Some more with Mr. Powell.

Actually, it's not the same debate anymore. This time we spent a good deal of time discussing 'usury,' and it's presence in the modern world. As you can imagine, Mr. Powell as a convinced Distributist, comes down very critically on the banking industry and on the practice of accepting interest on borrowed money. I, of course, am of a very different stance. Because the debate was entirely in the comment line of a post on his blog this time, I'll refrain from copying the replies here and instead just post a link to the original post with the comments. The debate does eventually shift back to the China discussion but we achieve a much better understanding, I believe, this time. Enjoy.

Home again, Home again jiggidy jog

Back from school. My best semester yet with respect to grades, at lease one A and two A- course grades so far. I don't know about the other three, but I don't think I did worse than a B in any of them.

In other news, I'm already back at work again doing the exact same thing I did last year. Except this summer, I get credits. 6 of them and a near guaranteed A. I feel good. It's been fun so far and I've been productive. We might migrate our entire build structure from Ant to Maven in the near future. If you don't know what that means, don't worry about it. It's a little technical.

I'll be building myself a new computer over the summer. It's be an AMD Am2 socket with an NVidia nForce SLI chipset. A 2.1 GHz AMD64 X2 will be the processor and and graphics card is a GeForce 8600GT with 256mg of memory. It should be pretty nice with lots of room to improve and wasn't all that expensive. The entire system was under $800, which is only two weeks of work for me and it should remain current with only minor upgrades years to come.

I'm going to try to resume conversation with Mr. Powell soon, I've been posting pieces of our conversation at a slow pace, but the last actual email I sent him was over two months ago. I had to stop because of school, but now I should have some more free time.

Also, a note to anyone who reads this, It's been a long while since I've received a comment. I know my friends read this, I've seen you. I'd still write even if nobody read or commented but it's nice to know that somebodies listening. Even more, I like reviews on my ideas and opinions. If you agree, say so; if I'm an idiot, inform me so I can mend my ways. Even if you have no opinion, some partial thoughts would help.

And finally, I want one of these. An eight core processor with 32 simultaneous threads seems to be about the coolest thing ever. The hardware JVM seems kind of fun as well, even if it's only really good for servlets.

Another from Mr. Powell

I'm way behind on this so here is Mr. Powells response to my last response.

Dear Mr. Stine,

Thanks for writing back! And thanks for your patience. I always enjoy
these discussions, but I can't always get to them as quickly as I'd
like.

I confess I did not read the link you provided, only because I
think it's important to work out our somewhat limited discussion
first, rather than going on to greater questions of whether or not the
"free market" as a whole is "good" for the poorer classes of China.
As I understand it, we're talking about whether we Americans have any
responsibility to the people who produce goods for us in other
countries, in this case, China. There's the obvious question of
whether Home Depot has a responsibility, since it's inspecting the
factories and paying them to make things. Then there's the nearer
question of whether we, as consumers, have any responsibility to learn
about working conditions elsewhere, or at least act on the information
when we get it.

This is a simpler question than whether in general it's better
or worse for Americans to pay Chinese to do any work for them. I don't
think the "big picture" of us helping the GNP rise really addresses
the question of particular sweatshop conditions.

So let me see if I state your position right, and please correct me if
I'm wrong.

"(1) While poor working conditions and/or human rights abuses are always
regrettable, they are the business of the government overseeing the
location, not corporations on the other side of the world, far less
consumers. Home Depot does not mandate insane workweeks or weekly
finger loss; they pay Chinese businessmen to perform a service. How
the businessmen perform this service is their responsibility, and that
of their government, not ours.

"(2) In fact, our role is entirely beneficial; we put money into the
Chinese economy that would not otherwise be there. Low as the wages
may be, they are wages from our money, and if we stop paying these
factories, those wages will vanish. (3) Any boycott or even the threat of
a boycott, such as this pending sweatshop legislation, is likely to
have one effect, and one effect only: less money into the Chinese
economy, and thus less money trickling down to the poor who want to
work.

Is that about right?

Now, let me try to respond to this, and hopefully I'll cover the
points you recently made as we go.


(1) Our responsibility. Last time you wrote:

> Which is hardly the responsibility or the fault of western factories,
> which is my point. Westerners don't force anybody to work in their
> factories; these people are merely invited to apply.

Yes, I agree with you that we do NOT have responsibility for the
misdeeds of foreign governments. In fact, we aren't even talking about
Western factories, but Chinese factories whose primary
or only clients are Western corporations.

Still, the question remains: what IS our responsibility?

That is why I posed the hypothetical question of the horrid factory
down the street.

> The standard of living is much higher in the United States than in China,
> largely because of the huge wealth of the nation. It wouldn't be possible
> to run such a factory because we are so well off.

Hmm. That seems a bit of a non-answer. The point is whether it would
be RIGHT to shop at such a place, not whether it could happen. (In
reality there are, on American soil, plenty of illegal immigrants
working vast farms for rather ridiculous wages, the fruits of which
end up in the produce aisle, but perhaps this is illegal it doesn't
count as the 'free market'.)

I hoped that by making it down the street, rather than out of sight in
China, it would make that morality question more urgent. So what
do you think? IF there were a factory down the street with equivalent
working conditions to that described in the report I posted online,
identical in every respect except adjusting the low wages to our cost
of living, (half our minimum wage, maybe, instead of half China's)
would it be all right to shop there?

That's what I'm getting at. We aren't responsible for China, but we
are responsible for profiting by their labor.


(2) Our role.

First, a bit about wage slavery.

> The reason you need a monopoly is simple. Without it, people always have a
> choice. They could always move to the factory with slightly better
> conditions and the original factory would have to improve conditions to
> bring back the workers. This means that the low wages and poor conditions
> must be due to pressures beyond the employer's control, ie. lack of
> productivity (employees can only be payed what they produce) or something
> else. The term "slavery" implies that someone is forcing someone to do
> something and they have no choice but without a monopoly on labor, the
> employer clearly cannot force people to work for them.

"MUST" be due? Every time? I still don't see why you can't have
an economy where all the major employers simply choose to underpay. If
they all choose to pay such low wages, there may as well be a
monopoly. Maybe a Henry Ford will come along who'll pay higher
wages and change the economic landscape...but maybe not. If not,
people aren't forced to work by government law; only by that physical
law about having to eat.

> Actually, this rasies the question of how the millionaire (by which I
> assume you to mean someone with an income of $100,000,000 per year) makes
> all that money a year with so little labor.

Of course, the example's extreme for the sake of clarity. Perhaps it's
not worth defending the specifics; my point was that you can have a
rising GNP while average wages are static or even sinking. It wasn't
exactly a business plan. :)

> It is also interesting that you chose an example where there was a
> monopoly on employment. What say there were two competing millionaires and
> six people in the labor market. An employee would merely have to threaten
> to work for the other guy and his employer would be forced to raise his
> wage lest he be outproduced by his rival.

Not if the employers had lunch together and agreed it was more
advantageous to them both to keep wages low. There wouldn't be laws
against this sort of collusion if it had never happened. (And in real
life, too, not just on desert islands.)

> In this way, the wages would be forced up to the productivity
> level of the employees (past which wages cannot rise unless the
> employer is willing to go into loss.)

I'm afraid I cannot accept that wages always magically rise to the
productivity level of the employees. I see where it works in theory,
but I don't see where it always works inexorably in practice. There
seem to be too many variables. For instance, there is no way an
employee who produces a shirt that sells for $15 or so in J. C.
Penney's hasn't produced more than 25 cents or so worth of wage. (Not
exact figures here, but the real figures are something like this for
many a factory overseas.)

> In the case of American CEOs, they are far more essential to the company
> than the average employee.

By picking on CEO compensation, I don't mean to deny that higher
skills deserve higher compensation. I'm all for paying masters more
than the apprentice. Just not 500 times more. Even if it does take
Thomas Monaghan and no one else to make Domino's so big, does Domino's
*need* to be so big? Are the pizza drivers automatically better off,
paid more, less likely to be laid off, because they work for such a
huge corporation? Anyhow, if there are any such benefits, are they worth
that ratio of compensation?

Nor do I mean to ignore all the other good folks, such as
shareholders, bankers, politicians receiving campaign donations, and
so on, who all too often take a grotesquely high share of other
people's work. The CEO's just an easy fellow to start with.

Because more of these profits should stay with the employees.

Economies are not pure mathematics; in real life, humans can be greedy
and can figure out ways to make employees work for a pittance while
pocketing more than their fair share of the profits. It may be that a
truly free market is the best mechanism for minimizing this
phenomenon, or it may not, but the general tone of your conversation
so far is that the iron laws of economics almost always prevent this
from happening in real life. CEOs are just magically worth millions a
year, and this is proved to be so simply because shareholders are
stupid enough to pay them this.

It almost sounds like there's no such a thing as economic injustice
(or stupidity), only developing countries that need a higher income so
they can get a higher GNP so everything will get better.

Maybe this is the crux of the matter. If there is such a thing as
economic injustice, it means there are people who, right now, can be
paid more and treated better *without* the business failing to turn a
profit. It will be a smaller profit (maybe), but everyone will keep
making a living, management included.

But if, as you seem to suggest, no one really has a choice, and what
generally looks an awful lot like slave labor is just what it takes to
turn a profit in that particular niche of the economy, then I can see
why you disagree with me. These people *can't* be paid more; they
*have* to have filthy bathrooms and crowded dormitories and horrid
diets and machinery that chops off a finger or two a week. If you fix
any of those problems, the expense will collapse the business; there
simply isn't any excess profit anywhere to divert to such charities.
Not even the income of the factory managers, or the managers of Home
Depot, or the American consumers demanding cheap products, or the
governments taxing the incomes of them all. Nope. Not a dime to spare.

Hmm. There are so many lovely kinds of injustice in the world; surely
there must be a bit of it in the economy? :)

Maybe it'd help me understand your position better if you gave an
example of what you consider to be economic injustice. Some crime,
present or past, that was perfectly legal at the time, but still
unjust.

Because if there is economic injustice, and if, for example, this
Chinese metals factory is practising it, then isn't Home Depot
profiting by it when they import the brackets and sell them so
cheaply? And don't we profit if we buy the stuff so cheaply?


(3) A boycott/threatened boycott.

Whether or not the individual consumer ought to refuse to buy "Made in
China" is one question, and the efficacy of this decision can
be debated. But let's focus on the anti-sweatshop bill. Were such a
bill enforced, we clearly would have efficacious action!

>
> If these
> factory bosses are raising wages in response to labor shortages,
> mightn't they do the same if threatened with losing the U.S. market?
>
> Actually, it might make matters worse. Generally, when there is less
> potential in the market for a particular item, the company produces less
> of it.

Ah, but why would there be less *potential?* There's all the potential
in the world if they're willing to treat workers as human beings. The
report I cited pointed out that the factory in question had been
willing to make all kinds of changes to accomodate its U. S.
client--in how they *packaged.*

These changes must have cost something, but the factory was willing to
do it to keep the client. Now, if the *entire U. S. clientele*
suddenly threatens to pull out unless minimum working conditions are
met--will all these entrepreneurs, managers, etc., simply throw up
their hands and refuse to cooperate? Some might, maybe, but *all* of
them? Most of them?

The bill isn't saying, "No more Chinese goods." It is saying, "What
you do with your workers is your responsibilty, but if you want us to
buy from you, you not only have to package the product properly, you
have to treat your workers with a minumim of respect. We have those
laws in our own country, and we don't deal with businesses who treat
their people like slaves."

> The factories can be moved to nations where the
> restrictions don't apply and nothing is solved and the Chinese are worse
> of than before.

But this bill isn't just for China; it would apply everywhere.

> However, by purchasing more Chinese made goods, the factory owners have
> incentive to increase production and the increased need for labor will
> cause wages to rise.

Again, with this bill, we'll purchase plenty of goods--that aren't
produced in horrific conditions.

> Moreover, by cutting
> China's income by refusing to trade with her, will reduce the local market
> for goods and labor and thusly hurt the Chinese employees. Their
> conditions will be even worse than before.

Since they would also be worse for the management, perhaps the
management would avoid this scenario by complying with demands for
minimum humane working conditions.

And if they didn't, if they refused, we stopped buying, the factory
closed--well, what's our responsibility then? It almost sounds
like I think we have a responsibility to refuse to fund the production
of goods produced with so much suffering, whereas you think we have a
responsibility to...keep buying no matter what?

Really? But if the price was lower in Vietnam, you'd take your business
there. Which might very well close the factory in China. Right? That'd be
business.

So it seems our only responsiblity here is to never stop buying from a
particular factory on moral grounds. But we can do it to save money.

But by now I've put way too many words into your mouth. Thanks again
for writing.

God Bless.

More on the free market in China.

Mr. Powell (link here)has done me the favor of converting our conversation to HTML markup for the sake of posting on my blog. He has also given me access to the comments section of his blog so now I can respond directly to articles he writes. I thank him for this.

Also here is my response to his counter response:

Dear Mr. Powell,

Nice to hear from you.

> It would seem that because people traveled so far just to get sweatshop
> jobs that they are better than the alternative, no?

Unfortunately, that only speaks poorly for the alternative. In fact,
your links were great, they shed a little light there. For instance,
the NYT article pointed out:

Government policy is playing a role in creating the coastal labor
shortages. Trying to close the yawning income gap between the urban
rich and the rural poor in China, the national government last year
eliminated the agricultural tax, and it also stepped up efforts to
develop local economies in poor, inland and western provinces, which
have mostly been left behind.

Perhaps some people, at least, were leaving their homes because of
intolerable taxation. There are precedents.


Which is hardly the responsibility or the fault of western factories, which is my point. Westerners don't force anybody to work in their factories; these people are merely invited to apply.

> Wage slavery can only exist where someone holds a monopoly on
> employment. With hundreds of companies owning factories in China,
> this is not the case.

Maybe we're using the term differently; the point is, if people will
work under such intolerable conditions, there must be some severe
external pressure at work, severe enough to be at least analogous to
that which keeps people enslaved. I don't see why you need a monopoly;
all you need are the majority of factories having the same deplorable
conditions. That's how it worked when Dickens wrote *Hard Times*, that's how
it works today.


The reason you need a monopoly is simple. Without it, people always have a choice. They could always move to the factory with slightly better conditions and the original factory would have to improve conditions to bring back the workers. This means that the low wages and poor conditions must be due to pressures beyond the employer's control, ie. lack of productivity (employees can only be payed what they produce) or something else. The term "slavery" implies that someone is forcing someone to do something and they have no choice but without a monopoly on labor, the employer clearly cannot force people to work for them.

Incidentally, the second article's report of a rising GNP and per
capita income in China proves very little regarding working
conditions. As you know, if a millionaire on a desert island employs
three people for 1 cent a year, the per capita income is about
$250,000.01. Nor is the example frivolous, when even in the U. S. the
compensation for an average CEO is hundreds of times that of the
average worker. Imagine the ratio in a country where people get paid
cents a day.


Actually, this rasies the question of how the millionaire (by which I assume you to mean someone with an income of $100,000,000 per year) makes all that money a year with so little labor. Chances are that this millionaire's contribution to the enterprise is far more valuable than his employees. Otherwise, with such a small labor market, It is unlikely that he could coerce them to perform anything for such a small amount, all they would have to do is refuse to work until he gave them a better wage.

It is also interesting that you chose an example where there was a monopoly on employment. What say there were two competing millionaires and six people in the labor market. An employee would merely have to threaten to work for the other guy and his employer would be forced to raise his wage lest he be outproduced by his rival. In this way, the wages would be forced up to the productivity level of the employees (past which wages cannot rise unless the employer is willing to go into loss.)

In the case of American CEOs, they are far more essential to the company than the average employee. While an individual pizza cook can be replaced easily, it's unlikely that Dominoe's would be nearly as big as it is today without Thomas Monaghan. Leadership is simply more valuable than individual effort. Otherwise, it would be impossible for them to coax such large salaries from their employers (CEOs are actually employees, not owners. In huge coorperations, such a Apple or Walmart, ownership is usually in the hands of a board of shareholders who hire and fire CEOs at their discretion somewhat like a major league Baseball coach.)

With increased productivity of the Chinese nation and the greater wealth of the nation as a whole, means there will be more job opportunities. With people making more money, no matter how much a minority, there will be a larger local market and thus more job opportunites. Only a few people can really afford a Porsche but that minority is enough to provide employment for everybody at Porsche. Also, with a rising wealthy class with more varied and sophisticated tastes will likely encourage an increase in the variety of jobs, many of which of much higher quality.

Now, the NYT article indicates that many factories are being forced to
improve their conditions because of labor shortages. This is a recent
development, but it's great. Of course it would be wrong to blame
foreign buyers like Home Depot for *all* China's internal
problems--merely another variation on imperialism. Still, we can take
responsibility for our part in the mess, and that's the point of
restricting imports from sweatshops. You may believe this would only
discourage more factories, but what is this belief based on? If these
factory bosses are raising wages in response to labor shortages,
mightn't they do the same if threatened with losing the U.S. market?


Actually, it might make matters worse. Generally, when there is less potential in the market for a particular item, the company produces less of it. Because of the reduced production there is a reduction in need for labor and consequently wages drop. Basically, because there is less need for labor, the company can relax and focus on attracting only the most destitute. Thus conditions can worsen and wages decrees. Or, alternatively, The factories can be moved to nations where the restrictions don't apply and nothing is solved and the Chinese are worse of than before.

However, by purchasing more Chinese made goods, the factory owners have incentive to increase production and the increased need for labor will cause wages to rise. Generally with the huge population which China has, demand will have to rise pretty high before a real dent can be made which is partially why conditions are still so poor. Moreover, by cutting China's income by refusing to trade with her, will reduce the local market for goods and labor and thusly hurt the Chinese employees. Their conditions will be even worse than before.

Lastly, there's the question of whether it's moral to knowingly buy
the fruit of such horrid labor. If the factory described in my article
was down your street, and the people were living in the same
conditions, an average of 5 of them losing fingers each month, getting
paid the U. S. equivalent of those wages...would you go to the gift
shop?


The standard of living is much higher in the United States than in China, largely because of the huge wealth of the nation. It wouldn't be possible to run such a factory because we are so well off. There is always an alternative, ie, Burger King. This is the reason that the national wealth of China needs to be increased. With a higher GNP, more and better jobs will be available and Chinese workers will be able to better than these factories. Something that is already happening.

Thanks again for writing! No obligation to write back, of course, but
I'll welcome any further thoughts you have.

Bill Powell


--
_______________________________________

Adventures of an Ex-Suburbanite

www.billpowellisalive.com

_______________________________________


In conclusion I would like to leave you with something I found a while ago and found fascinating. Basically this is a curriculum for a program that teaches the benifits of the Free-Market for poorer classes and it uses China as its key item of study. It is worth takeing a look at.

Andrew Stine

More on this later.

God Bless.

Some more free market discussion.

I mentioned oh, last month that I might be able to publish this discussion I've been having with Mr. Bill Powell (his blog here) just as soon as I received permission from him. Well, I finally got through and he gave me to go ahead. I think I'll post one letter at a time for simplicity's sake.

I already linked his post and my initial response. Here is his counter-response

Dear Mr. Stine,

Thanks for your note! Sorry it's taken me a bit to respond.

> It would seem that because people traveled so far just to get sweatshop
> jobs that they are better than the alternative, no?

Unfortunately, that only speaks poorly for the alternative. In fact,
your links were great, they shed a little light there. For instance,
the NYT article pointed out:

Government policy is playing a role in creating the coastal labor
shortages. Trying to close the yawning income gap between the urban
rich and the rural poor in China, the national government last year
eliminated the agricultural tax, and it also stepped up efforts to
develop local economies in poor, inland and western provinces, which
have mostly been left behind.

Perhaps some people, at least, were leaving their homes because of
intolerable taxation. There are precedents.

> Wage slavery can only exist where someone holds a monopoly on
> employment. With hundreds of companies owning factories in China,
> this is not the case.

Maybe we're using the term differently; the point is, if people will
work under such intolerable conditions, there must be some severe
external pressure at work, severe enough to be at least analogous to
that which keeps people enslaved. I don't see why you need a monopoly;
all you need are the majority of factories having the same deplorable
conditions. That's how it worked when Dickens wrote *Hard Times*, that's how
it works today.

Incidentally, the second article's report of a rising GNP and per
capita income in China proves very little regarding working
conditions. As you know, if a millionaire on a desert island employs
three people for 1 cent a year, the per capita income is about
$250,000.01. Nor is the example frivolous, when even in the U. S. the
compensation for an average CEO is hundreds of times that of the
average worker. Imagine the ratio in a country where people get paid
cents a day.

Now, the NYT article indicates that many factories are being forced to
improve their conditions because of labor shortages. This is a recent
development, but it's great. Of course it would be wrong to blame
foreign buyers like Home Depot for *all* China's internal
problems--merely another variation on imperialism. Still, we can take
responsibility for our part in the mess, and that's the point of
restricting imports from sweatshops. You may believe this would only
discourage more factories, but what is this belief based on? If these
factory bosses are raising wages in response to labor shortages,
mightn't they do the same if threatened with losing the U.S. market?

Lastly, there's the question of whether it's moral to knowingly buy
the fruit of such horrid labor. If the factory described in my article
was down your street, and the people were living in the same
conditions, an average of 5 of them losing fingers each month, getting
paid the U. S. equivalent of those wages...would you go to the gift
shop?

Thanks again for writing! No obligation to write back, of course, but
I'll welcome any further thoughts you have.

Bill Powell

I'll publish more of the discussion at a later date. Enjoy.

Also, coming soon, a controversial article!

God Bless.

Some Free market discusion.

I've been engaged in an ongoing debate with Bill Powel from Bill Powell is Alive, on the practicallity on a theoretical level of a new bill to restrict trade with China to products not manufactured through 'sweatshop' labor. It began as a response to a post on his blog attacking the brutality of Chinese factories and lauding the bill. I, of course am against the bill on the grounds that it will only hurt in in the long run.

Here a link to his post.

I wish the conversation was made available through the comment's section of his blog but, alas, I cannot comment on Mr. Powell's blog. The debate has transcribed instead through E-mail. I don't know if Mr. Powell would appreciate my publishing his mail that he sent me but I will publish my first response to his post:

It would seem that because people traveled so far just to get sweatshop jobs that they are better than the alternative, no?

Anyhow, proof that the further influx of the free-market is helping China here, and here. Wage slave indeed. Wage slavery can only exist where someone holds a monopoly on employment. With hundreds of companies owning factories in China, this is not the case.

As to that bill, I believe a restriction on imports would do more to discourage the building of factories in China period rather than improving their conditions. This would hurt China (and its people) far more than any inhumane factory conditions.

With Mr. Powell's permission I'll publish the entire rest of it because it's gotten pretty interesting. Until then, I hope you enjoy.

God Bless.