A Raspberry for Free Trade
Would President Clinton have
suffered his humiliating rebuff over fast-track trade legislation if the
administration had not wasted crucial months failing to take the issue
seriously? I don't know. Will that rebuff severely damage the world trading
system? I don't know. Is this the beginning of a more fundamental backlash
against globalization? I don't know that, either.
What I do
know is that the arguments advanced by fast track's intellectual opponents are
stunningly specious. Consider the tale of the tainted berries.
Here's the story: Last spring, there was an outbreak of a
nasty disease known as cyclosporiasis, which was eventually traced to
Guatemalan raspberries. Together with some other incidents, this led to a
demand for tougher controls on imported produce. A few weeks ago, Clinton asked
for legislation that would allow him to ban food imports from countries that do
not follow adequate sanitary standards in agriculture. Intellectual opponents
of globalization gleefully noted a double standard: We're willing to seize
shipments of foreign berries to protect yuppie consumers (the sort of people
who eat raspberries out of season) from inadequate foreign sanitary standards,
so why aren't we willing to protect U.S. workers from inadequate foreign labor
standards? Isn't it the same thing?
It isn't
the same thing, as the example of Kathie Lee Gifford will now demonstrate. A
few months back, you may remember, the infernally perky Gifford got some bad
press when it turned out that some of her clothing line was produced in Central
American sweatshops employing child labor. Since then she has had other
problems, which are more up Bob Wright's alley than mine. But it is useful, as a thought
experiment, to ask how opponents of imports would have reacted had the story
been slightly different.
Imagine that the United States imported a lot
of clothing from the nation of Freedonia. Without question, the growth of these
imports had cost some jobs in the United States, and possibly exerted some
downward pressure on American wages. Economists might point out, in their
tiresome way, that the jobs lost in the clothing industry were more than
matched by jobs gained elsewhere. They might point out that trade, by allowing
each country to specialize in doing what it does relatively well, normally
raises productivity and incomes in both countries. But these arguments would
not be much consolation to the displaced workers, or to the owners of the
affected clothing factories, and we would surely see a campaign against
Freedonian products--a campaign that would make the most of stories about the
low wages and terrible working conditions in Freedonian factories.
Now
suppose that an investigative journalist visited Freedonia and discovered that
it was all a sham. In reality, Freedonia was a high-tech, high-wage economy:
The Freedonian government had been faking poverty in order to avoid paying U.N.
dues. And Freedonian clothing manufacturers were able to undersell their U.S.
competitors not because of low wages but because robots and computers made them
highly efficient.
Here's the question: Would the people demanding limits on
Freedonian exports say, "Oh well, I guess that's OK, then"? Whom are we
kidding? The demands for protection would not abate because for the U.S.
industry competing against imports, it doesn't matter how the clothing was
produced . When the U.S. consumer is offered cheaper shirts from abroad, the
United States loses the same number of shirt-making jobs regardless of whether
the shirts were produced by workers making 30 cents an hour or $30 an hour.
Now I come
to berry seizures--not to praise them (sorry, I couldn't help myself) but to
point out how different the case is. For consumers of berries, it does
matter how the berry was produced: If it was watered with sewage, eating it
will make you sick. And for now the only practical way to enforce health
standards on the product is to enforce sanitary standards on its production.
But if we impose the Inverted Kathie Lee Gifford test--asking how our attitude
would change if it turned out that farmers in Guatemala were actually much
cleaner than rumor had it--we immediately see that our concern about foreign
sanitary standards, unlike our alleged concern about foreign labor standards,
is genuine.
Are those who want to impose import
restrictions against countries with low labor standards willing to lift those
restrictions against countries that start to pay decent wages? Circa 1970 Japan
was still a low-wage country, accused of keeping its workers in "rabbit
hutches" in order to pursue its relentless export drive. By the early 1990s
Japanese wages were actually higher than those in the United States. Did the
Japan-bashers relent? In 1975 South Korean wages were only 5 percent of those
in the United States; by 1995 they had risen to 43 percent. Did opposition to
Korean exports dissipate?
The real
complaint against developing countries is not that their exports are based on
low wages and sweatshops. The complaint is that they export at all. And so the
supposed friends of poor workers abroad are no friends at all. If they got
their way the result for the poor Freedonian would not just be no sweatshop--it
would be no job. And manufactured exports, initially based on low wages, are
the only route we know for rapid economic development.
As I pointed out in an earlier column in
Slate
, the growth of labor-intensive exports from Third World
countries, a development possible only because those countries are able to
offset their disadvantages by competing on the basis of cheap labor, has
brought about a huge improvement in the human condition, even if the wages look
miserably low by our standards.
It is hard to believe that
people who have spent years, even decades, writing about economics are really
so fuzzy-minded that they cannot see the difference between protecting
consumers from tainted produce and protecting workers from competing products.
On the other hand, I doubt that they are purely cynical. It is more likely that
some kind of double-think, some convenient ability to stop thinking clearly
when the situation demands it, is at work. But the truth is that I don't
know--and I don't think it matters.
