In the last decade, and coincident with the advent of broadband Internet technology, Internet regulation has been the subject of intense public debate over network neutrality, a legislative concept designed to provide Internet consumer/producers the right to open and non-discriminatory access to the network. At the heart of the debate is the determination of whether the Internet constitutes a commons, and if so, whether the commons needs to be regulated to protect equal and anti-discriminatory access in what is now, a largely privatized network. Of course, the Internet is not the first privatized network that engendered the commons debate. Arguably, while the Internet is a unique infrastructure in many respects, it also has significant similarities to earlier networks, such as roads, railroads, the telegraph, telephone networks, radio networks, and television networks (Blondheim, 2004). Indeed, many of these networks created positive network externalities that constituted public goods, and as such were considered commons subjected to common carriage law, a form of regulating the network infrastructure to protect the public good. Therefore, examining the Internet network neutrality debate through the lens of common carriage, while not new, is useful insofar as it centers the discussion on the firm foundation of historical precedent, and captures the essence of what is at stake. As such, this paper will cover a brief historical background of common carriage, describe the application of common carriage principles in the early Internet, compare and contrast proposed network neutrality legislation with common carriage principles, and conclude with a considered recommendation advocating for network neutrality legislation.
Common Carriage Background
Common carriage is a legal principle that intends “to guarantee that no customer seeking service upon reasonable demand, willing and able to pay the established price, however set, would be denied lawful use of the service or would otherwise be discriminated against (Noam, 1994, p. 436). The origins of common carriage law predate English law and whose precursors “go back to the Roman Empire and the legal obligations of shipowners, innkeepers and stable keepers” (Noam, 1994, p. 437). English common law supports the notion of common carriage, beginning with the 1701 case, Lane versus Cotton, in which Justice Holt asserted “that one in the public employment can not refuse the duty incumbent upon him and that there would thus be causes of action for a postmaster refusing a letter, inn keeper refusing a guest or blacksmith refusing to shoe a horse” (Moglen, 2009, p. 1). As such, common carriage’s core principal is that of anti-discrimination.
Common carriage was applied in the United States initially as common law, most notably to regulate the activity of the railroads, in absence of specific congressional legislation governing interstate commerce (“Western Union Telegraph Co. v. Call Pub. Co.,” 1901). In addition, common carriage was applied to the first U.S. telecommunications infrastructure, the telegraph network, as a result of discriminatory behavior by Western Union (“Western Union Telegraph Co. v. Call Pub. Co.,” 1901). Western Union’s discriminatory practices extended far beyond choosing winners and losers in the open market; the company went so far as to practice censorship by choosing political sides and only offering the perspectives of candidates whose policies favored Western Union (Rock, 2012; Wu, 2006a). As a result of this and other corporate abuses of monopoly power over the telecommunications network, common carriage over telecommunications was codified into law with Title II of the 1934 Communications Act (Noam, 1994). Since then, regulated telephone companies have been generally referred to as ‘common carriers’ and as such, have the obligation to provide non-discriminatory access to telephone service across the nation, and in exchange are not held liable for the content of traffic across the network.
The Internet and Common Carriage
To say that the Internet was created as a result of the common carriage principle of non-discrimination is not an overstatement. There was a time, prior to the 1980s, when consumers had to purchase their telephones from a Bell company and were not allowed to attach any other device to their phone line (Wu, 2006b). However, a series of court decisions, including the Hush-A-Phone and Carterfone decisions, led to the FCC to enact “a strong non-discrimination rule for consumer network equipment, and even blocked the regional Bell operating companies from offering such equipment” (Wu, 2006b, p. 33). The rule sparked a new wave of commercial innovations that saw the development of fax machines and modems, antecedents of modern networking.
Moreover, principles of non-discrimination were built into the very architecture of the Internet. According to Lessig and Lemley (2001), the design of both the Internet and it’s predecessor ARPANET were based on the end-to-end design principle which organizes the placement of intelligence at the ends, while making the communications protocols simple. “One consequence of this design is a principle of non-discrimination among applications” (Lessig & Lemley, 2001, p. 927). In essence, the network is a highly sophisticated set of dumb pipes, in the sense that any network or device can interconnect to the Internet by following the basic communication protocols. Of course, the last thing that cable and DSL providers want to be are ‘dumb pipes’ and therefore, many use a variety of strategies, including discrimination, to avoid becoming a commodity (Knowledge@Wharton, 2009). Indeed, there is little to prevent broadband providers from using their monopoly power over the network to introduce discriminatory behaviors that favor their commercial interests.
The Internet and Net Neutrality
The advent of the Internet has ushered in new era of debate over non-discrimination on the network, partly because with the Telecommunications Act of 1996, the FCC designated cable and DSL as ‘information services’, rather than telecommunications (United States. Congress., 1996), and as such, they are not designated as common carriers. Moreover, freed from constraint, telecommunications providers have used their network power to discriminate against perceived threats. For example, Telus Corporation blocked subscriber access to a Union website critical of their labor practices (CBC News, 2005). In addition, Madison River Communications, a DSL provider, blocked subscriber access to Vonage, a company with voice-over-IP technology that allows subscribers to place calls over the Internet, rather than paying for traditional phone service (Sandvig, 2007). Finally, Comcast Corporation intentionally blocked subscriber access to Bit Torrent, a popular peer-to-peer file sharing protocol (Weiser, 2009). Nor is the discrimination likely to end any time soon.
For example, former AT&T Chairman and CEO Whitacre (BusinessWeek, 2005) described the motivation for AT&T to discriminate against Internet upstarts like Google, Vonage, and MSN, noting:
Now what they would like to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it. So there’s going to have to be some mechanism for these people who use these pipes to pay for the portion they’re using. Why should they be allowed to use my pipes? (p. 1)
It is not surprising, that when freed from the constraint of common carrier classification, broadband providers use discriminatory practices to create and sustain competitive advantage; it is in their nature to do so.
However, the Federal Communications Commission (2010) recently passed a set of Open Internet rules to address broadband discriminatory practices. The Open Internet rules force broadband providers to be transparent about their network management practices, prevent the blocking of legal content, applications, services, or devices, and prevent unreasonable network discrimination (Federal Communications Commission, 2010). While the rules appear to provide a basis for the FCC to deal with discriminatory practices, there are several problems worth exploring.
First, the FCC treats fixed broadband and wireless broadband differently, providing far more leeway for cellular providers to discriminate, particularly against competing services. Second, there remains considerable question as to whether the FCC has the legal authority to enforce such rules, particularly given the FCC’s original classification of broadband as an ‘information service’. In fact, the DC Court of Appeals, ruling on the Comcast and BitTorrent FCC decision, recently “struck down a federal rule that required broadband providers to keep their networks open” (Puzzanghera & Guynn, 2010, p. 1). Furthermore, Senate Republicans recently attempted to put a bill on the floor to overturn the FCC’s Open Internet rules, however the bill was narrowly rejected (Puzzanghera, 2011). It appears likely that the FCC Open Internet rules will continue to be challenged in the legislature and the judiciary until the Internet is treated legally as a commons.
Of course, the critical issue with the Open Internet rules is the lack of legal recognition of the Internet as a commons. Instead, the emphasis is on the Internet is as an important commercial platform for innovation and growth that must be protected with administrative rules rather than law. While the Open Internet rules are an important step in anti-discrimination, they fall short of common carriage law insofar as they fail to treat the Internet as a legal commons that produces a public good. Moreover, the Open Internet rules are not a legislative solution and remain dependent on the support of the FCC. This author suggests that the anti-discrimination principles inherent in network neutrality proposals come largely from the common carriage principles of earlier legislation. Moreover, the current Open Internet rules contain important anti-discrimination principles, but lack the force of law. This author recognizes that despite the progress inherent in the FCC rules, net neutrality legislation is required to assure a lasting solution that recognizes the importance of the Internet to public good.
From the telegraph to the Internet, each new communication technology creates a similar debate. To what degree does the network constitute a public good and require regulation as a commons? In the past, common carriage laws have been used to assure that corporations are unable to use their network ownership to discriminate. However, the recent net neutrality rules enacted by the FCC, while providing an administrative basis to prevent the worst forms of discrimination, falls far short of common carriage legislation of the past, and continues to be challenged by lawmakers and the judiciary. Therefore, this author suggests that the fight against network discrimination has only just begun, until such a time where anti-discrimination law for the Internet is a reality.
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Weiser, P. J. (2009). The future of Internet regulation. University of California, Davis Law Review, 43, 529-590.
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No scandal in recent memory highlights government regulatory ineptitude quite as clearly as the Security and Exchange Commission’s failure to uncover Bernie Madoff’s Ponzi scheme, a scheme that bilked investors “of an estimated $65 billion” (Shafritz, Russell, & Borick, 2011, p. 362). Madoff, a wealthy, prominent, industry insider, perpetrated his scheme on unsuspecting investors beginning as early as 1992 and the SEC had received and investigated no less than six complaints between 1992 and 2008, when Madoff finally confessed (U.S. Securities and Exchange Commission Office of Investigation, 2009). Why was the SEC so slow to respond to tips and complaints about Madoff? More importantly, what institutional changes have been implemented at the SEC to assure that the regulatory agency is a more effective regulatory body in the aftermath of Madoff? This author finds that while the SEC’s internal investigation has revealed some of the systematic causes of their failure, and has worked to address them, the most notable and enduring failure of the SEC was a leadership failure that remains unaddressed, prompting a call for SEC leaders to adopt the principles of authentic leadership to develop an ethical organizational identity.
On Causes of the SEC Failure
In the wake of the SEC’s failure to catch Madoff, despite the numerous complaints, the SEC conducted an internal investigation to determine why they failed to uncover Madoff’s Ponzi scheme during the course of their many investigations (Wingfield, 2009). The SEC (2009) report found that a) investigations and examinations went uncompleted, b) the agency failed to collaborate both internally or externally, c) the agency lacked resources, d) the agency lacked needed expertise, and e) the agency did not have needed process, systems, or controls. Equally important, the agency found a) no conflict of interest or impropriety in their handling of the case, and b) no attempts by senior SEC officials to influence the investigation (U.S. Securities and Exchange Commission Office of Investigation, 2009). In addition, the report is notable for the focus on the specific SEC transactions with Madoff over the years, rather than investigation of systemic problems within the agency that contributed to the failures. As a result, the SEC (2009) report does not address the role of organizational processes, leadership, or culture, in the failure to uncover Madoff’s scheme, rather it ends suggesting employees involved in the failure should be put on a performance plan.
In light of the SEC’s failure to identify systemic issues, it is worthwhile to review outside criticism of the notable SEC failure. For example, Shafritz, et al. (2011) suggest the SEC was subject to the phenomenon of ‘agency capture’ whereby a government agency is overly influenced by industry economic interests. Galbraith (2009) describes the problem endemic to most government regulatory agencies thus:
Regulatory bodies, like the people who comprise them, have a marked lifecycle. In youth they are vigorous, aggressive, evangelical, and even intolerant. Later they mellow, and in old age – after a matter of ten to fifteen years—they become, with some exceptions, either an arm of the industry they are regulating, or senile. (p. 166)
In the case of the SEC’s examination of Madoff, the mid-level bureaucrats that examined Madoff appeared overly cautious given Madoff’s stature as a giant in the investment world (Shafritz, et al., 2011). In particular, because the career path of many in the SEC is in the very firms they are charged with regulating, the agency is susceptible to the ‘revolving door’ phenomenon (Barkow, 2010). Agency capture, therefore, can be considered an individual choice of self-interest over agency purpose. What, if anything, has the SEC done in the aftermath of their public failure, to reform the agency, and how will the agency address agency capture?
Because of the intense public scrutiny following the SEC’s failure to prevent Madoff’s Ponzi scheme, the agency has published a list of reforms they have undertaken. While the list of reforms is fairly comprehensive, this author will seek to outline reforms pertinent to the discussion in this paper. First, the SEC (2012) reorganized their enforcement division and added industry experts to their staff. Second, the SEC centralized the tracking and distribution of tips and complaints into a computer database (Lynch & Goldstein, 2011; U.S. Securities and Exchange Commission, 2012). Third, the SEC (2012) has put internal process controls and a governance structure in place to assure appropriate follow-up and disposition on examinations. Although, given the tactical nature of the reforms, this author thinks it likely that additional oversight failures are likely, primarily because organizational culture and leadership issues remain.
The Need for Authentic Leadership
The SEC’s failure, in some respects can be considered a failure of leadership and culture. Indeed, if you considered their failure to detect Madoff’s scheme in light of the larger regulatory responsibilities of the agency, the Madoff failure was one notable failure across two decades of similar failures. For instance, the SEC failed to detect the widespread corporate fraud of the late 1990’s as corporate giants like Enron, WorldCom, Adelphia, and Tyco bilked investors and employees out of millions. In addition, the SEC failed to adopt a regulatory position on mortgage lending practices that led to the subprime mortgage crisis. When one considers the regulatory lapses of the SEC (2012) compared with their avowed mission “to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation” (p. 1), one can likely conclude the agency is in dire need of change, but change to what?
Change is, by its very nature, a leadership problem. As a regulatory agency that has grown too ‘chummy’ with the industry as a whole, where self-interest appears to override agency purpose, the SEC needs to transform rather than simply reform. Some argue that the institutional design is flawed, and the agency requires a new design to prevent agency capture (Barkow, 2010). While the existing reforms and new institutional design are important, equally important is a leadership transformation. Some would argue that the SEC needs a ‘transformational’ leader to guide them into the future. However, this author would argue that an agency-wide focus on authentic leadership development is more appropriate, because transformational leadership lacks an ethical or moral dimension.
Authentic leadership theory was born out of the corporate scandals of the late 1990s (George, 2006), however the importance of authenticity was described by Lord Polonius in Shakespeare’s Hamlet, “This above all: to thine ownself be true, And it must follow, as the night the day, Thou canst not then be false to any man” (Shakespeare, 1986, p. 676). “Though, the working definition of an authentic leader is true to ones self, there is an expectation that being true to one’s self is also upheld by the overarching morality of society” (Tonkin, 2010). It is in this context, that authentic leadership applies to the problems of ethics and morality in an organization. Moreover, an authentic leader has the opportunity to drive the ethical identity of an organization through a written code of ethics and authentic leadership behaviors (Verbos, Gerard, Forshey, Harding, & Miller, 2007). How then, does one tell the difference between self-interested leaders and authentic leaders?
A Tale of Two Leaders
This author will describe his experience with two organizational leaders to illustrate an example of leadership authenticity. The first leader to discuss is Jon Doe. Jon’s day-to-day leadership was centered on the notion of crisis, real or manufactured, given both scenarios were equally useful to drive change. Insofar as Jon sought to transform the company, using crisis as an enabler, characterized Jon as a transformational leader. Moreover, Jon’s focus on transformation gave the appearance of the consummate executive, working towards the greater good of the company. However, over time, Jon would often switch positions on key topics regarding organizational change, depending on the power of the position relative to other positions. In addition, Jon would reprioritize organizational resources depending on the crisis of the moment, effectively abandoning earlier crisis, irrespective of the state of resolution. This author’s opinion is that Jon was an opportunist that was expert at aligning his self-interest with organizational interest, rather than an authentic leader.
Contrasted with Jon Doe is Jane Doe. Jane was an organizational leader that was several management levels below Jon. Jane worked tirelessly to craft the organizational mission, vision, and values with the team. In addition, Jane aligned word and deed, being the first to live organizational values. In this respect, Jane was truly an authentic leader. As a result, Jane’s organization was poised to make sound, ethical, business decisions even in ambiguous situations. Moreover, Jane’s team had greater organizational commitment and job satisfaction than Jon’s team. In essence, Jane was able to interweave the organization’s business identity and ethical identity with the organizational purpose.
The differences between these two examples highlight the importance of understanding one’s motivation. In dramaturgical terms, an actor or actress seeks to understand a character’s ‘through line’, the overriding motivation that drives the character’s behavior and decision-making. A leader’s understanding of their own ‘through line’ can serve to define organizational values and ethical identity, a situation desperately need at the SEC.
The SEC learned much from their self-examination of the failures that led to the biggest regulatory miss of the last twenty years. However, like any self-examination, there are difficult to reach places and blind spots that led the SEC to reform rather than transform. Most notably, the SEC self-examination did not recognize the contributing and enduring role played by organizational leadership and culture. It remains to be seen whether SEC reforms will have their intended effects, however, without the development of an authentic leadership capability within the agency, and the resulting ethical organizational identity, it appears likely that the SEC will remain an agency captured by the interests of the financial industry, rather than the interests of the public.
Barkow, R. (2010). Insulating agencies: Avoiding capture through institutional design. Texas Law Review, 89(1), 15-79.
Commission, U. S. S. a. E. (2012, July 30, 2012). The Investor’s Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation Retrieved August 19, , 2012, from http://www.sec.gov/about/whatwedo.shtml
Galbraith, J. K. (2009). The great crash, 1929. Boston: Houghton Mifflin Harcourt.
George, B. (2006). Truly authentic leadership. [Article]. U.S. News & World Report, 141(16), 52.
Lynch, S. N., & Goldstein, M. (2011, July 27, 2011). Exclusive: SEC builds new tips machine to catch the next Madoff Retrieved August 19, 2012, from http://www.reuters.com/article/2011/07/27/us-sec-investigations-idUSTRE76Q2NY20110727
Shafritz, J. M., Russell, E. W., & Borick, C. P. (2011). Introducing public administration (7th ed.). Boston: Longman.
Shakespeare, W. (1986). William Shakespeare, the complete works (Original-spelling ed.). Oxford Oxfordshire ; New York: Clarendon Press ; Oxford University Press.
Tonkin, T. (2010). Authentic leadership: A literature review. Research Paper. School of Global Leadership and Entrepreneurship. Regent University. Virginia Beach.
U.S. Securities and Exchange Commission. (2012, April 4, 2012). The Securities and Exchange Commission Post-Madoff Reforms Retrieved August 19,, 2012, from http://www.sec.gov/spotlight/secpostmadoffreforms.htm
U.S. Securities and Exchange Commission Office of Investigation. (2009). Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme – Public Version – U.S. Securities and Exchange Commission Office of Investigation, Retrieved from http://www.sec.gov/news/studies/2009/oig-509.pdf.
Verbos, A. K., Gerard, J. A., Forshey, P. R., Harding, C. S., & Miller, J. S. (2007). The positive ethical organization: Enacting a living code of ethics and ethical organizational identity. Journal of Business Ethics, 76(1), 17-33.
Wingfield, B. (2009, September 2, 2009). New Madoff Report Blasts SEC. The Regulators Retrieved August 19, 2012, 2012, from http://www.forbes.com/2009/09/02/bernard-madoff-sec-business-washington-madoff.html
Nearly 100 years after the infamous Triangle fire, on December 14, 2010, workers producing apparel for the Gap in the Hameen factory outside the capital of Bangladesh, became trapped by a 9th floor fire (Hammadi & Taylor, 2010). The fire quickly became a conflagration and raged between the workers and the exit. The workers fled to the fire exits and found locked doors, because management sought to prevent theft. Left with no recourse, workers either jumped from the top of the building to the ground below or perished from the smoke or flames (Hammadi & Taylor, 2010). This modern-day Triangle tragedy killed 29 workers and injured more than 100 (Griggs, 2011).
The tragedy in Bangladesh serves to highlight the continued exploitation of labor that occurs in the developing world in order to drive down the costs for U.S. corporations. The problem of exploitation is a complicated one that includes many factors, including the capitalist motives of growth and profit, relaxed or free trade agreements, the appeal of cheap labor and lack of regulatory standards in the developing world, and the need of developing world countries for capital investment to create economic stimulation. These factors combine to create a vicious cycle that leads to worker exploitation and needless tragedies like the Hameen factory fire and other equally abhorrent labor practices that often impact woman and children the most.
Structural Problem with Capitalism
Hodsen and Sullivan (2008) describe Marx’s view of the structural problem inherent under capitalism:
“The exploitation and misery of workers results directly from the laws of capitalism in which the market system demands that every capitalist buy labor as cheaply as possible in order to produce and sell goods as cheaply as possible and still turn a profit. If capitalists do not exploit their employees, they will be undercut by other capitalists who do.” (pg. 8)
Lower costs allow U.S. corporations to return profit to shareholders, compete more effectively, and fund new initiatives to grow their business; in essence, the capitalist incentive system is designed to maximize growth and profit, in direct conflict with workers’ needs for living wages and safe working environments.
The Appeal of Global Labor Differences
Labor costs vary widely across the globe based on a variety of factors, including the country economy, inflation rate, worker wages, overtime, benefits, and regulatory standards. Economies without regulatory standards to protect workers, prevent worker exploitation, or protect the environment can be very attractive to corporations that can pass savings on to shareholders in the form of profits or to fuel new growth initiatives.
Free Trade Agreements
Free trade agreements eliminate trade barriers like tariffs and quotas that historically prevented companies from moving work to countries with lower cost structures. Advocates of free trade policies, like the WTO and the World Bank argue that free trade promotes economic growth for open economies and a resulting reduction in poverty and inequality. In the World Bank report on globalization Collier and Dollar (2002) indicate that:
Globalization generally reduces poverty because more integrated economies tend to grow faster and this growth is usually widely diffused. As low-income countries break into global markets for manufactures and services, poor people can move from the vulnerability of grinding rural poverty to better jobs, often in towns or cities. (p. 1)
Others argue the free trade creates a race to the bottom where industries are more likely to move across borders to countries that have different cost structures and regulatory standards (Hassoun, 2008). While free trade agreements have opened markets and promoted trade, “these global institutions, however, have been much more reluctant to implement policies that provide protections for workers or for the environment” (Hodson & Sullivan, 2008, p. 203). By way of example, the Hameen factory fire is indicative of lax safety standards and either poor or poorly enforced labor policies.
A Vicious Cycle
The availability of lower cost labor pools made assessable by free trade agreements have driven the trend by corporations to move work overseas to countries whose economies are in dire need of capital investments and who consequently have created a business-friendly environment. The government of these countries, like Bangladesh, El Salvador, or Honduras, keep labor costs low to attract needed capital. For example, El Salvador, a member nation of the International Labor Organization (ILO), one of 5 nations that participate in the Central American Free Trade Agreement (CAFTA),
has particularly egregious violations of international labor standards including discrimination against women, the worst forms of child labor and the “violation of the fundamental rights of freedom of association and collective bargaining” (Monterrosa, 2004, p. 46). Countries with poor economies, high unemployment and free trade agreements make attractive targets for manufacturing investment, particularly when coupled with a pro-business environment that discourages labor unions and lacks effective enforcement of labor laws; the low labor costs are simply too attractive to pass up. Large infusions of capital for new manufacturing investments can perpetuate pervasive labor problems like exploitation of women and children, low wages and occupational safety issues.
An Example: From a Sweatshop in El Salvador to CSU
Two years after CAFTA was signed into law, Hanes Brands, a U.S. based maker of apparel across numerous brands, including the Champion Brand, announced the acquisition of the textile manufacturing operations of Industrias Duraflex, El Salvador, in order to continue to lower global supply chain costs (HanesBrands, 2007). Hanes Brands, has been implicated in child labor violations in Bangladesh (Kernaghan, 2006), while in the Dominican Republic, Hanes used “a range of illegal means to thwart workers’ efforts to exercise their associational rights” (Worker Rights Consortium, 2007, p. 3). A May 2009 report from the Washington Office on Latin America (WOLA) found continued institutional weakness and pervasive impunity in the enforcement of labor rights post-CAFTA in countries like El Salvador and cited numerous labor violations by Hanes Brands (2009). Companies like Hanes Brands are able to operate largely with impunity in free trade zones, ignoring ILO labor standards and local labor laws while being applauded by the investors for their superior business management. Meanwhile, Colorado State University, is selling CSU-branded Hanes merchandise to students and helping to support El Salvador’s sweatshop economy.
How are we to begin to solve the labor problems associated with globalization when we reward the worst abusers with profit?
Fair Trade versus Free Trade
Free trade agreements have done much to advance the cause of trade and little to advance the cause of workers rights. A move towards fair trade, with a linkage between international trade and basic labor standards, would do much to level the competitive labor field while improving justice (Barry & Reddy, 2005). Linkage may also have the effect of improving wages and decreasing poverty (Barry & Reddy, 2005). Upcoming trade agreements with Columbia and Peru are including more provisions for improved labor standards, although still may fall short in funding for enforcement projects (Washington Office on Latin America, 2009).
Improve Educated Consumer Choice
Information on ethical choices for purchased goods should be readily available to U.S. consumers whose current purchasing decisions reward corporations that exploit workers. While there is information available for those who choose to do the research, it appears to be fragmented and lacks an appropriate framework to make it easy for a consumer to make an ethical decision. Perhaps, were products labeled as “ethically manufactured” in the same way organic food is labeled “organic”, consumers could make an informed decision. That knowledge would certainly have prevented my purchase of the CSU-Global apparel.
The U.S. government, corporations, and consumers are equally culpable in the continued exploitation of workers and specifically the most vulnerable workers, women and children. There are many factors contributing to the ongoing exploitation of women and children in the developing world. Major factors include capitalist motives of growth and profit, free trade agreements that do not include provisions to enforce basic labor standards, the appeal of cheap labor and lack of regulatory standards in the developing world, and the need of developing world countries for capital investment to create economic stimulation. These factors help create a vicious cycle where U.S companies infuse large amounts of capital into developing economies to take advantage of the opportunity of free trade and cheap labor; while the governments of developing countries allow an environment hostile to labor to perpetuate continued exploitation to attract capital investment. It is the height of hypocrisy that the U.S. government, corporations, and workers, that insist on basic labor standards inside the U.S., have systematically help deny workers in the developing world the same basic rights.
Barry, C., & Reddy, S. G. (2005). Just Linkage: International Trade and Labor Standards (pp. 122). New York: Columbia University.
Collier, P., Dollar, D., & World Bank. (2002). Globalization, growth, and poverty : building an inclusive world economy. Washington, DC New York, N.Y.: World Bank; Oxford University Press.
Griggs, A. (2011, March 24). Triangle’s Fire Still Burns. Labor Notes. Retrieved May 29, 2011, from labornotes.org/2011/03/triangleâ€™s-fire-still-burns
Hammadi, S., & Taylor, M. (2010, December 14). Workers jump to their deaths as fire engulfs factory making clothes for Gap | World news | guardian.co.uk . Latest news, comment and reviews from the Guardian | guardian.co.uk . Retrieved May 29, 2011, from http://www.guardian.co.uk/world/2010/dec/14/bangladesh-clothes-factory-workers-jump-to-death
HanesBrands. (2007, September 6). Hanesbrands Inc : Hanesbrands Inc. Acquires Textile Plant in El Salvador Capping Successful First Year as an Independent Company. Stock Market Quotes and Financial News | 4-Traders. Retrieved May 30, 2011, from http://www.4-traders.com/HANESBRANDS-INC-31267/news/HANESBRANDS-INC-Hanesbrands-Inc-Acquires-Textile-Plant-in-El-Salvador-Capping-Successful-First-Year–411680/
Hassoun, N. (2008). Free trade, poverty and the environment. Public Affairs Quarterly, 22(4), 353 – 380.
Hodson, R., & Sullivan, T. A. (2008). The social organization of work (4th ed.). Belmont, CA: Wadsworth.
Kernaghan, C. (2006, October 24). Child Labor Is Back: Children Again Sewing Clothing for Wal-Mart, Hanes and Other U.S. Companies. Common Dreams. Retrieved May 29, 2011, from http://www.commondreams.org/news2006/1024-01.htm
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As the United States economy rebounds from the effects of the latest recession, many in the media are calling the recovery another jobless recovery, citing the growth of the gross domestic product coupled with a high unemployment rate. Both the media and politicians frequently suggest that the trend to outsource manufacturing and move service jobs offshore is the culprit for our economic woes. As a result, legislators are attempting to stem the tide of offshore labor and outsourcing through protectionist policies that mandate the use of American goods and services, tax corporations that use offshore resources or other draconian measures (Sealover, 2011). Both the media and politicians are spending their time and energy on the wrong problem. According to some estimates, offshored jobs will only make up 2% of the jobs lost by 15 million Americans annually (Lael & Robert, 2004). If outsourcing and offshore labor are not the cause of job loss, who or what is the real culprit? In short, the culprit is good-old-fashioned, American know-how.
Since before the creation of the Computing- Tabulating- Recording Company in 1911, the predecessor to IBM (“IBM Archives: 1900s,”), businesses in the United States have sought the means to improve business performance through the use of technology. From advanced robotics and computers on the factory floor to self-service kiosks at airports and grocery stores, automation has displaced far more United States workers than have migrated offshore (Collins & Ryan, 2007). Daniel Drezner, Associate Professor of Political Science at the University of Chicago also sees technology innovation as the root cause (2004):
There is no denying that the number of manufacturing jobs has fallen dramatically in recent years, but this has very little do with outsourcing and almost everything to do with technological innovation. As with agriculture a century ago, productivity gains have outstripped demand, so fewer and fewer workers are needed for manufacturing. (p. 27)
Former Secretary of Labor, Robert Reich described a tour taken at a U.S. factory, where the entire plant was run by two employees instructing more than 400 robots on the factory floor (Reich, 2009).
The capitalistic process of creative destruction, first described by Engels and Marx is alive and well as new industries consume the flesh of the old (Marx & Engels, 1974). For example, the newspaper business is a shadow of its former self because of Internet technologies. It would stand to reason that if millions of jobs and whole industries were destroyed via the relentless advance of technology throughout the last 30 years, then the total number of jobs in the United States would be shrinking. Yet, even given the current unemployment rate of 9.6% for 2010, the United States has added nearly 47 million jobs over the last 30 years of technology innovation and achievement; therefore additional contributing factors are likely at work (Bureau of Labor Statistics, 2011).
“Historically, the number of jobs has closely followed the growth of the labor force, despite major increases in foreign trade and the advent of a host of new job-displacing technologies” (Lael & Robert, 2004, p. 3). U.S. Bureau of Labor Statistics historical data for the since 1980 confirms that the labor force has grown at an annual rate of 1.18% while the number of employed workers has grown at a corresponding rate of 1.09% (Bureau of Labor Statistics, 2011). “When the U.S. economy gets back on track, many routine jobs won’t be returning–but new jobs will take their place. A quarter of all Americans now work in jobs that weren’t listed in the Census Bureau’s occupation codes in 1967” (Reich, 2009).
It is in the nature of journalists to make the public aware of problems. Equally so, it is in the nature of politicians to attempt legislative solutions. Henry Louis Mencken once wrote, “There is always an easy solution to every human problem—neat, plausible, and wrong” (Mencken, 1949, p. 443). The backlash against offshore and outsourcing is the classic example of focusing on the wrong problem. Instead of focusing on the relatively few jobs moving to lower cost labor pools, the United States should focus on quickly retraining workers displaced because of innovation. So the next time your hear the media blast the evils of outsourcing or your local politician suggest some new form of protectionist policy to prevent the use of offshore labor; picture them as the Dutch boy with a finger in the dike, trying to stem the tide of innovation, progress and good-old-fashioned, American know-how.
Bureau of Labor Statistics, U. S. (2011). Employment status of the civilian noninstitutional population, 1940 to date. In cpsaat1.pdf (Ed.). Washington D.C.: United States Department of Labor.
Collins, D., T. , & Ryan, M. H. (2007). The strategic implications of technology on job loss. Academy of Strategic Management Journal, 6, 27.
Drezner, D. W. (2004). The outsourcing bogeyman. [Article]. Foreign Affairs, 83(3), 22-34.
. IBM Archives: 1900s. IBM – United States Retrieved May 11, 2011, from http://www-03.ibm.com/ibm/history/history/decade_1900.html
Lael, B., & Robert, E. L. (2004). Services offshoring: Bane or boon and what to do? Brookings Policy Brief(132), 3.
Marx, K., & Engels, F. (1974). The Communist manifesto. Belmont, Mass.: American Opinion.
Mencken, H. L. (1949). A Mencken chrestomathy ([1st ed.). New York,: A. A. Knopf.
Reich, R. B. (2009). Manufacturing jobs are never coming back. Forbes. Retrieved from Forbes.com website: http://www.forbes.com/2009/05/28/robert-reich-manufacturing-business-economy.html
Sealover, E. (2011). Colorado House kills bill about overseas jobs. Denver Business Journal. Retrieved from Denver Business Journal website: http://www.bizjournals.com/denver/news/2011/05/04/house-kills-bill-about-overseas-jobs.html