When Your Rotten Factory Is My Business

Apple has wasted little time. After a bruising New York Times report on hazardous conditions in Chinese factories that produce Apple products, the company announced this week that an outside organization will be inspecting working conditions at the plants and making the findings public.

Some critics of Apple have responded favorably, but others have not. “The auditing has been proven to be weak, and real solutions need a lot more than auditing,” Judy Gearhart, executive director of the International Labor Rights Forum, told the New York Times. “It takes empowering workers.”

We certainly agree that real solutions must recognize how problems are linked in a transnational economy. “If this century has taught one lesson, it is that of interdependence,” Peter Drucker wrote in The New Realities. “No part of the developed world prospers unless all do.”

And prosperity gained by unfair practices threatens all parties, developed or not. If a Chinese company outcompetes a U.S. company because Chinese employees are willing to work for less, that’s one thing. But if a Chinese company outcompetes a U.S. company because Chinese employees are forced to breathe dangerous fumes—whereas a U.S. company would pay for ventilation—that’s another. It rewards endangerment.

It was this race-to-the-bottom dynamic that Drucker warned against when it came to matters such as the environment. “To pollute without paying for it confers a distinct competitive advantage on those who pollute the worst,” Drucker wrote. “To treat environmental impacts as ‘externalities’ can no longer be justified theoretically.”

So what can one do about labor or environmental abuses far away? Drucker saw some precedents for international remedies. “The 19th century cured two of mankind’s oldest scourges by transnational action—the slave trade and piracy on the high seas,” he noted. “It declared both to be common enemies of humanity, the suppression of which was in the interest of any country at any time.”

Drucker also saw some possible examples to follow in the 1930s New Deal. “The United States government abolished child labor despite stubborn opposition by a number of southern states, by forbidding shipment across state lines of goods produced by underage youngsters,” Drucker wrote. “We might similarly ‘quarantine’ polluters and forbid shipment in international commerce of goods produced under conditions which seriously pollute or damage the human habitat.”

Drucker averred, “This will be decried as ‘interference with sovereign nations’—and it is.”

What do you think? Is it realistic to think that there can be common labor standards around the world—and what’s the best way to set and enforce them?