Archived Posts September 2007 - Page 5 of 5 | Acton PowerBlog

Blog author: jballor
posted by on Wednesday, September 5, 2007

A recent NBER paper, “Distributional Effects of Globalization in Developing Countries,” by Pinelopi Koujianou Goldberg and Nina Pavcnik examines some effects of trade liberalization on low-skill workers.

Les Picker summarizes the findings, “Not surprisingly, the entry of many developing countries into the world market in the last three decades coincides with changes in various measures of inequality in these countries. What is more surprising is that the distributional changes went in the opposite direction from what the conventional wisdom suggests: while trade liberalization was expected to help the less skilled, who are presumed to be the relatively abundant factor in developing countries, there is overwhelming evidence that they are generally not made better off relative to workers with higher skill or education levels.”

There’s a lot more here to digest and the article has some predictably necessary nuances and caveats, not least of which concerns the problematic elements of trying to find a causal link between temporally related phenomena: “The authors’ findings suggest a contemporaneous increase in various measures of globalization and inequality in most developing countries, although establishing a causal link between these two trends has proven more challenging. However, the evidence has provided little support for the conventional wisdom that trade openness in developing countries would favor the less fortunate.”

It’s one thing to say that globalization proportionally rewards more highly educated and skilled workers relative to less educated and skilled workers. This by itself is not obviously unjust, and indeed, it seems to pass a basic sense of justice that jobs that require more skills and training ought to command a higher wage. Maybe a system that distributes more unevenly according to a measure of merit such as education or skill-level is more just than another system which is more equitable in purely distributive terms.

That said, it’s quite another thing to say that low-skilled workers are not made better off in absolute terms by globalization. I’m inclined to think that we shouldn’t be so concerned about relative disparities as we are by comparing in absolute terms the state of the working poor under systems of liberal versus illiberal trade.

If the working poor are better off under a liberal trade regime than an illiberal one, and higher educated workers are paid relatively more, there is a simultaneous increase in the poor’s immediate economic prospects as well as a relative increase in the economic incentive to improve their skills.

But his latter point only is effective in a situation where labor mobility is a real option, and as the NBER paper points out, “the strict labor market regulation that many developing countries had in place prior to the recent reforms is a potential source of labor market rigidities.”

So, for the promise of globalization to be realized, trade not only needs to be liberalized, but so does labor. Workers need to be free to move between sectors, both within and without national boundaries. As I’ve argued before in another context, we need both free trade and free labor.

For more on international labor mobility among low-skill workers, see this NYT piece, “Short on Labor, Farmers in U.S. Shift to Mexico.” See also, “New UN Report Underscores Ties between Poverty and Productivity.”

Blog author: kschmiesing
posted by on Wednesday, September 5, 2007

PowerBlog has in the past endorsed the concept of micro-loans as a market-friendly and thereby effective way of aiding the poor, especially in developing countries.

Now Arneel Karnani has attacked microfinance in a prestigious publication, largely on the basis of macroeconomic data.

Over at Business as Mission Network, microfinancier Peter Greer supplies a thorough and fascinating response to the charges.

Certainly any movement needs it critics and Karnani scores some genuine points, but it seems to me that Greer’s rebuttals are on the whole convincing. Micro-loans won’t eliminate poverty, but they play an important role in its alleviation—and in the rehabilitation of the dignity of the individuals who are able to take responsibility for their economic welfare.

Blog author: jarmstrong
posted by on Monday, September 3, 2007

Labor Day is one of those special American holidays that we all enjoy. We mark the end of summer by it, though fall doesn’t begin for several more weeks. This is the time we get back into our non-summer routines and school is now in session for most students and teachers. It is also a time for one final long weekend.

In the liturgy of my own church the benediction from yesterday’s worship said it well:

In the name of Jesus Christ, the carpenter’s son, let your labors be for the glory of God and for the common good.

In the name of Jesus Christ, Mary’s son, let all of your living be for love.

In the name of Jesus Christ, God’s Son, let our labor not be for a paycheck but for a world changed by God’s love and justice.

May God, Creator of the universe, maker and shaper of all things, bless you labor as well as your rest. May the Son of God, the son of a carpenter, bless all of the work that you do. May the Holy Spirit, ever working for the new creation, bless your service and keep you in God’s purpose, now and forevermore.

Amen!

I am reminded, by such a solid and theologically based expression of prayer, of just how weak my own childhood tradition was in handling the question of work done by Christians. There were at least three examples of this that are common to evangelical Pietism. (1) Work is only a means to an end, make money so that you can pay the bills and serve God in other ways. Many Christian conservatives still teach this in various forms. (2) Labor unions, and various expressions of work solidarity, are wrong. Christians should submit to their employers in such a manner that all efforts to improve working conditions are seen as a waste of time, if not outright rebellion. (3) Work is entirely secular, thus far less important, than ministry, mission or evangelism, which are all seen as sacred.

Don’t you think that the liturgical benediction expresses a much better approach to labor and rest?

John H. Armstrong is founder and director of ACT 3, a ministry aimed at "encouraging the church, through its leadership, to pursue doctrinal and ethical reformation and to foster spiritual awakening." His home blog is located here.