Bad jobs at bad wages are better than no jobs at all.
For many years a huge Manila garbage dump known as
Smokey Mountain was a favorite media symbol of Third World poverty. Several
thousand men, women, and children lived on that dump--enduring the stench, the
flies, and the toxic waste in order to make a living combing the garbage for
scrap metal and other recyclables. And they lived there voluntarily, because
the $10 or so a squatter family could clear in a day was better than the
alternatives.
The squatters are gone now, forcibly removed by
Philippine police last year as a cosmetic move in advance of a Pacific Rim
summit. But I found myself thinking about Smokey Mountain recently, after
reading my latest batch of hate mail.
The occasion was an op-ed piece I had written for the
New York Times, in which I had pointed out that while wages and working
conditions in the new export industries of the Third World are appalling, they
are a big improvement over the “previous, less visible rural poverty.” I guess
I should have expected that this comment would generate letters along the lines
of, “Well, if you lose your comfortable position as an American professor you
can always find another job--as long as you are 12 years old and willing to
work for 40 cents an hour.”
Such moral outrage is common among the opponents of
globalization--of the transfer of technology and capital from high-wage to
low-wage countries and the resulting growth of labor-intensive Third World
exports. These critics take it as a given that anyone with a good word for this
process is naive or corrupt and, in either case, a de facto agent of global
capital in its oppression of workers here and abroad.
But matters are not that simple, and the moral 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 have
chosen not to think their position through. While fat-cat capitalists might
benefit 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. Let’s turn the clock
back to the Third World as it was only two decades ago (and still is, in many
countries). In those days, although the rapid economic growth of a handful of
small Asian nations had started to attract attention, developing countries like
Indonesia or Bangladesh were still mainly what they had always been: exporters
of raw materials, importers of manufactures. Inefficient manufacturing sectors
served their domestic markets, sheltered behind import quotas, but generated
few jobs. Meanwhile, population pressure pushed desperate peasants into
cultivating ever more marginal land or seeking a livelihood in any way
possible--such as homesteading on a mountain of garbage.
Given this lack of other opportunities, you could
hire workers in Jakarta or Manila for a pittance. But in the mid-’70s, cheap
labor was not enough to allow a developing country to compete in world markets
for manufactured goods. The entrenched advantages of advanced nations--their
infrastructure and technical know-how, the vastly larger size of their markets
and their proximity to suppliers of key components, their political stability
and the subtle-but-crucial social adaptations that are necessary to operate an
efficient economy--seemed to outweigh even a tenfold or twentyfold disparity in
wage rates.
And then something changed. Some combination of
factors that we still don’t fully understand--lower tariff barriers, improved
telecommunications, cheaper air transport--reduced the disadvantages of
producing in developing countries. (Other things being the same, it is still
better to produce in the First World--stories 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 break 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 say “inevitably” because their employers are not in business for
their (or their workers’) health; they pay as little as possible, and that
minimum is determined by the other opportunities available to workers. And
these are still extremely poor 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.
Partly this is because a growing industry must offer a somewhat higher wage
than workers could get elsewhere in order to get them to move. More
importantly, however, the growth of manufacturing--and of the penumbra of other
jobs that the new export sector creates--has 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 each other for workers, and urban wages also
begin to rise. Where the process has gone on long
enough--say, in South Korea or Taiwan--average wages start to approach what an
American teen-ager can earn at McDonald’s. 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 far 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 poor that progress can be
measured in terms of how much the average person gets to eat; since 1970, per
capita intake has risen from less than 2,100 to more than 2,800 calories a day.
A shocking one-third of young children are still malnourished--but 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
help--foreign 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 unintended result of the
actions of soulless multinationals and rapacious local entrepreneurs, whose
only concern was to take advantage of the profit 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 image 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 plot of land--or of a
Filipino scavenging on a garbage heap?
The main answer, I think, is a sort of fastidiousness.
Unlike the starving subsistence farmer, the women and children in the sneaker
factory are working at slave wages for our benefit--and this makes us feel
unclean. And so there are self-righteous demands for international labor
standards: We should not, the opponents of globalization insist, be willing to
buy those sneakers and shirts unless the people who make them receive decent
wages and work under decent conditions.
This sounds only fair--but is it? Let’s 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 adhere 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 reason
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 deny 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 boon 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 earth 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? Maybe--although the historical record of regions like southern
Italy suggests that such aid has a tendency to promote perpetual dependence.
Anyway, there isn’t the slightest prospect of significant aid materializing.
Should their own governments provide more social justice? Of course--but they
won’t, or at least not because we tell them to. And as long 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 aesthetic standard--that
is, the fact that you don’t like the idea of workers being paid a pittance to
supply rich Westerners with fashion items.
In short, my correspondents are not entitled 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.
Paul Krugman is a professor of economics at MIT whose
books include The Age
of Diminished Expectations and Peddling Prosperity.
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