Krugman, In Praise of Cheap Labor

I know this may be hard for some of you to believe but before Paul Krugman was writing for the New York Times and outraging Bush administration supporters, he was writing for Slate and other publications and ridiculing Clinton administration officials for their 'dangerous obsession' with 'competitiveness' and their 'strangely careless arithmetic.' He was also known for challenging anti-globalization protesters for 'not thinking their position through.' His piece "In Praise of Cheap Labor Bad jobs at bad wages are better than no jobs at all" which appeared in Slate - Dismal Scientist - March 20, 1997 compactly sums up his position on this last point.

This piece is on the Eco 340 reading list but I wanted to post it here for those of you in Eco 740 who might be interested, and to open up a space for discussion.

Here's a choice excerpt:
.... moral outrage is common among the opponents of globalization--of the transfer of technology and capital from high-wage to low-wage countries and the resulting growth of labor-intensive Third World exports. These critics take it as a given that anyone with a good word for this process is naive or corrupt and, in either case, a de facto agent of global capital in its oppression of workers here and abroad.
But matters are not that simple, and the moral lines are not that clear. In fact, let me make a counter-accusation: The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through. While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers.

His arguments appeal to the Ricardian model. For more writing by Krugman along these lines I recommend his book 'Pop Internationalism' and other essays such as his piece in Foreign Affairs 'Competitiveness: a dangerous obsession'.

Comments

Aziz Kassim said…
Well,
I agree with Krugman when he asks the question "But what is the alternative?" According to him that foreign aid will make these countries to be dependent on this foreign aid and that will never help them to find an exit strategy from their poor conditions. Well, I have another suggestion, what if governments in developed countries give tax incentive to multinational corporations to pay subsidies for workers who have been devastated from outsourcing in developed countries to train them for another jobs that needs more skill such as help them to pay for tuition to go to school for new skills, help them until they have the skills to switch to another job, and … By doing that both developed and undeveloped countries benefit. Poor countries will growth and rich countries still can benefit from cheaper labor.
1:18 PM
Anonymous said…
The public may not support anything that looks like a subsidy to companies that fire workers. It might look like the government is encouraging them to do more of it. But I do agree that workers should get some support for retraining .
3:11 PM
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