Globollocks, v2.0

” it’s rather shameful for First World unions to support them”

Since when were unions supposed to be free trade? They all represent the self interest of fairly narrow groups. They have often fought hard to get their wages and working conditions, why would they give them up? The US steel unions were definitely in favour of steel tarriffs.

This is just another version of the lump of benefit fallacy. There are plenty of things that are better overall that are not better for everybody. Why should seamstresses in the first world in particular lose their benefits to seamstresses working in worse conditions? At least if they can avoid it.

Isn’t this the Smokey Mountain Myth in another guise?

Yes, thanks, and more globollocks. I’m not sure Kristof gets to be “airmiles” if Friedman’s on the same page, though. At least Kristof gives a hint of leaving the airport. Friedman reads like he’s found a pudding box offer and just hops from place to place, yammering on his cellphone, racking up miles.

I think it is case of push coming to shove. Taking such solidarity very seriously would have pretty radical implications, for wage bargaining for example.

“Is he trying to imply that construction workers want to get jobs doing stitching on shoes?” No, he makes no such inference.

“What kind of toxic sweaters-o-doom might a garment factory be making that generate tons of effluent to dump into rivers?” I used to teach english in a Catalan town dominated by a generally upmarket clothing industry. Its river stank, was devoid of fish and changed (primary) colour daily.

“Or is Airmiles trying to suggest to us that “sweatshops” form a homogeneous class of capital assets?” No idea what that means.

“People scavenge on dumps because they have nothing better to do. This is because they are unemployed… trade policy does not actually have that much impact on the overall level of employment in a society” They are not unemployed, they are employed savenging on dumps. So, yes, trade policy may not have an impact on the overall level of employment in society, but it does have an impact on the quality of that employment. If Cambodia cannot trade unless its workers meet rich country standards, then it may not trade at all and all Cambodians will then be condemned to jobs like scavenging.

For that reason you are right when you write “It is not the case that Cambodia would achieve full employment overnight if its trade and labour policies changed to whatever prescription Airmiles is writing” because they already are at full employment.

But you are incorrect to add “the fact that there are people scavenging on a dump in Phnom Penh is not actually something which can really be laid at the door of domestic protectionists.” Some or all of them could be employed in a factory working in conditions which are awful by our standards, but are MUCH BETTER than scavenging in a dump.

“If Cambodia’s labour standards already meet the proposed minimum standards for trade, then you can’t use Cambodia as an example for why those minimum standards are a bad idea, unless you’re prepared to also criticise the Cambodians.” Your logic is faulty. Kristof’s article is asking the question “what would happen if the Democratic Presidential candidate frontrunners implemented their current views on labor, environmental and human rights standards in international agreements?” Cambodia provides an example of what would happen. All countries would be obliged to have standards like Cambodia’s and, as a result, they would have lots of people scavenging and the like.

“It’s not fair to portray all opponents of neoliberalism as not caring about the Third World”. He doesn’t. He’s making the point that caring so much that you insist the Third World adopts First World working conditions if they want to trade does not mean they will necessarily end up with First World working conditions. Rather, they may end up scavenging on dumps.

This may be a result of the short Op-Ed length, but Kristof says a number of things which seem outright weird. Is he trying to imply that construction workers want to get jobs doing stitching on shoes? What kind of toxic sweaters-o-doom might a garment factory be making that generate tons of effluent to dump into rivers? Or is Airmiles trying to suggest to us that “sweatshops” form a homogeneous class of capital assets? This matters, because labour standards are radically different in many industries, and the garment industry has a well-deserved reputation for being one of the worst. It also obviously matters because it makes a difference to the gender profile of industrialisation.

I assume he is using it as a short-hand for industries where capital would try to beef up profit margins by squeezing labour costs as much as is (in)humanly possible. Feminisation is also part of this as you point out.

This whole article is another version of a particular line of Globollocks argument that I trace back to this Krugman article.

I believe that Jeffrey Sachs also made a similar argument along the lines of “the problem with sweatshops is not that there are too many but that there aren’t enough”. Along with Krugman’s piece this is what is waved around a lot by the pro-Globalisation supporters.

It’s basically an argument based on the implied assertion that there are no causes of unemployment in Third World countries other than protectionism. It’s not particularly coherent, to be honest, or even internally consistent. People scavenge on dumps because they have nothing better to do. This is because they are unemployed. However (as neoliberals are often keen to remind us when the context is the First World), trade policy does not actually have that much impact on the overall level of employment in a society; it can affect the level of income, but that’s not the same thing.

I always thought that this kind of neo-liberal argument relied on some variant of WA Lewis theory of economic development with Unlimited supplies of labour; with the bit about ‘excess’ labour packed into the informal economy and sort of hanging around the organised sector trying to get in. The idea being that as long as capitalists can opportunities to do so, and can make profits from; they are more than willing to sally forth and set up vast numbers of factories to employ this ‘surplus’ labour. Needless to say, there are some problems with this, but the current neo-liberal version, I think marries this to the fact that all that is needed is for the animal spirits of these capitalists to be unleashed by abolsihing trade barriers and (usually) domestic state regulation. The famous ‘caged tiger’ metaphor so beloved in The Economist.

It is not the case that Cambodia would achieve full employment overnight if its trade and labour policies changed to whatever prescription Airmiles is writing, so the fact that there are people scavenging on a dump in Phnom Penh is not actually something which can really be laid at the door of domestic protectionists. The idea that “jobs would be shifted” if this or that happened is a pure example of the lump-of-labour fallacy; Kristof would not say that “jobs were shifted” to Cambodia as a result of liberalisation and therefore shouldn’t make the symmetric claim.

There is one sense where protectionists/ism can be said to be relevant here. Opening First World agricultural makrets and removing domestic subsidies here would certainly improve income opportunities in the small-holder agricultural sector of many LDCs and stem some of the push factors that lead to labour flows from small/peasant farm labour being driven out of this sector by cheap imports of subsidised agricultural products. The problem with the argument about domestic regulation of labour and trade laws; is that the most evaluations from the World Bank’s WDR seem to indicate as far as I am aware, that there is actually no clear link between real wages and growth in employment in traditional ‘sweatshop industries’ like apparal manufacture. This I think complicates matters a lot but does indicate that abysmal labour conditions on the cry of the need to maintain competitiveness does not exist to anywhere the extent that is asserted by Globalisation enthusiasts.

Sweatshops that don’t sweat Kristof appears to make the assertion that it is possible to work in a shed full of sewing machines in a Southeast Asian country without perspiring.

This is incredible; I don’t now enough about Cambodia but many SE countries have problems with this and those in South Asia, labour under what are really very poor conditions. Many abuses are non-perspitaroy in nature; corporal punishment and sexual abuse being two of the more lurid ones that come to mind. Having lived in the vicinity of one of these latter day dark mills, they are nowhere near as benign as some apparently think.

Is it great or not? The most annoying thing in this piece is that the actual economy of Cambodia doesn’t have a role in Kristof’s argument, other than as a provider of scenery.

Not all that surprising given that the main attention on Sweatshops has flared up over a period when exports from many LDCs have become more in the line of manufactures and Cambodia is not a primary source of this (as yet) so it is really a stand-in for other target countries.

I always think of a trade union as a socialist institution, and was tutting over their failure to show solidarity with the working class of the world.

To some degree, I would say this would be a bit idealistic even when applied to Europe these days – just look at the attitudes towards labour migration displayed by some here. Most TUs have become more particularistic in their concerns and where they haven’t they have been on the receiving end of labour-repressive policies to break their power for a couple of decades by now. Some LDC ones might meet this kind of standard better, like perhaps COSATU but many TUs are either the patronage vehicles for political parties or more concerned with their own jobs and to keep out unorganised labour from upsetting their entrenched priveleges.

Daniel,

I always look forward to your posts but you’ve lost me here.

I see nothing wrong with construction workers wanting to move to factories. That has been my personal experience. And the garment making process includes many toxic chemicals, particularly with the use of dyes so it seems perfectly reasonable to talk about tons of effluent.

On the Smokey Mountain Myth I don’t read it as you do. I don’t think Kristoff is saying that all employment problems would be resolved but certainly it would help some people. The point he is making (as Krugman before him) is that there aren’t that many other options for the garment workers.

Nor do I think that it’s a false dichotomy to say that more ‘sweatshops’ are needed.

It’s not fair to portray all opponents of neoliberalism as not caring about the Third World; neither is it fair to portray them all as being ignorant either of conditions in Third World economies of of economic theory.

OK, I propose an armistice. Let’s all agree to assume that, barring overwhelming evidence to the contrary, those with whom we disagree about economic issues….

1. care about the poor,
2. are aware of and sympathetic to their plight,
3. are aware of basic economic theory, and
4. have very little in common with the party that ran Germany from 1933 to 1945.

Except perhaps for #4, those are some mighty big concessions you’re demanding. I’d be far more willing to concede that neither side cares about the poor than that both sides do.

“I was mocking him for switching back and forth between factories and garment workshops.” He doesn’t.

“But “sweatshops” aren’t dyeing factories. They’re places where garments are assembled by hand.” I don’t think anyone uses sweatshop that precisely. It’s simply a sweeping term used to sneer at foreign multinationals located in the Third World.

“I read him as saying quite clearly that Gephardt et al are guilty of pursuing policies that put people on rubbish dumps.” You’re right – he is. And he’s right.

The argument for which Kristof has been awarded the most Globollocks points is the “Smoky Mountain Myth” argument. But, as John pointed out, I think we need some more evidence that this is really a myth: that is, that production for export is not crucial to improving living conditions in developing nations. Again, the people on the smoking mountain are not, as Daniel says they are, “unemployed.” They’re working scavenging stuff off the mountain, and are presumably paid for this work somehow (or else they wouldn’t do it). Daniel himself argues that “trade policy can affect the level of income,” which is the thrust of the Krugman/Sachs argument against minimum labor standards: people whose scavenging jobs pay them little will get factory jobs that pay them more. This may be empirically wrong, but it is not incoherent or inconsistent.

I also have a hard time believing that the “minimum standards” the Democratic candidates have in mind are met by even Cambodia.

dsquared,

Once again, a little unfair (but thought provoking).

For one, Kristof doesn’t really say that globalisation/trade is going to directly and overnight lift people off the garbage dumps (a scene that is extremely commonplace here in India, BTW) or that protectionism is causing it. His point seems to simply be that the ‘sweatshops’ are a step forward (thus, the quotes from all the people outside dreaming about getting in) not back as the anti-globos claim.

[I think he’s largely right (though there surely would be some globalisation-fed horrors). When even governmental contract workers here in my country work in appalling conditions — scrawny men and women hammering away at rocks all day in the sun to dig up roads, for instance (the kind of thing I think he meant when he said the sweatshops were relatively sweatless) — I’ll take anything that looks like a step forward.]

That we need to be careful about anything at the international level moves us back — even if international labour standards aren’t being met — though perhaps Cambodia is meeting them, Africa may not be.

Which is not to say that activists should let up pressure on corporations. Hammer them by all means. No need to be anti-globalisation.

“I don’t see how you can fail to recognise that false dichotomy. It is possible to want more factories without wanting more sweatshops, because not all factories are sweatshops.”

All this turns on what the definition of a sweatshop is. Anything that doesn’t meet standards met in the West?

I personally won’t oppose international labour standards if they can be devised in such a way that there isn’t a withdrawal of those factories — those factories are better than nothing.

But how would an international minimum wage be implemented? Would you have pressure on governments as well?

And can ‘Airmiles’ call you ‘Armchair’?

Awaiting enlightenment. Honestly.

Sorry if I sound like the village idiot here, but can someone (perhaps dsquared?) please explain to me why global labour standards would be bad? Either via international treaty or via US import restrictions, say. It seems to me that poorer countries would still have an advantage over the US due to their lower costs of living, even if labour standards were normalised (in supply chains selling to countries with labour standards import restrictions, at least).

D-squared:

“I don’t accept this; if this were true, why all the stuff about the Democratic candidates?”

Because they promise to put an “emphasis on labor, environmental and human rights standards in international agreements” if they are elected – which would spell the end for sweatshops (whether narrowly or widely defined)

Robin Green

Somehow I don’t think dsquared is your man if you want to know “why global labour standards would be bad”.

Imagine you wanted to get a job as a cook but the government passes legislation saying noone is allowed to cook for a living unless they are at least as good as Gordon Ramsay. How many employed cooks do you think there would be?

That is the effect of global labour standards.

Jason

“The Asian Tigers also did it by sheltering their domestic markets like no one’s business, so I’m not sure that it’s as relevant as you think.”

Kristof isn’t arguing for free trade (and nor was I). He was simply arguing against US protectionism.

“Ireland, of course, is completely irrelevant, being a first-world country.”

Thanks to having achieved 10%+ growth rate every year for a decade. You think a country can grow like that just because it’s first world? Tell that to the Germans or the Japanese.

““Again, the people on the smoking mountain are not, as Daniel says they are, “unemployed.”” So I take it that homeless guys in the first world are “employed”? This is silly.”

Having criticised me for mixing what you call a first world economy with third world ones, it’s ironic you do exactly the same thing.

Just because you don’t receive a monthly salary from ICI or Nike or the government, it doesn’t mean you are unemployed.

John – Please cite an example of a global labour standard that anyone serious is actually advocating that would have a similar effect to your chef example, and explain why.

I think Kristof does suggest that Cambodia is shooting itself in the foot by enforcing high workplace standards.

I’m with you in thinking that developed world protectionism can be damaging but as a point of history somebody managed to get rich without a rich country to trade with.

I think the employment status of the scavengers is a bit of a red herring. On the one hand they are not a burden on the state, on the other I imagine they would welcome an alternative opportunity. On the third hand they probably don’t have much time to look for alternatives and on the fourth these people are possibly pathological cases even by Cambodian standards. Take your pick but the point is that market forces alone are not going to change their life anytime soon and free trade on its own will take a long while to have a significant impact.

After:
I think Kristof does suggest that Cambodia is shooting itself in the foot by enforcing high workplace standards.

I forgot to add that if that is so it can’t also be a criticism of US policy because if the US does introduce labour standard rules, Cambodia will actually be ahead of the game.

Robin

“John – Please cite an example of a global labour standard that anyone serious is actually advocating that would have a similar effect to your chef example, and explain why.”

It doesn’t matter whether anyone is seriously advocating something similar. I was using Gordon Ramsay as an extreme to make a point.

Try another example. Maybe you want to get a job with the police. They have some height below which you cannot be if you want a job with them. It may only be 5 foot 2 and you probably make it, but some people won’t. What will certainly not happen is that everyone will suddenly become at least 5 foot 2.

And that’s all Kristof is saying. Introduce labour standards and some factories in poor countries will close, forcing the employees of those factories into a much worse situation.

Jack

“I’m with you in thinking that developed world protectionism can be damaging but as a point of history somebody managed to get rich without a rich country to trade with.”

No country in history has grown as fast as the Asian tigers who managed it because they had very rich countries to export to. Countries trying to get rich in the C18 and C19 didn’t have anywhere so rich to export to.

“the point is that market forces alone are not going to change their life anytime soon and free trade on its own will take a long while to have a significant impact.”

I agree, but I do think US protectionism could quickly worsen their situation. After all, that is the history of the Great Depression.

“I forgot to add that if that is so it can’t also be a criticism of US policy because if the US does introduce labour standard rules, Cambodia will actually be ahead of the game.”

No, no. Imagine you cut off your leg. Then a US presidential candidate advocates that some people should cut off a leg. Along comes Kristof who criticises this because of the terrible effect it will have, using you to illustrate why. He can criticise the candidate even though he is only advocating what you have already done.

John S:

US protectionism could quickly worsen their situation. After all, that is the history of the Great Depression.

Now this is just false. Devaluation and tariffs were not the “beggar-thy-bneighbor” of myht but a totally appropriate response to the Depression and ameliorated rather than exacerbated the downturn. That’s because their main function was to open up space for expansionary policy domestically, not improve th etrade position in itself. Expansionary policy — monetary or fiscal — was necessary, but impossible as long as it would result in balance of payment problems. So as long as you couldn’t solve the coordination problem involved in many countries reflation simultaneously, tariffs were necessary to allow countries to undertake them individually.

Chirag: “His point seems to simply be that the ‘sweatshops’ are a step forward (thus, the quotes from all the people outside dreaming about getting in) not back as the anti-globos claim.”

Daniel: “I don’t accept this; if this were true, why all the stuff about the Democratic candidates? He also uses the phrase “jobs would shift to Malaysia or Mexico”, which is a very specific economic argument.”

If you see the slideshow, for instance, you’ll see clearly that the reason he mentions the garbage pickers and the constructions workers is mainly to put the sweatshop jobs into context.

In the slideshow he says something like: “The critique of the sweatshop jobs is basically right, and they are pretty wretched jobs. But here in Cambodia it’s also clear that they are, for many poor workers, among the best opportunities they have. There are a lor jobs in third world countries that are much, much worse.” (He goes on to cite the two examples he gives in the article.)

And look, he clearly isn’t saying that “Gephardt et al are guilty of pursuing policies that put people on rubbish dumps”.

He’s merely saying that given how horrible other jobs are, if international labour standards lead to the withdrawal of the sweatshops, one set of opportunities to move up in life would disappear.

You might disagree whether this will happen, of course.

Daniel: As I say above, a sweatshop is an always has been a sewing machine workshop with workers too close together and insufficient ventilation.

My trusty WordWeb informs me that sweatshop means this:

Factory where workers do piecework for poor pay and are prevented from forming unions; common in the clothing industry.

And clearly Klein, Gephardt, et al mean all manner of things by sweatshop. So when you respond to them you can be excused if you use it loosely, no?

JW

“Now this is just false. Devaluation and tariffs were not the “beggar-thy-bneighbor” of myht but a totally appropriate response to the Depression and ameliorated rather than exacerbated the downturn.”

So the US has a stock market crash in 1929 to which it responds with devaluation and tariffs. Soon after, the rest of the developed world is in depression too. This is just coincidence and nothing to do with beggar thy neighbour policies? I’m unconvinced.

I’m unconvinced.

Well, we’re not going to settle this here. But the story you tell is not the only or most compelling one. A good alternative is represented by barry Eichengreen — I recommend “Golden Fetters.”

The question is not what maximizes the income of developing-country workers in the short term, but rather what will insure the continued flow of investment in the long term, assuming that investment and GDP growth (and therefore improvement in living standards) have something to do with each other.

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. More important, in all of them the wages and living standards of average workers rose sharply over time (or did, at least, until the currency crises of 1998). Of course there are myriad counterfactuals one can offer, and manufacture for export was not the only reason for the success of these countries. 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?

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.

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.”

“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.

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.

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?

Great post, Mr. Squared.

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

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 …