Dani Rodrik’s book, The Globalization Paradox is a good read but, oh, his seven point plan in chapter 10 is way off base. His notion of ethics and morality and mine will never get together and celebrate. (See the book review on my pages.)
The Harvard economist begins rightly by saying that any rules governing globalization should not force the USA or EU nation states to accept goods that the consumer in those countries don’t want to buy. Primarily, this is goods manufactured by or assisted by the use of child or forced labour. No one, I hope, would dispute that premise.
However, he goes on to argue that the USA or the EU should not seek to impose conditions on any democratic developing country that uses child or forced labour. If the consumer in both America and Europe believe it is unethical to buy goods made by kids that is their entitlement as consumers. Neither should they be asked or be hoodwinked into turning a blind eye to the practice.
It is not a case of opposition on the basis of competitive advantage, i.e. children are cheaper than adults so the product can be sold cheaper and gain a higher profit. That only applies to the businesses using such labour. If cheapness was the only rationale, we would have children working in our own countries. People would not buy ‘fair trade’ goods.
This fierce advocate of the free market economy should be arguing for consumer choice. Economists are forever telling us that the consumer works on a rational self-interest basis. Let it be! Therefore, the developed nations must be allowed to insist that any product produced using child labour must be labelled to indicate such. Otherwise, we are hoodwinking the consumer; treating them as grabbing morons, who might not be impressed and decide to shop elsewhere. And we would be allowing the unscrupulous businesses to profit from exploitation.
Another point to raise here on globalization is that multinational companies (MNC) can take advantage of the situation and establish themselves abroad. This creates a problem for the home country as Rodrik himself is aware, “We cannot however pretend that out sourcing does not create serious difficulties for domestic labor standards”. P193
Three arguments have been put to me by others: the parents allow their kids to work. Yes, but the reason is that the business will not employ the parent as that would eat into the profit. Secondly, it helps the developing country to become an established industrial nation. Rodrik would support this view. However, the International Labour Organisation (ILO) 2013a suggests that there are bigger and better long-term advantages, 7 times better, by having the kids at school. www.ipsnews.net/2015/02/
The lack of a proper education system has an effect on the economy down the line. A point made by J.E. Stiglitz The Price of Inequality on several occasions in his book.
The third argument states that we did it and therefore developing countries must be allowed. It may not be a legitimate answer but we didn’t know any better at the time. But, yes, the ‘dark satanic mills’ of England, child labour and slavery, heinous crimes against humanity in the name of profit. Nonetheless, to argue that developing countries should be able to use whatever methods they deem fit until they have a matured industrial base, is tantamount to discarding millions of human beings to a living hell when we do know better.
Rodrik is quite adamant in his theory when he states, “Nations have the right to difference, not to impose convergence”. (p242)It is at this point that India is introduced into the equation, “A democratic country such as India can argue, legitimately, that its practices are consistent with the needs of its population”. (p245) The flow of the argument is that because India has an elected government and has passed legislation to protect minority rights that should, “…insulate the country against claims of systematic exploitation or exclusion” and “…provide cover against the charge that….standards are inappropriately low”.
I sat for a while, had a cup of tea, then another, and did a chore or two, all the time trying to fathom the logic behind the argument posed by Rodrik. The figures I’m about to present are wildly different but there is a consensus that we are talking in the millions. The 2011 Indian government census puts the number at 4.35 million, under the age of 14 used as cheap labour. Ipsnews.net/ op.cit. This does not cover the whole country. UNICEF suggests an alarming figure of 90m out of 250m worldwide. UNICEF contends that India has the highest number in the 6-14 age bracket and with 15m in hazardous occupations.
We can turn this ugly picture into one of horror by reports that throughout the country many thousands of children are held in captivity as slaves. Channel News Asia 2015/01/30 highlights that hundreds have recently been rescued. In one factory making bangles 120 were freed. The previous week 220 had been rescued from another slave shop. The figures for forced labour in carpet factories are estimates but are reckoned in the thousands. The carpets are sold in the USA.
The ILO study 2013a estimate:
- 168 million child labourers in the Asia and Pacific region.
- 85.3m 5-17 year olds employed in hazardous jobs.
- Bangladesh: of those employed in hazardous jobs 63% are between 5-9 years old.
- An estimated 22,000 children are killed at work annually.
Meanwhile, the government of India has passed legislation: in 2012 child labour was banned. In 2009 free education was introduced. Unfortunately, a law is useless unless it is systematically implemented, (see Chang later) as UNESCO say that 1.4m kids 6-11 years old are not at school.
And while commentators can point to the occasional member of the Dalit (untouchables) population who have had success the overall picture is quite different. Lower caste members usually always fill the lower paid jobs. In many areas the caste system still operates as it has always done.
J.E.Stiglitz (p191) brings our attention to an uplifting story of caste differences in India. A bunch of kids were asked to do puzzles in a mixed caste setting -no one knew who was what- there was no difference in the outcome. However, once the caste of the individual was made known the lower caste children performed much worse. Moral of the story, remove the stigma and you remove a barrier to achievement. The study was carried out by Karla Hoff & Priyanka Pandey.
The Cambridge economist Ha-Joon Chang in his book, Economics: The User’s Guide (p354) gives us two examples whereby child labour need not be the norm. Burundi 2010, the country had the smallest per capita income in the world. It had a child labour ratio of 19%. Whereas, Peru with a per capita income 30X higher had a child labour ratio of 38%. Therefore it’s not about how poor the nation is, it’s about the government, not economics but politics.
A second example is that of South Korea in the early 1960s at the time one of the poorest in the world, made primary education compulsory up to 12 years. The decision virtually wiped out child labour. South Korea’s reward came with time. A political decision and, I’m willing to gamble that S. Korea has never regretted the move.
I was slightly baffled by Rodrik’s next assertion that being a democracy provides ‘cover’ (see earlier quote) for India against charges concerning labour and the environment. What exactly did he mean by using the verb ‘cover’? I looked it up in the Oxford English dictionary and meaning 7 out of 8 reads: “(cover something up) try to hide or deny a mistake or crime”. To hide behind the mask of democracy, which we do find elsewhere, is plainly an acceptance of exploitation.
A point worth considering is that by the use of the word ‘cover’ Rodrik may have qualms about his support for India. Whatever his rationale he is no politician.
Equally baffling in his grand plan is the reference to countries that do not have a democratic process (China). They, it would seem cannot be shown the same leniency on child labour as they don’t have open elections. There is a built in assumption, a very large one, that in India’s case the electorate have sanctioned the use of child labour. They have not, as law is in place. It’s the government’s failure to implement the law that is at fault.
Moreover, Rodrik may wish to note the 2011 IMF report which concluded, “We find that longer growth spells are robustly associated with more equality in the income distribution”. Stiglitz p114 From the demand side of the market it could prove more beneficial for India to do something about the extent of poverty in the country. With 42% of its population registered as living on less than $1.25 a day; a massive 450m people; this would suggest that sustainable growth can only be achieved by increasing their buying power. Ha-Joon Chang p339
Furthermore, from his earlier quote, “…its practices are consistent with the needs of the population”. How can he square that circle? With 42% of the population living below the poverty line and goodness knows how many children as slaves or in forced labour. This would suggest to me that nearly half the population is held in the ‘poverty trap’. With little prospect of escaping their fate in the short term: how can it be “consistent with the needs of the population”. It makes me ponder on whose needs Dani Rodrik is thinking of.
Of course it will be the market. Although speaking of America, though capitalism is the same everywhere, J.E.Stiglitz writes, “Our system rewards profits, no matter how they’re made, and in a money-centric economy, it’s not surprising to see moral scruples put to the side”. p88
There must be an ethical boundary beyond which we should not travel and exploitation in whatever guise must form that border line. Whether it be sweatshops in America or Europe or virtual slavery in India or China it cannot be swept under the carpet. It is in our own self-interest to sweep that pus from humankind.
Do some good ………..Join Robin Hood.