Preferences for avoiding death

By Bill Kaye-Blake 30/04/2013

Slate blogger Matthew Yglesias has been getting flak for his post that appeared quickly after news of the factory collapse in Bangladesh. In it, he explained that economics was all about diff’rent strokes for diff’rent folks:

Bangladesh may or may not need tougher workplace safety rules, but it’s entirely appropriate for Bangladesh to have different—and, indeed, lower—workplace safety standards than the United States.

Reactions in Western corners of the internet have been fierce and occasionally funny:

Corey Robinson questions whether Yglesias is right about the collective preferences of Bangladeshis:

‘Hundreds of thousands of garment workers walked out of their factories in Bangladesh Thursday, police said, to protest the deaths of 200 people in a building collapse, in the latest tragedy to hit the sector.’

Would it not be easier for Matt Yglesias to dissolve the Bangladeshi people and elect another?

Justin Zachary at Daily Kos points out that the factory was in fact in violation of local safety laws:
What happened in Bangladesh was the result of the safety standards that are currently in place not being enforced. As Kalpona Akter, executive director of the Bangladesh Center for Worker Solidarity, told Democracy Now!, Bangladesh “already has some rules and regulations for safety,” with which some politically powerful owners are not complying.
Maha Rafi Atal at the (UK) Guardian tries to walk a middle ground of increased safety but continued employment for Bangladeshi workers:

that should be about making a distinction between wages, which do not have to be the same everywhere, and workers’ rights, which should.

It may look on the surface like Yglesias is being all ‘realist’ and ‘sensible’, but in fact he gets the economics wrong. He forgets three things:
  • preferences are only half the story. The other half is the choice space in which preference can be expressed. It is the combination of preferences and available options that lead to the choices made. Ascribing the choices to preferences alone gets the theory wrong; one can just as legitimately point to the limited options
  • the market theory that Yglesias uses to underpin his ideas — that there are market transactions deciding the prices of garments and safety — assumes freely available and perfect information. A large economic literature then explores the impact of relaxing that assumption. But that’s the post-grad course, and Yglesias is stuck in 101. Here’s the thing: we could make it perfectly obvious to Western consumers how their garments were made, what the working conditions were. Then we could talk about a market solution. Let me put it another way: is Burger King going to launch a horse-burger because people were buying them before they found out what was in them?
  • supply and demand do not exist outside the institutions that help shape the economy. An analysis that doesn’t account for politicians who can override police edicts and flout safety regulations is incomplete. We should recognise that, for example, agreements and regulations help set the conditions in which the market is operating. So, there are trade agreements around clothing that promote its production in poor countries, but much less international recognition of professional qualifications for doctors, lawyers, accountants, etc. (On that front, economics is like the Wild West — anyone can hang out a shingle.) It is at best disingenuous to throw your hands up and say

in a free society it’s good that different people are able to make different choices on the risk–reward spectrum.

In a free society, it’s also good that people can express different opinions. Even when they haven’t got a clue what they’re talking about.