>In the WTO and China discussions, the unions are not demanding protectionism
>against specific goods -- which manufacturers and unions have done in the past
>admittedly -- but are have now moved away from protectionism to a demand for
>enforcement of fair labor standards.
Nathan,
Due to an underdeveloped capital goods sector--economies of scale are not realized as investment demand does not create a large enough market--most third world countries suffer quite high vertically labor integrated labor coefficients.
That is, low wages do not give them a comparative advantage; their low average productivity puts them at absolute disadvantage and indeed greatly explains their obscenely lower average wages. For the working out of this argument, see Alejandro Vallue Baeza, "National Differences in Average Wages: The Case of Mexico and the United States" International Journal of Political Economy vol 27, no 4 (Winter 1997-98)
This is why--despite such low wages-- third world countries have little comparative advantage on that basis and so little of foreign direct investment goes to the third world where companies would then have to import at great transportation cost semiprocessed materials produced by better paid, albeit much more productive, labor.
It is possible that small, most labor intensive parts of the production process will continue to be relocated in third world countries but this will have the effect of increasing exports of semiprocessed goods.
Now to make up for its absolute disadvantage in unit costs, third world capitalists can only be internationally competitive under conditions of extreme wage repression.
What's the real answer to this? To shut them out of global markets? That's ridiculous, and to condemn people to even greater misery than presently obtaining in the same way the Harkin Bill did (for the terrible effects of bans on child labor, see most recent Critique of Anthropology, special issue on child labor). AFL CIO leading thinker Palley makes the inane suggestion of imposing tarriffs on third world producers.
If these third world countries are going to build a capital goods sector that is going to allow them to reduce unit labor costs through productivity gains, not simply extreme wage repression, they will need a market enlarged by foreign effective demand to obtain dynamic returns in capital goods production, e.g., power tools and computers (see Pasinetti). The last thing they need is to be cut off from international markets.
They will need some protection and subsidy of domestic machine building industries. We don't need Sweeney's campaign to indiscriminately lower other countries' trade barriers.
They will need to target FDI in specific lines, and demand tech transfer as well as lax IPR's as they begin to learn and produce on their own. They can't grant absolute freedom to the corporation that Clinton is fighting for on behalf of the American people.
>, but demands for
>labor standards benefit workers collectively in both countries at the
>expense of
>capitalists in both countries.
It's not that simple. If countries can't compete on the basis of unit labor costs due to the advanced countries' higher overall productivity other than through wage repression, then you are arguing that they not be allowed to export at all. And the resulting dearth of hard currency promises much greater misery than presently obtains. In fact it threatens unimaginable catastropes. And I think the AFL CIO , the EPI and other people of good will need to think a little bit more carefully before threatening to impose bans on the people of the third world.
>you disagree with the principles of labor standards, particularly the right of
>workers to organize without repression from the state or multinationals, I
>really have trouble distinguishing your position from the WALL STREET JOURNAL.
Please Nathan, the WSJ will probably champion human rights in China; they won't call for the right for boycotts and secondary strikes in the US. You want the right for workers to organize without repression? Really? Then why not turn out tens of thousands workers for those rights within the US FIRST and implant them with a conception of its overwhelming importance in ritualistic circumstances?
Yours, Rakesh