Libertarian law professor Richard Epstein's latest column is up at the Hoover Institution's Defining Ideas website. In it, he writes about the collapse of a garment factory in Bangladesh in which hundreds of workers were killed:
Bangladesh does not need to pass new laws to deal with the situation. It needs only to enforce expeditiously and uniformly the safety rules currently on the books, by immediately shutting down any building not in compliance with minimum safety standards. The credible threat of a shut down should have an instant effect on factory safety.
Any government ordered shut down puts contracts in jeopardy and idles hundreds of workers as well. It is highly unlikely that any thinly capitalized Bangladeshi firm could survive the economic dislocation of a shutdown. In order to stave a shut down off by improving factory safety, the savvy firm will have to raise its asking price from foreign purchasers like Benetton and may have to lower wages to remain competitive. The latter move will generate predictable protest, but safety is a quid pro quo for the wage reduction....
This direct solution also has huge advantages over the more ambitious proposals bandied about today. Pope Francis was shocked with the $38 per month minimum wage, which he equated with "slave labor." But the wages, however low they seem by Western standards, offer major advantages over the alternatives. How else could some 3.6 million individuals in Bangladesh stream into these factories for work? Indeed, pushing up the minimum wage could have a perverse effect if it turns out that the best solution, as noted above, calls for a mix of greater safety and lower wages.
