It appears that some of the silicone used to create the white “Make Poverty History” wristbands have been made (in their own words) unethically. (This Is London). I find the Church-led campaigns to end poverty as being wrong-headed and potentially counter productive, but I shall try to resist the temptation to smugly gloat.
Instead, I shall make a point that explains just why I’m not surprised by this revelation. This episode highlights the difficulty in a command and control system of economic allocation.
The officials at CAFOD, Christian Aid, Oxfam, etc will now travel out to the implicated factories and engage in a collaborative effort to raise the working conditions. Needless to say their attention to sorting out this issue will neglect potential problems that emerge elsewhere – you can’t control all aspects of a complex production process. If these charities are serious about changing working conditions, surely a far bigger incentive for Chinese factory managers is the threat of cancellation? Without having to step foot onto the factory floor, Oxfam can simply tear up their contract and find a new supplier – and that would have a far more powerful effect at ensuring “ethical standards” than simply a pat on the back and a “must try harder”.
It is important to note that a free market system does not hold a monopoly over sweatshop conditions. As this wristband case has demonstrated, they can arise even when their elimination is the central objective of the charity! Consequently the solution is not better monitoring, better management and more central control by the UK parties. Rather, a system that swiftly eliminates bad firms, and one that rewards good ones. Only then will the incentives of those pursuing prosperity, be aligned to those pursuing ethical fairness.
An alternative to managed trade is Free Trade – allowing the human rights of individuals to cross national borders. To support the more economically literate approach to development, buy an Orange wristband from the Orange Path Shop.
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