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Achieving the Millennium Development Goals: Free Trade in Goods, Labor, and Capital

January 7, 2012

I’m speaking to a Mid-South Model UN Group in about an hour about human rights and the Millennium Development Goals. I’m planning to record the talk, and it should be online eventually. Since human rights include the right to trade without interference, I’m going to focus on a couple of issues: free trade and immigration. Here is a handful of links-heavy posts from Division of Labour that I’ve written on immigration. Michael Clemens explains here how immigration is “The Biggest Idea in Development that No One Really Tried.” I explain my position on immigration for Forbes.com here and here.


If you don’t want to follow a bunch of links wherever they may lead, here are a couple that are especially good:

1. Lant Pritchett, Let Their People Come. The best book I’ve read on immigration.

2. Michael Huemer, “Is There a Right to Immigrate?

3. An old Freeman article called “Immigration: An Abolitionist Cause.”

Update, 10:07 AM: During the Q&A, minimum wages, workplace safety regulations, and the thesis that labor unions saved workers from industrial exploitation came up. As expected, the students came up with a lot of excellent objections demonstrating that this isn’t a simple matter of flipping a few switches and seeing the Millennium Development Goals achieved. I’ve written a handful of articles on minimum wages: 1, 2, 3, 4. A more detailed discussion of my sources can be found here.

The most important thing to remember about workplace safety regulation is that there is no free lunch. When we mandate increases in workplace safety, we restrict employers’ and employees’ options. While we might get “safer” workplaces, we get lower wages or less comfort on other margins. Steven Landsburg offers a great discussion of this applied to housing and flood insurance in his book The Big Questions, which I’m currently reading (here’s his book through my Amazon Associates account, and here’s his blog; his most recent post takes up immigration).

If we are going to be careful about our analysis, we have to look not just at the effects of a policy on a favored group or industry, but on the unseen and long run effects of the policy on everyone. If you’ve read Economics in One Lesson, that should look familiar. One of my favorite articles about the effects of labor unions is George Reisman’s discussion of how the UAW affected GM.

Some of the best work on the consequences of labor unions has been done by Richard Vedder and Lowell Gallaway. In this paper, they argue “that labor unions have reduced U.S. output by significant amounts–trillions of dollars over time.” Their book-length treatment of American labor history is called Out of Work: Unemployment and Government in Twentieth-Century America. If you have access to JSTOR, the best survey of what we know about labor markets in the early twentieth century is Price Fishback’s 1998 article in the Journal of Economic Literature.

It is also important to note that there is a big difference between choosing to move to a city and get a job and choosing to form a labor union so that you can get the government to force your employers to pay you more and provide safer workplaces. In the first case, you’re involved in wealth-creating trade. In the second case, you’re involved in wealth-reducing violence.

Policies that we enact because we think we’re helping the poor almost invariably hurt the poor. I quote again from page 51 Deirdre McCloskey’s The Bourgeois Virtues, which should be on every bookshelf or e-reader across the land:

Unions raised wages for plumbers and autoworkers but reduced wages for the nonunionized. Minimum wages protected union jobs but made the poor unemployable. Building codes sometimes kept buildings from falling or burning down but always gave steady work to well-connected carpenters and electricians. Zoning and planning permission has protected rich landlords rather than helping the poor. Rent control makes the poor and the mentally ill unhousable, because no one will build inexpensive housing when it is forced by law to be expensive. The sane and the already-rich get the rent-controlled apartments and the fancy townhouses in once-poor neighborhoods.

On another note, I’m glad The Google was able to confirm for me that “despoliation” is actually a word. Otherwise, I might have had to refudiate part of my talk.

11:01 AM Update:

Here are some of my papers on economic development (note to self: update this page). My paper on foreign aid and economic change might be of interest, as might my paper with Robert Lawson on “Human Rights and Economic Liberalization.”

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