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September 13, 2007

Stiglitz on Labour Laws

Joe Stiglitz is a Nobel winner. He's also most interested in development economics. A very interesting little snippet in his recent Project Syndicate piece:

And Malaysia had a third strike against it: for all the talk of the "white man's burden", the European powers did little to improve living standards in the countries they ruled. The dramatic decline in India's share of global GDP under Britain's rule, as Britain passed trade laws designed to benefit its textile producers at the expense of those in its colony, is the most visible example.

A decline in India's share of global GDP could be for entirely bengin, even beneficial, reasons. For example, if India was growing but the rest of the world was growing faster. But leave that aside, yes, we really did hamstring the Indian textiles industry. But not, however, by passing trade laws so much as imposing labour conditions upon the industry. We insisted that the Indian factories follow the same rules on child and female labour, working hours and so on, as the  factories in England.

A century and more on, does this remind you of anything? Yes, that's it, those people who insist that we must put labour standards into our trade agreements. The net effect will be the same as last time this was tried. It will benefit our own producers, cut off the Third World ones at the knees and perpetuate poverty there. That's not what the campaigners tell us of course, but it is what would happen.

September 13, 2007 in Trade | Permalink

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Comments

Reading your post a scene from Schindler's List flashed through my head of the Jewish Architect trying to explain about the foundations of a camp dorm and getting shot for her pains, yet her advice then used.

Posted by: Roger Thornhill | Sep 13, 2007 9:25:38 AM

Tim,

Here are a few other things we didn't do in India.

We didn't engage in 'infant industry' protectionism', which would probably have done more than anything else to improve Indian living standards.

We didn't introduce conscription in WWI.

We spent a fortune defending it - indeed as part of the independence dowry they got £20 m for the priviuliege of having been defended.

And this comment,

"The net effect will be the same as last time this was tried. It will benefit our own producers, cut off the Third World ones at the knees and perpetuate poverty there. That's not what the campaigners tell us of course, but it is what would happen"

is less than wholly accurate.

India was the principal export market for Lancashire cottons. They were gubbed. more than anything else, by borderless so called 'free trade'.

Want a very good example of how imperial labour policies make people poorer, or didn't really have the effect that was intended? Fine.

In 1833 slavery was finally abolished. This should have meant that ex-slaves should have been able to enjoy the fruits of their own labour. Right?

Wrong. We insisted in giving cheaper (slave-produced) Cuban and Brazilian sugar the same access to our home market as the more expensive, non slave produced, kind; with the result that by 1865, they had a revolt in Jamaica because the ex-slaves and their descendants were largely, and constantly, skint.

No buyers for their sugar. Read Lawrence James, 'The Rise and Fall of the British Empire'.


Tim adds: "India was the principal export market for Lancashire cottons. They were gubbed. more than anything else, by borderless so called 'free trade'."

No. That's the whole point of the above story. The same labour laws that ruled the Lancashire factories were imposed upon hte Indian ones. That's what gubbed them. That's what I'm actually on about.

Posted by: Martin | Sep 13, 2007 1:17:46 PM

Tim,

Sorry, I don't think it's as clear cut as you make out. For what you suggest to be true, you would have to be able to prove that the Indian cotton/textile trade would have been able to withstand import pressure without the imposition of British working conditions. Do you have any numbers that suggest that might be the case?

In any event, one could suggest that the retention of what might be deemed illiberal working practices is a form of protectionism; after all if that's what they need to survive, isn't that protectionism?

Posted by: Martin | Sep 13, 2007 4:35:42 PM