I absolutely agree with Paul Krugman - oh God, make mine a double!

As I slump here in a state of trauma, still trembling from the experience, let me again offer my thanks to the invaluable Cafe Hayek who drew my attention to a shocking - shocking, I tell you! - piece written by Paul Krugman.  If you are a soppy, 'Graun'-reading Leftie with a bleeding-heart conscience over the low wages and cruel conditions of workers in the Third-world, then read no further:

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.

Crikey!  That could have been written by Milton Friedman but I never imagined that Krugman could have allowed such sacrilege to flow from his keyboard.  Mind you, it was written in 1997 and thus Prof.Krugman shows us yet again what a singular man he is.  Where the rest of us started life believing and spouting rubbish until the school of hard knocks taught us differently, Prof. Krugman began by being emminently sensible and has now declined to economic peurility.  But here is another taste of his truer wisdom:

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. [...]

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.

You may read via the link - and I urge you to do so - Prof. Krugman's entire article written for Slate in 1997.  What can I say, except perhaps to quote good ol' Luke:

I say unto you, that likewise joy shall be in heaven over one sinner that repenteth, more than over ninety and nine just persons, which need no repentance.

Come back, Brother Krugman, and all will be forgiven!

 

Comments

[dearieme]

"That could have been written by Milton Friedman": yeah well, it could also have been written by me when I was about fourteen. You don't need to consider abroad to come to that conclusion - just consider our own past.

[David Duff]

Quite so, DM, but I am comparing the 'past' Krugman with the current Krugman, that's all.

[Stephen Newton]

DM is correct that we should learn from our past, but not on the what the lessons are. Krugman presents a brutalist argument, but brutalism isn't the only option.

It is most unlikely that pre-industrial Britons would have voted for the industrial revolution had such an option been possible. Here in the world's first industrial city life expectancy fell from around 40 to 26. People lived their short, unhealthy lives in the most squalid conditions.

Stalin, also a brutalist, understood this and made clear that in industrialising Russia he was sacrificing a few generations for a long-term good.

This approach is incompatible with democracy and creates extreme poverty: perfect conditions for political extremism to flourish.

Traditionally, countries protect themselves from cheap foreign imports by imposing trade tariffs. These retard industry in developing countries, slowing development and keeping the population impoverished and unable to stimulate a two-way trade by buying British.

A more complex, humane solution is to build on the work of the fair trade movement. Rather than tax foreign imports, it is possible to insist that workers are fairly paid and enjoy decent working conditions instead. This has the double benefit of creating a class of wealthy foreign workers in a position to buy British goods currently beyond their grasp and so actually help us grow too.

We have seen this work in Europe. Here Thatcher argued hard for brutalism around the creation of the single market. She envisioned a Europe in which British workers would be the cheapest and least protected so that we would suck in jobs from the continent. Instead, continental Europe opted to provide common protections for all.

[David Duff]

Total tosh but I haven't the time to deal with it now. Back later.

[rogerh]

A major advantage with making things is they are a good way to turn very average workers into useful amounts of money - things made can be transported and traded all over. Naturally today's capitalists took advantage of low wages out East and cheap transport, an option not available to C18th entrepreneurs. This left UK plc in a fix - loads of very average folk and sod all for them to do. So what's to do - work cheap or work clever?

A core problem with clever is how to educate and train lots and lots of folk to be brilliant designers, pharmacologists, film-makers, businesspersons, traders and so on. One problem is humanity - we are just not very clever - a few are but most most of us hover around 'average'. Short of a breeding program (the antecedents are not good) we are stuck. We probably could make better use of what we have - but we have rather let ourselves go so that will take 10 to 20 years, so a slight hiatus......

Work cheap? Well everyone can try that one, so cheap really will mean cheap. While we wait for 'clever' to come on-stream may I suggest we take a leaf out of China's book. Declare a few areas of the UK 'Free Enterprise Zones', clear the area of whiners with a few bulldozers, erase all semblance of law or regulation within and hand over the first few thousand acres to 'Early Adopters' - that should ginger things up.

An alternative? Become a gigantic hairdressing salon and knocking shop. That should tide us over until Asia gets really expensive - er but Africa?

[rogerh]

Sorry, for 'they are' read 'that it is' and also for 'most most' read 'most'.

Post in haste, repent at leisure

[H]

Workers in pre-industrial Britain voted for industrialisation with their feet in vast numbers, by leaving rural penury behind and taking up jobs in the new factories.

[Dom]

Stephen -- how do you define a fair wage to be paid to a foreign worker? If you mean, "a wage comparable to that of a worker in Britain", then you are hurting the foreign country. If a shoemaker in Someplacestan is paid the same as a shoemaker in Britain, then what will the farmers in Someplacestan do? They will become shoemakers, of course. Then where does the food come from? And is this even fair to the shoemakers, who can not now compete with other, richer, countries?

The only comparative advantage of Someplacestan is its cheap labor. You're doing a great disservice to its poor inhabitants if you take that away from them. And it is just short of evil that you do this in the name of fairness.

[Dom]

Here's an example of the more up-to-date Krugman. You gotta read this:

http://krugman.blogs.nytimes.com/2012/09/26/death-by-powerpoint-continued/

EVERY FREAKIN' WORD HAS BEEN CROSSED OUT. Read the comments to find out why.

[dearieme]

"The only comparative advantage of Someplacestan is its cheap labor": that's simply an economic advantage. A "comparative advantage" is a different idea.

[Dom]

Yes, you're right. I used it wrongly.