Child Labor and the Third World

I have seen the above video making the rounds on Facebook. I have seen people calling for boycotts, regulations, and other methods of “combating” situations like this for children in the third world. I think all of those solutions, while they mean well, are absolutely the wrong way to go about this. Situations like the one in the video above are used by those ignorant of economics with giant bleeding hearts to further some wrong-headed solution they think will save these children. I have written about child labor in the past, but since this video is making the rounds, I figured that I should cover the topic again 1.

Is Child Labor Really Bad?

For many, such a question seems pointless. “Of course it’s bad! That’s why we abolished it here in the United States!” they say. My retort is usually, “Did outlawing child labor actually end child labor?”. “Of course!” is usually the reply. I think such a reply outs such a person as both ignorant of economics and history. So lets delve into why such a common “fact” isn’t actually fact at all. Austrian Economist Ludwig Von Mises noted that, “in the capitalist society there prevails a tendency toward a steady increase in the per capita quota of capital invested… …Consequently, the marginal productivity of labor, wage rates, and the wager earners’ standard of living tend to rise continually” 2. Such a statement seems like a bold claim, particularly in such a climate as we have now where the average person has a relative skepticism of capitalism due to socialist and statist propaganda. “Capitalism” is a dirty word these days. But as the data has shown, free markets and economic freedom are directly correlated with a higher standard of living 3. The graphs below show how those in nations with more economic freedom (who more closely resemble a truly unhampered market), enjoy many other benefits associated with a higher standard of living.

We can see that government taking a step back from the economy creates more economic freedom which means those that live within a country are able to more easily accumulate capital. Accumulating capital raises the standard of living which lowers the amount of full-time hours required to survive and also means things like child labor become unnecessary. Thomas DiLorenzo notes that in 1870, the average number of hours considered “full-time” were 61. Today, it’s only 34 4. And if the data shows that less regulation, not more, creates a higher standard of living, that means regulations like abolishing child labor either do nothing to improve the standard of living or actively make the rise in the standard of living more difficult.

Bangladesh is a perfect example of this. In the 1990s, Bangladesh was faced with the United States and other western nations banning imports from the poor country because of its use of child labor. The Bangladesh government passed laws banning child labor which forced factory owners to fire around 30,000 children 5. No doubt those with bleeding hearts suffering from economic ignorance would count such an outcome as a victory. Unfortunately, it was not. Those that think such an outcome was ideal (hooray! We ended child labor!), are blind to the unforeseen consequences that occurred. I want to ask such people who may have cheered at this outcome, what they think happened to those children? Did they just magically go to school? No, of course not. Those kids took the sweatshop jobs because it was better than any other option open to them. “According to the British charity Oxfam, these kids didn’t go back to school or find better lives. Most of them took worse jobs or ended up on the streets. Thousands of children went into prostitution” 6. Those ignorant of the economic realities of the world don’t seem to grasp the fact that ignorance has consequences. Whether they realized it or not, their preference for ending child labor in Bangladesh was a preference that said, “I would rather you kids become prostitutes and sleep on the street than work in the ‘terrible conditions’ of the sweatshop”.

So what we have learned here is two-fold: (1) Free markets and economic freedom are directly connected to a continually rising standard of living. It becomes easier to gain capital and lowers the required number of hours of labor to live, which means longer work days and work weeks are no longer needed and children eventually no longer need to work in order to help support the family. (2) People will always seek the maximum value. In the case of job selection, they want the best pay and the best conditions and how these things are balanced are going to be subjective to each individual (that’s why here in the states, someone becomes a crab fisherman and someone else, a chef). Which means when even a child selects a job in a mine or factory, it’s because that was probably the best option available to them. So limiting that choice of that child is probably the worst thing those with bleeding hearts can do (as made clear by the Bangladesh example).

Back to the Congo and What to Do

So let us go back to the Congo. What are the options for this kid in the video? Well, prostitution is probably his last option after this mine since prostitution, and child prostitution in particular, are still a huge problem in the Democratic Republic of Congo 7. Either prostitution or child soldiering seem to be the only other viable job opportunities to these kids 8. UNICEF reported in 2011 that 30,000 kids lived on the streets 9. Really, given the nature of this data, that kid is probably a lucky one to even have a job mining. The fact that Sky News and those sharing the video are not talking about the lesser options available to kids in this country is a giant red flag that they want to push anti-capitalist propaganda at the expense of children rather than actually help said children.

So what is the solution then? Pressure, but of a different kind. Instead or pressuring bans and government regulation, pressure should be placed on the Congo government to liberalize markets. Currently, The Democratic Republic of Congo is ranked 117 in economic freedom, placing it in the “mostly unfree” category 10. Given the data already presented here, the solution is quite clear, free up the market and let that liberalization of the market allow that observation Mises had in a rising standard of living to occur naturally in the country. This would easily phase out the need for child labor. For those who want to do something, they should put their money where their bleeding hearts are and provide economic opportunities to people there by investing in businesses that will treat their workers kindly and fairly (or starting their own business there that will do just that). Create a demand, and there will be an entrepreneur there to provide it.

As a final thought I would like to point something out. Child labor has been around since before the idea of “capitalism” was even coined. Children had to work because, as I have already noted, their was not enough capital accumulated to phase it out. It wasn’t until the advancements brought about by capitalism that created efficiency and reduced the needed number of hours spent laboring, that children no longer needed to work. Simply put, those that want to place the laurels on government for ending child labor are doing so on false claims. The data provided here, hopefully, clearly illustrates that point.

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