The price of globalization

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For those who have asked about my weirdly-drugged seeming performance on Bloggingheads, the answer is not that I was drugged, but that I had gotten home at 4:30 that morning after a 36-hour trip from Vietnam. My lunatic scheduling of a Bloggingheads immediately thereafter is what accounts for the rambling debate of tangential, rather than the pointed dissection of John Bowe's book.

Therefore, pointed dissection here: I found the book oddly unsatisfying. Part of the reason the diavlog is muddy is that I found the book very muddy; it continually makes large, sweeping categorizations of things that aren't really alike, which makes it difficult to draw any conclusions.

Obviously, I am not predisposed to like the writing of a fellow who thinks that restrictive immigration policy and exporting our labor and environmental policies to countries that can't afford them, are the way to help poor people. But even saying that, the book was weirdly disjointed. It starts off with a case that is clearly slavery, or so close as to make no difference: workers were physically prevented from leaving until the picking season was up by an unscrupulous labor contractor who is now in jail.

But it then moves onto a case where the problem isn't physical coercion, but visa fraud and (arguably) fraud committed upon the workers. A plant in Omaha imported Indian workers on training visas who were forced (as is apparently common in India) to pay thousands of dollars to an unscrupulous subcontractor in order to get the job. They were then paid less than minimum wage, housed in crowded dormitories, given badly cooked food, and told crazy things about the neighborhood to discourage them from going off the premises. Nonetheless, they did leave the premises, frequently. And the main threat employed against them seems to have been that they would be fired and deported--i.e. that they would be fired, since an employer who terminates someone on a job-specific visa has a legal obligation to tell the government and otherwise take steps to ensure that the worker leaves the country. Is encouraging workers to go into debt that they then need to pay off by working for you slavery? It's certainly much less strong than the physical coercion argument.

But most of the book is about Saipan, and most of what he talks about has nothing to do with slavery. It has to do with Saipan's weird economy, which, as a US territory, was long based on labor-law arbitrage: Saipan could pay workers less than US minimum wage, but it was not subject to quotas under the multi-fiber agreement. It was thus flooded with guest workers who would never have been allowed to enter America, to the extent that, as in some Middle Eastern countries, local citizens became a wealthy minority elite, employing servants to do for them while they collected government handouts or worked at make-work government jobs. The guest workers, meanwhile, live in conditions that would hardly do for boy-scout camp in the US, work long hours, and have little fun. If they get pregnant, or lose their job, they get in trouble with their boss, and with the family back home. "What does this have to do with slavery?" you may be asking. So was I, all throughout the book.

Slavery self-referentially demands that we do something about it. Crappy jobs, on the other hand, evoke a more mixed response. Workers usually take crappy jobs because the alternatives are worse; self-evidently, this is true of the workers in the last two cases, because they don't want to go home. If you want to "do something" about those crappy jobs, it behooves you to carefully consider whether there is anything to be done that won't make a lot of very poor people worse off.

Among the many things that Bowe should try to tease out, but doesn't, are costs and benefits, cause and effect, winners and losers. Instead he simply posits that all the poor workers in the free market are losers out to rich capitalists, that globalization is the culprit behind their poverty, and that imposing higher wages and labor standards would make them all better off. Or, I should say, he implies those things; he never makes anything as indelicate as a conclusion.

Instead we get a great deal of bombast about democracy--while he lauds the notion that Americans should override the democratically elected governments of places like India, Bangladesh, Costa Rica, Mexico, and of course, Saipan, when it comes to things like labor standards and wages. We also hear a lot about listening to people in the developing world, although not, apparently, any of the ones who say that they want to come here and work for less than minimum wage. And there is a great deal of muddled complaint about globalization.

Much of that is self-contradictory. Farmers want to protect their incomes from competition by people who offer goods more cheaply by working much longer hours for less pay; we both agree that this is bad. But somehow, when industrial workers want the same thing, Mr Bowe finds this admirable.

What is not self-contradictory is often plainly wrong. He blames globalization, specifically farm subsidies, for forcing people to leave farms to work in factories. Farm subsidies are at best an extremely weak influence besides overpopulation, environmental degradation, technological change, land titling problems, and the fact that factory jobs are vastly more productive than subsistence farming. He also frequently acts as if free trade were somehow responsible for developing world poverty, which is lunatic. Anywhere that poverty is worsening right now, you will find either terrible, terrible government policy (Cuba, Zimbabwe) or war (Gaza, Congo). At that, I suppose the latter is simply a subset of the former.

Anywhere that poverty is improving, you will find massive amounts of trade. Forcing the people with whom we trade to pay higher wages or enact higher environmental standards threatens to make their wages uncompetitive--a fact that Bowe should recognize, since he several times chronicles factories shutting down because the mandated wage is too high. Exporting our standards threatens to throw a spanner into the most effective--indeed only--poverty reduction mechanism we've ever found.

Bowe short shrifts this, first, by ignoring his own evidence. But when he can't ignore the fact that, for example, the workers in the welding case would have been stuck at low wage work in India without the visa fraud he decries, he comes down on the side of the comparatively rich locals over the comparatively poor immigrants. Too often the "slaves", seem to be less important than what their presence does to us.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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