Economics

   There are still too many regulatory loopholes that allow labour abuses in big brand supply chains, argues Jon Entine Are global corporations cleaning up their supply chains? Trying to answer that question is like wrestling an octopus into a shoebox: no matter how hard you try, something dangles out somewhere. The debate over the abysmally low wages paid to workers in emerging economies illustrates the difficulty. There are two conflicting narratives, both tied to China. One is that wages are going up because of internal pressures, mostly an improving standard of living, and external pressures from public interest groups. The other is that because of widespread corruption, with global corporations in on the scheme, workers are getting screwed. Both narratives are partly correct. China is the manufacturing centre of world capitalism. In response to lagging wages and unrest among its poorest workers, numerous cities have upped their minimum wage, with the boom-town of Shenzhen raising its starting monthly salary 14% to $238. The rising wages have accelerated capitalist hopscotch, with some companies abandoning China. Women’s retailer New York & Co moved its operations to Vietnam two years ago. According to Charming Shoppes, after the Chinese new year holiday, 60% of its employees at one factory didn’t return and instead found jobs closer to their homes. The company says it’s also in the process of moving to Vietnam and Indonesia. “The garment business always moves around the developing world,” says Neal Black, chief executive of Jos A Banks Clothiers, calling this efficient capitalism. “It brings jobs, those people become skilled and then move on to products like electronics.” Southeast Asia has positioned itself as an alternative for companies trying to escape rising labour costs. But wage hikes in China have set off a chain reaction throughout the region. Better educated […]

Before I come to the point that I want to make today, I have a little story to narrate. About four years ago, I stumbled on to the microfinance sector by a sheer stroke of chance.  Before that I had always dreamt of doing something for the teeming millions suffering in the ruthless clutches of poverty. Microfinance, as you all know, was supposed to be one important tool in fighting the menace of poverty. I began my new assignment in this sector with all sincerity. Soon I was awakened to the fact that conventional microfinance, in most cases, was producing the results directly opposite of the stated aims. I cannot doubt the intentions of the donors, but in the intermediary layers there was a rampant abuse, which, in fact, was further plunging the poor into a bottomless pit of misery. That was the point when I began to reflect on the causes of the setbacks in the sector. During the same period the news of failures in the worldwide conventional microfinance sector began pouring in. this also coincided with the worst recession since the great depression of the 1930s. By the way it began with the sub-prime loan crisis and sooner, rather than later, it took over the whole developed world. Even today the world is still reeling under this crisis with no end in sight so far. The most striking realisation which I had during the period I was working with conventional microfinance, was the nature of the relationship between the client and the facilitating agency. It was a cold, business-like, kind of matter of fact type relationship. I was surprised to see the utter disregard of the facilitators towards the clientsÕ education, skills, abilities and plight. Here was the root cause of the set backs which led to […]

Suppose the internet existed in 1929. How might the Great Depression have been different? The Internet is a tool of global communication. If it had been available in the 1930s, the downturn and subsequent restructuring that became the Great Depression could have occurred faster and more efficiently, yielding less suffering. Eighty years later, we are on the brink of such an economic turning pointÉ how can we utilise the Internet to help prevent the suffering and hardships experienced in the 1930s? This is the question being asked on communities all over the internet, and it is the inspiration for a new website, EconomicTurningPoint.com. ETP is a nonpartisan global think-tank dedicated to utilising the resources available to us to address the current economic crisis and avoid a decade of poverty and warfare – and they’re recruiting. The theory behind the site – inspired by recent research by thinkers like Malcom Gladwell, Clay Shirky, James Surowiecki and Ray Kurzweil – is that a large international community of intellectually curious individuals, utilising modern communications technology and cooperating as a whole, can achieve great things. Edward Thompson, one of the site’s administrators, said:”We are facing a dramatic restructuring of our economy. The traditional steps for this process involve massive layoffs, stock sell-offs, crumbling consumer confidence, reduced spending, and then Ð after many years Ð a new economy rises from the ashes. What if we could sidestep most of that? What if we could avoid much of the hardship Ð and the potential for war, both civil and global Ð and simply restructure from where we are now? How would YOU do it?” Thompson emphasised the pragmatic nature of the website: “ETP welcomes people from all political persuasions; nonetheless, we will not tolerate stubborn ideology. All ideas are welcome on our website; partisan politicking and […]