|The Colby Reader|
Dr. Jagdish Bhagwati is the Arthur Lehman Professor of Economics at Columbia University and served as economic policy advisor to the director general of GATT (General Agreement on Tariffs and Trade). He is the author of books including The Economics of Underdeveloped Countries and Protectionism, as well as his most recent, A Stream of Windows: Unsettling Reflections on Trade, Immigration, and Democracy. He won Rhodes College’s Frank J. Seidman Distinguished Award in Political Economy in 1998. Bhagwati is one of the most distinguished international economists in the world today as well as one of the world’s most outspoken defenders of free trade.
PAR: You have long been an advocate of free trade. In a general sense, what do you see as the benefits of free markets and the open exchange of goods and services?
Bhagwati: Yes, for a very long time, to the extent that I am often described in the media as the world’s leading free trade economist! But I did start out my career, having returned to India from a basically English education at Cambridge and Oxford, as a knee-jerk import-substitutionist. Exposure to the dismal reality of economic experience in autarkic India and the far more sanguine experience of the Far Eastern economies that exploited world markets instead, converted me to freer trade. Openness to world markets enables a country to exploit the principle of specialization, getting it a better bang for its buck. It also introduces competition so that the domestic firms and entrepreneurs do not "goof off" in protected home markets. New ideas and products enter the economy through trade. World markets, as distinct from just domestic markets, also increase the incentive to invest, thus supporting the huge and productive investment rates that underlay the "Asian miracle". These are not armchair thoughts; they are conclusions reached by most sophisticated economists who have been following the postwar experience with open and closed trade regimes.
PAR: Can the United States, or any country, hope to curtail the practice of child labor in a country such as Pakistan by withholding trade privileges or refusing to do business with them? If not, why is free trade a better alternative to sanctions?
Bhagwati: That is a good question. I do not think that it makes any sense to use suspension of market access as a way of curtailing the use of child labor in, say, Pakistan. The problem is that the use of child labor in Pakistan is not confined to some tiny sector that depends hugely on exports to us. It is an immense problem — the ILO has variously, if imperfectly, estimated the number of working children in the developing countries as exceeding 200 million. Yes, you might just be able to close down child labor in one plant but it will prop us elsewhere. Trade sanctions may flag the problem but they cannot flog it. The answer has to depend on patient, long-term work which reflects governments working with NGOs which, in turn, must work at the micro, village level to promote primary education, provide income support for poor parents as children’s work loads and hence incomes are reduced, etc. etc. Senator Harkin may think he is doing good by simply threatening trade sanctions, and he is certainly well motivated; but he has no clue about the complexity of the problem and the effective solutions required.
PAR: Given what you have said, should the United States or a non-governmental entity even attempt to end such practices? Even if one concluded that such practices are harmful to humanity, some would argue that reforms need to be initiated from the "bottom-up", domestically, and that sanctions or pressure from the international community does not work. Would you agree?
Bhagwati: I am entirely in favor of our NGOs working to advance children’s agendas and am certain that their activities, alongside the activities of local NGOs, helps sustain the pressure for change. But government trade sanctions are entirely unhelpful in my view, not merely because of what I said earlier, but also because they are typically characterized by bias in one’s own favor. Thus, you rarely see the US government saying: Let us uphold the entire set of children’s rights, including the abolition of juvenile capital punishment (where the US is an offender) or the recruitment of children into the army (where US and UK worked in an exemption recently at the ILO). Instead, the government points the finger harder at issues where others are likely to be the defendants (as with child labor). Thus, when I asked the staffs of some of the Congresspeople who had supported the Harkin bill on trade sanctions against child labor-produced items, whether the Congressperson had addressed child welfare questions generally, the way Marianne Edelman does from the Children’s Defense Fund, and whether (s) he had active interest in children’s rights generally, the reaction was puzzlement and a simple assertion that the Congressperson was against child labor. Indeed! The self-serving selectivity of these Congresspersons devalues their alleged moral concerns; and it is not surprising because I believe that many of them have no genuine interest in the moral aspect of the agenda, despite their rhetoric. No wonder that the targets of their trade sanctions often think likewise.
PAR: Assessing the attitudes of the leaders of the world’s industrialized nations and the history of attempting to organize global initiatives to enact social change, do you see any momentum building to end the practice of child labor?
Bhagwati: I do not agree with your characterization that it is the leaders of the developed nations who are worried about reducing the prevalence of child labor. The concern is shared by people and leaders who cut across both developed and developing countries, e.g. the most active NGOs on child labor are naturally in India rather than in the US.
Most parents want good things for their children; and the impoverished ones desire it even more. Work for children is often driven by poverty, not by venality. The most effective antidote to continuing illiteracy and children working is, in fact, rapid growth which leads to increased economic opportunity and hence tilts the parental decision towards educating the child since the return to education improves. In India illiteracy failed to be effectively dented, as did poverty, simply because bad economic policies (such as autarky instead of free trade) reduced the overall growth rate for nearly 3 decades to just about 3.5% per annum! This is why I say often that agitating about child labor and attacking free trade and globalization which are generally components of a productive economic policy framework is ironic: the latter accentuates the former!
PAR: While most calls to curtail trading privileges are usually made by those with protectionist leanings who want to shelter domestic industries, the movement to end child labor seems a little more genuine. Can a compromise ever be reached between free traders and human rights groups? If so, what should it look like?
Bhagwati: I would say that, not just the reduction of child labor, but many social agendas are "genuine". But you generally devalue them by mixing them up with trade sanctions against the products made with child labor, for your allies in that game are always protectionists who are worried about the competition from their foreign rivals who use children at work. Besides, trade sanctions are hardly an effective way to truly address the problem. Then again, we have a right to ask: why are trade sanctions being used against child labor (a problem in the developing countries) and not against developed countries that exploit migrant labor, use sweatshops etc. as in the US itself? If we are to use trade sanctions to advance human rights and/or social agendas, I suggest that we use them symmetrically against all: sanctions, like doctors, should be sans borders! We need general principles here, not ad hoc measures that are directed at others. Human rights must necessarily be symmetric and universal, without playing favorites on behalf of the rich and powerful countries. Stones must be thrown at our glass houses, not just at other countries’: you devalue your moral cause if you throw stones at others’ glass houses while building a wall around your own, wittingly or unwittingly.
My preferred solution therefore is to recognize the complexity of the child labor problem, to use NGO activity and sophisticated use of funds to address the problem at the grassroots level, to encourage the use of social labeling such as SA 8000 so that consumers can avoid using products produced with child labor if they so choose, and generally to avoid resort to trade sanctions, which are neither an effective nor a desirable solution to the problem. I would combine these ground-level pro-active programs alongside a full-throated commitment to freer trade and more liberal economic reforms so that the resulting economic prosperity both reduces directly poverty and illiteracy and child labor (as I argued earlier) and generates the resources which can be utilized by the pro-active programs to direct added funds towards the social programs.
I would therefore like Free Trade to be seen as part of a moral or social agenda in itself since it creates the prosperity without which these agendas cannot be advanced significantly. It therefore should be stood alongside, as a companion to our moral and social agendas, not as an obstacle to it.