Support the Sweatshops If You Care About the Poor

Art Carden writes about the myth of the exploited worker in underdeveloped countries. The truth is that these workers have a lower marginal productivity and thus earn less in wages - the same goes for women and minorities. If we want to help them to improve their standard of living (i.e. if we want to increase their marginal productivity), then we should encourage more investment in sweatshops and other factories where these people are working. We should not threaten to burden them with international regulation or threaten to boycott their products, but we should encourage their profitability. 

Carden also makes a related point concerning the outsourcing of American jobs to China:

If an American worker earns $30 per hour while a Chinese worker earns $1 per hour, this is not by itself sufficient to show that investing in China is in a firm's best interests. If the American worker can produce 120 units of output in an hour while the Chinese worker can only produce two, then producing the good in the United States is actually cheaper. Each unit produced in the United States costs twenty-five cents, while each unit produced in China costs fifty cents.

Then the outsourcing of American jobs, which has occurred over the past decade, is not because the Chinese are being exploited but because of other factors that make it cheaper to operate in China such as lower regulation, a lack of union coercion, and lower taxes. Thanks once again to the Federal government, the US has become uncompetitive in world labor markets leading to the obliteration of any manufacturing base we once had.