Paul Krugman, in Praise of Cheap Labor Bad Jobs at Bad Wages Are Better Than No Jobs at All.

In Praise of Cheap Labor Bad jobs at spoiled meshs argon bankrupt than no jobs at all. Bycapital of Minnesota KrugmanPosted Friday, March 21, 1997, at 330 AM ET For more than than an(prenominal) years a huge Manila scraps dump know as Smokey Mountain was a favorite media symbol of Third founding poverty. Several thousand men, women, and children lived on that dumpenduring the stench, the flies, and the toxic pine in order to make a living combing the garbage for scrap metal and former(a) recyclables. And they lived there voluntarily, because the $10 or so a squatter family could clear in a day was better than the alternatives.Advertisement The squatters be asleep(p) now, forcibly re impactd by Filipino police last year as a cosmetic move in advance of a Pacific Rim summit. barely I found myself thought process about Smokey Mountain belatedly, after reading my in style(p) batch of hate mail. The occasion was an op-ed piece I had written for theNew York Times, in which I had pointed out that while wages and working conditions in the parvenu merchandise industries of the Third worldly concern are appalling, they are a vainglorious improvement over the previous, slight visible rural poverty. I view I should study expected that this comment would generate letters on the lines of, Well, if you lose your comfortable position as an Ameri send word professor you can always find another jobas long as you are 12 years old and willing to work for 40 cents an hour. Such honorable outrage is common among the opponents of globoseizationof the transfer of engineering science and capital from high-wage to depleted-wage countries and the resulting growth of grok-intensive Third World exports.These critics take it as a given that anyone with a profound word for this process is candid or corrupt and, in either case, a de facto agent of global capital in its oppression of workers here and abroad. But government issues are not that simple, and the m oral 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 gull chosen not to think their position through. While fat-cat capitalists might absorb ahead 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. Lets turn the clock back to the Third World as it was only two decades ago (and di restrainedery is, in many countries). In those days, although the rapid economic growth of a handful of vitiated Asian nations had started to attract attention, developing countries like Indonesia or Bangladesh were still in the main what they had always been exporters of raw materials, spell outers of manufactures.Inefficient manufacturing sectors served their domestic markets, sheltered behind import quotas, tho generated few jobs. Meanwhile, population pressure p ushed desperate peasants into cultivating ever more marginal land or seeking a livelihood in any way possiblesuch as homesteading on a mountain of garbage. Given this lack of other opportunities, you could hire workers in capital of Indonesia or Manila for a pittance.But in the mid-70s, brazen labor was not enough to allow a developing country to contest in world markets for manufactured goods. The entrenched advantages of advanced nationstheir infrastructure and adept know-how, the vastly larger size of their markets and their proximity to suppliers of key components, their political perceptual constancy and the subtle-but-crucial social adaptations that are necessary to operate an efficient economyseemed to outbalance even a tenfold or twentyfold disparity in wage rates.And accordingly something changed. Some combination of factors thatwe still dont fully chthonicstandlower tariff barriers, improved telecommunications, cheaper air transport decrease the disadvantages of pr oducing in developing countries. (Other things being the same, it is still better to produce in the initiatory Worldstories 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 locomote 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 understand inevitably because their employers are not in business for their (or their workers) health they get as little as possible, and that minimum is determined by the other opportunities available to workers.And these are still extremely unretentive 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. part this is because a growing industry must offer a fairly higher(prenominal) wage than workers could get elsewhere in order to get them to move. More importantly, however, the growth of manufacturingand of the penumbra of other jobs that the new export sector createshas 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 from each one other for workers, and urban wages also begin to rise. Where the process has gone on long enoughsay, in South Korea or chinawareaverage wages start to approach what an American teen-ager can arrive at at McDonalds. 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 removed 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 low-down that progress can be measured in terms of how untold the average person gets to eat since 1970, per capita intake has uprise from less than 2,100 to more than 2,800 calories a day. A shocking one-third of modern children are still malnourishedbut 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 helpforeign 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 unint ended result of the actions of soulless multinationals and rapacious local entrepreneurs, whose only concern was to take advantage of the meshing 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 word-painting 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 bandage of landor of a Filipino scavenging on a garbage heap?The main answer, I think, is a sort of fastidiousness. Unlike the famished subsistence farmer, the women and children in the sneaker factory are working at knuckle down wagesfor our benefitand this makes us feel unclean. And so there are self-righteou s demands for international labor standards We should not, the opponents of globalization insist, be willing to deal those sneakers and shirts unless the people who make them receive decent wages and work under decent conditions. This sounds only fairbut is it? Lets 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 cleave 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 power 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 d eny 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 bribe 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 man 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? Maybealthough the historical saucer of regions like southern Italy suggests that such aid has a tendency to gain ground perpetual dependence. Anyway, there isnt the slightest prospect of significant aid materializing. Should their own governments rear more social justice? Of coursebut they wont, or at least not because we tell them to.And as l ong 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 artistic standardthat is, the fact that you dont like the idea of workers being paid a pittance to supply rich Westerners with fashion items. In short, my correspondents are not authorize 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