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Fair Trade or die
Posted by: Jon Henke on Sunday, August 13, 2006

Don Boudreaux is usually not this foolish...
here's my dream platform on trade:
I steadfastly and unconditionally oppose any efforts to treat commerce transacted across political boundaries as different from commerce transacted within political boundaries.
They're tryin', man, they're tryin'.

Fortunately, most anti-free trade groups have recognized that the facts and the science are against them. Unfortunately, they've turned to secondary-effect appeals to, e.g., labor and environmental standards, reframing their objective as "Fair Trade". The effect, however, is the same. But, as Greg Mankiw recently wrote...
Wages, benefits, and labor and environmental standards are primarily a function of the level of economic development. Complaining about poor countries' low wages and benefits is essentially blaming the poor for being poor.

Talk about "strong standards" sounds nice, but it is not realistic: Labor and environmental standards cannot catch up to U.S. levels until China is much richer than it is today. Demanding "strong standards" can easily become an excuse for imposing trade restrictions, which will only improvish the world's poor even further, as well as denying Americans the benefits of globalization.
Free trade is the world's greatest anti-poverty program. Ironically, however, some of its greatest foes are the relatively wealthy special interests of the United States' Democratic Party. Don Boudreaux's well-intentioned trade platform should be immunized against the do-gooders who would insist we not trade with the poor until they show up in silk finery to match our own.
 
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Talk about "strong standards" sounds nice, but it is not realistic: Labor and environmental standards cannot catch up to U.S. levels until China is much richer than it is today.

I’m as much an advocate of free markets and free trade as any libertarian is, but the problem with the above statement is that it ignores the political situation in the PRC.
 
Written By: Suetonius
URL: http://
Free trade is the world’s greatest anti-poverty program.
I might be a’stealin’ that.

Here’s mine:

Environmental and labor laws are luxury goods. The only societies that will ever have them will be the societies that can afford them.

It behooves the US and the world to see that as many of us grow as rich as possible as quickly as possible.

yours/
peter.
 
Written By: Peter Jackson
URL: http://www.liberalcapitalist.com
It behooves the US and the world to see that as many of us grow as rich as possible as quickly as possible.

Is the goal of the PRC to make the vast majority of its population prosperous?
 
Written By: Suetonius
URL: http://
the problem with the above statement is that it ignores the political situation in the PRC.
I disagree. In fact, I think it’s the best available remedy to the political situation in the PRC.
Is the goal of the PRC to make the vast majority of its population prosperous?
It may not be their goal, but an emergin middle class and the vested financial interests that go with increasing wealth will be the unavoidable result of increased free trade with China. And middle classes demand political freedoms about which the poor don’t have the time to worry. Free markets result in free people. Not quickly, not perfectly, but more reliably than embargos, military preening or any other measure we’ve yet found.
 
Written By: Jon Henke
URL: http://QandO.net
I disagree. In fact, I think it’s the best available remedy to the political situation in the PRC.

Seventeen years after 1989 and the PRC is still a one party state; indeed, it is a nation which is using modern technology to become ever more totalitarian.

And middle classes demand political freedoms about which the poor don’t have the time to worry.

Not always. In the Roman Republic middling farmers and the like dropped their demands for political freedom as part of the bargain for a larger share of the economic wealth of the empire. Indeed, as Orlando Patterson points out, one of the reasons why Roman citizenship was so easy to give was because it was, from the standpoint of political power, meaningless.

Free markets result in free people.

Not necessarily. And let’s not kid ourselves of something - the PRC doesn’t have free markets. The state is far too heavily involved in the Chinese economy for that to be the case.

 
Written By: Suetonius
URL: http://
I’ve always quipped, it’s easy to be a conservative when you have stuff you don’t want to loose. The opposite being, it’s easy to be liberal when you have nothing of your own to loose...

Something very fitting from Barnett today "When you have little, there is little to complain about. When you have more, there is always something that gets your goat—or pet dog."

http://www.thomaspmbarnett.com/weblog/archives2/003572.html
China’s middle class looking less inscrutable

ARTICLE: "Chinese Tech Buffs Slake Thirst for U.S. TV Shows," by Howard W. French, New York Times, 9 August 2006, p. A6.

ARTICLE: "A Chinese Outcry: Doesn’t a Dog Have Rights?; Pets and policy aside, unmediated opinion rings loud and clear," by Howard W. French, New York Times, 10 August 2006, p. A3.

ARTICLE: "Ready for warfare in the aisles: For both domestic and foreign retailers, China is a market of unprecedented opportunity. But it is turning into a battleground," The Economist, 5 August 2006, p. 59.

Two great myths have stood at odds with one another for years re: China: the unlimited market and the huge difference in cultural tastes. Now as the huge market finally unfolds, we find the Chinese amazingly similar in tastes, with a few key difference in shopping habits (which can be trained away or adapted to), but lo and behold, as demanding as any Western consumer, so the fight for their hearts and wallets won’t be easy—not among foreign firms and certainly not between foreign and domestic ones.

But clearly, the connectivity is creating choice, and choice creates expectations, and that creates the opportunity for serious competition to both shape and meet those expectations (and then, of course, once they’re hooked, to constantly redefine them for future products).

China is so worried about ordinary Chinese getting uppity on the web in political terms, when it should really be worried about that which it cannot possibly stop: the rise of a demanding consumer base that begins to see economic freedom naturally bleeding into political freedom—as in, I don’t expect to complain about the leadership, but how about China’s crappy TV shows, or how dogs are regulated, or so on.

When you have little, there is little to complain about. When you have more, there is always something that gets your goat—or pet dog.

This pathway is already cast: check out the Economist’s numbers.

Go back to 1985 and virtually the whole of China’s urban pop lived on less than 25k yuan a year (the threshold of lower middle-class living). Now only 75% live on less than 25k and by 2025, roughly 10 percent will. It’s that jump from now to then that will reshape China in ways few will imagine. Our choice is how we get ready for that, shape that, and use it to our full advantage strategically to shrink the Gap.

And no, I’m not forgetting the rural poor. Just remember that China goes majority urban around 2020.
 
Written By: Keith, Indy
URL: http://
Keith,

...the rise of a demanding consumer base that begins to see economic freedom naturally bleeding into political freedom...

A lot of folks need to be prepared for a future where values other than "freedom" (however you want to describe that) are paramount in economically prosperous places.

And no, I’m not forgetting the rural poor. Just remember that China goes majority urban around 2020.

"Development" since classical times has seen the rural poor flood into the cities. That doesn’t necessarily lead to political freedom.
 
Written By: Suetonius
URL: http://
Suetonius,
Is the goal of the PRC to make the vast majority of its population prosperous?
Maybe not the main goal, but it is right up there. If the Communist party only wanted power, then they had that. The party has steadily liberalized the economy leading to drastically higher living standards. That has led to some liberalization politically.
indeed, it is a nation which is using modern technology to become ever more totalitarian.
That is pretty darn hard to accept. I can see few metrics by which one could possibly make that claim. China is a far more liberal society than it was 10, 20 or 30 years ago by almost any measure.
 
Written By: Lance
URL: http://www.asecondhandconjecture.com
Maybe not the main goal, but it is right up there.

Its goal might be plutocratic in design.

If the Communist party only wanted power, then they had that.

And they would presumably like to keep it.

The party has steadily liberalized the economy leading to drastically higher living standards.

There has been some liberalization combined with a lot of cronyism, etc.

That has led to some liberalization politically.

Like what? Give me some specific examples of liberalization.

That is pretty darn hard to accept. I can see few metrics by which one could possibly make that claim. China is a far more liberal society than it was 10, 20 or 30 years ago by almost any measure.

Frontline did a nice piece on the PRC this year; one of the most poignant points in the piece was the portion where they showed university students* a picture of "tank man" (the guy who stood down the tanks following the June crackdown). They had no idea who the man was. Why? Because the censorship regime in the PRC is so good that they have no real access to such information. Note that we’re talking about one of the most well recognized photographs in the history of photography. Anyway, that is a very good example of totalitarianism.

*What is especially ironic is that these students were from the same university as the students that helped spawn the events in 1989.

 
Written By: Suetonius
URL: http://
Lance,

Here’s the show: http://www.pbs.org/wgbh/pages/frontline/tankman/view/
 
Written By: Suetonius
URL: http://
<>

This is not entirely true.

For example, China is now using EU emission standards for all vehicles there and those are tougher than ours.

Secondly, China can build plants and products using the latest technology, and thus "leapfrog" older, dirty plants in say eastern Europe.

Finally, there is no reason why a government that has successfully smashed down Falun Gong and even managed to contain the internet could not force factories to comply with labor laws. (Actually, foreign companies, including Taiwanese have to do this, it’s the locals that get away with exploitation.) In fact, many local governments do enforce some codes, probably because they wish their land prices to go up by denying filthy indusries to set up shop.

Ignoring the Chinese government’s role, most large chain stores in the US now require social responsibiliy audits for suppliers. These can be pretty weak, or incredibly strong. Yes, sometimes the books can be jiggered, but certainly the factories I visit that pass these audits have very good fire safety compliance and such.

 
Written By: Harun
URL: http://
Whoops:

Talk about "strong standards" sounds nice, but it is not realistic: Labor and environmental standards cannot catch up to U.S. levels until China is much richer than it is today.

That was supposed to be above my points.
 
Written By: Harun
URL: http://
Harun,

As I recall, as of a few years ago they were using the second iteration of the EU standards (which were two or three iterations behind that in the EU). Have they adopted the latest EU standards since?
 
Written By: Suetonius
URL: http://
When did "Fair Trade" become a term of protectionism? I thought it was about consumers deciding to knowingly buy more expensive coffee from East Timor or whatever, and opposing the tariffs and subsidies that inhibit the exports of such countries.
 
Written By: Bitter
URL: http://qando.net/
Bitter,

I think that it is perfectly appropriate to voluntarily cease contact (as an individual or as part of a group) with a corporation, individual, etc. whose business practices you find reprehensible, etc.
 
Written By: Suetonius
URL: http://

 
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