In Praise of Cheap Labor RE: WTO the rampage! (fwd)

Robert S. Thau (
Tue, 7 Dec 1999 18:35:20 -0500 (EST)

Ernest Prabhakar writes:
> After all, which is more immoral: for a company to employ a 12
> year old child for a subsistence wage, or for a global entity to
> effectively forbid that child from working, even if his family is
> starving? Maybe neither is that great, but sometimes you have to
> live with the lesser evil.

I'm a bit hesitant to challenge someone with a more personal stake in
this issue than I'm ever likely to have. But in the West, at least,
this turned out in the long run to be a false dichotomy --- when wages
went up, the factories *didn't* shut down. People sometimes forget
that one of Henry Ford's most significant innovations was paying his
workers enough to afford a car. And Nike would not have gone broke if
they paid the workers in their Indonesian shoe factories (all of them,
put together) as much as they paid Michael Jordan in 1992.

Granted, cheap labor is one of the third world's major current sources
of comparative advantage. But that advantage wouldn't go away if,
say, your 12-year-old's parents were merely paid enough more to feed
the kid --- third world wages have a *loooong* way to go before they
come close to first-world levels.

> I'm all in favor of curbing the worst abuses, perhaps even by
> forbidding it, though I do agree that labelling (creating a market
> for moral choices, effectively) is often sufficient. What bothers
> me is that much of modern liberalism seems more focused on supporting
> our self-righteousness (rather like modern conservatism :-) rather
> than truly helping the poor. After all, the reason poor people in
> other countries work in these factories is that it the best option
> available to them. Trying to suppress that option, rather than
> improve or expand that option, does not seem to be morally
> defensible, even if it is politically expedient...

I've heard a fair bit of radio coverage of the views of the Seattle
protestors. Many of their spokes-folks were talking about improving
conditions in third-world factories; none were talking about shutting
them down. If you heard them saying "let them eat cake", I'd
appreciate a reference, but I don't think that's really representative
of the majority view of the Seattle anti-WTO groups.

In the meantime, what talk I've heard talk about shutting up factories
has come from the other side, as doom-and-gloom predictions of what
would happen if the third world had to deal with higher labor
standards. And I inevitably wind up filtering that through my
first-world experience, which is this: whenever a law or regulation is
floated which is going to cost businesses real money, whether it has
to do with, say, recycling (this was supposedly going to bankrupt
every company in Germany a few years ago), labor laws (every
U.S. minimum wage increase for the past few decades), or just plain
decent business practices (again from the U.S., parental and family
leave), the same litany is trotted out every time: "If this bill is
passed, we won't be able to stay in business. Jobs will be lost, and
innocent people will be hurt". You hear it from the companies. You
hear it from friendly regulators who are planning to "retire" into
high-paying jobs in the industries they are supposed to regulate. You
hear it from legislators the companies have bought. Then, if the law
gets passed anyway, somehow, miraculously, the companies manage to
still make money in bushels.

Maybe things are different in India, but here in the States, I've
learned to be skeptical about these sorts of pronouncements.