Tuesday, October 20, 2009


I watched Schmatta: Rags to Riches to Rags last night on HBO. It's a well-made, if one-sided and polemical, look at the history of the Garment District in New York City.

The basic narrative is the garment industry was one of the primary economic engines of industrialization in New York City. At the beginning of the 20th century, it provided lots of work, but it awful conditions and for low wages. The Triangle Factory Fire of 1911, in which over a hundred immigrant workers died, largely because the doors were barricaded to keep them from leaving, sparked support for labor's efforts to organize toward better pay and conditions.

Then the film traces the halcyon days of the 1940s and 50s. A time when there was more work to be had than workers to provide it. When unions were in ascendancy and guaranteed a decent wage and safe conditions. From there a gradual eroding begins.

In the 1960s, Latino workers come onto the what was until then predominantly Italian and Jewish scene. The film largely glosses over this as if there were little friction caused by this, but FLG isn't so sure. Then again, he doesn't know either. But more important than the influx of Latino workers was the partial lifting of quotas and protection for the American garment industry by Kennedy. This began the slow, but inevitable decline of the Garment District.

Then came the 1980s and Reagan, who by busting up ending the air traffic controller strike, somehow weakened the garment unions. The greed of the 1980s and the opening up of free trade during the Clinton 1990s spelled doom for the district. Then, of course, comes that evil Walmart for insisting on low prices, which results in a commodification of what was once considered a craft of making garments. And on the other end, the high-end, you have expensive, sophisticated marketing campaigns to decommodify garments so that they can charge $750 for a pair of jeans.

These $750 pair of jeans then leads us to Hong Kong, India, Hong Kong again and finally back to the United States. We see young girls working in awful conditions in China. Finally, we see a fire in Bangladesh where dozens of young girls perished in a startling similar fashion to the Triangle fire. Along the way, the filmmakers investigate the Kathy Lee Gifford controversy about sweatshops.

The protagonists of the film are the New York City garment worker and the garment unions, as their collective manifestation. Almost everybody in the film is either out of work or worried about work or mourning the fall of a once great industry. This then morphs into lamentations that America doesn't make anything anymore and that there's a raw deal being dealt to the American worker by the globalized economy, politicians, and the lack of unionization. Yet, while this storyline evokes Pathos, the film itself is logically inconsistent. Or, at the very least, myopic in its analysis.

There is much pride among the workers that the industry paid a decent wage that allowed the children to attend college and become doctors, lawyers, and what have you. The children of that generation did better than their parents because they went to college. College graduates aren't usually interested in become fabric cutters.

Another point is that the American culture's focus on prices is ultimately self-defeating because buying a cheaper garment from China means that there are less jobs in America. This then is followed by the dilettantish but seemingly profound argument that people always use in situations like this -- more American workers means more Americans spending more money, which means more jobs in America and on and on as the money filters through the economy.

What this sort of analysis misses is that if I pay $10 for a shirt instead of $20, then I have $10 more to spend on what I want. Perhaps I buy something else, which keeps an American employed and at the same time I keep a Chinese worker employed. Moreover, what if I only have $10 to spend in the first place? A $20 American shirt doesn't help me, but a $10 Chinese one does. I think this is primarily where the narrative goes wrong. Yes, the removal of protection in the garment industry hurt garment workers, but the fall in prices helped American consumers, particularly poor people.

Perhaps it's because I've actually taken statistics, but I'm sure one point in the film that was intended to be "ah ha!" actually angered me. They showed the percentage of clothes sold in the United States that was made in the United States. As you would expect, in the 1960s it was in the 90-ish%. Then, as time went on, it fell until 5% in 2008. But the point that immediately crept into my mind is that to be upset about this relies on zero sum thinking. If my business grows from $1 million to $1 billion, then I don't really care if my percentage of the business falls from 50% to 10%. A dropping percentage of clothes made in the United States is a problem only if the drop in the percentage isn't made up with a growth in the industry as a whole. In this case, it probably wasn't, but it still belies zero sum thinking. American jobs versus foreign jobs as if trade isn't mutually beneficial.

Another point raised, as a I mentioned before, are the terrible conditions overseas. Young girls in sweatshops huddled over sewing machines. Many of the buyers mentioned how they were morally torn by walking into the factories. At one point, the guy who brought the Kathy Lee case to light said it was as if we had returned to 1911.

And he's partially correct; however, it's no so much as if we have returned to 1911 as the developing world is passing through the economic stage that we passed through in 1911. They are in early stages of industrialization. It's a painful and ugly process. It seems so awful.

In this light, it seems like the offshoring of jobs from well-paid Americans to low-paid and exploited foreigners is immoral. We ought to work to keep these jobs here and to bring back the ones we have lost.

But what if I said that the only alternatives for these girls was prostitution or starvation? Which isn't an unreasonable assumption. Sure, it's a fucking shitty choice for a young girl to choose between working for hours in a shithole and becoming a whore or not eating, but it's probably one many of these girls have to face. If true, then they chose to work in front of a sewing machine. So, I say that bringing the jobs back may very likely force young girls in developing nations into prostitution, which I think is immoral.

At the end of the film, there is the cliched indictment of capitalism run amock. That we need more unionization to protect us from the perils of a global economic order of multinational corporations conspiring with politicians to screw over the American working man and woman. That the industry was 90% unionized in its heyday is considered proof, as if correlation is causation.

My thoughts on unions, specifically that they introduce unnecessary rigidities into the labor market, have been expressed at length on this blog. So, I'll not go on about them right now. But I will say that one could take another look at the issue and say that the 90% unionization at the high water mark may have just as likely been the cause of the industry's problems as well.

Obviously, these are complicated issues. I understand workers in the industry fearing for the future. I understand the moral outrage over young girls in shit conditions. I understand, although I disagree with it, why people perceive unions as beneficial. But trying to fight forces like globalization is like trying to fight gravity. We could put in protection, and it may even save a few jobs for a little while. In the end, though, they'll be gone anyway. It's the nature of economic change. Likewise, those horrible conditions in the developing world will give way to better ones as those economies develop. Perhaps they'll unionize to facilitate those changes, but it will happen once per capita GDP nears industrial levels.

While the history of the industry was interesting, it lost me when it became clear that it was simply showing the pain caused to the workers and the point-of-view of the unions. There's real pain, frustration, and fear there. But like the kids who went to college and became doctors and lawyers, so is our economy itself. It's transitioning from labor-intensive, low capital industries, like garment manufacturing, to capital-intensive, particularly human capital-intensive, industries.

Most importantly, although the American garment industry is in decline, our overall economy will create jobs in different sectors. It's hard to see now with the current employment rate, but the American economy has transitioned from industry to industry since its beginning. It will continue to do so unless we become convinced that we need to protect jobs instead of focusing on allowing new ones to develop.

Economic theories and evidence are cold comfort when you don't have a job and the industry you've always been in is disappearing. Likewise, in the midst of economic turmoil that economists didn't predict, it's difficult to trust that they know anything. Yet, almost every single economist will tell you that protecting jobs in an industry that is invariably moving overseas costs more than the good it brings.

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