June 18, 2003


Hereís why we capitalistic tyrants support globalisation in the developing world:

Ten years ago, when Nike was established in Vietnam, the workers had to walk to the factories, often for many miles. After three years on Nike wages, they could afford bicycles. Another three years later, they could afford scooters, so they all take the scooters to work (and if you go there, beware; they havenít really decided on which side of the road to drive). Today, the first workers can afford to buy a car.

Buy Nike, and liberate a third-world peasant.

Posted by Tim Blair at June 18, 2003 03:27 AM | TrackBack

You see? You SEE?!? Globalization is allowing happy peasants to buy evil, smoke-belching, gas-guzzling cars! It's all about ooooooooil!

Free Mumia!

Posted by: Damian P. at June 18, 2003 03:41 AM

F'ing-A, mate. This is they way it should work.

However, I think the next step would be their being able to afford the damn sneakers.

Posted by: Bill Jefferson at June 18, 2003 05:45 AM

I can find a used scooter for less money than a new pair of sneakers. Have you priced Nikes lately?

Posted by: Andrew at June 18, 2003 05:59 AM

This article just goes to show that globalisation is indeed a Good Thing, so long as large numbers of consumers get off their arse and ensure that globalisation is *more* than just hyper-mobile capital.

You think Nike now pays for "free or subsidised meals, free medical services and training and education" out of the blessed goodness of their heart? Think they were doing it 10 years ago? Is it any coincidence that they have been one of the most consistently targetted & boycotted users of 3rd world labour, and having had to respond to this criticism and lift their game? International transparency and regard for their corporate behaviour has had zero impact. Sure.

But giving credit where some credit is due - not all, not most, but some - for the movement to globalize humane labor practices, those stupid/smelly/hippie/anarchist/turtle lovers from seattle, wellllll, that would just taste like crow in your craw, wouldn't it. Go down to the barn and kick your "anti-globalist" straw man around. You'll feel better.

Posted by: Pasted at June 18, 2003 06:07 AM

Hi Pasted,

Plenty of people opposed Nike before the oh-so-trendy anti-globalists showed up. I refused to buy their shoes for my teenage son in the late 80s-90s because I didn't like their marketing techniques (Spike Lee pushing $200 tennis shoes as a status symbol for ghetto kids). But that doesn't make me a supporter of the pie-in-the-sky socialist/anarchist crap espoused by your sort.

That's the beauty of economic freedom: the system can improve with criticism for the betterment of all. Too bad you can't say the same for your chosen economic belief system, socialism, which has left a trail of death, deprivation and destruction that would make the most hard-hearted robber baron blush.

Posted by: Susan at June 18, 2003 06:31 AM


Let's agree that consumer pressure gets results. Companies change their practices when they perceive their interests to be at stake.

But if you go here, you'll see abundant evidence that the East Asian/Pacific nations were experiencing rapid increases in health, education, and living standards in the period 1975-1990, well before the anti-sweatshop movement got up a head of steam, and after many of those countries opened up their economies to foreign investment a la Nike. The anti-globalists turned up very late in the piece, when a substantial portion of the gains had already been made.

And the article Tim cites merely uses Nike as an example, anyway. How do you account for the fact that wages in multinational companies are several times higher than local companies, on average? Most of these multinationals have very low public profiles, and don't experience Nike levels of scrutiny. What's their motivation for paying more and offering better conditions?

And lastly: when will the anti-globalists admit that they've won? (Let's be gracious and concede the point.) If workers are many times wealthier and healthier, and can reasonably expect their children to do even better, what's left to fight for? Don't they run the risk, as Norberg warns, of destroying the achievements of people like Tsi-Chi?

Posted by: murray at June 18, 2003 07:08 AM

and I a few years more time they'll be jogging to work in Nilke sneakers

Posted by: GILES at June 18, 2003 07:32 AM

and I a few years more time they'll be jogging to work in Nilke sneakers

Posted by: GILES at June 18, 2003 07:47 AM

Susan - you make a valid point but then head straight for the name-calling strawman bashing I was talking about. I'm not anti-globalist, anti is far too strong. Perhaps other-globalist since the current understanding of the term in general use has been so narrowly defined.

I consider myself towards the left because of thinking that some forms of social welfare and redistributive justice (such as progressive taxation) are highly enlightened and self-preserving activities for societies to institutionalise. But its a moderate position: I'm no "pie-in-the-sky socialist/anarchist" crapper.

The east asian tigers/miracles welcomed the foreign investment which certainly drove their development trajectory. But it wasn't a neo-liberal free for all, which I think is what many believe is the only form of capitalism. Their growth was closely monitored and strongly guided and controlled by the authoritarian governments in question (for example, Singapore & Taiwan).

The 'free market' is an excellent mechanism for delivering just one thing: efficiency. Efficiency is generally very useful, and has positive consequences. But humans value more than just economic efficiency. And where its downsides come into conflict with other things we value (such as human development, or diverse media necessary for a healthy democracy) it needs parameters; it needs to be moderated, controlled and regulated. But it is up to humans (whether through their democratic governments or consumer boycotts or whatever) to make sure that their values are known and accounted for.

Posted by: Pasted at June 18, 2003 08:37 AM

Entreprenures/capital input
Material betterment/capital improvements/time for spiritual growth.

Problem: identify unnecessary production factor

Posted by: Stephen at June 18, 2003 08:46 AM


"...redistributive justice (such as progressive taxation)..."

I'm not much on straw men or name calling either. But undefined terms are a serious bugbear in debate.

So I, for one, would like to see an exhaustive, debate-quality definition for "redistributive justice."

Please include in your definition:
1) How and why (any) redistribution is, in fact, Just (i.e. your philisophical context for the term),
2) Ideal limits, e.g. at what point does redistributive justice become "unjust," and
3) Your proposed methods to deal with any "redistributees" who manage to opt out of the Redistributive Justice system.

I think you would have to agree that any reasonable and effective debate on these issues must include terms on which there is some common agreement as to meaning and validity. Hard to move forward without that, really.

Posted by: Stephen at June 18, 2003 09:07 AM

Pasted, when you say "[t]he 'free market' is an excellent mechanism for delivering just one thing: efficiency", what do you mean by efficiency? Is it productivity, or energy intensity, or what?

The reason I ask is that you appear to be making the common argument that there is a clear distinction between "economic" and "non-economic" values. But if economics is properly understood as the study of how and why people make choices (and those choices depend on what people value, of course), which choices should we classify as "non-economic"?

I assume you're answering me when you mention the Asian "tigers", but it seems that you avoid my question. Your original point was that activist pressure led to the improvements Norberg cites. I agreed that consumer pressure works but asked why those nations were on the road to prosperity long before the activists got our (and Nike's) attention. It seems that you give far too little credit to the factors Norberg cites here:

It is not altruism that is at work here; it is globalisation. With their investments in poor countries, multinationals bring new machinery, better technology, new management skills and production ideas, a larger market and the education of their workers. That is exactly what raises productivity. And if you increase productivity ó the amount a worker can produce ó you can also increase his wage.

The activists are welcome to claim responsibility, I suppose, but from here they look very much like the local witchdoctor crediting his raindance for saving the crops.

Posted by: murray at June 18, 2003 09:09 AM

The anti-globalisatin movement doesn't actually care about the results of their actions, just as long as they all get to feel all warm and fuzzy about themselves - it's called auto-eroticism.

Posted by: AndyM at June 18, 2003 09:52 AM

auto-eroticism? Do you mean they are up themselves?

Posted by: Lawrie at June 18, 2003 11:12 AM


You make some interesting remarks. It would seem that in today's world whether one is left or right comes down to how much one trusts government or private enterprise. Me, I'm right wing in that I distrust government. Those on the left perhaps have a stronger distrust of private industry and thus want government to regulate things so they are "fair". To me that has always been the credo of envy. There are so many examples of how governments have cocked up the world, that it is a wonder that anyone can even think of offering government regulation as a solution to anything. Unfortunately, regulation almost always complicates things. Speaking as a tax expert, I can tell you that the complication involved in the tax system is so immense that it ties up billions of dollars that could be used better elsewhere.

Don't seethe with the Roundheads,
Laugh with the Cavaliers!!

Posted by: Toryhere at June 18, 2003 11:20 AM

I know I'm drawing a long bow here but if we go back a bit globalisation has existed in one form or another for thousands of years - we called imperialism, conquest, empire-building etc. The Roman Empire spread it's influence and interests as far into the known world as possible with little or no care for the opinions of the locals about whether or not they wanted to join. The result? Road, clean water, better sanitation and members of the local communities becoming healthier, better educated and more prosperous than had they been left alone (Yes, I know I wasn't there and no, I don't have any ready-to-hand sources to quote). It reminds me very much of the Monty Python film "The Life of Brian" where John Cleese's character said (sic):
"alright, apart from road, aquaducts, toilets, education, law and order...What have the Romans ever done for us? Nothing" a rough quote - see the film. I don't own or like Nike fashion but I do love my health, education and safety.

Posted by: Jake D at June 18, 2003 12:00 PM


Let me start with a few fundamental questions. Can you show me one piece of evidence that demonstrates the link between boycotts, international criticism and activism and Nikeís decision to negotiate with suppliers into providing better conditions in their factories? Can you point me to any evidence demonstrating that boycotts actually harmed Nikeís sales figures? Is there any evidence that shows how many people actually made a choice to purchase other shoes due to the perception that Nike used suppliers who provided workers with poor conditions?

I believe that there is no evidence to justify claims of a correlation between so-called boycotts and Nikeís business decisions. First, counting the number of people who actually chose to buy shoes other than those carrying the Nike trademark solely due to issues related to labour standards is impossible. There are half-arsed surveys purporting to show what people say theyíd do, but nothing of which Iím aware that shows what they actually do. And even if there is evidence of peopleís purchases, it is impossible to know with certainty why they purchased specific brands over others. Second, refusing to buy Nike because you believe their shoes are made in factories with poor labour standards is not a particularly effective way to help workers. If boycotts were indeed successful Ė and letís say 50% of people who would have bought Nike shoes refused to buy them on the basis of unfair labour practices Ė then workers would be thrown out of work. But a more important point is that Nike shoes are often Ė though not always Ė made in the same factories as the other shoes of comparable quality and style. For example, there are dozens of factories within 100km of where I sit that make shoes for Nike, adidas-Salomon, Reebok, Sketchers, New Balance, Puma, LA Gear, and so on. Workers simply work on different production lines: conditions are exactly the same for all of them. So buying Reebok over Nike on the basis of labour standards doesnít make sense.

Your claims are founded on the premise that Nike has been pushed into making changes; or as you put it, they havenít acted Ďout of the blessed goodness of their heartí. I donít think that correlation stands up under scrutiny, but Iím willing to be proved mistaken on that count. I await your response. But I think youíre also wrong for other reasons. Many companies obviously moved production to places like China and Vietnam to take advantage of cheaper costs. This is not a particularly noteworthy point. Of more interest is the fact that this work was contracted out to mainly Taiwanese, Korean and Hong Kong invested companies who in turn built production facilities in other parts of Asia. There is a mistaken belief that a company like Nike can order a Taiwanese invested factory in China to lift its game.

First, are the people who thunder about exploitation and encourage boycotts comfortable with the idea of the US-based Nike Corporation imposing its standards, ideas, perceptions and views on Taiwanese invested, mainland managed production facilities? This would seem to me to smack of imperialism. This is why I used the term Ďnegotiateí earlier on. Boycotts arenít negotiations and serve only to retard improvements. Yes, retard. Second, how easy do you think it is for Nike management to cruise out to a factory and order management to spend US$1 million on providing a better ventilation system in the gluing section? Of course worker safety should be guaranteed, and of course the factory should provide good ventilation, pay at least minimum wages, and act in accordance with the law. But how easy do you think it is to do this, day after day, on the ground? How easy it is for Nike to monitor this? And how costly? Itís actually very, very difficult and very, very costly. Third, Nike isnít dealing with tin-pot outfits. Some of its suppliers are now multinational in their own right. Ordering these guys around isnít really an option. But parties can negotiate, and they do. Ordering and taking the moral high ground is counter productive in most instances. Fourth, I infer that you believe there are no decent people working for Nike. I wonder how much contact you have with any sector of Nikeís workforce, be it in R&D, marketing, human rights, or the factory workforce? Iíll stick my neck out here and say I think you have no contact with the company whatsoever. Iíll go further. I think you have no contact with any company outsourcing production in Asia. If you did youíd know that there are many people in large companies who are appalled with what they see in production facilities in the region. The problem is not that they are evil people, but they rarely see the facilities. Invariably, when HQ management sees appalling conditions they are upset. The question then is what to do. How do you make things better but at the same time maintain good relations with perhaps upwards of a thousand suppliers (some large retailers have more than 5,000 suppliers in China alone), and then monitor condition? Itís very easy for people like you to make pithy comments, but you have very little to contribute in whatís happening on the ground.

Posted by: Preston Whip at June 18, 2003 01:15 PM

I always thought the whole point of "Uncle" Ho Chi Min's turning Vietnam into a Worker's Paradise was so that the Government could secure a better deal than the Frogs had given the People.

If Nike swanned in with their original offer and the Commie bureaucrats took it, those Commies effectively pimped out their own people.

The multinational Nike, in the interests of more efficient capitalism, showed more largesse than the Commies originally requested.

I'd say Hanoi sold out the workers and the capitalist West, for a multitude of reasons (yes, some self interested) is the sugar daddy/hero here.

Yay for us!!!

Posted by: JDB at June 18, 2003 01:30 PM

Sorry to flog Pasted's dead horse one more time, but I can't leave "redistributive justice" just hanging there.

My Oz Pocket Oxford gives two meanings, fairness and thelegal system stuff. So I guess Pasted means redistributive fairness. So he/she is saying that it is fair to take money from the people who earned it and give that to others. I can think of reasons to have a welfare system, but none of them are "fairness". I would have thought taking money from the people (like me) who work hard to get it is fundamentally not fair.

And forget the blather about different pay rates. My income is set purely by market forces, I don't have a union or even an award. I get paid a lot purely because people highly value what I do. So how is it unfair for me to have that money.

If you say that others have less, or can't look after themselves, I ask, how long is that piece of string?

The reality is that we have a welfare state because most of the money comes from the minority of high income earners (note that last word) who are thus an easy target for governments. It's easy to get majority support for progressive taxation when the people who pay the tax are a minority of the population.

Calling it redistributive justice is just putting a pretty face on what the great French economist Bastiart called "legalised plunder".

Posted by: PJ at June 18, 2003 02:40 PM

Shoulder to shoulder with Murray, Toryhere,PJ,Whip, any others ommitted.A few extra comments are in order.
1] Statistics:when the communists under Ho Chi Minh were simply confined to the North, they merely confined themselves to murdering 50,000 peasants and imprisoned a further 50,000 to 100000 in camps which means, forced labour under appalling conditions.During Tet, during which much of the commies' force were finally wiped wiped out, they murdered another 5000 in Hue.When,allies having given into the communards back home, Murdering bastard Minh and his merry band of vermin were allowed to take over the South, an inital 40,000 southerners were imprisoned while 80,000 were murdered , after which more were imprisoned and worked to death in labour camps.

The regime is still viscious.

Apropos Stephen's post, leisure time is due to open commerce and, from technology, higher mvp of labour to capital.Physical well being also is advanced moost in free open market driven societies and not socialist nirvanas.

More-over, in places in which Nike factories have been set up, Nike provides clean , safe conditions and good paypackets which, in Vietnam are definitely superior to that which can be had under the murdering communistos of the regime.

Socialism has littered history with muder, oppression and economic ruin, it is not a record to be proud off. It runs hollow when socialists rant against capitalism when the culprits are corruption of markets led by socialist governments.

To this, the Greens are a pol potian regime. Their Alice in Wonder land vision for the future would be no less horrific. Instead of handing out gongs to the likes of Garretts and others, they should be failed from the taxpayer offices they enjoy. They are savages, destroyers and not great humanitarians. They are communist fucktards.

So, Philip Adams, continue to suck your sweeties in apolgising for savage regimes as you attack capitalism, the only thing which genuinley liberates people, along with the complement, the rule of common law. Indeed, the fucktards at ABC , along with the greens,should get real working life experience of living under such paradises - take your pick , there is Mugabe, Castro, North Korea. Enough `work-experienc choices to usefully let you lot disappear.

Posted by: d at June 18, 2003 05:33 PM

I particularly love the way Capitalism is so good at giving the poor peasants in developing countries the opportunity to
die early but at least die rich.

Posted by: Rex at June 18, 2003 05:46 PM

If there is a problem I have with your post, d, it is you point out that "Murdering bastard Minh and his merry band of vermin were allowed to take over the South", when South Vietnam was taken over in 1975. Minh had been dead for seven years when this happened.

Anyway, what people forget to point out is that wages are determined by the capital stock. When the first multinationals set up in a growing economy wages will be low because of a high labour supply and scarce capital. The solution to this is not to "limit foreign investment" or conduct any other silly schemes of the economic xenophobes, but to let in more foreign investment and have more and better companies.

Also it is never pointed out by the ferals that many of these developing countries have been gutted by communists in the first place. Even Noam Chomsky couldn't bring himself to apologise for his crimes against the Cambodians.

Posted by: Steve Edwards at June 18, 2003 05:46 PM

O.K., on Minh, Steve.Murdering bastards minus uncle Minh.
Rex should ponder the great strides in Bangladesh because of Grameenbank , an example which is being followed in some European countries, as wellas by India.
The transformation of the lives of many is real and it has nothing to do with socialism.Socialism ruins lives.And we need only even look at that sick bastard, Australia's own socialist economies of `welfare ' `free schools' `free medicine' `redistribution' for the sheer ruination socialism delivers.The only winners are fraudsters who make their piddling little `careerahs' out of it.

Posted by: d at June 18, 2003 06:18 PM

Rex, that link is to the New York Times, one isn't about to register with that site just to read the article indicated by the link; they are a pack of lying communards, wouldn't go near it, not even within ten minutes of one of their toilet bowl rags.

Posted by: d at June 18, 2003 06:22 PM


More power to you, but you might like to think this through a little more. After 1949, the CCP divided the population into urban and country dwellers. It instituted the hukou system (household registration) to prevent movement from rural to urban locations, provided cradle to grave welfare for urbanites but not for peasants, and underpinned industrialisation by procuring produce from China's farmers at extraordinarily low prices (i.e., peasants were forced to produce food for workers, but enjoyed almost none of the benefits). It was no surprise then that when the eastern seaboard was opened in the 1980s and 1990s and the government started to turn a blind eye to the hukou system that peasants flocked to jobs that end up killing them. A single month's wages could equal an entire family's earnings for twelve months in rural areas, and for many the risk is something they'll endure. There's a saying in China that translates to something like 'The pain of the job is less than the pain of no job'.

I for one don't think people should be working in conditions that kill them, but you might want to look at how the current government fails to implement laws and regulations that if enforced have enough teeth to prevent the conditions described in the story to which you link. The question then isn't about whether capitalism is evil, but how to ensure that the regulations already promulgated are enforced. As with so many others of your ilk, the pithy comment is about all you can muster. Why not come up here and help solve it? I will lay money on the assertion that you've never visited a Chinese factory in your life and have no intention of doing so. If you have, you can correct me by pointing me to the facility in question and providing details (Chinese name, operating procedures, size of workforce, locations, and so on).

Once you get your head around some of the complexity, the capitalism-kills-peasants-young argument starts to sound a tad simplistic. But then again, you like it that way, I'm sure. It makes everything so easy.

Posted by: Preston Whip at June 18, 2003 06:40 PM


You're right not to rate the NYT article too highly. It's a pretty pointless exercise at best (both the article and the newspaper as a whole). It's always fascinated me how the left think it's important to expose the true state of working conditions in places like China, but virtually ignore the fact that the same thing happens right beneath their noses at home. As far as the facts go, the NYT doesn't get anything wrong, but it's interesting that it's not looking too hard at comparable plants in upstate New York for instance. Here's my take on this.

Leftists are much more comfortable 'exposing injustices' in the developed world because they will never be called upon to put their money where their mouth is. That is, like Rex they can tap out their odes to exploitation from the comfort of their own homes, boycot Nike (but still buy shoes, clothes, watches, computers and so on made in exactly the same conditions), and never actually go the extra step to take action. But let's say Rex lived within a mile of a similar factory to the one detailed in the NYT piece. He'd actually have to get his sorry arse down to the factory, talk to the workers, listen to them, hear things he may not like, and actually have to work with them and management on developing a solution. You see, the workers near Rex's home may in fact enjoy the fruits of capitalism and have little time for any socialist fantasies. They may not actually link their bad working conditions with the evil side, and may not see their salvation in some socialist wet dream. This will be a big problem for Rex. Boycotting the product no longer cuts the mustard. The situation will obviously be more complex than the one presented in the paper about a factory thousands of miles away in a country he'll never visit. And that makes it harder.

It's just easier to whine about the evils of capitalism when it's so far away. The leftist dilemma is that unionism in countries like Australia, the UK and the US is in decline. Socialism is not taken seriously. And yet they patronisingly assume that the poor saps in China - uneducated, willing to listen to the white guy and a little bit simple - will welcome their intervention with open arms. That's leftist solidarity for you.

Come on over Rex. Solve it for us.

Posted by: Preston Whip at June 18, 2003 07:01 PM

An interesting blog on 3rd world development and descending into commentary on the NY Times. As an amateur economist the combination caused me to recall some of the commentary of Paul Krugman on the issue. Krugman, as some of the more informed here may realise is a liberal democrat economist who is the regular NY Times op-ed page commentator. Since adopting this role his strident anti-Bush stance stance has earned him a reviled status on web sites such as this one. My own opinion is that Krugmans recent NY Times columns discredit his previous achievements and talents. Krugman in the past (and given more editorial space than the paltry NY Times offering) was brilliant at writing for an ordinary audience from a position as an academic economist.

So what did the liberal democrat NY Times Op-Ed economist have to say on the issue being discussed here .... well sorry cant get the posts to work but go to www.pkarchive.org which is the unofficial PK site and under the 'International Trade' section in the archive see the article titled "In Praise of Cheap Labor". On the same link the article on "Enemies of the WTO" is also of interest.

Rex in particular should study these articles. I wonder if Rex understands how many Chinese die annually in state owned community coal mines in China from accidents and lung disease ? I wonder if Rex has seen the mortality statistics showing that longevity in the old Soviet stagnated and even declined from the 1960's at a time when longevity in the West was rising strongly?

Posted by: Thersites at June 18, 2003 11:58 PM

Having just re-read the the academic-liberal -left-democrat- Bush hater - NY Times columnists post I think it's good enough to post directly and no apologies if it takes up space .......


Bad jobs at bad wages are better than no jobs at all.
SYNOPSIS: Detractors of globalization don't understand Economic reality and comparative wages.

For many years a huge Manila garbage dump known as Smokey Mountain was a favorite media symbol of Third World poverty. Several thousand men, women, and children lived on that dump--enduring the stench, the flies, and the toxic waste in order to make a living combing the garbage for scrap metal and other recyclables. And they lived there voluntarily, because the $10 or so a squatter family could clear in a day was better than the alternatives.
The squatters are gone now, forcibly removed by Philippine police last year as a cosmetic move in advance of a Pacific Rim summit. But I found myself thinking about Smokey Mountain recently, after reading my latest batch of hate mail.
The occasion was an op-ed piece I had written for the New York Times, in which I had pointed out that while wages and working conditions in the new export industries of the Third World are appalling, they are a big improvement over the "previous, less visible rural poverty." I guess I should have expected that this comment would generate letters along the lines of, "Well, if you lose your comfortable position as an American professor you can always find another job--as long as you are 12 years old and willing to work for 40 cents an hour."
Such moral outrage is common among the opponents of globalization--of the transfer of technology and capital from high-wage to low-wage countries and the resulting growth of labor-intensive Third World exports. These critics take it as a given that anyone with a good word for this process is naive or corrupt and, in either case, a de facto agent of global capital in its oppression of workers here and abroad.
But matters are not that simple, and the moral lines are not that clear. In fact, let me make a counter-accusation: The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through. While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers.

After all, global poverty is not something recently invented for the benefit of multinational corporations. Let's turn the clock back to the Third World as it was only two decades ago (and still is, in many countries). In those days, although the rapid economic growth of a handful of small Asian nations had started to attract attention, developing countries like Indonesia or Bangladesh were still mainly what they had always been: exporters of raw materials, importers of manufactures. Inefficient manufacturing sectors served their domestic markets, sheltered behind import quotas, but generated few jobs. Meanwhile, population pressure pushed desperate peasants into cultivating ever more marginal land or seeking a livelihood in any way possible--such as homesteading on a mountain of garbage.
Given this lack of other opportunities, you could hire workers in Jakarta or Manila for a pittance. But in the mid-'70s, cheap labor was not enough to allow a developing country to compete in world markets for manufactured goods. The entrenched advantages of advanced nations--their infrastructure and technical know-how, the vastly larger size of their markets and their proximity to suppliers of key components, their political stability and the subtle-but-crucial social adaptations that are necessary to operate an efficient economy--seemed to outweigh even a tenfold or twentyfold disparity in wage rates.

And then something changed. Some combination of factors that we still don't fully understand--lower tariff barriers, improved telecommunications, cheaper air transport--reduced the disadvantages of producing in developing countries. (Other things being the same, it is still better to produce in the First World--stories of companies that moved production to Mexico or East Asia, then moved back after experiencing the disadvantages of the Third World environment, are common.) In a substantial number of industries, low wages allowed developing countries to break into world markets. And so countries that had previously made a living selling jute or coffee started producing shirts and sneakers instead.
Workers in those shirt and sneaker factories are, inevitably, paid very little and expected to endure terrible working conditions. I say "inevitably" because their employers are not in business for their (or their workers') health; they pay as little as possible, and that minimum is determined by the other opportunities available to workers. And these are still extremely poor countries, where living on a garbage heap is attractive compared with the alternatives.

And yet, wherever the new export industries have grown, there has been measurable improvement in the lives of ordinary people. Partly this is because a growing industry must offer a somewhat higher wage than workers could get elsewhere in order to get them to move. More importantly, however, the growth of manufacturing--and of the penumbra of other jobs that the new export sector creates--has a ripple effect throughout the economy. The pressure on the land becomes less intense, so rural wages rise; the pool of unemployed urban dwellers always anxious for work shrinks, so factories start to compete with each other for workers, and urban wages also begin to rise. Where the process has gone on long enough--say, in South Korea or Taiwan--average wages start to approach what an American teen-ager can earn at McDonald's. And eventually people are no longer eager to live on garbage dumps. (Smokey Mountain persisted because the Philippines, until recently, did not share in the export-led growth of its neighbors. Jobs that pay better than scavenging are still few and far between.)
The benefits of export-led economic growth to the mass of people in the newly industrializing economies are not a matter of conjecture. A country like Indonesia is still so poor that progress can be measured in terms of how much the average person gets to eat; since 1970, per capita intake has risen from less than 2,100 to more than 2,800 calories a day. A shocking one-third of young children are still malnourished--but in 1975, the fraction was more than half. Similar improvements can be seen throughout the Pacific Rim, and even in places like Bangladesh. These improvements have not taken place because well-meaning people in the West have done anything to help--foreign aid, never large, has lately shrunk to virtually nothing. Nor is it the result of the benign policies of national governments, which are as callous and corrupt as ever. It is the indirect and unintended result of the actions of soulless multinationals and rapacious local entrepreneurs, whose only concern was to take advantage of the profit opportunities offered by cheap labor. It is not an edifying spectacle; but no matter how base the motives of those involved, the result has been to move hundreds of millions of people from abject poverty to something still awful but nonetheless significantly better.

Why, then, the outrage of my correspondents? Why does the image of an Indonesian sewing sneakers for 60 cents an hour evoke so much more feeling than the image of another Indonesian earning the equivalent of 30 cents an hour trying to feed his family on a tiny plot of land--or of a Filipino scavenging on a garbage heap?
The main answer, I think, is a sort of fastidiousness. Unlike the starving subsistence farmer, the women and children in the sneaker factory are working at slave wages for our benefit--and this makes us feel unclean. And so there are self-righteous demands for international labor standards: We should not, the opponents of globalization insist, be willing to buy those sneakers and shirts unless the people who make them receive decent wages and work under decent conditions.
This sounds only fair--but is it? Let's think through the consequences.

First of all, even if we could assure the workers in Third World export industries of higher wages and better working conditions, this would do nothing for the peasants, day laborers, scavengers, and so on who make up the bulk of these countries' populations. At best, forcing developing countries to adhere to our labor standards would create a privileged labor aristocracy, leaving the poor majority no better off.
And it might not even do that. The advantages of established First World industries are still formidable. The only reason developing countries have been able to compete with those industries is their ability to offer employers cheap labor. Deny them that ability, and you might well deny them the prospect of continuing industrial growth, even reverse the growth that has been achieved. And since export-oriented growth, for all its injustice, has been a huge boon for the workers in those nations, anything that curtails that growth is very much against their interests. A policy of good jobs in principle, but no jobs in practice, might assuage our consciences, but it is no favor to its alleged beneficiaries.

You may say that the wretched of the earth should not be forced to serve as hewers of wood, drawers of water, and sewers of sneakers for the affluent. But what is the alternative? Should they be helped with foreign aid? Maybe--although the historical record of regions like southern Italy suggests that such aid has a tendency to promote perpetual dependence. Anyway, there isn't the slightest prospect of significant aid materializing. Should their own governments provide more social justice? Of course--but they won't, or at least not because we tell them to. And as long as you have no realistic alternative to industrialization based on low wages, to oppose it means that you are willing to deny desperately poor people the best chance they have of progress for the sake of what amounts to an aesthetic standard--that is, the fact that you don't like the idea of workers being paid a pittance to supply rich Westerners with fashion items.
In short, my correspondents are not entitled to their self-righteousness. They have not thought the matter through. And when the hopes of hundreds of millions are at stake, thinking things through is not just good intellectual practice. It is a moral duty.

Posted by: Thersites at June 19, 2003 12:16 AM

Thersites, that's a great column. It makes a nice counterpart to Norberg's piece, since it's less anecdotal and more thoroughly explains the economic underpinnings of globalization.

Whatever happened to Krugman? A sharp blow on the head, perhaps?

Posted by: murray at June 19, 2003 03:17 AM

Uh... Thersites? I have no problem with length, really -- but I hear that there is space opening up on Blogspot.

Posted by: Andrea Harris at June 19, 2003 03:18 AM

I am reminded of the great hew and cry of 19th century England as the peasants crowded into the cities to work in factories.

Yes the conditions were awful and Charles Dickens and others railed against them. But did he ever wonder why they came? Because the conditions in Rural England were much worse.

Posted by: tallan at June 19, 2003 11:57 AM

Exactly, working conditions are bad in these places but they are improving and they could be a lot worse.

Most, if not all, of the improvements are due to foreign investment in these countries due to lower labour costs that Krugman mentioned in the column Thersites posted.

Whip, do you have any names for these comparable plants which exist in upstate New York. I'm not disagreeing with you that they exist, I'm just wondering what they make and who owns them.

Posted by: sam at June 20, 2003 01:53 AM

Sam: I was just using NY as an example because it's in the NYT's backyard. I don't think you'd have to look far to find manufacturing plants in that state with poor OHS records, but I don't have names to hand. But if you want a concrete example try coal mining in Pennsylvania. Since mining started there over a century ago they've recorded over 51,000 (fifty one thousand) deaths in anthracite and bituminous mines. Regulations for safe mining weren't promulgated until 1969! Or you might like to look even closer to the NYT offices - i.e., the garment district and the sweatshops located there (and in Los Angeles, too). OHS is certainly better in the US than in China (no one could dispute that), but I can assure you that the picture is not even. There are some excellent facilities in China and some atrocious ones in the US (or any other developed country).

As for who owns them: I'd suggest that many facilities in the US exhibiting poor safety records are owned by US citizens. Having said that, did you know that at least one mainland Chinese manufacturer owns and operates a manufacturing facility in the US? From all reports it's an excellent place to work. As are indeed the Chinese plants owned by this company.

It's a complicated picture and moralising about the problems (one way or the other) don't really get us very far.

Posted by: Preston Whip at June 20, 2003 12:19 PM

Johan Norberg has written a fine article in,The Spectator,7/6, `The noble feat of Nike'.The impact of the Nikes of the world, i.e. not just Nike, is demonstrared by the telling sentence:in Vietnam,

`In ten years 2.2 million children have gone from
child labour to education.It would be extremely
interesting to hear an antiglobalist explain
to Tsi-Chi why it is important for
Westerners to boycott Nike,so that she
loses her job, and has to go back into
farming, and has to send her son to

He continues with a telling contrast:

` The European Left used to listen to
the Vietnamese communists when they
brought only misery and starvation to
their population'

Of the Tsi-Chi's of Vietnam, he points, they can now not merely aspire to it but realise, to send their sons off to becaome doctors, engineers , buinessmen.

As for poor pay, here is a telling statistic, Nike pays its people 3x what government owned factories pay.
Next, Nike subsidises foood for its employees, medical services, and also education and training.

So much for the crap about Nike being a harsh employer. As Norberg muses, `These facts make Nike sound more like Santa Claus than Scrooge.'

Here is another telling Statistic:
If you get to work for an American multinational (including Nike)in a low income country (like Vietnam), you get eight times the average income'.
I like this line: `If this is exploitation, then the problem in our world is that the poor countries aren't sufficiently exploited.'

So much for hand wringing and moralising about how nasty Nike and other comapnies are to people in countries like Vietnam.

Oh, those bastards the greenies with their pol potian visions should be put behind bars for what they would like to see happen to the Tsi-Chi s of the world.Along with the crap artists who appeared in the BBC-ABC studios last night including that stupid bitch Clare Short.

Posted by: d at June 20, 2003 12:33 PM