Resolved: On balance, economic globalization benefits worldwide poverty reduction 3
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- If children weren’t working in sweatshops, they’d be working in even more unfortunate conditions
- A2: Increased Poverty in the US
- Poverty can still decline even if inequality increases
- A2: Globalization Causes a Race to the Bottom
A2: Children in SweatshopsReducing poverty reduces children in sweatshopsNina Pavcnik, Associate Professor of Economics, Dartmouth College, 2009, How Has Globalization Benefitted the Poor?, Yale Insights, http://insights.som.yale.edu/insights/how-has-globalization-benefited-poor DOA: 1-1-15 Q: Another issue associated with globalization is child labor. Does buying a sweatshirt in the United States encourage child labor in the country where that was manufactured? The usual concern that we have about globalization leading to child labor focuses on the fact that globalization might generate employment opportunities in poor countries. In particular, consumers in developed coun-tries tend to import a lot of products, such as t-shirts, sweatshirts, and toys, that are made with low-skilled labor. By increasing the demand for these products, we are increasing employment opportunities for children in poor countries and this discourages them from going to school. But to understand the link between child labor and international trade, we really need to think about why children work. And one reason why children might work is the story I just told. But another reason children work is because their families can’t survive without the help of child work. Studies suggest that the main reason why children are working is the poverty of their household and the main channels through which trade is affecting whether children work is the effect of trade on household poverty. In circumstances where trade increases living standards of poor households, as was the case in Vietnam, households pulled their children away from work and children started going to school. The liberalization in Vietnam also created greater earning opportunities for children, but because of improved economic conditions these families no longer had to rely on children to work. If children weren’t working in sweatshops, they’d be working in even more unfortunate conditionsNina Pavcnik, Associate Professor of Economics, Dartmouth College, 2009, How Has Globalization Benefitted the Poor?, Yale Insights, http://insights.som.yale.edu/insights/how-has-globalization-benefited-poor DOA: 1-1-15 Q: This suggests that the knee-jerk response of banning children from working in any factory may not be the most effective way to improve their welfare. When you look at the images of children working in not-very-safe factories, that is the knee-jerk reaction. What we need to be asking is, if we banned child labor, if we shut down these factories, what would these children be doing? We would like to see them attend school, but that might not be the alternative for these children. They might take a job that is even more hazardous, like prostitution or stone quarrying, or work in parts of the economy that are even more informal than sweatshops. A2: Increased Poverty in the USTechnology, not trade, responsible for increased poverty in the USRavi Kanbur, Cornell University, 2015, Handbook of Income Distribution, Volume 2, pp. 1845-1881 There is, however, the issue of how much of the rising inequality in the United States can be attributed to trade, and how much to other factors, specifically to technology. The overview by Pavcnik (2011) captures the recent consensus: A large body of research on this topic finds little support that international trade in final goods driven by relative factor endowment differences can account for much of the observed increase in skill premiums in developed and developing countries… . First, the Stolper–Samuelson mechanism suggests that increased relative demand for skilled labour in countries abundant in skilled labour occurs as a result of shifts in the relative demand for skilled labour across industries… . However, the employment shifts across industries have not been sufficiently large to account for the large increase in wage inequality. Most of the observed increase in demand for educated labour in countries such as the United States is driven by increased relative demand for skilled labour within industries. (p. 242) There is significant debate on the relative role of trade. Although Krugman (2008) argues against his own earlier view that trade was a relatively small factor in explaining the rise of inequality compared to technology, there are also criticisms of the “small role of trade” view by Irwin (2008), Katz (2008), and Autor (2010). It would be fair to say that skill-biased technical change is considered to be a major driving force, if not necessarily the dominant force, behind rising inequality.7 This empirical and policy debate has in turn fed into an emerging literature that goes beyond simple H–O/Stolper–Samuelson formulations to consider within-industry wage differentials between heterogeneous firms and how these could be affected by trade. Poverty can still decline even if inequality increasesF. Wu, economist, Cardiff University, 2012, International Encyclopedia of Housing and Home, “Globalisation,” pp. 292-7 Potentially the most important transmission channel is growth. High rates of economic growth such as those experienced in China and India today translate into significant declines in the incidence of poverty even when the growth pattern is dampened by increased income inequality. A2: Globalization Causes a Race to the BottomTrade liberalization encourages higher standards and a race to the topWashington Times, October 6, 2014, “Economic Globalization Boosts Asia, bogs down US Middle Class,” http://www.washingtontimes.com/news/2014/oct/6/economic-globalization-boosts-asia-bogs-down-us-mi/?page=all DOA: 1-2-14 Critics of globalization warn of a destructive “race to the bottom,” as advanced nations are forced to weaken labor and environmental standards to compete with less-regulated producers in developing nations. This theory rests on the assumption that lower standards give LDCs a significant advantage in attracting global capital and gaining export markets at the expense of more developed countries. The OECD has found that, in practice, a lack of core labor standards plays no significant role in attracting foreign investment or in enhancing export performance. The OECD did find strong evidence “that there is a positive association over time between sustained trade reforms and improvements in core standards.”19 In other words, trade liberalization encourages higher standards, not lower standards. If anything, the real race may be toward the top. For reasons of internal efficiency as well as public perceptions, multinational companies tend to impose higher standards on their overseas production plants than those prevailing in local markets, thus raising average standards in the host country. Free trade and domestic liberalization—and the faster growth they create—are the best ways to encourage higher standards. As per capita incomes rise in less developed countries, so does the domestic political demand for higher standards, and the ability of the productive sector to pay for them. Punishing LDCs with trade sanctions would only cripple their long-term ability to raise domestic labor and environmental standards. 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