Capitalist Lawyer
30th November 2004, 19:24
So, commies, you think that sweatshops are automatically, categorically bad? Foreign investment is a form of colonialism? That's absurd.
Here's an opposing viewpoint from a Swedish economist:
My Webpage (http://reason.com/0312/fe.ng.poor.shtml)
Here's a partial quote. If you're interested, follow the above link and read the whole thing.
Reason: What’s the evidence that global capitalism benefits people in poor countries?
Norberg: Take just about any statistic, any indicator of living standards in the world, and you can see the progress that has been made over the exact period that worries globalization critics. In the last 30 years we’ve seen chronic hunger and the extent of child labor being halved. In the last 40 years, we’ve seen life expectancy going up to 64 years in developing countries. We’ve seen literacy levels approaching the maximum in most countries in the world. According to World Bank statistics, 200 million people have left absolute poverty -- defined as living on the equivalent of less than $1 a day -- over the past 20 years. What’s more, the most progress is found in the countries that increased trade and contacts with the outside world.
Globalization has also helped extend rights to women that had long been confined to men. These include being able to go into business, get an education, inherit money, and so on. One reason for this is simple economics. In a globalized, competitive economy, women are a potential resource. They are able to have new ideas, to produce, and to work. If you discriminate against women -- or anyone else -- you lose opportunities as a society or as an employer. Take the discussion that’s going on now in Saudi Arabia about whether women should be allowed to drive, which they can’t legally do now. While it’s unlikely the situation there will change anytime soon, it’s progress just to have the discussion. People are saying it’s extremely costly to hire drivers, often from other countries, to drive women around. You can see how basic economics, basic capitalism, creates the incentive to give women more rights.
Reason: Can you give a specific example of a developing nation that has benefited from globalization?
Norberg: Look at Vietnam, which I visited recently. It had the benefit that when the Communists took power there, they actually implemented their ideas. They collectivized agriculture and they destroyed private property, which meant that in the mid-1980s people were starving there. The Communists’ own ideas managed to do what the American bombs never did: destroy communism. In the wake of such failure, the government began to look for other examples, and they saw that Taiwan had succeeded by globalizing. The Communists in China were liberalizing trade and ownership laws and were seeing fast progress. The contrast is especially clear on the Korean peninsula. It’s the same population, with the same culture, just having two very different political and economic systems. In 50 years, one of them went from hunger and poverty to Southern European living standards. The other one is still starving.
Looking at all this, the Vietnamese chose to go global. They began to price land and they began to open up for investments and for trade, which led to quick results. Agricultural production took off and has made them one of the world’s biggest exporters of rice. But they also took in investments for manufacturing production. They’ve received tons of foreign investments and factories that gave people new opportunities and new resources that have increased their standard of living.
Reason: Critics would say that what Vietnam really imported were sweatshops.
Norberg: Sweatshops are a natural stage of development. We had sweatshops in Sweden in the late 19th century. We complained about Japanese sweatshops 40 years ago. You had them here. In fact, you still do in some places. One mistake that Western critics of globalization make is that they compare their current working standards to those in the developing world: "Look, I’m sitting in a nice, air-conditioned office. Why should people in Vietnam really have to work in those terrible factories?" But you’ve got to compare things with the alternatives that people actually have in their own countries. The reason why their workplace standards and wages are generally lower is the lack of productivity, the lack of infrastructure, the lack of machinery, and so on. If workers were paid U.S. wages in Vietnam, employers wouldn’t be able to hire them. The alternative for most workers would be to go back to agriculture, where they could work longer hours and get irregular and much lower wages.
Sweatshops are the way poor countries tap into their competitive advantage, which is cheap labor. Multinational corporations bring in more modern technology, including things like training and management systems, that actually increase productivity. When workers are more productive, they tend to earn more. That’s why in a typical developing nation, if you’re able to work for an American multinational, you make eight times the average wage. That’s why people are lining up to get these jobs. When I was in Vietnam, I interviewed workers about their dreams and aspirations. The most common wish was that Nike, one of the major targets of the anti-globalization movement, would expand so that a worker’s relatives could get a job with the company.
When unions, when protectionists, when uncompetitive corporations in the U.S. say that we shouldn’t buy from countries like Vietnam because of its labor standards, they’ve got it all wrong. They’re saying: "Look, you are too poor to trade with us. And that means that we won’t trade with you. We won’t buy your goods until you’re as rich as we are." That’s totally backwards. These countries won’t get rich without being able to export goods.
Reason: If the benefits of globalization are so obvious, why is there so much opposition to it, especially in the West? Vietnamese workers may be clamoring for more Nike factories, but protesters in Europe and North America are tossing bricks through the windows of McDonald’s and Starbucks.
Norberg: The further you get from the West, the more positive people are toward globalization, toward more business and trade ties with the rest of the world. The most vocal opponents of globalization in poor countries are often funded by critics from wealthier countries. For instance, Vandana Shiva 9director of the New Delhi-based Research Foundation for Science, Technology, and Ecology0 is a very vocal opponent of economic liberalization and biotechnology, and she’s funded by a lot of different Western groups. Actual farmers in the developing world mostly would like these new crops to actually get something done.
There are the old groups that have always been scared of foreign competition. Corporations that wouldn’t be able to beat competition from other countries are one of them. In the U.S., that includes the textile industry, which has funded a lot of the anti-sweatshop propaganda. You see the same thing when it comes to unions that are trying to educate people against free trade, trying to block the NAFTA agreements, the World Trade Organization negotiations, and similar things. But there are newer pressure groups too. These include nongovernmental organizations that have been mostly interested in domestic issues, which could be anything from workplace safety to opposing privatization and outsourcing. In a globalized world, it makes sense for these groups to make their case in front of international bodies. Probably more than most, environmental groups understood that they have an interest in challenging the new globalization forces. They are used to being able to lobby their own governments to stop certain substances, to stop genetically modified crops and the like. They understand that they have to take their issues to the WTO and to be able to fight for them there.
So, I'll ask (rhetorically) the same question I asked at the beginning of this thread...Half the population of El Salvador lives in poverty now, but what portion lived in poverty before the civil war? The numbers may be impossible to find. Its difficult to measure "poverty" when the economy consists largely of subsistence farming, rather than cash or income-based (ie, measurable) ways of making a living.
Is a poor Salvadoran better off scraping out a living on a farm, or working for low wages in a foreign-owned sweatshop? Most of recent history would indicate that he's better off working in the sweatshop.
Japan, S. Korea, Singapore, Malaysia, Taiwan, Costa Rica are all countries that have used foreign investment and sweatshops to grow out of poverty. China, Vietnam, Phillipines, Slovenia, Cambodia and many others are on that path. Perhaps El Salvador is, too.
It is naive to make the knee-jerk reaction that "foreign-owned sweatshops = colonialism = evil"
Here's an opposing viewpoint from a Swedish economist:
My Webpage (http://reason.com/0312/fe.ng.poor.shtml)
Here's a partial quote. If you're interested, follow the above link and read the whole thing.
Reason: What’s the evidence that global capitalism benefits people in poor countries?
Norberg: Take just about any statistic, any indicator of living standards in the world, and you can see the progress that has been made over the exact period that worries globalization critics. In the last 30 years we’ve seen chronic hunger and the extent of child labor being halved. In the last 40 years, we’ve seen life expectancy going up to 64 years in developing countries. We’ve seen literacy levels approaching the maximum in most countries in the world. According to World Bank statistics, 200 million people have left absolute poverty -- defined as living on the equivalent of less than $1 a day -- over the past 20 years. What’s more, the most progress is found in the countries that increased trade and contacts with the outside world.
Globalization has also helped extend rights to women that had long been confined to men. These include being able to go into business, get an education, inherit money, and so on. One reason for this is simple economics. In a globalized, competitive economy, women are a potential resource. They are able to have new ideas, to produce, and to work. If you discriminate against women -- or anyone else -- you lose opportunities as a society or as an employer. Take the discussion that’s going on now in Saudi Arabia about whether women should be allowed to drive, which they can’t legally do now. While it’s unlikely the situation there will change anytime soon, it’s progress just to have the discussion. People are saying it’s extremely costly to hire drivers, often from other countries, to drive women around. You can see how basic economics, basic capitalism, creates the incentive to give women more rights.
Reason: Can you give a specific example of a developing nation that has benefited from globalization?
Norberg: Look at Vietnam, which I visited recently. It had the benefit that when the Communists took power there, they actually implemented their ideas. They collectivized agriculture and they destroyed private property, which meant that in the mid-1980s people were starving there. The Communists’ own ideas managed to do what the American bombs never did: destroy communism. In the wake of such failure, the government began to look for other examples, and they saw that Taiwan had succeeded by globalizing. The Communists in China were liberalizing trade and ownership laws and were seeing fast progress. The contrast is especially clear on the Korean peninsula. It’s the same population, with the same culture, just having two very different political and economic systems. In 50 years, one of them went from hunger and poverty to Southern European living standards. The other one is still starving.
Looking at all this, the Vietnamese chose to go global. They began to price land and they began to open up for investments and for trade, which led to quick results. Agricultural production took off and has made them one of the world’s biggest exporters of rice. But they also took in investments for manufacturing production. They’ve received tons of foreign investments and factories that gave people new opportunities and new resources that have increased their standard of living.
Reason: Critics would say that what Vietnam really imported were sweatshops.
Norberg: Sweatshops are a natural stage of development. We had sweatshops in Sweden in the late 19th century. We complained about Japanese sweatshops 40 years ago. You had them here. In fact, you still do in some places. One mistake that Western critics of globalization make is that they compare their current working standards to those in the developing world: "Look, I’m sitting in a nice, air-conditioned office. Why should people in Vietnam really have to work in those terrible factories?" But you’ve got to compare things with the alternatives that people actually have in their own countries. The reason why their workplace standards and wages are generally lower is the lack of productivity, the lack of infrastructure, the lack of machinery, and so on. If workers were paid U.S. wages in Vietnam, employers wouldn’t be able to hire them. The alternative for most workers would be to go back to agriculture, where they could work longer hours and get irregular and much lower wages.
Sweatshops are the way poor countries tap into their competitive advantage, which is cheap labor. Multinational corporations bring in more modern technology, including things like training and management systems, that actually increase productivity. When workers are more productive, they tend to earn more. That’s why in a typical developing nation, if you’re able to work for an American multinational, you make eight times the average wage. That’s why people are lining up to get these jobs. When I was in Vietnam, I interviewed workers about their dreams and aspirations. The most common wish was that Nike, one of the major targets of the anti-globalization movement, would expand so that a worker’s relatives could get a job with the company.
When unions, when protectionists, when uncompetitive corporations in the U.S. say that we shouldn’t buy from countries like Vietnam because of its labor standards, they’ve got it all wrong. They’re saying: "Look, you are too poor to trade with us. And that means that we won’t trade with you. We won’t buy your goods until you’re as rich as we are." That’s totally backwards. These countries won’t get rich without being able to export goods.
Reason: If the benefits of globalization are so obvious, why is there so much opposition to it, especially in the West? Vietnamese workers may be clamoring for more Nike factories, but protesters in Europe and North America are tossing bricks through the windows of McDonald’s and Starbucks.
Norberg: The further you get from the West, the more positive people are toward globalization, toward more business and trade ties with the rest of the world. The most vocal opponents of globalization in poor countries are often funded by critics from wealthier countries. For instance, Vandana Shiva 9director of the New Delhi-based Research Foundation for Science, Technology, and Ecology0 is a very vocal opponent of economic liberalization and biotechnology, and she’s funded by a lot of different Western groups. Actual farmers in the developing world mostly would like these new crops to actually get something done.
There are the old groups that have always been scared of foreign competition. Corporations that wouldn’t be able to beat competition from other countries are one of them. In the U.S., that includes the textile industry, which has funded a lot of the anti-sweatshop propaganda. You see the same thing when it comes to unions that are trying to educate people against free trade, trying to block the NAFTA agreements, the World Trade Organization negotiations, and similar things. But there are newer pressure groups too. These include nongovernmental organizations that have been mostly interested in domestic issues, which could be anything from workplace safety to opposing privatization and outsourcing. In a globalized world, it makes sense for these groups to make their case in front of international bodies. Probably more than most, environmental groups understood that they have an interest in challenging the new globalization forces. They are used to being able to lobby their own governments to stop certain substances, to stop genetically modified crops and the like. They understand that they have to take their issues to the WTO and to be able to fight for them there.
So, I'll ask (rhetorically) the same question I asked at the beginning of this thread...Half the population of El Salvador lives in poverty now, but what portion lived in poverty before the civil war? The numbers may be impossible to find. Its difficult to measure "poverty" when the economy consists largely of subsistence farming, rather than cash or income-based (ie, measurable) ways of making a living.
Is a poor Salvadoran better off scraping out a living on a farm, or working for low wages in a foreign-owned sweatshop? Most of recent history would indicate that he's better off working in the sweatshop.
Japan, S. Korea, Singapore, Malaysia, Taiwan, Costa Rica are all countries that have used foreign investment and sweatshops to grow out of poverty. China, Vietnam, Phillipines, Slovenia, Cambodia and many others are on that path. Perhaps El Salvador is, too.
It is naive to make the knee-jerk reaction that "foreign-owned sweatshops = colonialism = evil"