Dean Baker
Al Jazeera English, July 9, 2012

Dean Baker
Yahoo! Finance, July 9, 2012

Dean Baker
Truthout, July 9, 2012

This is the second installment looking at the New York Times in depth investigation into the Caracol industrial park. For part one, click here.

Jobs at What Cost?

Sontag reports that while concerns over Sae-A’s labor practices were consistently brought to the attention of officials, the project continued to go forward without a comprehensive review:

Before the Haiti deal was sealed, the A.F.L.-C.I.O. urged American and international officials to reconsider, given what it described in a detailed memo as Sae-A’s egregious antiunion repression, including “acts of violence and intimidation” in Guatemala, where Homero Fuentes, who monitors factories for American retailers, calls Sae-A “one of the major labor violators.”

The five-page memo “accused Sae-A of using bribes, death threats and imprisonment to prevent and break up unions.” Sontag describes the allegations against Sae-A in some detail, and notes that while “Gail W. Strickler… the assistant United States trade representative for textiles, says she considered Sae-A ‘an exemplary corporate citizen,’” meanwhile “Scott Nova, executive director of the Workers Rights Consortium, calls the company ‘a big player in a dirty industry with a track record that suggests a degree of ruthlessness even worse than the norm.’”

Of course, labor rights violations in the garment sector in Haiti are nothing new. In fact, on the same day that U.S., Haitian and development bank officials inaugurated the Caracol park, an investigation by Better Work Haiti found "evidence of violations of freedom of association" at other Haitian textile factories.  The most recent Better Work Haiti report, which “uncovered a higher number of violations in the areas of core labour standards than what [was] observed in the previous assessments”, is available here. 11 of 20 factories were found to be non-compliant in at least one of the core labor standards.

“American officials said Sae-A would be closely monitored in Haiti because of trade legislation requiring stringent scrutiny through an American-financed inspection program.”  As part of the legislation providing duty free access to the U.S. market, the U.S., together with the Better Work Haiti program, provides oversight as well as training to employers, employees and Haitian government officials on labor rights issues. But as Yannick Etienne of the Haitian workers’ rights group Batay Ouvriye tells Sontag, ‘“it remains to be seen” whether the inspection program will have “any teeth.”’

Every two years, the U.S. must identify which producers are in compliance with core labor standards and Haitian labor law. The most recent report, which was published in the last month, notes that, “While this is USTR’s fourth report, this is the first reporting period that [non-compliant] producers have been identified.” Yet, giving credence to Etienne’s concerns, this does not mean that the three producers identified as non-compliant on core labor standards will miss out on duty-free access to the U.S. market. As long as the producer shows an effort to improve and work with the U.S. to correct the problems, they will face no sanctions.

One resident of Caracol, who went to Nicaragua to participate in a Sae-A apprenticeship came back so disillusioned he told the New York Times that as soon as he found other work, he would quit his job with Sae-A:

“The way the Koreans treat the Nicaraguan workers is awful,” Mr. Joseph said. “They just treat them like nothing. Just: ‘Do your job. If you don’t do it, I’ll call somebody else to do it.’ ”

Thomas Edsall devoted his blogpost today to several economists who claim that the upward redistribution we have seen over the last three decades is a result of revolutions in technology and that it will be difficult to reverse this development. In fact, much of this economic analysis is quite sloppy and it is easy to show that many of the factors leading to upward redistribution had nothing to do with technology. 

For example, the post features a graph that shows for the first time a sustained decline in the employment-to-population ratio (EPOP) even as output has continued to rise. While the graph is accurate, it is wrong to imply that this demonstrates any new impact of technology.

In prior decades the employment-to-population ratio was consistently rising because women were entering the labor force and because the baby boom cohorts were entering the labor market. At this point, the vast majority of working age women are already working. And, the baby boom cohorts are beginning to retire. These developments mean that the EPOP is likely to be largely stagnant or falling going forward regardless of what happens with technology. (The recent drop is due to the weak economy.)

Much of the rest of the analysis is similarly confused. For example, the piece refers to the millions of manufacturing jobs that the United States lost over the last decade. The biggest factor behind the job loss was not technology; productivity growth in manufacturing was not markedly faster in the 2000s than in prior decades. The main factor leading to job loss was the growing U.S. trade deficit.

This, in turn, was the result of a conscious policy decision by Robert Rubin to have an over-valued dollar. Robert Rubin's high dollar policy was put into practice with the muscle of the I.M.F. as it engineered the bailout from the East Asian financial crisis in 1997. As a result of the harsh terms of the bailout, developing countries decided to acquire massive amounts of reserves, which meant deliberately keeping down the value of their currencies against the dollar so as to run trade surpluses.