I own the cocoa station where Idrissa, a 9-year-old hand, carries 62.5-kilo sacks into the price of your $3.29 chocolate bar. You buy the bar; I keep the $0.04 I declined to send back to his father. God blesses the shipment. David Hebert’s Wall Street Journal column argues that imports don’t depress growth because imported goods enter the spending count and are subtracted again. He’s right about the scoreboard. He’s simply standing at the wrong end of the body.
The Bureau of Economic Analysis puts the accounting requirement plainly: “to avoid including foreign production in GDP it is necessary to subtract the value of imports.” Correct. Read the next sentence twice.
The same subtraction removes the cost of the hands.
Not only the wage. The hand itself. The shoulder. The machete. The child. Foreign production is subtracted from domestic output, and the person doing the foreign production disappears with it. That isn’t a flaw in the scoreboard. It’s the specification.
I’ve made the address of the harm the whole asset.
The bean leaves my station at the figure I post before the harvest. The farmer may argue with it, naturally. His next buyer is 60 miles down a road he can’t walk twice in a season, so the negotiation is mostly decorative. Côte d’Ivoire and Ghana have priced a decent life for the farmer at a $400-per-ton living-income differential. On your bar, that comes to about $0.04.
I declined the $0.04.
The petty-cash clerk entered it without comment, and the sacks went out. Watch what that buys me. It buys the father’s fear that next year’s price will be lower. The fear buys his willingness to send Idrissa instead of going himself. The boy carries the sack. The boy’s shoulder carries the price.
When the machete comes out, small hands are efficient hands.
I call Idrissa a procurement line. That’s the clean term. The plain version is a 9-year-old beneath a 62.5-kilo sack, carrying the sun on his neck and the season in his knees. I prefer the clean term because the plain one makes the buyer in the tasting room set down the sample, and the sample is how the contract closes. The Department of Labor lists cocoa among 204 goods from 82 countries produced with child or forced labor. The list is public. I read it as a procurement directory.
The $0.04 is not an incidental saving. It is the business model. The father and the boy are not on the ledger. The $0.04 is.
Now come with me to the other end of the same subtraction.
Carmen is a taper on the harness line of the automotive-parts plant I own outside San Pedro Sula. She tapes the wiring behind your dashboard. You drive the car. You don’t ask who taped it. That distance is part of the price I keep.
The extraction fan in Bay 4 runs 6 minutes on and 10 minutes off. I own the air in the off-window. The timer costs $0.09 a harness. I kept the $0.09.
By the sixth hour, isocyanate from the sealing adhesive settles into the creases of Carmen’s knuckles and the back of her throat. Her hands shake. Not enough to touch the tape. Enough to touch the splice. A bad splice becomes a recall, and a recall becomes my problem, so I bought wrist braces for $7 a pair. She replaces them from her own pay after they absorb the solvent.
The braces don’t repair the nerves. They delay the day the damage reaches production.
That is what I mean by adequate.
Pete was the line hand I priced out of my Ohio plant. Different country. Same arithmetic. Carmen earns $1.87 an hour. Pete earned $19.40. They run 14 harnesses an hour apiece. The difference is not skill. It’s jurisdiction. Her alternatives are narrower than her air.
| Carmen | Pete | |
|---|---|---|
| Wage, per hour | $1.87 | $19.40 |
| Harnesses, per hour | 14 | 14 |
| Labor in each harness | $0.13 | $1.39 |
The difference is $1.26 a harness, and I keep it. Their splice rates differ by less than 3%. That’s the part you should remember. Same speed. Same product. Different power to leave.
Carmen’s monthly labor pays her $405. It pays me $3,822. The number is not morally complicated. You’re counting the way I count now.
Lift your eyes off the shoulder and the knuckles for a moment. The station is only the example.
Imports don’t depress growth. They redistribute it. They move the wage to the place where the body is cheapest, move the product to the place where the buyer is richest, and leave the difference with the owner who arranged the distance. Every harness carries two lives in its price: the person taping it now and the person who might once have bought the car with the wage. The border is new. The arithmetic is ancient.
Cato the Elder kept the same books. In De Agri Cultura, he advised selling the old slave and the sickly slave alongside the old wagon, worn tools, blemished cattle, and whatever else had become superfluous. He priced a body beside equipment and called the list management.
I don’t have to sell Idrissa. I don’t have to feed him. The subtraction has already performed Cato’s auction for me.
The address of the harm is the whole asset.
Carmen’s wage doesn’t purchase the car her harness wires. Idrissa’s father’s price doesn’t purchase the chocolate his son carries into your pantry. I’ve arranged the prices so the hands that make the product contain no wage capable of buying it. That’s the good news.
The order book has softened by 2,000 units this quarter, according to my sales group. They call it preference drift. I signed the memo. I haven’t read the appendix. Someone mailed me a study about where the next generation of customers will come from. It sits flat on my credenza beneath the invoice from last month’s shipment.
The pages remain unopened.
The margin is as advertised.
Carmen’s hands shake by the sixth hour.
The splice holds.
Idrissa is 9. The sacks are 62.5 kilos. Your bar is $3.29, and the subtraction that keeps the beans out of American GDP keeps the boy out of every other ledger I keep. When his shoulder points too far, the station knows the order of the family. The father knows the price. The price orders the children.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.