipated that repairs would be needed so soon after the building’s opening, they must have contemplated that repairs and maintenance — to either exterior or interior common areas — would be needed at some time.”

    The city waived two guidelines in its facade improvement program so that special assessment financing could be granted to the owners of condominiums in this building.

    Some private parties have an interest in seeing Real Development — the “Minnesota Guys” — continue to receive subsidy from the City of Wichita. At Tuesday’s city council meeting, several businessmen testified on behalf of Real Development on the basis that this company is good for the future of downtown Wichita. Some of these, such as a current Key Construction executive, have an obvious financial motive for wanting the project to proceed with city subsidy.

    Others, such as a former Key Construction company executive, may also have financial motives that are not immediately obvious. In particular, two tenants of Real Development buildings testified. Joe Tigert, the manager of the New York Life office in Wichita, spoke on behalf of Real Development. He didn’t reveal that he’s a tenant of Real Development at 125 N. Market. Joe Lloyd of Liebherr-Aerospace also spoke in favor of Real Development. His office is at 105 S. Broadway, another Real Development property.

    Those who speak at Wichita City Council meetings are not required to disclose their motivations for speaking. And unlike the requirement at the federal and state level, those who are being paid to lobby the council are not required to disclose the fact that they are being paid, or who is paying them, or how much they spend lobbying.

    An underlying current of thought that is emerging is that because of its extensive holdings in downtown Wichita, Real Development is too big to fail. If the city doesn’t grant their request for expansion of the amount of the TIF district, the future of downtown Wichita is in doubt.

    Citizens ought to reject this argument. If we want to have a robust downtown Wichita, we need development that is grounded in solid free-market fundamentals. Development propped up with subsidy will not have the solid foundation that downtown needs if it is to be successful over the long term.

  • Sweatshops best alternative for workers in many countries

    While sweatshops are not the place most Americans would choose to work, they are often the best alternative available to workers in some countries. Pay is low compared to U.S. standards because worker productivity is low, and the process of economic development will lead to increases in productivity and pay. But most policies promoted to help the purported plight of sweatshop workers actually lead to harm.

    That’s the message of Benjamin Powell, who spoke to a group of university students and citizens last night in Emporia on the topic “In Praise of Sweatshops.” Powell is a professor of economics at Suffolk University in Boston and is affiliated with The Beacon Hill Institute. His appearance was part of the Emporia State University “Lectures on Liberty” series.

    “Often when people say there’s something wrong with sweatshops, implicitly what they’re saying is ‘while this is bad, the alternative must be better.’ Often the alternatives in these countries are much, much worse.” The alternatives are often subsistence agriculture and working in farm fields, Powell said.

    A sweatshop, according to Powell, is a workplace with low wages (compared to U.S. standards), and poor, possibly unsafe, working conditions and benefits, again compared to U.S. standards. The sweatshops that Powell is defending are those where people voluntarily choose to work. Sweatshops where workers are forced to work under the threat of violence constitute slave labor, which cannot be defended. These are not better than the alternatives available to the forced workers, the evidence being that the workers are forced to work in these sweatshops.

    As evidence of non-sweatshop working conditions is some countries, Powell mentioned the case of a Cambodian girl and her working conditions, as reported by Nicholas D. Kristof in the New York Times in 2004:

    Nhep Chanda is a 17-year-old girl who is one of hundreds of Cambodians who toil all day, every day, picking through the dump for plastic bags, metal cans and bits of food. The stench clogs the nostrils, and parts of the dump are burning, producing acrid smoke that blinds the eyes.

    The scavengers are chased by swarms of flies and biting insects, their hands are caked with filth, and those who are barefoot cut their feet on glass. Some are small children.

    Nhep Chanda averages 75 cents a day for her efforts. For her, the idea of being exploited in a garment factory — working only six days a week, inside instead of in the broiling sun, for up to $2 a day — is a dream.

    Generally, sweatshop workers are paid much more than most other workers in the country, and their working conditions are much better. Powell mentioned that working inside — rather than outside — is very desirable in most countries. The fact that sweatshops pay higher wages and have better working conditions than the workers’ alternatives is important to remember.

    Powell explained the factors that determine how much workers are paid. The upper bound that employers are willing to pay workers is based on the amount of value that a worker can create. In economic terms, this is called the marginal productivity of labor.

    The lower bound, the minimum employers can pay, is the value of workers’ next best alternative.

    If we want to increase the earnings of sweatshop workers, we have to create policies that raise both the upper and lower bounds, Powell said, adding that about three-fourths of the variation in earnings across countries is explained by the upper bound. This points to the importance of increasing worker productivity.

    In one debate, Powell said his opponent wanted to take the question of sweatshop wages off the table, admitting that pay is higher in sweatshops. Instead, she wanted to focus on worker health and safety. But it’s important to remember, Powell told the audience, that working conditions, even those related to health and safety, are part of a total compensation package. Wages and working conditions are interconnected and can’t be separated.

    Sometimes people ask why apparel companies — the largest users of sweatshops — can’t simply pay the workers more, pointing to large profits and highly paid executives at these companies. But Powell said that apparel companies usually aren’t excessively profitable.

    Additionally, businesses are not charities. Forcing them to pay workers more means that companies will begin to look at ways to reduce the amount of labor they use. They may replace workers with machines, or use more productive workers in other countries. The result is sweatshop workers will lose their jobs.

    Powell reminded the audience that it’s important to remember that in most countries where sweatshops are used, these jobs are much better — both in terms of pay and working conditions — than what the workers face as alternatives. Anything that causes companies to shut down sweatshops or employ fewer workers, then, means that workers lose these better jobs and return to harder work at lower wages, or perhaps no work at all.

    In discussing the anti-sweatshop movement, Powell said that some groups sincerely want to help sweatshop workers, but don’t understand the economic realities in sweatshop-using countries. But labor unions such as UNITE do understand economics. The policies they advocate to help sweatshop workers — international labor standards and minimum or “living” wages, for example — increase the cost of sweatshop labor, causing companies to use less of it. It also makes unionized garment workers more attractive, and may lead to more employment in developed countries like the United States.

    “So unions advocate this not out of love for third world workers. They do it quite maliciously, actually, to unemploy third world workers for the benefit of already relatively wealthy union members in the United States and Western Europe countries.”

    The worst thing that advocates for sweatshop workers can do is to call for boycotts of products produced in sweatshops. If a boycott decreases demand for a product, the company must reduce its price, and the upper bound of what sweatshop workers can earn goes down. Then workers either have their wages reduced, or they lose their jobs.

    Powell presented the results of his research examining sweatshop wages. In many countries that use sweatshops, wages are very low, compared to U.S. wages. But that isn’t the appropriate comparison. Instead, when comparing the wages of sweatshop workers to the average income in the workers’ own country, we find that sweatshop workers do very well, often earning from two to seven times as much as the average worker in each country.

    Powell said that “ethical branding” is an idea that might help sweatshop workers. This is a marketing strategy where a company uses the fact that products are produced in sweatshops as a way to increase demand and prices. This, in turn, would increase the demand for sweatshop workers and increase their wages. But this has to be a voluntary strategy, Powell said. Companies must see this as a business success. If it is not successful in increasing demand but companies are forced to implement this strategy, it will lead to less sweatshop employment.

    Also, demand — in terms of the number of units sold — must not fall. This is a problem with “fair trade” coffee, where people purchase less of the more expensive fair trade coffee.

    The real solution for improving sweatshop wages and working conditions, Powell said, is the process of economic development. Sweatshops existed in Great Britain and the United States at one time. As capital is accumulated, better technologies are developed, and workers become more educated, workers become more productive and earn more, both in income and better working conditions.

    This process took over a century in the U.S., but countries like Hong Kong, Singapore, and South Korea, which were sweatshop countries in the 1950s and 1960s, made very rapid improvements in wages and working conditions. Capital and technology is available from abroad, Powell said, and this process can be repeated. But anti-sweatshop policies risk stalling this development, resulting in a permanent sweatshop country with low incomes.

    The real question, Powell said, is not why some countries are poor, but why some countries are rich. Rule of law, respect for property rights, and respect for individual liberty and economic freedom are policies that promote rapid economic growth. Countries that do not have these stagnate and do not increase their standard of living.

    In conclusion, Powell said that sweatshop wages and working conditions are better than what many workers face as alternatives, and that’s why people voluntarily choose to work in them. While wages are low compared to developed countries, this is because productivity is low. The process of economic development is the way to raise productivity and wages. Much of the work of anti-sweatshop groups risks undermining the economic development processes that will raise living standards.

    A question from the audience asked about the proliferation of sweatshops abroad leading to the loss of American jobs. Powell replied that sweatshops lead to the decline of the American apparel industry. But it is in the interest of America, he said, to get garments at lower cost overseas, freeing up high-skilled U.S. labor and capital to do what we’re relatively better at. This increases the wealth of America.

    Another question referred to the human costs of sweatshop labor, contrasting those workers to Nike executives who earn millions. What is the cost in terms of damage to human dignity? Powell replied that businesses are not charities, and they don’t pay executives high salaries simply because they want to. The extremely high pay of the top executive serves as an incentive for underlings to work harder in jobs that are hard to observe quality of effort. Most people do not understand this, Powell said.

    He also said that if we’re concerned about the dignity of sweatshop workers in third world countries, we should be even more concerned about those who don’t have sweatshop jobs. These people either have no jobs, or jobs with much lower pay and worse working conditions than sweatshop workers.

    Another question asked if it would help the economies of third world countries if we simply raised the wages of sweatshop workers, referring to companies that are making millions in profits. Powell said that laws mandating higher wages will change the behavior of sweatshop companies, resulting in a loss of sweatshop jobs. But voluntary programs like ethical branding could work.

    Related material on this topic by Powell includes a Christian Science Monitor op-ed Don’t get into a lather over sweatshops, a working paper titled Sweatshops and Third World Living Standards: Are the Jobs Worth the Sweat?, and an article In Defense of “Sweatshops.”

    The ESU Lectures on Liberty was conceived by Greg Schneider, professor of History at Emporia State University, to bring in important academics who support the idea of research and scholarship on critical issues regarding liberty in American history. The lecture series is underwritten by the Fred C. and Mary R. Koch Foundation in Wichita.