Who Benefits From Sweatshops? Follow The Money

Consumers are ultimately the ones responsible for dangerous conditions in garment assembly plants in the Global South, Hong Kong-based business executive Bruce Rockowitz told the New York Times recently.  The problem is that improved safety would raise the price of clothing, according to Rockowitz, who heads Li & Fung Limited, a sourcing company that hooks up retailers like Macy's and Kohl's with suppliers in low-wage countries like Bangladesh.  "So far," he said, "consumers have just not been willing to accept higher costs."
Rockowitz isn't alone in blaming consumers in Europe and the United States for sweatshop conditions in the apparel industry.  The idea pervades popular culture.  When 1,129 Bangladeshi sweatshop workers died in the Rana Plaza collapse in April, a lawyer in the United Kingdom proposed raising money for the victims by having consumers pay a voluntary "T-shirt tax" on clothing stitched in Bangladesh.  "This isn't just the fault of companies who supply cheap clothes," barrister Victoria Butler-Cole explained.

But people rarely ask whether the facts support this idea.  How much money do we really save because of cheap labor in the Global South?
Labour costs for garments produced in the developing world - 1-3%.
Significant wage increases and improvements in conditions at Bangladeshi apparel plants would probably add 40 or 50 cents to the price of a $10 T-shirt, at most.

 Companies occasionally revert to the practice of underselling their rivals, and they often take advantage of new technologies to cut prices and generate an increase in sales.  But there's no automatic connection between lower labor costs and lower prices.  The price of a commodity is set by a complicated formula with many different factors, and labor costs are often a minor one.This is especially true in an industry like apparel, where changing fashions and brand name prestige have a disproportionate effect on pricing; the difference between a $120 pair of Nike sneakers and the $30 shoes at a discount store doesn't come from high wages for workers at Nike's Indonesian suppliers.

The magazine Ad Age estimated in 2007 that spending on advertising was equal to 5.1 percent of total sales in the apparel industry, while for apparel stores the number was 4.5 percent.  In other words, the cost for advertising the clothes can be as much as five times the cost of stitching them.   Other forms of marketing, such as telemarketing, email marketing, and junk mail, may account for an even larger share of an item's cost.  In 2009 writers for Monthly Review calculated that advertising might represent as little as 30 percent of the total cost of marketing.

If we had a say in the matter, it's not likely that we'd choose to let workers die in Bangladesh so that we can have our lives cluttered with ads, junk mail, and celebrity endorsements. 
But the sweatshop system isn't about what consumers want, and it's certainly not about what the workers want; the goal is to increase profits for manufacturers and retailers, to make the superrich even richer.
While blaming consumers for sweatshop conditions, Li & Fung CEO Bruce Rockowitz has done quite well from the business of sourcing sweatshops for multinationals.  His company had some $20 billion in revenues in 2012.
 Businessweek estimates that Rockowitz's personal compensation last year was $6.955 million, and his net assets have been put at $33 million or more.  In October 2011 Rockowitz married Hong Kong pop star Coco Lee in a ceremony that reportedly cost $20 million.

 by David L. Wilson - more here 

We're looking at the wrong costs here. For socialists the solution is simple; abolish the wages system; introduce production for use instead of for profit; common ownership and free access for all.
JS 

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