Reply #29: Oh, we're certainly not. We're in it to make a profit. [View All]

[Occam Bandage]

When it works well, trade is like democracy: the right things get done for all the wrong reasons. Our goal (meaning that of Western-based corporations) is to find unexploited sources of cheap labor. Their goal (meaning that of the Chinese people) is to find a steady source of income, with a lack of other opportunities meaning they have very few demands. So the factories go to China, the Chinese work in them, they find themselves with a bit of spare cash (not much, but a bit), and so perhaps they spend it at a food stand that an enterprising local set up, and then that cook has some money, etc., etc., and we're back in ECON1001 and all's well with the world. The Chinese economy grows, China develops more purely domestic industries, competition drives wages up, and most of the sweatshop factories move along to find some desperate subsistence farmers somewhere else, just as they moved out of America to Japan, and from Japan to Korea, and from Korea to China's seaboard, and are moving from the Chinese seaboard to the Chinese interior.

That's the theory of what happens when it works well. Sometimes things get stuck in the sweatshop stage, especially when governments are corrupt or undemocratic and thus they mismanage their trade laws to provide inordinate and artificial pressures against growth (China is hardly meek when it comes to setting trade policy though). Sometimes when the factories leave, they create employment crises (such as we are facing in America now).

And then, of course, all along there is that niggling feeling that it would be so much better if we just jumped right to the last stage and started paying them well despite the fact that it isn't in our financial interest to do so, or even better if there wasn't a China to worry about and all the factories just stayed here and paid us well instead.