Posted on 05/04/2013 4:32:40 PM PDT by rickmichaels
Before last week, Loblaw’s Joe Fresh was known mostly as a hot spot for cheap, stylish clothing. Few customers likely cared how the clothes were made. That all changed with the deadly collapse of an eight-storey factory complex used by the retailer in Bangladesh. Nearly 400 people are dead, and the owners of the complex—and the factories within it—that was reportedly built without proper permits, have been arrested on charges of negligence. Bangladesh’s government has vowed to inspect every manufacturer in the country.
The worst industrial accident in Bangladesh’s history offers an uncomfortable glimpse into the fast-growing garment industry there, and the treatment of its workers. According to a 2011 report by the consulting firm O’Rourke Group Partners, a generic $14 polo shirt sold in Canada and made in Bangladesh actually costs a retailer only $5.67. To get prices that low, workers see just 12 cents a shirt, or two per cent of the wholesale cost. That’s one of the lowest rates in the world—about half of what a worker in a Chinese factory might make—and a major reason for the explosion of Bangladesh’s garment industry, worth $19 billion last year, up from $380 million in 1985. The country’s 5,400 factories employ four million people, mostly women, who cut and stitch shirts and pants that make up 80 per cent of the country’s total exports.
For that $14 shirt, the factory owners can expect to earn 58 cents, almost five times a worker’s wage. Agents who help retailers find factories to make their wares also get a cut, and it costs about $1 per shirt to cover shipping and duties. Fabric and trimmings make up the largest costs—65 per cent of the wholesale price. Toronto-based labor rights activist Kevin Thomas says wages ultimately get squeezed most because businesses can easily control them, unlike the price of cotton or shipping.
A cost breakdown only partly explains the maze of relationships in the garment-supply chain. The retailer H&M, which had no connection to the collapsed building, works with 166 different factories in Bangladesh. It has published its supply chain, listing every factory around the world that makes H&M clothing in an effort to prove what most major stores claim: that it knows where its clothes come from. But according to observers, many don’t. Though most brands have a regular stable of factories, they may contract hundreds more for short stints. “It would be a very high risk to have a limited number of suppliers,” says Adriana Villaseñor, a senior adviser with the global retail consulting firm, J.C. Williams Group. Smaller factories often take on more than they can produce, Thomas says, and then subcontract later on—without the retailer’s knowledge. This week, Wal-Mart said it had “no authorized production in [the collapsed] facility,” but added that if unauthorized production were discovered, it would take “appropriate action.”
Amid mounting protests, both in Bangladesh and abroad, and calls for boycotts, retailers have pledged to improve working conditions. Primark, a U.K. chain that made goods in the ruined factory, and Loblaw Companies Ltd., have said they will compensate victims’ families. But Bangladesh is just one country in a vast supply chain. H&M, for instance, uses hundreds of other factories, including 262 in China. In Vietnam, workers make only slightly more than in Bangladesh: 14 cents per shirt. Real reform will mean paying a lot more than $14 for a shirt.
Your ignorance is on full display. Basic econ 201 would help.
http://econoblog101.wordpress.com/2013/04/11/chinese-monetary-policy-how-does-it-work/
This might help you understand Chinese monetary policy. It would help if you had an ECON major or more.
Sorry, I didn’t intend to not reply, must’ve gotten several at once on the same thread.
I have mixed emotions on this. Debauching the currency is in a sense enabled by reserve status but losing such status or even beginning to move away from it will start bringing the consequences of that debauchery home, which means pain for Americans.
China trade policy in tandem with a formal yuan peg was a deal with the devil, but that’s water under the bridge now. An actual floating exchange rate (not that there is, not yet at least) will mean onshoring to the extent that it’s possible, which will benefit me personally. But, it will also bring pain in the form of higher cost of goods, which will be repatriating the inflation we’ve exported.
Continuing efforts at wage suppression on other fronts, primarily immigration policy both formal and (ahem) informal, will mean that wage growth will not keep pace with the imported cost push, so Americans on the whole will be getting poorer. More pain.
Somebody needs to show me the long term strategic benefit from ever having entered into this trade arrangement, because I see dependence upon a very large and still hostile nation that has been industrialized at our expense, masked domestic inflation that has enabled government profligacy even greater than before, and a decimated working class becoming entirely too accustomed to government assistance.
What have the American people as a whole gotten in exchange? What sort of consideration for this international largesse has there been?
Oh lordy, a blog link. Your econ-fu I cannot possibly withstand, Grasshopper.
Two big reasons why the federal gov't isn't going to bring back jobs.
First, there were never any jobs that were crated, airlifted, and unpacked in Nanking to start with. A job in America happens when one American hires another American. The Chinese have no part in it. In the second place the federal gov't doesn't make jobs happen anywhere. State run economies fail. Conservatives are supposed to know that. Anyone who thinks America should have more jobs can create jobs himself simply by hiring someone --and if they can't or won't they should at least stop whining about how someone else should do all the heavy lifting for them.
The thing is that it's really not that hard to hire someone, and one of the easiest ways is to own a corporation and make it hire people. Right now in the US there's about $18T worth of corporations that employ about 120M Americans. That comes out to about $150K per job. Imagine if the all the gold bugs on the FR dumped their gold & bought stocks --we'd end up with higher employment, plus a lot of freepers would be much better off.
Of course those corps would be able hire even more people if they didn't have to waste so much of their earnings paying federal import taxes...
So, you blame the corporations? Well, they do not do the hiring for the most part. It has always been the small businessman/woman who led us out of troubled times. What you cannot do is change certain factors of production that are basic Econ. (land, labor, and, capital). Why do you think the Texan with 1,000 employees cut his workers to 28 hours a week? It was that the 2 million fine for Obamacare was cheaper then the alternative. That is the FED GOV in the way of jobs. You can go to your macro econ game, AKA national income accounting. Add the monetary policy you seem so bent on. Please realize that not all business owners are millionaires. When did you mortgage your home plus all you owned to start a business? I have.
lol, you may have a different take on my post if you read it again this morning with a good cup of coffee. I was saying anyone can hire someone and most people hire using corporations.
Some people say corporations hire employees but that's like saying guns kill people and pencils do arithmetic and beds have sex. Beds do not have sex and pencils can't do arithmetic and corporations don't hire. However while most killing is not done with a gun, most hiring is done using a corporation. Most employees work for corporations with hundreds of employees (census link here). There are people on this thread that say we want more jobs in the US. Fine. They should hire someone. I have and it's not that hard.
Of course hiring would be a lot easier without all the taxes --especially those import taxes.
“The thing is that it’s really not that hard to hire someone, and one of the easiest ways is to own a corporation and make it hire people. Right now in the US there’s about $18T worth of corporations that employ about 120M Americans. That comes out to about $150K per job. Imagine if the all the gold bugs on the FR dumped their gold & bought stocks —we’d end up with higher employment, plus a lot of freepers would be much better off.”
First, Gold bugs or anyone buying stocks would not guarantee a single job as the stocks bought have already been issued. The effect would most likely be a short term increase in the stock price and not new stock be issued. Even if this created more favorable borrowing terms for the corp. or corps,that would not guarantee one single new job.
--and there's no guarantee the sun will come up tomorrow but that doesn't stop a reasonable person from just saying "yeah, sun's coming up tomorrow and bigger corps hire more.
When I buy stock I own the company because they're using my money --just like when you mortgage your home you owe money to the guy that buys your lien from the original lender. There's no way around the fact that virtually all US payroll employees are hired by Corporations that first had to sell stocks for lots of money. There's also no way around the fact that people were willing to pay lots of money only because they could later sell those shares for even more money.
It doesn't matter if you agree, things are what they are; this is the historic value of all stocks along with how many people have jobs--
--and what happens is corps hire when the stock goes up, and the stock goes up when people spend money bidding up stocks.
Do you really believe your corporate BS? Try this:
http://economics.about.com/od/smallbigbusiness/a/us_business.htm
You blasted those who own gold. You preach stocks. What class of stocks are you speaking of?
My educating you is over.
Beliefs may change reality in Fantasyland but in real life there's nothing that I could possibly believe that could ever change the fact that:
--most hiring is done by corps,
--they hire more employees when they get more money,
--and they get more money when people buy more stocks.
It doesn't have to be believed or understood, it just is:
I was a China bear and an India bull for a decade. I took every bearish article on China at face value, and they're mostly bearish articles. And I was pretty bullish on the rest of the BRIC countries. Then I took a closer look at their historical numbers - the kind of look journalists probably don't have the background or the inclination to engage in. I also examined closely the kinds of things that each government is doing. I concluded that Brazil and Russia are non-Muslim versions of Saudi Arabia, meaning they are commodity producers dependent on commodity price cycles and India is like an insect trapped in amber, lacking the natural resources of the first two, but possessing, like the first two, the closest thing there is to a command economy without adopting full blown Marxism-Leninism.
Whereas China has essentially adopted 19th century American capitalism, without the shackles of either a welfare or a regulatory state. The country, which is slightly larger than the US, also has tremendous unexploited natural resources and 1.2b people whose entrepreneurial knack has seen its diaspora from decades or centuries ago become elite minorities wherever they land. At the recipient of 20% of China's exports, we might induce a economic contraction there with an outright embargo, but their growth would resume in short order, albeit on a lower base, unless the regime decides to bring back the command economy, where government planners used to decide what to produce and how much of it to produce. The point here is that capitalism works everywhere it is implemented, and trade is merely the icing on the cake, but not actually essential for economic growth.
amen.....
Most important, China is
Inevitably, tragedies like this will lead to automation.
Shipping, labor, and factory margin are $2.00 per shirt.
I have to believe that is very close to the break even cost of a shirt made entirely by a machine.
That machine will be located in the consuming country, and it will be instantly programmable for new styles and sudden changes in demand.
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