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Responding to Rana Plaza: Rethinking the Garment Industry

Bangladesh
In April 2013, Rana Plaza — an eight-story factory building in Bangladesh — collapsed, killing 1,130 people. The structure housed a number of North American and European brands, including Benetton, Bon Marche, The Children’s Place and Joe Fresh. Bangladesh has the second largest garment industry in the world, valued at $28 billion and ranked just behind China, although it has the lowest wages globally for garment workers.

The disaster, considered to be one of the worst industrial tragedies in history, has led to a call for increased accountability and transparency in the clothing industry. While agreements such as the Accord on Fire and Building Safety in Bangladesh have been put in place in the aftermath of the accident, there are still steps the garment industry can take to repair its broken system.

Companies such as H&M, Walmart and Gap have voiced their interest in improving conditions, yet progress has been a slow and difficult process.

The Building

The Rana Plaza building, based in the Dhaka District, was owned by Sohel Rana, who constructed the factory in 2006 with his father. It was created from poor quality construction materials, while heavy, vibrating machinery operated within its walls. The ground that the building had been set upon had previously been a body of water and was swampy, containing rubbish.

When Rana was developing the structure, the upper floors were added illegally, without a permit, and the creation was not made in consent. Inspection teams found cracks in the building on the Tuesday before, but workers were ordered to return to the unsafe environment the following day. That morning, the factory collapsed, with over 3,000 people inside.

The Aftermath

In the aftermath of the incident, workers protested and coalitions came together to promote rights within the garment industry and take measures towards preventing a future crisis like Rana Plaza. On May 15, 2013, brands, retailers and trade unions — such as Abercrombie & Fitch, American Eagle Outfitters and Fruit of the Loom — signed a five-year, legally binding agreement to create safer conditions in the Bangladesh Ready Made Garment industry, drafting the Accord on Fire and Building Safety in Bangladesh.

The Accord includes an inspection program, as well as the establishment of the right of workers to refuse unsafe work. Funds will be made available to repair any damaged equipment, and all corrective action plans and inspection reports will be publically disclosed.

Most recently, new signatories have continued to show solidarity for the Transition Accord, which extends the Accord on Fire and Building Safety in Bangladesh until after 2018.

Organizations, Brands and Change

In addition, a nine-member coalition including Human Rights Watch and the International Labor Rights Forum created the Apparel and Footwear Supply Chain Transparency Pledge, which demands that companies report on manufacturing sites and pertinent details twice a year.

The Follow the Thread Campaign, a coalition consisting of organizations such as Clean Clothes Campaign and Human Rights Watch, asked retail companies to sign a Transparency Pledge in April 2017.

Brands such as H&M, Walmart and Gap affirmed that they would like to participate in improving worker safety in Bangladesh. While Walmart did not sign the Accord on Fire and Building Safety in Bangladesh, the company was one of the founding members of the Alliance for Bangladesh Worker Safety, a group of 28 retailers that holds standards and inspections, as well as supporting worker empowerment, among other practices.

Commitment to Transparency

Yet these initiatives have not been enough. Reports by the coalition the Asia Floor Wage Alliance show that many garment buildings in Bangladesh do not have adequate fire exits. According to 2015 research from New York University’s Stern School of Business, out of 3,425 inspections in Bangladesh that were held after the collapse, only eight addressed their violations fully enough to pass final inspections.

A commitment to transparency still remains a vital aspect of progress needed in the garment industry. Workers frequently experience abuse, while earning low wages, with Bangladesh’s minimum wage being 32 cents per hour.

Facing the powerful impact of the Rana Plaza tragedy of 2013, corporations and unions have come together to try to address the dangerous conditions found in Bangladesh’s garment industry (which is one of the world’s biggest). But for factories to move forward, businesses and human rights organizations will have to confront the negligence found within the system and recognize that fashion is not worth such a costly price.

We, as a globe, will need to see increased accountability and responsibility in the manufacturing places of clothing companies to learn from Rana Plaza and see workers’ conditions sustainably improve.

– Shira Laucharoen

Photo: Flickr

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The Role of the Private Sector in Poverty Alleviation

The Role of the Private Sector in Poverty AlleviationThe responsibility of providing solutions for global poverty has traditionally fallen to governments and international aid agencies. Increasingly, however, the private sector is being singled out as another important player in achieving this task. Given that development is already a key interest of private sector organizations, it seems reasonable to assume that the attention being given to the private sector is justified. Going forward, then, it is important to understand exactly what the role of the private sector in poverty alleviation should be.

The ways in which the private sector can benefit the lives of the poor have been well documented. From creating jobs and enhancing education to producing the goods and services used by those in poverty, it is clear that the private sector is a part of many, if not all, areas of development. As such, governments should be seeking to foster a business environment through which the benefits of the private sector can be harvested.

The main problem with this, however, is that across much of the developing world, such conditions do not exist. Often, new market entrants find the environment to be hostile and difficult to navigate, which can lead to proposed initiatives collapsing or being withdrawn. As such, the role of the private sector in poverty alleviation is contingent on external conditions. In such cases, it is the role of government to attempt to make these more favorable, or at least competitive; otherwise, no progress will be made.

Government action should not stop at this point. With increased private sector activity comes increased growth, which allows for further opportunities for more traditional methods of combatting poverty. As such, it is perhaps easier to look at the public, private and charity sectors as three heads of one entity when it comes to alleviating poverty. Through collaboration, rather than separation, it is far more likely that the goal of poverty reduction can be achieved.

– Gavin Callander
Photo: Flickr

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Four Ways Capitalism Has Helped Alleviate Poverty

Four Ways Capitalism Has Helped Alleviate Poverty
Merriam-Webster defines capitalism as “a way of organizing an economy so that the things that are used to make and transport products are owned by individual people and companies rather than by the government.”

Today, in much of academia, capitalism is portrayed as an inherently corrupt system; the exploitative sweatshops and lack of child labor laws are constantly in the limelight.

Yet in the last 30 years, as capitalism flourished and globalization opened up its gates, 1 billion people have been taken out of poverty. Many remain unaware of and fail to account for global improvements in health, education and living standards.

  1. “Extreme” poverty has almost disappeared in most industrialized countries. Extreme poverty used to be a norm for many people throughout industrialized countries. Currently, however, severe poverty has disappeared in most industrialized countries because of free-market capitalism. Between 1990 and 2010, poverty rates fell by half in developing countries, from 43 percent to 21 percent — a reduction of almost 1 billion people. Compared to the average rate of poverty reduction throughout history, this is an impressive improvement.
  2. Third world countries are moving out of poverty. China and India have made the most progress in the pursuit to alleviate poverty after they began moving toward capitalism. Since the 1980s, these countries have abandoned central government planning, instead expanding and liberalizing trade in global markets, which improved economic conditions. China increased its per capita income 13-fold since the beginning of its economic reforms in 1978. The country pulled 680 million people out of poverty between 1981 and 2010 as well as reduced its extreme poverty rate from 84 percent in 1980 to 10 percent today. In India, income rose three-fold after the country liberalized its markets. Third world nations are experiencing an overall decrease in the rate of poverty as well. Thirty years ago, 50 percent of the people in the poorer nations of the world lived in extreme poverty. In contrast, in 2012, 21 percent of people in the poorer nations of the world lived in extreme poverty.
  3. More aid is able to reach third world countries. Since the beginning of globalization, and with more countries embracing capitalist ways, international and national aid has increased, helping boost development projects such as investments in schools, health clinics, housing and infrastructure, as well as improved access to water. Many more charitable nonprofit organizations have opened up and can now transfer and receive humanitarian aid globally through private companies more easily than ever before.
  4. Standard of living has gone up; more leisure time. Since the agricultural and industrial revolutions, individuals no longer need to spend all day doing manual labor in order to make a living. The standard of living has increased greatly. In the 18th century, being a country with a high standard of living meant having millions in dire conditions. France had the fourth highest standard of living of any country, yet 10 million, almost half the population, relied on some sort of public or private charity to survive, and 3 million citizens were full-time beggars. This poverty no longer exists in developed countries; more than half of the population has the privilege of leisure time, which can be used to further learning.

Capitalism has lessened the severity of poverty over time. Yet there is no hiding the fact that 1.2 billion people currently live in extreme poverty. Many of these capitalist problems stem from too much government regulation. However, we are continuing to gradually alleviate poverty. The report, by Oxford University’s poverty and human development initiative, predicts that “countries among the most impoverished in the world could see acute poverty eradicated within 20 years if they continue at present rates.”

– Marcelo Guadiana

Photo: Flickr

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How Extreme Poverty Decreased 80 Percent Since 1980

Poverty_foodIn a recent TED talk, Arthur Brooks, president of the conservative think tank, the American Enterprise Institute, discussed the need for ideology to be put aside when assisting those in destitution.

Originally from Seattle, Brooks dropped out of college early in his life to become a professional French horn player. His curiosity about a 1970’s National Geographic cover led him to research the fight against poverty.

He found that “there’s been an 80 percent decline in the world’s worst poverty,” which can be defined as those living on less than a $1.25 a day. Brooks attributes the improvement of 2 billion lives to the economic power provided by the capitalist system, a “policy” that both conservatives and liberals can get behind.

In his presentation, he highlighted five main reasons why capitalism provides the best environment for growth and prosperity: globalization, free trade, property rights, rule of law and entrepreneurship. All of these aspects of a free market emphasize economic freedom in the lives of the people who live under it.

“Capitalism is not just about accumulation,” he said during his talk. “At its best, it’s about aspiration.” Most important of all, economic freedom is something that both parties can get behind and support. It was, after all, President Obama who uttered the conservative’s favorite quote: “Free markets have created more wealth than any system in history. They have lifted billions out of poverty.”

While studies have shown that liberals and conservatives focus on different political topics, their affinity for free markets should still unite them against poverty and for freedom. Psychologists have identified a phenomenon called “political motive asymmetry” where individuals think their ideology is motivated by love and the opposite is motivated by hate.

Evidence provided by a U.N. study and a Fraser Institute study indicates that poverty decreases when economic freedom increases. More specifically, the U.N. report highlighted a 25 percent decrease in the number of people in extreme poverty between 1981 and 2005. At the same time, the Fraser Institute reported a 29 percent increase in economic freedom from 1980 to 2013.

Brooks continued his speech by challenging both liberals and conservatives to embrace arguments that they might typically be opposed to hearing. “I’m asking you and I’m asking me to be the person specifically who blurs the lines, who is ambiguous, who is hard to classify,” he says. Ending the divisiveness of the party system is only possible with divergent ideological thinking.

The current political environment in the U.S. can often limit the government’s ability to fight global poverty. Bipartisanship means compromise. In order to assist millions of those in extreme poverty, the mobilization of relief must come from both sides with productive dialogue and a collaborative attitude.

– Jacob Hess

Photo: Flickr

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Commodities Speculation, Food Pricing and Security

Commodities Speculation, Food Pricing and Security - TBP
During the beginnings of the Great Recession in 2008 and the years that followed, food prices went haywire. Indexes of food prices skyrocketed and took years to reach levels that even resembled normalcy. According to the United Nations, the crisis caused more problems with food security for the poor and drove even more people into poverty as food prices became a higher burden to bear. At least 130 million people were pushed into poverty in 2008 as a result of the food crisis and high pricing.

The idea of speculating what the future might hold in order to make some money is not new. In fact, the method has been used in virtually every market, with the exception of planned economies. Speculation by buyers and sellers in the market is actually helpful for reducing price volatility in markets for things such as food, as buyers and sellers can bet against price increases or decreases as a form of insurance against volatility.

However, problems can arise when non-commercial speculators enter the scene. These entities are generally financial institutions or investors. Excessive non-commercial speculation is bad for the health of the market because what is essentially calculated gambling on assets can actually end up increasing price volatility in the market, an issue that then causes people to become uncertain about the future.

Large amounts of uncertainty are not good for market coordination. In April and March of 2008, soybean and corn price volatility was upwards of 30% for each commodity (60% for wheat in March of the same year). These absurd outcomes have been largely attributed to the role of non-commercial speculators in the market. Other speculative tools such as commodity index funds, which use algorithms based on various different financial indicators to decide how to “bet,” facilitate even more speculative problems.

These speculative problems have caused the massive disruption of food supply chains and pricing. In 2014 the European Commission began to implement new regulations on securities markets (where commodities speculation takes place via “futures” and “options”). The new regulations were made to help avoid both the catastrophes of the 2008 financial crisis and the cascading problems that came with them, such as the food pricing speculation that drove millions into greater deprivation and the lack of reliable access to food at costs decided by market forces. These reforms were a step forward, and one of the first times serious measures had been introduced.

Although these concepts may seem quite far removed from the impoverished around the globe, financial markets can, and do, have reverberating effects around the global economy. In conjunction with the financial crisis, food speculation took a toll on those most in need and led to increased hardship across the board. However, as the European Commission demonstrated, measures can be taken to reduce the risks of excessive non-commercial speculation in markets. Responsibly done, commercial speculation can be a tool for increased market efficiency and stability. Without regulations in place, securities and commodities markets can become more sinister.

The Guardian cites figures estimating that large financial institutions including JP Morgan, Goldman Sachs, Morgan Stanley and others made billions of dollars off non-commercial speculation in food commodities between the years of 2010 and 2012.

– Martin Yim

Sources: Institute for Agriculture and Trade Policy, United Nations, Reuters, The Guardian
Photo: The Ecologist

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Benefits of a Universal Basic Income

Universal Basic Income is a concept where everyone receives a check from their government every month to pay for any necessities one may need. Although the thought of Universal Basic Income (UBI) is a radical move for any country, it can be a way to alleviate poverty. Instead of Food Stamp and Welfare programs, citizens would receive one lump sum check regardless of status. According to the Huffington Post “it could eliminate poverty to a great extent, and set the stage for a healthier and more productive society.”

Switzerland citizens have been fighting for this movement and have sparked a public referendum to push the movement forward. The country has seen the possible benefits of what a UBI can accomplish. Families can have food security, income inequality would decrease, and if countries adopt the idea with success may influence other countries to do the same. In the 1970’s Canada experimented with the implementation of a UBI, and according to the New York Times “poverty disappeared…High-school completion rates went up; hospitalization rates went down.”

Another reason this topic is so vital in today’s world is the advancement of technology. The Guardian has found “Oxford academics Carl Benedikt Frey and Michael A Osborne have predicted computerisation could make nearly half of jobs redundant within 10 to 20 years.” Thus, the more technology grows, the less jobs will be available to the public.

However, the chance of having a UBI gives citizens a way to achieve their professional dreams. Instead of people working a job they need to survive, with a monthly check from the government they can focus on what they really want to do. The economist has studied “Philippe Van Parijs, a Belgian philosopher, who believes a UBI provides ‘the real freedom to pursue the realization of one’s conception of the good life’” Therefore, a family living in poverty will lose the stress of worrying about their next meal and children can focus on education.

If this concept seems so beneficial why hasn’t it been done? One of the main concerns of creating a UBI is the downfall in work ethic; there is a possibility of laziness if people receive checks for simply being alive. Another drawback is the raise in taxes, BBC has stated “income tax would not necessarily rise, but value added tax – on what people buy rather than what they earn – could rise to 20% or even 30%.”

Despite some negativities in a UBI, it is an idea that may soon be adopted by a majority of the world. With its recent conversation in many governments there seems to be a positive outlook on this concept. A universal income may sound outlandish but so does ending world poverty; yet, both are achievable in the near future.

Sources: BBC, The Guardian, The Huffington Post, The New York Times
Photo: PBS

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Free Markets Can Reduce Poverty

free_markets
The development of free market economies has been accompanied by a large decrease in poverty around the globe. Extreme poverty is virtually nonexistent in the most industrialized countries.

Many people believe that after the fall of the Soviet Union more than 20 years ago, the world went through a wave of globalized development. Capitalism spread and free markets were adopted in numerous countries. Industries became a focus of countries everywhere.

Thirty years ago, 50 percent of people in poor nations were living in extreme poverty. Since the development of global markets, however, 21 percent of people in poor nations around the world are considered to be living in extreme poverty.

Capitalism has some clear effects on a country’s economic system, and therefore on its citizens. Free markets open up trade opportunities, increase competition for jobs and extend life expectancy.

When countries use free markets, they immediately become a global partner in trade. They are more able to import and export their products to a larger market, thus increasing their economic wealth greatly. Countries with higher economic success generally see less poverty in their citizens.

In a capitalistic system, jobs are given to those who work for them, and the workers only get paid when they complete their requirements. When there are more people than positions available, people will increase their efforts to rise above the rest and claim that position. Creating a competitive environment can increase the effort people put forward. Efforts to alleviate poverty must come from a system that rewards productivity and industriousness.

With the increase of economic prosperity in countries with many people living in poverty, they can move from the lowest global income bracket to the middle-income bracket. Data shows that by moving up in economic status, life expectancy increases. When people are in the lowest bracket, life expectancy is around 40; however, in the middle bracket, it increases to 60.

As seen in past experience, developing the free market system may be the best solution for the countries that are facing large amounts of poverty.

Ismael Hernandez, a writer for News-Press.com, said, “Wherever culture and institutions focus on creative and productive activity, you put in motion processes where great civilizations emerge and the lives of people are enhanced.”

— Hannah Cleveland

Sources: Market Oracle, News-Press
Photo: BlogSpot

Is Inclusive Capitalism Really Inclusive?

inclusive capitalism

Inclusive capitalism is becoming a frequently used phrase to describe a large number of economies around the world. However, in both developing and developed countries, the capitalist system in these places seem to be showing more holes. These economies that claim to support the entire people in a fair way are seeing greater inequalities than ever before.

In its most basic form, capitalism aims to uphold all citizens to the same standards, same opportunities and same rewards.

“[The capitalist system consists of] relative equality outcomes; equality of opportunity; and fairness across generations,” said Mark Carney, the Bank of England’s new governor.

The U.N. Development Programme found that income inequality in developing countries has risen by 11 percent over the past 20 years.

Undeveloped countries using a flawed capitalist system are caught in a bad cycle. The inequality seen in the economy creates a barrier for further development. However, a system that supports all citizens is far more likely to improve than one that focuses solely on the elite. Especially in countries that face severe poverty, if the low-end jobs are not supported by the government or provided substantial pay rates, then people will be less inclined to work in these positions. This deters the people in poverty from attempting to change their situation.

When a country emphasizes the importance of all workers, it provides an investment in its people and their labor.

Problems with capitalism are not contained to developing countries, however. Because 80 percent of countries around the world operate on a capitalist economy, it makes sense that ensuring the principles upon which the ideology is based should be a priority.

At the core of the problem, the effects on society that a person’s occupation has should be taken into consideration when determining pay rates. Often times, those who contribute to society most, such as teachers, nurses and farmers, are the people who are greatly underpaid.

“We should be rewarding those who grow our food and make our stuff, or teach the next generation of children, an amount that reflects the work they have put in, and the value we get out of it,” said writer Deborah Doane of The Guardian.

To achieve true inclusive capitalism, the salary gap between the CEOs and the average worker must decrease. The opportunities for both groups must be equivalent, and the current system does not allow for this equality.

“Inclusive capitalism needs to deconstruct and shed its attachment to the old-style competitive labour theory,”  Doane continued, “which suggests that if labour is in abundance, it should be paid cheaply.”

– Hannah Cleveland

Sources: The Guardian, The Vancouver Sun
Photo: Revive a Sunnah