Free Trade Cures Poverty: Unless You're a Democrat

Imagine that you are a poor child living in some Third World hellhole. If you haven't been sold in to slavery, prostitution, or kidnapped and forced to serve as a child soldier, chances are that you make a living in the fields or digging through city dumps for bits of metal. You probably live on less than $2 a day. (See Chart) Your family is just barely able to eat, and starvation is never more than a few days away. Since you have to work to eat, you couldn't go to school even if there was one. Your best chance at a decent life is probably joining a gang or the army, if you can tell the difference between the two. Education is not even a possibility. Your future is pretty-much hopeless.

Suddenly, a company from the United States decides to open a factory in your city. What to do? True, the hours are long. True, the wages are not what an American union member would expect. However, the hours are shorter and the money better than scrounging for metal in the dump or breaking your back in the fields. If they weren't better jobs than the ones people already held, why would they switch? In fact, these jobs offer the opportunity of a substantially higher-than-average wages to the workers who get them. In other words, they offer security against starvation, they offer the possibility of a better life where no possibility previously existed.

Now, imagine that the company in the United States faces protests from well-meaning liberals who oppose "sweatshops," like these idiots. They rant and rave about "the children" and how the Western Imperialists are exploiting the poor brown-peoples of the Third World, and demand the companies either abandon their sweatshops or pay their workers what their Western counterparts would receive.

Why did the American company want to locate a factory in your area in the first place? Certainly not because of stability. Why risk bombed buildings, riots, inflation and government takeovers in the Third World if you have to pay the same wages as you do in America? The single most-popular reason for any company to relocate abroad is for reduced labor costs. If the people in the Third World cannot offer their labor services cheaply, then they have no way of attracting jobs to their countries.

In other words, the anti-"sweatshop" protesters are condemning the Third World to poverty and starvation in the name of saving it from poverty and starvation. What's worse, the anti-sweatshop campaign has expanded to become the idea of "fair-trade." Fair Trade is the idea that buyers in the West should not only purchase products from impoverished nations, but pay more than the market price for it, make sure the producers are unionized, pay for the producer's education and the development of their homelands. Not surprisingly, the main backers of "fair-trade" are unions in the West. After all, when the cost of manufacturing here at home is the same as manufacturing in Ecuador, nobody will manufacture products in Ecuador, and the unions gain massive numbers of new members.

This movement will fail, fundamentally because the products are far-too-expensive. Take the example of Just Garments, a Salvadoran company founded specifically to serve the "fair-trade" market in 2003, which closed it's doors in 2007 because of a lack of sales. Liberals love to protest "corporate greed" and "exploitation," because it gives them a warm, fuzzy feeling of moral superiority. Unfortunately for the residents of El Salvador, they don't seem very warm and fuzzy about the prices they have to pay to see their demands met.

Unions overwhelmingly give their money (97% for AFSCME and the AFL-CIO,) to Democrats. It shows in the current Democrat Presidential candidates' positions on trade, with both Hillary Clinton and Barack Obama opposed to NAFTA and CAFTA.

Libertarians and Republicans are both unquestionably on the side of free trade. The Democrats, on the other hand, demand "fair-trade" and protectionism. I've discussed the similarities between Libertarians and Republicans on economic issues before, but I want to emphasize it for a reason: Our ideological enemies are diametrically opposed to everything we believe about capitalism, property rights, free-markets and free-trade. Pick any economic (rather than social,) issue and there is absolutely no agreement between Libertarians and Democrats. Democrats don't share our belief in the value of trade, and the value of the free-market.

Economic freedom is more important, in my mind, than most of the areas where Republicans and Libertarians differ: Drugs, prostitution, abortion, etc. You will have to decide for yourself if you agree, but realize that if you vote for the Libertarian Party this November because of policy differences on crack or hookers you might be electing by default people who have no faith in free-markets, and an endless belief in the power of government.

UPDATE: Hot of the presses from the Drudge Report, Starbucks' stock price is tanking in the face of cheaper competitors. Hmmm... could it be because of multiple price increases in the wake of adopting
"fair-trade" coffee?