Comments on: Globollocks, v2.0

By: robin green

robin green — Mon, 19 Jan 2004 22:05:11 +0000

John – instead of “temporarily”, I should have said “perhaps only temporarily”. As for slight price rises, I’m referring to the economics of sweatshop production, where the amount paid to the sweatshop labourers per item is a tiny fraction of the amount they eventually get sold for. So, it would only mean slight price rises in that sense. Sorry if that wasn’t clear. As for the euro comparison, I still think you aren’t getting it. I’m talking about imposing the same standards on all countries exporting to a country, which would mean that those where the cost of providing decent conditions is lowest (certain poorer countries) would be at the best advantage, as opposed to now, when those who provide better conditions have (other things being equal) a competitive disadvantage, which is what you seem to be alluding to, so you seem to be alluding to the problems with the exact opposite of my proposal, namely the status quo. I’m glad we are in so much agreement, although you don’t seem to notice it. As an aside, some factors which are considered in the US as employee benefits, such as health insurance, are something of a special case and not something that I think should be included in labour standards – health insurance should be provided by the state, in my view.

By: dsquared

dsquared — Mon, 19 Jan 2004 06:48:14 +0000

As it happens, I was reading a book about my second-favourite period of UK history over the weekend. It’s amusing to note how many of the arguments of the kind “raising labour standards will close down the factories and send the poor into horrible scavenging”, are nearly word-for-word copies of similar arguments made in the 1830s against the child labour laws passed in England. They were wrong then …

By: john s

john s — Sun, 18 Jan 2004 08:24:08 +0000

Jason “Depends how big the export market is.” True, but the US is a massive export market. “Marginal changes to 11.6% of the economy isn’t going to fix Cambodian unemployment any more than it would in the US.” Sure, but I don’t see that as an argument to care less when the US (or the EU for that matter) threatens trade barriers against third world countries. That will put more people in dump scavenging “unemployment”.

By: andrew

andrew — Sun, 18 Jan 2004 03:55:17 +0000

Great post, Mr. Squared. More Globaloney, and more D^2 posts in general, please. Thank you. :)

By: Jason McCullough

Jason McCullough — Sat, 17 Jan 2004 20:14:50 +0000

“Dsquared is arguing that this would have no impact on the number of people employed in Cambodia. One day, booming export industry. Next day nothing. Impact on employment: nil. Is that plausible?” Depends how big the export market is. I think he’s arguing that removing tariffs on Cambodia wouldn’t improve Cambodian employment, though, which isn’t symmetrical for a variety of reasons. On obvious practical grounds, Cambodia’s export earnings are 2.3 billion annually, GDP 19.7 billion (Googled up). Marginal changes to 11.6% of the economy isn’t going to fix Cambodian unemployment any more than it would in the US.

By: Jack

Jack — Sat, 17 Jan 2004 02:34:12 +0000

It’s not disrespect for Botswana, it is just that the lessons learned by a nation of 1.5million people and rich with diamonds and tourism are not close to universal. It is not that Botswana is not deserving of respect, possibly quite the opposite. It is just that it didn’t get where it is by following a simple recipe that would work for lots of other places. In any case this is all getting a bit confusing. Kristof is criticising socially concerned protective measures on the part of the US. D-squared says they are not such a big deal So why are we talking about what countries can and can’t do for themselves?

By: John S

John S — Sat, 17 Jan 2004 00:27:44 +0000

Robin “Labour standards: It seems to me that a number of the arguments against labour standards here have been against straw men. Of course it is the case that big unilateral labour standards improvements will temporarily raise prices (albeit slightly) and put a country at a competitive disadvantage, other things being equal. This is completely bleedin obvious.” Can you explain why it is obvious that big labour standard improvements will only temporarily raise prices and only slightly? If fast food outlets are obliged to pay their staff one hundred times more than they are paid now, this will only temporarily raise burger prices? And only slightly? “The question is, would the short-term dislocations engendered by minimum labour standards import rules forever lock some countries out of their export markets? And the answer is, of course not.” The euro has appreciated substantially against the dollar and European exporters hard cannot sell profitably into the US anymore. This is equivalent to the cost raising impact of increasing labour standards. Noone I know is arguing for European exporters to grin and bear it because, even if the euro goes on up, somehow things will get easier for them to export to the US. By the way, rigged agriculture markets aren’t much good either.

By: John S

John S — Sat, 17 Jan 2004 00:07:27 +0000

JW Mason After reading around about the Great Depression I totally admit that I overdid the trade barrier explanation. However, trade barriers, monetary contraction and devaluation all had the same effect on US imports in the 1930s as raising global labour standards today would – they cut US demand for imports. That contributed a lot to hardship in the rest of the world then. It would today too. “I don’t assume it — I offered an argument. The price of third-world labor which maximizes the total income of third-world workers is above the free-market level. In just the same way, and for the same reason, that the price of oil that maximizes the income of oil-producing countries is above the free market level. unlike OPEC countries, suppliers of third world labor lack the insitutions to make a cartel effective. but they can in principle achieve the same result thru appropriate labor standards.” This is true, but would also mean far less employment in third world countries, which is what Kristof is arguing. Fine if you’re in one of the nice factories, scavenging on a dump if you’re not. Jack “Surely we would have at least one success story in Africa if it was that simple.” Botswana? Whoops, dsquared gives globollocks points for mention of diamond-rich Botswana. Still, I’ve always thought he disrespects Botswana. Sierra Leone, Angola, Nigeria … are all very resource rich African countries which have not matched Botswana’s growth record. Diamonds help, but they’re not enough. Domestic policies are crucial too. Jason “A guy living on the street in NYC who sells scavenged cans for a living is no more “employed” than his equivalent in the third world, unless you think their potential productivity is equivalent to what they get from scavenging.” I disagree with you, but let’s return to what dsquared argues and, for argument, I’ll accept that anyone scavenging on a dump is unemployed. Dsquared argues that US trade policy has no impact on Cambodian employment. Think about that. Consider, for example, a US ban on any imports from Cambodia. Dsquared is arguing that this would have no impact on the number of people employed in Cambodia. One day, booming export industry. Next day nothing. Impact on employment: nil. Is that plausible? “Maybe, maybe not. Another interesting equestion is “would SK workers have been better off in 1962.”” Some yes. Others no. Barry “They had very, very little use for the free trade/free market/neoliberal/Chicago School theories, except as those theories granted them access to export markets. I don’t think that the Asian Tigers are useful for supporting neoliberalism, unless one is willing to ignore most of what they did, or to handwave it away.” This is a straw man. Kristof is only concerned about access to export markets (specifically the US). He says nothing about what Cambodia should do about imports.

By: robin green

robin green — Fri, 16 Jan 2004 23:35:38 +0000

Liberalisation: I'm not sure that liberalisation of US agriculture is an achievable goal, given (a) the large corporate interests involved, (b) the importance of agriculture to national security, (c) most fundamentally, the fact that free markets don't do very well at agriculture! Labour standards: It seems to me that a number of the arguments against labour standards here have been against straw men. Of course it is the case that big unilateral labour standards improvements will temporarily raise prices (albeit slightly) and put a country at a competitive disadvantage, other things being equal. This is completely bleedin obvious. That is precisely why I think it is up to the rich buyers to enforce standards on all their imports whichever country they come from - and in particular, because I believe laws are there precisely to enforce morality (although it does not follow that all moralities must be enforced by laws) - I believe it is a very appropriate role for the state to enforce minimum labour standards on sellers. Yes, there will be closures and openings of factories. But factories scraping the bottom of the barrel standards-wise are always under threat of competition, pretty much - unless they're based in somewhere like the torturing state of Burma, perhaps. The question is, would the short-term dislocations engendered by minimum labour standards import rules forever lock some countries out of their export markets? And the answer is, of course not.

By: Barry

Barry — Fri, 16 Jan 2004 23:27:18 +0000

“What’s peculiar about this argument is that we have had a natural experiment in the form of the original Asian Tigers and the later NICs. None of them followed global labor or environmental standards. All of them enjoyed rapid — perhaps even unprecedentedly rapid — growth.” IIRC, these countries were also highly mercantile. They had (and have) massive government subsidies of ‘desirable’ industries. They had very, very little use for the free trade/free market/neoliberal/Chicago School theories, except as those theories granted them access to export markets. I don’t think that the Asian Tigers are useful for supporting neoliberalism, unless one is willing to ignore most of what they did, or to handwave it away.

By: Jack

Jack — Fri, 16 Jan 2004 23:25:31 +0000

To me the the Globollocks thing is s symptom of people insufficiently wary of simple solutions to complex problems and mistaking the helpful for the miraculous, and the most subtle intellectual error, misprioritising solutions. I think that liberalisation in poor countries will probably end up being a good idea but international trade is not always the place to start. I’m with you on the first world workers too but imagine that the right balance is rarely struck and they either get no protection or salary weighted consideration. When the only tool you’ve got is the ability to put a cart before a horse, all problems look like a missed opportunity to grow GDP.

By: Jason McCullough

Jason McCullough — Fri, 16 Jan 2004 23:17:35 +0000

A guy living on the street in NYC who sells scavenged cans for a living is no more “employed” than his equivalent in the third world, unless you think their potential productivity is equivalent to what they get from scavenging. “But does anyone here really believe that South Korean workers would have been better off in 2002 if South Korea had been forced to obey global labor and environmental standards in 1962?” Maybe, maybe not. Another interesting equestion is “would SK workers have been better off in 1962.”

By: jw mason

jw mason — Fri, 16 Jan 2004 22:44:25 +0000

jack: It might be true that some appropriate level of labor standards is beneficial overall for all workers in boht the third and first worlds and by some reasonable measure. However it does not follow that a scheme set by the US will be too. I agree with this, and in fact almost everything you’ve posted. I’m actually much more abivalent onthis subject than my comments here. It’s very arguable that, in practice, the best trade policy the US could follow, from the point of workers in poor countries, is to remove all trade barriers of all kinds—and of course Daniel is right that labor standards are a kind of trade barrier. Two big caveats to this: Unlike most commenters here, I think the interest of first-world workers in protection is perfectly legitimate and needs to be accomodated to some degree; and, even if liberalization in rich countries helps workers in poor countries, liberalization in the poor countries themselves does not.

By: Jack

Jack — Fri, 16 Jan 2004 21:26:51 +0000

I think my Farquuad paraphrase sums the argument up well. There is a good reason to be suspicious of people with plans where you are the one that makes all the sacrifices. Steve, that and the observation that living standards in the first world were no always so great is the reason why there is an issue. However there have been so many failures to emulate the success of the tigers (Who are the later NICs exactly?) by merely aping the most obvious macroeconomic epiphenomena of these stories that there is no obvious reason to assume that lightning will strike again, especially when China and India can combine the advantages the tigers exploited with mercantilist muscle. Surely we would have at least one success story in Africa if it was that simple. It’s a bit like thinking that I could drive like Michael Schumacher just by making sure that I was at wheel of a Ferrari.

By: Jack

Jack — Fri, 16 Jan 2004 21:14:52 +0000

I’m not arguing against them except insofar as my original illustration is true. I even outlined circumstances where they might work well. But it matters who sets them and what they are and what they apply to. I think there is some cant talked about labor standards by unions. Labor standards are not a platonic form, they can be written in all sorts of ways and are not all appropriate in all places. Just because one set of labor standards might benefit third world workers you can’t deduce that what’s left over for third world workers from a different scheme designed to have no negative consequences for first world workers will be positive, let alone fair. Unions can behave like medieval guilds sometimes. To take you argument head on. It might be true that some appropriate level of labor standards is beneficial overall for all workers in boht the third and first worlds and by some reasonable measure. However it does not follow that a scheme set by the US will be too.