Wednesday, May 1, 2013

Euvoluntary Labor and Workplace Safety in Bangladesh: Wilson on Bill on Yglesias

At Groping To Bethlehem, "Bill" questions Matt Y.'s comprehension of institutional economic analysis in response to the tragic Bangladeshi version of the Triangle Shirtwaist Factory Fire that happened in New York in 1911 . Note the points he makes towards the bottom of the post. In a nutshell, the problems of Bangladesh are: industrial monopsony (BATNA), information asymmetry (regret condition), and institutional corruption (coercion by human agency). These three bullet points could have been lifted straight from the EE playbook.

Labor in Bangladesh is not euvoluntary.

Good, it's critical to identify this feature of the Bangladeshi economy, because it helps inform what a reasonable, ethical response might look like. A reasonable, ethical response includes unilaterally lowering any trade barriers that might remain with the impoverished country, and granting unlimited work visas in lieu of open borders (policies that the median voter should support anyway based on the likely outcomes).

Okay, maybe my libertopian flights of fancy, even if there's something close to unanimity in the economics profession supporting free trade (in goods if not necessarily always in migration), might be a bridge and half too far. At the very least, it's important for the sake of Bangladeshi workers that well-intentioned outsiders don't push for disruptions to what is famously one of the most fragile economies in the world.

Look, language is a funny ol' boy. We have at least three terms for the pretty much the same thing: "industrial policy" (meaning protectionist policies), "boycott", and "embargo". The practical result among this trio is the same: inhabitants of the target country (as well as the aggressor country) are made poorer by reduced opportunities to truck, barter, and exchange. The only difference is in the rhetoric and the mood affiliation.

So cries for boycotts aren't really any different than cries for the same kinds of policies the US has been inflicting on the immiserated citizens of Cuba for over half a century and on the oppressed population of Iraq between the close of Gulf War I and the start of Gulf War II, Electric Boogaloo. Treating Bangladeshis like war criminals hardly seems like an appropriate response to an industrial accident. It's probably wiser to recognize that workplace safety is a normal, perhaps superior good: as income rises, so goeth demand. It's probably wiser to do what we can to build wealth and productive capacity (read: trade with the Bangladeshi people) with them rather than throttle the extent of their market.

On a more positive note, I'm encouraged to see that the Bangladeshi people themselves are demonstrating against poor workplace safety standards: it's (weak) evidence that overall conditions could be improving. Truly desperate people don't have the luxury of marching in picket lines. Accidents notwithstanding, things might be looking up a bit.

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Do you have suggestions on where we could find more examples of this phenomenon?