Made to make your eyes water

A lot of people are spouting a load of nonsense about Bhopal, presumably in order to celebrate the anniversary of the tragedy there. "Hooray, it’s the anniverary of a tragedy, we can go bash a multinational! That’ll be worthy and tasteful."

The Union Carbide factory in Bhopal made pesticides to be used on Indian crops. Government tariffs made it economically unviable to import pesticides from abroad. Union Carbide set up a plant in India not to dodgily outsource production to somewhere cheap, but because it was the only way to do business in India. Famine was eradicated in India after the introduction of synthetic pesticides.

The Union Carbide factory in Bhopal met all Indian safety standards. It was designed and built by local engineers, again largely due to the protectionist regulations that banned foreigners from doing much of anything in India.

Following the tragedy, Union Carbide USA sold its Indian subsidiary and used all the money plus additional cash from its US operations to pay half a billion dollars to the victims. According to Union Carbide’s estimate of 3000 fatalities and 3000 non-fatal but disabled casualties, then this works out as $83,000 per head. According to pressure groups’ estimates of 15,000 fatalities and 45,000 disabilities, this still works out as $8000 per head.

The first figure is 80 years’ income. The second figure is 8 years’ income. While it may seem like a pittance in the west, it really isn’t – and if the plant had belonged to an Indian company, then the victims would have got nothing.

The Indian government enormously ballsed-up allocating the money, to the extent that many survivors died before they received a penny. This is not Union Carbide (or its new parent company Dow Chemical)’s fault. If you’re scandalised by Bhopal, go and protest against the Indian government’s incompetence – this is, after all, the thing that has kept India poor for the last 50 years.

Protesting against Dow for daring to buy a company that dared to do business helping people (yes, and obviously making money) in the developing world is somewhat pathetic.

NB it’s not only acceptable, but morally correct, to apply less stringent safety standards in India than in the US. In India, poverty is the biggest cause of premature death. In the US, it is not. Building a dangerous factory in India that makes its workers rich enough to afford food and medicine is better than not doing so (this is also why developing-world sweatshops are *good* – the people who work there are less abysmally badly-off than if they didn’t work in developing-world sweatshops).

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11 thoughts on “Made to make your eyes water

  1. (this is also why developing-world sweatshops are *good* – the people who work there are less abysmally badly-off than if they didn’t work in developing-world sweatshops).

    False dichotomy alert. The choice isn’t working in sweatshops or nothing at all but making what is, better than what is. If I wasn’t pissed on saturday night I’d go into more details so fuck off.

  2. The choice isn’t working in sweatshops or nothing at all but making what is, better than what is.

    If you improved conditions to the extent that the factories were no longer economically viable, then their workers would suffer more than if you didn’t.

    Equally, there’s a cost trade-off between safety and pay: each $ spent on safety measures is a $ you could spend on paying workers more or employing more workers.

    All that said, I agree there’s scope to lobby to improve pay and conditions somewhat. If I hadn’t been pissed on Friday night when I wrote the article, I might have phrased this section better…

  3. Yes, but the argument against sweatshops is that the low wages and poor conditions are not necessary for the survival of the factory, but rather that they are necessary for the factory (and associated supply chain) to operate on profit margins that are obscenely high.

    I’d suggest that the wages of sweatshop workers could be doubled without pushing the company anywhere close to loss.

  4. The evidence is in in this one and Andrew is right; the massive anti-sweatshop campaign against Nike ended up with them making their factories better, not closing them.

    I’d add that if you’ve got a plant making dangerous chemicals near a built-up area, there is simply no economic justification for skimping on safety standards. The economy of Prince William Sound would also be 100% up the wall without oil, but that doesn’t get Exxon off the hook.

  5. Fair point, although Nike is a high-margin brand that can actually afford it; I suspect the reason there hasn’t been such a high-profile campaign against Wal-Mark is that it would be miserably unsuccessful.

    It doesn’t let Union Carbide off the hook to note that allowing an enormous shanty town to exist next to a chemicals factory is monumentally dangerous anywhere with any safety standards (even Western chemicals factories explode into epic fireworks every now and then), but it is again worth noting that UC didn’t choose for the local authorities to let it happen.

  6. Where’d you get those figures from? The official figures nicked from the BBC are 3000 deaths on the night of the explosion and 15,000 deaths subsequently with the number suffering permananent disabilities at 50,000 – though Amnesty Internation recently put the figure as 7000 immediate deaths and 100,000 suffering permanent disabilities and illnesses due to it.
    In October, the Indian Supreme Court okayed a plan by the state welfare commission to divide up compensation of $350m to 570,000 victims. That’s just over $600 per head. Yes, I average and estimate, but you started it.

    …it is again worth noting that UC didn’t choose for the local authorities to let it happen.

    "…just before disaster struck in Bhopal, an internal document circulating in Union carbide‚Äôs headquarters in America was warning that a catastrophic leak was possible; but the report was never sent to the managers of the Bhopal site."
    From the Times.

    I think they had fair warning of some of the safety issues that were affecting the site – situated where it was or not. An internal document like this does not sound like the average everyday possible billion-to-one-chance what-if scenario. It sounds like they had legitimate reasons to be concerned something of this nature could occur – or at least think it worthy enough of attention to write up an internatl document about it. Their only real duty was to pass it to those who could make doubly sure the safety standards in place would at least minimise the risk of it happening. That a memo like this never reached the hands of those in charge of the Bopal site displays a certain disregard for any standards of safety, ‘Indian’ or otherwise.

    How’s the hangover? And, more importantly, your central heating? ;)

  7. Hey, if UC were selling pesticides to Indian farmers who live and buy things in India, were their profit margins necessarily "obscenely high"? They were buying labor at third-world prices but also selling the product at third-world prices — which is not true of Nike, who sell sneakers in the first world.

    I, myself, would suggest that if all companies which can be described by the word "sweatshop" are in precisely identical financial situations, then they could save even more money by keeping only one set of books for everybody. They could all share. This would enormously simplify the bookkeeping when they all double everybody’s wages.

  8. Umm. Erm. The second paragraph above was unnecessarily sarcastic and I apologize.

  9. The argument that increasing wages will help the poor workers and just reduce profits a little is completely wrong even in the case of Nike. Every dollar of extra profit the Nike makes has to go somewhere. It is either consumed on invested. Assuming that investment is attractive because of the "high rates of profit" Nike is making in China this means Nike will take their excess profits and build more factories. Each additional factory will hire more people. Reducing Nike’s profits will results in 2 effects: 1) Less investment because Nike will have less profit to reinvest 2) Less investment also because it will be less attractive to keep capital in Nike for investors since the rate of profit is not that high. In other words increasing wages for workers will just reduce the growth rate of industrialization in China and result in less jobs for Chinese people although it will be true that those that have jobs will be better jobs. It should also be noted that increased profits, will result in increase amount of capital or foreign investment and therefore increased demand for labour which will raise wages and improve working conditions. The main problem in China right now is not sweatshops, it is that not enough people are working in sweatshops. People in rural areas are much worse off than those in cities working in sweat shops. I think it is better to give those people a chance for a better life by allowing wages to remain low than to just give benefits to the richer labourers in the sweatshops who are already doing better.

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