"The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all."
A very quick reply to the above.
I know that the OP is a statement of feeling more than fact, and that it dismisses the idea of justifying sweatshops for good reason. And I understand that a refutation of this last idea is kind of repulsive and even pedantic in the context, but please hear me out here.
IMO, the question that you should always ask yourself in matters of public policy is not "is it perfectly ethical?" but "what are the alternatives?" Additionally, you shouldn't ever let the perfect become the enemy of the improving, however glacially.
My girlfriend does research work on industrial policy in Africa, Botswana specifically. Rio Tinto is a mining firm with working conditions that are well below what we would accept in the West. And yet, people take those jobs because they are reasonably good by industry standards and, more importantly, better than other local employment opportunities. And the government is happy to have Rio Tinto in their country because they (Rio Tinto) bring deep pockets that they (again, Rio Tinto) use to create new infrastructure. Rio Tinto may create substandard working conditions by our standards, but they also create roads and jobs where there were none before.
Similarly, I have spent some time studying the political economy of China, where the West has essentially outsourced its manufacturing sector. The conditions of Chinese sweatshops are well below what we would accept in the United States. And I have a number of quarrels with Chinese economic policy, but it is also hard to argue -- at least in 2010 -- with double-digit growth over a decade and the rapid elevation of very large numbers of people out of poverty. All through essentially sweatshop labor.
Is it right? Is it just? Do the ends justify the means? Fortunately, that kind of stuff is above my pay grade, but I just wanted to push back a little on the race to the bottom rhetoric a bit. Trade may seem exploitative in the short-term, and often it is, but in the long-term game the picture is frequently more complicated.