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Thursday, May 23, 2013

 
It's long past time for an international minimum wage

by David Atkins

I've been beating the same drum for some time now, but I must point out with pride that the once-unthinkable movement toward international progressive regulation is gaining steam. It's going to be a hard sell for many progressives who have long resisted a global economy by advocating a retreat to protectionism and localism, to switch course and fully embrace an international, hyper-connected progressivism. But what has come out of Pandora's Box cannot be stuffed back in without the destruction of civilization as we know it. The only reasonable path toward a progressive future is forward, not backward. Part of that progressive future must include an international minimum wage, as Hamilton Nolan elegantly argues:

The deadly collapse of a garment factory in Bangladesh has sparked calls for better worker treatment. The revelation that Apple manages to avoid almost all taxes has drawn vague calls for tax reform. A more direct path to fairness: let's just have a reasonable international minimum wage.

We live in a global economy, as pundits are so fond of proclaiming. The global economy is the delightful playground of multinational corporations. They're able to drastically lower their labor costs by outsourcing work to the world's poorest and most desperate people. And they're able to escape paying taxes, like normal businesses do, by deploying armies of lawyers to play various countries' tax codes off against one another. The result is that money that should, in fairness, go to workers and governments ends up in the pockets of the corporation. The global economy is extremely advantageous to corporations, who owe no loyalty to anyone or anything except their stock price; it is disadvantageous to normal human beings, who exist in the world and not as a notional accounting trick.

In America, we accept the minimum wage as a given. It enjoys broad support. It is the realization of an ideal: that there is a point at which low pay becomes a moral outrage. (Where that point is, of course, is up for continuous debate.) Do not mistake the minimum wage for some sort of consensus of nonpartisan economists; it is a moral statement by our society. A statement of our belief that the economically powerful should not have a free hand to exploit the powerless.

Yet we are all hypocrites. We protect ourselves with a minimum wage, while at the same time enjoying the low consumer prices that come with ultra-low wages being paid to workers abroad. Our own purchasing habits reward companies for paying wages that are sure to keep their workers in poverty for life. We soothe ourselves by saying that these desperately poor workers are still better off than they would be without a job; yet we would reject that argument if an employer here tried to use it to pay us less than the minimum wage. We simply do not care if people halfway around the world who we do not see are exploited, if it saves us money.

Many business interests say that raising the wretched wages in one country will simply send the factories to another, even poorer country. That's a great reason to institute an international standard that would render that strategy moot. Bangladesh, where more than a thousand garment workers died in the Rana Plaza collapse thanks to the cutthroat quest to drive down prices, represents the bottom of the international manufacturing economy. The minimum wage of garment workers there is less than $50 per month. For all of our lofty rhetoric about a connected world and freedom and opportunity, we happily acquiesce to a system which keeps these workers— desperate, poor, and with little bargaining power— trapped in poverty. Can you live on $50 per month in Bangladesh? Yes, clearly. You can live in poverty.

Opponents of all sorts of "living wage" laws say that those who would advocate such a thing misunderstand the inherent economic forces of capitalism. Not true. We understand them all too well. We understand that, as history has amply demonstrated and continues to demonstrate, absent regulation, economic power imbalances will drive worker wages and working conditions down to outrageous and intolerable levels. People will, indeed, work all day for two dollars if that is their only option. That does not make it morally acceptable to pay people two dollars a day. Capitalism must be forcefully tempered by morality if we are to claim to be a moral people. [Emphasis added]
Another way of putting it is that, as I have said before, human life and dignity are incredibly cheap on the open market:

But the biggest problem with this worldview is the failure to recognize that human life and dignity are drearily cheap on the open market. Absent laws to prevent such exploitation, the open market looks like Dickensian England: abundant child labor, eighty hour work weeks, mass immiseration, horrific discrimination, and a host of other evils. It turns out that consumers don't much care how a product was made so long as it works, and businesses are more than happy to institute revolting practices in order to create even more decadent wealth for owners and investors. Contrary to social conservative claims, there is no amount of religious fervor or charitable giving that even makes a dent in the horror of purely market-driven economics.

Which leads to the other great failure of rational actor theory in libertarian economics: the artificial separation of government and the governed in a democratic society. At least in representative democracies, the government exists as a mutual compact of citizens who choose to prevent the ills and excesses of the coldhearted markets by funding a protective system of checks and balances, social programs, guaranteed infrastructure, worker protections, product regulations, and a host of other goods and services that reduce the ability of the powerful to exploit the powerless on the open market. The choice to pay taxes to regulate meat companies so that consumers don't have to do the research and take on the purchase risk of which companies' hamburgers might be tainted, is just as equally valid a decision as the choice between going to Burger King or McDonalds.

There will be great resistance to this idea, not only among multinational corporations whose profits would be impacted, but also among policymakers. That's because politicians in developed countries have attempted to disguise stagnant wages by, among other things, exploiting "free trade" and cheap labor overseas to deflate the price of imported goods. In some cases an increased international minimum wage won't affect prices at all (there's only so much the developed world will pay for a pair of jeans, after all), but in some cases it might. Certainly, multinational corporations will attempt to maintain their current, immoral record profits by passing on the cost of an increased minimum wage to consumers. But some corporations will exercise competitive advantage to take slightly less profit in exchange for greater market share.

We live in a time of great imbalance. Multinational corporations have global power and reach beyond that of any nation-state. The plutocratic class both human and corporate is rootless and able to shift its home base wherever it pleases, threatening to take jobs with them. Products are manufactured cheap in developed countries, sold at outrageous markups in developed countries, and then the profits are lightly taxed by nation-states competing with one another for plutocratic favor--or worse, offshored in advantage-seeking tiny tax havens. Such a system cannot long continue. Balance must be achieved and the multinational corporate class brought to heel. An effective response to climate change demands it if nothing else.

Just as federal minimum wage standards prevent corporations from exploiting poor states while selling to rich ones in the U.S., so too can an international minimum wage compel the same dynamic among federal powers. It's an idea that is long past due.