Dying
to Work for Slave Wages
by
Sinclair Noe
DOW
+ 130 = 14,831
SPX + 14 = 1597
NAS + 41 = 3340
10 YR YLD - .01 = 1.63
OIL + 3.04 = 94.07
GOLD + 9.30 = 1468.40
SILV + .18 = 23.93
SPX + 14 = 1597
NAS + 41 = 3340
10 YR YLD - .01 = 1.63
OIL + 3.04 = 94.07
GOLD + 9.30 = 1468.40
SILV + .18 = 23.93
Yesterday
the Federal Reserve left interest rates unchanged and announced they
would continue buying $85 billion a month in Treasury bonds and
mortgage backed securities; they might increase or reduce the
purchases depending; they blamed politicians for fiscal policy, or
lack thereof.
Today,
the European Central Bank cut interest
rates for the first time in 10 months, promising to provide as
much liquidity as eurozone banks need well into next year and to
help smaller companies get access to credit. The ECB lowered its
main interest rate by a quarter percentage point to a record low
0.50 percent in response to a drop in eurozone inflation to an
annualized 1.2%, well below its target level, and rising
unemployment. ECB President Mario Draghi said the central banks was
“ready to act if needed', should more be required to boost the
eurozone's economic health.
Sounds
good; doesn't mean much. The late moves by the ECB probably won't do
much to lift the economic health. The best analogy I heard today was
that the ECB action is like opening the windows in a convertible when
the top is already down.
In
recent months there have been growing calls for European countries to
move away from austerity measures. Both French President Francois
Hollande and newly-elected Italian Prime Minister Enrico Letta have
urged a reconsideration of austerity policies. Yesterday, Spaniards
took to the streets to protest 27% unemployment; 57% among the
Spanish youth; Greeks staged a one day national strike, shutting down
almost everything; The Greek government is cutting government jobs.
We
don't hear much about May Day protests in the US. Seattle seems to be
the only US city that can muster a crowd; yesterday, 3,000 people
marched through Seattle; it was not without incident; protesters
threw bottles and did some property damage; police threw pepper spray
grenades and arrested 17 protesters.
In
Indonesia, tens of thousands of workers marched, many dressed as
ants, complete with bright red outfits and antennae to depict the
exploitation of workers.
In
Dhaka, Bangladesh the protests drew thousands. This was the scene of
a building collapse last week. A eight-story garment factory,
originally built as a three-story building, suddenly collapsed. The
landlord and some of the factory owners have been arrested. The death
toll stands at 433, while more than 2,400 survivors were pulled from
the rubble, hundreds more are still missing. Bangladesh's prime
minister is promising reforms in the nation's garment industry, which
is now the second largest in the world, behind only China. In the
days after the collapse, thousands of Bangladeshi workers took to the
streets in protest, demanding the death penalty for those responsible
for the collapse.
Perhaps
the most intriguing response to the building collapse in Bangladesh
came from the new Pope Francis; according to Vatican Radio, he
condemned the “selfish profit” motive of the companies whose
search for low prices meant “slave conditions” for workers.
He
was quoted as saying: “Today in the world this slavery is being
committed against something beautiful that God has given us - the
capacity to create, to work, to have dignity. How many brothers and
sisters find themselves in this situation. Not paying fairly, not
giving a job because you are only looking at balance sheets, only
looking at how to make a profit. That goes against God.”
Later,
in his weekly sermon in St Peter’s Square in the Vatican, Pope
Francis called for more concern for “social justice.” “Work
is fundamental for dignity,” he said, and denounced unemployment as
the result of “an economic conception of society based on selfish
profit outside the bounds of social justice”. Saying: “There are
many people who want to work but cannot. When a society is organised
in a way that not everyone is given the chance to work, that society
is not just.”
Human
dignity derived from work, he said, but too many countries had “made
choices that mean exploiting people.”
The
collapsed factory produced apparel for large Western brands like
Benetton, Children’s Place and Primark. Sadly, without the
Western-brands angle, the collapse might not have even made news. And
the companies have started to respond, however the response is not
always satisfying. There have been efforts to turn blame toward
Bangladeshi officials and an environment of corruption and lax
oversight. And then there is the old saw of globalization, that
without the demand from Western brands, the Bangladeshi economy would
implode; the argument is that people are dying to get a job. This is
the idea that slave wages are better than no wages, and our slaves
are happy slaves. The Pope said the typical garment factory wage is
38-euros a month, the equivalent of $49 a month. Or what the new Pope
calls “slave labor”. In fact, wages are even lower, with the
legal minimum salary routinely paid to employees only $37 a month for
a six-day week with 10-hour shifts.
The
70-mllion strong Lutheran World Federation has also condemned the
circumstances in the market that led the tragedy. The Anglican Church
and the Seventh Day Adventists have joined in rescue operations.
The
Bangladeshi prime minister noted that workplace disasters have
occurred in the United States, too; she cited last month's explosion
of a fertilizer plant in West, Texas, in which 14 people died and 200
were injured.
"Anywhere
in the world, any accident can take place," she said. "You
cannot predict anything."
Of
course, it is still to be determined if the building collapse in
Bangladesh or the fertilizer plant explosion in West, Texas were in
fact mere accidents. It is unlikely that the owners of the West plant
intended to kill anyone, but there was, at least, gross neglect in
the siting of the plant in the midst of a town, where the company was
situated - so close to the town, schools and other infrastructure;
certainly it raised red flags in the way they stored the ammonium
nitrate, the construction of the building, and the amounts of
chemicals they reported as stored on site – 1,350 times more than
what normally triggers Department of Homeland Security oversight.
Perhaps it was in someone's financial interest to ignore the danger.
The
Senate yesterday announced an
investigation into
what went wrong at the plant. One of the leading problems was likely
that the Occupational Safety and Health Administration – which is
responsible for the enforcement of workplace safety regulations –
hadn't inspected the site since
February 1985.
OSHA
has too few resources to do the job assigned to it. This year, OSHA
has a budget of $535 million to protect workers at over 8 million
workplaces. OSHA conducts about 40,000 inspections each year.
Together with state OSHA programs, it has 2,000 inspectors; with
those resources, federal
OSHA can conduct an inspection of every facility only once every 131
years. And the sequester is expected to reduce OSHA's budget by 8.2%.
This
lack of attention to the safety of our workplaces and neighborhoods
is no accident. It is the work of industry trade associations, think
tanks, opponents of regulations, Congress, and even the Supreme
Court; in other words, its what the folks in Bangladesh would
describe as an environment of corruption and lax oversight.
The
traditional cure to our economic ills has always been growth. But
now, despite the various and sometimes contrasting efforts, the
economy refuses to grow. The economic tools that have been applied –
lower interest rates, quantitative easing, and strict austerity, are
failing or found to be insufficient. Suppose that instead of chasing
after more stuff, more jobs, more consumption, and more income, we
aimed for enough stuff, enough jobs, enough consumption and enough
income.
Our
main indicator of progress, GDP, is a measure of economic activity—of
money changing hands. It doesn't tell us anything about what kind of
activity is occurring. If the police came to your door and said that
"activity" in your neighborhood had increased by 3% last
year, you'd want to know what kind of activity. Was it more children
playing in parks, or was it the clean-up following an explosion at a
nearby fertilizer plant? We need to ask the same kinds of questions
about GDP. Did it grow because our society became wealthier, or did
it grow because we ran up huge debts and liquidated our natural
assets?
Perhaps
the biggest fear that most people have when they hear "no
growth" is "no jobs", but the evidence for a
relationship between economic growth and job creation is much weaker
than you would expect and varies remarkably between countries. In the
US, for example, a 3% increase in GDP tends to be accompanied by a 1%
fall in unemployment. In France, the same amount of GDP growth
reduces unemployment by only half a percent. In Japan, there is no
relationship whatsoever.
I
can't recall a Pope talking about slave labor. I think it might be
the beginning of a new dialogue, and if that is the case, the
conversation is starting from a very different place than what we've
heard before. The new Pope has a pretty large base, and that balcony
looking over Vatican Square is quite the bully pulpit.
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