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May 15, 2007



Hi Dani,

That sounds sensible but I genuinely don't think that labour standards have to significantly reduce development space. By labour standards I'm not talking about forcing China to pay a minimum wage of $6.80 an hour (what is the minimum wage in the US, by the way?) but rather that they are required to enforce workplace safety legislation and fair employer employee contracts (or to allow independent trade unions). In areas such as manufacturing China's competitive advantage is, I think, large enough that it could handle these restrictions. Indeed, in the long run they may well help its development (as part of a general system of checks and balances on rising inequality which, in the long run - pace Sokoloff and Engerman - harms institutional development).

On a similar topic, according to Johann Hari a columnist in London's Independent newspaper, it was western business interests that got together to stifle the China communist party's recent attempt to strengthen labour rights. The Independent is reputable so presumably Hari's facts pan out. It's a useful reminder that political globalisation sails quietly alongside economic globalisation.

R Mutt

This analogy between lock-in and globalization isn't making a lot of sense to me.

In the narrow-gauge railroad example, there are two kinds of infrastructure: track and rolling stock. These seem to tie in together to produce lock-in: once most tracks are narrow gauge you don't want to buy broad-gauge cars and engines. Once most cars and engines are narrow-gauge, you don't want to build broad-gauge lines.

But I don't see how the existence of these "narrow-gauge" unrestricted trade agreements makes it harder to create "broad-gauge" restricted agreements. If you want to create a new bilateral agreement with labour restrictions, why does the mere existence of other unrestricted agreements make that less viable? You can carry what you like over these "tracks".


Here's the rub; A: many of our big trading partners already have strong labor regulations, a U.S.-Europe Free Trade agreement with "labor standards" would be superflous.

B; most of the developing countries that this could apply to are so tiny & are such an infintesimal amount of our total trade that it would barely accomplish much.

Jim Leitzel

The lack of a principled approach to the desirable extent of 'harmonization' is palpable. As a result, expedience and domestic interests seem to drive policy choices. Countries don't mind forcing other folks to harmonize with their tune, but when it comes to changing domestic policies to join someone else's melody, it's another, er, key. Maybe intellectual property and internet gambling policy should be governed by different harmonization regimes, but we lack a coherent story of precisely why and how.

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