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Author Topic: Sweatshops. Good or Bad?
Jimmy Brogan
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posted 05 August 2003 09:49 AM      Profile for Jimmy Brogan   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Rory says they're terrific.

quote:
That's appalling, yet 25 years ago, about 250 million Chinese were living in such extreme poverty. China has achieved a dramatic reduction in the incidence of severe privation through rapid economic growth, much of it generated by increased foreign trade.

The same is true of India, Malaysia, Mexico, the Philippines and most other less developed countries that are deeply engaged in globalization. It's no coincidence that these trade-friendly countries enjoy rapid economic growth, while those with little involvement in international trade and investment stagnate.

Compassionate people who care about extreme poverty in the world should take note of these facts. Instead of rioting in the streets against the World Trade Organization, they ought to support globalizing multinational companies like The Gap, which are serving consumers and generating profits while playing a key role in alleviating dire poverty in low-income countries.


[ 05 August 2003: Message edited by: JimmyBrogan ]


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Foxer
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posted 05 August 2003 03:12 PM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
It's an interesting concept - they're not good, but they're better than nothing, but it's exploitation but they'll starve without it etc etc.


You know - (at the incredible risk of being flamed) I wonder if this isn't a phase that workers and business owners (and perhaps even countries and gov'ts) just have to go thru? Like being a teenager before you're an adult. bear with me for a second..

The working conditions are harsh - but they make enough money to get by. And they're all working in larger places. They're gaining some skill. They're talking more amongst themselves. This seems to me to be the path and the necessary mix to lead to the first labour movements and rights groups. Humans need to meet their basic requirements (good ole mazlov), and then they start to think about making their lives better. They can push for better conditions, better pay, etc. If you DIDN'T have the pressure cooker of the 'sweat shop' environment - would they? I wonder.

Further - it seems like the best opportunity for organizations to step in and accelerate the process. Like the article said, workers were organizing. Perhaps if loans were offered by pro-human rights groups to those who wished to start competative factories in a co-op ownership form, where workers owned the factories and the profits. It would tend to grow naturally from there.

I guess what i'm wondering is CAN you get to the next step without going thru this step? Does a worker have to go from 2 dollars a day to 10 dollars an hour? Or is going to 10 dollars a day for "only" 9 hours of work a reasonable step?


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Albireo
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posted 05 August 2003 04:55 PM      Profile for Albireo     Send New Private Message      Edit/Delete Post  Reply With Quote 
Hey... how about a Right-Wing Columnist sweatshop so that The Free Press can fire Leishman's overpaid ass and publish drivel from a dollar-a-day columnist in a developing country?

[ 05 August 2003: Message edited by: albireo ]


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Doug
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posted 05 August 2003 05:01 PM      Profile for Doug   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Exactly. If they're so wonderful why doesn't he go work in one?
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jeff house
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posted 05 August 2003 05:08 PM      Profile for jeff house     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
You know - (at the incredible risk of being flamed) I wonder if this isn't a phase that workers and business owners (and perhaps even countries and gov'ts) just have to go thru?

You shouldn't be flamed.

No doubt many people think about it like this. But in fact many countries have been going through this "phase" for the last several hundred years. I am most familiar with Argentina, where factories, unions, and so on have existed for one hundred years or so. That didn't help them when the economic recipe imposed on them by the IMF turned into a disaster, and pretty well everyone lost their life savings about two years ago.

The Soviet Union was deemed a failure after seventy five years of failure to achieve adequate development. So what do I tell my Argentine friends 300 years after they became integrated into the world economy, and still have nothing?


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Foxer
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posted 05 August 2003 05:28 PM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
what do I tell my Argentine friends 300 years after they became integrated into the world economy, and still have nothing?

I honestly don't know. It seems like the natural progression is 'stuck'. For years the feudal system in england had the king more or less owning everything, with the barons and then the surfs down the food chain. That went thru a change, and we got the magna carta. Then more changes, and 'peasants' could own land, and finally the 'class battles' of the late 1800's.

If the process is frozen in place, whats the answer? You can't take a step back - how do you get the sabot out of the wheel now and get it moving again?


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Courage
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posted 05 August 2003 06:07 PM      Profile for Courage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Foxer:

I honestly don't know. It seems like the natural progression is 'stuck'.


There is no 'natural progression'. There ARE deliberate policy choices, and deliberate acts of power to maintain certain economic relationships.
There ARE plans fomented and implemented to ensure that a certain class stays atop the economic ladder. There is no 'deus ex machina', just good ol' productive material relations which have no eternal or historical 'law' behind them, except for the law of the stronger.


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Mandos
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posted 05 August 2003 06:15 PM      Profile for Mandos   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Hear, hear! I myself am a fan of ol' fashioned goal-oriented linear progress, but the policy choices that keep the poor poor are made right out there in the open where you can see them. HIdden in plain sight, so to speak. No conspiracy.

Ending poverty in the third world is a matter of making other policy choices that allow people to make their own decisions and set their own priorities, rather than "letting" the magic of the Perfect Market doing it for them.


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'lance
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posted 05 August 2003 06:15 PM      Profile for 'lance     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
There is no 'natural progression'. There ARE deliberate policy choices, and deliberate acts of power to maintain certain economic relationships.

I agree. Both orthodox ("scientific") Marxists and followers of the "Whig" interpretation of history argued that history had a direction, that there were certain stages and an end point (in the case of the Marxists), or else a steady improvement (the Whigs). Neither claim, I believe, is borne out by a really careful study of history.


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Courage
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posted 05 August 2003 06:18 PM      Profile for Courage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by 'lance:

I agree. Both orthodox ("scientific") Marxists and followers of the "Whig" interpretation of history argued that history had a direction, that there were certain stages and an end point (in the case of the Marxists), or else a steady improvement (the Whigs). Neither claim, I believe, is borne out by a really careful study of history.


Neitzsche laid about 4-tonnes of dynamite under that business...

Then Popper cleared away the rubble...


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'lance
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posted 05 August 2003 06:50 PM      Profile for 'lance     Send New Private Message      Edit/Delete Post  Reply With Quote 
Lot of people never heard the news.
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Foxer
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posted 05 August 2003 07:08 PM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
So - what IS the answer?
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Gir Draxon
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posted 05 August 2003 07:11 PM      Profile for Gir Draxon     Send New Private Message      Edit/Delete Post  Reply With Quote 
Sweatshops are of acourse a horrible thing, but I guess a small wage is better than no wage (when combined with a lower cost of living).

According to our standards, the jobs are exploitive, but what other choice do some people have?


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Mandos
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posted 05 August 2003 07:13 PM      Profile for Mandos   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Perhaps a philosophy of development that includes local food and materials security rather than cash-crops for foreign goods? Local manufacturing for local consumption? Things that let the internal economy develop without having to take into account the whims and fancies of international investors and hedge funds, not to mention fickle consumer demand in developed countries? Things like that, where you set your own priorities for the kind of local develop you actually need (and not the Glorious Market).

Of course, usually whenever this is tried, it is squashed.


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Foxer
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posted 05 August 2003 07:16 PM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
mandos -

quote:
Of course, usually whenever this is tried, it is squashed.

is there an example?


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Mandos
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posted 05 August 2003 07:18 PM      Profile for Mandos   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Places in Latin America.

[ 05 August 2003: Message edited by: Mandos ]


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Pogo
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posted 05 August 2003 07:21 PM      Profile for Pogo   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
I have packed away my bookshelf, but I have a book from the ILO that looked into multinational companies in third world countries. In general (which automatically begs for counter examples I know) they said that multinationals pay higher and give better working conditions than existing employment. To examine them in isolation of the cultural changes that are occurring in what is usually low skill agrarian cultures where technology and capital is pulverizing the workforce is probably a critical fault.

I have problems with the Chinese example as being any sign of progress. Perhaps the per capita income is higher now but the disparity between rich and poor is widening. Moreover, the idea of the iron bowl (food for all) is not there anymore. Beggars are rampant. Capitalism even Chinese style is leaving lots by the roadside.


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Foxer
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posted 05 August 2003 07:26 PM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
Anywhere specific? or any specific program? I'm not trying to be a pain - just wanted somewhere to start doing a bit of research.

personanlly I believe history does show that there are certian natural, or perhaps 'logical', cycles and tendancies. Examining successes and failures might give some insight as to what a good answer would be. Seems like a no-motion argument right at the moment, can't go forward, can't go back.

Forcing change has always been difficult - too much energy required to create momentum. But if there are paths which will tend to keep in motion once set in motion, a push might be all it takes.


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Mandos
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posted 05 August 2003 07:30 PM      Profile for Mandos   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Chile for instance. Any place where nationalization of foreign industry was prevented by coups.
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'lance
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posted 05 August 2003 07:43 PM      Profile for 'lance     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Seems like a no-motion argument right at the moment, can't go forward, can't go back.

Nonsense. The claim is simply that there's nothing inevitable, natural, or necessary (in the sense of determined by other factors) about "progress."

Positive change is possible. But there's no such thing as "progress in general," because so many of the changes that take place during, say, industrialization are incommensurable. When contemplating, or trying to bring about change, one has constantly to ask: precisely what sort of change? How will it come about? Exactly who will benefit, who will suffer, and in what ways? (For that matter, what ecosystems will benefit -- if any -- and which will be degraded, and in what ways?) How will new wealth be distributed? Will gaps between rich and poor, powerful and powerless, shrink or grow? What will happen to desirable things like literacy, good health, democracy, equality, social solidarity? What might be some of the unintended consequences of all this? And so forth.

To talk of progress in general, as if it's one simple, single, well-understood thing, is hopelessly abstract and positively unhelpful, if not indeed destructive. At least, coming from the theologians of global capital who staff the IMF and World Bank and so forth, often enough such talk serves only to mask a good many ugly, unjust realities.

[ 05 August 2003: Message edited by: 'lance ]


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Foxer
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posted 05 August 2003 08:57 PM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
ok lance - leaving the 'natural' argument aside for the moment, what methods or concepts have been applied successfully in the past to help resolve this type of situation?
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'lance
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posted 05 August 2003 08:59 PM      Profile for 'lance     Send New Private Message      Edit/Delete Post  Reply With Quote 
If by "this type of situation" you mean inhuman working conditions and miserable pay, in sweatshops or other kinds of factories, unions and collective bargaining had a lot of success.
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Foxer
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posted 05 August 2003 09:24 PM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
So what's holding them up in places like argentina?
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Jingles
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posted 05 August 2003 09:37 PM      Profile for Jingles     Send New Private Message      Edit/Delete Post  Reply With Quote 
It's interesting that many of the arguments made by the think tank trust fund group about the benefits of sweat shops are the same arguments that were made to justify slavery.

They argued that being a slave for the white man was better than being a bush savage destined for eternal hellfire. In the same vein, today's slaveholders will say that they are doing the backward peoples of the third world a favor by conferring the blessing of a market economy to save them from their barbaric ways.

In both cases, the slaveowner trys to pass off his motive as purely altruistic, not interested in profit but soley in the welfare of the slave. They aren't setting up sweatshops for their own benefit, but to help elevate the primitives to the level of the civilized man.

It was bullshit then, and it's bullshit now.


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'lance
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posted 05 August 2003 10:54 PM      Profile for 'lance     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
So what's holding them up in places like argentina?

Dude. Please to pay attention...

quote:
...the economic recipe imposed on them by the IMF turned into a disaster, and pretty well everyone lost their life savings about two years ago.

At the risk of vast oversimplification: Historically, some workers in some countries have made their lives better by organizing, and by political action. This being contrary to the interests of the ruling class, they naturally strike back with repressive measures of various kinds. (Or if they're wiser, or conclude that it's in their best interests, they make deals and concessions. They may conclude that the movement would have radical or even revolutionary potential, or simply that it's the price of doing business). Sometimes this repression is successful in the short term; other times in the long term. Other times some kind of tacit or explicit bargain is reached between labour and capital.

Argentina, in case you hadn't noticed, has periodically suffered under repressive regimes. Meanwhile, IMF "austerity" measures, which generally make loans and bailouts conditional on privatization, devaluation, massive cutbacks in public services, etc., are merely a new form of repression, this time imposed externally.

I'll say it again and I'll say it slow: there is nothing inevitable or unstoppable about "progress," here defined as improvements in wages and working conditions. To suggest, in the abstract, that such a progress could have "momentum" is merely to use a metaphor, and a particularly ahistorical and misleading -- meaningless -- one.


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Foxer
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posted 05 August 2003 11:23 PM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
You know lance - i know a hell of a lot about a lot of things. To date I don't know everything, so sometimes I ask questions. You have no reason to answer in such a hostile tone. And you certainly don't have to 'speak slowly' for me.

Obviously you know little about it either. You could have been man enough to just say that. I have know idea what kind of deals the IMF does with countries like argentina, or why their plans failed. Or what types of models would be successful.

Given that - perhaps you shoudln't be criticizing orgs like the IMF for at least trying.


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'lance
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posted 05 August 2003 11:28 PM      Profile for 'lance     Send New Private Message      Edit/Delete Post  Reply With Quote 
Well, you're right about my hostile tone. I apologize for that. It certainly came out far nastier than I intended.

But I've read enough about the IMF and their prescriptions, by people who can speak with authority about it, to reject most of what they do. For example there was a lengthy Harper's essay a few months back, which I'll recommend. Not strictly polemical, it nevertheless struck me as a fairly serious indictment of IMF thinking.

You're right that the IMF is "trying" -- but whatever exactly it is that they're trying, it's failed spectacularly in country after country to raise the standard of living of more than a very few lucky beneficiaries, typically those who can buy up privatized state enterprises for a song.

Harper's isn't available on line, but I'll look up which issue it's in. You might find it in the library if you're interested, or perhaps I can persuade a certain babbler, who has library access, to post a link.

[ 05 August 2003: Message edited by: 'lance ]


From: that enchanted place on the top of the Forest | Registered: Jul 2001  |  IP: Logged
Foxer
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posted 06 August 2003 12:24 AM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
Appology accepted and appreciated. Thanks.

quote:
For example there was a lengthy Harper's essay a few months back, which I'll recommend. Not strictly polemical, it nevertheless struck me as a fairly serious indictment of IMF thinking.

I'd be interested in reading it - even if you could remember the title, I may be able to access it..

quote:
typically those who can buy up privatized state enterprises for a song.

This i know a little more about - in russia this is precisely what happened, and the effect was devistating. The 'lucky few' were, of course, criminals.


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'lance
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posted 06 August 2003 12:52 AM      Profile for 'lance     Send New Private Message      Edit/Delete Post  Reply With Quote 
I have it in front of me. "The Economics of Empire: Notes on the Washington Consensus," by William Finnegan, in the May 2003 Harper's.

Although he talks in passing about Argentina, he concentrates more on Bolivia, to which he travelled, and the effect of "Bretton Woods" institutions -- the WTO and the World Bank, but mostly the IMF -- on that country. So in that sense it's concrete and specific. But he ranges back and forth over the history of these institutions, their ideological underpinnings -- which underwent a radical shift in the 1980s, from Keynesianism to laissez-faire free-market economics -- and where the institutions and their ideas have fallen down.

(Despite all the World Banks efforts to reduce poverty, for example, "more than a billion people are now living on less than one dollar a day -- the figure in 1972 was 800 million...")

But lest you think he's a red-toothed radical, here's a representative passage:

quote:
It's easy to be cynical about the double binds -- the rigged world trade system, to be blunt -- faced by poor countries. And the bald contradictinos of US policy and preachments suggest, certainly, a degree of official cynicism. But nobody really wants to see economies stultify or implode (nobody except, perhaps, a few financial specialists known as vulture capitalists), and the IMF's great efforts to prevent emerging-economy disasters with emergency bailouts, although frequently unsuccessful, seem basically sincere. The problem lies, rather, with the model.

In short he's more analytical than purely ideological -- lays the blame more on the reigning economic orthodoxies than simply on (in Teddy Roosevelt's phrase) "malefactors of great wealth."

Anyway, highly recommended.

Incidentally, here's Finnegan on the subject of sweatshops, or if you like the "new" sweatshops located in "export-processing zones":

quote:
China offers foreign corporations some of the world's cheapest labor, particularly in what are called export-processing zones, or free-trade zones. EPZs are tax-free manufacturing zones, where local labor and environmental laws (if any) are often relaxed or suspended in order to attract foreign capital. Today, tens of millions of people in more than seventy countries work in EPZs. They are where the American (and Canadian, and Western European) manufacturing jobs go when they go south. Or, rather, parts of the jobs go there, temporarily, because multinational firms have found that it is often most profitable to distribute the different aspects of production and assembly to different contractors and subcontractors, often in different countries, with the lowest-skilled, most tedious, unhealthy, labor-intensive work typically going to the least developed country. Mobility is essential to this arrangement -- the ability to quickly transfer operations from country to country in search of the cheapest production costs and least hassle from local authorities. Thus the facilities in EPZs, the vast prefab sheds and plants, are rarely owned by the contractors who use them, let alone by the multinationals who place the orders. They are leased.

EPZs are not a viable development model. Wages are low, and workers are typically drawn not from local communities but from distant villages and rural areas. With the constant threat that companies will pick up and leave if they are taxed or regulated, local governments rarely profit in any significant way. Local-content laws and knowledge transfer are seldom, if ever, part of the package. A few corrupt officials, along with managers drawn from local elites, profit, certainly, but the great influx of foreign technology and capital that EPZs are supposed to bring rarely materializes.

And this seemingly minor, disappointing fact undermines a crucial assumption, widespread in the West, about the new global division of labor. The assumption is that the developed world is turning into one big postindustrial service economy while the rest of the world industrializes, and that, yes, sweatshops, child labor, egregious pollution, health and safety nightmares, and subsistence-level wages come with industrialization, but that any country that wants to develop must go through all that. We went through it. So did Western Europe. This assumption, though not usually stated so crudely, underpins every serious argument for corporate-led globalization. The problem is that the industralization that Indonesia, Honduras, the Philippines, and dozens of other countries are now experiencing is not the same industrialization that we in the West experienced. It's true that people are moving from farms to factories, and that urbanization is occurring at a rapid pace. But exploitation and immiseration are not development. And unregulated, untaxed foreign ownership, with profits being remitted to faraway investors, will never build good infrastructure. It is simply not clear how, under the current model, the poor majority in most poor countries will ever benefit from globalization.


(emphasis in original)


From: that enchanted place on the top of the Forest | Registered: Jul 2001  |  IP: Logged
Foxer
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posted 06 August 2003 01:05 AM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
found it - this one right?

http://www.mindfully.org/WTO/2003/Economics-Of-EmpireMay03.htm


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'lance
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posted 06 August 2003 01:08 AM      Profile for 'lance     Send New Private Message      Edit/Delete Post  Reply With Quote 
Yup, that's the one.
From: that enchanted place on the top of the Forest | Registered: Jul 2001  |  IP: Logged
Gir Draxon
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posted 06 August 2003 01:41 AM      Profile for Gir Draxon     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Jingles:
It's interesting that many of the arguments made by the think tank trust fund group about the benefits of sweat shops are the same arguments that were made to justify slavery.

They argued that being a slave for the white man was better than being a bush savage destined for eternal hellfire. In the same vein, today's slaveholders will say that they are doing the backward peoples of the third world a favor by conferring the blessing of a market economy to save them from their barbaric ways.

In both cases, the slaveowner trys to pass off his motive as purely altruistic, not interested in profit but soley in the welfare of the slave. They aren't setting up sweatshops for their own benefit, but to help elevate the primitives to the level of the civilized man.

It was bullshit then, and it's bullshit now.


Who is talking about helping "savages" here? Are you suggesting that providing people with employment somehow related to that "white man's burden" stuff? I'd like to hear what a sweatshop worker would have to say if they lost their job and can't make a living, but you tell them that its for their own good.

Of course a thriving local economy is better than one dependant on sweatshops. But is mass unemployment and worse poverty better than providing cheap labor?


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Foxer
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posted 06 August 2003 03:41 AM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
That was a very interesting document. Needless to say, i never form an opinion from a single source, but much of the information provided had 'the ring of truth' about it. Interesting - he showed where the theories worked, and what was done slightly differently.

quote:
The assumption is that the developed world is turning into one big postindustrial service economy while the rest of the world industrializes, and that, yes, sweatshops, child labor, egregious pollution, health and safety nightmares, and subsistence-level wages come with industrialization, but that any country that wants to develop must go through all that. We went through it. So did Western Europe.

Owtch

quote:
This assumption, although not usually stated so crudely,

Double Owtch!!

Thanks for the doc - it makes a good starting point for further reading.

Although frankly I think he took the easy way out, picking on bush. That's like hunting cattle with a high powered rifle and scope

And I personally want to break his comma key.


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Mandos
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posted 06 August 2003 10:52 AM      Profile for Mandos   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Of course a thriving local economy is better than one dependant on sweatshops. But is mass unemployment and worse poverty better than providing cheap labor?
Naturally, we should reject this false dichotomy.

If the choice were between dead-end cheap labour and worse poverty and suffering, then of course we should choose the dead-end cheap labour. Thing is, I claim that if we were to end the dependence on dead-end cheap labour for export markets and instead allow, real, local development, there would be no such choice. In the long run, the dead-end cheap labour and the systems to enforce this dependence are exactly what creates the dichotomy and stacks the deck against real development.


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Black Dog
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posted 06 August 2003 11:52 AM      Profile for Black Dog   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Interesting article from today's Grope on the World Bank's privatization policies.
They don't work.

quote:
Who is talking about helping "savages" here? Are you suggesting that providing people with employment somehow related to that "white man's burden" stuff? I'd like to hear what a sweatshop worker would have to say if they lost their job and can't make a living, but you tell them that its for their own good.

Of course a thriving local economy is better than one dependant on sweatshops. But is mass unemployment and worse poverty better than providing cheap labor?


Most sweat shop workers can't make a living on the earnings they do get anyway. As for the local economy, in most places where sweatshops have taken root they've done so because of a systematic, deliberate destruction of the local economy by foreign interests, which is what forces people to work in the sweatshops in the first place.


From: Vancouver | Registered: Jun 2002  |  IP: Logged
DrConway
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posted 06 August 2003 12:39 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
An excellent book on the subject is Globalization and its Discontents by Joseph Stiglitz.

Foxer, you will be surprised at how many "liberal" economists who hold a Keynesian perspective are in favor of free trade. Stiglitz and Krugman are two of them.

However, for all this, Stiglitz in his book has all sorts of reasons for trashing the IMF. He goes a bit too easy on the World Bank, but then again he did work there so he may feel somewhat desirous of not burning too many bridges.

Before you even read the book, though, I can tell you right off the bat that the IMF's policies make absolutely zero sense fron a Keynesian perspective. All the policies the IMF requires to be enacted to "stabilize" a country generally went out of fashion with the Great Depression in industrial nations, as all they do is contribute to sagging demand, high unemployment, and poor savings and capital investment.

An excellent chapter in this book compares the Russian hell-bent-for-leather rush to embrace capitalism, helped along by Americans who saw stars in their eyes at the thought of being able to "convert" their life-long enemy, to the Chinese methods of careful, stagewise, movement from being a "socialist" country into a capitalist one.

In almost every way it is clearly shown that the interventionist stance the Chinese government employs in the conversion process has brought less dislocation and suffering than the Russian process of just sitting back and letting Yeltsin guzzle vodka.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Foxer
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posted 06 August 2003 02:10 PM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
I have to admit doc, i'm still in favour of free trade as a concept and practice - but there's free trade, and then there's free trade.

I'm still researching this - but as near as i can tell it's the sweeping aspect that's killing these countries. Imagine how it would have been different in bolivia if A) they had not been allowed to sell infrastructure out of public hands (railroads, hydro etc) and B) picked a handful of industries and sheltered them against free trade until they had matured, and could actually compete. For example, a 10 - 20 year phase in of free trade for farmed products.

Without free trade, or at least limited free trade, these countries can still become crushed or abandoned. For example, as mentioned in the article taxing processed foods at entry can make it impossible for these smaller countries to create value-added products. Free trade is a necessity i suspect, if they're ever going to have a chance to build.

But by the reports i've read so far, it seems to be a little like giving a bunch of newbies a computer and internet but no firewall - they'll never have a chance to learn about and add security before the hackers have been into every system.

I suspect that it's like most things in life - it works best in moderation. Mind you it doesn't seem that the IMF has grasped that quite yet.

So the REAL question becomes - how does a country secure it's inflation rate and stablize its currency, then borrow funds to grow, without the IMF? Hitler pulled it off by using the swiss, but with currency today the same tricks wouldn't work.

I think you'd have to borrow from more than one country or source, to ensure that no one org had too much power. I'm not sure how you'd pull it off unless you had something else to offer, like strategic importance or other issues. I know the un has done some really interesting things effectively with PPP's.

Another question is who would tell the leaders of those countries about this 'succesfull model' even if it was worked out? Costs a lot of money to even educate and demonstrate (vs dictate).


From: Vancouver BC | Registered: Jul 2003  |  IP: Logged
DrConway
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posted 06 August 2003 04:53 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
Czechoslovakia, to cite a modern example, was able to become export-competitive in Europe by disregarding prescriptions to artificially lower the exchange rate of its currency; instead, the country let the currency exchange rate come up so that its goods would be cheaper on the world market, and so even though a slightly higher inflation rate was the result, this was balanced by the fact that enough hard currency came in to be able to finance the expansion and modernization of factories and equipment.

The industrial nations took decades or even centuries to fully reduce their tariff barriers. The only reason for forcing newly-industrialized or nonindustrial nations to lower ALL their tariff barriers at once is to, quite bluntly, kill the competition.

Think of it as the Wal-mart approach to international trade.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Foxer
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posted 06 August 2003 08:25 PM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
Yeah, that's kind of where i'm going doc, free trade is more of an end goal, rather than a starting point.

I suppose a temporary stratagy of internal wage/price freezes could also be used in some cases to stabilize the inflation rate. Freeze the sale of some assets too for a very short time. Anyone violating this could be brought up on profiteering charges.

Once the inflation is stabilized you've got a bit of a starting point, but then throwing the door open for free trade right off the bat is nuts. You have to let the economy mature a bit and retain the rights to tools to make that happen. Then start relaxing the barriers as you can, and exposing your people to the world wide market in a controlled fashion.


From: Vancouver BC | Registered: Jul 2003  |  IP: Logged
beluga2
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posted 07 August 2003 03:11 AM      Profile for beluga2     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
You have to let the economy mature a bit and retain the rights to tools to make that happen. Then start relaxing the barriers as you can, and exposing your people to the world wide market in a controlled fashion.

Sadly, this is exactly the sort of thing that the existing WTO/IMF rules are dead-set against.


From: vancouvergrad, BCSSR | Registered: Mar 2003  |  IP: Logged
Foxer
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posted 07 August 2003 03:17 AM      Profile for Foxer     Send New Private Message      Edit/Delete Post  Reply With Quote 
T'would indeed seem to be the case beluga.

These guys need to take a lesson from roddenbury and live by a 'fiscal prime directive'. Don't interfere directly and demand they be 'just like you' till the society is ready for it.


From: Vancouver BC | Registered: Jul 2003  |  IP: Logged

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