Waylaid Dialectic

January 16, 2012

Corporate Evil

Filed under: China,Trade — terence @ 6:49 am

In comments to my last post J. writes:

Corporations and the larger, increasingly global corporate state is evil. Full stop.

I’ve always been uncomfortable applying the word evil to very broad categories, such as ‘corporations’. But his comment reminded me of one other important point about global businesses and global trade: the issue is not purely economic, political economy is deeply important too.

There are no such things as free markets or free trade. Markets and trade always occur embedded in institutions – laws and norms that form the rules of the game. And these rules can make things considerably better or worse for workers above and beyond the pure economics of what is occurring. If you get good, fair rules workers will typically benefit most from trade. The trouble is that in countries such as China the rules aren’t good or fair. What’s more, the fact that they’re not good or fair reflects in part the impact of lobbying from business groups. Here’s Johann Hari writing in 2007.

Last year, the Chinese dictatorship announced a new draft of labour laws designed finally to allow Chinese workers like her – too late – some basic rights.

The new law would permit people like Lan and Meiren to join trade unions. It would give them the right to a written contract. It would give them the right to a severance payment. It would give them the right to change jobs freely. Where previously China’s labour rules were diffuse, dispersed and barely enforced, now they would be drawn together and backed with big fines.

The dissident-killing Chinese Communist Party didn’t propose this change out of a sudden flush of benevolence. They did it because the Chinese people have in increasing numbers been refusing to be tethered serfs for the benefit of Western corporations. Last year, there were 300,000 illegal industrial actions in China, a huge spate of “factory kidnappings” of managers, and more than 85,000 protests.

The Chinese people were showing they did not want to leap from a Maoist gulag to a market-fundamentalists’ sweatshop. They demanded a sensible compromise: strong trade and markets to generate wealth, matched by strong trade unions to stop markets devouring them. They want an end to grinding poverty, but one that doesn’t kill them as they get there.

But they bumped into a huge obstacle. Groups representing Western corporations with factories in China sent armies of lobbyists to Beijing to cajole and threaten the dictatorship into abandoning these new workers’ protections.

The American Chamber of Commerce – representing Microsoft, Nike, Ford, Dell and others – listed 42 pages of objections. The laws were “unaffordable” and “dangerous”, they declared. The European Chamber of Commerce backed them up.

Like I said, I have some trouble with the word ‘evil’, but lobbying China to be more repressive? That’s evil if ever I saw it.

 

 

November 23, 2010

Currency Rap Battle

Filed under: China,Random Musings — terence @ 1:07 pm
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H/T to Duncan Green

May 17, 2010

China and the World Bank

Filed under: China,Institutions — terence @ 5:44 pm
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I’ve always held the belief that giving developing countries more power on the boards of the World Bank and IMF would be beneficial. And, along these lines, had you asked me, I would have instinctively answered that recent moves to give more power to China on the boards of the Bank and Fund would be a good thing. However, over at AidWatch, erstwhile World Bank staffer William Easterly, provides one very good argument as to why this might not be the case: censorship.

The globalisation of censorship isn’t new (remember the Salman Rushdie affair, or Margaret Thatcher’s attempts to get a book about the British secret service banned elsewhere in the English speaking world). And in New Zealand there was recent controversy regarding the Chinese government reportedly pressuring local council’s in New Zealand not to let Falun Gong marchers enter in their Christmas parades.

But while it isn’t new – the rising economic might of China and density of economic inter-linkages between China and the rest of the World give pretty good reason to believe that it’s probably intensifying. Which isn’t good.

Or, to put it another way: censorship bad; globalisation really freakin complicated.

April 20, 2010

Back to the Future!…no wait, um…Forward to the Past!

Filed under: Aid,China — terence @ 8:47 am
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Over at AidWatch Laura Freschi interviews Deborah Brautigam. The subject: what western aid donors can learn from China’s aid to Africa.

[Freschi]: It’s my reading of your book that you think Western donors could learn something from the way China behaves in Africa. What are the strengths of the Chinese way? Are there specific strategies or programs that the West should pay attention to?

[Brautigam]: As a donor, China’s way has several advantages. Take the way they operate. They rarely “poach” skilled staff from African ministries to work in their own offices. The focus on turnkey infrastructure projects is far simpler and doesn’t overstretch the weak capacity of many African governments faced with multiple meetings, quarterly reports, workshops, and so on. Their experts don’t cost much. In addition, their emphasis on local ownership is genuine, even if it leads to projects like a new government office building, a sports stadium, or a conference center. They understand something very fundamental about state-building — something that Pierre L’Enfant understood in 1791 when he teamed up with George Washington in newly independent America: new states need to build buildings and dignity, not simply strive to end poverty.

But the Chinese also funded university scholarships, roads, bridges, mini-hydropower, and irrigation, for decades — when other donors had moved away from most of these sectors. And like Japan, they see nothing wrong with using subsidies to help foster investment by their own companies; this is seen as beneficial to both sides. From the 1970s to the early 1990s, Southeast Asia’s “miracle” was underwritten not only by good policies, but by Japanese investment, and Japanese aid was a partner in this. These investments boosted manufacturing prowess, attracting Japanese firms to go offshore. China’s engagement in Africa could have similar results in at least a handful of countries with receptive leadership. The Chinese avoid local embezzlement and corruption by very rarely transferring any cash to African governments. There is almost no budget support, no adjustment or policy loans. Aid is disbursed directly to Chinese companies who do the projects.

In short: employ expats, build infrastructure, provide project aid, and give tied aid.

Brautigam’s work seems interesting and, for what it’s worth, I’ve a sneaking, guilty sympathy for project aid, am not anti-infrastructure, and accept that there are meaningful trade-offs between employing expats and employing locals (future posts on all these topics, I hope) but can I just point out the bleeding obvious for a second:  Western donors did all this, for about three decades, with very mixed results. Lots of white elephants, ‘boomerang aid’ (so-called because the lion’s share of it returns to the countries of origin), and grotesque corruption.

Also worth noting is that Chinese experts don’t cost much for the same reason that Chinese garments are cheap – wages are low in China. And there’s not much that Western donors can do to replicate this with their own expats (although they could, I guess, employ Chinese). Also, Australia and New Zealand, at least, never moved away from scholarships. And I can tell you from experience that such scholarships are no less problematic than any other form of aid.

Like I said, Brautigam’s work is interesting and the whole interview is well worth reading (thanks to AidWatch for posting it!) but having read it I remain a sceptic as to whether the west has much to learn from China’s aid practices.

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