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You are here: Home > Current Topics > Mind your Business > 31 May 2004 |
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Economic Truths of Child Labour: Now we are learning that fashionable trainers were crafted by children in grim circumstances in Laos or the Philippines. The International Labour Organisation (ILO), an arm of the United Nations, has just published a report outlining these horrors and urging steps the world should take to suppress child labour. It says that one in six children are at work between their sixth and 17th birthdays. The occurrence of child labour seems a good barometer of local poverty. The ILO's arguments are more than moral outrage - they also say that children are of less economic value without decent schooling. I don't contest the good intentions of these arguments. I'm sure I'd be pained if I saw children in workshops in Cambodia or Somalia. Yet for the ILO's economic literacy, I give low marks: suppressing child labour would only deepen misery. In its foggy way, the ILO argues parents should be paid the equivalent of their child's market value, replacing the income forfeited if the child attends school instead. It is ambiguous where this money would come from but presumably through taxation of the population - i.e. the parents. It is easy for us to 'tut' about child labour from our capitalist affluence. If you live in the deeply impoverished nations where markets have been suppressed or deformed, your only asset is your ability to work, and that of your children. 
Sometimes I find people assume children did nothing more than picnic and play happily until the evil capitalists forced them into the textile mills and down the mines after the Industrial Revolution. The truth is that child labour was the reality of life in all rural economies long before Dickens got on the case of the child chimney sweeps. Image: Children had a useful function in sweeping chimneys as they were small enough to get into difficult areas. It was the rise in capitalism that permitted the extended years of leisure we call education. Working in the newly emerging factories was regarded as a far better option than slaving in the fields - linen was more profitable than turnips. Child labour is not the invention of modern 'globalisation'. All farming has always used children. Scotland's school summer holidays exist not so everyone can fly down to the Spanish Costas, but so that children can help with the harvest. To learn rural skills was the reality of education in most of human history. In more urban areas the young would learn other appropriate skills. 
Image: Children at work as part of the family haymaking in 1929. We have a long summer break so that children could help at the busiest time of the year. I believe that working in scruffy factories in Manila or Nairobi is an opportunity for the people involved. Making fashion garments or chic trainers for eventual sale on Princes Street (the main shopping area in Edinburgh, the capital of Scotland - ed) offers far greater benevolence than the humbugging of overseas aid. Aid is famously described as a device by which the poor people in the West fund the rich in the Third World. But free trade in shirts transfers money from the rich of the West to the poor of the East. 
Image: Is buying more clothes made in the 'sweatshops' of the world the best route to helping those in poverty? Copyright: Jenny W, available from Stock.Xchng. All the US democratic presidential candidates have been out shouting each other about child labour as a malignancy (something that is evil in nature and has the characteristic of uncontrolled growth) caused by globalisation. Our own politicians are apprehensive about 'asylum seekers', the new euphemism for immigration. Do people try to flock westwards because of our crazy policies? Or do they look for a solution to the economic problems they have in their own country? The biggest single preventable cause of poverty is the European Union's agricultural policies. Affluence could spread across the planet if we opened our markets to non-EU foodstuffs. I remain baffled why no Scottish politician campaigns to cut the price of our groceries. Would it not be popular? I'm not advocating sending any child into dangerous or degrading roles, but I do believe every school could allow pupils to widen their knowledge and experience by participating in local commercial life. It could be fun. It could be life-changing. Many of Scotland's young are held captive in schools that bore and alienate them. All that we seem to accept is newspaper paper rounds and there is even talk in Brussels of banning them. Participating in your community's shops, say, can only widen experience. With regard to student jobs as a degradation. It ought to be part of growing up. As the economies of Asia accelerate, the number of children working tumbles, as parents prefer to buy education. They know the educated child should earn more and so help the extended family. Self-interest must be a better guide than abstract good intentions from the ILO's office block in Geneva. Next time you are exploring the ever-cheaper wares in your favourite shops, look at the origin labels. The people who produce these items are richer than they would be without production lines nearer their homes. A pernicious (having the quality of destroying or being destructive) argument is that children working stop adults earning full wages. This is precisely the economic dunce speak that used to argue a woman's place is in the home. Adam Smith argued that a poor man's poverty can be his asset; he can trade or work his way up. The Third World's great advantage is their relative cheapness. Muddled, if kindly, thinking wants to suppress this. Rich countries should welcome the new nations joining the markets. Child labour will evaporate as prosperity spreads. In the meantime, Scottish pupils might find a day's work far more educational than torture by chalkboard. |
The article above represents a point of view that many people would find difficult to accept. It is based on a number of important factors that are at the very heart of what economics and business is all about - resource allocation.
One important feature of the above is the belief in the ability of the market to allocate scarce resources efficiently and to lead to improvements in welfare over time. The photographs in the section above show how the UK has come through a development period where children were used as labour, where poverty, disease and deprivation was widespread.
The industrial revolution led to a shift from a primarily agricultural economy to one based on secondary (manufacturing) industry. As the UK has developed further, service industries have become dominant so that the split between primary, secondary and tertiary (and quaternary?) is shifting. Many less developed countries (LDCs) are in the process of going through that development. It could be argued that they need to go through this process to generate wealth that can then be used to invest in welfare improvements such as education and health.
Image: Is this the answer to an improved lifestyle for the world's poor - work your way out? A young boy rests from digging in a clay pit where he provides raw materials for a brick factory in Mexico City, 1970. He leans on a pickaxe that is bigger than himself.
Title: Child Labour. Copyright: Getty Images, available from Education Image Gallery.
The opposite end of the spectrum would be state control. In such economies, the state is heavily involved in directing economic resources. It may do so with the intention of improving welfare but free market supporters would argue that information is so complex and imperfect that they are more likely to make mistakes and create worse problems than solve everything!
Aid is a very controversial topic. We are now in a world where we see images of poverty, starvation, disease, malnutrition, etc. every day and also, immediately as they tend to happen. The knee jerk reaction is to send off some sort of package to help those in need. Aid can be in the form of food, medicines, equipment or human expertise. Aid can also take the form of the setting up of trading links between countries - through encouraging trade, LDCs earn revenue, which they can then use to invest in further development.
The reason why aid is viewed with suspicion is that:
The intentions behind aid therefore might be laudable but the reality might be something quite different. Aid also implies that we are going to see some sort of rapid development and the receiver country very quickly 'becoming like us'. Of course this is not the case and it may also not be desirable. Our model of an economy and a way of life may not match that of other cultures and traditions.
Such an argument is being used at present with regard to the 'imposition' of a democratic system on Iraq. Islamic culture may not recognise such a system as being desirable in the way that we, in the West might do and what right have we, in the West, to assert the primacy of our system above any other?
The issue therefore is what the 'best' way of moving forward might be. Should we, in the West, become further involved in putting pressure on other countries and on multi-nationals to improve their codes of practice when dealing with these countries; should we become more involved with aid projects to try to rectify some of the problems that we witness; or should we be encouraging the development of these economies by trading with them, accepting that conditions they currently work in are not acceptable to us by our standards but do so in the belief that the end result will lead to greater prosperity and welfare benefits to those involved?
The other major issue raised by the article is that of market failure. Market failure occurs where for some reason or another, the interaction of the forces of demand and supply does not provide a resource allocation that is efficient by some definition. This definition could be social efficiency where the cost to society is greater than the benefits to society of some economic decision or it could be technical or allocative efficiency. The former refers to a situation where an output could have been produced using fewer inputs and the latter where output does not reflect the demand in the economy as a whole.
The argument goes that if market failure occurs then the state has a responsibility to step in to correct the failure either by 'tweaking' the market or by direct provision. In the case of 'public goods' such as justice, streetlights, roads and law and order, they cannot be provided by the market because it is not possible to exclude those who do not pay from gaining the benefit, they have to be provided collectively therefore.
Image: Has the attempt to intervene in markets like agriculture led to more problems than it has solved? Copyright: Petra Winkler, available from Stock.Xchng.
Merit goods, on the other hand, could be provided by the market but the possibility exists that if purely provided by the market some people would either not be able to afford to buy the service they need or would not appreciate the importance of purchasing the product. Health and education are normally cited as the two examples of such goods.
Ways of correcting market failure therefore might include any of the following:
Those supporting free markets would argue that there is excessive use of these tools to influence markets and that they will in fact cause more problems than they solve. The reference by John Blundell to EU agricultural policy is a good example of the belief that by restricting trade we are all losing out on welfare benefits.
The inclusion of the article from John Blundell provides what could be argued as being a 'non-politically correct' view of the response of the rich countries to the problem of child poverty and the use of children in the workplace. The idea that we regularly use and wear all manner of goods produced in circumstances which we would find hard to understand, let alone put up with, may be hard to accept when we are confronted with news such as that highlighted by the recent Nike, Nestle and Coca-Cola stories. (Further information about the Coca-Cola case - http://www.bized.co.uk/cgi-bin/chron/chron.pl?id=1940)
But, the whole point of studying economics and business studies is to open our minds to alternative approaches to problems and issues in the world. The most important issue should be what policy strategies should be in place that would lead to the greatest benefit to the most number of people. The problem therefore is - is a free market approach the best way of doing that or should we rely on governments to intervene to solve these issues?
This is your chance to investigate the arguments further. The task can be approached in one of two ways:
This is not really a mark scheme because the content of your report/debate will depend on what you decide to include. But one vitally important aspect of tackling the task is to think about what you are reading.
You will read contradictory statements and the argument can become very confusing. This is not surprising because those putting forward their arguments will want to emphasise points that are relevant to their point of view. It does not mean, however, that they are right.
Remember the difference between positive and normative statements! Some useful things to think about when conducting a critical review of such information is as follows:
