Supply and Demand: Human Trafficking in the Global Economy

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On New Year's Day 2011, I flew to Lagos to research human trafficking in Nigeria. Towards the end of my trip, I visited a small town called Badagry, about a two-hour drive west of Lagos. In 1502, Portuguese colonists built one of the first slave-trading posts along the coast of West Africa in this city. The non-descript, two-story building still stands today as a museum, but for more than 300 years, it was one of the most active slave-trading outposts in West Africa. Estimates are that almost 600,000 West Africans were shipped from Badagry to the Americas to be agricultural slaves. That figure represents approximately one in twenty of all slaves transported from West Africa to the Americas during the entire time of the North Atlantic Slave Trade.

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It was a haunting experience walking through the old slave-holding pens, gazing at the iron shackles, imagining the fear and terror that must have coursed through the veins of slaves as they awaited their fates. Like so many millions today, those 600,000 individuals transported from Badagry to the Americas were victims of human trafficking. In fact, all 12 to 13 million of the West African slaves transported across the Atlantic to the Americas were victims of human trafficking. While their lengthy journeys at sea are very different from the journeys of most human trafficking victims today, the purpose of those journeys remains the same: the callous exploitation of the labor of vulnerable people in order to maximize profit.

The Nature of Slavery Today

However, unlike the agricultural and domestic slaves of the past, today's victims of modern-day slave trading are exploited in countless industries, and they are vastly more profitable. Whether for commercial sex, construction, domestic work, carpet weaving, agricul ture, tea and coffee, shrimp, fish, minerals, dimensional stones, gems, or numerous other industries that I have investigated, human trafficking touches almost every sector of the globalized economy in a way it never has before. Understanding the reasons for this shift in the fundamental nature of human trafficking is vital if more effective efforts to combat it are to be deployed. The key thesis to understand is that the slave exploiter's ability to generate immense profits at almost no real risk directly catalyzed the pervasiveness of all forms of contemporary slave labor exploitation.

One point is crucial to establish from the start--slavery still exists. But what exactly is "modern slavery?" There is still considerable debate regarding the definition of terms such as "slavery," "forced labor," "bonded labor," "child labor," and "human trafficking." With "slavery," we can go as far back as the League of Nations Slavery Convention of 1926 and the International Labor Organization's Forced Labor Convention of 1930. These early definitions focused on the exercise of power attaching to a right of ownership over another human being.

Over the decades, international conventions and jurisprudence relating to slavery shifted away from targeting actual rights of ownership toward the nature of the exploitation, particularly as it involves coercion (physical or other), nominal or no compensation, and the absence of freedom of employment or movement. The term "forced labor" has generally come to replace the term "slavery," given the powerful historical and emotional connotations of the latter term. Similarly, "human trafficking" has come to replace the term "slave trade."

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It is open to debate whether these terminological substitutions are helpful, but when it comes to "human trafficking," I believe the use of this term has done considerable disservice to the tactical prioritization required to combat these crimes more effectively. Definitions of the term "human trafficking," such as that found in the United Nations Protocol to Prevent, Suppress, and Punish Trafficking in Persons (the Palermo Protocol of 2000) or the US Trafficking Victims Protection Act (TVPA, of the same year), have historically suffered from a greater focus on the movement connotation of the term "trafficking" rather than the exploitation involved. The result has been a prioritization of efforts to stop cross-border migration instead of slave-like exploitation, the real purpose of trafficking; this approach has met with limited success.

Terminological debates aside, within the broad context of modern-day slavery, I estimate the number of slaves at the end of 2010 to have been between 30 and 36 million. Depending on how one specifies terms such as "coercion" and "held captive," the number of people considered slaves could be slightly lower or considerably higher. There are many modes by which slaves are exploited, and these can be aggregated into various categories. I have chosen three: bonded labor, forced labor, and trafficked slaves.

Bonded, Forced Labor, and Trafficked Slaves

The economic model of bonded labor dates back centuries. In essence, individuals borrow money or assets and are bound in servitude until the debts are repaid, and often they never are. Forced laborers are similar to bonded laborers but without the intermingling of credit and labor relationships. However, the line between bonded labor and forced labor is easily blurred. The more farcical a debt becomes, the more the bonded laborer is actually a forced laborer.

Human trafficking is essentially modern-day slave trading, which ensnares millions of people in debt bondage or forced labor conditions in a plethora of industries. Regardless of the industry of exploitation, there are three common steps to the business model of most human trafficking networks: acquisition, movement, and exploitation, which often results in one or more counts of re-trafficking. Acquisition of trafficked slaves primarily occurs in one of five ways: deceit, sale by family, abduction, seduction or romance (with sex trafficking), or recruitment by former slaves. Poor or marginally subsistent individuals are the ones most vulnerable to exploitation because of their economic desperation.

Trafficked slaves are moved from countries of origin through transit countries into destination countries, except in the case of internal trafficking, during which the same country acts as origin, transit, and destination. However, trafficking victims often undergo multiple stops in several countries, where they are repeatedly resold and exploited. At each destination, victims are threatened, abused, and tortured. They may be told they must work off the "debt" of trafficking them between jobs. The accounting of these debts is invariably exploitive, involving deductions for living expenses and exorbitant interest rates. For others, no farce of debt repayment is provided--they are simply kept in a state of perpetual forced labor.

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Slave exploiters often re-sell trafficked slaves to new exploiters. If the slaves do not escape, their cycle of exploitation may never end. Even if they do escape, they often return to the same conditions of poverty or vulnerability that led to their initial enslavement, resulting in one or more instances of re-trafficking.

Most importantly, slave exploiters and traffickers take advantage of the fact that movement in the globalized world is exceedingly difficult to disrupt. Borders are porous, documents can be forged, and it can be difficult to identify a potential victim of human trafficking before the forced labor has taken place. Movement is also inexpensive. Whereas ships from Badagry to the Americas had to spend weeks at sea at great expense to transport slaves to the point of exploitation, today's victims of human trafficking can be transported from one side of the planet to the other in a few days or less, at a nominal cost of doing business even when airfare is involved. For these and other reasons, any efforts to combat human trafficking by thwarting movement will prove highly challenging.

The final step in the human trafficking business model is exploitation. Exploitation of trafficked slaves primarily involves the coercion of some form of labor or services with little or no compensation. The location and nature of the coercion is industry-specific. In cases of commercial sex, exploitation involves multiple counts of coerced sex acts every day in physical confinement and under threats of harm to the slave or their loved ones back home. The brutality of this form of human trafficking cannot be overstated. It involves rape, torture, forced drug use, and the wholesale destruction of a human body, mind, and spirit.

Another common sector is construction, which may involve exploitation of human trafficking victims under strict confinement at construction sites, with little or no payment for months at a time. In agriculture, trafficked slaves are confined to the area of harvest and are coerced to work under threats of violence or eviction from tenant homes, and with minimal or no wages. When it comes to carpets, trafficked child slaves are locked inside shacks where they are drugged and beaten to work for eighteen hours a day, suffering spinal deformation and respiratory ailments.

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For these and other products that are tainted by exploitative labor, I have traced the complete supply chains from the point of production to the retailers that sell the tainted products in the United States. This is an important step toward catalyzing the kind of corporate and consumer awareness campaigns required to strike back against the use of trafficked, slave, or child labor in products consumed in Western markets. However, in order to truly combat human trafficking, we must understand exactly why it has become so prevalent throughout the global economy. What compels those involved in this type of exploitation to engage in it?

Incentives Underlying Trafficking

Just like most law-abiding citizens, criminals are rational economic agents, and when a near risk-free opportunity to generate immense profits emerges, they will flock to it. Modern-day slavery is immensely more profitable than past forms of slavery. This is the key factor driving the tremendous demand for new slaves through human trafficking networks. Whereas slaves in 1850 could be purchased for a global weighted average of between US$9,500 and US$11,000 (adjusted for inflation) and generate roughly 15 to 20 percent in annual return on investment, today's slaves sell for a global weighted average of US$420 and can generate 300 to 500 percent or more in annual return on investment, depending on the industry. In terms of risk, the laws against human trafficking and forced labor in most countries involve relatively anemic prison sentences and little or no economic penalties. Even where there are stiff financial penalties stipulated in the law, such as in the United States, the levels of prosecution and conviction of slave exploiters remain paltry.

As a result, the real risk of exploiting trafficked slaves is almost nonexistent. That is to say, the costs of exploiting a slave are miniscule as weighed against the immense profits that criminals can reap. This basic economic reality gives us a clear sense of some of the powerful forces of demand that promote the trafficking and slave-like exploitation of men, women, and children around the world. I believe these forces are also the ones we can most effectively disrupt in the near term.

However, there is also a supply-side to human trafficking, meaning those forces that promote the supply of potential human trafficking victims. We must also mitigate these forces, though it will prove difficult to effect a near-term impact on the human trafficking industry through supply-side efforts alone. The supply of contemporary trafficked slaves is promoted by longstanding factors such as poverty, lawlessness, social instability, military conflict, environmental disaster, corruption, and acute bias against female gender and minority ethnicities.

The policies and governance of economic globalization sharply exacerbated these and other forces during the 1990s. The deepening of rural poverty, the net extraction of wealth and resources from poor economies into richer ones, the evaporation of social safety nets under structural adjustment programs, the overall destabilization of transition economies, and the broad-based erosion of real human freedoms across the developing world all increased the vulnerability of rural, poor, and otherwise disenfranchised populations. These forces unleashed mass-migration trends that shrewd criminals and slave traders could easily exploit. While these global economic and sociocultural supply-side drivers of the contemporary human trafficking industry will require considerable, long-term efforts to redress, we do not have to rely on supply-side measures alone to severely mitigate, if not virtually abolish, human trafficking.

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In fact, the demand-side of most human trafficking industries is highly vulnerable to disruption. The specific forces of demand that drive any industry will vary. For example, in commercial sex, male demand to purchase commercial sex is a key factor of demand that would not be present with construction or tea. However, there are always two forces of demand that are common to any human trafficking industry and they are both economic: slave exploiter demand for maximum profit and consumer demand for lower retail prices (the price elasticity of demand).

For almost any business in the world, labor is typi cally the highest cost component to overall operating expenses. Thus, throughout history, producers have tried to find ways to minimize labor costs. Slavery is the extreme of this. Slaves afford a virtually nil cost of labor. With a drastically reduced cost of labor, total operating costs are substantially reduced, allowing the slave owner to maximize profit. However, drastically lower labor costs also allow producers to become more competitive by lowering retail prices. The retail price of any product or service is largely based on the costs of producing, distributing, and marketing that product or service, along with the available supply of the product or alternatives, and whatever brand premium the market will bear. If a major component of cost is stripped out of the production model, then producers can finely balance their desire to maximize profit and lower retail price.

Depending on the product, the lower it costs, the more people will tend to purchase it. Conversely, the more expensive a product is, the less people will tend to purchase it. This concept is called the price elasticity of demand, and depending on the specific product or service, the "elasticity" can be high or low, implying changes in price can have large or small impacts on consumer demand. Because consumers in general almost always prefer the lower priced version of the same product or service (if all other variables such as quality are the same), producers often try to compete by minimizing price, and one of the most effective ways to do this while retaining profitability is to exploit labor.

In a globalized economy, where products are available in our nearby shops from all over the world, the need to be price competitive is greater than ever. A seller of t-shirts or rice no longer just competes with producers nearby, but with producers on the other side of the world. As an example, I was conducting research into bonded labor in South Asia during the summer of 2010, and an exporter of precious stones in Chennai told me quite candidly that he was forced to exploit low-wage labor (actually bonded and child labor) in order to compete with the Chinese, who he believed to be doing the same. Because transportation costs are 90 percent less than they were in 1920, and since all types of exploited labor can be used to minimize production expenses, the entire world is in competition, and human trafficking has evolved from the old world into the globalized world as a key way in which unscrupulous producers can minimize labor costs to advance profits and remain price competitive.

Combating Trafficking

Understanding the twin economic forces of demand that have helped catalyze the accretion in levels of human trafficking throughout the global economy suggests two tactical priorities in efforts to combat these crimes. First, attack the profitability human traffickers enjoy. An attack on profitability will reduce aggregate demand for slave labor because slave owners will be forced to accept a lower-profit (hence less desirable) business, or they will pass the increased costs to the consumer by elevating retail price, which will in turn reduce consumer demand.

The most effective way to attack profitability is to elevate real risk. Depending on the type of industry, the tactics will vary, but such efforts will assuredly involve the following: elevated efforts by law enforcement to proactively investigate and intervene in human trafficking crimes; the expansion of community-based antislavery efforts; elevated funding for anti-trafficking police, prosecutors, and judges, especially in developing nations; fast-track courts to prosecute trafficking crimes quickly so as to minimize risks to the survivor-witness; and a massive increase in the financial penalties associated with human trafficking crimes, including enterprise corruption, asset forfeiture, and victim compensation, to help former slaves get their lives back on track.

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An increase in penalties, along with increased prosecution and conviction levels achieved through the kinds of tactics described above, should elevate the real risk and cost of human trafficking to an economically detrimental level. Put in criminal law terms, we are trying to elevate the deterrent and retributive value of the real penalty associated with the commission of slave-related crimes to a far more effective level. In turn, criminals will likely diversify their operations to other, less toxic opportunities, just as quickly as they originally flocked to trafficking and labor exploitation.

The other main force of demand relates to consumers. While we typically prefer to buy our products at the best price, we are also far removed from the complex supply chains that may be tainted by trafficked or slave labor at the bottom end of the production process. However, we are also in control of our consumer force of demand, so it is up to us to demand that lawmakers enact provisions whereby corporations must investigate and certify that their supply chains are free of trafficked, slave, or child labor of any kind. Consumers must also demand that companies whose products they purchase take a leadership role in conducting the kind of investigation and certification required, and that such activities should be a regular aspect of their internal controls and operating model. By attacking the fundamental motivation behind the exploitation of trafficking slaves--profits--and by leveraging consumer power to shift the market away from the "cheap at all costs" product to the product that is morally and socially responsible, a powerful near-term impact can be achieved on the business of human trafficking.

The ugliness of human trafficking dates back centuries, and even though we agreed 150 years ago as a human civilization that slavery is unacceptable, it is more pervasive and expansive today than it was centuries ago when the slave port at Badagry was in its prime. The forces of globalization have made human trafficking a highly profitable and virtually risk-free enterprise. As a matter of ensuring basic human dignity and freedom, the global community must utilize every resource available to combat traffickers and slave exploiters by elevating the real risk and cost of the crime, while eliminating the immense profitability that human traffickers and slave exploiters currently enjoy.

The persistence of human trafficking is an affront to human dignity and a denial of any claims of moral legitimacy by contemporary capitalist civilization. The time is long overdue for the world to come together to deploy the kinds of sustained interventions required to eliminate this evil forever.

SIDDHARTH KARA is an Affiliate of the Human Rights and Social Movements Program, and a Fellow with the Carr Center Program on Human Trafficking and Modern-Day Slavery at the Harvard Kennedy School of Government.