Bell Curve The Law Talking Guy Raised by Republicans U.S. West
Well, he's kind of had it in for me ever since I accidentally ran over his dog. Actually, replace "accidentally" with "repeatedly," and replace "dog" with "son."

Monday, August 04, 2008

The 21st Century Economy

Hi Gang,


I'm working at home and sitting waiting for my lunch to heat up while I watch Obama give a speech in Lansing, Michigan.  It was interesting observing the muted reaction to his talk about the 21st Century economy.  Obama talked about weaning ourselves off of oil and gas (polite, golf claps).  He talked about investing in renewable energy technology (again, golf claps).  Only when he talked about all the jobs that these things would create did the applause go above the smattering level.  This doesn't really surprise me.  Michigan politics (both parties) are the politics of denial.  The right thinks that the way to respond to the declining profits for the big auto companies is to boost subsidies to the big three.  The left thinks that if they can only legislate global trade out of existence the good old days of the 50s and 60s will return.  Both are neck deep in denial (and that ain't a river in Egypt).  

Global trade is not only here to stay, it is desirable for the country as a whole.  And even if global trade hurts a minority of Americans, sacrificing trade at the alter of the UAW would be a huge mistake.  It would represent a huge transfer of wealth from the majority to the minority in a way that is inefficient in the short term and unsustainable in the long term.  It would be better to do what small, trade dependent countries like Denmark and the Netherlands do...mitigate the bad effects of trade for the minority by providing unemployment insurance, health care and decent education and continuing education for all.  

Subsidizing GM, Ford and Chrysler will only perpetuate the legendary lack of innovation that typifies these corporate dinosaurs.  It would be far better to expose them to the full force of negative market pressures for their decades of bad management and poor foresight.  Instead we should subsidize companies that innovate and invent new products that fit the next century.

Obama is closer to what I think should be done in these regards than McCain.  McCain wants to subsidize the 20th century industries like Oil and automobiles.  What a monumental waste of money!  But since Michigan politics is the politics of denial, McCain's message of subsidies to the old smoke stack industries sells.  

Obama needs to think of a way to sell his superior policy approach to the rust belt.  I think he can.  But that is the task before him.

33 comments:

USwest said...

I would really like it if, when the Olympics tries to start, the air over Beijing is putrid and they have to postpone events. As I listen to the news today that they may have to shut down more factories and take another 1 million cars off the road while praying for rain to get clear skies by Friday, I am reminded of the damage old "smoke stack" industries and autos can do. You can't just "clean it up". My older relatives remind me that the air quality in the US improved 10 fold when they mandated unleaded gas.

Green technology is the new boom industry. Everyone needs to get on board. Just replacing my light bulbs and taking 3 minute showers isn't going to do much good. The low hanging "green lifestyle" fruit is gone. It's now time for government and industry to clean up their acts. And industry won't do anything without proper incentive. So I say there are no sacred cows. If US automakers can't compete, let them close. Honda manages to make cars in the US and make a profit at the same time- mostly because it doesn't have to tangle with the UAW and because it makes cars people want. So if you want industry to stay in the US, better find ways to keep it here.

The Law Talking Guy said...

I am not fond of straw men. Some on the left may think they can legislate global trade out of existence; most don't, and that's an unfair characterization. The question is whether one believes as a matter of ideology that all global trade per se good, as "free traders" often do, or whether you believe that some global trade might not be good and should be curtailed or regulated (as the "fair trade" camp advocated).

For Michigan, of coruse, to the extent we are talking about international trade in cars, there is little evidence that foreign cars of sufficient quality to compete with American automobiles are produced under unsavory working or environmental conditions in Japan, Korea, Mexico, or Europe. Introduction of Chinese cars may be a different kettle of wax (or ball of fish). I strongly believe that whatever economic benefits may be gained by saving a few cents on cheaper consumer goods is easily outweighed morally by the human cost of near-slavery conditions and massive environmental pollution that sometimes happens in some places with unregulated free trade. That is not a Luddite position.

Raised By Republicans said...

It's not a straw man in the context of statements like the one I quote here.

"I strongly believe that whatever economic benefits may be gained by saving a few cents on cheaper consumer goods is easily outweighed morally by the human cost of near-slavery conditions and massive environmental pollution that sometimes happens in some places with unregulated free trade."

I'm particularly confident (so far) I'm not setting up a straw man, because I have never heard the anti-trade folks in organized labor or LTG oppose any particular restriction on trade.

What's more, as I've said repeatedly, LTG consistently identifies problems well but horribly misunderstands the causes and solutions. The "near slavery conditions and massive environmental pollution" is not a consequence of trade per se. It is a result of bad local labor and environmental laws.

It is possible to ban child labor, ensure work place safety and protect the environment, without directly curtailing trade.

If we take a country like China (where the air will undoubtedly be unhealthy for the Olympics in the tradition of previous Olympic Games in Mexico City and Los Angeles) and then do nothing but curtail trade, I can guarantee you that labor and environmental conditions will NOT IMPROVE and I'd bet money that they'd actually worsen.

A similar argument can be made for Michigan. Suppose we do what the UAW and the Big Three actually demand all the time - impose massive tariffs on imported cars and subsidize American made cars. We could do that but where would the money come from? Furthermore, we might increase the number of people with jobs making SUVs but would the increasing cost of living due to higher taxes, fewer competitive alternatives and higher prices be worth it to society as a whole?

I'm not suggesting we close our eyes to the suffering caused to minorities of people within the economy. I'm saying that the best way to address that suffering is NOT by curtailing trade.

USWEST said...

It would benefit our economy greatly if we were to promote worker safety and worker rights abroad. This would, possibly, reduce some of the competitive advantage companies find in re-locating production abroad. And the only way you get a say on such matters is to use trade to build vested interests abroad.

I used to run into anti-trade arguments in college. And I always asked what would happen when workers abroad figured out that they could demand better wages and conditions? NO on ever answered me. Now it is happening. Workers in places like Mexico are becoming more emboldened. And that will alter trader and labor patterns in the future. This isn't a bad thing. It is just a long, slow process. But in the end, I think it raises all boats. The Chinese have progressed greatly through trade. And as their labor gets more pricey, it will be passed to some other country, and then that fleet of boats will rise, etc.

USWest said...

BTW: This is why most labor unions in the US call themselves "International Brotherhoods". If you work to improve the rights of workers around the world rather than on just saving jobs for a few members in the US, you will be better off.

The Law Talking Guy said...

"It is possible to ban child labor, ensure work place safety and protect the environment, without directly curtailing trade."

How? Not if the WTO considers any attempt to do so (by barring importation of such unsavory goods) a violation of free trade rules. And they do.

The *only* effective way to improve labor and environmental conditions is to bar importation of products produced in exploitative ways, requiring that products meet certain standards. We (pretend) to do with child labor and animal cruelty. Some try to do this with blood diamonds. Without such controls, market forces invariably dictate that where one person gains a competitive advantage through pollution or hiring child labor, others must do the same (or go out of business).

Right-wing free-traders oppose all such rules as "protectionism."

And yes, RBR, you are setting up a straw man if you think that I and others are "anti-trade" people (rather than "fair trade" people) who oppose all trade liberalization and support all tariffs. For instance, I did not support Bush's steel tariffs on China. I supported NAFTA after the side-deals were made. I think free trade with Colombia is probably a good symbol (with no real effect one way or another). And I believe in reductions of agricultural subsidies to large agribusinesses, particularly the "pay-not-to-grow" kind that is morally offensive to me.

The problem really is that free-traders always oppose any attempt to enforce labor/environmental standards abroad, calling it "protectionism." Politicla forces advocating "free trade" are usually just trying to find a way to avoid the hard-wong gains in environemtnal and labor protection in the developed world. That's where the real political divide is here, not between Luddites and Classical Liberals.

RBR appears to agree that the market will somehow sort out these problems. Good luck.

Raised By Republicans said...

How you ask? The US, EU, Japan, and Australia all have strict laws against child labor, workplace hazards and environmental pollution. They may not be as strict as you would like but by the standards of the world they are very very strict and benefit their populations greatly.

Rightist forces around the world oppose such sensible policies. And that is something I spend a good of my time (through volunteering) and money (through donations to political groups) trying to overcome. But this is a political problem not one derived from trade.

You talk about righwingers opposing such laws. True they do. But that's not the same thing as saying that free trade is the CAUSE of any of those things - which I take it you assert.

For example, you opposed NAFTA until the side deals requiring increased regulatory protections in Mexico were set up. I agree that such side deals are beneficial both to us and to the Mexican workers. But I also KNOW that both Mexico and the US were better off overall even without the side deals. Trade alone improved conditions for most people in both countries. Indeed, the added GDP and incomes (and the tax revenues that go with them) brought by NAFTA enable Mexican politicians to speak realistically about exactly the kind of regulatory enforcement that LTG advocates.

If we withhold trade until the potential partners adopt the policies we like we would be holding the good hostage for the sake of the perfect.

The only way it would make logical sense to avoid trade except with other established democratic welfare states would be if we thought that trade somehow prevented democratic welfare states from emerging. But this is not the case. In fact, most of the empirical research I've seen on this says that trade actually encourages welfare spending (as US West suggested in her comment). We should go full speed ahead on trade and press for better domestic policies from our trading partners as a long term strategy.

Just to clarify our further discussion:

LTG, do you think that trade is a cause of child labor, dangerous workplaces etc?

Do you think that trade prevents the emergence of sensible regulations along the lines seen in most industrialized democracies (I mean trade itself - not political opposition)?

I suspect the answer to both questions is "no." In that case, I think you should seriously reconsider your preferred order of policies.

Dr. Strangelove said...

I think the basic question is: How do we trade with developing nations that do not require manufacturers to respect labor and the environment?

On the one hand, without such restrictions manufacturers can undersell competitors on the world market. But on the other hand, stifling trade would devastate nascent economies and leave their labor and environment in an even worse position.

So of course we compromise, allowing significant but not unfettered trade, and applying what pressure we can to get nations to protect workers and the environment. I think really all of us on the blog stand in about the same position on such trading issues--it's just a matter of which foot you put more weight on. And I certainly trust Obama's stance better than McCain's on this one.

Raised By Republicans said...

Dr. S,

Here is the problem as I see it. If we can establish that poor people in a country that trades will be better off than poor people in a country that doesn't (all else equal), then putting conditions on open trade relations is bad policy.

It is especially bad policy if it is true that opening an authoritarian regime to trade puts liberalizing pressure on it.

The Law Talking Guy said...

Q: Do you think that trade is a cause of child labor, dangerous workplaces etc?

A: Yes. These conditions would not exist but for the factories that are erected in these places to export under free trade rules. The factories migrate naturally to places where labor laws and environmental laws are nonexistent or unenforced. The governments in these places make sure the laws are lax in order to profit (corruptly) from the new factories. The conditions did not exist before the factories came. There is a myth that when factories come, rural peasants and urban poor flock to them because they represent a better life. Some may, but that is only because their life stinks. People consent to work in horrible conditions only when traditional ways of making a living are denied to them. The usual ways this occurs are dispossession, expulsion/refugee statuts, immigration under false pretenses, children being "sold" under false pretenses, and plain bad economic luck (like the Typhoon in Burma, droughts, etc.). Simply put, Pakistani children would not be making soccer balls for export if nobody would buy soccer balls made by children.

I do not believe it is reasonable to argue that these working children are better off. The argument against child labor was *always* that children worked because they got more utility out of doing so. That is obviously a result of false choices. It is better that children get an education and that the government provide subsistence for them while they learn the skills that will make the next generation successful. The effects of child labor on children are disastrous.

Q: Do you think that trade prevents the emergence of sensible regulations along the lines seen in most industrialized democracies (I mean trade itself - not political opposition)?
A: It can, but it need not. Free trade can encourage a corrupt government to collect rent from exploitative industries. In other words, influx of foreign capital can encourage the "banana republic" phenomenon, where local political constituencies become hardened against progressive political change necessary to put such regulations in place. You cannot separate the economic from the political in this regard.

Pombat said...

Whilst I agree that child/practically-slave labour is bad, I also find it quite amazing how quickly society has come around to this idea - you don't even have to go back a full two centuries to see societies where children working is considered the norm, with the exceptions being the particularly wealthy families.

For a light-hearted break though, check out the fourth set of videos in the list here:
http://www.abc.net.au/tv/gruentransfer/poll/vote/past.htm
The Gruen Transfer is an ABC series here in Aus that has a panel of four advertising execs discussing various advertising ploys. Often very funny.

Raised By Republicans said...

"A: Yes. These conditions would not exist but for the factories that are erected in these places to export under free trade rules. The factories migrate naturally to places where labor laws and environmental laws are nonexistent or unenforced."

You are mistaken about the facts here. First, factories exist in the absence of trade. In the 1960s and 1970s many developing countries engaged in "Import Substitution Industrialization" and the working conditions in those factories were often pretty bad. Check out the working conditions in mines in China in the 60's and 70's for example. Or the Chinese iron working industry during the same period.

Trade is neither a necessary nor a sufficient condition for labor abuses. That is a fairly well established historical fact.

"Free trade can encourage a corrupt government to collect rent from exploitative industries."

There is absolutely no evidence to support this. In fact research by political economists with left leaning sympathies (like Geoff Garret) show pretty clearly that free trade actually has the opposite effect on government policies.

You say that business gravitate to the countries with lowest regulatory burdens (a common argument about a global "race to the bottom"). But again, not only is there no evidence that trade encourages or this kind of race to the bottom but there is contrary evidence.

Check out these studies:

David M. Konisky. 2007. "Regulatory Competition and Environmental Enforcement: Is There a Race to the Bottom?" in American Journal of Political Science v 51, n 4. -- Konisky shows that there is no race to the bottom among the US states with regard to regulatory levels (they look at local enforcement of the clean water act).

Prakash and Potoski. 2006. "Racing to the Bottom? Trade, Environmental Governance, and ISO 14001" v50, n2. -- They find that low regulatory levels in exporting states DO NOT influence other states to lower their regulatory levels. On the contrary, they find evidence that trade is associated with INCREASES IN REGULATORY LEVELS.

Raised By Republicans said...

"I do not believe it is reasonable to argue that these working children are better off."

Better off than what? If you are comparing child laborers to children in an wealthy post-industrial society then certainly you are right. But if you are comparing child laborers to child slave-soldiers in war torn Africa, then it's not so clear.

If our goal is improving the standards of living for poor people around the world, we need to ask, "would they be better off if we did nothing else but prevent that tennis shoe factory from opening up?" All the evidence says that they would in fact be worse off if we took away the tennis shoe factory.

If we want to change the debate to "given the existence of the tennis shoe factory, would they be better off if they had laws protecting children, workers' safety and the environment?" then I think we would all agree that they would be.

Then the question becomes "does the existence of international trade prevent the passage of these laws?" There is a great deal of evidence that it does not.

The Law Talking Guy said...

"Trade is neither a necessary nor a sufficient condition for labor abuses. That is a fairly well established historical fact."

And nobody would dispute such a broad generalization. But you only have to look at the child labor problems associated with the export market to realize how much the prospect of cheap labor promotes such things, particularly in countries that previously had low levels of industrialization.

BTW It's not "trade" we're talking about - trade is fine - it's unregulated, untaxed "free" trade.

Factories do exist without foreign investment, of course. But the argument you are making, RBR, is that trade will lead to increased economic development in developing countries - this means many more factories, urban jobs, etc.

Are you seriously arguing that child labor is okay because it's better than being a child soldier? What's next, a justification for sex slavery as better than starvation (often the choice being made)? I'm not sure where to go with this. Surely we can agree that child labor is bad and that developed countries should be able to bar importation of goods produced with child labor?

Does the existence of a tennis shoe factory that uses child labor to be profitable create political conditions (powerful and wealthy owners/operators) that make it harder to ban child labor? I think the answer must be yes. Does the existence of a tennis shoe factory that must consume gorilla habitat to be profitable create political conditions that prevent protection of gorilla habitat? Again, the answer is almost certainly yes.

My question is this: will unregulated international trade solve all the problems it creates, or is it necessary for developed countries use economic leverage (such as tariffs, quotas, or import bans) to deter/punish bad practices?

What about blood diamonds? Should international economic leverage be used there? If so, how does that differ from child labor?

I think we can't take a pollyannish view that free trade has no victims, or that cynical view that those victims are just the necessary the broken eggs for the economic omelette. I think we need to take action to help the victims of trade, and that can sometimes mean limiting free trade.

Raised By Republicans said...

"Are you seriously arguing that child labor is okay because it's better than being a child soldier?"

Of course not. I was trying to make you think about what you are comparing things too. You can't just say "children are worse off." You have to say "worse than off than with XYZ." You were making an implied comparison but with only one side to it. I was pointing out that there are in fact many things that are better and even a few things that are worse things than being a child laborer so it far from obvious which comparison you were attempting to make.


"BTW It's not "trade" we're talking about - trade is fine - it's unregulated, untaxed "free" trade."

OK, fair enough. We both think that child labor is bad. We both think it would be better for workers if there were better labor laws and environmental laws.

My question to you is simple: Do you think that banning the tennis shoe factory from being built in the first place will make those problems more or less likely to be solved? YES OR NO.

If you think the answer is "Yes" then you are exactly as anti-trade as I have been saying you are. If you say "yes" to that question then you should stop trying to frame your opposition to trade in terms of regulatory policy and instead just come clean and admit you think trade itself is the problem.

By the way, you like to berate people who make pro-trade arguments for not providing what you call "real evidence." I've provided citations to two recent articles in support of parts of my argument and you have not only ignored that part of my posting but not provided any "real" evidence of your own.

USwest said...

No one here has taken a pollannish view. And we all agree that opening the economic playing field has made victims. Industrialization in the United states and the UK created victims. And how was that corrected in the US? Where did we get all of our labor law? The workers in these factories got confident enough and angry enough to start forming labor movements that forced the owners of capital and the government to start putting laws in place to protect workers. I just don't get why people think this doesn't happen overseas as workers become more empowered.

The problem with all the arguements here thus far is that everyone is taking a top down approach while ignoring the bottom up possibilities.

I am all in favor of recently implemented rules in the US for example banning all toys from China that contain lead. Great. Consumer protection at home is necessary and it does not constitute a barrier to trade or a protectionist measure. And once the Chinese understand that their reputation in the market will be tainted, it will correct its approach. And once it prevents factories from using lead, the conditions for worders automatically improves.

I would love it if indigenous people could live their traditioanl lives and make it the world. But things have moved on and that isn't possible anymore. What I would prefer is that we challenge governments in developing nations to adopt better environmental policy, protmote the protection of forests and indegenous lands. But protectionist measures that do that using a big stick won't work.

Raised By Republicans said...

"My question is this: will unregulated international trade solve all the problems it creates, or is it necessary for developed countries use economic leverage (such as tariffs, quotas, or import bans) to deter/punish bad practices?"

Talk about straw man arguments. There is no such thing as "unregulated international trade" and there never has been.

I am convinced by the evidence that I have spent a fair amount of time researching for the Globalization classes that I teach that the answer to your question is not really relevant. The question is based on an mistaken view of how politics works in this kind of arena.

What we have here is a desire for a whole range of good things. We all want improving wages, standards of living, labor laws, environmental protection etc.

I'm convinced that we can't get those things without TWO factors. First, we need trade because it is a neccessary condition for sustainable economic growth PERIOD. Second, we need governments that are responsive to the policy demands of their citizens. If we have the first without the second we get a rich dictatorship (something like the East Asian tigers in the 1970s and 80s). If we have the second without the first we have a well meaning government that doesn't have the resources to meet the needs of its people (something like Costa Rica in the 70s and 80s). If we have neither then we have a totalitarian regime with a population living in ever worsening poverty (think USSR or China in the 60s and early 70s).

Both trade and responsive governemnts are good things for people. A population with an unresponsive government will be better off with trade than without it. A population with a responsive government will be better off with trade than without it. Of course it would be best if this hypothetical population has BOTH the benefits from trade AND a responsive government.

Unfortunately, many governments are not responsive. So we are left with a question of whether trade prevents governments from being responsive. LTG has essentially argued that trade prevents governments from being responsive. There is little evidence in support of this argument and a lot of evidence to the contrary. That is, there is a lot of evidence that trade encourages governements to become MORE RESPONSIVE than they once were.

We are then left with this. Is the problem of world poverty best solved by witholding trade from governments we don't like? That is, knowing that a nasty government will not distribute and mange it's countries resources in ways we approve of, should we then also condemn that country to continued poverty? Or should we first engage in trade that will improve the lots of at least some portion of their socity (even if the government is distorting the flow of those gains to benefit only their supporters)?

I think it is easier for us to get to the kind of world we all want if we first make it richer.

Dr. Strangelove said...

"Dr. S - Here is the problem as I see it. If we can establish that poor people in a country that trades will be better off than poor people in a country that doesn't (all else equal), then putting conditions on open trade relations is bad policy."

I agree with your premise. As I wrote above, "stifling trade would devastate nascent economies and leave their labor and environment in an even worse position."

But I do not agree with your conclusion. As you have said, it is not a binary question of "free trade or no trade" but rather there is a spectrum of liberal and restricted trading arrangements. To find the right balance, we must weigh the economic benefits of freer trade to developing nations--and as you have noted, to world stability--against the costs of such policies to ourselves and the world environment.

And there are indeed serious costs. Economically, outsourcing obviously costs American jobs when corporations can build a factory somewhere else, pay pennies on the dollar for labor, and take no precautions to protect the environment. Morally, accepting dangerous and exploitative working conditions anywhere cheapens the value of life and the dignity of labor everywhere. Environmentally, dumping toxic waste into the water supply and belching carbon into the atmosphere will affect the entire planet in the long run, no matter where it is done.

The right balance is to accept lower standards of protection for labor and the envrionment elsewhere, but to require at least some protections. Admittedly, this may slow the economic development of some nations in the short term. But in the long run, I believe that fighting to preserve the environment and fighting for the rights of workers--at least to some degree--will lead to a better outcome for all nations.

The Law Talking Guy said...

"My question to you is simple: Do you think that banning the tennis shoe factory from being built in the first place will make those problems more or less likely to be solved? YES OR NO."

That's an odd question. Obviously, if no tennis shoe factory is built, there will be no abuses in that tennis shoe factory. My head hurts to think about any other way to answer this question. I don't know how to speculate on what else would happen in the absence of the particular tennis shoe factory.

The question I think you mean to ask me is really as follows:

Is Country X better off with (A) a tennis shoe factory that employs child labor, has abusive labor practices, and pollutes or (B) no tennis shoe factory? I answer "A." I think RBR answers "B."

For the third time, I pose the question of blood diamonds. Do you support the ban or not? If so, why is that not "anti-trade?" What is the difference between that international trade action and others? [Of course, RBR, you probably don't mean "trade" per se, rather "the economic development that follows from trade." - perhaps the argument is that blood diamonds never lead to economic develoment?]

"LTG has essentially argued that trade prevents governments from being responsive." No, that's way, way too broad a generalization. I carefully said that some kinds of increased trade CAN make governments less responsive under certain conditions, then detailed how that could happen. I think that Chinese nationalism and authoritarianism is increasing, not decreasing, today, even as trade with China increases.

Look at divestment in South Africa as an example of how outside economic pressure forced change. Did divestment delay change? That would seem to be the thrust of RBR's argument that free trade is always superior to restrictions on trade. Should divestment ever be used? Is it wrong to pressure China on Darfur? I think these questions need to be considered.

I hear USWest saying that there are other ways to improve working conditions other than non-importation of goods manufactured in ways we don't approve. Fine, but I'm not comfortable with washing my hands on that basis. To answer you, USWEst, I think America would have been better off in the 1850s if the world refused to buy cotton made with slave labor. Is that an "anti-trade" position?

Dr. Strangelove said...

Did you say that right, LTG? Do you answer "A" while RbR answers "B"? I thought it was the other way around...

Raised By Republicans said...

I think you are mischaracterising my position LTG.

Part of this is that I know that multinationals are far less likely to employ children than are locally run companies. Also wages at multinationals tend to be higher than the local companies pay. So I don't see the multinational tennis shoe factory as the main culprit in these problems.

Where child labor is a problem, it is a problem throughout the economy. Isolating that economy, won't end the child labor problem. It will just give that country fewer resources with which to combat child labor.

Raised By Republicans said...

I think part of the misunderstanding we keep having is that LTG seems to believe that countries exist in a kind of presitine state of nature before the multinationals show up and start enslaving the local children and poluting the water table.

I think local economic elites are at least as likely to do those nasty things and that a government (one that is responsible to the demands of its people) will have an easier time keeping both foreign and domestic companies from doing nasty things when the economy is thriving.

Trade makes the economy overall thrive. Lack of trade makes it stagnate and decline.

USwest said...

I think th eover-focus on one aspect of abuse, in this case, Child Labor is where the problem is.

I would Point Out LTG that your question about slave labor and cotton is irrelevant because in that era, everyone was using slave labor, be it for cotton or sugar, so no one was going to boycott those goods due to labor. And I would point out that the African tribes themselves kiddnapped and sold their own people, which ties to RBR's arguement about unresponsibve or abusive government.

I also agree with RBR that on the issue of child labor. Where that happens, it happens all over the economy and it has a better chance of being exposed when multinationals go in. And yes, I do agree that if we refused to by soccar balls made by children in Pakistan, then perhaps the abuses would be curtailed. But it is equally likely that they would find a new market for the soccar balls.

I'd point out as well that in many of these nations, children have to work to help feed their families. It was no different in newly industralized US. So it isn't really a moral question for them, but a question of survivial.

As for job loss in the US due to relocating factories . . . do we really know how many jobs have been lost for this particular reason? Many US businesses adjust by refocusing as say distributors of goods rather than producers. Many US businesses come home after a stint abroad because they find the foreign workforce to difficult to deal with. I was just reading a great profile of what has happened in Medellin thanks to the US-Colombian Trade deals in the Washington Post. And I think it a great article that can illustrate for all of us, in a concrete way, the potential for positive change because of trade. More than anything, trade gives people options.

Raised By Republicans said...

It's very hard to tell how many US jobs have been lost due to trade and how many have been gained do to trade. What we do know is that until recently (Thank you GOP!), the total number of jobs in this country has been increasing fairly steadily.

Getting back to the original topic of this thread...Obama's proposal of investing in new green industries like electric car technology, solar power conversion for houses and windmills for farms etc would play to the natural economic advantages of this country in the global economy.

By focussing on industries that favor heavy capital investment and highly skilled labor, we play to our strengths. McCain (and the UAW and the Big Three Auto companies) would have us invest in industries that favor less skilled labor and involve older technologies (like SUVs with gas powered engines).

The Law Talking Guy said...

Dr. S is right - I said it backwards. RBR prefers "A", I prefer "B." That got lost in rewording.

I think RBR and USWest are making a lot of assumptions about the state of economic life without free trade agreements. The assumption appears to be that child labor in a factory for export is better than what the child would experience otherwise. I don't see why that should be so. It may be true that multinational companies run their factories better, but - as in China - factories owned and run by multinationals are rare. Rather, local factories just begin exporting products for multinational brand names.

I do work as a lawyer with such companies. American company X hires a middleman Y who finds a factory in China, Cambodia, Thailand, Bhutan, Russia- wherever the labor is cheapest. Comapny Y greases a few local palms and there's no problem with labor or other laws. The local governor usually owns a part of the factory, and so forth. If problems develop, the jobs move elsewhere. Sometimes we hear that children are actually locked into these factories, or women end up going to the bathroom in place on the line. Sometimes they are beaten. Sometimes they are indentured servants, paying back money they "owe." If they are crippled by bad working conditions or industrial accidents, they are discarded.

This stuff is real, folks, and the what causes it is the "don't ask/don't tell" policy of countries opening up themselves to such "free trade." What can stop it quickly is a determined commitment by developed nations not to buy such products. To insist on minimum standards of safety and wages. These need not be up to 1st-world standards, but there must be some floor, I argue.

Instead I hear this pollyannish view (I say it again) that we need not worry, that the rising tide will lift all boats, that labor standards will improve all on their own. Meanwhile we can buy our cheap goods and sit back, smug in the pretense that serving our own self-interest actually helps the very people who are the victims.

Of course, this isn't all of free trade, but as I keep saying, I'm hardly opposed to all trade! I'm opposed to the blind attitude that we have no responsibility for the harm caused abroad by the goods produced for us.

USWest said...

I think there are comments missing from this thread. I know there was at least one additional exchange with Me and RBR.

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