Make It Cheap

It should be clear by now that free market globalization is in actuality “crony capitalism” whereby politicians hand over public wealth to private corporations in exchange for political support. This model is used in impoverished nations throughout the world to provide loans to desperate economies channeled through the International Monetary Fund (IMF) and the World trade Organization (WTO) which the U.S. controls. The foundation for the model is deregulation and privatization. It very soon becomes apparent that globalization is in fact simply unscrupulous corporatism.

The manufacturing corporation seeks to produce its product as cheaply as possible by using the labor of poverty stricken Third World countries. In order to achieve this goal, it was necessary to give up the ownership of their productive facilities and the employment of workers. Instead production was outsourced to contractors and sub-contractors at a less than livable wage in the poorest of countries. For example, if companies, such as Wal-Mart, Ralph Lauren, Liz Claiborne, K-Mart, Nike, and Reebok were contracting for labor in China where at one time 87 cents per hour was considered a living wage by the government, some U.S. Companies paid as little as 13 cents per hour. The mark- up on many of the products jumped from 100% to 400%.

The CEO's saw this as an opportunity to decrease their costs, increase their profits and above all develop a brand name that consumers would buy. Soon consumers no longer bought the product but rather they bought the brand which represented a life style. The life style was introduced through advertising, design and marketing. All the products manufactured carried the brand logo. You might be middle class but the brand logo gave you upper class pride of ownership. The logo was there for all to see, whether it was Levi, Gap, Tommy Hilfiger or Eddie Bauer.

When complaints came in about conditions in the sweat shops and less than a living wage for the workers, the corporation spokesman could say that they did not employ anyone. The contractor was responsible. He owned the factory and set the pay scales. The corporation tells the contractor how to design the product but to “make it cheap.”

All the costs of building factories, buying machinery and labor are transferred to the contractors and subs. The most profitable corporations are running from the costs of production. Factories re-
quire maintenance , employees cost in wages and benefits. By ridding itself of these expenses, corporate profit rises enormously. Money is then available to design and market brand logos.

As for the workers in the sweatshops,for example in Honduras in 2003 garment workers were paid 24 cents for each $50 branded sweat shirt. Most contractors pay the worker less than the required living expenses. Nevertheless, if the worker does not take a job with the contractor, his only other option is backbreaking labor, subsistence farming, prostitution, trash picking or starvation. Today because of the economic crises world wide, many of these marginal workers are being laid off as sales dwindle.

Obviously free trade agreements do not promote free trade at all but only protect multinational corporations from competition by local industries that may be unionized. Free trade agreements only reduce tariffs and barriers to entry to the benefit of the corporation.

It's axiomatic that the people at the top have always had a hard time seeing those at the bottom. As Molly Ivins said, “ they practically need a telescope.”


References:

Molly Ivins
Klein, Naomi. No Logo. 2009
Wikipedia