Thursday, September 06, 2007

Should China Be Judged and Condemned?

Walt G writes: "How can U.S. companies compete against foreign companies that do not have to abide by the same laws and regulations? Even I could run a profitable company in the U.S. with 25 cents-per-hour prison labor, by dumping dangerous chemicals on the ground, spewing poisonous vapors into the air, and ignoring all rules, regulations, and standards. We could easily have a capitalist Chinese economic model in one of our states if we were to remove all the laws and protections inherent to our way of life."

Consider this depressing description of Developing Economy A:

“Workers are paid poorly, only 15-25 cents per hour, and are expected to work 60 hours per week, often in unsafe and dangerous conditions. Sweat shops can be found in every major city across the country. There are no worker fringe benefits, no paid holidays, etc., and unions are nonexistent. Child labor is common, especially providing long hours of grueling manual labor on farms, and farms are so dependent on child labor that schools are not even in session during the peak growing and harvest months of the year. There are no environmental, safety or labor standards to speak of, and dirty black clouds of smoke are a common sight. City streets and sidewalks are often covered with rotting animal waste. People burn garbage everywhere without restriction, and the foul smells and thick smoke from burning garbage are a daily nuisance.”

Sounds like China today? Actually the description above is of the United States in 1900, when it could accurately be described as a “developing economy” by today’s standards.

Now imagine that in 1900 there had actually been a country in Europe or Asia that was an advanced, developed economy equivalent to the U.S. today, and it had started to engage in trade with the emerging, developing USA. Couldn't all of the claims against China today by the U.S. have also been made against the U.S. in 1900 by an advanced economy then – dangerous and unsafe working conditions, limited environmental regulations, no unions, low wages, child labor, etc. etc.?

Many of the conditions we take for granted today in the U.S. are the luxuries of an advanced economy that only became possible because the U.S. went through a developing stage of economic growth (like China today) to eventually become advanced. It's advanced economies with their wealth, prosperity and resources that can afford high standards for safety, the environment and working conditions, not developing economies with their relative lack of wealth and resources.

Therefore, just like it wouldn't have been “fair” for an advanced economy in 1900 to condemn the U.S. for its deplorable working, safety and environmental conditions, it's not “fair” for us today in the U.S. to judge and condemn the conditions in China. Imposing the safety, labor and environmental standards of a developed economy on an emerging, developing economy is not "fair." And imposing trade barriers based on a developing economy like China, based on the standards of a developed economy like the U.S. that has maybe a 100-year head start on China in terms of economic development, cannot be considered "fair."

Bottom Line: Advanced labor, health, safety, and environmental standards are luxuries that only advanced economies can afford. The U.S. couldn't afford these luxuries in 1900 and China can't afford some of them today. But just like the U.S. eventually created enough wealth to afford a clean environment, end child labor, regulate safety, and improve working conditions, so will China. Just give it time.


At 9/07/2007 8:06 AM, Blogger Unknown said...

You misunderstand their mistake. They seriously believe America is wealthy with comfortable working conditions because of labor laws, minimum wage laws, and other regulations.

They seriously believe if all regulations were eliminated it would soon be the 1900s all over again.

At 9/07/2007 8:15 AM, Anonymous Anonymous said...

The explanation of United States history you present shows how subjective the term “fairness” is. However, it does not answer how U.S. companies and workers can compete with Chinese companies who have an extreme cost advantage (whether “fair” or not “fair”). I agree it’s a laudable goal to help those who are less fortunate than we are, but I’m not sure how altruistic the United States’ citizens are feeling in 2007. To label U.S. workers, who have a Puritanical self-concept, as “uncompetitive,” with hidden undertones of lazy, does not help matters any. If Mexico can’t compete with China’s cost advantages, how can the U.S. realistically compete with them?

Your defense of China’s lax safety, health, and environmental manufacturing methods, along with their well-documented human rights’ abuses and their ability to sell products cheaper than U.S. manufacturers, sounds like affirmative action for China. Using your arguments of past societal problems and poverty in China, shouldn’t blacks be allowed preferential treatment over whites in employment and college admittance using the same criteria in the U.S.? Or, like the anti-affirmative action groups propose, should everyone be held to the same lofty standards?

Let’s call Chinese free trade in its current form for what it is— charity or affirmative action—while giving the U.S. companies and workers credit for providing for those who are less fortunate. U.S. companies and workers should be thanked not ridiculed as uncompetitive.

At 9/07/2007 4:11 PM, Anonymous Anonymous said...

Cleaning up China's act is simple .... put pressure on Wal-Mart ... do believe they're the Capitalist Chicoms biggest customer.

At 9/07/2007 8:39 PM, Blogger Mark J. Perry said...

China was admitted to the World Trade Organization in 2001, and meets all guidelines established by the WTO for world trade, just like the U.S.

Walt G asks "How can U.S. companies compete against foreign companies that do not have to abide by the same laws and regulations?"

Companies in China that export to the U.S. have to abide by exactly the same WTO laws and regulations as the U.S.

In fact, China does a MUCH better job of following WTO rules than the U.S. Almost 100 complaints have been filed against the U.S. in the last 12 years, and almost 50 since China was admitted to the WTO in 2001. In contrast, only 8 complaints have been filed against China. Therefore, you can make the case that China abides by the WTO rules much better than the U.S., which has 6X more complaints.


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