The hoo-ha about child labour in the manufacture of Sherrin AFL footballs strikes me as massively wrong-headed.
The girl in this picture is 18, and left school for a low paid manufacturing job at 14. It is not so common these days, but this was common a generation ago in Australia. Growing up in country NSW, i knew boys who would leave school at the legal minimum age of 14yrs and 9months – taking jobs that helped support their parents and siblings. Go back another generation or two, and a significant minority of Australian kids did not go onto high school.
Now let us think about what happens to these Indian kids if Sherrin closes their factory – they will lose their employment and hence their incomes. With less demand for labour in the community, wages will fall for everyone.
Some families may have chosen an additional wage over education for some of their children – and at the margin this may send some kids back to school. However, the grim reality of development is that child labour is the norm until societies get rich. So for most families, this simply means a decline in living standards, and less probability of any of their kids being sent onto secondary school.
A common pattern in poor communities is that the most promising child is sent to secondary school, while the others work to support both the families in general and that child’s education in particular. For these families, the loss of income due to Sherrin closing their factory would mean taking that child out of secondary school.
Fifty years ago, children in Singapore and Hong Kong made shoes. Now they go to university. To deprive the families of India this proven route out of poverty because it makes us feel squeamish is selfish and short sighted.
Let us suppose that the fair-trade do gooders win and all shoes and textiles are made in the west once again. What happens?
First the price of poor Indian labour goes down by a lot, and the price of basic textiles increase (which is regressive in both producer and consumer markets). Next, the increase in price leads to an increase in the returns to research and development in textile manufacturing (plentiful cheap labour means that there has not been all that much mechanization in this area). Finally, we figure out a cheap way to get machines to stitch our shoes and textiles – and the price declines once again.
The gains from this are likely to be concentrated in a tech company (probably in California or Germany), rather than spread out across millions of poor children in the developing world.
So the price goes back down for us western consumers … But the wages never go back up for the poor children. Is this really such a good policy?