Krugman and Trade–An end to finger wagging?

At last Krugman acknowledges that there has been a massive shift of jobs to low-income third world countries.

Since then, however, the sources of our imports have shifted to Mexico, where wages are only 11 percent of the U.S. level, and China, where they’re only about 3 percent or 4 percent.

As usual, Krugman fails to mention to that many of these countries have no labor protection, no right to bargain collectively…that they have become de facto awash in sweat shops, many of which our own companies happily use.

Nary a peep is heard from Krugman on this score. Instead, he seems to think that the poor in China and Mexico now have hopes of climbing the ladder. I guess that explains all the illegal Mexican immigrant labor. NAFTA must be a success sorry, Paul? Sorry, but there is no hope until labor is protected.

Krugman thinks that highly skilled jobs are staying in the states. Oh? He cites North Carolina and Lenovo. Is that it? Research centers are cheaper in China and India. Even the prestigeous scientific journal Science has acknowledge that fact.

Beijing–With China emerging as a world research power, top AAAS officials and their Chinese counterparts signed a series of cooperative agreements that could serve as the foundation for future collaborations on a range of scientific issues.
–October, 2007

The only highly skilled jobs staying in the states are those of bankers and investors, for now. With the rise of Sovereign Wealth Funds and state sponsored capitalism, the bankers and investors are surrendering, inch by inch, their corner of the world. But that is another story.

Look, when trade agreements are made with countries that have no labor rights, whose entire history has been the systematic repression of those right, what do you expect? You think that the repressive Chinese regime is about to surrender power? That they will not use its vast labor force to enrich itself and its collection of cronies?

The “contract agreement” China enacted last May is already in shambles. State owned, state directed banks, investment firms and corporations? You think that these entities will be responsible to the vast Chinese underclass? How convenient it is to have a repressive government run the only union in the country. Where are the checks and balances? Walmart is having a field day in China. [Maybe we should call it quits; announce the end to democracy; install a one-party dictatorship in the U.S.]

Sweat shops have proliferated because China looks upon its populace as mere cannon fodder in its effort to become a “frontier country.” According to He Chuanqi, who headed the research team of the CAS [the guys responsible for mapping China’s future], by 2050 there is a six percent chance of China’s minimum wage being $1,300/month, $15,600/year, $7.50/hour–in 2002 dollars! For a full discussion with links, see here.

Come on, Paul. Think. Actually look at the facts. Stop creating straw men to attack. The problem is not protectionism but the lack of rules underpinning globalization: The failure to ensure labor’s right to bargain collectively, to name just one.

If you continue to ignore some very unpleasant realities, if you refuse to understand the repressive regimes you now celebrate, if you refuse to address issues involving labor, then protectionism is what you will get.

Finger wagging? Yeah, right at you, Paul.

–thanks, Coberly. Edits made in italics.