Tuesday, April 13, 2004

Labor Rights and Trade Liberalization

Disclaimer: I know I am pretty late in the game on the whole trade debate and what I have to say is not likely to be all that original, but please forgive me, I came to the debate late and much of it happened when I was still watching the Ninja Turtles. If you find that my later comments contradict my earlier ones, please take a look at the standard response of the inconsistent.

That said, "The China Syndrome", an article that appeared In These Times raised some important issues. The thrust of the piece was that the mistreatment of workers in repressive regimes like China harms the cause of labor around the world. This matter is separate from the question of low wages in Third World and a much more compelling argument against indiscriminate free trade. Low wages, when they occur organically in a free society, are the result of economic necessity. If the price of labor wasn't at that level or thereabouts, it is unlikely that a developing nation would be able to attract the capital needed for further economic growth and development. Under these circumstances the classic case for tree trade still works, more or less. However, in instances where workers (and is often the case in such situations, citizens) are denied their basic rights (such as the right organize), the entire equation is changed. Rather than wage level being the natural product of the market, they are the artificial consequence of government policy and therefore quite unfair. In fact, it runs completely counter to the spirit of free trade and amounts to protectionism, as it benefits the ruling class of one country at the expense of the working class worldwide (or at least those whose countries are part of the global economy). Therefore, when it is possible, there is no reason to limit trade with governments whose policies are so anti-competitive and immoral. If this thinking was put into pracitce, than China and other regimes like it would be shut out of major markets, while relatively liberal, but poor states like India and Mexico would benefit.

However, there is an important exceptions to my point. Geopolitics should not be ignored when divising trade policy, as decisions about trade do affect foreign relations. Enacting protectionist measures against China, especially now that we need its cooperation in managing North Korea, might have serious repurcussions. By the same token, opening our markets to the goods of authoritarian allies like Pakistan would also probably be good policy, though it is not in line with the principle outlined above.


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