Keady’s wrong. A better solution.

Below is a letter to the editor of the University News.

To the Editor:

I saw that our school recently brought social justice activist Jim Keady to SLU to speak about foreign laborers making the products we choose to buy. Specifically, Mr. Keady has chosen Nike corporation as his target, since his refusal to wear their products cost him his job as a soccer coach. While I admire his principle, his methods are madness and are doomed to fail.

While his group hasn’t called for a Boycott of Nike products just yet, Mr. Keady believes, as he articulates in a YouTube video, that a boycott of Nike wouldn’t hurt the workers he’s sworn to protect. I disagree.

Frankly, he might get a minor victory here and there, but at the end of the day, I doubt his efforts will have any effect on Nike’s balance sheets any more than a rounding error would. Nike’s mission is to deliver a return on investment for people who chose to invest in that company, not to accede to Mr. Keady’s worldview of social justice.

So, I challenge students inspired by Mr. Keady to boycott Nike’s “sweatshop-made” products. By boycotting the specific products Nike sources in the countries Mr. Keady mentions, workers would be worse off. If successful (unlikely), a large enough boycott could force Nike to close those factories down and move them elsewhere, leaving the workers jobless and worse-off. Some point to make. Obviously, the workers are better off than if Nike wasn’t there in the first place.

Where do you go from here? How can their lives be improved?

Mr. Keady’s efforts to unionize the labor force and have those workers demand higher wages than what the market in those countries will bear, will likely have a similar effect. Those workers probably lose their jobs. Don’t believe me? You can try this at home! Round up your co-workers. Tell your boss you’ve formed a union and that you’re asking for a collective 200% raise. See what happens.

Better yet, ask some of GM’s laid-off employees how well their plans for higher wages and a strong union worked out for them. Many of them got fired, plants were closed and moved to other places (ask Michael Moore about Flint), and the company eventually went bankrupt. More people were fired, more plants were closed, and after the bankruptcy re-organization the newly hired employees work next to older workers making about twice their salary for the same position.

While I don’t like unions, they only tend to work when the company tells them “no” more often than “yes.”

Unions and employers are often competing forces, and when the demands of one side are too unreasonable to the other, things don’t typically end well. Mr. Keady should be well aware of this, given his decision to resign, rather than wear Nike clothing. His decision not to accept their offer is not too different than the situation he came to SLU to speak about. If the workers demand too much, they lose their jobs, and others will take their place, either in the current factory, or elsewhere. If the employer offers too little, and employees quit, others will take their jobs, either in the current factory, or elsewhere.

I’m not writing to criticize Mr. Keady’s goals, because he believes strongly in them, and their goal of eradicating poverty is noble. I mean, who doesn’t want a 200% raise for the same day’s work? But, I am afraid that, if pursued, his plan of action will fail miserably, and the workers he cares so much about will be worse off.

A better plan, in my opinion, would be to encourage Nike’s competitors to source their products directly across the street. And it’s not something that hard to accomplish. They can offer more money to workers than Nike does, and still be profitable. Of course, they won’t do this in an effort to be charitable, because they will benefit from the costs Nike spent training those employees. Without having to spend the same amount of money to train those employees, they can pay more in salary, and still remain profitable since their training costs will be lower. To retain their labor force, Nike will have to raise its level of pay or stand to lose skilled employees to a competitor.

A few centuries ago, a young country across the ocean had somewhat similar working conditions, and poverty was widespread. That country was the United States of America. Sure, there were unions, but competition is what really raised wages, since most unions have similar demands. Fast forward to today in St. Louis, where you have unions actually picketing each other. Can you imagine that happening in Indonesia?

Through competition (along with advances in technology and capital investments), not unionization and pity campaigns, economies evolve, and people are lifted out of poverty. To try and get Nike to pay more absent robust competition is an utter waste of time and scarce resources.

Jim Swift
Alexandria, Virginia
John Cook School of Business, 2006

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