Sunday, July 01, 2007

The problem of unsafe products from China are just a symptom of the bigger problem!

Interesting picture about consumer protection, courtesy of Flickr.

In the past couple of months, we've seen some alarming stories about dangerous products coming from China.

Dirk Lammers of the Associated Press wrote:

Poisoned pet food. Seafood laced with potentially dangerous antibiotics. Toothpaste tainted with an ingredient in antifreeze. Tires missing a key safety component. U.S. shoppers may be forgiven if they are becoming leery of Chinese-made goods and are trying to fill their shopping carts with products free of ingredients from that country. The trouble is, that may be almost impossible.

The Lammers family shopped far and wide, and came to the conclusion that merchants sell all kinds of products from China. Even more alarming, even if the label didn't say "made in China," it likely has a component (ingredient) that was.

The reason for this is simple, companies make billions off the cheap labor found in China and other less developed countries lacking the same level of consumer protection, we think (my opinion) we have.

The U.S. Bureau of Labor Statistics, which keeps tally of labor costs abroad, doesn't seem to have any data on China, or India for that matter. I mention India because, we seem to be in the market for a lot of their labor, recently.

The closest I could find was Sri Lanka, which in 2005 (most recent year available) has a labor compensation rate of 52 cents an hour.

I noticed a lot of countries left out. For instance, the region to the South of the United States, only has data for Mexico and Brazil. Mexico, which has a better economy than most of the area, has a labor cost of $1.57 an hour.

Maybe this is one of the major reasons our border to the South isn't very secure. Minimum wage, or even welfare benefits must seem like a king's ransom to some of these people.

Going back to China, I was able to find an estimate of labor costs in China by using Google. Judith Banner wrote in the Monthly Labor News Review:

Employees in China’s city manufacturing enterprises received a total compensation of $0.95 per hour, while their non-city counterparts, about whom such estimates had not previously been generally available, averaged less than half that: $0.41 per hour. Altogether, with a large majority of manufacturing employees working outside the cities, the average hourly manufacturing compensation estimated for China in 2002 was $0.57, about 3 percent of the average hourly compensation of manufacturing production workers in the United States and of many developed countries of the world.

A little higher than the government figure for Sri Lanka, but not much. Of course, I can think of a lot of countries, we outsource the cost of labor to, not included on the government list.

It makes sense -- that since a lot of these countries have a much lower standard of living, as well as, not very many consumer protection laws -- unsafe products have the capability to spread, worldwide.

In fact, with counterfeiting (another worldwide problem) thrown in, who knows what might show up in the supply chain? For example, it was recently disclosed that counterfeit drugs from China were likely being dispensed from pharmacies in the United States.

Chris Hansen, Dateline, did a pretty revealing story about this, here. The FDA did announce new rules, shortly after this, but I'm not sure this makes us very safe. All sorts of illegal drugs, make it past customs, daily.

I'm not sure if blaming China is the solution. After all, we aren't only outsourcing labor costs over there. Many of the other countries we outsource labor to, don't protect their people very well, and could care less about, consumer protection, also.

In fact, in many of these countries, people have a hard enough time keeping food on table!

Perhaps, we should take a closer look at ourselves? There are corporations here in the West, making a lot of money by stocking these products on our shelves. And at less than 60 cents an hour in labor costs, it must be extremely profitable for them.

The worker in China, or Sri Lanka isn't living very well off less than 60 cents an hour.

Perhaps, if certain companies had to start paying the true costs of padding their bottom lines with cheap labor, it wouldn't be as profitable.

I was amazed that despite all the special interests, obviously behind the recent immigration bill, that it was promptly defeated by the voice of the public. Many of us believe this bill, was at least in part, a ploy to drive down the cost of labor.

I'm not saying that all the politicians had ulterior motives, or that all corporations lack ethics, but it did reveal that the voter (individual person) has a choice, and more importantly, a voice!

It might be wise for politicians and corporations to get more on board with their voters, and customers.

If you are interested in learning more about this, I recommend Lou Dobbs, who has become extremely outspoken about a "war against the middle class." His site can be viewed, here.

Here are some references used for this post.

Article by Judith Bannister (Monthly Labor News Review), here.

Article by Dirk Lammers (AP), courtesy of the Washington Post, here.

Counterfeiting merchandise is enabled by outsourcing labor (my opinion). I've written a lot about this, here.

Previous posts about China and other dangerous activities coming from there, including espionage and hacking, can be viewed, here.

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