Sweatshops, tacos, and Wal-Mart: Is there anything to criticize?

Anti-sweatshop and anti-Wal-Mart movements are usually based on arguments that are just plain wrong

Seth Perlman/AP
The Wal-Mart Supercenter signage is seen in Springfield, Ill., Monday, May 16, 2011. Wal-Mart isn't without faults, but most of the arguments made against it are wrong, writes guest blogger Art Carden.

I discussed sweatshops and immigration in my Forbes column a few weeks ago. Since then, I’ve seen a couple of great posts on sweatshops and exploitation from Mark Pennington and Matt Zwolinski.

Pennington makes the curious point that the case for sweatshops is usually met with derision, scorn, and moral outrage even though it is based on intro-level economics and what is, in my opinion, very persuasive evidence comparing sweatshop wages and working conditions to the workers’ alternatives. Zwolinski asks why we cast so much aspersion on sweatshop employers who are actually paying wages and offering opportunities to their workers and do not criticize those of us who are sitting at home doing nothing or next-to-nothing for the poorest of the world’s poor.

I’m at a bit of a loss to understand why the cases for free trade and against minimum wages and rent control are not merely ignored but angrily resisted. Bryan Caplan proposes what I think is a useful mechanism: for the activist, results take a backseat to signaling the correct affiliation. If the social context is one in which showing that you care matters more than anything else, we might be able to understand the persistence of erroneous beliefs about economic issues. Dropping the anti-sweatshop petitions and picking up the banner of free trade isn’t likely to make a big difference in the grand scheme of things, but it might lose you a few friends.

Zwolinski ably takes up the left-libertarian critique of sweatshops, and it can easily be applied to left-libertarian criticisms of firms like Wal-Mart. As I mentioned a few days ago, I think the most important lesson Wal-Mart and Taco Bell teach has less to do with their virtues (or lack thereof) and more to do with what they illustrate about changes in the relative levels of coercion and cooperation over the last several centuries.

I’m the first to grant that there are solid reasons to criticize Wal-Mart/Taco Bell/sweatshops/corporations/etc; indeed, when I give lectures on the effects of Wal-Mart I generally include a section in which I discuss these reasons. Nonetheless, I don’t think libertarians should embrace the anti-sweatshop movement or the anti-Wal-Mart movement because they are generally founded on claims and arguments that are just spectacularly wrong. The anti-sweatshop movement is but one element of a much larger rebellion against basic economics. Most of the anti-sweatshop arguments I encounter are grounded in a fundamental failure to engage and understand the law of comparative advantage.

A few years ago, I wrote a Mises Daily–which I should probably update in light of the most recent research-in which I made the case that the debate about Wal-Mart is not a debate about the abuses of government power on some margins like eminent domain. The Wal-Mart debate is, for the most part, a debate about the nature and desirability of voluntary, commercial society writ large. Wal-Mart’s use of the state to steal from others via eminent domain is definitely worthy of criticism, but the typical anti-Wal-Mart case is grounded in a larger critique of commercial society. It’s use of the state to hobble its competitors via higher minimum wages and employer health care mandates also deserves criticism, but if anything, these positions have been praised rather than condemned by Wal-Mart’s more vocal critics. Similarly, the Taco Bell tomato controversy of a few years ago was based not on the kind of nuanced arguments about subtle and not-so-subtle forms of coercion that Roderick Long and others are making, but on the critics’ failure to understand or appreciate how productivity and opportunity cost determine wages in competitive markets.

Is there room in the intellectual division of labor for libertarian criticisms of firms large and small? Undoubtedly. However, I think Walter Block’s “Libertarian Nuremberg Trial” thought experiment is useful here, especially in a world where we’re trying to use our limited time and attention to make the biggest difference. When I think of those who are guilty of the greatest crimes against liberty and dignity, firms like Wal-Mart and Yum! Brands are pretty far down the list.

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