Fighting Forced Labor and Eliminating Counterfeits

Finance: Ending Trade that Cheats American Workers By Modernizing Trade Laws and Enforcement, Fighting Forced Labor, Eliminating Counterfeits, and Leveling the Playing Field, February 16, 2023

I am less worried about China stealing our intellectual property. Their students have come here, gotten advanced degrees and largely returned home.  This may plant the seeds of future revolution in China. It also means that in many areas of technology, particularly artificial intelligence, they are ahead of the game. Perhaps we need to steal more from them. Making it easier for Chinese students to stay would be a good first step.

WM, Trade: The Global Challenge of Forced Labor in Supply Chains: Strengthening Enforcement and Protecting Workers, July 21, 2021

Finance: Fighting Forced Labor: Closing Loopholes and Improving Customs Enforcement to Mandate Clean Supply Chains and Protect Workers, March 18, 2021

Supply chains are global and many nations who have controlled the virus by shutting down the economy rather than tailored quarantines will quickly find that many with less robust immune systems will get very sick when their economies open. There will be a third and fourth waves in these nations, precisely because there are available vectors who have not yet gotten sick. The supply chain will be stressed, if not stopped, even if draconian openings and closings can be imposed in China. 

Draconian measures may be efficient, but they may add a different kind of fever, one that the regime will likely underestimate. Revolution kills production lines once people have too much. China, Inc. may not be as efficient a partner in a post-revolutionary future. Workers with more freedom to bargain and vote will want more stuff, which means higher prices here. Higher prices mean higher wages will be required, but jobs will come back as the economy changes.

The other issue with China, as well as south Asia and the global south, is defacto slavery. Boycotting the products of slavery worked in fighting the Confederacy. The mass migration of slaves had more of an impact. A boycott of Xinjiang cotton and tomatoes is problematic during a pandemic, but generally it cannot succeed as a stand-alone action. Even though it may hurt in the short run, we should still do it. 

To make a boycott work, we cannot do it alone. At minimum, Islamic nations must join in as well and start linking the cause of the Uygurs to the New Silk Road. The ethnic Turkmen range from modern Turkey to Xinjiang, so a little solidarity on their part could go a long way. If we do go this route, the whole effort to interfere in Iran must end. We cannot be with South Asian Muslims on some things and expect solidarity with them on others.

On the moral front, I am not sure we have room to talk. We hold migrants in stark conditions prior to deportation. If you doubt it, visit Lewisburg Federal Prison. Also stop in the Federal Prison Industries factory while you are there. Visit any food processing plant with large immigrant workforces (send people undercover) and see how many workers were trafficked and how local law enforcement reacts when they decide they want to leave. Examine the plight of sex workers in the United States and see how many of their pimps have arrangements with local police.

Our best weapon is our example. As long as slavery exists in the United States, our moral voice is compromised. Again, I am not saying to ignore this situation. I am saying to All In to really fight slavery. Also, call it slavery. On the same subject, examine the Chinese treatment of peasant workers at their factories. There is a two-level society, and American consumers benefit from this. Our commitment to abolishing slavery cannot live only in the fringes.

This is not to say that loopholes cannot be closed, although we must stop our own unfair trade practices as well. American food should not show up in countries just before harvest when doing so depresses the price of local agricultural products. Poverty begets slavery. Making others poor is an invitation to exploitation.

Poor farmers can either be individual or tenant farmers who are essentially peons. The drive for lower food prices for American consumers comes at a human cost. This is especially true when only one buyer dominates the market, as is sometimes the case for export to America (if not often). 

Poor factory workers never have access to collective bargaining. This factor also  drives down wages in American factories - often those with immigrant labor bearing the brunt of bad working conditions, poor wages and lax enforcement. The major difference is that being blacklisted in the United States for attempting to organize is rarely deadly, as it can sometimes be overseas.

Improved enforcement takes money and the willingness to accept higher food prices. More inspectors with more authority are needed at home and abroad. Government or third party inspection is vital to make sure work is safe, fairly compensated and able to organize. We cannot expect worker protection in China or Guatemala if we do not insist on it in North Carolina and Alabama.

Existing supply chains must be reexamined and should not privilege big named brands over smaller importers and suppliers. Citing bad behavior must be cited. There is no better education than a ticket.

As I commented on Tuesday, the long term solution to labor inequality is employee ownership at all points in the supply chain. A multi-national employee owned firm would provide all workers an equal standard of living and ownership rights. I would hope this would start here. The one pebble that will move mountains is allowing market investors the same exception to capital gains taxes when shares are sold to a qualified broad-based ESOP (or COOP) that privately owned companies now receive. A bigger pebble is enacting an asset value added tax with an internationally agreed upon rate with the same loophole. Sometimes loopholes can be a good thing.