Environmental Standards, Worker-Safety Standards, and Trade

by Don Boudreaux on June 25, 2005

in Myths and Fallacies, Regulation, Trade

I am urged by people wiser than me not to ignore the substantive questions raised in this challenge to the principle that people are not made better off when government arbitrarily prevents them from buying and selling peacefully as each chooses.

First question:

Imagine a country has the policy of imprisoning men and women between the ages of 15 and 25 and forcing them to work in factories. The government doesn’t pay the workers, but sells their labor to foreign corporations for $1/hour. Suppose Nike outsourced production of sneakers to this country and Dell outsourced customer service to it. The Nike factory dumps waste from sneaker production into the river that serves as the local water supply.

Would an American who found this reprehensible be chastised for being opposed to free trade?

Typically, the countries that we outsource jobs to have weaker environmental and labor laws. Isn’t it perfectly legitimate to be opposed to this practice, just like it would be perfectly legitimate to be opposed to the government in the hypothetical example?

Although not going to the heart of the above question, I begin with this prefatory note: Slaves generally make poor workers in all jobs but those involving the performance of very simple and repetitive tasks – tasks for which both the input and output are easily monitored. Dell surely wouldn’t want enslaved workers manning its call centers even if the wage it was asked to pay for this service were $0 per hour.

Now to the heart of the above question, which, as I understand it, is this: Isn’t it wrong to trade with people whose governments do not protect them with environmental and labor regulations that are as strict as those in operation here in the United States?

No.

First, there is no single, objectively correct level of environmental cleanliness.  Ditto for worker safety. A cleaner environment and safer working conditions are unquestionably desirable, but they are not free. To achieve any particular level of, say, factory safety requires resources that could be used to produce other valuable goods and services. Ditto for achieving any particular level of environmental cleanliness.

The wealthier a society, the better able are its people to afford greater worker safety and more reduction in pollution.

For an American today to prevent people in places such as China and Chad from trading with Americans because factories there are less safe than ours are today, and because they emit more pollutants into the air and waters than do factories here, is to punish these poorer people based on the insupportable presumption that our standards today are the correct ones – correct not only for us, but for peoples much poorer than us.

It’s a curious bit of American chauvinism that elevates Uncle Sam’s current, specific legislative standards on worker safety and environmental protection into a global standard of morality.

Second, because trade promotes wealth for all trading parties, hampering the ability of people in poor countries to trade keeps them poorer than otherwise – which keeps them less able to afford safer working conditions and cleaner environments.  (There’s an enormous amount of empirical support for these claims.  See, for example, the just-released 2nd edition of Douglas Irwin’s Free Trade Under Fire, Johan Norberg’s In Defense of Global Capitalism, or Martin Wolf’s Why Globalization Works.)

Third, government-specified environmental safety and worker safety isn’t the only (indeed, not even the main) source of cleaner environments and improved worker safety. Common-law processes and, more importantly, economic competition fueled by more open trade and greater material prosperity also work to improve environmental quality and worker safety. (I’ll not get here into the very difficult question of the relative importance of statutory specification of minimum environmental and worker-safety standards compared with improvements on these fronts brought about through more decentralized, less-formal methods. I seek here only to record that a country’s actual level of environmental cleanliness and worker safety is not synonymous with the standards written down in statute books of that country’s government. The actual achievement might be better or worse than what is officially declared.)

Fourth, calls to prevent trade with people in countries that have less-strict environmental and labor standards than we have in the U.S. are typically ruses to protect domestic industries from foreign competition – ruses meant to camouflage the vile and greedy protectionist intent behind a pretend concern for the welfare of people in poor countries.

….

More later on other challenges offered by those who are opposed to people spending their money and selling their wares peacefully as each chooses to do.

Be Sociable, Share!

Comments

comments

Add a Comment    Share Share    Print    Email

Previous post:

Next post: