The losers in the race to the bottom

You should feel guilty when you buy cheap dresses. Fast fashion is crass and cheap and sits on the backs of other people,” Charney insists. “It looks sexy, but it is basically stolen goods, hot goods. Twenty cents an hour is slavery.”

The remorseless logic of competition: anything you can make cheap, I can make cheaper. Bangladesh has the lowest labor costs in the world, with the minimum wage for garment workers set at roughly $37 a month. For a consumer to get a bikini from H&M or Walmart for $4.99, costs have to be very low. So wages go right down and safety considerations disappear. This is what economists call “the race to the bottom.”

The problem with the race to the bottom is that costs do not—cannot—simply vanish; they have to go somewhere. And so mostly they are shifted from those who have power and money to those who have nothing.

Safety is an easy, invisible thing to cut because it might never matter, and when it does it’s too late. As far as possible, the risks of cheap manufacture have been passed down from the corporation to the local contractor, who passes them down to the individual workers.

The dress you wear can only be so cheap because its makers and the society they inhabit absorb the cost of its manufacture. Economists call this “externalization”—getting costs to move outside the business.

Consumers seek out cheap bargains and companies compete eagerly with low prices. And the easiest cost to cut is always people.

Notes from the book, Heffernan, Margaret. “A Bigger Prize.”

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