Dark Satanic Mills
When Grieder writes that "the Kader fire was ordained and organized by the free market itself," he is referring to the fact that the problems that contributed to the fire are, in his view, systemic in nature. He does not accept the proposition that individual actions and oversights led to the fire, that instead the reason these oversights occurred was because of systemic problems.
The Kadar fire occurred in a toy factory that was producing toys, mainly for export to Western nations. This is part of a practice known as outsourcing, wherein a company that wants to produce something designs the product, markets it, but hires a third-party to do the production. The underlying logic of this system lies with comparative advantage, where nations gain by trading in goods in which they have a comparative advantage with other nations. Thailand is a country that has a lot of workers and relatively few good jobs, so the cost of labor in Thailand is relatively low. This low cost means that Western firms are likely to hire companies in places like Thailand because they can produce at a lower price than can companies in the West.
This system is commonplace in the world today. The argument that Grieder makes is that this system effectively encourages what is known as a race to the bottom, where countries and companies engage in global competition for this business, with the only thing that they have to offer is low cost. In order to compete, companies like Kadar have incentives to minimize their costs anywhere possible. This does include things like wages and benefits, but is also includes things like safety measures. Many business leaders see safety measures as an added cost. At Kadar, for example, there were plans for emergency exits but those exits were not built. Moreover, the workers were locked in, for whatever reason, and there did not appear to be functioning alarms or sprinklers, either, since those would have cost the company more.
Grieder's point is that these issues are not strictly related to the poor choices on the part of Kadar management. There are thousands of companies around the world that operate using the same business practices and they do this in competition with one another for this business. The incentives...
The owner may have made poor decisions, Grieder argues, but did so just as thousands of his cohorts do around the world because if he does not, the companies he supplies will take their business to a low cost supplier. Often the companies in the West that subcontract out to firms like Kadar take a "don't ask don't tell" approach to such violations of safety ordinances. They do not investigate the conditions at the factories of subcontractors, and as such the subcontractors only have one incentive -- money.
The governments, like the one in Thailand, are also complicit. There are fire safety regulations in Thailand, but these are routinely overlooked.. Either there is overt corruption and inspectors are paid to overlook violations, or the government officials do not even bother to send inspectors. It is not just overt corruption that causes such problems, but government officials who recognize the benefits of having economic growth in their countries. The owners of the factory pay taxes, and the factory provides hundreds or thousands of jobs in a country where there is a need for massive amounts of jobs. So government is usually complicit, and their greed motivation is not directly tied to the factory, but tied to the creation of a system that overlooks safety and worker violations in order to continue to draw in foreign business.
Such tragedies are not inevitable in the sense that there is no specific need for such violations to be a part of competition. However, eliminating such instances is, from the starting point where we are now, going to be exceptionally difficult. First, consumers need to care and make workers' safety and rights a part of their shopping decision-making criteria. Right now, people will blow off their family on a holiday to save twenty bucks, so money is clearly the primary motivator of most purchase decisions in the West. Thus, there is no pressure brought to bear either of these factories or on the governments in these countries.
Attempts to bring about change in the Third World have been so ineffective for a few reasons. If we think back to the Triangle…
