And that's true, Ed, but the factories, the infrastructure, the skilled workforce still exists there. And then locals with some clout buy the old buildings and keep making money with them, paying the higher wages the locals begin to demand, but making more expensive products.
In the short term they would not move out, but in the long term they would not invest in a place unless they were confident that it would remain a cheap place for labour.
In the short term, they would certainly cut their employment numbers. Each person is slightly more or less productive than the next, so they would employ people in order of productivity until it no longer would be viable to employ more. If the cost of labour goes up, then this viable point would reduce, so those who are least productive would get cut until they would be at the viable point again.
Bottom-line is, just because you can exploit someone, doesn't mean you should. How would you feel if doctors charged everything you own for removing your appendix? You'd die if you didn't get it removed, so if they all formed a cartel they could get away with it.
Wrong. These people are logical and rational human beings. According to logic, if you can exploit someone,
you should. Although it is not the best outcome overall, it is the best outcome for those that get a choice in the matter. This is why we have governments, essentialy: To prevent situations like this occuring within a country. The problem with large multi-national corporations is that they deal in more than one country, and they thrive of these discrepancies in the law.
Oh, and I really doubt that Nike would go bankrupt if their profit margin from these sweatshops went down from 700% to 400%.
No, but if their profit margin halved, an awful lot of people would get awfully angry, and those running the company would not want to see that happen.