A Better Explanation

A recent interview with Former Secretary of Labor Robert Reich asked the following question:

We understand that there is a link between human rights and labor rights, but can you comment on economic and political arguments for including labor rights in free trade agreements?

Reich answered by saying:

Poor countries obviously cannot afford the same degree of labor protection we give our workers in this country in terms of minimum wages and working conditions. That doesn't mean, however, that poor countries should not be held to some minimum standard--that's where human rights come in. There should not be slavery or forced labor or child labor--that is, the employment of children under the age of 15, seven days a week, ten hours a day. That sort of thing should be prohibited. There ought to be a universal right for workers to form labor unions if they so wish. These are basic human rights, regardless of whether a nation is rich or poor. But then we come to a set of labor standards that should be understood as relative to the wealth of a nation. As poor nations become richer, they should be expected to raise their minimum wages and improve their working conditions. There's no reason that both of these sets of standards, one having to do with human rights and one having to do with steady improvements in minimum wages and working conditions as nations become richer, shouldn't be included in all trade treaties.

Much like Don Evans, Mr. Reich is terrible out of touch. First, he didnt even answer the question. Second, he thinks we are so stupid that he must reiterate that worker rights are human rights.

Mr. Reich we all know that child labor and forced labor (aka slavery) are wrong. But this softball question gave you the chance to make the case politically and economically for both workers and the nation as a whole ... and you blew it. Let me, a lifetime factory worker explain it to you, the former Secretary of Labor;

First, the core labor rights, as defined by the International Labor Organization are the freedom from forced labor, freedome from child labor, freedom from employment discrimination and the freedom of association.

Second, these rights make sense for American workers b/c we no longer have to compete with child or slave laborers. We will still have to compete with low-wage workers in foreign countries. But eliminating the child/slave competition raises the bar for us and helps, a little bit, to get us to a more level playing field.

Third, these rights make sense for the United States government for several reasons. Most important being the fact that the freedome of association generates unions. Unions are friends of democracy (what could be more democratic than a union local? unions teach people what deomcracy means). And unions are foes of autocracy. Recent history is ripe with examples ... Solidarity in Poland, COASTU Unions in South Africa, uprisings in the Phillipines, Argentina and the list goes on! Unions can help spread democracy peacefully!

Fourth, the countries we trade with with be more economically stable. Freedom of association leads to unions leads to more equal sharing of wealth leads to increased domestic demand. Increased domestic demand means two things: the foreign countries can afford to but more of our goods and the foreign countries will be less effected by financial crisis (such as the Asian Financial Crisis) ... so we dont have to bail everyone out.

So who loses out?

In the long run, no one.

In the short term, corporations ... they might have to pay a fair wage for a short period of time, but aggregate global demand will eventually increase ... thus generating more business.

My next post will lay out the arguement for labor rights from a less political and more classical (well, keynesian actually) perspective.