At the turn of the last century, i.e., early 1900’s, there was great press about a terrible tragedy. It was a fire at the Triangle Shirtwaist Factory in 1911. It was a sweatshop in New York city’s garment district. A fire started and when employees tried to escape many of the exits were chained shut or the fire escapes, if they existed, were dilapidated. The fire caused 146 deaths.

Why is this relevant to this blog? Although there has been very little reporting of it, see this article at the Columbia Journalism Review of how under-reported,  there was a fire at a garment plant in Bangaladesh where 29 workers died in December, 2010. The factory made clothes for the Gap, Abercrombie & Fitch, JC Penney, Target, and others. Thus it is quite possible that clothes from this factory are in your closet. Regulation in the US tightened up fire codes and worker safety here but US manufacturers can’t compete on price with countries with lax regulations. Thus, in the effort to save dollars the wholesalers and retailers have driven production to where there is the least regulation even if it causes toxic drywall, unsafe toys, or unsafe working conditions. US manufacturers can’t meet the ‘China price’ because they have to comply, rightfully IMHO, with environmental and safety conditions. This is not ‘competitive advantage’ as economists would argue but regulatory arbitrage (go to the place with the least costly regulations even if its not safe). Note too – where work was shipped to Mexico, and then China (thus the phrase ‘China price’) but now Bangaladesh and Vietnam. There is a continuous devaluing of the working environment. Think about that when you next buy a shirt.