Ending Regimes of Poverty

Now that the dust has settled on the trade talks between rich and poor nations in Cancun this September, the domestic “trade meltdown”—the collapse of the Clinton-era consensus on free trade—has returned glaringly to the fore. A New York Times columnist recently pointed out that most of the Democratic hopefuls have shifted toward Dick Gephardt’s protectionist stance. Dennis Kucinich is calling for the outright repeal of NAFTA. And Joe Lieberman is stuck in the lonely role of defending Clinton’s laissez faire trade philosophy.

One of the most contentious questions is what, if any, labor standards should be included in international trade agreements. Advocates of “fair trade” call upon the U.S. to use its economic power to universalize such standards. Laissez-faire types, with equal moral urgency, argue that this would only shut the developing world out of global markets. There is some truth in both positions, and conservatives and liberals alike need to make some compromises that they will find ideologically unappealing.

There is no doubt that the invisible hand of markets often needs to be tempered by the helping hand of government. Asymmetries of information often give employers the advantage in negotiating working conditions and can make labor markets substantially less than perfect. The workplace safety standards and enforcement mechanisms this country has adopted are sensible ways of dealing with such problems. Should we therefore demand that our trading partners maintain regulations equivalent to ours?

If the country in question has a relatively accountable and democratic political system, then the answer is no—we should allow those states to adopt or reject domestic policies as they see fit. We ought not to assume that a nation’s elected representatives are less concerned with their citizens’ well being than we are. On the other hand, we cannot assume such beneficence from regimes that are not accountable to their people. There is doubtless much room for improvement in the domestic policies of nations such as China, and we should use the carrot of trade to induce them to adopt adequate labor protections.

The lack of democratic accountability on the part of so many of the world’s impoverished nations has even broader implications that call into question America’s miserly attitude toward foreign aid. Regimes that do not feel compelled to provide sensible labor protections for their workers are not going to feel any more pressed about providing the public infrastructure and services that would raise their citizens’ living standards. After all, why divert resources that they can use to strengthen their control over their citizens and enrich themselves? The now deposed Suharto regime in Indonesia, for example, was notorious for squandering public funds on subsidies for businesses owned by President Suharto’s children. Developed nations like the United States ought to donate money to cover these gaps—not to the governments, which will siphon aid into their own bank accounts, but to non-governmental organizations that will spend the aid on primary education, disease control, family-planning and other measures that improve the quality of life and foster economic growth.

Of course, this goes against our ingrained tight-fistedness when it comes to helping the global poor. But in fact, trade enthusiasts ought to recognize that in the long run, such aid would serve U.S. national interests. By choosing to stand by while corrupt regimes enrich and empower themselves instead of promoting growth and development, we are missing opportunities to gain productive trade partners and new markets for our own exports.

Besides, in helping other countries escape poverty, we may be in for a pleasant surprise. Although the connection between growth and democracy can be tenuous in the short run, in the long run, as Samuel Hungtington has pointed out, “high levels of economic wealth are associated with high levels of equity, stability, [and] democracy.”

Rising levels of education among the formerly impoverished, combined with rising levels of optimism about their future, should decrease the appeal of extremist ideologies antithetical to democracy. By hastening the demise of the regimes that stand in the way of trade and growth, we would be doing ourselves a favor and, more importantly, we would be giving entire nations an opportunity to escape their misery.

Eoghan W. Stafford ’06, an editorial editor, is a social studies concentrator in Leverett House.