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Here's the problem. You have a bunch of people who feel it's bad to exploit poorer nations' low wage because it keeps the people of those countries poor. However, those countries' entire competitive advantage is their low wage.
If their workers were paid the same as richer nations, it would be cheaper for richer nations to keep the jobs internal to their economies (no transportation, tariffs, overhead). Therefore, the strategy backfires, and less money is transfered to the poorer nations.
This is a form of BackDoorProtectionism. BackDoorProtectionism simply aims to keep others from entering your market, but quietly and subtly.
You can imagine how pissed off the developing nations were when all the protesters went at it at the World Trade Organization's little shindig in Seattle this year (1999). -- SunirShah
- You could imagine, but I think you'd be wrong. Here in Brazil people aren't much worried about protestors at the WTO. Most of them are far more radically anti the free trade prescriptions coming from these organizations.
- Because they're much more concerned about the obvious forms of FrontDoorProtectionism?, like the way the US just raised import tax on Brazilian agricultural products last year.
- And because they just don't really buy economic liberalism anymore. They've seen it screw up in Argentina and Bolivia. They believe the idea that if you just open your borders and stop taxing companies, wealth starts to flow in, is a hopelessly simplistic model of what actually happens in the real world.
[Originally from Wiki:BackDoorProtectionism""]
- I didn't know you were so naive back then, Sunir.
- Well, I was 19 and, well, naive. I was listening to CBC radio's coverage of the protest, and they interviewed an African diplomat who as complaining about 'Back door proectionism'. These days (2004) I could go on at length about anti-globalization. Although I don't doubt that artificially rapidly raising the average wages of a nation would severely cripple its economy, as a world minimum wage would do. After QuebecCity, I think a lot of the anti-globalization protesters are more naive. As PhilJones writes, people actually living in those countries likely have different sentiments than expressed on The Streets here. I think it's often a matter of using pathos for the third world as a foil to advance a domestic agenda. I'd rather listen to someone from that country than students from this one, speaking as a student myself who is now grossly aware of his own limited sensing on this issue. -- SunirShah
See also SocialCapitalism, WageSlave