TCS Daily

Ending Child Labor

By Christopher Lingle - August 20, 2004 12:00 AM

PRAGUE, Czech Republic- No one disagrees that it is deplorable when children or any other workers are underpaid, starved, or beaten while being held as indentured servants or treated as virtual slaves. However, it would be a gross caricature to suppose that all or even most child workers in the developing world suffer under this worst case scenario.

In all events, the worst offenses against child labor occur are in those countries that remain poor. Unless these countries attract investment or are able to export their products, their economies will not generate enough resources for their governments to prosecute criminal acts against children.

Similarly, it would be a rude generalization to assume that the use or abuse of child labor in poor and distant cultures implies that they place a lower value on their children. In the first instance, generalizing from specific extreme cases of abuse that appear in the media is misleading. Sensationalism may sell papers, but it does not tell the full story. Second, finger-wagging by leaders of developed economies smack of casting stones after becoming rich enough to move out of a glass house.

Child labor is lamentable and rightly evokes empathy. However, emotions should not overpower reason. Blanket condemnation of all child labor as unjust or insisting that it be made illegal everywhere would almost certainly lead to worsening of conditions for all parties. Perversely, refusing to trade with countries or companies simply because they rely upon child labor may perpetuate a situation that we seek to remedy.

Child labor is often vital to a family's economic welfare due to the low marginal value of labor. This low productivity keeps the income of most people so low that children are needed to work to supplement the family income even though the wages they earn are miserably low.

Countries that suppressed capitalism and engaged in socialist experiments hindered industrial progress and perpetuated poverty. It was socialist policies many of the less-developed economies that kept living standards and real wages low. In others, corrupt economic policies and interventionism kept living standards lower than they might have been.

Interesting lessons can be learnt from progress made after the Industrial Revolution. As new inventions became more widely used, greater skills were required that caused worker productivity to increase and wages to rise. In turn, rising wages meant that the low productivity associated with child labor made less economic sense.

And now the spread of industrialization through globalization has significantly raised the value of labor's marginal product allowing for rising living standards. By investing in these less-developed economies, multinationals create more job opportunities and raise the demand for labor.

Perhaps the best possible outcome is that the heavy reliance upon child labor in developing countries will eventually disappear as underdeveloped economies experience modernization. The most successful path for modernization is through trading with the rest of the world while opening up to foreign investment.

This view of progress is supported by the observance that sweat shops involving child labor in industrialized economies is quite exceptional. In other words, the economic necessity or rationality of child labor disappears as countries progress through their economic life cycles. The transient nature of the dependence upon child labor may not take the sting out of the harsh conditions facing those who currently endure the loss of their youth. However, it offers a general consolation from a social standpoint and implies hope for future generations.

Boycotting firms that use child labor is likely to lead to counterproductive results on several accounts. Clearly, learning the responsibilities of work while young can be beneficial. Not so long ago, family farms provided the backbone of America's workforce. Doubtless, many children on America's farms were and are obliged by their parents to work long hours.

Yet people who grew up on these farms were generally regarded as custodians of the virtues and values that guided this country for so many generations. Even today many American farm families rely upon their offspring to assist with harvesting or milking. Few would promote a boycott of products from these family farms due to their reliance upon child labor. Reasonable people understand that there can be good reasons for and desirable results from children being introduced to hard work and long hours.

Apart from working, alternatives for children in developing countries are few. On the one hand, income from their efforts might sustain an entire family. On the other hand, children released from employment in Third World countries are unlikely to attend school. Young girls may face worse outcomes as their best contribution for their families may be for them to become child brides or prostitutes. In sum, the loss of income from work generated by international sales is likely to worsen the plight of the youngsters and their families.

Ironically, good intentions may worsen the situation by leading to an extension of the time before developing economies modernize so that children remain out of the work force. Buying goods and trading with these less-developed economies helps accelerate growth and advances development. Economic growth and modernization of industrial capacities can provide additional surplus to support schooling. Indeed, access to education will become necessary to equip subsequent generations of workers with basic skills.

Many voices are raised to refuse to buy goods made in factories using child labor. But the stated intention of many public policy initiatives often masks vested interests. Good intentions can be exploited to legitimate policies leading to benefits for a few while shifting costs to many.

As in other cases involving international trade, special interest groups will lobby to restrain competition by insisting upon applying domestic community standards. Tragically, the highest costs of obstructing trade would be borne by citizens of the countries that are already so poor that they depend upon child labor.

Distressed countries will remain poor if they cannot trade, and there will be little impetus to improve conditions for all workers, not only children. The sad conclusion is that the only thing worse than for children in underdeveloped countries to be "exploited" is for them not to be. For too many workers in the developing world, the alternative to open trade with the industrialized world is increased deprivation and continued suffering. For them, child labor is a blessing, albeit mixed, but certainly it is not altogether a curse.

Christopher Lingle is Visiting Professor of Economics at Universidad Francisco MarroquĂ­n in Guatemala and Global Strategist for eConoLytics.


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