Kyle blasts the Obama administration for weighing in against a minimum wage increase in Haiti from $0.24/hr to $0.61/hr, which would have affected local contractors who sell products to American companies such as Levi Strauss and Hanes. (The wage increase was scaled back to $0.31 for textile workers as a result of Obama Administration lobbying.)
Obviously, anyone who's vaguely human is going to want to see people in Haiti do better than they're doing now. And obviously, the amount of cost that this change would add to jeans and undershirts is pretty minimal.
The thing that's worth asking in this situation is whether the proposed minimum wage increase actually benefits people in Haiti or not. From the source (The Nation broke the story) I would imagine that the assumption is that this is a simple matter of taking a small amount of money from Hanes and Levi and a few other companies (actually, reading around, it appears that Hanes and Levi do not in fact operate the factories in Haiti, they just buy stuff from locally run factories there) and giving that money to workers in Haiti who will clearly be much better off. If that is all there is to it, it's hard to oppose.
To the extent that there's a reasonable cause for the Obama administration to weigh in against this, it would be concern that this move would in fact hurt Haitians overall. The increase from $0.24 to $0.61/hr may seem very tiny to us, but it's more than a doubling of the wages for workers and labor costs for employers on the ground actually in Haiti. This is in a country in which two thirds of potential workers can't get formal jobs anyway. (Meaning that at best the 1/3 best off Haitians would be affected by this increase.) So it could well be that this would result in making the barriers to expanding formal employment even higher than they are already. And at best offer a meager "trickle down" to the two thirds who aren't formally employed from the one third who are.
If this is just a move on the part of the Obama administration to help out some friends in the fashion industry, it's pretty disgraceful. But it may well be that, having been alerted by Levi and Hanes' self-interested complaints, the economists in the administration honestly think that this will overall hurt the Haitian economy, which doesn't exactly have a surfeit of jobs in the first place. Goodness knows, it wouldn't be the first time that Haiti had hurt itself with policies that seemed like they would help people but in fact made things even worse. If there's some example out there in which doubling the minimum wage in an economy with unemployment around 50% was a helpful move, I am not aware of it, though I am sure that those at The Nation are willing to put their full faith into hoping for the best.
FROM THE ILLUSTRATED EDITION.
7 hours ago
4 comments:
Haiti wouldn't be in such deep trouble if it weren't for the doctrine of "free trade". The reason why there are so many Haitians living in urban poverty (whether employed or not) in the first place is that Haitian farmers were pushed out of business by the dumping of cheap imported agribusiness rice into the market. It's more "efficient", as the vocabulary goes, for Haitians to import their food and instead spend their time sewing clothes for a pittance. Never mind diversified local economies and self-supporting communities - we want our cheap jeans! (Jeans that are made from cotton, I might add, which is industrially grown in the most environmentally destructive way possible).
The whole system is morally bankrupt.
The better question is why the USA has the right to dictate domestic economic policy to Haiti in the first place. We should give Haiti no aid and should not interfere in its sovereign decisions.
Whenever the USA intervenes in other countries' decisions, we emphasize short-term gains and end up incurring long-term losses. By overthrowing an elected leader in Iran (whom the oil companies disliked), we ended up with the Shah, who alienated his people so much that they created the present theocracy. By supporting Saddam Hussein against the Iranian theocracy, we created the conditions that gave rise to Iraq Wars I and II. By arming the Afghan mujahiddin against the Soviets, we essentially sponsored what is now the Taliban. Need I go on?
Mariana,
Haiti wouldn't be in such deep trouble if it weren't for the doctrine of "free trade". The reason why there are so many Haitians living in urban poverty (whether employed or not) in the first place is that Haitian farmers were pushed out of business by the dumping of cheap imported agribusiness rice into the market. It's more "efficient", as the vocabulary goes, for Haitians to import their food and instead spend their time sewing clothes for a pittance.
I certainly don't want to discount the genuine disasters which are often caused when large, outside forces start mucking about in a developing nation in order to "help out", without having a sufficient understanding of the implications of their actions. (And this isn't just a matter of thinking things through -- it's often impossible to model ahead of time what the results of an action in a complex system will be.) There are, for instance, been agricultural sectors in Africa nearly destroyed by the influx of free food from Western aid. Of course, given the choice between taking free food from the West and paying for food grown by local farmers, people will invariably choose the free stuff. But if that puts the farmers out of business, everyone become dependent on the aid and no longer have the ability to feed themselves.
That said, economic specialization is generally something that makes people better off rather than less so. I don't know the details of the situation in Haiti, but it is certainly possible that many people there are better off (in the sense of, having more reliable access to more food and other basic necessities) if they buy foreign rice and work in garment factories than if they do subsistence farming. In this sense, the problem is more that there aren't more factory jobs than that rice is being imported cheaply.
Short of knowing all the details, I must admit it's hard to imagine that the problem in a country with so much starvation is that rice is too cheap and plentiful.
Joe Magarac,
The better question is why the USA has the right to dictate domestic economic policy to Haiti in the first place. We should give Haiti no aid and should not interfere in its sovereign decisions.
The claim isn't that the US dictated policy in Haiti, but rather that the US embassy strongly encouraged the Haitian government to take certain actions by pointing out the likely results of behaving differently.
I'm not necessarily clear how saying something like, "You should really moderate this minimum wage increase or else a lot of jobs my leave your country," is an unacceptable violation of sovereignty.
Whenever the USA intervenes in other countries' decisions, we emphasize short-term gains and end up incurring long-term losses.
The big mistakes such as you point out are certainly obvious, but that's in part because people tend to gloss over the times that intervention "worked". For instance, South Korea is pretty clearly far better off than if the US had allowed North Korea to conquer it and run the show. Panama doesn't seem to be particularly worse of because or Noriega's ouster, etc.
I don't think one can claim that all cases where the US gets involved in a foreign country turn out badly, but then, one doesn't need to make that claim in order to argue that the US should be much more cautious about intervening in foreign countries than it has been in the last few decades.
"Short of knowing all the details, I must admit it's hard to imagine that the problem in a country with so much starvation is that rice is too cheap and plentiful."
It does seem to be a contradiction; however, the fact that Haiti now imports the majority of its rice (80% in 2008) means that it is extremely vulnerable to changes in the global rice supply. In 2008, to quote Ann Leonard in "The Story of Stuff", "the combination of rising fuel costs, a severe drought, and...the diversion of water to more lucrative crops had lowered worldwide rice production. As a result, global rice prices tripled over a few months in early 2008, leaving thousands of Haitians simply unable to afford this staple food."
The problem of widespread starvation and hunger is not usually one of supply, but rather of access. Maybe Haitians make more money by sewing clothes in sweat shops that they would as farmers, but that doesn't guarantee that they can afford to buy the food that they once could have grown themselves.
Pushing farmers off the land to become a cheap urban workforce was a deliberate goal of USAID and World Bank policy. Anyway, the reason it is "more efficient" to have poor nations import food and export sweatshop goods is because of externalized costs that aren't factored into the equation - such as the ecological and social costs of fossil fuels and industrial agriculture.
World policymakers also seem to have forgotten that "free trade" (or any economic operation, for that matter) should not be a goal in and of itself, but only insofar as it improves human lives. The economy should exist to serve people, not the other way around!
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